-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, KoTycGJ9Y1G3r6oLLRTVXIz2OuUGIhCxnkRQpaVxiDWvqd5YVJJmaOy1wBjHcTQj BTbkiogccxIEYC05avGLdQ== 0001144204-08-067131.txt : 20081128 0001144204-08-067131.hdr.sgml : 20081127 20081128161714 ACCESSION NUMBER: 0001144204-08-067131 CONFORMED SUBMISSION TYPE: 6-K PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20081128 FILED AS OF DATE: 20081128 DATE AS OF CHANGE: 20081128 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CARTHEW BAY TECHNOLOGIES INC CENTRAL INDEX KEY: 0001022518 STANDARD INDUSTRIAL CLASSIFICATION: MISCELLANEOUS ELECTRICAL MACHINERY, EQUIPMENT & SUPPLIES [3690] IRS NUMBER: 000000000 FILING VALUES: FORM TYPE: 6-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-31481 FILM NUMBER: 081220537 BUSINESS ADDRESS: STREET 1: C/O LANG MICHENER - ATTN: H. DRABINSKY STREET 2: BROOKFIELD PL, 181 BAY STREET, STE 2500 CITY: TORONTO STATE: A6 ZIP: M5J 2T7 BUSINESS PHONE: 4163074015 MAIL ADDRESS: STREET 1: C/O LANG MICHENER - ATTN: H. DRABINSKY STREET 2: BROOKFIELD PL, 181 BAY STREET, STE 2500 CITY: TORONTO STATE: A6 ZIP: M5J 2T7 FORMER COMPANY: FORMER CONFORMED NAME: ASTRIS ENERGI INC DATE OF NAME CHANGE: 20000901 6-K 1 v133735_6-k.htm Unassociated Document
 
FORM 6-K
 
REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16 UNDER THE SECURITIES ACT OF 1934 
 
For the month of November, 2008
 
Commission File Number 0-31481
 
 
CARTHEW BAY TECHNOLOGIES, INC.  
(Translation of registrant’s name into English)
 
Brookfield Place, 181 Bay Street, Suite 2500
Toronto, Ontario, Canada M5J 2T7
(Address of principal executive offices)
 
 
Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F. Form 20-F x Form 40-F o
 
 
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): _____
 
 
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): _____
 
 
Indicate by check mark whether by furnishing the information contained in this Form, the registrant is also thereby furnishing the information to the Commission pursuant to rule 12g3-2(b) under the Securities Exchange Act of 1934. Yes o No x
 
 
If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b) 82-_____________.
 
 
 
November 28, 2008
 
Management’s Discussion and Analysis

The following is a discussion of the results of operations and financial condition of Carthew Bay Technologies Inc. (“Carthew Bay”) for the quarters ended September 30, 2008 and 2007. The financial statements are prepared in accordance with Canadian Generally Accepted Accounting Principles (“GAAP”) and are presented in Canadian dollars unless otherwise stated. This discussion should be read in conjunction with the audited consolidated financial statements and notes for December 31, 2007 and Management’s Discussion and Analysis for the year ended December 31, 2007.

Additional information relating to Carthew Bay is on SEDAR at www.sedar.com and EDGAR at www.sec.gov.
 
Forward-looking Statements and Risk Factors

The following discussion contains forward-looking statements that are based on current expectations and entails various risks and uncertainties. These risks and uncertainties could cause or contribute to actual results that are materially different from those expressed or implied. The forward-looking information contained in this document is current only as of the date of the document. There should not be an expectation that such information will in all circumstances be updated, supplemented or revised whether as a result of new information, changing circumstances, future events or otherwise. You should not place undue reliance on forward-looking statements. Readers are encouraged to read the section entitled “Risks and Uncertainties” in this MD&A for a discussion of the factors that could affect our future performance.

Overview and Business of Carthew Bay Technologies

Founded in 1983, Carthew Bay Technologies Inc. (formerly Astris Energi Inc.) had become a leading alkaline fuel cell (AFC) technology company. More than $18 million has been spent to develop the Company’s AFC technology, resulting in a fuel cell that has unique attributes compared with other fuel cell technologies. The Company ceased being a developer of fuel cell technology with the sale of substantially all of its assets. (see further explanation below).

Based in Toronto, Canada, the Company became public through a reverse takeover in 1995 to broaden its access to capital. It trades on the U.S. OTC Bulletin Board under the symbol CWBYF.

On August 1, 2007 the Company announced that it had completed its previously announced sale of assets to MKU Canada Inc., an Ontario incorporated company which is a wholly owned subsidiary of MKU Cyprus Ltd., formerly referred to as Green Shelters Innovations Ltd. The transaction includes the sale of substantially all of the assets of the Company, including its fuel cell and test load technology assets for consideration of: i) US$3,064,363 in cash ($3,216,049 Canadian: ii) forgiveness of US$1,225,000 and $380,000 Canadian of face value secured convertible debentures held by ACME Global Inc. (a subsidiary of MKU Cyprus Ltd.) along with over US$210,000 ($234,558 Canadian) of accrued interest: iii) an option for Astris to purchase for nominal consideration ($1.00) 4,248,750 shares recently acquired by ACME Global Inc. for US$.08 per share, total US$339,900 ($384,024 Canadian): iv) the forgiveness of a secured convertible promissory note in the amount of US$600,000 ($642,700 Canadian). The Company has exercised the option to reacquire and cancel the 4,248,750 shares.
 
As a condition of the sale, Jiri Nor and Anthony Durkacz have resigned both as officers and directors of the Company effective July 31, 2007. Peter Nor has resigned as an officer of the Company effective July 31, 2007. Director Michael Liik has become the new President & CEO and Director Brian Clewes has become the new CFO, Secretary & Treasurer of the Company. 
 
 
It is Management’s objective to utilize the cash proceeds from the Asset Sale and its US public listing to seek out a new business opportunity. The Company believes that it is in an attractive position to do so given the collective business experience and networks of the new management group as well as Directors.

In addition, the company changed its name to Carthew Bay Technologies Inc. on August 17, 2007 with the Ministry of Government Services Ontario.
 
Developments after the Sale of Assets

On October 26, 2007, a resolution was passed to approve the issuance of 625,000 Common Shares of the Corporation to settle certain obligations incurred in settlement of it’s Consulting Agreement owing by the Corporation to Ardour Capital Investments LLP or any of its designates.

On November 23, 2007, The Board of Directors approved a motion to provide Management with the authority to negotiate, execute, and deliver a Letter of Intent on substantially the same terms as presented and to execute and deliver the first convertible debenture of US$1.0 million in connection with a proposed RTO transaction with Colorep.

On December 9, 2007 the Company executed a Letter of Intent (“LOI”) with Colorep Inc. (“Colorep”), relating to a transaction whereby shares of CBT will be exchanged for all of the issued and outstanding shares of Colorep (“RTO”).
 
Colorep (Rancho Cucamonga, CA) develops and offers for sale sustainable subsurface printing and dyeing technology for decorating a wide variety of textiles and other consumer products. Colorep has previously announced its intention to acquire Transprint USA Inc. (“Transprint”); a privately held employee owned company founded in 1978, with headquarters and manufacturing facilities in Harrisonburg, VA; and design studios and showrooms in New York City and Charlotte, NC. Transprint offers printing products and design services worldwide for the apparel, commercial and residential furnishings markets. The definitive share purchase agreement between Colorep and Transprint has been completed. One of the conditions precedent to the conclusion of the RTO under the LOI is receipt by Colorep of a credit facility sufficient to enable Colorep to conclude the acquisition of Transprint.
 
Pursuant to the LOI and subject to the terms thereof, CBT will invest $2 million US$ in two equal tranches into secured debentures (the “Debentures”) of Colorep. The Debentures will bear interest at 1% per month (unless increased pursuant to the terms of the LOI) and interest will accrue until maturity on April 30, 2008. Subject to certain conditions, CBT is obligated to advance the first $1 million US$ to Colorep upon signing of the LOI and completion of related loan documentation which was completed and advanced February 1, 2008. The second $1 million US$ will be advanced upon execution of a binding share exchange agreement. The LOI further provides that upon receipt of all approvals, such as but not limited to shareholder and regulatory approvals, necessary to conclude the RTO, CBT will, as part of the closing of the RTO, cancel the debentures. There are many conditions associated with the conclusion of the various transactions included as part of the LOI and such conditions include but are not limited to, those conditions elsewhere identified herein; a condition that CBT consolidate its shares pursuant to a formula included as part of the LOI and the completion of the Transprint acquisition by Colorep which occurred January 8, 2008.
 
Subject to certain extension provisions set out in the LOI, the transactions contemplated there under must be completed prior to April 30, 2008 but no later than September 30, 2008. Upon closing of the RTO, all of the current members of the Board of Directors of CBT, other than Michael Liik, will resign and will be replaced by between four and six new members.
 
Page 2
 
Execution of the LOI has received the unanimous approval for the Board of Directors of CBT and the LOI was filed on EDGAR on February 6, 2008.
 
The RTO transaction is subject to M&A/Success Fees of 1.4% of the transaction value or $1,150,000, payable as a combination of cash remaining in CBT immediately prior to the RTO transaction and treasury shares of CBT issued at a price equivalent to the value per share (after giving consideration to the shares issued in this regard) received by the shareholders of CBT as a consequence of this transaction. The fee would be increased by an additional 0.06% of the transaction value or $500,000, or such pro-rated amount, determined 3 months after closing of the RTO transaction and based upon the performance of the post-RTO shares. In the event that the performance of the post-RTO shares, is between $0.70 per share equivalent value (as further described in the LOI) and $1.00 per share, the additional $500,000 fee would be pro-rated such that no fee would be earned on the lower threshold and the full fee earned on the upper threshold (This fee would be payable in treasury shares of CBT on the basis described above. In the event that an appropriate mechanism to issue these shares post-RTO cannot be established in advance, the additional fee would be considered fully earned and payable upon closing of the RTO transaction. On June 16, 2008 the Company issued shares in satisfaction of the first component of the Success Fee to be held in escrow pending successful completion of the RTO transaction.
 
On May 22, 2008, the Company signed a consulting agreement with a former director, to provide services to the Company to facilitate the transition continuing from the asset sale to MKU Canada Inc referred to above. This resulted in the issuance of 2,500,000 Common Shares of the Corporation.

On July 8, 2008 the Company announced that a delay in the closing of the RTO would occur as a consequence of the delay in the signing of the RTO Agreement (May 23, 2008). In addition, the Transaction closing was changed to December 31, 2008. The transaction requires the filing of a Registration Statement with the SEC by the Company. It was anticipated that the Registration Statement would be filed by the end of July and will require 90 to 120 days for SEC review and comments. Thereafter, the Company would convene a Special Meeting of shareholders to vote on the RTO transaction. In the event that shareholders approve same, the transaction would close shortly thereafter. It is likely that the Company will delay its annual meeting to coincide with this special meeting to avoid duplicating associated costs.

On September 5, 2008, the Company announced that there would be further delays with the completion of Colorep’s audit, which would affect the filing of the Registration Statement with the SEC.

On October 27, 2008 the Company announced that it had re-negotiated the terms of the RTO Agreement with Colorep, Inc. and agreed to extend the closing of the RTO Agreement from December 31, 2008 to June 30, 2009. In exchange for this agreement, Colorep will increase the ownership percentage of the post-RTO company held by the current CBT shareholders such that upon closing of the RTO transaction, CBT shareholders shall hold 12.753% of the post-RTO common stock of the surviving company, based upon the current issued and outstanding shares of Colorep. In addition, in the event that Colorep issues additional shares or securities convertible into shares of Colorep prior to the RTO, CBT will be granted dilution protection such that in no event shall the interest of the current CBT shareholders in the surviving company be allowed to fall below 8% of the issued and outstanding post-RTO common stock of the surviving company (based on the current issued and outstanding shares of Colorep), or 5.3% of the post-RTO ownership of the surviving company, as calculated on a fully diluted basis.

As a further inducement to extend the closing, Colorep has agreed to: (i) increase their obligation to contribute to CBT overhead expenses from $20,000 to $30,000 per month and to pre-pay such amounts through the end of January, 2009; (ii) pay any outstanding accrued interest on CBT debentures and thereafter make interest payments on a monthly basis as well as to pre-pay future interest on same through to the end of January, 2009; (iii) pay any and all amounts outstanding to CBT in respect of legal or costs owing to CBT plus all reasonable costs associated with effecting this amendment, to a maximum of $307,000 including the satisfaction of (i) and (ii) above. Any amounts still outstanding in excess of the $307,000 cap will be payable on February 1, 2009.

Page 3

Outlook

This Outlook section contains certain Forward-Looking Statements. By their nature, Forward-Looking Statements require us to make assumptions and are subject to inherent risks and uncertainties. Please refer to the caution regarding forward-looking statements on page 1.

Given the sale of substantially all of the assets of the Company to MKU Canada Inc., the Company looked to utilize its publicly traded vehicle with remaining cash of approximately $2,600,000, no debt, and substantial tax loss carry forwards, with the sole intention of creating shareholder value. The Company evaluated different proposals before entering into the LOI with Colorep. The Company will continue to keep shareholders apprised through news releases and filings with the relevant Canadian and US securities commissions.

Financial Review

The following is a review of the key performance measurements from the income statement for the years ended September 30, 2008 and September 30, 2007.

Revenue

For the nine months ended September 30, 2008, revenue from the sale of fuel cells and related products, contract work and interest was $149,714 compared with $59,444 for the same period in 2007. For the third quarter of 2008, the only revenue was interest earned on investments.

Expenses

For the nine months ended September 30, 2008, expenses were $1,457,790 compared to $ 1,452,298 in the same period in 2007.

Net Loss for the six months ended September 30, 2008

Carthew Bay Technologies Inc. reported a net loss of $1,308,076, (a loss of $0.018 per share basic and fully diluted) for the nine months ended September 30, 2008 compared to a gain of $2,006,750 (a gain of $0.038 per share basic and diluted) for the nine months ended September 30, 2007.

Liquidity and Capital Resources

Carthew Bay Technologies Inc. had an overall cash outflow of $2,308,047 in the first nine months of 2008 compared to a cash inflow of $2,517,605 in the first quarter of 2007. The negative cash flow in 2008 was due to the investment in the Debenture of Colorep Inc. As at September 30, 2008, Carthew Bay Technologies Inc. had assets of $2,541,659 compared to the $2,690,157 in 2007.

Page 4
 
Off-balance-sheet Arrangements

Carthew Bay Technologies Inc. does not have any off-balance sheet arrangements.
Share Capital

Share capital consists of the following:

Authorized:
Unlimited common shares
10,000,000 preferred shares

   
2008
2007
 
  
Common Shares
Common Shares
 
    
Number
  
 
$Value
    
Number
  
 
$Value
  
                           
Issued at January 1
    
50,789,682
   
10,845,648
   
48,131,669
   
11,205,002
 
-in exchange for compensation to
                          
employees
                          
- shares issued in settlement of debt
    
213,334
    
12,800
              
professional fees and expenses from
                          
related parties
    
25,401,632
    
1,267,624
    
1,838,732
    
151,416
  
Conversion of advances payable
                
4,248,750
    
384,024
  
Conversion of US$ Debentures
                
899,281
    
29,567
 
Redemption of shares owned by dissenting shareholders
    
-
    
-
    
( 80,000
)
  
( 17,083
)
Redemption of shares owned by The ACME Global Inc.
    
-
    
-
    
(4,248,750
)
  
( 907,278
)
     
25,614,966
    
1,280,424
    
2,658,013
   
( 359,354
)
                           
Balance, end of period
    
76,404,648
   
12,126,072
   
50,789,682
   
10,845,648
 
 
Business Risks

Until the sale of substantially all of its assets Carthew Bay Technologies Inc. (Formerly Astris Energi Inc.) was a late-stage development company entering the pilot production phase, and there were a number of relevant business risks at that stage of development, and within the fuel cell industry generally. With the completion of the sale of assets on August 1, 2007, these risks are no longer of concern. Please refer to the MD&A for the nine months ended September 30, 2007 and the MD&A for the year ended December 31, 2007 for a complete description of the risks inherent at those dates.
 
The Company has never paid dividends and it does not anticipate paying dividends in the foreseeable future.

The Company has never declared any cash dividends on its Common Shares, and if the Company were to become profitable, it would be expected that most or all of such earnings would be retained to support the business. As a result, shareholders must rely on stock appreciation for any return on their investment in the Common Shares.
 
Page 5
 
The Company has authorized an unlimited number of common shares and up to 10,000,000 preferred shares of capital.

Under Canadian law the Company is able to issue an unlimited number of its common shares and up to 10 million preferred shares. The Company does not need the consent of its shareholders to issue these additional shares. Therefore, there is a high likelihood of dilution from the issuance of additional shares. The additional shares can be used to thwart a takeover attempt that the Board of Directors does not deem in the Company’s best interest, however the Company has not made any provision for issuing shares in that manner. The Company has not issued any preferred shares.
 
SUMMARY OF THE RESULTS FOR THE LAST FOUR QUARTERS

 
    
Three months
ended
Sept 30, 2008
    
Three months
ended
Jun 30, 2008
    
Three months
ended
Mar 31, 2008
    
Three months
ended
Dec 31, 2007
    
Total
 
                                 
(expressed in $Cdn)
                                
                                 
Revenue
    
120,000
    
10,776
    
18,938
    
NIL
    
149,714
  
                                 
Gain (expenses)
    
135,616
    
(1,374,423
)
  
(218,983
)
  
(163,557
)
  
1,621,347
  
                                 
Income (net loss)
    
255,616
    
(1,363,657
)
  
(200,035
)
  
(163,557
)
  
1,471,633
  
                                 
Net Income (loss) per Common Share)
    
(.004
)
  
(.028
)
  
(.004
)
  
(.003
)
  
0.027
  
 
 
Page 6
 

CARTHEW BAY TECHNOLOGIES INC.
(Formerly Astris Energi Inc.)

Consolidated Financial Statements
(Canadian Dollars)
(Unaudited - See Notice to Reader)
September 30, 2008 and 2007


 
Notice to Reader
Regarding the financial statements for the nine months ended September 30, 2008 and 2007
 
The accompanying consolidated interim balance sheets of Carthew Bay Technologies Inc. as at September 30, 2008 and the consolidated interim statements of operations and deficit and cash flows for the nine months then ended have been prepared by management in accordance with Canadian generally accepted accounting principles. These interim financial statements have not been reviewed by an auditor to verify the accuracy or completeness of such information. Readers are cautioned that these statements may not be appropriate for their purposes. These should be read in conjunction with the 2007 audited financial statements of Carthew Bay Technologies Inc.
 
  “Brian D. Clewes”
  Chief Financial Officer
 
Toronto, Canada
November 28, 2008
 
 
CARTHEW BAY TECHNOLOGIES INC.
Consolidated Interim Balance Sheet
(Canadian Dollars)
(Unaudited - See Notice to Reader)
Statement I
 
     
Sept 30, 2008
    
Dec 31, 2007
    
Sept 30, 2007
  
Assets
                    
Current
                    
Cash and Short Term deposits
  
$
236,384
  
$
2,544,431
  
$
2,539,686
  
Prepaid expenses and deposits
    
-
   
87,500
   
125,000
 
Interest and fees receivable (Note 13)
    
160,000
    
-
    
-
  
Government Tax receivable
    
5,275
   
2,767
   
25,471
 
     
401,659
   
2,634,698
   
2,690,157
 
Investment - Colorep (Note 13)
    
2,140,000
    
-
    
-
  
                     
   
$
2,541,659
  
$
2,634,698
  
$
2,690,157
  
 
                       
Liabilities
                    
Current
                    
Accounts payables and accrued liabilities
  
$
-
  
$
82,887
  
$
118,000
  
                     
Shareholders' Equity (Deficiency)
                    
Share capital (Note 7(a))
    
12,126,072
   
10,845,648
   
10,845,648
 
Contributed surplus (Note 10)
    
6,170,288
   
6,152,788
    
6,161,472
 
Deficit
    
(15,754,701
)
  
(14,446,625
)
  
(14,434,963
)
     
2,541,659
    
2,551,811
    
2,572,157
 
                     
   
$
2,541,659
  
$
2,634,698
  
$
2,690,157
  
 
Page 3
 
CARTHEW BAY TECHNOLOGIES INC.
Statement II
 
Consolidated Interim Statement of Operations and Deficit
(Canadian Dollars)
(Unaudited - See Notice to Reader)
 
     
For the Three
months ended
Sept 30, 2008 
    
For the Three
months ended
Sept 30, 2007
    
For the Nine
months ended
Sept 30, 2008
    
For the Nine
months ended
Sept 30, 2007
  
Revenues
                          
Interest
 
$
120,000
  
$
16,826
  
$
149,714
  
$
59,444
  
Total
    
120,000
    
16,826
    
149,714
    
59,444
 
-
                
-
        
Expenses
                          
Research and Development
    
-
    
162,781
    
-
    
528,017
 
Gov’t R&D Earned
    
(90,678
)
  
-
   
(131,383
)
  
(247,822
)
General and administrative
    
19,626
    
103,134
    
190,024
    
631,749
 
Professional fees
    
83,606
   
147,861
    
1,529,527
   
354,860
 
Net Options expense
    
-
    
58,422
    
17,500
    
58,422
  
Interest
   
66
    
(87,631
)
  
358
    
18,441
  
Debenture financing cost
          
(378,477
)
            
Net currency expense
    
( 148,236
)
  
220,132
    
( 148,236
)
  
99,272
  
Amortization of long lived assets
    
-
    
(33,994
)
  
-
    
9,359
  
Gain on sale of assets (Note 1)
          
(3,399,604
)
        
(3,399,604
)
     
(135,616
)
  
(3,207,376
)
  
1,457,790
   
(1,947,306
)
                           
Net Income (loss) for the period
    
255,616
   
3,224,202
    
(1,308,076
)
  
2,006,750
  
                           
Deficit, beginning of period
    
(16,010,317
)
  
(17,659,165
)
  
(14,446,625
)
  
(16,441,713
)
                           
Deficit, end of period
  
$
(15,754,701
)
  
(14,434,963
)
$
(15,754,701
)
$
(14,577,228
)
                           
Gain/(Loss) per common share, basic
and diluted
  
$
.004
  
$
.062
  
$
(0.018
)
$
.038
  
Weighted Average Common shares
Outstanding
    
59,851,027
   
52,419,826
   
74,583,132
   
52,419,826
  
 
Page 4
 
CARTHEW BAY TECHNOLOGIES INC.
Statement III
(Formerly Astris Energi Inc.)
Consolidated Interim Statement of Cash Flows
(Canadian Dollars)
(Unaudited - See Notice to Reader)
 
     
For the Three
months ended
Sept 30, 2008 
    
For the Three
months ended
Sept 30, 2007
    
For the Nine
months ended
Sept 30, 2008
    
For the Nine
months ended
Sept 30, 2007
  
Operating
                          
Income (loss) for the period
  
$
255,616
  
$
3,224,202
  
$
(1,308,076
)
$
2,006,750
  
Items not requiring cash
                          
Depreciation and amortization of Capital Assets
    
-
    
( 33,994
)
  
-
    
9,359
  
Amortization of Debenture Financing costs
    
-
    
( 378,477
)
  
-
    
-
  
Imputed interest
          
( 87,631
)
        
-
  
Options expense
    
-
    
58,422
    
17,500
    
58,422
  
Consulting and professional fees paid in capital
stock to related parties
    
71,875
    
-
    
1,280,424
   
151,415
 
Unrealized foreign currency gain
         
(216,699
)
      
-
  
Gain on Sale of Assets (Note 1)
          
( 3,399,604
)
        
( 3,399,604
)
Net change in non-cash working capital
balances related to operations (Note 8)
    
(149,726
)
  
( 298,424
)
  
( 157,895
)
  
( 332,316
)
     
178,765
   
(1,132,204
)
  
( 168,047
)
  
(1,505,974
)
Investing
                          
Proceeds from sale of assets
    
-
    
3,298,368
    
-
    
3,298,368
  
-
          
3,298,368
    
-
    
3,298,368
  
Financing
                          
Investment - Colorep Debenture (Note 13)
    
(140,000
)
        
(2,140,000
)
      
Repayment of obligations under Capital Lease
    
-
    
( 33,234
)
  
-
    
( 38,913
)
Proceeds from advances payable
    
-
    
110,000
   
-
    
764,224
  
Deferred Financing costs and Derivative Liability
    
-
           
-
            
     
(140,000
)
  
76,776
   
(2,140,000)-
    
725,311
  
                           
Net increase (decrease) in cash during period
    
37,765
   
2,242,929
    
( 2,308,047
)
  
2,517,605
  
                           
Cash, beginning of period
    
198,619
   
296,757
   
2,544,431
   
22,081
  
                           
Cash, end of period
  
$
236,384
  
$
2,539,686
  
$
236,384
  
$
2,539,686
  
 
Page 5

CARTHEW BAY TECHNOLOGIES INC.
(Formerly Astris Energi Inc.)
Notes to the Consolidated Interim Financial Statements
September 30, 2008 and 2007
(Canadian Dollars)

1.  DESCRIPTION OF BUSINESS  

Carthew Bay Technologies Inc. (Formerly Astris Energi Inc.) (the “Company”) designed, developed, manufactured and sold alkaline fuel cells (“AFCs”) and alkaline fuel cell systems, fuel cell and battery test loads and provide engineering and other services.  
 
Since inception, the efforts of the Company have been devoted to the development of AFCs for industrial, commercial, educational, scientific, transportation and similar applications.  The Company had not earned significant revenues.

 
On August 1, 2007, the Company sold substantially all its assets, including its wholly-owned subsidiaries, to MKU Canada Inc., an arm’s-length third party. MKU Canada Inc. is a wholly-owned subsidiary of MKU Cyprus Ltd. The transaction includes the sale of substantially all of the assets of the Company, including its fuel cell and test load technology assets for consideration of: i) US$3,064,363 in cash ($3,216,049 Canadian: ii) forgiveness of US$1,225,000 and $380,000 Canadian of face value secured convertible debentures held by ACME Global Inc. (a subsidiary of MKU Cyprus Ltd.) along with US$210,000 ($234,558 Canadian) of accrued interest: iii) an option for the Company, for a consideration of $1 to purchase 4,248,750 of its own shares: iv) the forgiveness of a secured convertible promissory note in the amount of US$600,000 ($642,700 Canadian). The Company has exercised the option to reacquire and cancel the 4,248,750 of its own shares. (See Note 7 (e) for additional information.)

With the sale of substantially all of its assets, the Company ceased to be in the development stage. In prior years, the Company reported as a development stage enterprise.

 
The Company changed its name to Carthew Bay Technologies Inc. on August 17, 2007.

2. UNAUDITED INTERIM FINANCIAL STATEMENTS

 
The unaudited consolidated interim balance sheet as at September 30, 2008 and the unaudited consolidated interim statements of operations and deficit and cash flows for the nine months and three months ended September 30, 2008 and 2007, have been prepared with Canadian Generally Accepted Accounting Principles (GAAP) on the same basis as the audited consolidated financial statements of the company for the year ended December 31, 2007. These consolidated interim financial statements include all adjustments, which, in the opinion of management, are necessary for the fair presentation of the results of operations necessarily indicative of results to be expected for the full year. These unaudited consolidated interim financial statements should be read in conjunction with the Company’s annual audited consolidated financial statements for the year ended December 31, 2007.
 
3. SIGNIFICANT ACCOUNTING POLICIES 

Basis of Presentation

Effective January 1, 2005, the Company, Astris Energi Inc., and its wholly-owned subsidiary, Astris Inc., were amalgamated to streamline administrative functions. The amalgamated company continued with the same name as the parent company.

Page 6
 
CARTHEW BAY TECHNOLOGIES INC.
(Formerly Astris Energi Inc.)
Notes to the Consolidated Interim Financial Statements
September 30, 2008 and 2007
(Canadian Dollars)
 
These consolidated interim financial statements have been prepared by management in accordance with Canadian Generally Accepted Accounting Principles (“GAAP”) and reflect the accounts of the Company and its wholly-owned holding company 2062540 Ontario Inc. that in turn holds all the outstanding shares of its foreign subsidiary, Astris s.r.o.

2062540 Ontario Inc. and Astris s.r.o. were sold on August 1, 2007. (See Note 1)

All material inter-company transactions and balances have been eliminated on consolidation.

3. SIGNIFICANT ACCOUNTING POLICIES 

Revenue Recognition

Revenues from the sale of fuel cell products and related components are recognized when there is persuasive evidence of an arrangement, goods have been delivered, the fee is fixed or determinable and collection is reasonably assured.  

 
Revenues relating to engineering and testing services are recognized at the time services are rendered.

Cash and Cash Equivalents

Cash equivalents comprise certain highly liquid instruments with a maturity of three months or less when purchased. At September 30, 2008 and 2007 and December 31, 2007, the Company had no cash equivalents.

Property, Plant and Equipment

Property, plant and equipment are recorded at cost less provision for amortization and impairment, where indicated. Amortization is provided over the estimated useful lives of these assets on a straight-line basis, calculated as follows:

Building
40 years
Machinery and equipment
5 years
Furniture and fixtures
10 years
Leasehold improvements
Corresponding lease term

In the event that the future undiscounted net cash flows relating to these long lived assets are less than their carrying amounts, they are written down to fair value.  The impairment loss would be reflected in the operations of the year when impairment occurs.

Inventory

Inventory is valued at the lower of cost or market value. Cost is determined on a first-in first-out basis.
 
Page 7

CARTHEW BAY TECHNOLOGIES INC.
(Formerly Astris Energi Inc.)
Notes to the Consolidated Interim Financial Statements
September 30, 2008 and 2007
(Canadian Dollars)

3. SIGNIFICANT ACCOUNTING POLICIES (continued)

Research and Development Costs, Investment Tax Credits and Government Assistance

All costs relating to scientific research and product evaluation are expensed as incurred. Product development costs are expensed as incurred unless the product or process is clearly defined; the associated costs can be identified; technical feasibility has been reached; there is intention to produce or market the product; the future market is clearly defined; and, adequate resources exist or are expected to be available to complete the project.  To date, these criteria have not been met and, accordingly, no development costs have been deferred.

Investment tax credits are recognized in the period in which the credits are earned and realization is considered more likely than not. Government grants are recognized when received. Assistance received or receivable is accounted for using the cost reduction approach.

     
2008
    
2007
  
               
Canadian SRED credits
  
$
131,383
  
$
388,886
  

Income Taxes

Income taxes are recorded using the liability method.  Future income and deduction amounts arise due to temporary differences between the accounting and income tax bases of the Company’s assets and liabilities.  Future income tax assets and liabilities are measured using substantively enacted income tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. The effect on future income tax assets and liabilities of a change in income tax rates is recognized in the period that includes the date of substantive enactment.  Valuation allowances are provided to the extent that realization of such benefits is considered to be more unlikely than not.

Use of Estimates

The preparation of the consolidated interim financial statements in conformity with Canadian generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the reported amounts of revenue and expenses during the year. Financial statement items subject to significant management judgment include revenue recognition, the completeness of accounts payable and accrued liabilities, the valuation of convertible debentures, the valuation of stock-based compensation, warrant valuation and future income taxes. Actual amounts could differ from management’s estimates.

Page 8
 
CARTHEW BAY TECHNOLOGIES INC.
(Formerly Astris Energi Inc.)
Notes to the Consolidated Interim Financial Statements
September 30, 2008 and 2007
(Canadian Dollars)
 
3. SIGNIFICANT ACCOUNTING POLICIES (continued)

Financial Instruments

At September 30, 2008, the Company’s financial instruments comprise cash and receivables.

The fair values of the Company’s financial instruments approximate their carrying values due to the short-term nature of the instruments.
 
The Company is exposed to risks arising from fluctuations in interest rates and the degree of volatility of these rates.  The Company does not use derivative instruments to reduce its exposure to interest risks.

The Company is exposed to credit risk on the accounts receivable from its customers.  In order to reduce its credit risk, the Company has adopted credit policies that include the payment of small orders by credit card before shipping, the analysis of the financial position of its customers, and the regular review of their credit limit. In addition, before the commencement of a major order, the Company requests a substantial deposit from the customer. These deposits, when received, are recorded as deferred revenue until the order is delivered.

The Company is exposed to risks arising from fluctuations in foreign exchange rates and the degree of volatility of these rates.  The Company does not use derivative instruments to reduce its exposure to foreign exchange risk.

Derivative Instruments

The Company issued convertible debentures as part of its financing activities. Accounting for convertible debentures with a debt conversion into shares component based on a varying stock price is covered by SFAS 133 in the United States and Section 3855 of the CICA Handbook in Canada. These sources prescribe when a financial instrument is to be recognized on the balance sheet and at what amount; sometimes using fair value and other times using cost-based measures. They also specify how financial instrument gains and losses are to be presented and define financial instruments to include accounts receivable and payable, loans, investments in debt and equity securities, and derivative contracts. Details of the accounting for these convertible debentures as derivative instruments are included in note 12.

Page 9
 
CARTHEW BAY TECHNOLOGIES INC.
(Formerly Astris Energi Inc.)
Notes to the Consolidated Interim Financial Statements
September 30, 2008 and 2007
(Canadian Dollars)
 
3. SIGNIFICANT ACCOUNTING POLICIES (continued)

Stock-based Compensation
 
The Company accounts for stock-based compensation in accordance with CICA Handbook section 3870, “Stock-Based Compensation and Other Stock-Based Payments.” This section establishes standards for the recognition, measurement and disclosure of stock-based compensation and other stock-based payments made in exchange for goods and services, and applies to transactions, including non-reciprocal transactions, in which an enterprise grants shares of common stock or other equity instruments, or incurs liabilities based on the price of common stock or other equity instruments. As permitted by Section 3870, the Company applied this change prospectively for new awards granted on or after January 1, 2002. In periods prior to January 1, 2002, the Company recognized no compensation when stock options or warrants were issued to employees or non-employees.
 
Effective January 1, 2004, the Company adopted the revised accounting recommendations contained in the CICA Handbook Section 3870. Commencing in the fiscal year 2004, the Company recorded compensation expense for stock options granted to employees on or after January 1, 2004, based on the fair value method of accounting. For the period ended September 30, 2008, the amount of compensation cost recognized in income and credited to contributed surplus was $17,500 (2006 - NIL).

Comprehensive Income

Income and losses arising from the translation of certain year-end balances in the Company’s foreign subsidiary are insignificant and grouped with currency expense on the consolidated interim statements of operations and deficit.

Foreign Currency Translation

The Company translates foreign currency denominated transactions and the financial statements of integrated foreign operations using the temporal method. Monetary assets and liabilities denominated in currencies other than Canadian dollars are translated into Canadian dollars at the rate of exchange in effect at the balance sheet date. Revenues and expenses are translated at the transaction exchange rate, with the exception of amortization, which is translated at historic rates. Foreign currency gains and losses resulting from the translation of assets and liabilities are reflected in net income of the period.

Leases
 
Leases entered into by the Company as a lessee were classified as capital or operating leases. Leases that transfer substantially the entire risks and benefits incidental to ownership were classified as capital leases. At the inception of a capital lease, an asset and an obligation were recorded at an amount equal to the lesser of the present value of the minimum lease payments and the asset’s fair market value at the beginning of each lease. Rental payments under operating leases are expensed as incurred.

Page 10
 
CARTHEW BAY TECHNOLOGIES INC.
(Formerly Astris Energi Inc.)
Notes to the Consolidated Interim Financial Statements
September 30, 2008 and 2007
(Canadian Dollars)
 
3. SIGNIFICANT ACCOUNTING POLICIES (continued)
 
Asset Impairment

The Company has adopted CICA Handbook Section 3063, Impairment of Long-lived Assets. This standard establishes principles for the recognition, measurement and disclosure of the impairment of long-lived assets on a prospective basis. The standard outlines the impairment process and defines the impairment loss as being measured as the excess of the carrying value of the asset over its fair value. The evaluation is performed at the lowest level of a group of assets and liabilities with identifiable cash flows that are independent of those of other assets and liabilities.

Loss per Share

Basic loss per share is calculated on the weighted average number of common shares outstanding during the period.  The diluted loss per share is calculated based on the weighted average number of common shares that would have been outstanding during the period had all potential common shares been issued at the beginning of the year or when the underlying options or warrants were granted, if later.
 
New Accounting Pronouncements

(i) Financial Instruments

On January 1, 2007, the Company adopted CICA Handbook Sections 1530, Comprehensive Income (‘Section 1530’); Section 3251, Equity (‘Section 3251’); Section 3855, Financial Instruments - Recognition and Measurement (‘Section 3855’), Section 3861, Financial Instruments - Disclosure and Presentation (‘Section 3861’) and Section 3865, Hedges (‘Section 3865’).

Section 1530 establishes standards for reporting and presenting comprehensive income, which is the change in equity from transactions and other events during a period from non-owner sources. Other comprehensive income refers to items recognized in comprehensive income that are excluded from net income calculated in accordance with GAAP. The adoption of Section 1530 did not have a material effect on the Company’s financial position and results of operations for the fiscal periods ended September 30, 2008 and 2007

Section 3861 establishes standards for presentation of financial instruments and non-financial derivatives, and specifies the information that should be disclosed about them. Section 3865 describes when and how hedge accounting can be applied as well as the disclosure requirements. Hedge accounting enables the recording of gains, losses, revenues and expenses from derivative financial instruments in the same periods as those related to the hedged items. The adoption of Sections 3861, 3865 and 3251 did not have a material effect on the Company’s financial position and results of operations for the fiscal periods ended September 30, 2008 and 2007
 
 
Page 11
CARTHEW BAY TECHNOLOGIES INC.
(Formerly Astris Energi Inc.)
Notes to the Consolidated Interim Financial Statements
September 30, 2008 and 2007
(Canadian Dollars)
 
3. SIGNIFICANT ACCOUNTING POLICIES (continued)

New Accounting Pronouncements (continued)

Section 3855 defines the terms ‘financial instrument,’ ‘financial asset’ and ‘financial liability.’ Under Section 3855, financial assets must be classified into one of four categories: held-for-trading, held to-maturity, loans and receivables and available-for-sale; financial liabilities must be classified into one of two categories: held-for-trading and other financial liabilities. (Capital lease receivables and obligations do not meet the scope of Section 3855, except for the Section’s derecognition and impairment standards.) All derivative instruments, including those that are embedded in, but not closely related to, another contract must be classified as held-for-trading. All financial instruments, including derivatives, are measured at fair value except for loans and receivables, held-to-maturity investments and other financial liabilities, which are measured at amortized cost, using the effective interest method where applicable. Subsequent measurement and changes in fair value will depend on their initial classification, as follows: held-for-trading financial assets are measured at fair value and changes in fair value are recognized in net income; available-for-sale financial instruments are measured at fair value with changes in fair value recorded in other comprehensive income until the investment is derecognized or impaired at which time the amounts would be recorded in net earnings. Under the adoption of these new standards, the Company designated restricted cash as held-for-trading, which is measured at fair value. Accounts receivable are classified as loans and receivables, which are measured at amortized cost. Accounts payable and accrued liabilities, advances payable, derivative liability and convertible debentures are classified as other financial liabilities, which are measured at amortized cost.

The adoption of these standards resulted in the decrease of $507,814 in the fair value of various convertible debt instruments on December 1, 2006 and a corresponding decrease in the deficit of the Company. This decrease in the fair value of the convertible debt will result in increased accretion charges in future periods such that the fair value of the debt will equal its face value at maturity.
 
(ii)  Non-Monetary Transactions:

Effective January 1, 2006, the Company adopted CICA Handbook Section 3831, Non-monetary Transactions (‘Section 3831’). This standard requires all non-monetary transactions to be measured at fair value unless they meet one of four very specific criteria. Commercial substance replaces culmination of the earnings process as the test for fair value measurement. A transaction has commercial substance if it causes an identifiable and measurable change in the economic circumstances of the entity. Commercial substance is a function of the cash flows expected by the reporting entity. The adoption of this standard did not have a material effect on the Company's financial position and results of operations for the fiscal years periods ended September 30, 2008 and 2007.

(iii)  Cash Flow Statements:

In March 2007, the CICA amended Handbook Section 1540, Cash Flow Statements (‘Section 1540’). Paragraph 1540.55 was amended such that cash distributions on financial instruments classified as equity, and the distributions are determined in accordance with a contractual agreement or relevant constating documents, now require disclosure of the extent to which cash distributions are nondiscretionary. The adoption of this amended standard did not have a material effect on the Company's financial position and results of operations for the periods ended September 30, 2008 and 2007.

Page 12
 
CARTHEW BAY TECHNOLOGIES INC.
(Formerly Astris Energi Inc.)
Notes to the Consolidated Interim Financial Statements
September 30, 2008 and 2007
(Canadian Dollars)
 
3. SIGNIFICANT ACCOUNTING POLICIES (continued)

New Accounting Pronouncements (continued)

(iv)  General Standards of Financial Statement Presentation:

In September 2007, the CICA added paragraphs to Handbook Section 1400, General Standards of Financial Statement Presentation (‘Section 1400’) to include new requirements regarding an entity’s ability to continue as a going concern. The additions to Section 1400 apply to interim and annual financial statements relating to fiscal years beginning on or after January 1, 2008. Earlier adoption is encouraged. The adoption of this standard did not have a material effect on the Company's financial position and results of operations for the fiscal periods ended September 30,2008 and 2007

(v) Inventories

In September 2007, the CICA issued Handbook Section 3031 Inventories (‘Section 3031’). This section supersedes CICA Handbook Section 3030 Inventories, and is based on International Financial Reporting Standard IAS 2, ‘Inventories.’ The Section prescribes the accounting treatment for inventories and applies to interim and annual financial statements relating to fiscal years beginning on or after January 1, 2008. Earlier adoption is encouraged. The Company is currently evaluating the impact of this standard on its financial position, results of operations and cash flows. The Company does not anticipate that the application of Section 3031 will have a material impact on its financial position and results of operations.

(vi)  Financial instruments - disclosures and presentation:

In December 2006, the CICA issued Handbook Section 3862, Financial Instruments - Disclosures, and Section 3863, Financial Instruments - Presentation. These two new sections replace Section 3861, Financial Instruments - Disclosure and Presentation, which was adopted by the Company in fiscal 2007. Section 3862 includes a complete set of disclosure requirements for financial instruments that revise and enhance the disclosure requirements in Section 3861. Section 3863 contains the standards for presentation of financial instruments and non-financial derivatives and is essentially consistent with the presentation requirements currently found in Section 3861. These two new sections apply to interim and annual financial statements relating to fiscal years beginning on or after October 1, 2007. The adoption of these standards did not have a material effect on the Company’s consolidated financial position or results of operations for the fiscal period ended September 30, 2008.

(vii) Capital disclosures:

In December 2006, the CICA issued Handbook Section 1535, Capital Disclosures (‘Section 1535’). This new guidance establishes standards for disclosing information about an entity’s capital and how it is managed. This section requires the disclosure of an entity’s objectives, policies and processes for managing capital and information regarding an entity’s compliance or non-compliance with any capital requirements. Section 1535 applies to interim and annual financial interim statements relating to fiscal years beginning on or after October 1, 2007. This standard affects disclosure only.

Page 13
 
CARTHEW BAY TECHNOLOGIES INC.
(Formerly Astris Energi Inc.)
Notes to the Consolidated Interim Financial Statements
September 30, 2008 and 2007
(Canadian Dollars)
 
3. SIGNIFICANT ACCOUNTING POLICIES (continued)

New Accounting Pronouncements (continued)

(viii) Goodwill and intangible assets:
In January 2008, the CICA issued Handbook section 3064, Goodwill and Intangible Assets, which will replace Section 3062, Goodwill and Other Intangible Assets. The standard provides guidance on the recognition of intangible assets in accordance with the definition of an asset and the criteria for asset recognition as well as clarifying the application of the concept of matching revenues and expenses, whether these assets are separately acquired or internally developed. This standard will apply to the Company’s interim and annual financial statements beginning January 1, 2009. The Company has not yet determined what the impact of adopting this standard will have on the Company’s consolidated financial statements.

United States generally accepted accounting principles

 
In September 2006, the Financial Accounting Standards Board (FASB) issued FASB Interpretation No. 48, "Accounting for Uncertainty in Income Taxes - an interpretation of FASB Statement No. 109" (FIN 48), which clarifies the accounting for uncertainty in tax positions. This Interpretation requires that we recognize in our financial statements the benefit of a tax position if that position is more likely than not of being sustained on audit, based on the technical merits of the position. The provisions of FIN 48 become effective as of the beginning of the Company’s 2008 fiscal year, with the cumulative effect of the change in accounting principle recorded as an adjustment to opening retained earnings. The Company is currently evaluating the impact that FIN 48 will have on its financial statements.
 
In September 2006, the FASB issued Statement No. 157, "Fair Value Measurements" (FAS 157), which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. The provisions of FAS 157 become effective as of the beginning of the Company’s 2008 fiscal year. The Company is currently evaluating the impact that FAS 157 will have on its financial statements.
 
In September 2006, the Securities and Exchange Commission issued Staff Accounting Bulletin No. 108, "Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements" (SAB 108), which addresses how to quantify the effect of financial statement errors. The provisions of SAB 108 become effective as of the end of the Company’s 2007 fiscal year. The adoption of SAB 108 did not have a material effect on the Company's reported financial position or results of operations.
 
In February 2007, the FASB issued Statement No. 159, "The Fair Value Option for Financial Assets and Financial Liabilities, including an amendment of FASB Statement No. 115" (FAS 159). FAS 159 permits companies to choose to measure many financial instruments and certain other items at fair value that are not currently required to be measured at fair value and establishes presentation and disclosure requirements designed to facilitate comparisons between companies that choose different measurement attributes for similar types of assets and liabilities. The provisions of FAS 159 become effective as of the beginning of the Company’s 2009 fiscal year. The Company is currently evaluating the impact that FAS 159 will have on its financial statements.

Page 14
 
CARTHEW BAY TECHNOLOGIES INC.
(Formerly Astris Energi Inc.)
Notes to the Consolidated Interim Financial Statements
September 30, 2008 and 2007
(Canadian Dollars)
3. SIGNIFICANT ACCOUNTING POLICIES (continued)

New Accounting Pronouncements (continued)

In December 2007, the FASB issued SFAS No. 141(R), Business Combinations (“SFAS No. 141R”), replacing SFAS No. 141, Business Combinations (“SFAS No. 141”).  This Statement retains the fundamental requirements in Statement 141 that the acquisition method of accounting (which Statement 141 called the purchase method) be used for all business combinations and for an acquirer to be identified for each business combination.  This Statement also establishes principles and requirements for how the acquirer: a) recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, and any noncontrolling interest in the acquiree; b) recognizes and measures the goodwill acquired in the business combination or a gain from a bargain purchase and c) determines what information to disclose to enable users of the financial statements to evaluate the nature and financial effects of the business combination.  This Statement clarifies that acquirers will be required to expense costs related to any acquisitions.  SFAS No. 141(R) will apply prospectively to business combinations for which the acquisition date is on or after fiscal years beginning December 15, 2008.  Early adoption is prohibited.  The Company has not yet evaluated the impact, if any, that SFAS No. 141(R) will have on its financial statements.  Determination of the ultimate effect of this pronouncement will depend on the Company’s structure at the date of adoption.

In December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statements — An Amendment of ARB No. 51 (“SFAS No. 160”).  SFAS No. 160 establishes new accounting and reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary.  Specifically, this statement requires the recognition of a noncontrolling interest (minority interest) as equity in the consolidated financial statements and separate from the parent’s equity.  The amount of net income attributable to the noncontrolling interest will be included in consolidated net income on the face of the income statement.  SFAS No. 160 clarifies that changes in a parent’s ownership interest in a subsidiary that do not result in deconsolidation are equity transactions if the parent retains its controlling financial interest.  In addition, this statement requires that a parent recognize a gain or loss in net income when a subsidiary is deconsolidated.  Such gain or loss will be measured using the fair value of the noncontrolling equity investment on the deconsolidation date.  SFAS No. 160 also includes expanded disclosure requirements regarding the interests of the parent and its noncontrolling interest.  SFAS No. 160 is effective for fiscal years beginning on or after December 15, 2008, with retrospective presentation and disclosure for all periods presented.  Early adoption is prohibited.  The Company currently has no entities or arrangements that will be affected by the adoption of SFAS No. 160.  However, determination of the ultimate effect of this pronouncement will depend on the Company’s structure at the date of adoption.


In May 2008, the FASB issued SFAS No. 162, The Hierarchy of Generally Accepted Accounting Principles (“SFAS 162”). SFAS 162 identifies the sources of accounting principles and the framework for selecting the principles used in the preparation of financial statements of non-government entities that are presented in conformity with generally accepted accounting principles in the United States. The provisions of SFAS 162 are effective 60 days following the SEC’s approval of the Public Company Accounting Oversight Board amendments to AU Section 411, The Meaning of Present Fairly in Conformity with Generally Accepted Accounting Principles. The Company is currently evaluating the impact of the provisions of SFAS 162, but does not anticipate that the provisions of SFAS 162 will have a material impact on our financial statements.

Page 15
 
CARTHEW BAY TECHNOLOGIES INC.
(Formerly Astris Energi Inc.)
Notes to the Consolidated Interim Financial Statements
September 30, 2008 and 2007
(Canadian Dollars)
 
In March 2008, the FASB issued SFAS No. 161, Disclosures about Derivative Instruments and Hedging
Activities (“SFAS 161”). SFAS 161 is intended to improve financial reporting about derivative instruments and hedging activities by requiring enhanced disclosures to enable investors to better understand their effects on an entity's financial position, financial performance, and cash flows. The provisions of SFAS 161 are effective for the third quarter of fiscal 2009. The Company is currently evaluating the impact of the provisions of SFAS 161, but does not anticipate that the provisions of SFAS 161 will have a material impact on our financial statements.

4. PROPERTY, PLANT AND EQUIPMENT

All of the Company’s property, plant and equipment were sold in 2007. (See Note 1)

5. RELATED PARTY TRANSACTIONS AND BALANCES 

(a) Amounts owing to Directors and Officers

As at September 30, 2008, accounts payables and accrued liabilities included amounts owing to the following persons and companies.
 
 
    
 Position
    
Sept 30, 2008
    
Dec 31, 2007
  
                     
Brian Clewes
    
Director
    
Nil
    
25,000
  
Chris Besant
    
Director
    
Nil
    
25,000
  
 
         $
 Nil
  
$
50,000
  
 
Page 16
 
CARTHEW BAY TECHNOLOGIES INC.
(Formerly Astris Energi Inc.)
Notes to the Consolidated Interim Financial Statements
September 30, 2008 and 2007
(Canadian Dollars)
 
 5. RELATED PARTY TRANSACTIONS AND BALANCES (continued)

(b) Directors and Officers

During the periods ended September and December, the Company incurred the following consulting expenses with its directors and officers:

 
    
Position 
    
Sept 30, 2008
    
Dec 31, 2007
    
Sept 30, 2007
  
                           
Brian Clewes (“BC”)
    
Director
    
12,500
   
49,005
    
36,588
  
Anthony Durkacz (“AD”)
    
Director and Officer
    
-
   
9,059
    
7,059
  
Fortius Research and Trading
    
Controlled by AD
    
-
   
48,733
    
40,400
 
Arthur Laudenslager
    
Director
    
12,500
   
46,122
    
33,706
  
397230 Ontario Inc
    
Controlled by BC
    
518,876
    
40,000
    
-
 
Chris Besant
    
Director
    
12,500
    
11,417
    
-
 
Howard Drabinsky (“HD”)
    
Director
    
-
   
1,000
    
-
 
Lang Michener
    
For HD
    
12,500
    
10,417
    
-
 
Rich Callandar (“RC)
    
Director
    
12,500
    
1,000
    
-
 
Stirling Partners
    
Controlled by RC
    
12,500
    
10,417
    
-
 
Liikfam Holdings Inc.
    
Controlled by ML
    
798,750
    
118,750
    
50,000
  
Macnor Corp. re Jiri Nor (i)
    
Controlled by JN
    
30,000
   
93,330
    
80,000
  
Macnor Corp. re Peter Nor (i)
    
Controlled by JN
    
-
   
56,000
    
48,000
 
Michael Liik (“ML”)
    
Director
    
-
   
36,941
    
34,941
  
Jiri Nor (“JN”)
    
Director and Officer
    
-
   
9,059
   
7,059
  
         
$
1,412,626
  
$
541,250
  
$
337,753
  

These transactions were in the normal course of operations and are measured at the exchange amount, which is the amount of consideration established and agreed to by the related parties.
 
 
(i)
Jiri Nor and Peter Nor provided services on behalf of Macnor Corp. respectively.
 
 
(ii)
397230 Ontario Inc. and Liikfam Holdings Inc. received shares to be held in escrow pending completion of the RTO Transaction in partial settlement of the M&A Success fee as defined in Note 14 of the December 31, 2007 Audited Financial Statements.
 
Page 17
 
CARTHEW BAY TECHNOLOGIES INC.
(Formerly Astris Energi Inc.)
Notes to the Consolidated Interim Financial Statements
September 30, 2008 and 2007
(Canadian Dollars)
 
6.
INCOME TAXES

 
As at Dec 31, 2007, the Company has non-capital tax losses carried forward of approximately $8,975,000. If unused, these tax losses will expire approximately as follows:

2010
1,228,000
2014
2,882,000
2015
3,030,000
2026
1,835,000
 
 
In addition, the Company has non-deductible scientific research and development expenditures amounting to approximately $2,120,000 which have no expiry.

 
Investment tax credits recorded during the period to September 30, 2008 as a reduction of expenses aggregated to $40,7105) (For the year ended December 31, 2007 -$388,886, for the year ended December 31, 2006 - $177,715).

The tax effect of significant temporary differences is as follows:

     
2007
    
2006
  
Net income (loss) before income taxes
  
$
1,995,088
    
($2,120,422
)
Statutory income tax rate
    
36.12
%
  
36.12
%
Income tax recovery at statutory rate
    
720,626
    
( 765,896
)
Non-taxable gain
    
(813,229
)
  
( 393,543
)
Non-deductible expenses
    
566,160
    
779,530
  
Application of non-capital losses applied
    
(473,533
)
  
-
  
Change in valuation allowance
    
( 24
)
  
379,909
  
               
Income tax expense
  
$
-
  
$
-
  

The components of the Company’s net future income tax assets are as follows:

     
2007
    
2006
  
               
Statutory income tax rate
    
33.5
%
  
36.12
%
Non-capital losses
 
$
3,006,600
  
$
3,432,484
  
Scientific research and development expense
              
($2,120,000)
    
710,200
    
635,351
  
Valuation allowance
    
(3,716,800
)
  
(4,067,835
)
               
Net future income tax asset
  
$
-
  
$
-
  
 
No provision for future tax benefit for the current period as the closing of the RTO as outlined in Note 14 will negate the value of any future tax benefit from loss carry forwards.
 
Page 18
 
CARTHEW BAY TECHNOLOGIES INC.
(Formerly Astris Energi Inc.)
Notes to the Consolidated Interim Financial Statements
September 30, 2008 and 2007
(Canadian Dollars)
 
7. SHARE CAPITAL AND CONTRIBUTED SURPLUS

a) Share capital

Share capital comprises the following:

Authorized
Unlimited common shares
10,000,000 preferred shares

Issued and outstanding

At September 30, 2008 there were 73,904,648 common shares were issued and outstanding. (December 31, 2007, 50,789,682) See note 10.

The weighted average number of common shares outstanding during the nine month period ended September 30, 2008 were 59,172,543 and for the nine month period ended September 30, 2007 -52,419,826
 
No preferred shares have been issued.
 
Page 19
 
CARTHEW BAY TECHNOLOGIES INC.
(Formerly Astris Energi Inc.)
Notes to the Consolidated Interim Financial Statements
September 30, 2008 and 2007
(Canadian Dollars)
 
7. SHARE CAPITAL AND CONTRIBUTED SURPLUS (continued)

b) Common stock issued to settle obligations of the Company to directors, officers and former directors of the Company.

In 2006, the Company issued 2,616,310 shares of common stock to settle obligations owing by the Company to certain directors and/or officers of the Company and/or to companies owned by them.

 
 
 
 
 

Name
    
Date 
    
$
    
Number 
    
Obligation Settled
  
                           
Macnor Corp.
    
January 18, 2006
    
106,000
   
651,138
   
Professional services
 
 
    
July 26, 2006
    
4,000
   
35,048
   
director fees
 
 
    
October 25, 2006
    
16,000
   
203,189
   
and reimbursements
  
 
    
Total
    
126,000
   
889,375
       

David Ramm
   
January 18, 2006
    
10,000
   
61,428
   
Director fees and
 
 
    
July 26, 2006
    
2,000
   
17,524
   
reimbursements
  
 
    
Total
    
12,000
   
78,952
       

Fortius Research and
   
January 18, 2006
    
10,000
   
61,428
   
Financial consulting,
  
Trading
    
July 26, 2006
    
4,000
   
35,048
   
director and expense
  
 
    
May 18, 2006
    
37,500
   
178,291
   
recovery
  
 
    
Total
    
51,500
   
274,767
       

A. Laudenslager
    
July 26, 2006
    
4,000
   
35,048
   
Director fees and
 
 
    
January 18, 2006
    
590
   
3,630
   
reimbursements
  
 
    
January 18, 2006
    
19,768
   
121,428
       
 
    
Total
    
24,358
   
160,106
       

Brian Clewes
    
January 18, 2006
    
25,465
   
156,428
   
Director fees and
 
 
    
July 26, 2006
    
4,000
   
35,048
   
reimbursements
  
 
    
Total
    
29,465
   
191,476
       

Gary Brandt
   
January 18, 2006
    
8,698
   
53,428
   
Director fees and
 
 
    
July 26, 2006
    
4,000
   
35,048
   
reimbursements
  
   
Total
    
12,698
   
88,476
       

Page 20
 
CARTHEW BAY TECHNOLOGIES INC.
(Formerly Astris Energi Inc.)
Notes to the Consolidated Interim Financial Statements
September 30, 2008 and 2007
(Canadian Dollars)
 
7. SHARE CAPITAL AND CONTRIBUTED SURPLUS (continued)

Liikfam Holdings Inc.
    
January 18, 2006
    
39,512
   
242,712
   
Financial
  
 
    
May 18, 2006
    
25,000
   
118,861
   
consulting,
  
 
    
July 26, 2006
    
29,000
   
254,096
   
director fees and
 
 
    
October 25, 2006
    
25,000
    
317,489
   
reimbursements
  
                           
 
    
Total
    
118,512
   
933,158
        
                           
           
374,533
    
2,616,310
        

In 2007, the Company issued 1,838,732 shares of common stock to settle obligations owing by the Company to certain directors and/or officers of the Company and/or to companies owned by them.

Name
    
Date
    
$
  
 
Number
    
Obligation Settled
  
Liikfam Holdings Inc.
    
March 16, 2007
    
41,667
    
505,982
    
Director fees
  
Jiri Nor
    
March 16, 2007
    
5,059
    
61,431
    
Director fees
  
Arthur Laudenslager
    
March 16, 2007
    
32,103
    
389,845
    
Director fees
  
Michael Liik
    
March 16, 2007
    
32,941
    
400,021
    
Director fees
  
Brian Clewes
    
March 16, 2007
    
34,586
    
420,021
    
Director fees
  
Anthony Durkacz
    
March 16, 2007
    
5,059
    
61,432
    
Director fees
  
           
151,415
    
1,838,732
        

In the first three quarter of 2008, the Company issued 22,276,632 shares of common stock to settle obligations owing by the Company to certain directors and/or officers of the Company and/or to companies owned by them.

Name
    
Date
    
$
 
 
Number
    
Obligation Settled
  
Liikfam Holdings Inc.
    
June 16, 2008
    
718,750
    
13,638,520
    
M&A/Success Fee*
  
Macnor Corp.
    
June 16, 2008
    
30,000
    
500,000
    
Consulting Contract
  
Macnor Corp.
    
Aug 1, 2008
    
50,000
    
1,250,000
    
Consulting Contract
  
Macnor Corp.
    
Aug 21, 2008
    
18,125
    
625,000
    
Consulting Contract
  
Macnor Corp.
    
Sept 21, 2008
    
3,760
    
625,000
    
Consulting Contract
  
397230 Ontario Ltd.
    
June 16, 2008
    
428,879
    
8,138,112
    
M&A/Success Fee*
  
           
1,249,504
    
24,776,632
        
 
* 397230 Ontario Inc. and Liikfam Holdings Inc. received shares to be held in escrow pending completion of the RTO Transaction in partial settlement of the M&A Success fee as defined in Note 13.
 
Page 21
 
CARTHEW BAY TECHNOLOGIES INC.
(Formerly Astris Energi Inc.)
Notes to the Consolidated Interim Financial Statements
September 30, 2008 and 2007
(Canadian Dollars)
 
7. SHARE CAPITAL AND CONTRIBUTED SURPLUS (continued)

c) Common stock issued for cash

i) Pursuant to a subscription agreement dated March 3, 2004 with an accredited investor, as defined under the laws of the province of Alberta, the Company issued a private placement of 651,450 units, comprising one common share and one common share purchase warrant each, for an aggregate purchase price of $CDN 390,870. The common share purchase warrants are exercisable up to March 4, 2007, each entitling the holder to purchase one common share at $1.00 (U.S.) per share. Each warrant entitles the holder to purchase one common share.

ii) Pursuant to a subscription agreement dated March 26, 2004 with an accredited investor, as defined under the laws of the province of Ontario, the Company issued a private placement of 236,035 units, comprising one common share and one common share purchase warrant each, for an aggregate purchase price of $CDN 138,080. The common share purchase warrants are exercisable up to March 27, 2007, each entitling the holder to purchase one common share at $0.50 (U.S.) per share.

iii) Pursuant to a subscription agreement dated September 30, 2004 with an accredited investor, as defined under the laws of the province of Alberta, the Company issued a private placement of 104,500 units, comprising one common share and two common share purchase warrants each, for an aggregate purchase price of $CDN 61,100.  The first tranche of common share purchase warrants was exercisable up to October 1, 2005, at $0.80 (U.S.) per share. The second tranche of common share purchase warrants are exercisable up to April 1, 2007 at $1.00 (U.S.) per share. Each warrant entitles the holder to purchase one common share.

iv) Pursuant to a subscription agreement dated September 3, 2004 with an accredited investor, as defined under the laws of the province of Alberta, the Company issued a private placement 79,630 units, comprising one common share and one common share purchase warrant each, for an aggregate purchase price of $CDN 43,000.  The common share purchase warrants are exercisable up to September 30, 2007 each entitling the holder to purchase one common share at $0.80 (U.S.) per share.
v) Pursuant to subscription agreements dated July 26 - 28, 2004 with certain accredited investors, as defined under the laws of the province of Alberta, Canada and the United States of America, the Company issued a private placement 1,694,167 units comprised of one common share and one common share purchase warrant each, for an aggregate purchase price of $CDN 660,725. The common share purchase warrants were exercisable up to December 31, 2005, each entitling the holder to purchase one common share at $0.50 (U.S.) per share.

vi) Pursuant to a subscription agreement dated October 1, 2004, with a U.S. company, the Company issued a private placement 88,900 units, comprising one common share and one common share purchase warrant each, for an aggregate purchase price of $CDN 52,000.  The common share purchase warrants are exercisable up to September 30, 2007 each entitling the holder to purchase one common share at $0.90 (U.S.) per share.

Page 22
 
CARTHEW BAY TECHNOLOGIES INC.
(Formerly Astris Energi Inc.)
Notes to the Consolidated Interim Financial Statements
September 30, 2008 and 2007
(Canadian Dollars)
 
7. SHARE CAPITAL AND CONTRIBUTED SURPLUS (continued)

d) Common stock issued for cash (continued)

vii) Pursuant to subscription agreement dated October 8, 2004 with an accredited investor, as defined under the laws of the province of Ontario, Canada, the Company issued a private placement 20,000 units comprising one common share and one common share purchase warrant each, for an aggregate purchase price of $CDN 11,500.  The common share purchase warrants are exercisable up to October 8, 2007, each entitling the holder to purchase one common share at $0.90 (U.S.) per share.

viii) Pursuant to a subscription agreement dated December 3, 2004 with a U.S. company, the Company issued a private placement 166,700 units, comprising one common share and one common share purchase warrant each, for an aggregate purchase price of $CDN 62,500.  The common share purchase warrants are exercisable up to December 3, 2007 each entitling the holder to purchase one common share at $0.60 (U.S.) per share.
 
During the first nine months of 2008 and all of 2007 and 2006, there were no shares issued for cash.

Page 23
 
CARTHEW BAY TECHNOLOGIES INC.
(Formerly Astris Energi Inc.)
Notes to the Consolidated Interim Financial Statements
September 30, 2008 and 2007
(Canadian Dollars)
 
7. SHARE CAPITAL AND CONTRIBUTED SURPLUS (continued)

  e) Stock option plan
The Company has stock option plans for its employees and consultants who are regarded as integral to the progress of the Company and its operations. Options are normally issued as a bonus on employment or are tied into performance related compensation. Performance related compensation includes completion of research and development projects within specific timeframes and budgets, achieving financial targets on behalf of the Company or introduction/referral/completion of business agreements or arrangements. In general, the minimum vesting requirement of options issued is one year. The maximum term of options is five years from the grant date. Normally, the exercise price of the option is determined using the five-day closing average of the shares prior to the grant date.

On October 22, 2004, the Board of Directors passed a resolution authorizing an amendment increasing the maximum number of common shares for issuance under the Company’s Stock Option Plan to 5,100,000 shares.

On October 12, 2005, the Board of Directors received approval from shareholders at the Company’s Annual General Meeting to increase the common shares available for the Company’s Stock Option Plan by 2,000,000 shares.

On September 6, 2007, in conjunction with the sale of the assets of the Company (see Note 1), the Board of Directors approved the cancellation of all share purchase options that were outstanding at that date. At that same meeting, the Board of Directors approved the granting of new share purchase options as follows:

(i) Stock options granted

The Company issued 7,121,758 Incentive Options to six directors under the following terms: Exercise price US $0.027; expiring September 6, 2012; vesting subject to successful completion of the reverse takeover transaction as described in Note 14.

The Company issued 1,500,000 Settlement Options to former directors and officers under the following terms: Exercise price US $0.021; expiring August 1, 2012; vesting immediately.

The Company issued 508,697 Finders’ Fee Options to a consultant and to a director for introducing the Company to Colorep, Inc. under the following terms: Exercise price US $0.027; expiring November 23, 2012; vesting subject to successful completion of the reverse takeover transaction as described in Note 14.

The Company issued 500,000 Performance Options to a former director for work performed in the preparation and filing of the Company’s SRED Application for all amounts to be claimed by the Company for its 2007 fiscal year. They were issued under the following terms: Exercise price US $0.035; expiring May 22, 2013; vesting immediately.

Page 24
 
CARTHEW BAY TECHNOLOGIES INC.
(Formerly Astris Energi Inc.)
Notes to the Consolidated Interim Financial Statements
September 30, 2008 and 2007
(Canadian Dollars)
 
7. SHARE CAPITAL AND CONTRIBUTED SURPLUS (continued)

e) Stock option plan (continued)

(ii) Stock options exercised

No stock options were exercised during the 2008 or 2007 fiscal.

(iii) Stock option valuation

Stock options issued are valued using the Black-Scholes option pricing model with the following assumptions: risk free interest rate of 4.30%; expected life of 5 years; expected volatility of 396%; dividend yield of 0% (2007 - 4.3%; 1 - 5 years; 142%; 0%, respectively).

 (iv) Summary table
 
 
          
Weighted
  
 
    
Options for
    
Average
  
 
    
Common
Shares
    
Exercise
Price U.S.$
  
               
Balance, December 31, 2005
    
4,043,840
    
0.25
  
               
Options granted
   
50,000
    
0.14
  
Options exercised
   
-
   
-
 
Options expired
   
( 275,000
)
  
0.36
  
               
Balance, December 31, 2006
    
3,818,840
    
0.24
  
               
Options granted
   
9,130,455
    
0.0256
  
Options exercised
   
-
    
-
  
Options cancelled
   
(3,818,840
)
  
(0.24
)
               
Balance, December 31, 2007
    
9,130,455
    
0.0256
  
               
Issued September 23, 2008
    
500,000
    
.035
  
               
Balance, September 30, 2008
    
9,630,455
    
.026
  

Page 25
 
CARTHEW BAY TECHNOLOGIES INC.
(Formerly Astris Energi Inc.)
Notes to the Consolidated Interim Financial Statements
September 30, 2008 and 2007
(Canadian Dollars)
 
7. SHARE CAPITAL AND CONTRIBUTED SURPLUS (continued)

   
(v) Weighted average remaining contractual life

The following table summarizes information about the Company’s stock options outstanding as at September 30, 2008:
 
 
Number
Weighted
Number
Exercise
Outstanding at
Average
Exercisable at
Price
September 30,
Remaining
September 30,
US$
2008
Life in Years
2008
       
0.021 - 0.027
9,630,455
3.94
2,508,697

f) Common share purchase warrants

The following table illustrates the continuity of the Company’s warrants during 2008 (no warrants were issued in 2008):
 
Recipient
    
Issue date
    
Expiry date
    
Number
    
Exercise price US$
    
Expired
during the period
    
Number outstandingat September 30,
2008
  
                                       
Macnor Corp
    
27-Jan-05
    
27-Jan-08
    
2,000,000
    
0.75
    
2,000,000
        
Macnor Corp
    
27-Jan-05
    
27-Jan-08
    
2,000,000
    
0.92
    
2,000,000
        
Macnor Corp
    
27-Jan-05
    
27-Jan-08
    
1,000,000
    
1.08
    
1,000,000
        
Matthew Chipman
    
15-Mar-06
    
15-Mar-09
    
500,000
    
0.19
          
500,000
  
Michael Sheppard
    
15-Mar-06
    
15-Mar-09
    
500,000
    
0.19
          
500,000
  
Belcor Development Trust
    
24-Mar-06
    
22-Mar-09
    
88,900
    
0.19
          
88,900
  
Belcor Development Corp.
    
24-Mar-06
    
22-Mar-09
    
255,600
    
0.19
          
255,600
  
Alternate Energy Corporation
    
22-May-06
    
12-Apr-09
    
1,500,000
    
0.19
          
1,500,000
  
Ardour Capital Investments
   
10-Apr-06
    
9-Apr-09
    
185,000
    
0.27
          
185,000
  
Cornell Capital Partners
    
10-Apr-06
    
9-Apr-09
    
1,600,000
    
0.19
          
1,600,000
  
Cornell Capital Partners
    
10-Apr-06
    
9-Apr-09
    
600,000
    
0.20
          
600,000
  
Cornell Capital Partners
    
10-Apr-06
    
9-Apr-09
    
1,000,000
    
0.30
          
1,000,000
  
Acme Global Inc.
    
10-Apr-06
    
9-Apr-09
    
366,700
    
0.19
          
366,700
  
Old Debenture Holders
    
10-Apr-06
    
9-Apr-09
    
19,300
    
0.19
          
19,300
  
Acme Global Inc.
    
10-Apr-06
    
9-Apr-09
    
141,132
    
0.20
          
141,132
  
Old Debenture Holders
    
10-Apr-06
    
9-Apr-09
    
5,428
    
0.20
          
5,428
  
Acme Global Inc.
    
10-Apr-06
    
9-Apr-09
    
229,187
    
0.30
          
229,187
  
Old Debenture Holders
    
10-Apr-06
    
9-Apr-09
    
12,063
    
0.30
          
12,063
  
                           
7,003,310
  

Page 26
 
CARTHEW BAY TECHNOLOGIES INC.
(Formerly Astris Energi Inc.)
Notes to the Consolidated Interim Financial Statements
September 30, 2008 and 2007
(Canadian Dollars)
 
8. CONSOLIDATED STATEMENTS OF CASH FLOW

 
a) The net change in non-cash operating working capital balances related to operations comprises the following:

 
    
Three months to September 30, 2008
    
Three months to September 30, 2007
    
Nine months to September 30, 2008
    
Nine months to September 30, 2007
  
                           
Decrease (increase) in receivables
  
$
(160,000
)
$
1,417
  
$
(160,000
)
$
3,780
  
Decrease (increase) in prepaid expenses
    
12,500
    
(43,328
)
  
87,500
    
( 24,279
)
Decrease (increase) in gov’t receivables
    
4,774
    
(6,730
)
  
( 2,508
)
  
( 25,471
)
Increase in unallocated gov’t grant
          
271,733
          
-
  
Decrease (increase) in advance from related parties
    
-
    
(50,000
)
  
-
    
-
  
Decrease (increase) in inventory
    
-
    
-
    
-
    
32,127
  
Increase (decrease) in accounts payables
   
( 7,000
)
  
(458,773
)
  
(82,887
)
  
(307,845
)
Increase (decrease) in deferred revenue
    
-
   
(12,743
)
  
-
   
( 10,628
)
                           
   
$
( 149,726
)
$
(298,424
)
$
(157,895
)
$
(332,316
)

9. COMPARATIVE FIGURES

Comparative figures have been reclassified to conform to the current year’s basis of presentation.

Page 27
 
CARTHEW BAY TECHNOLOGIES INC.
(Formerly Astris Energi Inc.)
Notes to the Consolidated Interim Financial Statements
September 30, 2008 and 2007
(Canadian Dollars)
 
10. STATEMENT OF EQUITY
 
     
Number of
Shares Issued
    
Consideration
Amount
    
Contributed
Surplus
    
Deficit
    
Total
  
                                 
Balance, December 31, 2004
    
26,316,551
    
6,227,074
    
3,016,647
    
(8,990,427
)
  
253,294
  
Acquisition of Astris s.r.o
   
5,000,000
    
1,955,000
    
254,000
    
-
    
2,209,000
  
Issued as payment for consulting fees to non-related parties
    
4,305,927
    
1,294,214
    
-
    
-
    
1,294,214
  
Issued as payment for consulting fees to related parties
    
1,884,091
    
454,308
    
-
    
-
    
454,308
  
Issued as repayment of advances from director
    
125,000
    
26,150
    
73,850
    
-
    
100,000
  
Options exercised for cash
    
275,000
    
73,350
    
-
    
-
    
73,350
  
Options issued to employees
    
-
    
-
    
21,144
    
-
    
21,144
  
Options issued to related parties
    
-
    
-
    
215,030
    
-
    
215,030
  
Warrants issued to non-related parties
    
-
    
-
    
482,068
    
-
    
482,068
  
Loss for the year
    
-
    
-
    
-
    
(5,330,864
)
  
(5,330,864
)
 
Balance, December 31, 2005
    
37,906,569
    
10,030,096
    
4,062,739
    
(14,321,291
)
  
(228,456
)
                                 
Issued as payment for consulting fees to non-related parties
    
2,925,115
   
496,393
   
-
    
-
    
496,393
  
Issued as payment for consulting fees to related parties
    
2,616,310
   
374,533
   
-
    
-
    
374,533
  
Options issued for consulting and professional fees to non-related parties
    
-
    
-
    
5,002
    
-
    
5,002
  
Warrants issued to non-related parties
    
-
    
-
    
1,115,749
    
-
    
1,115,749
  
Conversion of $CDN convertible debentures
   
275,998
   
20,740
   
-
    
-
    
20,740
  
Conversion of $US convertible debentures
    
4,407,677
   
283,240
   
-
    
-
    
283,240
  
Loss for the year
    
-
    
-
    
-
    
(2,120,422
)
  
(2,120,422
)
                                 
Balance, December 31, 2006
    
48,131,669
    
11,205,002
    
5,183,490
    
(16,441,713
)
  
( 53,221
)
 
Page 28
 
CARTHEW BAY TECHNOLOGIES INC.
(Formerly Astris Energi Inc.)
Notes to the Consolidated Interim Financial Statements
September 30, 2008 and 2007
(Canadian Dollars)
 
10. STATEMENT OF EQUITY (continued)
 
 
    
Number of
Shares Issued
    
Consideration
Amount
    
Contributed
Surplus
    
Deficit
    
Total
  
                                 
Balance, December 31, 2006
    
48,131,669
    
11,205,002
    
5,183,490
    
(16,441,713
)
  
( 53,221
)
Issued as payment for consulting
                                
fees to related parties
    
1,838,732
    
151,415
    
-
    
-
    
151,415
  
Conversion of $US convertible debentures
    
899,281
    
29,568
                
29,568
  
Conversion of Advance payable
    
4,248,750
    
384,024
                
384,024
  
Redemption of shares owned by dissenting shareholders
    
( 80,000
)
  
( 17,083
)
  
12,283
          
( 4,800
)
Redemption of shares owned by The ACME Global Inc.
    
(4,248,750
)
  
( 907,278
)
  
813,804
          
( 93,474
)
Valuation of Settlement Options
                
33,568
          
33,568
  
Valuation of Incentive Options
                
99,418
          
99,418
  
Valuation of Finders Fee Options