Commercial Progress

IdaTech experienced a considerable increase in demand during 2007 for its proprietary reformer-based systems, with the mix of systems sold weighted towards the ElectraGen™ reformer-based systems which consist of a fuel cell and integrated reformer. In total, 22 such systems (XTR and XTi systems) as well as 10 ElectraGenTM hydrogen-based systems were sold and shipped in the year ended 31 December 2007.

This weighting highlights IdaTech's reforming capability as a key competitive advantage and its ability to break through the "hydrogen barrier" to fuel cell adoption in the telecommunications industry.

Significantly, IdaTech has products with ten major telecommunication groups, of which six are ranked in the top ten telecommunications groups globally as measured by revenue. IdaTech is certified as a vendor by five of these ten, having passed the critical phase of test and evaluation. Additionally, IdaTech has progressed towards field deployment of its systems as evidenced by the recent receipt for delivery in early 2008 of an order for 10 ElectraGen™ reformer-based systems, its largest order to date, from a large Latin American telecommunications integrator.

IdaTech added seven new channel partners in Central and South America, Europe and Asia, bringing the worldwide total to 22 and laying the commercial foundation to support accelerated adoption of IdaTech's products in regions IdaTech believes are key for fuel cell systems in the telecommunications industry.

IdaTech is currently tendering for a number of significant opportunities for field deployment of its systems. As previously announced, IdaTech is currently awaiting final selection by a major European telecommunications company.

In addition, the Company continues to pursue the German funded fuel cell programme - the National Innovation Programme. Shipments under this programme are expected to commence in 2008.

New Product Launches

In addition to the launch of the ElectraGenTMXTi, a 5 kWe fully integrated fuel cell system, in September 2007, the Company launched the iGen™ fuel cell system for the industrial market. This is a CE certified 250 watt integrated power generation solution for charging batteries in industrial applications in December 2007. Operating on a liquid fuel of methanol and water, the compact iGen™ system is designed to work with battery packs and renewable energy systems such as solar and wind power in challenging environments.

Potential applications for the industrial iGen™ system include automated battery charging in signaling, sensing and telemetry, security and telecommunications applications, including solar and wind hybrid configurations.

Operational Progress

IdaTech's flexible, low cost volume manufacturing facility in Tijuana, Mexico became fully operational, on schedule and budget, in the second half of 2007 with a staged transfer of production of systems from the main facility in Bend, USA.

By the end of the year, the Company was successfully producing nearly all its ElectraGenTM systems in this facility on schedule. During 2008, the reforming module and the production of iGenTM will be transferred to Tijuana as planned. This manufacturing strategy allows IdaTech to produce its products at a significantly lower cost, is highly scalable and does not require large capital investment.

Technical Progress

During 2007, IdaTech demonstrated its leadership in advanced fuel reforming, successfully delivering a dual-fuel (diesel and military fuel) integrated system under a $3 million US Army contract. The next phase, worth $2.6 million over two years, is currently underway.

Under a separate contract, the Company delivered a modified iGen™ portable power system, meeting or exceeding its technical requirements and achieving an almost 48 per cent. size and 35 per cent. weight reduction compared with the standard Industrial iGen™.

Additionally, the Company worked on its multiple private contracts for advanced development of its proprietary metal membrane hydrogen purification technology, Hypurium™, for a range of large scale industrial applications.

Outlook

IdaTech's commercial focus in 2008 is to build on the considerable success achieved during 2007 and to grow the accounts established last year into initial field deployments, establish new telecommunication customers and achieve approved vendor status with new and existing telecommunications customers. IdaTech will also increase its commercial efforts in relation to the iGen™ sub-1kWe product line. The Company is also working to position itself to take advantage of regional opportunities, such as the Federal Communications Commission ruling in the USA, which requires wireless and landline operators to install emergency backup power for the vast majority of their base stations commencing one year after the ruling is approved.

The Company intends to continue advancing IdaTech's technology in reforming and hydrogen purification through its development programmes with government and private organisations and its internal programmes.

Trading for 2007 was in line with expectations and the Board is confident in achieving its objectives for 2008. As at 31 December 2007, the cash resources available to IdaTech were ahead of expectations.