Year-end Report January – December 2020
“Geared for acceleration”
• Financing of SEK 60 million acquired for development of hydrogen- and battery sensor segments.
Outcome January to December
• Net sales amounted to kSEK 1 177 (2 464).
• Profit after net financial items amounted to kSEK -12 795 (-8 584).
• Basic and diluted earnings per share: SEK -1,27 (-0,99).
• Cash flow from operating activities and investing activities: kSEK -10 007 (-10 644).
Outcome October to December
• Net sales amounted to kSEK 23 (785).
• Profit after net financial items amounted to kSEK -4 494 (-2 531).
• Basic and diluted earnings per share: SEK -0,41 (-0,26).
• Cash flow from operating activities and investing activities: kSEK -2 207 (-2 697).
Significant events October – December
• Insplorion completed a directed issue and received SEK 30,0 million before transaction costs.
• Insplorion completed a rights issue and received SEK 30,3 million before transaction costs. The rights issue was significantly oversubscribed.
• German automotive OEM rents Insplorion’s battery development instrument via Kistler.
Significant events after the end of the period
• Insplorion has been approved for listing on Nasdaq First North Growth Market.
• Insplorion is allocated MSEK 1.1 through the exercise of warrants.
Finwire.tv: See CEO Patrik Dahlqvist comment and answer questions about the year-end report at 17.00 today 23 February 2021, at https://www.finwire.tv/webcast/insplorion/q4/
A word from the CEO
It has been an intense quarter for Insplorion. In addition to the regular operations, we carried out two new issues and prepared a relisting on Nasdaq First North. The issues included a directed issue of MSEK 30 to institutional, international investors, such as AP Ventures and Formue Nord, and a rights issue of MSEK 30.3 to existing shareholders. The strengthened cash balance provides the right conditions for Insplorion to continue the development and commercialization effort, primarily in the hydrogen and battery sensor segments.
The operational activities have made visible progress during 2020. At the end of November, it was clear that a leading German automobile manufacturer had placed an order to rent Insplorion’s battery development instrument for a period of 4 to 6 months. The order was received through the international measurement technology company Kistler, and the collaboration with Kistler was formalized in conjunction with the deal. The German automobile manufacturer is focusing strongly on electrification and intends, among other things, to use Insplorion’s instrument to measure the state of lithium-ion batteries. The company has decided to use our Nanoplasmonic Sensing System (NPS), which provides insights about performance as well as aging of battery cells. The potential strengthened considerably in the battery sensor business during the fall, as the U.S. Patent and Trademark Office (USPTO) announced that our battery sensor patent “Battery with sensor” will be granted.
The work on our hydrogen sensor is advancing by means of our project with Chalmers and PowerCell, supported by the Swedish Energy Agency. Our aim is to finalize a commercial prototype before the turn of the year 2021/22. In parallel to the product, we are developing the business and connecting with major stakeholders, for example through our participation in the program “New Energy Challenge”, where we engaged with the energy company Shell. Our hydrogen sensor offers a very rapid response even at low levels of hydrogen. This is particularly important to be able to contribute to improved safety, but also to optimize the operation of fuel cells. Safety and process optimization are decisive steps towards a more efficient hydrogen system, and our technology thus contributes to the transition to large-scale, fossil-free energy. Our new shareholder, AP Ventures in London, has a very good knowledge about and access to large networks within the hydrogen economy and has already helped us establish new contacts for the company.
The instrument business experienced a sluggish market in 2020. Due to COVID-19, the possibilities to conduct physical meetings and, most importantly, demonstrations, were reduced – but gradually, they were replaced by digital meetings. We have developed our working procedures in such a way that digital demonstrations and sales meetings have increased our efficiency, insofar as it has been possible to carry them out. At the same time, we are seeing universities temporarily but widely direct their research spending to virus-related research, which has reduced the possibilities to secure research funding for several of our instrument customers. Nevertheless, we have a positive view of the current year, as the number of ongoing contacts with customers is on the rise, as is their interest.
Within the air quality sensor segment, work is proceeding as anticipated. The platform has been upgraded based on field tests and early customer installations. A few installations were carried out in the Nordic countries during the second half of 2020; we have received positive feedback and expect to see a growing number and scope of installations, in particular when the results from the first phase of installations demonstrate the technology’s advantages over existing solutions.
Since January 29, 2021, our share is listed on Nasdaq First North. The move to a larger trading venue has involved the attraction of many new shareholders. From an organizational perspective, our growth continues, and we are planning to strengthen the organization with a CFO as soon as possible.
Gothenburg, February 23, 2021
Patrik Dahlqvist, CEO
The Company’s sales within the research instruments business area is characterized by few measuring instruments sold but at high prices per unit. The variation in sales can therefore be high from one quarter to the next, making it difficult to compare quarterly results. COVID-19 has had negative effect on instrument sales during the first half of the year, see also note below. Company’s aim is to grow the instrument business continuously, but sales usually depend on our customers’ availability of funding.
The performance is still negative as development costs have increased. Investments in marketing and customer adaptation in air quality, product development in battery sensor, and strengthening of the organization are the most important reasons for the higher costs, which are in line with plan.
Financial position and liquidity
Cash and cash equivalents amounted to kSEK 65 153 (22 003) as of 31 December. As previously disclosed, the Company will receive MSEK 2,1 from the Eurostar project during the year. In total, the Company will be provided MSEK 5 during the project’s 3 years. For the 3BeLiEVe project, MSEK 1,8 will be received during this year and in total, the company will receive SEK 4,9 million during the project’s 2,5 years. These funds will be recognized as revenue as they are generated. At the end of the period, the Group’s interest-bearing liabilities totaled kSEK 4 491 (4 591).
Cash flow for the period (1 January – 31 December) amounted to kSEK 44 222 (15 410), of which cash flow from operating activities amounted to kSEK -5 300 (-6 084). This is mostly attributable to the negative operating result in the amount of kSEK -12 576, which is mitigated by changes in working capital (mainly in the form of received project funds that were not consumed during the year) of kSEK 7 127 (4 559). During the period, the Group has invested kSEK 4 707 (4 559), mostly attributable to the capitalized development and investments in equipment. Financing activities contributed kSEK 54 230 (26 054), of which new issues accounted for 54 330, after deduction of transaction costs.
Insplorion follows the developments relating to COVID-19 closely. The personnel’s health and safety is being prioritized and Insplorion complies with all official instructions and guidelines. The virus outbreak has affected the companies, with delays in instrument sales being the most prominent effect. The virus’ future impact on business and society is creating uncertainty and long-term effects are difficult to assess.
In research instruments, sales are expected to grow gradually as more and more customer processes reach the phase for internal or external funding. As a consequence of COVID-19, it has been difficult to finalize sales during 2020 and sales processes has been postponed to 2021. During 2021, the nitrogen dioxide sensor is projected to generate revenue as well. The Company intends to continue to seek grant funding at national and EU level for sub-projects characterized by higher degree of technical risk that are in line with the development plan. In addition, this is a way to build cooperation’s with industrial operators and to leverage the funding by shareholders.
Risks and uncertainties
The Group is considered to still be subject to the same risks and uncertainties that are detailed in the 2019 annual report.
The net sales of the parent company for the period 1 October – 31 December amounted to kSEK 459 (1 215), and the profit after net financial items amounted to kSEK -4 715 (-2 850). The parent company’s equity totaled MSEK 70,6, of which MSEK 2,9 restricted.
During November, the company carried out a directed issue of 1,500,000 new shares at a subscription price of SEK 20 per new share. Furthermore, during December 2020, the company carried out a rights issue of 1,515,778 new shares at a subscription price of SEK 20 per new share. For payment of guarantee compensation in the form of new shares, the number of shares increases by a total of 123,725 shares. After the end of the financial year, 93,884 new shares were subscribed for through the warrant programme TO1. After registration of all new issues with the Swedish Companies Registration Office, the number of shares and votes in the company will amount to a total of 13,085,944. As of the balance date 2020-12-31, the number of registered shares amounted to 12,801,409.
The current warrant programme are:
- Subscription warrants programme TO1 2018/2023: As part of the funding agreement established in 2018, the financier ESGO and existing shareholders were allotted subscription warrants free of charge. Each subscription warrant entitles the holder to purchase one Insplorion share at a subscription price of SEK 11.50 per share. Warrants for less than SEK 500,000 in total may be exercised at five occasions during the two-week periods that precede the dates 12, 24, 36, 48 and 60 months after the date of registration, which was 5 February 2018. In total, 392,604 warrants have been issued, corresponding to approximately 4.0 percent of the Company’s current number of shares. In February 2020, 71,352 warrants were converted into shares. During the subscription period in January / February 2021, 90,892 were converted into shares, with the remaining number of options being 230,360. Due to the rights issue carried out in December, recalculation has been made in accordance with the terms of the warrant program TO1, which means that each warrant gives the right to subscribe for 1,033 shares compared to previously one share.
The Board of Directors proposes that no dividend be paid for the financial year 2020.
Policies for the preparation of the interim report
This report was prepared in accordance with the Swedish Annual Accounts Act and pursuant to the general recommendations of the Swedish Accounting Standards board BFNAR 2012:1 Annual accounts and consolidated (K3). Intangible assets are recognized according to the capitalization model in the general recommendations.
This report has not been reviewed by the Company’s auditors.
Upcoming financial reports
2021-05-19 Interim report for the first quarter 2021
2021-08-25 Half-year report for 2021
2021-10-28 Interim report for the third quarter 2021
2022-02-24 Year-end report for the financial year 2021
Annual General Meeting
2021-04-13 Annual General Meeting for the financial year 2020
The annual report for the financial year 2020 will be available at www.insplorion.com no later than 3 weeks before the Annual General Meeting.
Presentation of the interim report, Gothenburg, 23 February 2021.
Insplorion AB (publ)
Board of Directors
Insplorion AB, with its disruptive sensor platform NanoPlasmonic Sensing (NPS), operates within four field;. air quality sensors, hydrogen sensors, battery sensors and research instruments. The sensors are small, durable and cost efficient at volume production. Our sensor technology enables air quality sensors at home, in cars and in public environment, Our hydrogen sensors show a sub-second response time, making them the fastest in the world and will promote the growth of hydrogen infrastructure. The battery sensor optimizes battery control and usage. Our instruments give scientists around the world nanometer sensitive real time data of surface processes in fields like catalysis, material- and life science. FNCA Sweden AB, +46(0)8-528 00 399 email@example.com, is Insplorion’s Certified Adviser at Nasdaq First North.