Airthings - Annual Report 2021

Annual Report 2021

Key highlights

The year in brief

Airthings ASA reported a strong 2021 with revenues growing 60% to USD 33.7 million. Growth was solid across all three business segments. Demand has been even stronger than the revenue figures indicate, as production capacity has been held back by component shortage.

Annual Recurring Revenue (ARR) came in at USD 2.9 million at the end of 2021, representing growth of 153% from 2020. The growth primarily reflects the strong progress in the Airthings for Business segment – a segment which made a step change from USD 1.4 million in revenues in 2020 to USD 6.9 million in 2021.

Gross profit margin was 61% for the full year, which was a decline from 2020 mainly due to changes in the product and channel mix in the Consumer segment and higher component prices. This was partly offset by a higher share of recurring revenue from the Software-as-a-Service offering in Airthings for Business. Recurring revenues in this area generate gross profits of over 80%.

Despite the global supply chain challenges, Airthings can look back at several significant highlights throughout 2021: the releases of View Plus and View CO2 for Business, two material Airthings for Business partnerships with Carrier Corporation and Quebec Government, the rolling-out in thousands of new stores across the US in Walmart, CVS and Home Depot, the launch of My Pollen Levels in the Airthings App, and the acknowledgement as an industry leader in the Frost & Sullivan Indoor Air Quality Systems Report. We see significant growth potential for 2022 after building up product stock and look forward to delivering into a strong market momentum going forward.

1Q

Airthings successfully launched its most advanced air quality monitor View Plus at CES, as well as a new in-app feature, My Pollen Levels. The company also signed a deal with Walmart to roll out in nearly 800 stores in the consumer segment.

Quarterly highlights

2Q

Airthings for Business signed a key partnership with Carrier Corporation. In Consumer, the products were rolled out in more than 3,000 CVS stores in the US, raising the total store count to over 5,500. View Plus began shipping to customers, accelerating market traction and marketing activities.

3Q

Airthings for Business was awarded a 10-year contract with the Quebec Government to supply air quality monitoring in all private schools. View CO2 for Business was launched, a new offering enabling further sales opportunities in Airthings for Business and within the Quebec contract. In Consumer, we grew our retail footprint and we are now available in more than 1,300 Home Depot locations.

4Q

The fourth quarter included the successful launch of the View series products View Pollution and View Radon, as well as a record-breaking quarter for Airthings for Business in terms of revenue. Frost & Sullivan selected Airthings as industry leaders in their Indoor Air Quality Systems Report, highlighting our growth and innovation.

This is Airthings ASA

Airthings is a leading global technology company of award-winning radon and indoor air quality solutions for homeowners, businesses, and professionals. Founded in 2008, Airthings is on a mission to ensure that people and businesses around the world recognize the importance and impact of indoor air quality and take control of both health aspects and energy consumption through simple, affordable, and accurate technology solutions.

Airthings' products have made radon detection and indoor air quality monitoring easy to deploy, accurate, and user friendly. Our technology has received several accolades including the TIME's Best Inventions award and CES Innovation Award Honors. Frost & Sullivan positions Airthings as industry leader in global indoor air quality market in their 2021 Global Indoor Air Quality Systems report.

Headquartered in the heart of Oslo, Norway, and with offices in the US and Sweden, the company is growing from a current base of over 140 employees from more than 35 nationalities.

Our story

Every idea starts with a problem, and radon testing for homeowners had not improved in almost 30 years. Concerned consumers only had two options - to call a professional to test their radon levels, or to purchase a single-use charcoal test which was then sent to a lab for analysis. Several particle physicists working together at CERN (European Organization for Nuclear Research) saw an opportunity to improve the

radon market, and help consumers and businesses take control of their indoor air quality. This was the foundation for the establishment of Airthings in 2008.

We have since branched out from a pure radon focus, into monitoring and controlling of a wide range of air quality issues for homes, businesses, and professionals. On top of this, our products also enable significant energy savings in buildings and contribute to reduced emissions and a lighter environmental footprint.

International expansion & recognition

Airthings have taken a global distribution approach, combining a strong presence in leading online stores with availability in nearly 800 Walmart stores, 3,000 CVS stores, and 1,300 Home Depot stores in the US, and a wide range of regional and national retail chains in several other countries.

Airthings is also building strong relations with leading B2B partners and last year strengthened the position in the business market with

the signing of a major strategic agreement with Carrier Corporation, a leader in the heating and air conditioning market. The company also won a large tender with the Quebec government in Canada to supply air quality monitoring in all private schools over the next 10 years.

Our technology

Since the start in 2008, Airthings has introduced a steady stream of innovative solutions for consumers, businesses, and professionals to tackle indoor air issues such as radon, particle pollution (particulate matter, PM 2.5), carbon dioxide (CO2), mold risk, airborne chemicals (VOCs) and virus risk. Airthings for Business Indoor Air Quality (IAQ) monitors can be used to satisfy air requirements for the WELL Building Standard, and the products are RESET accredited, demonstrating our high standards in the IAQ market.

The heart of our system is in the cloud where we turn data into advanced analytics. Airthings is gathering tremendous amounts of anonymized data from sensors in homes and buildings around the world, which are being used to add real insights for our customers.

From industrial design and radio protocol to app creation, software and firmware, our technology and solutions are developed in-house. Most of our products are smart products with corresponding apps, online dashboards, advanced cloud analytics, and APIs. Airthings now offers digital radon detectors as well as smart indoor air quality monitors and solutions for professionals, homes, schools, offices, and other commercial buildings, and is continuously adding new features. This is earning us our reputation of true leadership in the industry.

Business overview

Airthings is a hardware-enabled software company developing, innovative products and systems for monitoring of indoor air quality, radon, and energy efficiency, with a stated goal to be a global leader in these areas. Airthings sells to consumer market, the commercial business market, and to professionals within radon and air quality monitoring, reporting across the three business segments Airthings for Consumer (Consumer), Airthings for Business (AfB), and Airthings for Professionals (Pro).

Airthings for Consumer (Consumer)

Airthings for Consumer offers a range of top-of-the-line air quality monitors to anyone who wants to create and maintain a healthy home environment. We are the global leader in the consumer air quality market with revenue in this segment increasing 36% to USD 23.6 million in 2021. Our largest market is currently in the US. Airthings' strategy is to expand our global presence by working with more premium retailers and e-commerce partners worldwide.

Airthings for Business (AfB)

Airthings for Business is our B2B segment, offering air quality solutions to schools, office buildings, and other commercial buildings. Launched in 2019, Airthings for Business has grown significantly over the last three years and sees strong momentum. Revenue in 2021 reached USD 6.9 million, an increase of 386% over 2020. An increasing share of this is recurring revenue, based on a Software-as-a-Service model. Customers can monitor indoor air quality with actionable insights and remotely make decisions to save energy and improve productivity and wellbeing.

Airthings for Professionals (Pro)

Airthings for Professionals provides an NRPP/NRSB certified radon measurement device tailored toward home inspectors and radon professionals. Measurement professionals enjoy an easyto-use application, coupled with a dashboard to organize their business. Airthings offers devices, calibration services, leasing options, and an Affiliate Program for its users. Our Pro segment grew by 44% from 2020 to 2021, reaching USD 3.2 million in revenue.

Letter from the CEO

Dear Airthings Community,

2021 was another magnificent year for Airthings and I want to take the opportunity to thank the team of highly skilled and passionate employees for the efforts they have put in over the past year. We have so much to be proud of including:

We grew our revenues by 60%, with continuing solid growth for Consumer, a step change in revenue for Airthings for Business, and strong growth also for our Pro segment
We expanded our Consumer sales channels significantly, entered new B2B partnerships in Airthings for Business, and signed a groundbreaking deal with the Quebec government for long-term air quality monitoring in schools
We successfully launched View Plus series the most advanced air quality monitors on the market – and received great reviews
We continued our work to help increase global awareness about air quality and to promote Airthings as the best solution to secure families, students and employees everywhere to breathe cleaner air.

The Consumer business continued to make strong progress, despite significant supply limitations, with revenue increasing by 36% to USD 23.6 million, and with major expansion of retail sales channels into thousands of Home Depot, Walmart, and CVS pharmacy stores in the US. The launch of the View Plus generated strong demand in these channels, although global supply chain issues and logistic challenges rendered us unable to produce enough of the View Plus to meet demand. We expect these challenges to ease going forward.

Airthings for Business made incredible advances in 2021, such as the signing of a strategic cooperation agreement with Carrier Corporation,

a leader in the heating and air conditioning market. With the rise of legislation and government concerns over health and air quality in public indoor spaces, Airthings for Business is fantastically positioned to help any business improve monitoring and control of both their air quality and energy consumption. Revenue increased more than fourfold to USD 6.9 million in 2021, with the large contract for schools in Quebec boosting revenue in the fourth quarter.

We are ready to drive Airthings for Business to new heights in 2022 and look forward to doing more in-person events for both partners and clients. The success of the Air Summit event in Oslo in September 2021 shows the importance of building relationships with key players in the industry to help businesses take control of the air in their buildings. Exciting new features like our Public Dashboard and Building Pressure will help drive growth going forward, and there is so much more to come.

Our Pro division is also taking huge steps forward, with an impressive revenue increase of 44% to USD 3.2 million in 2021. With growing demand, a new app, opening of the first radon calibration lab, and much more, the Airthings Pro division is a favourite of home inspectors and radon professionals across the globe.

We are on a responsible growth journey and are working to ensure that people around the world can take control over their air quality with simple, sustainable, and accessible technology solutions for every building and home. This will benefit both people and the planet. In 2022, we launched the unbranded airforkids.com site to educate children about the air we breathe and have set a goal to educate a million people by 2026.

We joined the UN Global Compact in 2020 and with the release of our first Sustainability Report in 2021 we are thrilled to announce that documented CO2 savings from less than 0.5% of our customers exceeds Airthings' total CO2 emissions reported for 2020. This is just the beginning, and as CEO of Airthings I can assure you of our commitment to continue to advance our positive ESG-impact in the years to come. After the end of the year, we received a Silver Rating from the sustainability ratings organization Ecovadis. This is an acknowledgement of our quality across environment, ethics, labor & human rights, and sustainable procurement, placing us among the top-25% of all rated companies.

Thank you to everyone in the Airthings team and our partners and customers who have helped us reach our goals this year. I look forward to our future together.

Oyvind Birkenes CEO, Airthings

Board of Directors Report

Airthings is a hardware-enabled software company developing, marketing and offering innovative products and systems for monitoring of indoor air quality, radon, and energy efficiency, with a stated goal to be a global leader in these areas. The company sells to the consumer market, the commercial business market, and to professionals within radon and air quality monitoring. Airthings also reports across these three business areas; Airthings for Consumer (Consumer), Airthings for Business (AfB), and Airthings for Professionals (Pro). Headquartered in in Oslo, Norway, Airthings ASA has two wholly owned subsidiaries, Airthings America Inc. in the US and Airthings AB in Sweden.

Airthings ASA - the parent company of the Airthings Group – was admitted to trading on Euronext Growth in Oslo in October 2020 and aims for an up-listing to the Oslo Stock Exchange during 2022.

Airthings is a global provider of indoor air quality solutions, with the key markets in the US and Europe representing 71% (75%) and 29% (25%) of revenue in 2021, respectively. The company's strategy is to work closely with e-commerce partners, premium retailers, key commercial B2B partners, and home inspectors and radon professionals to provide our premium solutions to customers across all three business segments through the most effective sales channels. Amazon currently represents the company's biggest sales channel, mainly directed towards consumers. Going forward, Airthings will continue its global expansion by growing its presence with both new and existing partners worldwide.

Historically, Airthings has mainly directed its efforts towards the consumer market. However, with the launch of Airthings for Business in

2019 the company opened new market opportunities and a new business model generating high-margin recurring revenue through a Software-as-a-Service model. Airthings for Business saw significant growth in 2021, with recurring revenue increasing as a share of total revenue.

Financial summary

The Airthings Group ("the Group") has converted the consolidated financial statements to the International Financial Reporting Standards (IFRS) as endorsed by the European Union (EU) and restated the financials for both 2021 and 2020 for comparison. As part of the implementation of IFRS the Group changed its presentation currency to USD. The functional currency of the parent company is NOK. Please see note 8.1 for details on first time adoption of IFRS.

All financial statements in this report are presented on a going concern basis in accordance with the Norwegian Accounting Act section 3-3a, and the Board of Directors confirms that the prerequisites for a going concern assumption are indeed present.

Airthings grew both revenue and gross profit during 2021, which was a very eventful year including the commercial breakthrough of Airthings for Business and continued strong demand in both the Consumer and Pro segments.

Income statement

Revenues in 2021 amounted to USD 33.7 million, up 60% compared with USD 21.0 million in 2020. This comprised USD 33.7 million in revenues and USD 0.03 million in other operating income. Gross profit grew by 55% in the period, reaching USD 20.7 million for 2021. The gross margin for the full year 2021 ended at 61%. This compares with 64% in 2020, with the decrease mainly

attributed to changes in the product and channel mix in the Consumer segment and higher component prices. EBIT decreased from a loss of USD 5.5 million in 2020 to a loss of USD 9.4 million in 2021. This reflects the ongoing global expansion, with investments into sales, marketing, and R&D as the significant contributors to higher personnel expenses. Depreciation increased from USD 0.7 million to USD 1.3 million in 2021, due to office expansion in addition to investments in production tools.

Net financial items mounted to positive USD 0.1 million in 2021, compared to a negative USD 0.7 million in 2020. The company has limited interest-bearing debt, and the net financial items consist primarily of exchange rate fluctuations between USD and NOK.

Net loss before taxes was USD 9.3 million in 2021, compared to a net loss before taxes of USD 6.2 million in 2020. Tax income was USD 2.1 million. This generated a net loss of USD 7.3 million which compares to net loss of USD 4.1 million in 2020.

Balance sheet

Airthings Group had total assets of USD 83.7 million at the end of 2021, down from USD 91.0 million at the end of 2020. Current assets amounted to USD 67.3 million, including cash and cash equivalents of USD 42.2 million. Non-current assets amounted to USD 16.3 million, which mainly comprises right of use assets, deferred tax assets, and goodwill relating to the Airtight acquisition in 2020.

Airthings Group had total liabilities of USD 15.8 million as per December 31, 2021, up from USD 14.3 million at the end of 2020. Total liabilities consist primarily of lease liabilities, trade payables, contract liabilities, and other provisions.

In 2021, Airthings Group increased its share capital by NOK 12 108.00 to NOK 1 718 164.37 allocated across 171 816 437 shares, each with a nominal value of NOK 0.01. The increase was driven by share issue in connection with the employee option program.

As of 31 December 2021, total equity amounted to USD 67.8 million, corresponding to an equity ratio of 81%. This compares to total equity of USD 76.6 million and an equity ratio of 84% in 2020.

Cash flow statement

Airthings Group's cash flow from operating activities was negative USD 15.9 million in 2021, down from negative USD 4.4 million in 2020. This was driven by a planned expansion which generated a loss before tax of USD 9.3 million and increasing working capital requirements. The latter was accentuated by the increased spending to secure inventory in a globally tight semiconductor market.

Total cash flow from investments was USD -1.0 million in 2021, compared to USD -1.9 million in 2020. The main drivers in 2020 were cash payments related to the Airtight acquisition.

Cash flow from financing was USD -2.6 million in 2021, including repayment of interest-bearing debt of USD 1.9 million in January 2021.

Cash and cash equivalents hence declined to USD 42.2 million at year-end 2021, down from USD 62.9 million at the end of 2020. The net cash spending reflects the company's strategy to invest in growth, in particular increasing marketing and sales costs.

Allocation of net profit

The consolidated accounting loss for 2021 was USD 7.3 million, with the proposed allocation of the net profit for the year shown in the Annual Financial Statement.

PARENT COMPANY ACCOUNTS

(Figures for 2020 in brackets)

The annual accounts for the parent company Airthings ASA have been prepared according to Norwegian Generally Accepted Accounting Principles (NGAAP). The functional currency of the parent company is NOK.

Airthings ASA's revenue from sales amounted to NOK 285.8 million (204.0) and other revenue to NOK 0.2 million (1.2). Gross profit was NOK 170.4 million in 2021 (135.0). Operating expenses amounted to NOK 250.2 million (177.4), and loss before tax was NOK 86.5 million (48.6). Tax income was NOK 17.8 million in 2021 (18.5), generating a net loss of NOK 68.7 million (-30.1).

Total assets amounted to NOK 694.7 million at year-end 2021 (746.6), whereof current assets represented NOK 551.9 million (633.6). Total equity was NOK 607.0 million per December 31, 2021 (671.3).

Current liabilities was NOK 87.7 million per year-end 2021 (75.3), whereas the parent company had long term liabilities of NOK 9.6 million (12.3) related to an employee share option program.

Net cash flow from operating activities was negative NOK 101.5 million (-50.5), and net cash flow from investing activities negative NOK 49.3 million (-35.0). This included an increase in goodwill and R&D due to the merger with Airtight. Net cash flow from financing activities was negative NOK 14.5 million (563.7) due to repayment of interest-bearing liabilities in 2021. Cash and cash equivalents in the parent company hence declined to NOK 360.0 million per December 31, 2021 (525.4), reflecting the investments to facilitate the rapid upscaling of the company.

RISKS AND RISK MANAGEMENT

The Group is exposed to a range of risks affecting its financial performance, including market risk, credit risk and liquidity risk. The Group seeks to minimize potential adverse effects of such risks through sound business practice, risk management, and hedging.

Risk management is a continuous process and an integrated part of the Group's business. When operating across multiple markets, Airthings is exposed to a range of risks that may affect its business. The key risk areas are discussed below.

Liquidity

Liquidity represents the risk where the Group may potentially encounter difficulty in meeting obligations associated with financial liabilities

that are settled by provision of cash or another financial asset. The Group supervises its risk by monitoring its working capital, and overdue trade receivables. The Group has a strong cash position of USD 42 million, which the Board of Directors consider sufficient to fund the Group's growth strategy towards in long-term revenue targets. The liquidity risk is hence considered to be limited.

Credit

Credit risk represents the possibility of a counterparty not meeting its obligations under a financial instrument or customer contract, leading to a financial loss. The Group is mainly exposed to credit risk from its operating activities.

by trading with creditworthy third parties. The Group has close connection with its customers and receivable balances are monitored on an ongoing basis. It is the Group's policy that all customers wishing to trade on credit terms are subject to credit verification procedures, which include an assessment of credit rating, short-term liquidity, and financial position.

The Group's exposure to losses have historically been low. However, the increased operations of the Group outside the US and home markets exposes Airthings to different credit risk environments. The Board of Directors deems credit risk to be at an acceptable level given the current operational circumstances and outlook of the Group.

Foreign currency

in foreign exchange rates relates primarily to the Group's operating activities (revenue and expenses denominated in a foreign currency) and the Group's net investments in foreign subsidiaries. A significant part of revenues is denominated in USD, with a small portion incurred in NOK, EUR and CAD. Most of its operating expenses are incurred in NOK. Further, the Group could also potentially be negatively affected by fluctuations in other currencies in the future. The Group does not currently hedge currency exposure with the use of financial instruments but monitors the net exposure over time.

Interest rate

Interest rate risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Group's borrowings have historically been exposed to interest rate fluctuations. As all borrowings were repaid in January 2021, the Group does no longer have any significant interest rate risk related to interest-bearing liabilities.

CORPORATE GOVERNANCE

Airthings considers sound corporate governance to be a prerequisite for value creation, trustworthiness, and access to capital. To secure strong and sustainable corporate governance, it is important that Airthings ensures appropriate and healthy business practices, reliable financial reporting, and an environment of compliance with legislation and regulations across Airthings Group.

Airthings ASA is incorporated in Norway in accordance with the Norwegian Public Limited Liability Companies Act of 13 June 1997 no. 45 (the "NPLCA") and is subject to Norwegian law. The shares of Airthings are listed on Euronext Growth. As a Norwegian public limited liability company listed on Euronext Growth, Airthings complies with the Norwegian Securities Trading Act, the Continuing obligations for companies listed on Oslo Børs, the Norwegian Public Limited Liability Companies Act and all

other applicable laws and regulations.

The Company endorses the Norwegian Code of Practice for Corporate Governance issued by the Norwegian Corporate Governance Board on 14 October 2021, as amended from time to time (the "NUES Code").

The applicable governance principles in Airthings are articulated in a set of corporate governance principles which are approved by the board of directors. These apply to all of Airthings' subsidiaries as well as Airthings ASA.

Shareholders exercise the ultimate authority in Airthings through the Annual General Meeting, where all shareholders are entitled to attend. The board of directors encourages all investors to participate at the AGM.

Financial reporting in Airthings is built on reporting from the individual legal entities, which are reported monthly according to a pre-defined process and conveyed to the Group Finance team in a standardized format. These financial statements are reviewed by the Group Finance team before being consolidated into a set of consolidated financial statements for the Group. Based on these consolidated financial statements, management in Airthings reports on the financial performance of the Group to the board of directors monthly. Furthermore, management prepares detailed quarterly financial reporting which is approved by the board of directors and published externally.

Airthings ASA and subsidiaries are covered by Directors and Officers liability insurance. The insurance indemnifies directors and officers for defence costs and potential legal liability arising out of claims made against them while serving on a board of directors and or as an officer. The insurance policy is issued by a reputable, specialized insurer with appropriate rating.

AIRTHINGS' SUSTAINABILITY JOURNEY: FOR PLANET, FOR PEOPLE, FOR BUSINESS

Airthings is a purpose-driven company that cares about making a difference for people, planet,

and business. Our mission is to empower the world to breathe better. As leaders in indoor air quality monitoring, focused on the health and wellbeing of homes and businesses alike, sustainability is close to our heart and part of our core values.

2021 was a milestone year at Airthings, as we continued our sustainability journey, building a holistic sustainability strategy throughout our value chain. The 17 United Nations (UN) Sustainable Development Goals (SDGs) became the pillars of our framework, with a specific focus on 6 SDGs.

Airthings' mission to empower the world to breathe better contributes directly to SDG#3 health and wellbeing. Airthings for Business supports both SDG#11 sustainable cities and communities and SDG #13 climate action, by making buildings smarter through data-driven solutions. To address SDG #12, responsible for consumption and production, we work to understand the impact of the whole life cycle of our products. Our dedication to the company culture and human rights, diversity, and inclusion are a part of our contribution to SDG #8, decent work, and economic growth. Finally, we contribute to SDG#4 quality education. We help to improve indoor air quality in schools and empower teachers to educate children about the air. We continue to be a part of the UN Global Compact and support its 10 principles.

In 2021, we focused on developing regular monitoring to a deeper granular level of our different environmental, social, and governance indicators throughout our value chain. One of the most exciting highlights of 2021 was earning a silver Ecovadis sustainability rating. Entitled "The World's Most Trusted Business Sustainability Ratings,"1 Ecovadis' is an independent and unbiased evaluation that covers four different categories: the environment, ethics, labor, human rights, and sustainable procurement. Using their evidence-based assessment, the organization ranks companies in categories from zero to platinum. We are thrilled to have been awarded a silver ranking, putting us in the top 25% of companies evaluated. As this is our first year being considered, we are encouraged by the high score and are dedicated to working towards continually improving our score.

As a medium-sized company, with <500 employees, we are not subject to report on the new EU Taxonomy, but we are considering adapting our business activity reporting to be inline. We can already contribute directly to the scope of mitigation of climate change through the data-driven solutions, while not causing significant harm to the other 5 categories. Furthermore, our products can help our customers as the activity could be considered Taxonomy aligned.

Let us walk you through how Airthings products contribute positively to the 3 dimensions of sustainability for the planet, for people, for business and how we are working internally to improve in these dimensions.

We have big sustainability goals and a solid ESG strategy for how we will achieve them:

How Airthings products can promote energy efficiency and avoid CO2 emissions in buildings

The environmental impact from buildings can be broken down into the construction of the building versus the energy needed for everyday operations. 36% of the total greenhouse gases emissions come from energy production for buildings.

Therefore it is very important to reduce wasted energy and improve the efficiency of buildings. From a small sample of case studies from 20 customers, we have seen the potential our products have to help our users make datadriven decisions to save energy. We are thrilled to see that our customers avoided more than 2000 tons of CO2 emissions in 2021. These savings are higher than Airthings' operational CO2 emissions in 2020. We empower our customers to reduce their energy consumption by giving them tools to make effective decisions while managing their buildings.

Facility managers are able to remotely monitor air quality and climate, and they can minimize the energy consumed and maximize comfort. The best way to improve efficiency in the building is to ensure energy is not wasted on heating, cooling, ventilation, and lighting in rooms that aren't being used. Similarly, tracking patterns of occupancy and utilization of the building and using this to optimize the HVAC systems can minimize wasted energy and maximize employee performance.

With our easy-to-use APIs this is possible. Globally, much of the current building stock is older and has numerous systems. Airthings' system enables even older HVAC systems to be more datadriven with our new insights for facility managers. Our next step is to further automate systems to optimize air quality with minimal manual effort.

How Airthings understands the lifetime impact of our product

Throughout 2021, we completed two major analyses to get an overview of our internal carbon footprint. First, following ISO 14040 - 14044, we performed a Life Cycle Assessment (LCA) for five

of our products (View Plus, Wave Series, Home, Hub, and Wave Mini). We delineated our goal and scope, followed a data collection and inventory analysis, and finished with an impact assessment and interpretation. Likewise, we focus on highquality products and aim for >10 years lifetime for the hardware and the experience.

Secondly, using financial statements, we calculated the total carbon footprint of Airthings across scope 1, 2, & 3 following the Greenhouse Gas Protocol. We calculated scope 2 emissions using a market-based methodology, using the European mix as a carbon factor. The total emission of scope 2 in 2021 in Oslo headquarters was 20 tons of CO2 eq. At the same time, over 98% of our emissions were indirect throughout our value chain (scope 3). We used a combination of calculation methods and a cloud-based program focusing on all spending and their average emissions factors to calculate scope 3 emissions. This carbon accounting was compared with the LCA of our product to generate a closer overview of our emissions. More specific data from our LCA and carbon accounting will be included in our sustainability report by May 2022.

How Airthings products help occupants breathe healthier air

Air pollution is the presence of substances above the natural level in the air. Polluted air can be harmful to the environment and to humans. Globally, 9 out of 10 people breathe air that exceeds WHO recommended limits for pollutants. Likewise, we spend 90% of our time indoors, where most of the contaminants are circulating because of poor ventilation. Therefore, understanding indoor air quality is vital to taking control of our health. Airthings does advanced cloud analytics using existing and historical data from our devices to empower people (both individuals

and businesses) to control air quality, climate, and energy usage. There are many types of invisible pollutants in the air we breathe that affect human health: CO2, radon, particulate matter (PM), volatile organic compounds (VOCs), mold, humidity, etc. By helping our customers visualize what is in their air, we can help them mitigate air pollutants, reducing their risk of exposure and potentially disease. We have witnessed through customers' interviews and comments that they are taking actions like providing more ventilation, installing radon mitigation systems, air purifiers, and humidifiers or dehumidifiers because of the insights provided by Airthings.

How Airthings is pursuing a social responsibility from the inside

Our goal is to foster a diverse and inclusive work culture. The first step Airthings took towards improving our social responsibility within our daily operations and our supply chain was to develop governance policies. We drafted a policy on human rights, diversity, and inclusion following the principles laid out in the Universal Declaration of Human Rights.

We also determined our baseline metrics of diversity. In 2021, the average number of FTEs was 96. Our employees have reported high satisfaction with the working environment, with an Employee net promoter score (ENPS) of 46, and we continuously strive to achieve incremental improvements. Absence due to sickness amounted to 0.38% in 2021. No personal injuries or damages were registered in 2021.

Our employees currently represent more than 35 nationalities and 28% identify themselves as female. We are aiming for a gender balance of 40-60% women. Likewise, we are setting new targets per team in 2022. Generally, the tech industry is characterized by a low share of female employees. To counter this, Airthings is working systematically to improve the share of female employees at all levels. One of the company's objectives is to offer equal salary and career opportunities regardless of gender. Our Board of Directors is balanced in terms of gender, with

4 men and 4 women, and includes employee representatives. More information and equality statement can be found at www.airthings.com.

Our culture at Airthings is one of the aspects we are most proud of as a company. A positive and healthy culture is key to creating an organization that upholds our company values of Dare, Love, and Focus. In 2021, we continued investing in our people, bringing more people on board to help expand our business and reach our goals. We are continually improving our hiring processes by making them more transparent to ensure we find and attract a diverse group of top talent which we onboard through training programs to cultivate an inclusive community. Even as we grow, we aim to maintain an egalitarian atmosphere where everyone feels valued, heard, and empowered.

As part of our goal to educate 1 million children about air quality, we launched Air for Kids last year. With this fun and educational project, we aim to teach about what's in the air we breathe for curious kids, parents, and teachers everywhere. We have created multiple educational blogs with accompanying quizzes for the kids to see how much they have learned. The quizzes were completed by 245 unique visitors in 2021.

We also launched our first air quality poster contest. Through direct outreach, we educated 30 kids on air quality, and we reached 2,900 visitors with our website so far.

How Airthings products can help improve our customers' business

We have continued to empower the world to breathe better in 2021. More than 10,000 schools, 3,000 buildings, and 41,000 business sensors are driving our goal to enable 4,000,000 people to breathe healthier air and energy efficiency by optimizing both of these elements.

Frydenbø Group is an industry leader in commercial real estate in Norway, owning over 110,000 sqm of commercial space. They have been innovators in the property management space and installed their first Airthings sensors in 2019. By integrating the data-driven Airthings for Business solution into their system, they took the correct actions to decrease their energy consumption by 16%.

When at work and in the classroom, we exhale CO2, which can accumulate in poorly ventilated classrooms, lecture halls, and offices. Excess levels of the gas are linked to higher risk of spreading viruses and bacteria's, and to restlessness, drowsiness, increased heart rate, higher blood pressure, excess sweating, and headaches. Research has found a 12% decrease in sick days and 100% improvement in cognitive scores when the indoor air quality in buildings was improved.

How Airthings is strengthening its governance

We have strengthened our governance by establishing six new policies and guidelines to our way of working: circular principles; human rights, diversity, and inclusion policy; suppliers' code of conduct; whistleblower guidelines and reporting portal; sustainable procurement guidelines; and travel guidelines. We have also updated the employee handbook according to these recent additions. We had no reported cases of human rights violations or child labor from our key suppliers.

When will the sustainability report 2021 be published?

There is so much great work being done within Airthings on how we can become a more environmentally responsible, circular, and people-focused company. 2021 measured our baseline for sustainability at Airthings and now we can continue to build upon this foundation as we grow as a company. Details about our work can be found in our upcoming Annual Sustainability Report, which will be released in May 2022. We aim to pursue economic growth without causing harm to the environment and take good care of the people involved in our value chain.

OUTLOOK

Airthings' key focus for 2022 is to capitalize on the current land grabbing opportunity and continue its expansion in both existing and new geographical markets. Airthings ended 2021 with an undelivered backlog of around NOK 10 million, providing a strong start to 2022. Going forward, the company sees higher production volumes for View Plus, although uncertainties

remain with regards to the availability of components. Airthings is continuously monitoring the component market and proactively taking steps to mitigate the situation and secure production going forward. Certain components may however not be available in the quantities required to fully satisfy the strong market demand Airthings is experiencing.

Airthings has set a bold NOK1bn revenue target for 2024 - purely based on organic growth - but maintains an opportunistic view on potential acquisitions. The Board and management share a strong belief in continued positive market demand for Airthings' products and services and strong confidence in the ability to successfully turn this market opportunity into profitable growth in the years to come. Airthings' growth model has been backed by high investments in technology, people, brand awareness, and marketing, and the cost intensity is set to decline with increasing scale and a higher share of highmargin recurring revenue going forward. The company aims for break-even on the EBITDA-level during 2023, and expects gradually improving operational leverage to allow for long-term EBITDA-margins above 25%.

This report contains certain forward-looking statements that involve risks and uncertainties and that reflect current views about future events and are, by their nature, subject to significant risks and uncertainties. There are a number of factors that could cause actual results and developments to differ materially from those expressed or implied by these forward-looking statements. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot assure you that our future results, level of activity, performance or achievements will meet these expectations. You should therefore not place undue reliance on forward looking statements.

Aksel Lund Svindal Chairman of the Board

Emma Tryti Board member

Liv Hege Dyrnes Board member

Anlaug Gårdsrud Underdal Board member

Lars Rahbaek Boilesen Board member

Tore Helge Rismyhr Board member

Geir Førre Board member

Karin Berg

Board member

Oslo, March 30, 2022

Øyvind Birkenes CEO

Statement of the Board of Directors and CEO

Responsibility Statement

The Chief Executive Officer and the Board of Directors confirm, to the best of our knowledge, that the financial statements for 2021 have been prepared in accordance with IFRS as adopted by the EU, with additional information as required by the Accounting Act, and give a true and fair view of the Group's Consolidated financial statements and the Group's assets, liabilities, financial position and results of the operations.
We also confirm that the report by the Board of Directors provides a fair overview of the parent company and the Group and its development, financial results and position, and describes the Group's key risks and uncertainties.

Oslo, March 30, 2022

Aksel Lund Svindal Chairman of the Board

Emma Tryti Board member

Liv Hege Dyrnes Board member

Anlaug Gårdsrud Underdal Board member

Lars Rahbaek Boilesen Board member

Statement

Tore Helge Rismyhr Board member

Geir Førre Board member

Karin Berg Board member

Øyvind Birkenes CEO

Shareholder information

Airthings' objective is to provide strong value creation and positive long-term returns to the company's shareholders. The Company plans to achieve this by delivering on an ambitious business plan, and through precise, timely and relevant communication that enable investors to evaluate the Company's current status, the prospects for profitable growth, and the inherent operational and financial risks.

Investor relations

Clear and accurate communication with investors and analysts, both in Norway and internationally, is a high priority for Airthings. A key objective for the company is to ensure that investors, potential investors, other stakeholders and the market in general have simultaneous access to accurate, clear, relevant, and up-to-date information about Airthings. To facilitate this, the Group will hold quarterly presentations of its quarterly results, with attendance from senior management. These presentations will be open to the investor community, media and the public at large, and will also be made available online. All investor relation activities are conducted in compliance with applicable rules, regulations, and recommended practices.

Devoted to good Corporate Governance

Airthings considers sound corporate governance to be a prerequisite for sustainable value creation and trustworthiness, and for access to capital at a fair cost of capital.

Airthings' stakeholders should demand that the company follows healthy business practices and ethical business conduct, operates in compliance with all relevant legislation and regulations across the Group, and presents reliable financial reporting.

Airthings Board-approved governance regime maintains governance documents describing

the principles for its business conduct, which applies to all of Airthings' subsidiaries as well as Airthings itself.

Employee Share Purchase Program

Airthings believes its employees should be given the opportunity to participate in the value creation, and has established a share-based payment program in which all employees are granted share options upon employment. For further details, please see note 6.8.

Share capital

On December 31, 2021, the share capital in the company amounted to NOK 1 718 164,37, distributed across 171 816 437 shares with a nominal value of NOK 0.01 per share. Airthings has one class of shares, with each share carrying one vote. Firda AS was the largest shareholder with 25 826 543, or 15.0%, of the share capital at the end of 2021.

Shareholders' Authorization to the Board to Increase Share Capital in the Group

The Extraordinary General Meeting (EGM) on October 22, 2020 authorized the board of directors to increase the share capital by up to NOK 663 306, of which NOK 385 807 remains. On May 5, 2021 the Annual General Meeting (AGM) gave the board of directors three separate authorizations to increase share capital; up to NOK 427 823 in connection with investments general purposes and transactions (NOK 427 823 remains), up to NOK 73 565 in connection with a new incentive program and current granted options (NOK 62 316 remains), and up to an aggregate nominal value of NOK 171 129 to acquire treasury shares (NOK 171 129 remains).

All above authorizations are valid until the Airthings AGM in 2022, however no longer than until June 30, 2022.

Shareholder	Shares	Ownership
Firda AS	25 826 543	15.0%
Verdipapirfondet KLP Aksjenorge	7 762 222	4.5%
Rabakken Invest AS	5 800 364	3.4%
Atlas Invest AS	5 637 468	3.3%
Halvor Wøien	4 879 522	2.8%
Erlend Peter Johnsen Bolle	4 819 722	2.8%
Victoria India Fund AS	4 558 131	2.7%
J.P. Morgan Bank Luxembourg S.A.	4 433 967	2.6%
Sundal, Bjørn Magne	4 364 999	2.5%
Yoshioka, Koki	4 166 650	2.4%
Other	99 566 849	57.9%
Total shares	171 816 437	100.0%

Financial calendar
1Q22 quarterly results	May 5, 2022
Half-yearly report	July 14, 2022
3Q22 quarterly results	October 27, 2022
4Q22 quarterly results	February 9, 2023

Analyst coverage
DNB	Christoffer Wang Bjørnsen	+47 24 16 91 43
Arctic Securities	Kristian Spetalen	+47 95 10 08 87
ABG	Øystein Lodgaard	+47 22 01 60 26
SEB	Oliver Kielland	+47 21 00 85 22
Carnegie	Eirik Rafdal	+47 22 00 93 78

Ownership structure - Number of shares held	Number of shareholders	Number of shares	Proportion of share capital
1-1 000	1 296	551 407	0.3%
1 001 -10 000	1 046	4 014 252	2.3%
10 001-100 000	280	8 599 345	5.0%
100 001-500 000	66	15 465 384	9.0%
500 001-	51	143 186 049	83.4%
Total	2 739	171 816 437	100.0%

Airthings - Annual Report 2021

Airthings Financials

Consolidated financial statements

Consolidated statement of profit or loss

Consolidated statement of

comprehensive income

Consolidated statement of financial position

Consolidated statement of cash flows

Consolidated statement of changes in equity

Notes to the consolidated financial statements

Section 1 - General information and accounting policies

1.1 Corporate information
1.2 Basis of preparation
1.3 General accounting policies
1.4 Significant accounting judgements, estimates and assumptions

Section 2 - Operating segments and profit or loss items

2.1 Operating segments
2.2 Revenue
2.3 Other operating income
2.4 Employee benefit expenses
2.5 Other operating expenses
2.6 Depreciation and amortization
2.7 Finance income and costs
2.8 Income tax

Section 3 - Other operating activities

3.1 Inventories
3.2 Trade and other receivables
3.3 Contract liabilities
3.4 Trade and other payables
3.5 Provisions

Section 4 - Group structure

4.1 Overview of Group companies
4.2 Business combinations

Section 5 - Fixed assets

5.1 Intangible assets
5.2 Goodwill and impairment considerations
5.3 Property, plant and equipment
5.4 Right-of-use assets and lease liabilities

Section 6 - Financial instruments and equity

6.1 Overview of financial instruments
6.2 Interest-bearing liabilities
6.3 Ageing of financial liabilities
6.4 Financial risk management
6.5 Fair value measurement
6.6 Cash and cash equivalents
6.7 Share capital and shareholders information
6.8 Share-based payments
6.9 Earnings per share
6.10 Changes in liabilities arising from financing activities

Section 7 - Other disclosures

7.1 Remuneration to Management and Board
7.2 Related party transactions
7.3 Commitments and contingencies
7.4 Events after the reporting period

Section 8 - Changes in accounting policies

8.1 First time adoption of IFRS

Alternative performance measures

Consolidated statement of profit or loss

For the years ended 31 December
Amounts in USD 1,000	Notes	2021	2020
Revenues	2.2	33,671	20,893
Other operating income	2.3	28	123
Total revenue and other operating income		33,699	21,016
Cost of goods sold		13,041	7,576
Employee benefit expenses	2.4	15,127	9,094
Other operating expenses	2.5	13,566	9,132
Operating profit or loss before depreciation & amortization (EBITDA)		-8,035	-4,786
Depreciation and amortization	2.6	1,335	736
Operating profit or loss (EBIT)		-9,371	-5,522
Finance income	2.7	323	20
Finance costs	2.7	268	673
Net financial items		55	-653

Profit (loss) before tax		-9,315	-6,175
Income tax expense	2.8	-2,055	-2,044
Profit (loss) for the year		-7,261	-4,131

Profit (loss) for the year attributable to:
Equity holders of the parent company		-7,261	-4,131
Earnings per share:
Basic earnings per share	6.9	-0.04	-0.03
Diluted earnings per share	6.9	-0.04	-0.03

Consolidated statement of comprehensive income

For the years ended 31 December
Amounts in USD 1,000	2021	2020
Profit (loss) for the year	-7,261	-4,131

Other comprehensive income:
Items that subsequently will not be reclassified to profit or loss:
Exchange differences on translation of parent company	-2,366	4,289
Total items that may be reclassified to profit or loss	-2,366	4,289

Items that subsequently may be reclassified to profit or loss:
Exchange differences on translation of foreign operations	14	25
Total items that may be reclassified to profit or loss	14	25

Other comprehensive profit (loss) for the year	-2,352	4,314
Total comprehensive profit (loss) for the year	-9,612	183

Total comprehensive profit (loss) attributable to:
Equity holders of the parent company	-9,612	183

Consolidated statement of financial position

Amounts in USD 1,000	Notes	31.12.2021	31.12.2020	01.01.2020
ASSETS
Non-current assets
Goodwill	5.1, 5.2	3,210	3,317	0
Intangible assets	5.1	2,495	2,332	418
Deferred tax assets	2.8	4,509	2,953	738
Property, plant and equipment	5.3	809	595	263
Right-of-use assets	5.4	4,241	3,578	2,579
Other non-current assets	3.5, 6.8	1,075	1,524	38
Total non-current assets		16,339	14,298	4,037

Current assets
Inventories	3.1	11,429	4,694	3,306
Trade receivables	3.2	11,850	7,000	4,640
Other receivables	3.2	1,889	2,041	1,618
Cash and cash equivalents	6.6	42,174	62,943	5,589
Total current assets		67,342	76,678	15,154

TOTAL ASSETS		83,680	90,976	19,190

Amounts in USD 1,000	Notes	31.12.2021	31.12.2020	01.01.2020
EQUITY AND LIABILITIES
Equity
Share capital	6.7	190	188	65
Share premium		78,669	78,472	10,440
Other capital reserves		1,704	1,096	636
Other equity		-12,721	-3,108	-841
Total equity		67,842	76,648	10,300

Non-current liabilities
Non-current interest-bearing liabilities	6.2	0	0	2,037
Non-current lease liabilities	5.4	3,803	3,243	2,319
Deferred tax liabilities	2.8	0	343	0
Non-current provisions	3.5	1,090	1,442	0
Total non-current liabilities		4,892	5,028	4,356

Current liabilities
Current interest-bearing liabilities	6.2	0	1 901	0
Current lease liabilities	5.4	670	473	260
Trade and other payables	3.4	7,027	4 139	2 301
Contract liabilities	3.3	894	422	73
Income tax payable	2.8	27	10	4
Current provisions	3.5	2,328	2 355	1 897
Total current liabilities		10,946	9,300	4,534

Total liabilities		15,838	14,327	8,890
TOTAL EQUITY AND LIABILITIES		83,680	90,976	19,190

Aksel Lund Svindal

Chairman of the Board

Emma Tryti Board member

Oslo, March 30, 2022

Liv Hege Dyrnes Board member

Anlaug Gårdsrud Underdal Board member

Lars Rahbaek Boilesen Board member

Tore Helge Rismyhr Board member

Geir Førre

Board member

Karin Berg Board member

Øyvind Birkenes CEO

Consolidated statement of cash flows

For the years ended 31 December
Amounts in USD 1,000	Notes	2021	2020
Cash flows from operating activities
Profit (loss) before tax		-9,315	-6,175
Adjustments to reconcile profit before tax to net cash flows:
Net financial items	2.7	-55	653
Depreciation and amortization	2.6	1,335	736
Share-based payment expense	6.8	608	460
Working capital adjustments:
Changes in inventories	3.1	-6,736	-1,387
Changes in trade and other receivables	3.2	-4,697	-2,783
Changes in trade and other payables and contract liabilities	3.3, 3.4	3,360	2,188
Changes in provisions	3.5	-380	1,900
Other items
Tax paid	2.8	1	-4
Net cash flows from operating activities		-15,879	-4,412
Cash flows from investing activities
Development expenditures	5.1	-574	-269
Purchase of property, plant and equipment	5.3	-495	-404
Purchase of shares in subsidiaries, net of cash acquired	4.2	0	-1,255
Interest received	2.7	102	14
Net cash flow from investing activities		-968	-1,914
Cash flow from financing activities
Proceeds from issuance of equity	6.7	198	69,162
Proceeds from sales of own shares	6.7	0	184
Transaction costs on issue of shares	6.7	0	-3,641
Repayment of borrowings	6.10	-1,901	-177
Payments for the principal portion of the lease liability	5.4	-636	-302
Payments for the interest portion of the lease liability	5.4	-217	-149
Interest paid	2.7	-4	-106
Net cash flows from financing activities		-2,560	64,971
Net increase/(decrease) in cash and cash equivalents		-19,407	58,644
Cash and cash equivalents at 1 January		62,943	5,589
Net foreign exchange difference		-1,362	-1,290
Cash and cash equivalents at 31 December		42,174	62,943

Consolidated statement of changes in equity

					Other Equity
Amounts in USD 1,000	Share capital	Share premium	Treasury shares	Other capital reserves	Cumulative translation differences	Retained earnings	Total equity
Equity 1 january 2020	65	10,440	-0.3	636		-841	10,300
Profit (loss) for the year						-4,131	-4,131
Other comprehensive profit (loss)					4,314		4,314
Total comprehensive profit (loss)					4,314	-4,131	183
Sale of treasury shares			0.3			184	185
Capital increase (note 6.7)	123	68,032				1 007	69,162
Transaction costs						-3,641	-3,641
Share-based payments (note 6.8)				460			460
Equity 31 December 2020	188	78,472	0	1,096	4,314	-7,422	76,648
Profit (loss) for the year						-7,261	-7,261
Other comprehensive profit (loss)					-2,352		-2,352
Total comprehensive profit (loss)					-2,352	-7,261	-9,612
Capital increase (note 6.7)	1	197					198
Share-based payments (note 6.8)				608			608
Equity 31 December 2021	190	78,669	0	1,704	1,962	-14,683	67,842

Section 1 – General information and accounting policies

1.1 Corporate information

Airthings ASA ("the Company") is a publicly listed company on Euronext Growth, with the ticker symbol AIRX. Airthings ASA was admitted to trading on Euronext Growth on 30 October 2020. Airthings ASA is incorporated and domiciled in Norway. The Company's principal offices are located at Wergelandsveien 7, 0167 Oslo, Norway.

Airthings and its subsidiaries (collectively "the Group", or "Airthings") develop and produces solutions for monitoring indoor air quality, radon and energy efficiency. The Group sells it's products and solutions to consumers and businesses around the world.

The consolidated financial statements of the Group for the year ended 31 December 2021 were authorized for issue in accordance with a resolution of the Board of Directors on 30 March 2022.

1.2 Basis of preparation

The consolidated financial statements of the Group comprise consolidated statement of comprehensive income, consolidated statement of financial position, consolidated statement of cash flows, consolidated statement of changes in equity and related notes.

The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS") as adopted by The European Union ("EU"), and represents the first financial statements of the Group in accordance with IFRS. See note 8.1 for information related to first time adoption of IFRS.

The consolidated financial statements have been prepared on a historical cost basis. All figures are presented in USD thousands (1,000), except when otherwise stated.

The consolidated financial statements provide comparative information in respect of the previous period. In addition, an additional statement of financial position as at 1 January 2020 is presented in these financial statements due to the first time adoption of IFRS.

Further, the consolidated financial statements are prepared based on the going concern assumption. The Group has so far seen limited business impact related to the Covid-19 pandemic as the consumer demand for its products has in some cases increased due to elevated air quality awareness. In other instances, Covid-19 has led to a pressed semiconductor market which has resulted in increased component prices and delivery delays as production capacity has been held back by component shortage. Also, the pandemic has led to slowed retail store roll-out and limited access to buildings for the business segment. The Board continues to monitor the situation carefully to ensure appropriate measures are taken as the situation continues to unfold during 2022.

Presentation currency and functional currency

The consolidated financial statements are presented in United States dollar ("USD"). For each entity, the Group determines the functional currency and items included in the financial statements of each entity are measured using that functional currency. Airthings ASA has Norwegian krone ("NOK") as its functional currency and it's subsidiaries have SEK or USD as their functional currencies. The Group presents it's consolidated financial statements in USD to provide the primary users of the financial statements with more convenient information.

For presentation purposes, balance sheet items are translated from functional currency to presentation currency by using exchange rates at the reporting date. Items within total comprehensive income are translated from functional currency to presentation currency by applying yearly average exchange rates. The resulting translation differences are recognized in other comprehensive income.

Climate risk

The impact of climate risks has been taken into account in the preparation of the Group's consolidated financial statements for the year ended 31 December, 2021. However, the risks identified are not considered to have a significant impact on the Group considering the nature of the its operations. Potential impacts of climate change are continuously considered in assessing whether assets may be impaired. As of 31 December, climate risk is not expected to have any significant impact on the Group's assets or liabilities.

1.3 General accounting policies

Airthings has selected a presentation in which the description of accounting policies as well as estimates, assumptions and judgmental considerations are disclosed in the notes to which the policies relate. A summary of the Group's general accounting policies not disclosed in the notes, are presented below:

Current versus non-current classification

The Group presents assets and liabilities in the statement of financial position based on current/ non-current classification.

An asset is current when it is:

Expected to be realized or intended to be sold or consumed in the normal operating cycle,
Held primarily for the purpose of trading,
Expected to be realized within twelve months after the reporting period, or
Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period. All other assets are classified as non-current.

A liability is current when:

It is expected to be settled in the normal operating cycle,
It is held primarily for the purpose of trading,
It is due to be settled within twelve months after the reporting period, or
There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period. The Group classifies all other liabilities as non-current.

Deferred tax assets and liabilities are classified as non-current assets and liabilities.

Statement of cash flows

The consolidated statement of cash flows is prepared using the indirect method.

Changes in accounting policies

Standards issued but not yet effective

New or amended standards and interpretations which are effective for annual periods beginning on or after 1 January, 2022 and which the Group believes are relevant and may impact the Group's financial statements and/or disclosures are discussed below. The Group has not early adopted any standards or amendments that have been issued, but are not yet effective.

Amendments to IFRS 16 - Covid-19-Related Rent Concessions beyond 30 June 2021

In May 2020, the IASB issued Covid-19-Related Rent Concessions - Amendment to IFRS 16 Leases. The Board amended the standard to provide an optional relief to lessees from applying IFRS 16's guidance on lease modification accounting for rent concessions arising as a direct consequence of the pandemic. The amendment was intended to apply until June 30, 2021, but as the impact of the Covid-19 pandemic is continuing, the IASB extended the period of application of the practical expedient to June 30, 2022.

The practical expedient applies only to rent concessions occurring as a direct consequence of the Covid-19 pandemic and only if all of

the following conditions described in IFRS 16 paragraph 46B are met:

The change in lease payments results in revised consideration for the lease that is substantially the same as, or less than, the consideration for the lease immediately preceding the change.
Any reduction in lease payments affects only payments originally due on or before June 30, 2021.
There is no substantive change to other terms and conditions of the lease.

The amendment applies to annual reporting periods beginning on or after April 1, 2021. The Group has not received Covid-19-related rent concessions, but plans to apply the practical expedient if it becomes applicable within allowed period of application. The amendments are not expected to have a significant impact on the Group's financial statements.

Amendments to IAS 8 - Definition of Accounting Estimates

In February 2021, the IASB issued amendments to IAS 8, in which it introduces a definition of "accounting estimates". The amendments clarify the distinction between changes in accounting estimates and changes in accounting policies and the correction of errors. Also, they clarify how entities use measurement techniques and inputs to develop accounting estimates.

The amendments are effective for annual reporting periods beginning on or after 1 January 2023, but are not expected to have a material impact on the consolidated financial statements of the Group.

1.4 Significant accounting judgements, estimates and assumptions

The preparation of the consolidated financial statements in accordance with IFRS and applying the chosen accounting policies requires management to make judgments, estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses.

The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances. Actual results may differ from these estimates. The estimates and the underlying assumptions are reviewed on an ongoing basis.

The accounting policies applied by management which includes a significant degree of estimates and assumptions or judgments that may have the most significant effect on the amounts recognized in the financial statements, are summarized below:

Estimates and assumptions:

Measurement of deferred tax assets (note 2.8)
Value in use calculations in relation to impairment testing of goodwill (note 5.2)
Estimating fair value for share-based payments transactions (note 6.8)

A detailed description of the significant estimates and assumptions are included in the individual note referenced above.

The Group based its assumptions and estimates on parameters available when the consolidated financial statements were prepared. Existing circumstances and assumptions about future developments, however, may change due to market changes or circumstances arising that are beyond the control of the Group. Such changes are reflected in the assumptions when they occur.

Accounting judgements:

• Determination of CGUs (note 5.2)

A detailed description of the significant accounting judgements are included in the individual notes referenced above.

Section 2 - Operating segments and profit or loss items

2.1 Operating segments

ACCOUNTING POLICIES

An operating segment is a component of an entity:

a) that engages in business activities from which it may earn revenues and incur expenses,
b) whose operating results are regularly reviewed by the entity's chief operating decision maker to make decisions about resources to be allocated to the segment and assess its performance, and
c) for which discrete financial information is available.

For management purposes, the Group is organized into business areas based on its different markets and has three reportable segments, as follows:

Consumer private customers
Business business customers such as schools, office buildings and other commercial buildings
Professional professional customers such as home inspectors and certified radon professionals

No operating segments have been aggregated to form the above reportable operating segments.

The Board of Directors is the Group's chief operating decision maker and monitors the operating results of its business units separately for the purpose of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on EBITDA measured consistently with operating profit or loss before depreciation and amortization as reported under NGAAP (the Group's

previous reporting language). The Group's financing (including finance costs and finance income), depreciation and amortization and income taxes are managed on a Group basis and are not allocated to operating segments as underlying assets are managed on a Group basis.

Group functions and adjustments/ eliminations

The remaining of the Group's activities and business are shown in the "Group functions" column in the tables below. These activities mainly relate to R&D, marketing and administrative functions of the Group.

The "Adjustments/eliminations" column in the tables below consists of IFRS adjustments that are not included as part of the segment reporting to the Board. The adjustment of USD 2,502 thousands (2020: USD 1,925 thousands) is related to consideration payable to a customer which was previously recognized as OPEX under NGAAP. Under IFRS, this is accounted for as a reduction of revenue. The adjustment of USD 3,793 thousands (2020: USD 2,377 thousands) reflect the reversal of lease expenses for the Group's operating leases under NGAAP (2021: USD 853 thousands, 2020: USD 451 thousands), in addition to the reclass from OPEX to a reduction of revenue (2021: USD 2,940 thousands, 2020: USD 1,926 thousands). The IFRS adjustments are mainly related to the Consumer segment.

For the year ended 31 December 2021 (USD 1,000)	Consumer	Business	Professional	Group functions	Adjustments/ eliminations	Consolidated IFRS
REVENUES & PROFIT
External customers	26,064	6,942	3,167		-2,502	33,671
Other operating income				28		28
Total revenue	26,064	6,942	3,167	28	-2,502	33,699
Cost of goods sold	9,574	2,708	743	16		13,041
Employee benefit expenses	1,603	3,230	134	10,160		15,127
Other operating expenses	2,177	796	225	14,162	-3,793	13,566
EBITDA	12,710	208	2,065	-24,310	1,291	-8,035

For the year ended 31 December 2020 (USD 1,000)	Consumer	Business	Professional	Group functions	Adjustments/ eliminations	Consolidated IFRS
REVENUES & PROFIT
External customers	19,188	1,430	2,200		-1,925	20,893
Other operating income				123		123
Total revenue	19,188	1,430	2,200	123	-1,925	21,016
Cost of goods sold	6,363	648	565			7,576
Employee benefit expenses	1,298	1,675	54	6,068		9,094
Other operating expenses	1,212	213	115	9,970	-2,377	9,132
EBITDA	10,314	-1,106	1,466	-15,914	453	-4,786

Major customers

In 2021 the largest customer of the Group accounted for 31% (2020: 47%) of consolidated revenues, mainly allocated to the consumer segment. The second largest customer accounted for 17% of consolidated revenues in 2021 (2020: less than 10%), also mainly allocated to the consumer segment. The Group does not have any other customers that represents more than 10% of the Group's revenue.

Segmental analysis of assets and liabilities

Assets and liabilities by reporting segment is not included in management reporting and is therefore not disclosed separately within the operating segments.

Geographical disaggregation

Reference is made to note 2.2 Revenue for information on the Group's geographical markets.

Non-current operating assets (USD 1,000)	2021	2020
Located in Norway	7,126	6,334
Located in foreign countries	419	170
Total	7,545	6,504

Non-current assets for this purpose consist of property, plant and equipment, right-of-use assets, and intangible assets.

2.2 Revenue

Airthings Group is a manufacturer of air quality sensors and hardware-enabled software products for air quality, radon measurement and energy efficiency solutions. The Group's revenue from contracts with customers are reported in three main segments as described in note 2.1: Consumer, Business and Professional.

The consumer segment sells air quality sensors to private customers through retailers and e-commerce.
The business segment sells air quality solutions to schools, office buildings, and other commercial buildings.
The professional segment sells measurement solutions which enables inspectors and certified radon professionals to accurately measure, analyze and report on buildings. The professional segment also offers rental of products and calibration services.

ACCOUNTING POLICIES

Revenue from contracts with customers is recognized when control of the goods or services are transferred to the customer at an amount that reflects the consideration to which the Group expects to be entitled in exchange for those goods or services. The Group has concluded that it is the principal in all its revenue arrangements, and hence recognizes revenue gross.

Sale of goods

Revenue from the sale of air quality sensors are recognized at the point in time when a performance obligation arising from a contractual obligation with a customer has been met. The Group's performance obligation is satisfied at a point in time, upon delivery or when the goods are packed and shipped, depending on the delivery terms. The payment terms are generally 30 days after the performance obligation is satisfied.

The Group considers whether there are other promises in the contract that are separate performance obligations to which a portion of the transaction price needs to be allocated (e.g., services or SaaS). Where a contract included several performance obligations, revenue is splitted among the different performance obligations based on relative stand alone selling prices.

In determining the transaction price for the sale of a product, the Group considers the effects of variable consideration, the existence of significant financing components, non-cash consideration, and any consideration payable to the customer. Revenue is recognized net of any discounts.

(i) Variable consideration

If the consideration in a contract includes a variable amount, the Group estimates the amount of consideration to which it will be entitled in exchange for transferring the goods to the customer. The variable consideration is estimated at contract inception and constrained until it is highly probable that a significant revenue reversal in the amount of cumulative revenue recognized will not occur when the associated uncertainty with the variable consideration is subsequently resolved. Some contracts for the sale of air quality sensors and radon detectors provide customers with a right to return the goods within a specified period. The Group also provides retrospective volume rebates to certain customers once the quantity products purchased during the period exceeds the threshold specified in the contract. The rights of return and volume rebates give rise to variable consideration.

Right of return

The Group uses the expected value method to estimate the variable consideration given the large number of contracts that have similar characteristics. The Group then applies the requirements on constraining estimates of variable consideration in order to determine the amount of variable consideration that can be included in the transaction price and recognized as revenue.

Consideration payable to a customer

Consideration payable to a customer is accounted for as a reduction of the transaction price, unless the payment to the costumer is in exchange for a distinct good or service and the fair value of the distinct good or value can be reasonably estimated. Consideration payable to a customer is estimated when the sale occurs and recognized as a provision (refer to note 3.5). The transaction price is reduced accordingly.

Sale of software as a service (SaaS)

The Group also has revenue from license fees, which are SaaS contracts consisting of a software licensing model where software is licensed on a subscription basis and centralized on Airthings platform. Revenue from SaaS arrangements, where the customer cannot take possession of the software license and where the software license cannot be separated from its related hosting services are considered as "right to access" licenses and revenue is recognized over time (i.e. the subscription period).

Sale of services

Revenue from the rendering of services mainly relates to calibration services delivered in connection with a solution to the business or professional market. These calibration services are sold separately or bundled but do not

significantly customize or modify the other products in the contract. Contracts for bundled sales of equipment and calibration services are comprised of two performance obligations because the equipment and installation services are both sold on a stand-alone basis and are distinct within the context of the contract. Accordingly, the Group allocates the transaction price based on the relative stand-alone selling prices of the equipment and installation services. Revenue from these services is recognized over time using an input method to measure progress towards completion of the services, because the customer simultaneously receives and consumes the benefits provided by the Group.

Rental income

Rental income is derived from the rental of equipment such as Corentium Pro in the professional segment. Rental income arising is accounted for on a straight-line basis over the lease term and is included in revenues in the consolidated statement of comprehensive income. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognized over the lease term on the same basis as rental income.

Set out below is the disaggregation of the Group's total revenues:

Revenues (USD 1,000)	2021	2020
Revenue from contracts with customers	33,172	20,572
Rental income	499	322
Total revenues	33,671	20,893

Set out below is the disaggregation of the Group's revenue from contracts with customers:

Geographical information (USD 1,000)	2021	2020
EMEA	9,537	5,166
North America (USA and Canada)	23,635	15,406
Total revenue from contracts with customers	33,172	20,572

The information above is based on the location of the customers.

Timing of revenue recognition (USD 1,000)	2021	2020
Goods transferred at a point in time	31,791	20,222
Subscription and services transferred over time	1,382	349
Total revenue from contracts with customers	33,172	20,572

The transaction price allocated to the remaining performance obligations (unsatisfied or partially unsatisfied) as at 31 December are, as follows:

(USD 1,000)	2021	2020
Within one year	110	65
More than one year	175	71
Total	285	136

The table above does not include remaining performance obligations that are part of contracts with an original duration of one year or less. The remaining performance obligations expected to be recognized in more than one year relate to the delivery of software services (Saas).

Performance obligations

Product sale:

The Group's performance obligation is satisfied at a point in time, upon delivery of the hardware products. Payment is generally due within 30 days after delivery. Revenue recognized at the point of delivery is only recognized for an amount of the consideration that reflects the consideration the Group expects to ultimately be entitled to. The variable consideration is re-assessed at the end of each reporting period and recognized as (or when) the uncertainty is subsequently resolved.

SaaS license fee:

The Group's performance obligation is satisfied over time (as "right to access" licenses). The customer receives the right to access Airthings intellectual property throughout the license period for which revenue is recognized over the license period. The software is run on Airthings' platform and the customer may only access the software through a network (cloud). The customer cannot take possession of the software/ code and is not able to run the software on its own server.

Other services:

Other services mainly consist of calibration services provided by the Group in connection with sales in the professional segment. Revenue is recognized over time because the customer

simultaneously receives and consumes the benefits provided by the Group. The Group recognizes revenue normally on the basis of hours incurred.

Contract balances:

As the Group's revenues are generally recognized and invoiced upon delivery (goods) or in advance (SaaS subscriptions), the Group does not have a significant amount of contract assets.

Contract liabilities relate to remuneration received in advance for SaaS subscriptions. Subscriptions are normally prepaid by the customer for 12 months. As such, the balance of account at the end of the year mainly represents the Group's deferred revenue related to performance obligations that will be satisfied within 12 months. The Group's contract liabilities are disclosed in note 3.3.

2.3 Other operating income ACCOUNTING POLICIES

Government grants

Government grants are recognized where there is reasonable assurance that the grant will be received, and all attached conditions will be complied with. Grants related to an expense item is recognized as income on a systematic basis over the periods that the related costs, for which it is intended to compensate, is expensed. Alternatively, such grants are deducted in reporting

the related expense. Grants related to assets is recognized by deducting the grant in calculating the carrying amount of the asset. The Group applies a consistent presentation approach to all similar grants.

When the Group receives grants of non-monetary assets, the asset and the grant are recorded at nominal amounts and released to profit or loss over the expected useful life of the asset, based on the pattern of consumption of the benefits of the underlying asset by equal annual installments.

Other income

Other operating income is recognized to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured, regardless of when the payment is received. Revenue is measured at the fair value of the consideration received or receivable, taking into account contractually defined terms of payment and excluding taxes or duty.

Other operating income (USD 1,000)	2021	2020
Government grants	28	123
Total other operating income	28	123

Only grants recognized as income are presented in the table above.

Government grants in the consolidated statement of comprehensive income

Grants (USD 1,000)	Line item	2021	2020
Grant from Innovation Norway	Other operating income	28	123
Grant from SkatteFUNN - A	Employee benefit expenses	276	419
Grant from SkatteFUNN - B	Other operating expenses	276	86
Total government grants recognized		580	629

Grant from innovation Norway

In 2020, Airthings ASA received funds from Innovation Norway related to a R&D project. The Group recognized USD 28 thousands as other operating income in 2021 (2020: USD 123 thousands).

Grant from SkatteFUNN

In 2020, Airthings ASA received funds from SkatteFUNN (a Norwegian government R&D tax incentive program designed to stimulate R&D in Norwegian trade and industry). In 2021 the Group recognized USD 552 thousands as a cost reduction of R&D expenses, respectively as reduced employee benefit expenses and other operating expenses (2020: USD 505 thousands). As of 31 December 2021 the Group has recognized a receivable of USD 539 thousands related to the grant from SkatteFUNN (31 December 2020: USD 557 thousands, 1 January 2020: USD 569 thousands) as presented in the table below.

Grant from EU Horizon

Airthings, through the merger with Airtight AS, was in 2018 granted EUR 1.72 million through EUs' Horizon 2020 program. The grant was 70% investment funding of a total project cost of EUR 2.45 million for the period 1 August 2018 to 31 July 2020. The grant was later extended with one year until 31 July 2021. The grant is reported as a reduction in intangible assets.

Government grants in the consolidated statement of financial position

Government grants receivable (USD 1,000)	31.12.2021	31.12.2020	01.01.2020
Grant from Innovation Norway		136	399
Grant from Horizon		346
Grant from SkatteFUNN	539	557	569
Total government grants receivable	539	1,038	968

Government grant receivables are included as other receivables in the consolidated statement of financial position and included in the specification in note 3.2.

As of 31 December 2021, the Group did not have any government grant liabilities (31 December 2020: USD 69 thousands related to EU Horizon grant, 31 December 2019: USD 0).

2.4 Employee benefit expenses

ACCOUNTING POLICIES

Employee benefit expenses comprise all types of remuneration to personnel employed by the Group and are expensed when earned. Ordinary salaries can be both fixed pay and hourly wages and is earned and paid periodically. Holiday pay is earned on the basis of ordinary pay and is normally paid in the holiday months of the following year. The employer's national insurance contribution (social security) is calculated and expensed for all payroll related costs including pensions. Pensions contributions are earned on a monthly basis. Shared based payment expenses is related to the Group's share option program

(see note 6.8). Other employee expenses consist of other benefits such as insurance, telephones and remuneration to the Board of Directors.

Pensions

The Group has a defined contribution pension plan for its employees which satisfies the statutory requirements in the Norwegian law on required occupational pension ("lov om obligatorisk tjenestepensjon").

Contributions are paid to pension insurance plans and charged to the income statement in the period to which the contributions relate. Once the contributions have been paid, there are no further payment obligations.

Employee benefit expenses (USD 1,000)	2021	2020
Salaries	12,022	7,160
Social security costs	1,680	1,038
Pension costs	438	264
Share-based payment expenses	608	460
Other employee expenses	380	171
Total employee benefit expenses	15,127	9,094
Average number of full time employees (FTEs)	105	73

At the end of the reporting period, members of the Board and management held shares and share options in Airthings ASA. For information on remuneration to Management and the Board of Directors, including disclosures on shares and share options held, see note 7.1.

2.5 Other operating expenses

ACCOUNTING POLICIES

Other operating expenses are recognized when they occur and represent a broad range of operating expenses incurred by the Group in its day-to-day activities. Other operating expenses consist of expenses that are not classified on the lines for cost of materials, employee benefit expenses, depreciation and amortization, impairment and income tax expense.

Other operating expenses (USD 1,000)	2021	2020
Marketing	4,744	3,345
External services	4,538	2,897
Freight	1,373	738
Offices	1,207	663
Private placement and listing fees		885
Software	615	360
Other operating expenses	1,089	244
Total other operating expenses	13,566	9,132

Total operating expenses by function

The table below illustrates the Group's employee benefit expenses and other operating expenses by function. These measures are regularly provided to and reviewed by the Board.

Operating expenses (USD 1,000)	2021	2020
Sales and marketing	19,366	11,685
Research and development	8,110	5,390
General and administrative	1,217	1,152
Total operating expenses	28,693	18,226

Total research expenses for 2021 were USD 8 million (net of cost reduction from SkatteFUNN, refer to note 2.3), recognized as employee benefit expenses and other operating expenses in the consolidated statement of profit or loss. For 2020 total research expenses were USD 5 million (net of cost reduction from SkatteFUNN, refer to note 2.3).

Remuneration to the auditor (USD 1,000)	2021	2020
Statutory audit fee	103	31
Tax advisory and other services	45	25
Total remuneration to the auditor	148	56

The amounts above are excluding VAT.

2.6 Depreciation and amortization

ACCOUNTING POLICIES

Depreciation and amortization expenses includes the monthly charge on property, plant and equipment, intangible assets and right-of-use assets over the assets estimated useful lives or lease term. The depreciation and amortization expenses are recognized on a straight-line basis.

Depreciation and amortization expenses (USD 1,000)	Note	2021	2020
Depreciation of property, plant and equipment	5.3	256	158
Depreciation of right-of-use assets	5.4	737	428
Amortization of intangible assets	5.1	342	149
Total depreciation and amortization expenses		1,335	736

2.7 Finance income and costs

ACCOUNTING POLICIES

Interest income and interest expenses are calculated using the effective interest method.

Foreign currency gains or losses are reported as foreign exchange gain or foreign exchange loss in finance income or finance costs, except for currency translation effects from translation of foreign subsidiaries and the parent company which are presented within OCI. For other accounting policies related to the underlying financial instruments, reference is made to note 6.1

Interest costs on lease liabilities represent the interest rate used to measure the lease liabilities recognized in the consolidated statement of financial position (see note 5.4 for further information).

Finance income (USD 1,000)	2021	2020
Interest income	102	19
Other finance income		1
Foreign exchange gain	221
Total finance income	323	20

Finance costs (USD 1,000)	2021	2020
Interest expenses	15	107
Interest expense on lease liabilities	217	149
Foreign exchange loss		417
Other finance costs	37
Total finance costs	268	673

Foreign exchange (USD 1,000)	2021	2020
Foreign exchange gain	6,350	4,088
Foreign exchange loss	6,129	4,504
Net foreign exchange gain (loss)	221	-417

Interest income and expenses

Interest income represents mainly interest income on cash deposits, and interest expenses represents mainly interest expenses on lease liabilities, measured and classified at amortized cost in the consolidated statement of financial position.

2.8 Income tax

ACCOUNTING POLICIES

Current income tax

Current income tax is measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted at the reporting date in the countries where the Group operates and generates taxable income.

Deferred tax

Deferred tax liabilities/ deferred tax assets are recognized in line with IAS 12. Deferred tax is provided using the liability method on temporary differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes at the reporting date. Deferred tax liabilities are recognized for taxable temporary differences.

Deferred tax assets are recognized to the extent that it is probable that taxable profit will be available against which the deductible temporary differences and the carry forward of unused tax losses can be utilized.

The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilized. Unrecognized deferred tax assets are re-assessed at each reporting date and are recognized to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.

In assessing the recoverability of deferred tax assets, the Group relies on the same forecast assumptions used elsewhere in the financial statements and in other management reports.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively

enacted at the reporting date.

Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority. As most of the deferred tax assets and liabilities relates to Airthings ASA (parent company), these are to a large extent offset in the consolidated financial statements.

SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS

Deferred tax assets are recognized for unused tax losses to the extent that it is probable that taxable profit will be available against which the losses can be utilized. Significant management judgment is required to determine the amount of deferred tax assets that can be recognized, based upon the likely timing and the level of future taxable profits, together with future tax planning strategies.

The Group has USD 20 266 thousand as at 31 December 2021 (USD 11 749 thousand as at 31 December 2020 and USD 2 032 thousand as at 1 January 2020) of tax losses carried forward in the parent company, which have been fully recognized as deferred tax assets in the consolidated financial statements, as the Group consider it to be probable that these taxable losses may be utilized in the near future.

When assessing the probability of utilizing these losses, the Group considers factors such as:

Positive evidence

Unused tax losses relate to the parent company Airthings ASA, where most of the Groups operations are located, and there are no maturity related to usage of such losses according to the Norwegian applicable tax regulation.
The recent losses which form the basis of the deferred tax asset have been according to budget and is a result of the Group's significant growth strategy. The losses are mainly

caused by significant R&D, marketing, and sales investments. Going forward, investment activity in % of revenues is expected to decrease. Further, before the Group initiated its significant growth strategy, it has a history of being profitable. Within the near future, the Group expects that taxable profit will allow the deferred tax asset to be recovered.

Negative evidence

Airthings ASA has not sufficient other tax increasing temporary differences which the unused tax losses can be utilized against
The Group has limited tax planning opportunities available at the moment (e.g. group contribution) as Airthings ASA is the only Norwegian entity in the Group.

Overall, the Group has as of 31 December 2021 determined that the positive evidence outweighs existing negative evidence to support recognition of deferred tax assets and thus the 50% probability threshold ("more likely than not") is considered as passed. However, there are uncertainties connected with the Group's forecasts of taxable profit. If the Group had concluded that the 50 % probability threshold was not met, and decided not to recognized deferred tax assets (limited to partly recognition or no recognition at all), this would have caused a decrease in deferred tax assets, decrease in negative tax expense and in the end a decrease in equity. No recognition at all of deferred tax assets related to taxable losses would in isolation result in an equity reduction of USD 4 459 thousand as at 31 December 2021.

Current income tax expense (USD 1,000)		2021	2020
Tax payable		10	-43
Change deferred tax/deferred tax assets (ex. OCI effects)		-2,065	-2,001
Total income tax expense		-2,055	-2,044

Deferred tax assets (USD 1,000)	31.12.2021	31.12.2020	01.01.2020
Property, plant and equipment	3,682	26	22
Right-of-use assets (net amount)	-98	-138
Customer contracts	-604	-1,066	-1,038
Other current assets	-100	-26
Merger	-2,354		-3
Losses carried forward (including tax credit)	-20,266	-11,749	-2,032
Other	-1 592	-1,238	-323
Basis for deferred tax assets	-21,331	-14,192	-3,374
Calculated deferred tax assets	4,685	3,115	742
- Deferred tax assets not recognized	-175	-162	-4
Net deferred tax assets in the statement of financial position	4,509	2,953	738

Deferred tax liabilities (USD 1,000)	31.12.2021	31.12.2020	01.01.2020
Intangible assets		-1,557
Basis for deferred tax liabilities		-1,557
Calculated deferred tax liabilities		-343
- Deferred tax not recognized
Deferred tax liabilities in the statement of financial position		-343

The Group's operations are subject to income tax in various foreign jurisdictions. The statutory income tax rates vary from 20.6% to 22%, which results in a difference between the statutory income tax rate in Norway and the average tax rate applicable to the Group. The effect from the statutory income tax rates from other countries (Sweden and USA) on the Group tax rate is very limited as the main operations are in Norway.

The average tax rate for the Group's deferred tax assets are 22% for 31.12.2021, 22% for 31.12.2020 and 22% for 01.01.2020. The average tax rate for the Group's deferred tax liabilities was 22% for 31.12.2020.

A reconciliation of the differences between the theoretical tax expense under the rate applicable in Norway and the actual tax expense is as follows:

Reconciliation of income tax expense (USD 1,000)	2021	2020
Profit or loss before tax	-9,315	-6,175
Tax expense 22% (Norwegian tax rate)	-2,049	-1,358
Change to prior period tax expense
Permanent differences*	9	-527
Effects of foreign tax rates	-1
Effect of not recognizing deferred tax assets	-13	-158
Recognized income tax expense	-2,055	-2,044

* The permanent differences are related to SkatteFUNN and other non-deductible costs among the Group's entities.

Section 3 - Other operating activities

3.1 Inventories

ACCOUNTING POLICIES

Inventories are valued at the lower of cost and net realizable value. Costs incurred in bringing each product to its present location and condition are accounted for, as follows:

Components: purchase cost on a first-in/ first-out basis (FIFO)
Finished goods: cost of direct materials, direct wages, packaging and a proportion of manufacturing overheads based on the normal operating capacity

Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale.

Inventories (USD 1,000)	31.12.2021	31.12.2020	01.01.2020
Finished goods	8,006	4,694	3,306
Components	3,423
Total inventories at the lower of cost and net realizable value	11,429	4,694	3,306

The increase in inventories in 2021 is a result of increased components prices coupled with a strategy of securing supply in a pressed semiconductor market.

There were no write-downs of finished goods or components in 2021 (2020: USD 26 thousands). There were no reversal of write-down of components or finished goods in the periods presented.

3.2 Trade and other receivables

ACCOUNTING POLICIES

Trade and other receivables

The Group's trade receivables consist solely of amounts receivable from revenue contracts with customers. Trade receivables are generally on terms of 30 days. Other receivables consist mainly of prepaid expenses and government grant receivables related to SkatteFUNN.

Trade and other receivables are financial assets initially recognized at fair value and subsequently at amortized cost using the effective interest rate method. Trade and other receivables are subject to impairment by recognizing an allowance for expected credit losses.

Expected credit losses

The Group recognizes an allowance for expected credit losses (ECLs) for its financial assets. ECLs are based on the cash flows that the Group expects to receive. For trade receivables, the Group applies a simplified approach in calculating ECLs. Therefore, the Group does not track changes in credit risk, but instead recognizes a loss allowance based on lifetime ECLs at each reporting date. The Group bases the allowance of its historical credit loss experience, adjusted for forward-looking factors specific to the debtors and the economic environment. Conditions and policies for considering financial assets as in default and when they are written off are further described in note 6.1.

Trade receivables (USD 1,000)	31.12.2021	31.12.2020	01.01.2020
Trade receivables from customers at nominal value	11,950	7,000	4,640
Allowance for expected credit losses	100
Total trade receivables	11,850	7,000	4,640

Other receivables (USD 1,000)	31.12.2021	31.12.2020	01.01.2020
Prepaid expenses	814	433	434
Government grants	539	1 038	968
VAT receivable	305	309	80
Related parties	41	3	21
Other	191	257	115
Total other receivables	1,889	2,041	1,618

The credit risk of financial assets has not increased significantly from initial recognition. The increase in loss allowance is mainly related to the increase in the gross amount of trade receivables.

As at 31 December the ageing analysis of trade receivables is, as follows:

	Trade receivables
Ageing analysis of trade receivables (USD 1,000)	Not due	< 30 days	31-60 days	>60 days	Total
Trade receivables at 31.12.2021	5,937	2,666	1,177	2,070	11,850
Trade receivables at 31.12.2020	5,475	390	472	664	7,000
Trade receivables at 01.01.2020	3,887	336	248	169	4,640

For details regarding the Group's procedures on managing credit risk, see note 6.4.

3.3 Contract liabilities

ACCOUNTING POLICIES

A contract liability is recognized if a payment is received or a payment is due (whichever is earlier) from a customer before the Group transfers the related goods or services. Contract liabilities are recognized as revenue when the Group performs under the contract (i.e., transfers control of the related goods or services to the customer).

Contract liabilities relate to remuneration received in advance for revenue from contracts with customers as well as the allocated transaction price for the remaining performance obligation. Revenue is recognized when the Group fulfills the performance obligation in the contract. Contract liabilities are shown in the table on the next page:

Contract liabilities (USD 1,000)	31.12.2021	31.12.2020
Amount included at the beginning of the period	422	73
Addition of new contract liabilities	1,487	639
Performance obligations recognized in the period	-1,014	-290
Total contract liabilities	894	422
Current contract liabilities	719	351
Non-current contract liabilities	175	71

The significant increase in the period's contract liabilities is mainly attributed to the allocated transaction price for the remaining performance obligation related to SaaS contracts, prepaid 12 months in advance.

3.4 Trade and other payables

ACCOUNTING POLICIES

Trade and other payables are liabilities, i.e. present contractual obligations arising from a result of past events where settlement is expected to result in an outflow of resources (payment). Trade payables consist of invoices for goods and services where the Group has received the significant risks and rewards of ownership as at the end of the reporting period. Other payables mainly consist of withholding payroll tax and social security tax.

Trade and other payables are measured at fair value upon initial recognition and subsequently at amortized cost. Trade and other payables are expected to be settled within the normal operating cycle within twelve months after the reporting period.

Trade and other payables (USD 1,000)	31.12.2021	31.12.2020	01.01.2020
Trade payables	4,775	2,788	1,384
Government grant liabilities (note 2.3)		69
VAT payable		34	34
Withholding payroll taxes and social security	976	961	418
Other payables	1,275	287	465
Total trade and other payables	7,027	4,139	2,301

3.5 Provisions

ACCOUNTING POLICIES

Provisions are liabilities with uncertain timing or amount and are recognized when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. The amount recognized as a provision is the best estimate of the

expenditure required to settle the present obligation at the end of the reporting period, that is, the amount that an entity would rationally pay to settle the obligation at the end of the financial year or to transfer it to a third party.

The group classifies provisions in the following categories:

• Salary related costs: Contains a provision for accrued holiday pay, accrued bonuses, restructuring (when the Group has approved a formal and detailed restructuring plan, and the restructuring either has commenced or been announced publicly) and other salary related accruals.

• Social security for share based payments: contains a provision for the accrued social security on share options and restrictive share units which will be paid when the options are exercised. Provisions are calculated based on an intrinsic value method. As part of the share-based payment program, employees are required to compensate the Group for

social security taxes payable upon exercise. Hence, a corresponding receivable has been recognized as other non-current assets in the balance sheet.

• Other provisions: contains provision for accrued consideration to a customer.

A provision is made and calculated based on management assumptions at the time the provision is made and is updated as and when new information becomes available. All provisions are reviewed at the end of the financial year.

Reconciliation of provisions (USD 1,000)	Salary related costs	Social security for share-based payments	Other provisions	Total
At 1 January 2020	858		1,038	858
Additional provisions made	1,289	1,421	1,953	2,710
Amounts used	-858	-112	-1,925	-971
Unused amounts reversed
Currency translation effects		133		133
At 31 December 2020	1,289	1,442	1,066	2,731

Current provisions				2,355
Non-current provisions				1,442

At 1 January 2021	1,289	1,442	1,066	2,731
Additional provisions made	1,723	-61	2,041	1,662
Amounts used	-1,289	-228	-2,502	-1,517
Unused amounts reversed		-24		-24
Currency translation effects		-39		-39
At 31 December 2021	1,723	1,090	604	2,813

Current provisions				2,328
Non-current provisions				1,090

Section 4 - Group structure

4.1 Overview of Group companies

ACCOUNTING POLICIES

Basis of consolidation

The consolidated financial statements comprise the financial statements of Airthings ASA and its subsidiaries as at 31 December 2021. The subsidiaries are consolidated when control is achieved as defined by IFRS 10. Specifically, the Group controls an investee if, and only if, the Group has:

Power over the investee (i.e., existing rights that give it the current ability to direct the relevant activities of the investee)
Exposure, or rights, to variable returns from its involvement with the investee
The ability to use its power over the investee to affect its returns

Generally, there is a presumption that a majority of voting rights results in control. However, the Group considers all relevant facts and circumstances in assessing whether it has power over an investee.

The Group re-assesses whether or not it controls an investee if facts and circumstances indicate

that there are changes to one or more of the three elements of control. Consolidation of a subsidiary begins when the Group obtains control over the subsidiary and ceases when the Group loses control of the subsidiary. Assets, liabilities, income and expenses of a subsidiary acquired or disposed of during the year are included in the consolidated financial statements from the date the Group gains control until the date the Group ceases to control the subsidiary.

Profit or loss and each component of other comprehensive income ("OCI") are attributed to the equity holders of the parent of the Group. All intra-group assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the Group are eliminated in full on consolidation.

The Group do not have ownership in joint arrangements as defined by IFRS 11, other associates, interests in unconsolidated structured entities or interests in unconsolidated subsidiaries that require disclosure under IFRS 12.

The consolidated entities

The subsidiaries of Airthings ASA are presented below:

Consolidated entities	Office	Funct. CUR	Shareholding	Group's voting ownership share
Airthings America INC	USA	USD	100%	100%
Airthings AB	Sweden	SEK	100%	100%

Airtight AS was a subsidiary of Airthings ASA as of 31 December 2020, but have in 2021 been merged with the parent company. All subsidiaries are included in the consolidated statement of financial position.

4.2 Business combinations

There have been no business combinations during 2021. In 2020, the Group acquired Airtight AS.

ACCOUNTING POLICIES

A business combination is as a transaction or other event in which an acquirer obtains control of one or more businesses. A business consists of inputs and processes applied to those inputs that have the ability to create outputs. Determining whether a particular set of assets and activities is a business should be based on whether the integrated set is capable of being conducted and managed as a business by a market participant.

Business combinations are accounted for according to IFRS 3 using the acquisition method. The cost of an acquisition is measured as the aggregate of the consideration transferred, which is measured at fair value at acquisition date according to IFRS 13, and the amount of any non-controlling interests in the acquiree. For each business combination, the Group elects whether to measure the non-controlling interests in the acquiree at fair value or at the proportionate share of the acquirees' identifiable net assets. Acquisition-related costs are expensed as incurred and included in other operating expenses.

When the Group acquires a business, it assesses the financial assets and liabilities assumed for appropriate classification and designation in accordance with the contractual terms, economic circumstances and pertinent conditions as at the acquisition date.

Any contingent consideration to be transferred by the acquirer will be recognized at fair value at the acquisition date. Contingent consideration classified as an asset or liability that is a financial instrument and within the scope of IFRS 9 Financial Instruments, is measured at fair value with the changes in fair value recognized in the statement of profit or loss.

Goodwill arises in a business combination when the fair value of consideration transferred exceeds the fair value of identifiable assets acquired less the fair value of identifiable liabilities assumed. Goodwill acquired in a business combination is allocated to each of the Group's cash-generating units that are expected to benefit from the combination irrespective of whether other assets or liabilities of the acquiree are assigned to those units, and tested subsequently for impairment.

SIGNIFICANT ACCOUNTING ESTIMATES AND ASSUMPTIONS

In a business combination, the assets acquired and liabilities assumed are valued at fair value at the time of acquisition. The various assets and liabilities are valued on the basis of different models, requiring estimates and assumptions to be made. Goodwill is the residual value in this allocation. Errors in estimates and assumptions can lead to an error in the split of the value between the various assets and liabilities incl. goodwill, but the sum of the total excess values will always be consistent with the purchase price paid.

The economic useful life of intangible assets acquired in a business combination are assessed as either finite or indefinite. Intangible assets with indefinite useful lives are subsequently tested for impairment by assessing the recoverable amount of the CGU to which the intangible assets relates, further described in note 5.2. Intangible assets with finite useful lives are amortized over the useful economic life and assessed for impairment or changes to the amortization period as described in note 5.1. The assumptions applied to determining the economic useful lives in a business combination may involve considerable estimates such as future innovations and developments to software and technology.

Determination of fair values

Fair values have been determined for initial recognition based on the following methods:

Property, plant and equipment acquired in a business combination

The fair value of items of equipment, fixtures and fittings is based on a market or cost approach using quoted market prices for similar items when available and replacement cost when appropriate.

Intangible assets acquired in a business combination

The fair value of technology acquired in a business combination is determined using the multi-period excess earnings method, whereby the subject asset is valued as a residual after deducting a fair return on all other assets that are part of creating the related cash flows.

Other current assets and liabilities acquired in a business combination

The fair value of other current assets and liabilities acquired in a business combination is determined based on the estimated selling price in the ordinary course of business less the estimated costs of completion and sale.

Acquisitions in 2020

On 21 August 2020, the Group acquired 100% of the voting shares of Airtight AS ("Airtight"). Airtight is a software company that has developed patented technology to reduce energy waste from commercial buildings. The Airtight solution is enabling a significant reduction of energy waste from buildings. The smart sensor technology monitors and balances energy waste from buildings, using existing ventilation systems.

The transaction is accounted for as a business combination in accordance with IFRS 3. The

acquisition date for accounting purposes corresponds to the date when the Group obtained control of the legal entity, on 21 August 2020.

The acquisition-date fair value of the total consideration transferred was USD 5.0 million, whereas USD 1.4 of cash and USD 3.6 million of shares in Airthings ASA. Transaction costs related to legal services of USD 5 thousands were expensed and are included in other operating expenses for 2020.

From the date of acquisition until end of 2020, Airtight AS contributed with a total of USD 25 thousands of revenue and negative USD 25 thousands to the net profit before tax. Further, total revenue of the combined entity would have been USD 20.9 million in 2020 if the business combination had occurred on 1 January 2020.

The following intangible assets outside of goodwill were identified in the Airtight acquisition, including management's expectation of economic useful life:

• Technology - 10 years

Only assets and liabilities where fair value exceeded the carrying amount under other IFRS standards are included in the summary above.

The fair value of the identifiable assets and liabilities of Airtight AS as at the date of acquisition were:

Fair value recognized on acquisition (USD 1,000)	21.08.2020
ASSETS
Non-current assets
Intangible assets - Technology	1,678
Property, plant and equipment	32
Total non-current assets	1,709
Current assets
Cash and cash equivalents	163
Other current assets*	533
Total current assets	696
Total assets	2,405

Fair value recognized on acquisition (USD 1,000)	21.08.2020
Non-current liabilities
Deferred tax liability	-336
Total non-current liabilities	-336
Current liabilities
Other current liabilities	-214
Total current liabilities	-214
Total liabilities	-550

Total identifiable net assets at fair value	-1,855
Purchase consideration transferred	5,001
Goodwill arising on acquisition	3,145

Purchase consideration transferred
Cash	1,418
Shares in Airthings ASA	3,583
Total purchase consideration transferred	5,001

* Other current assets include trade receivables with a fair value of USD 61 thousands (equals the gross contractual amounts receivable). At the date of the acquisition, the Group expected the total amount of the contractual cash flows to be collected.

Provision for deferred tax is made for the difference between acquisition cost and acquired tax base in accordance with IAS 12. Offsetting entry of this non-cash deferred tax is technical goodwill. The remaining goodwill includes the value of expected synergies arising from the acquisition and assembled workforce, which is not separately recognized.

None of the goodwill recognized is expected to

be deductible for income tax purposes.

As the Airtight system is integrated with the components of the Group's business segment and management monitors the business on this level, the goodwill arising from the transaction is allocated to the Group's business segment CGU. For impairment considerations of goodwill, reference is made to note 5.2.

Analysis of cash flows on acquisition (USD 1,000)	21.08.2020
Net cash acquired with the subsidiary	163
Cash paid	1,418
Net cash flow from acquisition	-1,255

Acquisitions in 2021

The Group did not have any acquisitions in 2021.

Acquisitions after the balance sheet date

The Group did not have any acquisitions after the balance sheet date.

Section 5 - Fixed assets

5.1 Intangible assets

Nature of the Group's intangible assets

The Group's intangible assets mainly comprise of software and systems, internal development projects and technology acquired through the acquisition of subsidiaries.

ACCOUNTING POLICIES

Intangible assets acquired

Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets acquired in a business combination is their fair value on the date of acquisition. Following initial recognition, intangible assets are carried at cost less any accumulated amortization and accumulated impairment losses.

Capitalization of internal development costs

Development expenditures on an individual project, which represents new applications, are recognized as an intangible asset when the Group can demonstrate:

The technical feasibility of completing the intangible asset so that the asset will be available for use or sale
Its intention to complete and its ability and intention to use or sell the asset
How the asset will generate future economic benefits
The availability of resources to complete the asset
The ability to measure reliably the expenditure during development

Other costs are classified as research and are expensed as incurred. These expenses are disclosed in note 2.5.

Useful lives and subsequent measurement

The useful lives of intangible assets are assessed as either finite or indefinite and may in some cases involve considerable assessments. Intangible assets with indefinite useful lives are initially measured at cost and subsequently measured at cost less any accumulated impairment losses.

Intangible assets with finite useful lives are amortized over the useful economic life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortization period and the amortization method for an intangible asset with a finite useful life are reviewed at least at the end of each reporting period. The initial assessment and review of economic useful lives requires management to make estimates and assumptions on the Group's IP and competition in the future. Changes in the expected useful life are treated as changes in accounting estimates.

(USD 1,000)	Software & systems	Technology	Goodwill	Total
Acquisition cost as at 1 January 2020	418			418
Additions through acquisitions		1,678	3,145	4,823
Additions	269			269
Currency translation effects	39	92	172	303
Acquisition cost as at 31 December 2020	727	1,770	3,317	5,814
Additions	433	141		574
Currency translation effects	-31	-47	-108	-185
Acquisition cost as at 31 December 2021	1,129	1,864	3,210	6,203
Accumulated amortization as at 1 January 2020
Amortization charge for the year	108	41		149
Currency translation effects	11	4		15
Accumulated amortization as at 31 December 2020	119	45		164
Amortization charge for the year	167	176		342
Currency translation effects	-4	-4
Accumulated amortization as at 31 December 2021	282	217		498
Net book value:
At 1 January 2020	418			418
At 31 December 2020	607	1,724	3,317	5,649
At 31 December 2021	848	1,647	3,210	5,704
Economic life (years)	5	10	Indefinite

Depreciation plan Straight-line

The additions in 2020 are mainly related to the acquisition of Airtight, in addition to a new app for the Pro segment conducted by an external consultancy. The app was completed in late 2020 and amortization commenced. Additions in 2021 relate to implementation of a subscription tool within the Airthings for Business segment.

5.2 Goodwill & impairment considerations

ACCOUNTING POLICIES

Recognized goodwill in the Group is derived from the acquisition of Airtight AS in 2020, see note 4.2 for more information.

Goodwill is an intangible asset which may not individually be recognized as an intangible asset due

to the requirements in IAS 38. The value of goodwill is primarily related to synergies, assembled workforce and their competency to generate and commercialize new technology as well as high growth expectations. Goodwill also arises due to the requirement to recognize deferred tax liabilities for the difference between the assigned values and the tax bases of assets acquired and liabilities assumed in a business combination at amounts that do not reflect fair value.

Goodwill is initially measured at cost (being the excess of the aggregate of the consideration transferred, the amount recognized for non-controlling interests, and any previous interest held over the net identifiable assets acquired and liabilities assumed).

After initial recognition, goodwill is measured at cost less any accumulated impairment losses. For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each of the Group's cash-generating units (CGUs) that are expected to benefit from the combination, irrespective of whether other assets or liabilities of the acquiree are assigned to those units.

According to IFRS 3, goodwill is to be allocated at the acquisition date, to each of the acquirer's CGUs, or groups of CGUs, which are expected to benefit from the business combination. This can include existing CGUs of the acquirer irrespective of whether other assets or liabilities of the acquiree are assigned to those units. The Goodwill from the acquisition of Airtight AS in 2020 was allocated to the business segment CGU. The key assumptions used to determine the recoverable amount of the CGU are disclosed further below.

Impairment considerations

The Group has goodwill which are subject to annual impairment testing. The testing is performed annually as at 31 December and when circumstances indicate that the carrying value may be impaired.

Impairment is determined by assessing the recoverable amount of each CGU (or group of CGUs) to which goodwill relates. When the recoverable amount of the CGU is less than its carrying amount, an impairment loss is recognized. Impairment losses relating to goodwill cannot be reversed in future periods.

An asset's recoverable amount is the higher of an asset's or CGUs fair value less costs of disposal and its value in use. When the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.

The Group applies the value-in-use model for determining recoverable amount for the purpose of goodwill impairment testing. For more information on the model and key assumptions, see description below.

Goodwill (USD 1,000)
Gross amount as at 1 January 2020
Additions through acquisition (see note 4.2)	3,145
Currency translation effects	172
Gross amount as at 31 December 2020	3,317
Currency translation effects	-108
Gross amount as at 31 December 2021	3,210

Accumulated impairment as at 1 January 2020
Impairment for the year
Accumulated impairment as at 31 December 2020
Impairment for the year
Accumulated impairment as at 31 December 2021

Carrying amount as at 1 January 2020
Carrying amount as at 31 December 2020	3,317
Carrying amount as at 31 December 2021	3,210

All of the Group's goodwill is allocated to the Business segment CGU.

SIGNIFICANT ACCOUNTING JUDGEMENTS

Business segment - CGU

For impairment testing, goodwill acquired through the business combination of Airtight was allocated to the business segment CGU. Reference is made to note 4.2 for further information on the business combination which occurred in August 2020. The business segment CGU is the smallest identifiable group of assets that generates cash inflows to the Group (that goodwill can be allocated to), and these are largely independent of the cash inflows from other assets.

Basis for determining the recoverable amount

The CGUs recoverable amount has been determined based on its value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. The cash flows are derived from detailed budget and forecast calculations for the next four years approved by the Board of Directors. Restructuring activities and significant future investments are excluded from the budgets. A long-term growth rate is calculated and applied to project future cash flows after the fifth year. The recoverable amount is sensitive to revenue growth in the forecast period, the discount rate, expected future cash flows and the terminal growth rate.

SIGNIFICANT ACCOUNTING ESTIMATES AND ASSUMPTIONS

Impairment testing of goodwill

The calculation of value in use for the CGU's are most sensitive to the following assumptions:

Revenue growth
Free cash flow margin (before tax)
Pre-tax discount rate
Terminal growth rate

Revenue growth

The expected growth in revenues are based on the expected growth in the industry and the Group's market share. The growth forecast is based on management's expectations of future conditions in the markets incl. competition. The assumption is presented as the constant average growth rate over the forecast period.

EBITDA margin

The EBITDA margin is determined from an analysis of historical levels before tax, adjusted for expected changes to employee benefit expenses, other expenses, capital expenditures and changes to working capital.

Pre-tax discount rate

The discount rate reflects the current market assessment of the risks specific to the CGU. The pre-tax discount rate is estimated based on the weighted average cost of capital (WACC).

Terminal growth rate

The terminal growth rate is the estimated long-term rate of growth in the economy where the business operates, aligned with long term global inflation targets.

The key assumptions used to determine the recoverable amount for the business CGU are presented below. The recoverable amount of the cash generating units are higher than their carrying amount and no impairment loss has been recognized in the current or prior period.

CGU	Revenue growth in	EBITDA	Terminal	Pre-tax dis
	the forecast period*	margin	growth rate	count rate
Business CGU - 31 December 2021	20.3%	9.80%	2.0 %	11.4 %

*Revenue growth rate is based on a compound annual growth rate (CAGR)

Sensitivity analysis

Future events could cause the key assumptions to deviate from the amounts used in the forecast period. The Group has performed a sensitivity analysis for each key assumption; revenue growth in the forecast period, EBITDA margin (before tax), terminal growth rate and the pre-tax discount rate. Management believes that no reasonably possible change in the key assumptions above would cause the carrying amount of the CGU to materially exceed its recoverable amount.

5.3 Property, plant and equipment

ACCOUNTING POLICIES

Property, plant and equipment ("PP&E") is stated at cost, net of accumulated depreciation and accumulated impairment losses, if any. When significant parts of PP&E are required to be replaced at intervals, the Group depreciates them separately based on their specific useful lives. All other repair and maintenance costs are recognized in profit or loss as incurred.

Depreciation is calculated on a straight-line basis over the estimated useful lives of the assets. The residual values, useful lives and methods of depreciation of PP&E are reviewed at each financial year end and adjusted prospectively, if appropriate.

The Group assesses, at each reporting date, whether there is an indication that property, plant and equipment may be impaired. If such indication exists, the Group estimates the asset's or CGUs recoverable amount. The recoverable amount is the higher of an asset's or CGUs fair value less costs of disposal and its value in use. The recoverable amount is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets.

No indicators for impairment of property, plant and equipment were identified in the current or prior period.

(USD 1,000)	Furniture and equipment	Rental instruments	Total
Acquisition cost as at 1 January 2020	372	52	425
Additions through acquisitions	47		47
Additions	378	27	404
Currency translation effects	49	4	53
Acquisition cost as at 31 December 2020	846	83	929
Additions	443	53	495
Currency translation effects	-29	-3	-31
Acquisition cost as at 31 December 2021	1,260	132	1 393
Accumulated depreciation as at 1 January 2020	149	12	161
Depreciation for the year	143	15	158
Currency translation effects	13	2	14
Accumulated depreciation as at 31 December 2020	305	29	334
Depreciation for the year	247	9	256
Currency translation effects	-6		-6
Accumulated depreciation as at 31 December 2021	545	39	584
Net book value:
At 1 January 2020	223	40	263
At 31 December 2020	541	53	595
At 31 December 2021	715	94	809
Economic life (years)	5	5
Depreciation plan		Straight-line

5.4 Right-of-use assets and lease liabilities

ACCOUNTING POLICIES

At inception of a contract, The Group assesses whether the contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.

Group as a lessee

At the commencement date, the Group recognizes a lease liability and corresponding right-of-use asset for all lease agreements in which it is the lessee, except for the following exemptions applied:

Short-term leases (defined as 12 months or less)
Low value assets (with an underlying value of less than USD 5 thousands)

For these leases, the Group recognizes the lease payments as operating expenses in the consolidated statement of comprehensive income.

Measuring the lease liability

The lease liability is initially measured at the present value of the lease payments for the right to use the underlying asset during the lease term that are not paid at the commencement date. The lease term represents the non-cancellable period of the lease, together with periods covered by an option to extend the lease when the Group is reasonably certain to exercise this option, and periods covered by an option to terminate the lease if the Group is reasonably certain not to exercise that option.

The lease payments included in the measurement comprise:

Fixed lease payments, less any lease incentives received
Variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the commencement date

The lease liability is subsequently measured by increasing the carrying amount to reflect interest on the lease liability, reducing the carrying amount to reflect the lease payments made and remeasuring the carrying amount to reflect any reassessment or lease modifications, or to reflect adjustments in lease payments due to an adjustment in and index or rate.

The Group presents its lease liabilities as separate line items in the consolidated statement of financial position.

Measuring the right-of-use asset

The right-of-use asset is initially measured at cost. The cost of the right-of-use asset includes the corresponding amount of the initial measurement of the lease liability, any lease payments made at or before the commencement date and initial direct costs incurred.

The right-of-use asset is subsequently measured at cost less accumulated depreciation and impairment losses, applying the same policies for impairment as for property, plant and equipment (note 5.3). The right-of-use asset is depreciated from the commencement date to the earlier of the lease term and the remaining useful life of the right-of-use asset. Depreciation is calculated on a straight-line basis.

The Group presents its right-of-use assets as separate line items in the consolidated statement of financial position.

Group as a lessor

The Group does also act as a lessor through the professional segment, where the Group rents out equipment on a short term basis. Such leases in which the Group does not transfer substantially all the risks and rewards incidental to ownership of an asset are classified as operating leases. The Group does not have finance leases. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognized over the lease term on the same basis as rental income.

The Group's assets under operating leases are included as property, plant and equipment and presented as rental instruments in note 5.3.

The Group's rental income under operating leases is included as revenue in the consolidated statement of profit or loss and specified in note 2.2.

The Group's leased assets

The Group leases several assets, mainly office space in Oslo and Bergen, Norway. Additionally, the Group leases office space in Stockholm, Sweden and Fort Worth, Texas, Chicago, Florida

and Massachusetts, USA. Leases of office space generally have lease terms between 3 and 10 years. The Group also leases office equipment, however, these are expensed as incurred as they are either considered short-term or of low-value.

The Group's right-of-use assets recognized in the consolidated statement of financial position are presented in the table below:

Right-of-use assets (USD 1,000)	Office space	Other	Total
Balance as at 1 January 2020	2,542	37	2,579
Additions of right-of-use assets	1 254	19	1 273
Depreciation	422	6	428
Currency translation effects	154		154
Balance as at 31 December 2020	3,528	50	3,578
Additions of right-of-use assets	1 536	1	1 537
Depreciation	728	8	737
Currency translation effects	-136		-136
Balance as at 31 December 2021	4,199	59	4,241

Economic life (years)	2-6	6
Depreciation plan	Straight-line

Expenses in the period related to practical expedients and variable payments (USD 1,000)	2021	2020
Short-term lease expenses	8	6
Low-value assets lease expenses	196	113
Variable lease expenses in the period (not included in the lease liabilities)
Total lease expenses in the period	205	120

The lease expenses in the period related to short-term leases are included in other operating expenses in the consolidated statement of comprehensive income, and the payments are presented in the Group's operating activities in the consolidated statement of cash flows.

The Group's lease liabilities

Undiscounted lease liabilities and maturity of cash outflows (USD 1,000)	31.12.2021	31.12.2020	01.01.2020
Less than one year	999	649	394
1-2 years	994	650	450
2-3 years	1,001	643	455
3-4 years	1,010	635	455
More than four years	1,312	1,513	1,532
Total undiscounted lease liabilities	5,316	4,090	3,285

Changes in the lease liabilities (USD 1,000)	Total
At first time adoption at 1 January 2020	2,579
New leases recognized during the period	1,273
Cash payments for the principal portion of the lease liability	-302
Cash payments for the interest portion of the lease liability	-149
Interest expense on lease liabilities	149
Currency translation effects	166
Total lease liabilities at 31 December 2020	3,716
Current lease liabilities in the statement of financial position	473
Non-current lease liabilities in the statement of financial position	3,243

Changes in the lease liabilities (USD 1,000)	Total
At 1 January 2021	3,716
New leases recognized during the period	1,537
Cash payments for the principal portion of the lease liability (financing activities)	-636
Cash payments for the interest portion of the lease liability (operating activities)	-217
Interest expense on lease liabilities	217
Currency translation effects	-144
Total lease liabilities at 31 December 2021	4,473
Current lease liabilities in the statement of financial position	670
Non-current lease liabilities in the statement of financial position	3,803

Lease commitments not included in the lease liabilities

Inflation adjustments

In addition to the lease liabilities presented above, the Group is committed to pay variable lease payments for its office buildings, mainly related to future inflation adjustments which is not included in the initial calculation of lease liabilities. The lease liability and right-of-use asset will be adjusted to reflect the inflation adjustment when the uncertainty related to the adjustment has been resolved, however, due to low inflation forecasts these adjustments are expected to be immaterial.

Extension and termination options

The Group has some lease contracts that include extension and termination options. These options are negotiated by management to provide flexibility in managing the Group's business needs. The Group did not include the extension period for leases as part of the lease term when management were not reasonably certain to exercise the option to extend the leases. Furthermore, the periods covered by termination options are included as part of the lease term only when they are reasonably certain not to be exercised.

Other matters

The Group's leases does not contain provisions or restrictions that impacts that Group's dividend policies or financing possibilities.

Section 6 - Financial instruments and equity

6.1 Overview of financial instruments

ACCOUNTING POLICIES

A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.

Classification of financial instruments

The Group's financial instruments are grouped in the following categories:

Financial Assets

Financial assets measured subsequently at amortized cost:

This includes mainly trade receivables and cash and cash equivalents.

In order for a financial asset to be classified and measured at amortized cost or fair value through OCI, it needs to give rise to cash flows that are 'solely payments of principal and interest (SPPI)' on the principal amount outstanding. This assessment is referred to as the SPPI test and is performed at an instrument level. All of the Group's financial assets (i.e. trade receivables and cash and cash equivalents) are part of the Group's business model with the sole objective to collect contractual cash flows. Additionally, the contractual terms of the financial assets, primarily applicable to trade receivables, give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding, thereby passing the SPPI test.

Reference is made to note 3.2 for information about the Group's policies related to estimating expected credit losses.

Financial Liabilities

Financial liabilities measured subsequently at amortized cost:

Represent the Group's interest-bearing liabilities as well as non-interest bearing liabilities such as trade payables.

The Group does not have derivative financial instruments. None of the Group's financial liabilities are designated as at fair value through profit or loss, i.e. they are all measured at amortized cost.

Initial recognition and subsequent measurement

The Group's financial assets and liabilities are initially recognized at fair value plus directly attributable transaction expenses.

Subsequently, these instruments are measured at amortized cost using the effective interest method (EIR). Gains and losses are recognized in profit or loss upon impairment, when the instruments are derecognized as well as through the EIR amortization process.

Impairment of financial assets

Financial assets measured at amortized cost are considered for impairment by recognizing an allowance for expected credit losses (ECLs). The Group applies a simplified approach (as applicable for trade receivables) in calculating ECLs, where the Group does not track changes in credit risk, but instead recognizes a loss allowance based on lifetime ECLs at each reporting date. The Group bases its ECLs on its historical losses, adjusted for forward-looking factors specific to the debtors and the economic environment (e.g. market trends, default rates in the retail market etc.).

Derecognition of financial instruments

A financial asset is derecognized when the rights to receive cash flows from the asset have expired, the Group has transferred its rights to receive cash flows from the asset or the Group

has assumed an obligation to pay the received cash flows in full under a "passthrough" arrangement.

A financial liability is derecognized when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms or the terms of an existing liability are substantially

modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognized in the consolidated statement of comprehensive income.

The carrying amount of the Group's financial assets and liabilities are presented in the tables below:

31 December 2021 (USD 1,000)	Note	Financial instruments at amortized cost	Total
Assets
Trade receivables	3.2	11,850	11,850
Cash and cash equivalents	6.6	42,174	42,174
Total financial assets		54,024	54,024
Liabilities
Non-current interest-bearing liabilities	6.2
Current interest-bearing liabilities	6.2
Trade payables	3.4	4,775	4,775
Non-current lease liabilities	5.4	3,803	3,803
Current lease liabilities	5.4	670	670
Total financial liabilities		9,248	9,248

Significant finance income and finance costs arising from the Group's financial instruments are disclosed separately in note 2.7.

31 December 2020 (USD 1,000)	Note	Financial instruments at amortized cost	Total
Assets
Trade receivables	3.2	7,000	7,000
Cash and cash equivalents	6.6	62,943	62,943
Total financial assets		69,944	69,944
Liabilities
Non-current interest-bearing liabilities	6.2
Current interest-bearing liabilities	6.2	1,901	1,901
Trade payables	3.4	2,788	2,788
Non-current lease liabilities	5.4	3,243	3,243
Current lease liabilities	5.4	473	473
Total financial liabilities		8,405	8,405

1 January 2020 (USD 1,000)	Note	Financial instruments at amortized cost	Total
Assets
Trade receivables	3.2	4,640	4,640
Cash and cash equivalents	6.6	5,589	5,589
Total financial assets		10,229	10,229
Liabilities
Non-current interest-bearing liabilities	6.2	2,037	2,037
Current interest-bearing liabilities	6.2
Trade payables	3.4	1,384	1,384
Non-current lease liabilities	5.4	2,319	2,319
Current lease liabilities	5.4	260	260
Total financial liabilities		6,000	6,000

6.2 Interest-bearing liabilities

Specification of the Group's interest-bearing liabilities

Non-current interest-bearing liabilities (USD 1,000)	Interest rate	Maturity	01.01.2020
Term loan, DNB (NOK)	8.50%	01.08.2022*	1,012
Term loan, Innovation Norway (NOK)	4.45%	10.01.2026**	1,025
Total non-current interest-bearing liabilities			2,037

Current interest-bearing liabilities (USD 1,000)	Interest rate	Maturity	31.12.2020
Term loan, DNB (NOK)	8.50%	01.08.2022*	846
Term loan, Innovation Norway (NOK)	4.45%	10.01.2026**	1,055
Total current interest-bearing liabilities			1,901

* In mid 2019, the Group entered a loan agreement with DNB and received funds of USD 1,125 thousands on 1 August 2019. The term loan was initially repaid in monthly installments over three years with an interest rate of 8.5%, but was settled in full in January 2021.

** In 2018, the Group entered into a loan agreement with Innovation Norway and received of USD 1,025 thousands on 9 January 2019. The term loan was initially repaid in quarterly installments over five years starting from 10 January 2021 with an interest rate of 4.45%, but was settled in full in January 2021.

The reconciliation of changes in liabilities incurred as a result of financing activities are presented in note 6.10. Assets pledged as security for loans and borrowings are presented in the table below:

Assets pledged as security & guarantee liabilities (USD 1,000)	31.12.2021	31.12.2020	01.01.2020
Secured balance sheet liabilities:
Interest-bearing liabilities to financial institutions		1,901	2,037
Value of assets pledged as security for secured liabilities:
Trade receivables	1,134	2,227	2,164
Inventories	1,134	2,227	2,164
Property, plant and equipment	1,134	2,227	2,164
Total assets pledged as security	3,402	6,680	6,492

The Group has not given any guarantees to or on behalf of third parties in the current and previous period.

6.3 Ageing of financial liabilities

Contractual undiscounted cash flows from financial liabilities is presented below:

		Remaining contractual maturity
31.12.2021 (USD 1,000)	Note	1-12 months	1-2 years	2-3 years	3-4 years	More than 4 years	Total
Financial liabilities
Non-current interest-bearing liabilities	6.2
Current interest-bearing liabilities	6.2
Trade and other payables	3.4	7 027					7,027
Non-current lease liabilities	5.4		994	1,001	1,010	1,312	4,316
Current lease liabilities	5.4	999					999
Total financial liabilities		8 026	994	1,001	1,010	1,312	12,343

		Remaining contractual maturity
31.12.2020 (USD 1,000)	Note	1-12 months	1-2 years	2-3 years	3-4 years	More than 4 years	Total
Financial liabilities
Non-current interest-bearing liabilities	6.2
Current interest-bearing liabilities	6.2	1,901					1,901
Trade and other payables	5.4	4,139					4,139
Non-current lease liabilities	5.4		650	643	635	1,513	3,441
Current lease liabilities	5.4	649					649
Total financial liabilities		6,689	650	643	635	1,513	10,130

		Remaining contractual maturity
01.01.2020 (USD 1,000)	Note	1-12 months	1-2 years	2-3 years	3-4 years	More than 4 years	Total
Financial liabilities
Non-current interest-bearing liabilities	6.2			1,012		1,025	2,037
Current interest-bearing liabilities	6.2
Trade and other payables	5.4	2,301					2 301
Non-current lease liabilities	5.4		450	455	455	1,532	2,891
Current lease liabilities	3.4	394					394
Total financial liabilities		2,695	450	1 467	455	2,557	7,623

6.4 Financial risk management

Overview

The Group's principal financial liabilities comprise lease liabilities and trade and other payables. The main purpose of these financial liabilities is to finance the Groups' operations. The Group's principal financial assets include trade receivables, and cash and short-term deposits that derive directly from its operations.

Market risk

Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk for the Group comprises two types of risk: interest rate risk and currency risk. Financial instruments affected by market risk include interest bearing debt, cash and cash and cash equivalents, trade receivables, lease liabilities and trade and other payables.

Interest rate risk

Interest rate sensitivity

The sensitivity to a possible change in interest rates, with all other variables held constant, on the Group's profit before tax, is illustrated below. In calculating the sensitivity analyses, the Group assumes that the sensitivity of the relevant statement of profit or loss item is the effect of the assumed changes in respective financial risks.

Interest rate sensitivity	Increase / decrease in basis points	Effect on profit before tax (USD 1,000)
31 December 2021	+/- 50
31 December 2020	+/- 50	10
1 January 2020	+/- 50	10

Foreign currency risk

Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign exchange rates. The Group is exposed to currency fluctuations due to the international nature of its operations. The Group's exposure to the risk of fluctuations in foreign exchange rates relates primarily to the Group's operating activities (revenue and expenses denominated in a foreign currency) and the Group's net investments in foreign subsidiaries. A significant part of revenues is denominated in USD, with a small portion incurred in NOK, EUR and CAD. Most of its operating expenses are incurred in NOK. Further, the Group could also potentially be negatively affected by fluctuations in other currencies in the future. The Group does not currently hedge currency exposure with the use of financial instruments but monitors the net exposure over time.

Foreign currency sensitivity

The following table illustrates the sensitivity for a hypothetical increase or decrease in the foreign exchange rates related to the Group's financial assets and liabilities in the period, holding all other variables constant:

Foreign currency sensitivity	Date	Change in FX rate	Effect on profit before tax (USD 1,000)
Increase / decrease in NOK/USD	31.12.2021	+/- 10%	526
Increase / decrease in NOK/USD	31.12.2020	+/- 10%	502
Increase / decrease in NOK/USD	01.01.2020	+/- 10%	362

Foreign currency sensitivity	Date	Change in FX rate	Effect on profit before tax (USD 1,000)
Increase / decrease in NOK/CAD	31.12.2021	+/- 10%	470
Increase / decrease in NOK/CAD	31.12.2020	+/- 10%	115
Increase / decrease in NOK/CAD	01.01.2020	+/- 10%	41

Foreign currency sensitivity	Date	Change in FX rate	Effect on profit before tax (USD 1,000)

Increase / decrease in NOK/EUR	31.12.2021	+/- 10%	267
Increase / decrease in NOK/EUR	31.12.2020	+/- 10%	216
Increase / decrease in NOK/EUR	01.01.2020	+/- 10%	97

Credit risk

The credit risk is low in the Consumer segment, where most sales are based on upfront or simultaneous payment, and the Group may also seek advance payments to offset risk on trade receivables in the other segments. The Group has close connection with its customers and receivable balances are monitored on an ongoing basis. It is the Group's policy that all customers wishing to trade on credit terms are subject to credit verification procedures, which include an assessment of credit rating, short-term liquidity, and financial position.

The Group's exposure to losses have historically been low. However, the increased operations of the Group outside the US and home market exposes Airthings to different credit risk environments. The Board of Directors deems credit risk to be at an acceptable level given the current operational circumstances and outlook of the Group.

An impairment analysis is performed at each reporting date to measure expected credit losses. The provision rates are based on days past due, product type, customer type and rating, and coverage by letters of credit or other forms of credit insurance. For an overview of the ageing of trade receivables and the expected credit losses recognized for trade receivables see note 3.2.

Liquidity risk

Liquidity represents the risk that the Group may potentially encounter difficulties in meeting obligations associated with financial liabilities that are settled by provision of cash or another financial asset. The Group supervises its risk by monitoring its working capital, and overdue trade receivables. The Group has a strong cash position of USD 42 million, which the Board of Directors consider sufficient to fund the Group's growth strategy towards in long-term revenue targets. The liquidity risk is hence considered to be limited.

An overview of the maturity profile of the Group's financial liabilities with corresponding cash flow effect is presented in note 6.3 and 6.10.

6.5 Fair value measurement

ACCOUNTING POLICIES

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:

In the principal market for the asset or liability, or

In the absence of a principal market, in the most advantageous market for the asset or liability

The principal or the most advantageous market must be accessible by the Group.

The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest. A fair value measurement of a non-financial asset takes into account a market participant's ability to generate economic benefits by using the asset in its highest and best use or by selling it to another participant that would use the asset in its highest and best use.

The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs.

All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorized within the fair value hierarchy, described as follows, based on the lowest level

input that is significant to the fair value measurement as a whole:

Level 1 Quoted (unadjusted) market prices in active markets for identical assets or liabilities
Level 2 Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable
Level 3 Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable

Fair value disclosures

Management has assessed that the fair values of cash and short-term deposits, trade and other receivables, trade payables and other current liabilities approximate their carrying amounts largely due to the short-term maturities of these instruments and the current risk free interest rates.

Interest-bearing liabilities

The fair values of the Group's interest-bearing loans and borrowings are determined by using the discounted cash flow (DCF) method using a discount rate that reflects the issuer's borrowing rate as at the end of the reporting period. The own non-performance risk as at 31 December 2021 was assessed to be insignificant.

Set out below is a comparison, by class, of the carrying amounts and fair values of the Group's financial instruments, other than those with carrying amounts that are reasonable approximations of fair values:

Liabilities disclosed at fair value (USD 1,000)	Date	Carrying amount	Fair value	Level 2
Interest-bearing liabilities (note 6.2)	31.12.2021
Interest-bearing liabilities (note 6.2)	31.12.2020	1,901	1,901	X
Interest-bearing liabilities (note 6.2)	01.01.2020	2,037	2,037	X

The Group had no interest-bearing debt as of 31 December 2021.

6.6 Cash and cash equivalents

ACCOUNTING POLICIES

Cash and cash equivalents in the statement of financial position comprise cash at banks and short-term deposits with a maturity of three months or less, which are subject to an insignificant risk of changes in value. For the purpose of the consolidated statement of cash flows, cash and cash equivalents consist of cash and shortterm deposits. Restricted bank deposits comprise of cash for withholding taxes which may not be used for other purposes, in addition to restricted funds related to a credit agreement with DNB MasterCard and restricted deposits in Nordea.

Cash and cash equivalents (USD 1,000)	31.12.2021	31.12.2020	01.01.2020
Bank deposits, unrestricted	40,846	61,800	5,352
Bank deposits, restricted	1,328	1,143	238
Total cash and cash equivalents	42,174	62,943	5,589

Bank deposits earns a low interest at floating rates based on the bank deposit rates.

6.7 Share capital and shareholders information

For the purpose of the Group's capital management, capital includes issued capital, share premium and all other equity reserves attributable to the equity holders of the parent. The primary objective of the Group's capital management is to ensure that it maintains a healthy working capital and financial stability in order to support its growing business operations and to

maximize shareholder value.

The Group manages its capital structure and makes adjustments in light of changes in economic conditions. To maintain or adjust the capital structure, the Group may adjust the dividend payment to shareholders, return capital to shareholders, issue new shares or issue debt. The Group monitors capital using an equity ratio, which is 'Total equity' divided by 'Total assets'.

(USD 1,000)	31.12.2021	31.12.2020	01.01.2020
Total Equity	67,842	76,648	10,300
Total Assets	83,680	90,976	19,190
Equity ratio	81%	84%	54%

ACCOUNTING POLICIES

Treasury shares

Own equity instruments that are reacquired (treasury shares) are recognized at cost and deducted from equity. No gain or loss is recognized in profit or loss on the purchase, sale, issue or cancellation of the Group's own equity instruments. Any difference between the carrying amount and the consideration, if sold, is recognized as other equity.

Costs related to equity transactions

Direct and incremental transaction costs are deducted from equity, net of associated income tax.

Distribution to shareholders

The Group recognizes a liability to make distributions to equity holders when the distribution is authorized and the distribution is no longer at the discretion of the Group. As per the corporate laws of Norway, a distribution is authorized when it is approved by the shareholders. A corresponding amount is recognized directly in equity. No distributions were made to shareholders in the current or prior period. Further, there are no proposed dividends.

The ultimate parent

Airthings ASA is the ultimate parent of the Group.

Share capital in Airthings ASA	Number of shares authorized and fully paid	Par value per share (NOK)	Financial Position (USD 1,000)
At 1 January 2020	567 729	1.00	65
Share capital increase - April 2020	55 658	1.00	5
Share capital increase - July 2020	18 466	1.00	2
Share capital increase - August 2020	21 453	1.00	2
Share capital increase - October 2020	663 306	1.00	71
Share split (1:200) - October 2020	131 334 588
Share capital increase - October 2020	37 037 037	0.01	41
Share capital increase - October 2020	608 000	0.01	1
Share capital increase - November 2020	299 400	0.01	0
At 31 December 2020	170 605 637	0.01	188
Share capital increase - February 2021	523 400	0.01	1
Share capital increase - April 2021	112 900	0.01	0
Share capital increase - July 2021	289 600	0.01	0
Share capital increase - October 2021	284 900	0.01	0
At 31 December 2021	171 816 437	0.01	190

Issued capital and reserves:

All shares are ordinary and have the same voting rights and rights to dividends. Reconciliation of the Group's equity is presented in the statement of changes in equity.

Purchase and sale of treasury shares

The Group's treasury shares were settled in connection with the listing at Euronext Growth in 2020.

The Group's shareholders:

Shareholders in Airthings ASA at 31.12.2021	Total shares	Ownership/Voting rights
Firda AS	25 826 543	15%
Verdipapirfondet KLP AksjeNorge	7 762 222	5%
Rabakken Invest AS	5 800 364	3%
Atlas Invest AS	5 637 468	3%
Halvor Wøien	4 879 522	3%
Erlend Peter Johnsen Bolle	4 819 722	3%
Victoria India Fund AS	4 558 131	3%
J.P. Morgan Bank Luxembourg S.A.	4 433 967	3%
Bjørn Magne Sundal	4 364 999	3%
Koki Yoshioka	4 166 650	2%
JPMorgan Chase Bank	4 000 000	2%
Verdipapirfondet EIKA Spar	3 382 067	2%
Skandinaviska Enskilda Banken AB	3 025 292	2%
Skilling Systemer AS	3 000 000	2%
Danske Invest Norge Vekst	2 962 962	2%
Møsbu AS	2 814 236	2%
Verdipapirfondet Storebrand Norge	2 657 876	2%
Longfellow Invest AS	2 453 534	1%
Nore-Invest AS	2 450 659	1%
Storlien Invest AS	2 427 533	1%
Other	70 392 690	41%
Total	171 816 437	100%

Shares held by management and the Board of Directors at the end of the reporting period is disclosed in note 7.1.

Shareholders in Airthings ASA at 31.12.2020	Total shares	Ownership/Voting rights
Firda AS	24 949 613	15%
Rabakken Invest AS	8 300 364	5%
Verdipapirfondet KLP Aksjenorge	8 062 222	5%
Atlas Invest AS	5 637 468	3%
Verdipapirfondet Norge Selektiv	4 984 704	3%
Bjørn Magne Sundal	4 851 853	3%
Halvor Wøien	4 829 522	3%
Erlend Peter Johnsen Bolle	4 819 722	3%
Skilling Systemer AS	4 350 763	3%
J.P. Morgan Bank Luxembourg S.A.	4 258 660	2%
Koki Yoshioka	4 166 650	2%
JPMorgan Chase Bank, N.A., London	4 000 000	2%
Danske Invest Norge Vekst	2 962 962	2%
Verdipapirfondet DNB Norge	2 962 962	2%
Storebrand Norge I Verdipapirfond	2 901 978	2%
Møsbu AS	2 814 236	2%
HSBC Trinkaus & Burkhardt AG	2 770 974	2%
Verdipapirfondet DNB SMB	2 664 451	2%
Longfellow Invest AS	2 427 534	1%
Storlien Invest AS	2 427 533	1%
Other	65 461 466	38%
Total	170 605 637	100%

Shares held by management and the Board of Directors at the end of the reporting period is disclosed in note 7.1.

Shareholders in Airthings ASA at 01.01.2020	Total shares	Ownership/Voting rights
Firda AS	146 876	26%
Rabakken Invest AS	49 140	9%
Atlas Invest AS	41 600	7%
Halvor Wøien	30 061	5%
Erlend Peter Johnsen Bolle	30 000	5%
Bjørn Magne Sundal	30 000	5%
Longfellow Invest AS	29 685	5%
Skilling Systemer AS	27 081	5%
Other	183 286	32%
Total	567 729	100%

Shares held by management and the Board of Directors at the end of the reporting period is disclosed in note 7.1.

6.8 Share-based payments

ACCOUNTING POLICIES

Employees (including members of the Board and management) of the Group receive remuneration in the form of share-based payments, whereby employees render services as consideration for equity instruments (equitysettled transactions).

Equity-settled transactions

The cost of equity-settled transactions is determined by the fair value at the date when the grant is made using

an appropriate valuation model (the Black-Scholes-Merton Model).

That cost is recognized in employee benefits expense, together with a corresponding increase in equity (other capital reserves), over the period in which the service and, where applicable, the performance conditions are fulfilled (the vesting period). The cumulative expense recognized for equity-settled transactions at each reporting date until the vesting date reflects the extent to which the vesting period has expired and the Group's best estimate of the number of equity instruments that will ultimately vest. The expense or credit in the statement of profit or loss for a period represents the movement in cumulative expense recognized as at the beginning and end of that period.

Service and non-market performance conditions are not taken into account when determining the grant date fair value of awards, but the likelihood of the conditions being met is assessed as part of the Group's best estimate of the number of equity instruments that will ultimately vest. Market performance conditions are reflected within the grant date fair value. Any other conditions attached to an award, but without an associated service requirement, are considered to be non-vesting conditions. Non-vesting conditions are reflected in the fair value of an award and lead to an immediate expensing of an award unless there are also service and/or performance conditions.

No expense is recognized for awards that do not ultimately vest because non-market performance and/or service conditions have not been met. Where awards include a market or non-vesting condition, the transactions are treated as vested irrespective of whether the market or non-vesting condition is satisfied, provided that all other performance and/or service conditions are satisfied.

Share option plans - description

Option scheme 2018

Under the Group's share option plan from 2018, rights to purchase Airthings ASA shares at a specific price are granted to members of the Board, management and employees of the Group. Each option grant vest as follows: 25% of the options are vested 12 months from the grant date, then 1/48 vest each month thereafter. Full vesting occurs after four years and last possible exercise is 10 years from grant date.

Option scheme 2021

Options granted after the Annual General Meeting 2021 vests with equal tranches with 25% each year starting on the first anniversary of the grant date. The options can be exercised after they are fully vested until they expire 5 years after the grant date.

The Group accounts for the share options under the two option schemes as equity-settled transactions, measured by applying the Black-Scholes-Merton option-pricing model for European options ("BSM"). Share options held by members of the Board and management at the end of the reporting period are summarized in note 7.1.

The fair value of the options were determined at the grant dates and expensed over the vesting period. USD 608 thousands was expensed as employee benefit expenses in the period (USD 460 thousands in 2020). The expected future social security tax on share based payments are recorded as a liability and disclosed in note 3.5.

Movements during the year

The following table illustrates the number and weighted average exercise prices (WAEP) of, and movements in, share options during the year:

	2021 WAEP (NOK)	2021	2020 WAEP (NOK)	2020
Outstanding options 1 January	2.08	9 715 824	1.42	9 541 600
Options granted	9.36	1 744 156	5.00	1 690 824
Options forfeited	4.71	-372 923	1.49	-352 400
Options exercised*	1.40	-1 210 800	1.11	-1 164 200
Options expired
Outstanding options 31 December		9 876 257		9 715 824

Exercisable at 31 December

* The weighted average exercise price at the date of exercise of these options was NOK 1.40 in 2021, and NOK 1.11 in 2020.

The weighted average remaining contractual life for the options outstanding as at 31 December 2021 was 6.06 years (2020: 7.27 years). The weighted average fair value of options granted during the year was NOK 4.05 (2020: NOK 3.46).

Overview of outstanding options at 31.12.2021:

Exercise price (NOK)	Number of outstanding options	Weighted Average remaining contractual life	Number of options exercisable
0.00 - 2.00	5 226 600	5.34	4 747 800
2.00 - 4.00	2 427 000	7.70	1 265 800
4.00 - 6.00	120 000	8.58	29 600
6.00 - 8.00	281 800	8.68	132 064
8.00 - 10.00	1 447 874	4.60	2 708
10.00 - 12.00	106 971	6.69	2 845
12.00 -	266 012	9.13	23 792
Outstanding options 31 December	9 876 257		6 204 609

Exercise price (NOK)	Number of outstanding options	Weighted Average remaining contractual life	Number of options exercisable
0.00 - 2.00	6 162 000	6.32	4 901 800
2.00 - 4.00	2 923 000	8.75	592 800
4.00 - 6.00	160 000	9.62
6.00 - 8.00	380 000	9.68
8.00 - 10.00
10.00 - 12.00	10 509	9.88
12.00 -	80 315	9.92
Outstanding options 31 December	9 715 824		5 494 600

Overview of outstanding options at 31.12.2020:

SIGNIFICANT ACCOUNTING ESTIMATES AND ASSUMPTIONS

Estimating fair value for share-based payment transactions requires determination of the most appropriate valuation model, which depends on the terms and conditions of the grant. This estimate also requires determination of the most appropriate inputs to the valuation model including the expected life of the options, volatility and dividend yield and making assumptions about them. Due to limited historical data and liquidity these assumptions include significant estimates by management.

Assumptions used to determine fair value of option grants:

The following table list the inputs to the model used for the plans for the years ended 31 December 2021 and 31 December 2020, respectively:

	2021	2020
Weighted average fair values at the measurement date (NOK)	4.05	3.46
Dividend yield (%)	0%	0%
Expected volatility (%)	45.6%	48.9%
Risk–free interest rate (%)	1.20%	0.95%
Expected life of share options (years)	5.79	9.99
Weighted average share price (NOK)	9.67	5.66
Weighted average exercise price (NOK)	9.36	5.08
Model used	BSM	BSM

The expected life of the options is based on historical data and current expectations and is not necessarily indicative of exercise patterns that may occur. The expected volatility reflects the assumption that the historical volatility over a period similar to the life of the options is indicative of future trends, which may not necessarily be the actual outcome.

Exercise of options are subject to social security taxes (SST). For SST-provisions, see note 3.5.

6.9 Earnings per share

ACCOUNTING POLICIES

Basic EPS is calculated by dividing the profit for the year attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding during the year.

Diluted EPS is calculated by dividing the profit attributable to ordinary equity holders of the

parent by the weighted average number of ordinary shares outstanding during the year plus the weighted average number of ordinary shares that would be issued on conversion of all the dilutive potential ordinary shares into ordinary shares.

The following table reflects the income and share data used in the EPS calculations:

(Profit or loss in USD)	2021	2020
Profit or loss attributable to ordinary equity holders - for basic EPS	-7 260 506	-4 130 864
Profit or loss attributable to ordinary equity holders adjusted for the effect of dilution*	-7 260 506	-4 130 864
Weighted average number of ordinary shares - for basic EPS	171 306 689	131 891 490
Weighted average number of ordinary shares adjusted for the effect of dilution	178 442 358	140 197 370
Basic EPS - profit or loss attributable to equity holders of the parent	-0.04	-0.03
Diluted EPS - profit or loss attributable to equity holders of the parent*	-0.04	-0.03

*The ordinary shares are not adjusted for the effect of dilution as the effect of including the additional shares is antidilutive.

6.10 Changes in liabilities arising from financing activities

Reconciliation of changes in liabilities incurred as a result of financing activities:

				Non-cash changes
2021 (USD 1,000)	Note	01.01. 2021	Cash flow effect	New leases	Foreign exchange movement	Other changes	31.12. 2021
Non-current interest-bearing liabilities	6.2
Current interest-bearing liabilities	6.2	1 901	-1 905			4
Lease liabilities	5.4	3 716	-853	1 537	-144	217	4 473
Total liabilities from financing		5 617	-2 758	1 537	-144	221	4 473

				Non-cash changes
2020 (USD 1,000)	Note	01.01. 2021	Cash flow effect	New leases	Foreign exchange movement	Other changes	31.12. 2021
Non-current interest-bearing liabilities	6.2	2 037	-284		41	-1 795
Current interest-bearing liabilities	6.2					1 901	1 901
Lease liabilities	5.4	2 579	-451	1 273	166	149	3 716
Total liabilities from financing		4 616	-735	1 273	207	255	5 617

Section 7 - Other disclosures

7.1 Remuneration to Management and Board

Remuneration to the Board of Directors

Remuneration for the members of the Board is determined by the Annual General Meeting (AGM). The remuneration is not linked to the Group's performance but reflects the Board's responsibilities, expertise, time and commitment. Remuneration of the Board of Directors consist of a fixed annual fee, and was adopted by the General Meeting on May 5, 2021. Annual remuneration is USD 23 thousands for the Chairman and USD 23 thousands for Board Members, whereof 50% shall be paid out in advance and 50% in arrears. Employee representatives do not receive remuneration nor share options for board participation.

Remuneration to the management team

The Board of Airthings ASA determines the principles applicable to the Group's policy for compensation to the management team. The Board is directly responsible for determining the CEO's salary and other benefits. The Group's management team includes the Chief Executive Officer ("CEO"), the Chief Operating Officer ("COO"), the Chief Product Officer ("CPO"), the Chief Marketing Officer ("CMO"), the Chief Financial Officer ("CFO"), the SVP Airthings for Business, SVP Airthings for Consumer, and the Director of Human Resources ("Director of HR").

Principles for determining base salary

The main principle for determining base salary for each member of the management team has been a fixed annual salary with the addition of benefits in kind such as telephone, insurance and internet subscription subscription. The fixed salary has been determined on the basis of the following factors: competitive salary level, scope of work and responsibilities, as well as an assessment of

the business and individual performance.

Bonus

In addition to base salary, the CEO and COO has a performance based bonus agreement up to 40% (CEO) and 30% (COO) of base salary. The criteria for bonus realization is determined 50% on achievement of KPIs, and 50 % is discretionary set by the Board. SVP Airthings for Business and SVP Consumer products have an agreement of bonus up to 30% of base salary. The criteria for bonus achievement is based on the sales teams total budget. The other part of the management team has an agreement of bonus up to USD 14 thousands with criteria for realization on a wide number of KPI targets.

Pension

All members of the management team are part of the defined contribution pension scheme.

Share-based payment benefits

Members of the management team and members of the Board have been granted share options under the Group's share option plan, described in note 6.8. The share options held by the management team is summarized further below.

Severance Arrangements

If the CEO is terminated by the Board, he is not entitled to severance pay outside of the ordinary notice period of 3 months. Similarly, there are no agreements for severance pay for the other members of the management team, outside of the ordinary notice period of 3 months.

Loans and guarantees

No loans have been granted and no guarantees have been issued to members of the management team or any member of the Board of Director in the current or prior reporting period.

Name	Title	Salary	Bonus	Pension	Other	Total
Øyvind Birkenes	CEO	228	49	8	1	286
Magnus Navdal Bekkelund	CFO 2	63		2		65
Audhild Andersen Randa	COO 2	63		2		65
Erlend Bolle	CPO	137	8	7	1	153
Lauren Pedersen	CMO	159	8	8	1	176
Torje Carlsson	SVP, Airthings for Consumer	152	39	8	1	200
Pål Berntsen	SVP, Airthings for Business	151	40	8	1	200
Erik Lundby	Former CFO 3	80	8	6		94
Koki Yoshioka	Former COO 3	82	8	7	1	98
Jonas Olsson	Former VP R&D Hardware Products 3	83	8	8	1	100
Alexander Sagen	Former VP R&D Software Solutions 3	65	8	6	3	82
Total		1 262	177	68	12	1 519

Remuneration to the management team for the year ended 31 December 2021 (USD 1,000 1):

1 Compensation is paid in NOK, with the USD equivalent determined based on the average exchange rate during the year.

2 Compensation is only reflected for the period that the executive was a part of management which was from 1 August, 2021.

3 Compensation is only reflected for the period that the executive was a part of management which was until 31 July, 2021.

Name	Title	Salary	Bonus	Pension	Other 2	Total
Øyvind Birkenes	CEO	182	38	6	731	957
Erlend Bolle	CTO	120	5	5	1	132
Koki Yoshioka	COO	125	5	6	1	137
Lauren Pedersen	CMO	112		6	17	135
Erik Lundby	CFO	45		2		47
Pål Berntsen	SVP, Airthings for Business	130	37	6	29	202
Torje Carlsson	SVP, Airthings for Consumer	132	36	6	1	175
Jonas Olsson	VP R&D Hardware Products	84		6	1	90
Alexander Sagen	VP R&D Software Solutions	96	5	4	13	118
Total		1 025	128	46	795	1 995

Remuneration to the management team for the year ended 31 December 2020 (USD 1,000 1):

1 Compensation is paid in NOK, with the USD equivalent determined based on the average exchange rate during the year.

2 Other compensation includes exercised options during the period (excluding social security tax). The following members of the management team exercised options during 2020: Øyvind Birkenes: 608,000 options (strike price: NOK 0.51 - 3.36). Pål Berntsen: 27,000 options (strike price: NOK 1.45). Alexander Sagen: 10,000 options (strike price: NOK 0.70)

Name	Title	2021	2020 6
Aksel Lund Svindal	Chairman of the Board 2	12
Geir Førre	Board member 3	12	19
Liv Dyrnes	Board member	12	11
Lars Boilesen	Board member	12	11
Emma Tryti	Board member 4
Karin Berg	Board member 4
Anlaug Underdal	Board member - Employee representative		8
Tore Rismyhr	Board member - Employee representative		14
Audhild Andersen Randa	Former Board member 5		11
Total compensation to Board of Directors		48	74

Remuneration to the Board of Directors for the year ended 31 December (USD 1,000 1):

1 Compensation is paid in NOK, with the USD equivalent determined based on the average exchange rate during the year.

2 Board member in 2020

3 Chairman of the Board in 2020

4 New board member from the extraordinary general meeting held on 28 October, 2021.

5 Board member until July 2021

6 Total remuneration includes remuneration related to options exercised during the period. The following Board members exercised options during 2020 (no exercises in 2021): Anlaug Underdal: 13,000 options (strike price: NOK 0.70). Tore Rismyhr: 16,200 options (strike price: NOK 3.36)

Shares held by the management team:

Name	Title	31.12.2021	31.12.2020
Øyvind Birkenes 1	CEO	2 824 114	2 798 114
Magnus Navdal Bekkelund	CFO	7 500
Audhild Andersen Randa	COO	25 000
Erlend Bolle	CPO	4 819 722	4 819 722
Lauren Pedersen 2	CMO	315 621	255 400
Torje Carlsson ³	SVP Airthings for Consumer	360 000	360 000
Pål Berntsen 4	SVP Airthings for Business	518 200	518 200
Erik Lundby 5	Former CFO		146 811
Koki Yoshioka	Former COO		4 166 650
Jonas Olsson	Former VP R&D Hardware Products		31 800
Alexander Sagen	Former VP R&D Software Solutions		110 000
Total		8 870 157	13 206 697

1 Privately and through Longfellow Invest AS

2 Through Lato Invest AS

3 Through Carlsson Invest AS

4 Privately and through Dube Invest AS

5 Through Calluna AS

Name	Title	31.12.2021	31.12.2020
Aksel Lund Svindal	Chairman of the Board 1	1 141 978	1 088 133
Geir Førre	Board member 2	25 826 543	24 949 613
Liv Dyrnes	Board member	17 500	7 500
Lars Boilesen	Board member	100 000
Emma Tryti	Board member ³
Karin Berg	Board member 3
Anlaug Underdal	Board member - Employee representative	46 000	42 800
Tore Rismyhr	Board member - Employee representative	63 800	63 800
Audhild Andersen Randa	Former Board member 4		15 000
Total		27 195 821	26 166 846

1 Through A Management AS. Board member in 2020

2 Through Firda AS. Chairman of the Board in 2020

3 New board member from the extraordinary general meeting held on 28 October, 2021

4 Board member until July 2021

Share options held by the management team as at 31.12.2021:

Name	Title	31.12.2021	Strike price (NOK)	Remaining life (years)
Øyvind Birkenes	CEO	2 086 600	0.51 - 8.56	3.66 - 7.01
Magnus Navdal Bekkelund	CFO	46 584	8.56 - 13.35	4.42 - 9.13
Audhild Andersen Randa	COO	120 000	8.56	4.42
Erlend Bolle	CPO	70 000	8.56	4.42
Lauren Pedersen	CMO	285 000	3.36 - 8.56	4.42 - 8.1
Torje Carlsson	SVP Airthings for Consumer	761 200	1.45 - 8.56	4.42 - 7.0
Pål Berntsen	SVP Airthings for Business	548 000	1.45 - 8.56	4.42 - 7.0
Total		3 917 384

Share options held by the management team as at 31.12.2020:

Name	Title	Outstanding options	Strike price (NOK)	Remaining life (years)
Øyvind Birkenes	CEO	1 936 600	0.51 - 3.36	4.66 - 8.01
Lauren Pedersen	CMO	200 000	3.36	9.10
Torje Carlsson	SVP Airthings for Consumer	686 200	1.45	8.00
Pål Berntsen	SVP Airthings for Business	473 000	1.45	8.00
Erik Lundby	Former CFO	160 000	7.52	9.65
Koki Yoshioka	Former COO
Jonas Olsson	Former VP R&D Hardware Products	200 000	3.36	9.25
Alexander Sagen	Former VP R&D Software Solutions	192 400	0.7 - 1.45	6.42 - 7.92
Total		3 848 200

Name	Title	Outstanding optionds	Strike price (NOK)	Remaining life (years)
Aksel Lund Svindal	Chairman of the Board	100 000	3.36	7.25
Geir Førre	Board member
Liv Dyrnes	Board member
Lars Boilesen	Board member
Emma Tryti	Board member
Karin Berg	Board member
Anlaug Underdal	Board member - Employee representative	67 800	0.7 - 8.56	4.42 - 5.84
Tore Rismyhr	Board member - Employee representative	57 030	3.36 - 8.56	4.42 - 7.75
Total		224 830

Share options held by the Board of Directors as at 31.12.2021:

Share options held by the Board of Directors as at 31.12.2020:

Name	Title	Outstanding optionds	Strike price (NOK)	Remaining life (years)
Geir Førre	Chairman of the Board
Aksel Lund Svindal	Board member	100 000	3.36	8.25
Liv Dyrnes	Board member
Lars Boilesen	Board member
Anlaug Underdal	Board member - Employee representative	47 000	0.70	6.84
Tore Rismyhr	Board member - Employee representative	43 800	3.36	8.75
Audhild Andersen Randa	Board member
Total		190 800

7.2 Related party transactions

Related parties are major shareholders, members of the Board and Management team in the parent company and the group subsidiaries. Note 4.1 and 6.7 provides information about the Group structure, including details of the subsidiaries and shareholders. Significant agreements and remuneration paid to management and the Board for the current and prior period are presented in note 7.1. Shares and

share options held by the management team and the Board are also summarized in note 7.1.

All transactions within the Group or with other related parties are based on the principle of arm's length.

The following tables provide the total amount of transactions and balances with related parties (outside the Group) for the relevant financial periods:

Related party transactions in 2021 and balances at 31 December 2021 (USD 1,000)	Executive management	Board Member	Other	Total
Income from related parties			6,088	6,088
Payments to related parties	1,520	47	1,015	2,583
Related party receivables	41			41

Payments to related parties include remuneration paid to management and the Board (refer to note 7.1), commissions and accrued cost invoiced from Rn222 Inc., rent of premises from Energy Control AS and consultant services from Firda AS. Income from related parties include sale of goods to Rn222 Inc. and Energy Control AS.

Related party receivables as at 31 December 2021 are mainly related to prepaid salary to employees.

Related party transactions in 2020 and balances at 31 December 2020 (USD 1,000)	Executive management	Board Member	Other	Total
Income from related parties			2,146	2,146
Payments to related parties	1,995	72	870	2,937
Related party receivables	3			3

Payments to related parties include remuneration paid to management and the Board (refer to note 7.1), fees invoiced from Rabakken invest AS, commissions and accrued cost invoiced from Rn222 Inc., and rent of premises from Energy Control AS. Income from related parties include sale of goods to Rn222 Inc. and Energy Control AS.

Related party receivables as at 31 December 2020 are mainly related to prepaid salary to employees.

Related party transactions in 2020 and balances at 31 December 2020 (USD 1,000)	Executive management	Board Member	Other	Total
Related party receivables	21			21

Related party receivables as at 1 January 2020 are mainly related to prepaid salary to employees.

RN222 Inc. is a distributor of the Group's products in Canada. RN222 Inc. provides some consultancy services that are invoiced to the Group. The beneficial owner of RN222 Inc. was the leader of the Professional segment until February 2022.
Energy Control AS is a shareholder of the Group, and has provided consultancy services to Airthings ASA. The beneficial owner of Energy Control AS in employed in the Group.
Firda AS is the largest shareholder of the Group, and is owned by Geir Førre (Board member).
Rabakken Invest AS is a shareholder of the Group, and has provided consultancy services to Airthings ASA.

7.3 Commitments and contingencies

ACCOUNTING POLICIES

Other commitments and contingencies

Contingent liabilities are not recognized in the annual accounts. Significant contingent liabilities are disclosed, with the exception of contingent liabilities where the possibility of an outflow of economic resources is considered remote.

Contingent assets are not recognized in the annual accounts but are disclosed when an inflow of economic benefits is considered probable.

7.4 Events after the reporting period

ACCOUNTING POLICIES

If the Group receives information after the reporting period, but prior to the date of authorization for issue, about conditions that existed at the end of the reporting period, the Group will assess if the information affects the amounts that it recognizes in the Group's consolidated financial statements. The Group will adjust the amounts recognized in its financial statements to reflect any adjusting events after the reporting period and update the disclosures that relate to those conditions in the light of the new information. For non-adjusting events after the reporting period, the Group will not change the amounts recognized in its consolidated financial statements but will disclose the nature of the non-adjusting event and an estimate of its financial effect, or a statement that such an estimate cannot be made, if applicable.

Adjusting events

There have been no significant adjusting events subsequent to the reporting date.

Other commitments

The Group does not have other significant commitments to be disclosed.

Assets pledged as security and guarantee liabilities

For assets pledged as security and guarantee liabilities, see note 6.2.

Non-adjusting events

War in Ukraine

The escalation of the conflict between Russia and Ukraine which led to armed conflicts in Ukraine on 24 February, 2022 has created uncertainty regarding the development of the global economy. The evolving conflict does currently not impact the Group directly, as it has no operating presence in either Russia, Belarus or Ukraine. Indirect effects however, such as financial market volatility, sanctions-related knock-on effects, general economic market conditions and other future responses of international governments, might have an impact on the Group's financial results and financial position. The Group's management continues to monitor the situation and has an ongoing assessment of potential impact on the Group's financial results and financial position.

There have been no other significant non-adjusting events subsequent to the reporting date.

Section 8 - Changes in accounting policies

8.1 First time adoption of IFRS

These financial statements, for the period ended 31 December 2021 are the first the Group has prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union (EU).

Accordingly, the Group has prepared financial statements that comply with IFRS applicable as at 31 December 2021, together with the comparative period ended 31 December 2020, as described in the basis of preparation (note 1.2). In preparing the financial statements, the Group's opening statement of financial position was prepared as at 1 January 2020, the Group's date of transition to IFRS.

This note explains the principal adjustments made by the Group when transitioning to IFRS from its previous reporting framework; Generally Accepted Accounting Principles in Norway ("NGAAP") as of 1 January 2020, as well as for the period ended 31 December 2020.

Exemptions applied

IFRS 1 allows first-time adopters certain exemptions from the retrospective application of certain requirements under IFRS. The Group has applied the following exemptions:

The Group has decided to use the option of calculating the right-of-use asset and lease liability as net present value of remaining lease payments as at 1 January 2020, using the incremental borrowing rate. The leases where the lease period ends within 12 months from the transition date, are treated as short term leases.
The Group has decided to use the practical expedient in IFRS 15 Revenue from Contracts with Customers to not restate contracts that are completed at transition date, 1 January
IFRS 1 defines a completed contract as a contract for which the entity has transferred all of the goods or services as identified in accordance with previous GAAP.

• As at 1 January 2020, the Group has set its cumulative translation differences that existed at the transition date to IFRS to zero.

Effect of transition to IFRS

The main differences recognized at the transition to IFRS are:

The recognition of right-of-use assets and lease liabilities with corresponding depreciation and interest expenses, which was previously expensed as part of operating expenses
Difference related to consideration payable to customers (accounted for as revenue reduction under IFRS)
Reversal of goodwill amortization

The impact of the IFRS adjustments on the consolidated statement of financial position when transitioning from NGAAP as at 1 January 2020, and 31 December 2020 are described in detail below. Additionally, the impact of the IFRS adjustments on the consolidated statement of profit or loss and the consolidated statement of cash flows are described in detail further below.

NGAAP figures presented below are based on previously reported annual reports and translated to USD by using end rates for balance sheet and average rates for statement of comprehensive income. Where balances are subsequently restated, figures are based on the last presented restated balance in the annual report or interim report for Q4 2021.

Reconciliation of transitional effects

Reconciliation of equity and financial position as at 1 January 2020:

Amounts in USD 1,000	Note	NGAAP	Effect of transition to IFRS	IFRS
ASSETS
Non-current assets
Intangible assets		418		418
Goodwill
Property, plant and equipment		263		263
Right-of-use assets	A		2,579	2,579
Deferred tax assets	D	510	228	738
Other non-current assets		38		38
Other non-current assets		1,230	2,807	4,037
Current assets
Inventories		3,306		3,306
Trade receivables		4,640		4,640
Other receivables		1,618		1,618
Cash and cash equivalents		5,589		5,589
Total current assets		15,154		15,154
TOTAL ASSETS		16,383	2,807	19,190

Amounts in USD 1,000	Note	NGAAP	Effect of transition to IFRS	IFRS
EQUITY AND LIABILITIES
Equity
Share capital		65		65
Share premium		10,440		10,440
Other capital reserves		636		636
Other equity	E	-31	-810	-841
Total equity		11,109	-810	10,300
Non-current liabilities
Non-current interest-bearing liabilities		2,037		2,037
Non-current lease liabilities	B		2,319	2,319
Deferred tax liabilities
Non-current provisions
Total non-current liabilities		2,037	2,319	4,356
Current liabilities
Current interest-bearing liabilities
Current lease liabilities	B		260	260
Trade and other payables		2,301		2,301
Contract liabilities		73		73
Income tax payable		4		4
Current provisions	C	858	1,038	1,897
Total current liabilities		3,236	1,298	4,534

Total liabilities		5,274	3,617	8,890
TOTAL EQUITY AND LIABILITIES		16,383	2,807	19,190

Reconciliation of equity and financial position as at 1 January 2020 continued:

Reconciliation of equity and financial position as at 31 December 2020:

Amounts in USD 1,000	Note	NGAAP	Effect of transition to IFRS	IFRS
ASSETS
Non-current assets
Intangible assets		2,332		2,332
Goodwill	C	3,096	221	3,317
Property, plant and equipment		595		595
Right-of-use assets	A		3,578	3,578
Deferred tax assets	D	2,688	265	2,953
Other non-current assets		1,524		1,524
Other non-current assets		10,234	4,064	14,298

Reconciliation of equity and financial position as at 31 December 2020 continued:

Amounts in USD 1,000	Note	NGAAP	Effect of transition to IFRS	IFRS
Current assets
Inventories		4,694		4,694
Trade receivables		7,000		7,000
Other receivables		2,041		2,041
Cash and cash equivalents		62,943		62,943
Total current assets		76,678		76,678
TOTAL ASSETS		86,912	4,064	90,976

EQUITY AND LIABILITIES
Equity
Share capital		188		188
Share premium		78,472		78,472
Other capital reserves		1,096		1,096
Other equity	E	-2,390	-718	-3,108
Total equity		77,367	-718	76,648
Non-current liabilities
Non-current interest-bearing liabilities
Non-current lease liabilities	B		3,243	3,243
Deferred tax liabilities		343		343
Non-current provisions		1,442		1,442
Total non-current liabilities		1,785	3,243	5,028
Current liabilities
Current interest-bearing liabilities		1,901		1,901
Current lease liabilities	B		473	473
Trade and other payables		4,139		4,139
Contract liabilities		422		422
Income tax payable		10		10
Current provisions	F	1,289	1,066	2,355
Total current liabilities		7,761	1,539	9,300

Total liabilities		9,545	4,782	14,327
TOTAL EQUITY AND LIABILITIES		86,912	4,064	90,976

IFRS adjustments of consolidated financial position as at 1 January 2020:

A: The IFRS adjustment of USD 2,579 thousands reflects the recognized right-of-use asset less depreciation for the year related to leasing of office space. Under NGAAP lease payments were accounted for as operating expenses and hence no right-of-use asset has previously been recognized.

B: The IFRS adjustments of USD 2,319 thousands and USD 260 thousands reflect the non-current and current portion of the lease liability recognized for leasing of office space under IFRS 16. Under NGAAP no lease liability was recognized.

C: The IFRS adjustment of USD 1,038 thousands reflects adjustments related to accrued consideration payable to a customer. Under IFRS this amount is estimated when the sale occurs and recognized as a provision. The transaction price is reduced accordingly.

D: The IFRS adjustment of USD 228 thousands reflects the recognition of deferred tax asset related to the IFRS adjustment described under "C" above.

E: The IFRS adjustment of USD 810 thousands reflects the effect on equity related to the IFRS adjustment described under "C" above.

IFRS adjustments to profit or loss for 2020:

A: The IFRS adjustment of USD 3,578 thousands reflects the recognized right-of use asset less depreciation for the year related to leasing of office space.

B: The IFRS adjustments of USD 3,243 thousands and USD 473 thousands reflect the non-current and current portion of the lease liability recognized for leasing of office space under IFRS 16.

C: Prior to conversion to IFRS, goodwill was amortized. The IFRS adjustment of USD 221 thousands consists of reversal of previously recognized goodwill as goodwill is not amortized under IFRS, but rather tested for impairment annually.

D: The IFRS adjustment of USD 265 thousands in deferred tax assets consists of the income tax effect of the IFRS adjustment related to IFRS 16 and IFRS 15 effects.

E: The IFRS adjustment of USD 718 thousands consists of the P&L effect of the years IFRS adjustments in addition to translation differences on the IFRS adjustments and adjustments in the opening balance of equity at the date of transition to IFRS.

F: The IFRS adjustment of USD 1,066 thousands reflects adjustments related to accrued consideration payable to a customer. Under IFRS this amount is estimated when the sale occurs and recognized as a provision. The transaction price is reduced accordingly.

Amounts in USD 1,000	Note	NGAAP	Effect of transition to IFRS	IFRS
Revenues	A	22,818	-1,925	20,893
Other operating income		123		123
Total revenue and other operating income		22,941	-1,925	21,016
Cost of goods sold		7,576		7,576
Employee benefit expenses		9,094		9,094
Other operating expenses	B	11,510	-2,377	9,132
Operating profit or loss before depreciation and amortization (EBITDA)		-5,239	453	-4,786
Depreciation and amortization	C	509	227	736
Operating profit or loss (EBIT)		-5,748	226	-5,522
Finance income		20		20
Finance costs	D	524	149	673
Net financial items		-504	-149	-653
Profit (loss) before tax		-6,252	77	-6,175
Income tax expense		-2,017	-27	-2,044
Profit (loss) for the year		-4,235	104	-4,131

Reconciliation of consolidated statement of profit or loss as of 31 December 2020:

The Group reported other comprehensive income under IFRS of USD 4,314 thousands. No other comprehensive income has historically been reported under NGAAP as no such statement is required under NGAAP and due to the fact that the accounts were previously presented in NOK.

IFRS adjustments of consolidated statement of comprehensive income as of 31 December 2020:

A: Under IFRS, consideration payable to a customer is accounted for as a reduction of the transaction price, unless the payment to the customer is in exchange for a distinct good or service and the fair value of the distinct good or service can be reasonably estimated. The IFRS adjustment of USD 1,925 thousands relates to consideration payable to a customer which was previously recognized as OPEX under NGAAP. Under IFRS, this is accounted for as a reduction of revenues.

B: The IFRS adjustment of USD 2,377 thousands reflects the reversal of lease expenses for the operating leases of office space (USD 451 thousands), in addition to the reclassification of consideration payable to a customer from OPEX to a reduction in revenue (USD 1,926 thousands).

C: The IFRS adjustment of USD 227 thousands reflects the reversal of amortization of goodwill (USD 201 thousands) and the additional depreciation of right-of-use assets for the period for leases recognized under IFRS 16 (USD 428 thousands).

D: The IFRS adjustment of USD 149 thousands reflects the interest expense on the IFRS 16 lease liability.

Reconciliation of statement of cash flows for 2020:

Amounts in USD 1,000	Note	NGAAP	Effect of transition to IFRS	IFRS
Cash flows from operating activities
Profit (loss) before tax		-6,252	77	-6,175
Adjustments to reconcile profit before tax to net cash flows:
Net financial items	A	504	149	653
Depreciation and amortization	B	509	227	736
Share-based payment expense		460		460
Working capital adjustments:
Changes in inventories		-1,387		-1,387
Changes in trade and other receivables		-2,783		-2,783
Changes in trade and other payables and contract liabilities		2,188		2,188
Changes in provisions	C	1,872	28	1,900
Other items
Tax paid		-4		-4
Net cash flows from operating activities		-4,893	481	-4,412
Cash flows from investing activities
Development expenditures		-269		-269
Purchase of property, plant and equipment		-404		-404
Purchase of shares in subsidiaries, net of cash acquired		-1,255		-1,255
Interest received		14		14
Net cash flow from investing activities		-1,914		-1,914

Cash flow from financing activities
Proceeds from issuance of equity		69,162		69,162
Proceeds from sales of own shares		184		184
Transaction costs on issue of shares		-3,641		-3,641
Repayment of borrowings		-177		-177
Payments for the principal portion of the lease liability	D		-302	-302
Payments for the interest portion of the lease liability	D		-149	-149
Interest paid		-106		-106
Net cash flows from financing activities		65,422	-451	64 971
Net increase/(decrease) in cash and cash equivalents		58,614	30	58,644
Cash and cash equivalents at 1 January		5,589		5,589
Net foreign exchange difference		-1,290		-1,290
Cash and cash equivalents at 31 December		62,913	30	62,943

IFRS adjustments of consolidated cash flows year ended 31 December 2020:

A: The effect on net financial items of USD 149 thousands reflects the interest expense on the lease liability recognized under IFRS 16.

B: The IFRS adjustment of USD 227 thousands reflects the reversal of amortization of goodwill under NGAAP (USD 201 thousands) and the additional depreciation of right-of-use assets for the period for leases recognized under IFRS 16 (USD 428 thousands).

C: The IFRS adjustment of USD 28 thousands reflects adjustments related to accrued consideration payable to a customer. Under IFRS this amount is estimated when the sale occurs and recognized as a provision. The transaction price is reduced accordingly.

D: The IFRS adjustments represent lease payments of USD 302 thousands and payments for the interest portion of the lease liability of USD 149 thousands.

Reconciliation of consolidated statement of profit or loss as of 31 December 2021:

The Group presented its Q4 2021 report according to NGAAP. Below is a comparison of the consolidated NGAAP YTD Q4 2021 P&L figures reported in the interim report and full year 2021 IFRS 2021 figures reported in the annual report.

Amounts in USD 1,000	Note	NGAAP	Effect of transition to IFRS	IFRS
Revenues	A	36,173	-2,502	33,671
Other operating income		28		28
Total revenue and other operating income		36,201	-2,502	33,699
Cost of goods sold		13,041		13,041
Employee benefit expenses		15,127		15,127
Other operating expenses	B	17,359	-3,793	13,566
Operating profit or loss before depreciation and amortization (EBITDA)		-9,326	1,291	-8,035
Depreciation and amortization	C	1,257	78	1,335
Operating profit or loss (EBIT)		-10,583	1,213	-9,371
Finance income		323		323
Finance costs	D	51	217	268
Net financial items		272	-217	55
Profit (loss) before tax		-10,311	996	-9,315
Income tax expense		-2,129	74	-2,055
Profit (loss) for the year		-8,182	922	-7,261

The Group reported other comprehensive income under IFRS of negative USD 2,352 thousands. No other comprehensive income has historically been reported under NGAAP as no such statement is required under NGAAP and due to the fact that the accounts were previously presented in NOK.

IFRS adjustments to statement of profit or loss for 2021:

A: Under IFRS, consideration payable to a customer is accounted for as a reduction of the transaction price, unless the payment to the customer is in exchange for a distinct good or service and the fair value of the distinct good or service can be reasonably estimated. The IFRS adjustment of USD 2,502 thousands relates to consideration payable to a customer which was previously recognized as OPEX under NGAAP. Under IFRS, this is accounted for as a reduction of revenues.

B: The IFRS adjustment of USD 3,793 thousands reflects the reversal of lease expense for the operating leases of office space (USD 853 thousands), in addition to the reclassification of consideration payable to a customer from OPEX to a reduction in revenue (USD 2,940 thousands).

C: The IFRS adjustment of USD 78 thousands reflects the reversal of amortization of goodwill (USD 658 thousands) and the additional depreciation of right-of-use assets for the period for leases recognized under IFRS 16 (USD 736 thousands).

D: The IFRS adjustment of USD 217 thousands reflects the interest expense on the IFRS 16 lease liability.

Alternative performance measures

This section includes information about alternative performance measures (APMs) applied by the Group.

These alternative performance measures are presented to improve the ability of stakeholders to evaluate the Group's operating performance. The Group applies the following APMs:

Annual recurring revenue (ARR)

ARR is the value of annualized sales from all active subscriptions, licenses and service contracts within the Airthings for Business and Professional segments. The calculation is based on monthly subscription fees as at 31 December (MRR), multiplied by 12 in order to represent an annualized figure. The numbers presented in the table below are translated from NOK to USD applying the average NOK/ USD exchange rate for 2021 and 2020 respectively. ARR is considered an important supplemental measure for stakeholders to get an overall understanding of revenue generation within the Group's operating activities.

(USD 1,000)	2021	2020
MRR December (as per IFRS financial statements)	239	94
ARR	2,866	1,132

EBITDA

The Group's earnings before interest, tax, depreciation and amortization (EBITDA) is used to provide consistent information on Airthings' operating performance relative to other companies, and is frequently used by analysts, investors and other stakeholders when evaluating the financial performance of the Group. EBITDA, as defined by Airthings, includes total operating revenue and excludes depreciation, amortization and impairment loss. For a reconciliation of EBITDA, refer to the consolidated statement of profit or loss.

EBITDA (USD 1,000)	2021	2020
Revenue	33,671	20,893
EBITDA	-8,035	-4,786
EBITDA margin	-24%	-23%

Gross profit margin

Gross profit margin is defined as revenue less cost of goods sold as a percentage of total revenue. Management believes that this measure is important for the users of the financial statements to determine the profitability and the financial performance of the Group.

Gross profit margin (USD 1,000)	2021	2020
Revenue	33,671	20,893
Cost of goods sold	13,041	7,576
Gross profit	20,630	13,317
Gross profit margin	61%	64%

Airthings - Annual Report 2021

Airthings ASA

Parent Company Financials

Financial statements

Income statement

Statement of financial position

Statement of cash flows

Statement of changes in equity

Notes to the parent company financial statements

Section 1 - General information and accounting policies

Section 2 - Profit or loss items

2.1 Revenue
2.2 Other operating income
2.3 Employee benefit expenses
2.4 Other operating expenses
2.5 Finance income and costs
2.6 Income tax

Section 3 - Balance sheet items

3.1 Inventories
3.2 Trade receivables, receivables, pledged assets and guarantees etc.
3.3 Provisions and other payables

Section 4 - Related parties

4.1 Subsidiaries
4.2 Related parties

Section 5 - Fixed assets

5.1 Intangible assets
5.2 Business combinations
5.3 Property, plant and equipment

Section 6 - Financial instruments and equity

6.1 Cash and cash equivalents
6.2 Financial risk management
6.3 Share capital and shareholders information

Section 7 - Other disclosures

7.1 Events after the reporting period

Income statement

For the years ended 31 December
Amounts in NOK 1 000	Notes	2021	2020
Revenues	2.1, 4.2	285 844	203 961
Other operating income	2.2	240	1 160
Total revenue and other operating income		286 084	205 121
Cost of sales		115 694	70 154
Employee benefit expenses	2.3	115 418	76 022
Other operating expenses	2.3, 2.4, 4.2	134 788	101 427
Operating profit or loss before depreciation & amortisation (EBITDA)		- 79 816	- 42 482
Depreciation and amortization	5.1, 5.3	10 411	1 996
Operating profit (loss) / EBIT		- 90 226	- 44 478
Finance income	2.5	4 161	753
Finance costs	2.5	436	4 913
Net financial items		3 725	- 4 160

Profit (loss) before tax		- 86 501	- 48 638
Income tax expense	2.6	- 17 805	- 18 512
Profit (loss) for the year		- 68 696	- 30 126

Profit (loss) for the year is proposed allocated as follows:

Total allocated	- 68 696	- 30 126
To (from) other equity	- 68 696	- 30 126

Statement of financial position

Amounts in NOK 1 000	Notes	31.12.2021	31.12.2020
ASSETS
Non-current assets
Goodwill	5.1, 5.2	20 758	0
Intangible assets	5.1	21 547	5 183
Deferred tax asset	2.6	36 938	22 057
Property, plant and equipment	5.3	6 270	4 486
Investments in subsidiaries	4.1	1 150	45 656
Receivables group companies	4.2	46 635	23 278
Other non-current assets	3.2	9 484	12 304
Total non-current assets		142 782	112 965

Current assets
Inventories	3.1	94 670	37 707
Trade receivables	3.2	83 150	56 150
Other receivables		14 112	14 433
Bank deposits, cash and cash equivalents	6.1	359 968	525 358
Total current assets		551 901	633 649

TOTAL ASSETS		694 683	746 614

Amounts in NOK 1 000	Notes	31.12.2021	31.12.2020
EQUITY AND LIABILITIES
Equity
Share capital	6.3	1 718	1 706
Treasury shares		0	0
Share premium		713 145	711 464
Other capital reserves		15 137	9 912
Other equity		- 122 989	- 51 817
Total equity		607 012	671 265
Non-current liabilites
Non-current provisions	3.2	9 609	12 304
Total non-current liabilites		9 609	12 304
Current liabilities
Interest-bearing liabilites		0	7 222
Trade payables		40 288	23 812
Income tax payable		0	0
Other payables	3.3	8 259	7 573
Provisions	3.3	29 516	24 437
Total current liabilities		78 062	63 045

Total liabilities		87 671	75 349
TOTAL EQUITY AND LIABILITIES		694 683	746 614

Aksel Lund Svindal Chairman of the Board

Emma Tryti Board member

Oslo, March 30, 2022

Liv Hege Dyrnes Board member

Anlaug Gårdsrud Underdal Board member

Lars Rahbaek Boilesen Board member

Tore Helge Rismyhr Board member

Geir Førre Board member

Karin Berg Board member

Øyvind Birkenes CEO

Statement of cash flows

For the years ended 31 December
Amounts in NOK 1 000	Notes	2021	2020
Cash flows from operating activities
Profit (loss) before tax		- 86 501	- 48 638
Depreciation and amortization	5.1, 5.2, 5.3	10 411	1 996
Share-based payment expense		5 225	4 325
Working capital adjustments:
Changes in inventories	3.1	- 56 963	- 9 663
Changes in trade receivables		- 27 000	- 17 344
Changes in trade payable		16 475	11 885
Changes in other liabilities and receivables		36 830	6 963
Other items
Tax paid		0	0
Net cash flows from operating activities		- 101 522	- 50 477

Cash flows from investing activities
Purchase of intangible assets and development expenditures	5.1, 5.2	- 45 727	- 2 528
Purchase of property, plant and equipment	5.3	- 3 611	- 3 141
Purchase of shares in subsidiaries, net of cash acquired		0	- 12 758
Payments on long-term receivables		0	- 16 527
Net cash flow from investing activities		- 49 339	- 34 954

Cash flow from financing activities
Proceeds from issuance of equity	6.3	1 693	563 592
Proceeds from sales of own shares		0	1 732
Repayment of borrowings		- 16 222	- 1 667
Net cash flows from financing activities		- 14 529	563 658

Net increase/(decrease) in cash and cash equivalents		- 165 390	478 227
Cash and cash equivalents at 1 January		525 358	47 130
Cash and cash equivalents at 31 December		359 968	525 358

Statement of changes in equity

Amounts in NOK 1 000	Share capital	Treasury shares	Premium reserve	Other paid in equity	Other equity	Total equity
Equity 1 january 2020	568	- 3	91 668	5 587	1 388	99 209
Adjusted opening balance, share-based payment					285	285
Sale of treasury shares		3			1 732	1 735
Capital increase, April	56		59 944			59 999
Capital increase, July	18		27 736			27 754
Capital increase, August	21		32 222			32 244
Capital increase, fund issue	663		- 663
Capital increase, October	376		499 994			500 370
Capital increase, November	3		563			566
Share based payment				4 325		4 325
Costs related to capital increase October **					- 34 688	- 34 688
Stabilisation mechanism ***					9 591	9 591
Result for the year					- 30 126	- 30 126
Equity 31 December 2020	1 706	0	711 464	9 912	-51 817	671 265

Equity 1 January 2021	1 706	0	711 464	9 912	- 51 817	671 265
Capital increase February	5		513			519
Capital increase May	1		143			145
Capital increase August	3		283			286
Capital increase November	3		742			745
Merger Airtight AS ****					- 2 475	- 2 475
Share based payment				5 225		5 225
Result for the year					- 68 696	- 68 696
Equity 31 December 2021	1 718	0	713 145	15 137	- 122 989	607 012

* In comparable financial figures for 2019, reclassification have been made between Other paid-in Equity and Other Equity of NOK 5 587 thousands related to share based payment. The reclassification have been implemented in the opening balance per 1 January 2020.

** On October 30, 2020, Airthings completed a private placement and subsequent listing on Merkur Market (now Euronext Growth). Shares outstanding prior to and after the transaction were 132 667 280 and 170 306 237, respectively, representing an increase of 28% or 37 037 037 shares. Price per share was NOK 13.5.

*** Proceeds from over-allotment in conjunction with the IPO. The Company was not a direct party or participant in either the stabilization agreement or the option in any other way than accepting the event and agreeing on receiving a share of the proceeds related to any short-sale gain.

**** Parent-/subsidiary merger with Airtight AS according to the simplified rules for intra-group mergers as set out in Section 13-24 of the Norwegian Public Limited Companies Act.

Section 1 – General information and accounting policies to the parent company financial statement

1.1 Corporate information

The Company´s financial statements for the year ended 31 December 2021 were authorized for issue in accordance with a resolution of the Board of Directors on 30 March 2022.

Airthings has been granted exemption from the Norwegian Tax Authority to publish its Annual Report in English only.

The Company, as used in these financial statements, is the Parent Company under the Consolidated Financial Statements also included in this Annual Report.

1.2 Basis of preparation

Airthings financial statements have been prepared in accordance with Norwegian Accounting Act and generally accepted accounting principles (NGAAP). The functional and presentation currency of the parent company is Norwegian krone ("NOK").

Going Concern

The annual accounts have been prepared based on the going concern assumption in accordance with section 3-3a of the Norwegian Accounting

Act. This is based on the Group's plans, budgets and level of activity going forward.

1.3 General accounting principles

Current versus non-current classification

The Group presents assets and liabilities in the statement of financial position based on current/ non-current classification.

An asset is current when it is:

Expected to be realized or intended to be sold or consumed in the normal operating cycle,
Held primarily for the purpose of trading,
Expected to be realised within twelve months after the reporting period, or
Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period. All other assets are classified as non-current.

A liability is current when:

It is expected to be settled in the normal operating cycle,
It is held primarily for the purpose of trading,
It is due to be settled within twelve months after the reporting period, or

• There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period. The Company classifies all other liabilities as non-current.

Deferred tax assets and liabilities are classified as non-current assets and liabilities.

Statement of cash flows

The consolidated statement of cash flows is prepared using the indirect method.

1.4 Significant accounting judgements, estimates and assumptions

The preparation of accounts in accordance with the Accounting Act requires the use of estimates. It also requires Group management to exercise judgment in applying the Group's accounting policies. The areas where significant judgments and estimates have been made in preparing the financial statements and their effect are disclosed in the notes.

1.5 Revenue

Income from sale of goods and services are recognized at fair value, net after deduction of VAT, returns, discounts and reductions.

Revenue from sale of goods

Revenue from sale of goods are recognized in the income statement when both risk and control have passed on to the buyer. The risk being the asset's profit and loss potential, whilst control is defined as having both the decision-making rights as well as the jurisdiction. Normally this will be when the goods are delivered to the customer. Historical data is applied to estimate and make provisions for quantity discount and returns at the date of sales.

Revenue from sale of software as a service (SaaS)

The Company also has revenue from license fees, which are SaaS contracts consisting of a software licensing model where software is licensed on a

subscription basis and centralized on Airthings platform. Revenue from SaaS arrangements, where the customer cannot take possession of the software license and where the software license cannot be separated from its related hosting services are considered as "right to access" licenses and revenue is recognized over time (i.e. the subscription period).

1.6 Share-based payments

Airthings has a share-based payment program where all employees are granted share options when they commence in their position.

Equity-settled transactions

The cost of equity-settled transactions is determined by the fair value at the date when the grant is made using an appropriate valuation model (the Black-Scholes-Merton Model).

That cost is recognized in employee benefits expense, together with a corresponding increase in equity (other capital reserves), over the period in which the service and, where applicable, the performance conditions are fulfilled (the vesting period). The cumulative expense recognized for equity-settled transactions at each reporting date until the vesting date reflects the extent to which the vesting period has expired and the Company's best estimate of the number of equity instruments that will ultimately vest. The expense or credit in the statement of profit or loss for a period represents the movement in cumulative expense recognized as at the beginning and end of that period.

Service and non-market performance conditions are not taken into account when determining the grant date fair value of awards, but the likelihood of the conditions being met is assessed as part of the Company's best estimate of the number of equity instruments that will ultimately vest. Market performance conditions are reflected within the grant date fair value. Any other conditions attached to an award, but without an associated service requirement, are considered to be non-vesting conditions.

Non-vesting conditions are reflected in the fair value of an award and lead to an immediate expensing of an award unless there are also service and/or performance conditions.

1.7 Pensions

The Company has a defined contribution pension plan for its employees which satisfies the statutory requirements in the Norwegian law on required occupational pension ("lov om obligatorisk tjenestepensjon").

The scheme is a defined contribution plan. Contributions are paid to pension insurance plans and charged to the income statement in the period to which the contributions relate. Once the contributions have been paid, there are no further payment obligations.

1.8 Goodwill

Recognized goodwill in the Company us derived from the merger with Airtight in 2021. Goodwill is depreciated over five years. In addition, goodwill is reviewed for impairment, annually or more frequently if events or changes in circumstances indicate that the carrying value may be impaired.

1.9 Intangible assets

Expenditure on own Research and Development are expensed as and when they incur.

Expenses for other intangible assets are reflected in the balance sheet providing a future financial benefit relating to the development of an identifiable intangible asset can be identified and the cost can be measured reliably. Otherwise, such expenditure is expensed as and when incurred. Capitalised development costs

are amortized linearly over the asset's expected useful life.

1.10 Fixed assets

Property, plant and equipment ("PP&E") are capitalised and depreciated linearly down to the residual value over the expected useful economic life of the assets. When the depreciation plan is changed, the effect is distributed over the remaining depreciation period. Maintenance of operating equipment is expensed on an ongoing basis. Upgrades or improvements are added to the acquisition cost of the asset and depreciated in line with the asset. The difference between maintenance and upgrade / improvement is assessed based on the condition of the asset when purchased. Plots and land are not depreciated.

Costs related to leases of fixed assets are expensed over the lease period. Prepayments are reflected in the balance sheet as a prepaid expense, and are distributed over the rental period.

1.11 Impairment of intangibleand fixed assets

Impairment tests are carried out if there is indication that the carrying amount of an asset exceeds the estimated recoverable amount. The test is performed on the lowest level of fixed assets at which independent ingoing cashflows can be identified. If the carrying amount is higher than both the fair value less cost to sell and the value in use (net present value of future use/ ownership), the asset is written down to the highest of fair value less cost to sell and the value in use.

Previous impairment charges, except write-down of goodwill, are reversed in later periods if the conditions causing the write-down are no longer present.

1.12 Inventories

Inventories are valued at the lower of cost and net realizable value. Costs incurred in bringing each product to its present location and condition are accounted for, as follows:

Components: purchase cost on a first-in/ first-out basis (FIFO)
Finished goods: cost of direct materials, direct wages, packaging and a proportion of manufacturing overheads based on the normal operating capacity

Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale.

1.13 Investments in Subsidiaries

Investments in subsidiaries are valued at cost in the Company's financial statements. The investment is valued as cost of the shares in the subsidiary, less any impairment losses. An impairment loss is recognized if the impairment is not considered temporary, in accordance with the generally accepted accounting principles. Impairment losses are reversed if the reason for the impairment loss disappears in a later period.

1.14 Receivables

Trade receivables and other receivables are recorded in the balance sheet at face value after deduction of provisions for expected loss. Provisions for losses are made on the basis of individual assessments of the individual receivables. Additionally, for accounts receivables, an unspecified provision is made to cover expected losses.

1.15 Income taxes

Current income tax

Current income tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted at the reporting date.

Deferred Tax

Deferred tax is provided using the liability method on temporary differences at the balance sheet date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.

Deferred tax liabilities have been recognized for all taxable temporary differences.

Deferred tax assets are recognized for all deductible temporary differences, the carry-forward of unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry-forward of unused tax losses can be utilized.

Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current tax assets against current income tax liabilities and the deferred taxes relate to the same taxable company and the same taxation authority. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realized, or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the balance sheet date.

1.16 Provisions

Provision for warranties and service work for completed projects /sales is recorded at the expected cost of such work. The estimate is based on historical figures for service and warranty repairs. The amount is recorded under other current liabilities and is recognized in the income statement on a straight-line basis over the warranty and service period.

1.17 Foreign currencies

Transactions in foreign currency are translated at the rate applicable on the transaction date. Monetary assets, receivables and liabilities are translated at the exchange rate on the balance sheet date. Changes to exchange rates are recognized in the income statement as they occur during the accounting period. Foreign currency gains or losses are reported as foreign exchange gain or foreign exchange loss in finance income or finance costs.

Section 2 – Profit or loss items

2.1 Revenue

Revenue (NOK 1 000)	2021	2020
Revenues from sale of goods (hardware)	277 458	201 673
Revenues from services performed (software)	8 385	2 288
Total	285 844	203 961

Geographical distribution (NOK 1 000)	202 2021	2020
EMEA	78 738	49 167
North America (USA and Canada)	207 105	154 793
Total	285 844	203 961

2.1 Other operating income

Grants

Airthings ASA has in 2021 and 2020 received funding from Innovation Norway in addition to tax refunds (Skattefunn) which both are classified as operating grants. Operating grants are accounted for at the same time as the costs they are intended to cover.

Tax refunds are accounted for as a cost reduction. The grant from Innovation Norway is presented as other revenue.

The Skattefunn grant is presented as a short term receivable of NOK 4.75 million in the balance sheet and as a reduction of R&D cost, respectively as reduced employee cost and other operating cost.

Grants reported as other revenue (NOK 1 000)	2021	2020
Innovation Norway	240	1 160
Total	240	1 160

Airthings, through the merger with Airtight, was in 2018 granted EUR 1.72 million through EU's Horizon 2020 program. The grant was 70% investment funding of a total project cost of EUR 2.45 million for the period 1 August 2018 to 31 July 2020.

The grant was later extended with 1 year to 31 July 2021. The grant is reported as a reduction in intangible assets.

2.3 Employee benefit expenses, remuneration to Coroporate Management,
Board of Directors and Auditors

Salaries and personnel expenses (NOK 1 000)	2021	2020
Salaries/wages	93 845	62 895
Non-cash share based payment	4 757	3 962
Social security fees	13 562	9 193
Pension expenses	3 725	2 390
Other benefits	3 235	1 523
Skattefunn	- 2 375	- 3 941
Capitilized personel cost	- 1 332
Total	115 418	76 022

Average numbers of full-time equivalents	96	65

Pension obligations

Airthings ASA has a pension scheme that meets the requirements set out in the Obligatory occupational pension Act.

At 31 December 2021, Airthings ASA's pension scheme had 93 members. The cost of pension is specified in the above table.

Share-based payment

For information about share-based payment plans, see note 6.8 to the consolidation financial statments.

Remuneration of Corporate Management and Board of Directors

Information about remuneration of the Board of Directors and the executive management is included in note 7.1 to the consolidation financial statements. For information about share-based payment plans, see note 6.8 to the consolidation financial statements.

Remuneration of auditors (NOK 1 000)	202 2021	2020
Statutory audit	888	292
Tax advisory and other services	386	234
Total remuneration to auditors	1 274	525

2.4 Other operating expenses

Lease

Lease object (NOK 1 000)	Expiration of agreement	Annual lease
Office space in Oslo	31.05.2027	7 094
Office space in Bergen	30.06.2026	216
Lease of office equipment	31.11.2022	8
Total		7 318

2.5 Finance income and cost

Finance income (NOK 1 000)	Notes	2021	2020
Interest income from group entities	4.2	1 171	587
Other interest income		875	166
Profit on foreign exchange		2 114
Total finance income		4 161	753

Finance costs (NOK 1 000)	2021	2020
Other interest expenses	120	1 006
Other financial expenses	316
Loss on foreign exchange		3 907
Total finance costs	436	4 913

Foreign exchange loss Net foreign exchange gain (loss)	15 125 2 114	19 949 - 3 907
Foreign exchange gain	17 239	16 042
Foreign exchange (NOK 1 000)	2021	2020

2.6 Income tax

This year's tax expense (NOK 1 000)	2021	2020
Entered tax on ordinary profit/loss:
Payable tax		- 356
Prior period adjustment	- 22
Change in deferred tax asssets	- 17 783	- 18 156
Tax expense on ordinary profit/loss	- 17 805	- 18 512

Taxable income (NOK 1 000)	2021	2020
Ordinary result before tax	- 86 501	- 48 638
Permanent differences	9	- 35 508
Change in temporary differences	7 964	199
Taxable income	- 78 529	- 83 947

Payable tax in the balance (NOK 1 000)	2021	2020
Payable tax on this years's result
Tax on reversed losses		- 356
Total payable tax in the balance	0	- 356

The tax effect of temporary differences and loss carried forward that has formed the basis for deferred tax and deferred tax assets, specified on types of temporary differences.

Temporary differences (NOK 1 000)	2021	2020	Difference
Tangible assets	32 474	39 781	7 307
Inventory		- 225	- 225
Receivables	- 882		882
Total	31 592	39 556	7 964

Accumulated loss to be carried forward	- 178 735	- 100 206	78 529
Tax effects as part of merger	20 758	26 419	5 661
Basis for deferred tax assets	- 167 900	- 87 069	80 831
Deferred tax assets (22%)	- 36 938	- 19 155	17 783

Section 3 – Balance sheet items

3.1 Inventories

Inventory (NOK 1 000)	2021	2020
Finished goods	64 635	37 707
Components	30 035
Acquisition cost 31 December	94 670	37 707
Inventories valued at purchase cost	94 670	37 932
Inventories valued at net realisable value	94 670	37 707
Write-down for obsolescence	0	225

The increase in inventories in 2021 is a result of increased components prices coupled with a strategy of securing supply in a pressed semiconductor market. There were no write-downs

of finished goods or components in 2021 (2020: NOK 225 thousands). There were no reversal of write-down of components or finished goods in the periods presented.

3.2 Trade receivables, receivables, pledged assets guarantees etc.

Debtors which fall due later than one year after the expiry of the financial year (NOK 1 000)	2021	2020
Inter company loans	46 635	23 278
Employers provisions related to share based compensation	9 484	12 304
Other receivables to employees		27
Total	56 119	35 609

Debt secured by collateral (NOK 1 000)	2021	2020
Short-term debt secured by collateral		16 222
Total	0	16 222

Book value of pledged assets (NOK 1 000)	2021	2020
Equipment, fixtures and fittings and other movables	6 270	4 077
Inventories	94 670	37 707
Trade receivables	83 150	56 150
Total	184 090	97 934

Pledged amount (NOK 1 000)	2021	2020
Pledge on inventories	10 000	19 000
Pledge on operating assets	10 000	19 000
Pledge on accounts receivables	10 000	19 000
Total	30 000	57 000

3.2 Trade receivables, receivables, pledged assets and guarantees etc.

Other payables (NOK 1 000)	2021	2020
Public duty payable	8 259	7 573
Total	8 259	7 573

Provisions (NOK 1 000)	2021	2020
Loan Innovation Norway		9 000
Wages and holiday pay (included tax)	13 239	10 854
Other provisions	8 389	982
Accrued revenue	7 888	3 601
Total	29 516	24 437

Total other payables and provisions	37 774	32 010

Section 4 - Related parties

4.1 Subsidiaries

Investments in subsidiaries are booked according to the cost method.

Company	Location	Ownership/ voting rights	Currency	Equity per 1.1.	Annual net profit/loss	Equity per 31.12.
Airthings America INC	USA	100 %	USD	- 573 268	85 206	- 488 063
Airthings AB	Sweden	100 %	SEK	0	267 942	292 942

Book value of investment in balance sheet of Airthings ASA	Amount (NOK 1 000)
Airthings America INC	975
Airthings AB	176
Total	1 150

4.2 Related parties

Receivables on subsidiary Airthings America INC (NOK 1 000)	2021	2020
Long term loan to Airthings America INC	44 937	23 278
Long term loan to Arthings AB	1 698

Transactions with subsidiary Airthings America INC (NOK 1 000)	2021	2020
Sale of goods to Airthings America INC	53 750	34 398
Sale of goods to Airthings AB	3 984
Purchase of services and cost allocation from Arthings America INC	4 344	1 093
Purchase of services and cost allocation from Arthings AB	3 796
Loan interest Arthings America INC	1 125	587
Loan interest Arthings AB	47
Transactions with shareholders (NOK 1 000)	2021	2020
Commissions and accrued cost invoiced from Rn222 INC	8 038	7 549
Sale of goods to Rn222 Inc	51 387	20 095
Rent of premises from Energy Control AS	192	118
Sale of goods to Energy Control AS	966	79
Fees invoiced from Firda AS	502
Fees invoiced from Rabakken Invest AS		516

Section 5 - Fixed assets

5.1 Intangible assets

(NOK 1 000)	Goodwill	Software and systems	Technology	Total
Acquisition cost as at 1 January 2021		6 271		6 271
Additions through business combinations *	26 419		14 712	41 131
Additions		3 273	1 323	4 596
Acquisition cost as at 31 December 2021	26 419	9 544	16 036	51 998
Accumulated depreciations 31 December 2021	5 661	2 522	1 510	9 693
Net book value as at 31 December 2021	20 758	7 022	14 526	42 305
Depreciation in the year	5 661	1 435	1 510	8 606
Depreciation rate (%)	20 %	20 %	10 %
Depreciation plan	Linear	Linear	Linear
Econmic useful life	5 Years	5 Years	10 Years

* Please see note 4.2 in consolidated statment

5.2 Business combinations

On 7 July 2021 Airthings ASA merged with its subsidiary Airtight AS, a software company that has developed patented technology to reduce energy waste from commercial buildings. The merger between the wholly-owned subsidiary and the parent company was contemplated to simplify the corporate structure of the Group. For accounting and tax purposes, the effective date of the merger was 1 January 2021. Airthings AS originally became a subsidiary of Airthings ASA in August 2020.

As Airtight AS was 100% owned by Airthings ASA, the vertical merger was carried out without payment of any consideration, according to the Public Limited Liability Companies Act. The merger was accounted for according to the guidance in section 6 of the Norwegian Accounting Standard 9 (NRS 9) concerning mergers, which implies use of the group continuity method. As such, on the effective date of the merger, all assets and liabilities in Airtight AS was continued into Airthings ASA's separate financial statements at the book values used in the consolidated financial statements of Airthings ASA. Airtight AS was simultaneously dissolved.

For tax purposes, the merger was implemented with full tax continuity, in accordance with Chapter 11 of the Taxation Act.

The table below illustrates the balance sheet of Airtight AS as at the effective date of the merger (1 January 2021) and represents the book values that were merged into Airthings ASA:

Amounts in (NOK 1 000)	1.1.2021
ASSETS
Non-current assets
Intangible assets	1 469
Property, plant and equipment	139
Other non-current assets	265
Total non-current assets	1 873

Current assets
Other receivables	2 997
Cash and cash equivalents	2 341
Total current assets	5 338
TOTAL ASSETS	7 211

EQUITY AND LIABILITIES
Equity
Other equity	5 788
Total equity	5 788

Current liabilities
Trade and other payables	1 423
Total current liabilities	1 423

Total liabilities	1 423
TOTAL EQUITY AND LIABILITIES	7 211

As the merger was accounted for according to the method of group continuity, in addition to the assets and liabilities presented above, NOK 13.2 million of excess values related to technology and NOK 26.4 million related to Goodwill were transferred from the consolidated financial statements to the separate financial statements of Airthings ASA as at the effective date of the merger. The effect on equity on the separate financial statements of Airthings ASA was NOK

2.5 million, which represents the difference between the book value of shares in Airthings previously recognized and net book value of Airtight's assets and liabilities in the consolidated financial statements of Airthings ASA.

5.3 Property plant and equipment

(NOK 1 000)	Property, plant and equipment	Total
Acquisition cost as at 1 January	6 374	6 374
Additions	3 998	3 998
Acquisition cost as at 31 December 2021	10 372	10 372
Accumulated depreciations 31 December 2021	4 102	4 102
Net book value as at 31 December 2021	6 270	6 270
Depreciation in the year	1 805	1 805
Depreciation rate (%)	20 %
Depreciation plan	Linear
Econmic useful life	5 years

Section 6 - Financial instruments and equity

6.1 Restricted cash

Restricted funds deposited in the tax deduction account (NOK 1 000)	2021	2020
Restricted tax deductions	4 579	4 267
Restricted cash	5 667	3 958
Other restricted funds	1 400	1 400

Other restricted funds is a guarantee related to a credit agreement with DNB Mastercard.

6.2 Financial risk management

Overview

The parent company is exposed to a range of risks affecting its financial performance, including market risk, credit risk and liquidity risk. The Company seeks to minimize potential adverse effects of such risks through sound business practice, risk management and hedging.

Risk management is a continuous process and an integrated part of the Company's business. When operating across multiple markets, Airthings is exposed to a range of risks that may affect its business. The key risk areas are discussed below.

Market risk

Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk for the Company comprises two types of risk: interest rate risk and currency risk. Financial instruments affected by market risk include interest bearing debt, cash and cash and cash equivalents, trade receivables, lease liabilities and trade and other payables.

Interest rate risk

Interest rate risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company's borrowings have historically been exposed to interest rate fluctuations. As all borrowings were repaid in January 2021, the Company does no longer have any significant interest rate risk related to interest-bearing liabilities.

Foreign currency risk

Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign exchange rates. The Company is exposed to currency fluctuations due to the international nature of its operations. The Company's exposure to the risk of fluctuations in foreign exchange rates relates primarily to the Company's operating activities (revenue and expenses denominated in a foreign currency) and the Company's net investments in foreign subsidiaries. A significant part of revenues is denominated in USD, with a small portion incurred in NOK, EUR and CAD. Most of its operating expenses are incurred in NOK. Further, the Company could also potentially be negatively affected by fluctuations in other currencies in the future. The Company does not currently hedge currency exposure with the use of financial instruments but monitors the net exposure over time.

Credit risk

Credit risk represents the possibility of a counterparty not meeting its obligations under a financial instrument or customer contract, leading to a financial loss. The Company is mainly exposed to credit risk from its operating activities.

The credit risk is low in the Consumer segment, where most sales are based on upfront or simultaneous payment, and the Company may also seek advance payments to offset risk on trade receivables in the other segments. The Company has close connection with its customers and receivable balances are monitored on an ongoing basis. It is the Company's policy that all customers wishing to trade on credit terms are subject to credit verification procedures, which include an assessment of credit rating, short-term liquidity, and financial position.

The Company's exposure to losses have historically been low. However, the increased operations of the Company outside the US and home markets exposes Airthings to different credit risk environments. The Board of Directors deems credit risk to be at an acceptable level given the current operational circumstances and outlook of the company.

Liquidity risk

Liquidity represents the risk where the Company may potentially encounter difficulty in meeting obligations associated with financial liabilities that are settled by provision of cash or another financial assets. The Company supervises its risk by monitoring its working capital, and overdue trade receivables. The Company has a strong cash position of NOK 360 million, which the Board of Directors consider sufficient to fund the company's growth strategy towards in long-term revenue targets. The liquidity risk is hence considered to be limited.

6.3 Share capital and shareholders information

The share capital of Airthings ASA as of 31 December 2021 was NOK 1,718,164.37 consisting of 171,816,437 ordinary shares at NOK 0.01 per share. The Company's shares have equal voting rights. For information of shareholder see note 6.7 the consolidated financial statements.

Section 7 - Other disclosures

7.1 Events after the reporting period

There have been no significant adjusting events subsequent to the reporting date.

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Airthings - Annual Report 2021

Breathe better. Live better.

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AI assistant

Airthings — Annual Report 2021

3524_10-k_2022-03-30_80a1860c-24db-4c44-ab1d-8ba162370b02.pdf

Annual Report 2021

Key highlights

The year in brief

1Q

Quarterly highlights

2Q

3Q

4Q

This is Airthings ASA

Our story

International expansion & recognition

Our technology

Business overview

Airthings for Consumer (Consumer)

Airthings for Business (AfB)

Airthings for Professionals (Pro)

Letter from the CEO

Dear Airthings Community,

Board of Directors Report

Financial summary

Income statement

Balance sheet

Cash flow statement

Allocation of net profit

PARENT COMPANY ACCOUNTS

RISKS AND RISK MANAGEMENT

Liquidity

Credit

Foreign currency

Interest rate

CORPORATE GOVERNANCE

AIRTHINGS' SUSTAINABILITY JOURNEY: FOR PLANET, FOR PEOPLE, FOR BUSINESS

How Airthings products can promote energy efficiency and avoid CO2 emissions in buildings

How Airthings understands the lifetime impact of our product

How Airthings products help occupants breathe healthier air

How Airthings is pursuing a social responsibility from the inside

How Airthings products can help improve our customers' business

How Airthings is strengthening its governance

When will the sustainability report 2021 be published?

OUTLOOK

Statement of the Board of Directors and CEO

Responsibility Statement

Shareholder information

Investor relations

Devoted to good Corporate Governance

Employee Share Purchase Program

Share capital

Shareholders' Authorization to the Board to Increase Share Capital in the Group

Airthings Financials

Table of Contents

Consolidated financial statements

Notes to the consolidated financial statements

Section 1 - General information and accounting policies

Section 2 - Operating segments and profit or loss items

Section 3 - Other operating activities

Section 4 - Group structure

Section 5 - Fixed assets

Section 6 - Financial instruments and equity

Section 7 - Other disclosures

Section 8 - Changes in accounting policies

Alternative performance measures

Consolidated statement of profit or loss

Consolidated statement of comprehensive income

Consolidated statement of financial position

Consolidated statement of cash flows

Consolidated statement of changes in equity

Section 1 – General information and accounting policies

1.1 Corporate information

1.2 Basis of preparation

Presentation currency and functional currency

Climate risk

1.3 General accounting policies

Current versus non-current classification

Statement of cash flows

Changes in accounting policies

Standards issued but not yet effective

Amendments to IFRS 16 - Covid-19-Related Rent Concessions beyond 30 June 2021

Airthings Annual Report 2021