Shelly Group SE

Quarterly Report • Nov 29, 2022

REPORTING PERIOD

30 SEPTEMBER 2022

CONSOLIDATED FINANCIAL STATEMENTS

CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS OF 30 SEPTEMBER 2022

Unless otherwise stated, all amounts are in BGN thousand.

ASSETS	Notes	September 30, 2022	December 31, 2021
Non-current assets
Property, plant and equipment	3.01	4 692	4 798
Intangible assets	3.02	3 686	3 116
Advances for acquisition of assets		-	19
Assets with right of use	3.03	320	108
Goodwill	3.04	160	160
Investments in associated companies	3.05	88	40
Other long-term capital investments	3.06	758	2 624
Trade receivables	3.07	1 027	2 054
Deferred tax assets	3.08	57	72
Total non-current assets		10 788	12 991
Current assets
Inventory	3.09	17 435	7 560
Trade receivables	3.10	23 978	19 167
Other receivables	3.11	3 428	1 912
Cash and cash equivalents	3.12	24 739	30 541
Prepaid expenses	3.13	362	234
Total current assets		69 942	59 414
TOTAL ASSETS		80 730	72 405

Date: 14 November 2022

Compiler of the financial statements: Executive Director:

/Albena Benkova Beneva/ / Dimitar Stoyanov Dimitrov/

CONSOLIDATED STATEMENT OF FINANCIAL POSITION (continued) AS OF 30 SEPTEMBER 2022

Unless otherwise stated, all amounts are in BGN thousand.

LIABILITIES	Notes	September 30, 2022	December 31, 2021
Non-current liabilities
Bank loans	3.14	1 619	2 007
Lease liabilities	3.15	173	80
Total non-current liabilities		1 792	2 087
Current liabilities
Current share of bank loans	3.14	670	572
Current share of lease liabilities	3.15	74	58
Trade payables	3.16	1 455	1 487
Payables to employees	3.17	520	173
Social security liabilities	3.17	212	115
Tax liabilities	3.18	2 300	1 315
Other liabilities	3.19	748	1 026
Total current liabilities		5 979	4 746
TOTAL LIABILITIES		7 771	6 833
EQUITY
Registered capital	3.20	18 000	18 000
Treasury shares		(780)	-
Retained earnings	3.21	49 341	39 394
Reserves	3.22	1 800	1 800
Reserve from issue of shares	3.23	5 403	5 403
Other comprehensive income	3.24	(782)	1 036
Foreign exchange rate differences from translation of
financial statements of foreign operations		(23)	(61)
TOTAL EQUITY		72 959	65 572
TOTAL LIABILITIES AND EQUITY		80 730	72 405

Date: 14 November 2022

Compiler of the financial statements: Executive Director:

/Albena Benkova Beneva/ / Dimitar Stoyanov Dimitrov/

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE PERIOD ENDING 30 SEPTEMBER 2022

Unless otherwise stated, all amounts are in BGN thousand.

	Notes	9 months of 2022	9 months of 2021
Revenue from sale	4.01	57 829	38 521
Cost price of sales	4.01	(28 901)	(18 507)
Gross profit		28 928	20 014
Other operating income	4.02	2 718	555
Sales expenses		(2 078)	(1 830)
Administrative expenses	4.03	(13 962)	(7 215)
Other operating expenses	4.04	(1 829)	(311)
Profit from operating activities		13 777	11 213
Financial income		-	250
Financial expenses	4.05	(236)	(104)
Share in the profit of associated companies	3.05	48	-
Profit from the ordinary activities		13 589	11 359
Profit before tax on profit		13 589	11 359
Corporate profit tax income (expense)	4.06	(1 842)	(1 313)
Profit for the period from continuing operations		11 747	10 608
Profit/(loss) for the period from discontinued operations		-	(562)
Net profit		11 747	10 046
Other comprehensive income:
Items that can be reclassified to the profit or loss
From other long-term capital instruments		(1 511)	(1 894)
Foreign exchange rate differences from translation of
statements of foreign operations		38	20
Foreign exchange rate differences from written-off investments		(160)	-
Other comprehensive income for the period, after		(1 633)	(1 874)
taxation
TOTAL COMPREHENSIVE INCOME		10 114	8 172
Net profit attributable to:
Owners of the Parent-company		11 747	10 046
Minority interests		-	-
Other comprehensive income attributable to:
Owners of the Parent-company		(1 633)	(1 894)
Minority interests		-	-
Total comprehensive income attributable to:
Owners of the Parent-company		10 114	8 172
Minority interests		-	-
Net income per share		0.65	0.57

Date: 14 November 2022

Compiler of the financial statements: Executive Director:

/Albena Benkova Beneva/ / Dimitar Stoyanov Dimitrov/

The consolidated statement of comprehensive income should be read in conjunction with the explanatory notes set out on pages from 7 to 61, which form an integral part of the financial statements attached.

CONSOLIDATED FINANCIAL STATEMENT OF CHANGES IN EQUITY FOR THE PERIOD ENDING ON 30 SEPTEMBER 2022

Unless otherwise stated, all amounts are in BGN thousand.

	Registere d capital	Retained earnings	Other compreh ensive income	Share premium reserves	Reserves Treasur	y shares	Foreign exchange rate differences from translation of fin. Stat. of foreign operations	Total	Minority interest	Total equity
Balance as of January 1, 2021	18 000	26 938	4 849	5 703	1 500	(138)	280	57 132	(296)	56 836
Transfer to reserves	-	-	-	(300)	300	-	-	-	-	-
Net Profit	-	15 962	-	-	-	-	-	15 962	-	15 962
Other comprehensive income	-	-	(3 573)	-	-	-	(341)	(3 914)	-	(3 914)
Other movements	-	-	(240)	-	-	-	-	(240)	-	(240)
Dividend distribution	-	(3 600)	-	-	-	-	-	(3 600)	-	(3 600)
Sale of treasury shares	-	-	-	-	-	138		138	-	138
Change in minority interest	-	(296)	-	-	-	-	-	(296)	296	-
Effect from sale of subsidiaries	-	390	-	-	-	-	-	390	-	390
Balance as of December 31, 2021	18 000	39 394	1 036	5 403	1 800	-	(61)	65 572	-	65 572
Balance as of January 1, 2022	18 000	39 394	1 036	5 403	1 800	-	(61)	65 572	-	65 572
Net Profit	-	11 747	-	-	-	-	-	11 747	-	11 747
Other comprehensive income	-	-	(1 808)	-	-	-	38	(1 780)	-	(1 780)
Treasury shares	-	-	-	-	-	(780)	-	(780)	-	(780)
Reserves	-	(1 800)	-	-	-	-	-	(1 800)	-	(1 800)
Other variations	-	-	(10)	-	-	-	-	-	-	-
Balance as of September 30, 2022	18 000	48 559	(782)	5 403	1 800	(780)	(23)	72 959	-	72 959

Date: 14 November 2022

Compiler of the financial statements: Executive Director:

/Albena Benkova Beneva/ / Dimitar Stoyanov Dimitrov/

The consolidated statement of changes in equity should be read in conjunction with the explanatory notes set out on pages from 7 to 61, which form an integral part of the financial statements attached.

CONSOLIDATED FINANCIAL STATEMENT OF CASH FLOW

FOR THE PERIOD ENDING 30 SEPTEMBER 2022

Unless otherwise stated, all amounts are in BGN thousand.

	Notes	9 months of 2022	9 months of 2021
Cash flows from operating activity
Proceeds from clients		49 865	35 750
Payments to suppliers		(41 402)	(24 261)
Payments of taxes		(3 355)	(1 735)
Payments of corporate tax		(1 089)	(418)
Payments to employees and social security		(8 888)	(4 576)
Other proceeds/payments, net		(68)	(88)
Net cash flows from operating activities		(4 937)	4 672
Cash flow from investment activities
Cash flows related to non-current tangible and intangible assets		(1 403)	(841)
Cash flows from sales of tangible assets		-	42
Results (Profit and Losses) from investing activities		2 798	-
Purchase of investments		(100)	(8)
Net cash flows from investment activities		1 295	(807)
Cash flow from financing activities
Treasury shares		(780)	-
Financial leasing payments		(61)	(54)
Loans paid		(382)	(375)
Cash flows related to interest and commissions		(45)	(54)
Dividend paid		(1 719)	(3 436)
Other income / payments, net		(68)	(42)
Net cash flow from financing activities		(3 055)	(3 961)
Net increase (decrease) in available cash and cash equivalents for the period		(6 697)	(96)
Net positive (negative) exchange rate differences		895	70
Available cash and cash equivalents in the beginning of the period		30 541	26 050
Available cash and equivalents at the end of the period	3.12	24 739	26 024

Date: 14 November 2022

Compiler of the financial statements: Executive Director:

/Albena Benkova Beneva/ / Dimitar Stoyanov Dimitrov/

1.	Information about the Group 10
1.1.	Legal status10
1.2.	Ownership and Management 10
1.3.	Scope of Activities11
1.4.	Group structure 11
2.	Basics of preparation of financial statements and accounting policies12
2.1.	General framework of financial reporting 12
2.2.	Initial application of new and amended IFRSs in force for the current accounting period13
2.3.	Accounting principles14
2.4.	Functional currency and recognition of currency exchange rate differences14
2.5.	Transactions and balances 15
2.6.	Assumptions 16
2.7.	Subsidiaries and associated companies16
2.8.	Minority interest 17
2.9.	Consolidation17
2.10.	Definition and assessment of the items in the consolidated financial statements 17
2.10.1.	Revenues17
2.10.2.	Expenses20
2.10.3.	Property, plant and equipment 20
2.10.4.	Intangible assets22
2.10.5.	Goodwill 23
2.10.6.	Other long-term capital investments23
2.10.7.	Investments in Associated companies24
2.10.8.	Non-current assets held for sale 24
2.10.9.	Inventories 25
2.10.10.	Financial instruments25
2.10.11.	Cash and cash equivalent29
2.10.12.	Leasing29
2.10.13.	Provisions 30
2.10.14.	Liabilities to employees31

2.10.15.	Share capital31
2.10.16.	Income tax expenses33
2.10.17.	Earnings per share34
2.10.18.	Judgments that are crucial in applying accounting policies of the Group34
2.10.19.	Fair values35
	3. Notes to the consolidated statement of financial position37
3.01.	Property, plant and equipment 37
3.02.	Intangible assets38
3.03.	Assets with right of use39
3.04.	Goodwill 39
3.05.	Investments in associated companies39
3.06.	Other long-term capital investments40
3.07.	Long-term trade receivables 40
3.08.	Deferred tax assets40
3.09.	Inventories 41
3.10.	Trade receivables41
3.11.	Other receivables42
3.12.	Cash and cash equivalents 42
3.13.	Prepaid expenses43
3.14.	Bank loans 43
3.15.	Lease44
3.16.	Trade payables45
3.17.	Payables to employees45
3.18.	Tax liabilities45
3.19.	Other liabilities 45
3.20.	Registered capital46
3.21.	Retained earnings47
3.22.	Reserves47
3.23.	Reserve from issue of shares47
3.24.	Other comprehensive income 48
4.	Notes to the consolidated statement of comprehensive income48
4.01.	Sales revenue and cost price of sales48
4.02.	Other operating income 48

4.03.	Administrative expenses49
4.04.	Other operating expenses49
4.05.	Financial expenses49
4.06.	Tax Expense/Savings49
5.	Contingent liabilities and commitments 50
6.	Transactions with related parties 50
7.	Financial instruments by category 51
8.	Financial risk management 52
9.	Fair value 58
10.	Events after the end of reporting period60

AS OF 30 SEPTEMBER 2022

Unless otherwise stated, all amounts are in BGN thousand.

1. Information about the Group

1.1.Legal status

Allterco JSCo (the mother company), Sofia, is entered in the Commercial Register of the Registry Agency with UIC as per Bulstat (Unified Identification Code as per the Bulgarian Statistical Register): 201047670 and LEI code 8945007IDGKD0KZ4HD95. The company is with registered office and address of management in Bulgaria, Sofia 1407, 103, Cherni Vrah Blvd. No changes in the seat, address or the name of the company were made during the reporting period. The initial registered capital was BGN 5,488,000 (five million four hundred and eighty-eight thousand), distributed in 5,488,000 ordinary registered voting shares with nominal value of BGN 1.00 each. At the end of 2015, the capital was increased to BGN 13,500 thousand through cash and non-cash contributions. At the end of 2016, the capital was increased to BGN 15,000 thousand after the successful Initial Public Offering on the Bulgarian Stock Exchange. In 2020, the capital was increased to BGN 18,000 thousand as a result of a procedure for Secondary Public Offering of a new issue of shares. The public offering of shares was carried out in the period September 28, 2020 – October 30, 2020 on the basis of a Prospectus, together with the supplements to it, confirmed by the Financial Supervision Commission with Decision № 148-F of February 18, 2020, Decision № 405-E of June 11, 2020, Decision № 601-E of August 13, 2020 and Decision № 791-E of October 29, 2020.

Since December 2016 the shares of Allterco JSCo are traded on Bulgarian Stock Exchange and from 22.11.2021 company's shares are also traded on the Frankfurt Stock Exchange.

As of 30 September 2022 the Group is managed and represented by Svetlin Todorov, Wolfgang Kirsch and Dimitar Dimitrov.

1.2.Ownership and Management

The Allterco Group includes Allterco JSCo. (the parent-company) and its subsidiaries, in which the parentcompany has a direct or indirect controlling interest. Allterco JSCo. is a public company in Bulgaria under the Public Offering of Securities Act.

The distribution of the share capital of the company Allterco JSCo. as of 30 September 2022, is as follows:

Name	Number of shares:	% in the capital
Svetlin Todorov	5 847 120	32.48%
Dimitar Dimitrov	5 847 120	32.48%

Unless otherwise stated, all amounts are in BGN thousand.

Persons holding less than 5% of the capital
Other physical persons and legal entities	6 305 759	35.04%
Total	17 999 999	100.00%

As of 30 September 2022, the Company announced its intention to acquire 40,000 shares representing 0.22% of the capital.

As of 30 September 2022 members of the Board of Directors are:

• Gregor Bieler Chairman;
• Nikolay Martinov Deputy Chairman;
• Dimitar Dimitrov Executive Director and Representative;
• Wolfgang Kirsch Executive Director and Representative;
• Svetlin Todorov Member of the Board of Directors and Representative;

The representatives represent the Company together or individually.

1.3.Scope of Activities

The scope of activities of Allterco JSCo includes the acquisition, management, evaluation and sale of participations in Bulgarian and foreign companies; acquisition, management and sale of bonds; acquisition, evaluation and sale of patents, assignment of licenses for use of patents to companies in which the Company participates; financing of companies in which the Company participates.

The scope of activities of group companies includes development, production and trade with IoT (Internet of Things) devices and management of real estate owned by the Group.

1.4. Group structure

As of 30 September 2022 the Group included Allterco JSCo. and the following subsidiaries:

	September 30 2022	December 31 2021
Name of the company	Percentage of participation	Percentage of participation
In the country
ALLTERCO TRADING OOD (Ltd.)	100%	100%
ALLTERCO ROBOTICS EOOD (Solely-owned LLC)	100%	100%
ALLTERCO PROPERTIES EOOD (Solely-owned LLC)	100%	100%

Unless otherwise stated, all amounts are in BGN thousand.

	September 30 2021	December 31 2020
Name of the company	Percentage of participation	Percentage of participation
Abroad
ALLTERCO ROBOTICS INC, USA	100%	100%
ALLTERCO EUROPE GMBH, GERMANY	100%	100%

In the beginning of 2021 Allterco JSCo. acquired a stake in newly established (associated) company in China – Allterco Asia Ltd., with a seat and office in Shenzhen. The registered share capital of the newly registered company is CNY 100 000. Allterco acquired 30% (8 thousand BGN) stake and holds an option to acquire additional up to 50% extending its total shareholding up to 80%.

In September 2021 Allterco sold its participation in the capital of 3 Asian subsidiaries.

In December 2021 Alltreco JSCo. established a new subsidiary in Germany. The name of the new subsidiary is Allterco Europe GmbH and its registered capital is EUR 500 000 and it is 100% owned by Allterco JSCo. In the first quarter of 2022 Allterco JSCo increased the capital of its wholly owned subsidiary Allterco Robotics Ltd. The goal of the capital increase is to accelerate the development of new products, to increase the production capabilities and finance the entrance to new markets. The registered capital of Allterco Robotics was increased from BGN 1 500 000 to BGN 7 000 000 by issuing new 5 500 000 shares at par value of BGN 1,00 each.

During the reporting period the Board of Directors of Allterco JSCo has approved to increase the capital of the subsidiary Allterco Robotics Inc USA with 1.5 million USD, part of which will be an increase in capital and an additional cash contribution.

At the end of the reporting period Alltreco JSCo has made an additional cash contribution of 1 million USD (2 006 thousand BGN) to its subsidiary, which is provided for a period of one year against an annual interest rate of 1.0%. At the date of this statement, the increase in the capital of the subsidiary by 500 thousand USD has not been finalised.

2. Basics of preparation of financial statements and accounting policies

2.1. General framework of financial reporting

Unless otherwise stated, all amounts are in BGN thousand.

The Group maintains its current accounting and prepares its financial statements in accordance with the requirements of the Bulgarian commercial and accounting legislation.

These financial statements have been prepared in accordance with the requirements of the International Accounting Standards, published by the International Accounting Standards Board and adopted by the European Union. As of 30 September 2022, IASs include the International Accounting Standards (IASs), the International Financial Reporting Standards (IFRSs), the Interpretations of the Standing Interpretation Committee and the Interpretations of the IFRS Interpretation Committee, approved by the IAS Committee.

The IAS Committee issues every year the standards and their interpretations, which after the formal approval by the EC, are valid for the year in which they are issued. However, a big part of them is not applicable to the company's business because of the specific issues that are addressed in them.

2.2. Initial application of new and amended IFRSs in force for the current accounting period

2.2.1. Accounting standards applicable for the current reporting period

The management considered all standards and clarifications to the standards, which are applicable to the activities of the Company and which are officially adopted by the EU as of the date of preparation of the current financial statements.

The management reviewed the amendments in the existing accounting standards which are enforceable as of January 1, 2022 and assessed that no changes in the current accounting policy are necessary.

2.2.3. Standards and clarifications issued by IASC awaiting adoption by the EU Commission

Standard or clarification, date of amendment and enforcement	Name of the standard or clarification	Adoption status by EU Commission
Amendments to IAS 1 issued on 23 January 2020 and 15 July 2020, in effect for annual financial periods starting at or after 1 January 2023	Classification of liabilities as current or non-current and classification of assets as current and non-current – postponement of enforcement date	Waiting adoption	for	a	date	of
Amendments to IAS 1 issued on 12 February 2021, in effect for annual financial periods starting at or after 1 January 2023	Financial statements presentation and disclosure of accounting policies	Waiting adoption	for	a	date	for
Amendments to IAS 8 issued on 12 February 2021, in effect for annual financial periods starting at or after 1 January 2023	Accounting policies, Amendments in the accounting assessments and mistakes: Definition of accounting assessments	Waiting adoption	for	a	date	for

Unless otherwise stated, all amounts are in BGN thousand.

Amendments to IAS 12, issued on 7 May 2021, in effect for annual financial periods starting at on after 1 January 2023	Corporate profit tax: Deferred tax related to assets and liabilities arising from one deal	Waiting for a date for adoption
IFRS 17 issued on 9 December 2021, in effect for annual financial periods starting at or after 1 January 2023	Insurance contracts: Initial application of IFRS 17 and IFRS 9 – Comparable data	Submitted for adoption by the Commission, expected to be adopted during the first quarter of 2022

2.3. Accounting principles

The consolidated financial statements of the Group have been prepared in accordance with the going concern principle. The latter assumes that the Group will continue to exist in the foreseeable future.

During the last reporting period the COVID-19 pandemic did not cause any negative effect on the business activities of the Group. The military conflict between Russia and Ukraine, which started in February 2022, at this stage, also do not have negative effect on the business of the Group.

The Management has no plans or intentions to sell the business or discontinue the operations, which could significantly change the book value or classification of the assets and liabilities recognized in the financial statements.

The valuation of assets and liabilities and the measurement of income and expenses are carried out in compliance with the principle of historical cost. This principle has been modified in certain cases by revaluing certain assets and / or liabilities to their fair value at December 31 of the current or previous year, as set out below.

2.4. Functional currency and recognition of currency exchange rate differences

Functional and Reporting Currency

The accounting currency for the presentation of the elements of the consolidated financial statements is the Bulgarian Lev (BGN), which is the functional currency of Allterco JSCo.

The data in the elements of the consolidated financial statements and the notes thereto are presented in thousands of BGN, unless explicitly stated otherwise. When presented in the financial statements and the explanatory notes, amounts over BGN 500 are rounded to BGN 1 thousand.

The Group's companies keep their accounting records in the functional currency of the country in which they operate. The effects of exchange rate differences related to the settlement of foreign currency transactions or the accounting of foreign exchange transactions at rates other than those at which they were

Unless otherwise stated, all amounts are in BGN thousand.

initially recognized are included in the statement of comprehensive income at the time they occur, are treated as "other operating income and expenses", except for those related to investments and loans denominated in foreign currency, which are presented as "financial income" and "financial expenses". Nonmonetary assets and liabilities initially denominated in foreign currencies should be translated to the functional currency using the historical exchange rate at the date of the transaction and subsequently not revaluated at the closing exchange rate.

Comparative data

Usually the Company presents comparative information about the comparable (previous) reporting period. Where necessary, comparative data shall be reclassified (or recalculated) in order to achieve comparability against changes in performance in the current reporting period.

A change has been made to the breakdown of administrative expenditure for the nine months of 2021 in order to be comparable to the current and previous periods.

2.5. Transactions and balances

A transaction in foreign currency is recognized initially in the functional currency by applying the foreign currency exchange rate (spot) between the functional currency and the foreign currency at the time of the transaction or operation.

At each date of financial statement preparation:

(a) monetary positions, receivables and payables denominated in foreign currency are recalculated into the functional currency using the exchange rate published by the BNB on the last business day of the month of the report;

(b) non-monetary items held at historical cost in a foreign currency are translated using the exchange rate at the date of the transaction, if an exchange rate other than that of the transaction (average monthly, daily or other) is applied; and

(c) non-monetary items held at fair value in a foreign currency are recalculated using the exchange rates at the date when the fair value was determined.

Foreign currency exchange differences are recognized in accordance with IAS 21 the Effects of Changes in Foreign Exchange Rates.

The items of the consolidated statement of financial position and consolidated statement of comprehensive income of foreign companies of the Group, using a functional currency other than Bulgarian lev, are

Unless otherwise stated, all amounts are in BGN thousand.

translated into BGN to be included in the consolidated statement of the group as follows

• All monetary and non-monetary assets and liabilities (including comparative information) are recalculated at the BNB closing exchange rate at the date of the relevant statement of financial position. As of 30 September 2022 the exchange rate of BGN to USD was 2.00639 BGN and for NOK was 1.84795 BGN for 10 NOK (As of 30 September 2021 BGN/USD was 1.68912 and BGN/10 NOK was 1.92408);
• The income and expense items of each comprehensive income statement are recalculated at the accounting date at the weighted average exchange rate for the accounting year;
• All exchange rate differences obtained are recognized as other comprehensive income.
• The cumulative amount of these exchange rate differences is presented in a separate component of equity until the foreign operation is released.

2.6. Assumptions

The presentation of financial statements in accordance with International Financial Reporting Standards requires the management to make the best estimates, accruals and reasonable assumptions that have an effect on the reported values of assets and liabilities, of income and expenses, and of the disclosure of contingent receivables and liabilities. These estimates, accruals and assumptions are based on the best assessment using the available information at the date of preparation of the financial statements, and therefore future actual results may differ from the amounts presented in the current financial statements.

2.7. Subsidiaries and associated companies

Subsidiaries are the entities over which Allterco JSCo. exercises control as defined in IFRS 10 Consolidated Financial Statements.

The parent-company (the investor) controls the investee company if it has:

• Rights over the ownership of the subsidiary;
• Rights over the variable returns from its participation in the subsidiary;
• Ability to use its powers over the entity in order to influence the size of return on investment.

Subsidiaries are considered controlled starting from the date on which control is acquired by the Group and they cease to be consolidated on the date when the control have been lost.

Unless otherwise stated, all amounts are in BGN thousand.

Associated company is a company in which the Group has significant influence on decisions regarding operating and financial policies, but without being able to fully control those policies.

2.8. Minority interest

Minority interest is valued at the proportionate share of identifiable net assets at the acquisition date.

2.9. Consolidation

The consolidated financial statements of the Group include the financial statements of the parent company and the subsidiaries. All assets, liabilities, capital, income, expenses and cash flows of the group companies are presented as such as they belong to just one entity.

Subsidiaries are those entities that are controlled by the parent company. Control occurs when the parent company exercises its rights on variable return arising from its participation in the subsidiary's capital and has the ability to influence this return from investment through its power. The consolidated financial statements have been prepared following the same accounting policies with respect to similar transactions and business facts of all companies in the group. All mutual interests, as well as significant internal transactions, balances and unrealized gains in the Group are eliminated and the financial statements are prepared using the full consolidation method. The financial results of operations of the subsidiaries are included in the consolidated financial statements from the date of acquisition of control over them and cease to be consolidated from the date on which such control is lost. When a subsidiary is acquired as a result of an internal group restructuring, its net assets and financial result are included from the beginning of the earliest accounting period presented in the financial statements.

2.10. Definition and assessment of the items in the consolidated financial statements

2.10.1. Revenues

Revenue from sales and operating expenses has been accrued at the time of their occurrence, regardless of cash receipts and payments. The accounting and recognition of revenue and expenses should be carried out in compliance with the requirement for a cause-consequence connection between them.

Revenue is measured at the fair value of the remuneration received or to be received or paid, less any discounts provided.

Unless otherwise stated, all amounts are in BGN thousand.

The Group recognizes revenue when the amount of revenue can be measured reliably, when it is possible for the Group to obtain future economic benefits, and when it meets specific criteria for each of the Group's activities, as specified below.

Amounts collected on behalf of third parties, such as sales taxes and value added tax, are excluded from revenue.

▪ Revenue recognition under contracts with customers

Revenues in the Group are recognized when the control over the goods and/or services promised in the contract with the customer are transferred to the customer. The control is transferred to the customer upon fulfilment of the contractual obligations by transferring the promised goods and/or rendering the promised services as in general the Group generally controls the goods or services before transferring them to the customer.

The Group recognizes revenue when it meets its obligations under the terms of the contract, by transferring the promised service to the customer. An asset (good or service) is recognized as transferred after the customer obtains control over that asset.

▪ Evaluation of a contract with a customer

There is a contract with a customer only when upon its entry into force it:

• ✓ it has a commercial nature and motive;
• ✓ the parties have approved it (orally, in writing or on the basis of "established and generally accepted business practice") and have undertaken to fulfil it;
• ✓ the rights of each party can be identified in relation to the goods or services to be transferred;
• ✓ payment terms can be identified; and
• ✓ there is a probability that the remuneration to which the company is entitled in the performance of its obligations will be received.

A contract for which one of the above criteria has not yet been met is subject to a new evaluation in each reporting period. Remuneration received under such a contract is recognized as a liability (liability under the contract) in the Statement of financial position until:

• ✓ all criteria for recognition of a contract with a customer are met;
• ✓ the company has fulfilled its obligations and has received all or almost all of the remuneration (which is not refundable); and / or

Unless otherwise stated, all amounts are in BGN thousand.

✓ when the contract is terminated and the remuneration received is not refundable.

In the initial evaluation of its contracts with customers, the Company makes an additional analysis and assessment of whether two or more contracts should be considered in their combination and should be reported as one and respectively whether the promised goods and / or services in each individual and / or combined contract must be accounted for as one and / or more performance obligations.

Any promise to transfer goods and / or services that are distinguishable (themselves and in the context of the contract) is accounted for as a single performance obligation.

The Company recognizes revenue for each individual obligation to perform within an individual contract with a customer by analyzing the type, term and conditions for each specific contract.

▪ Measurement of revenues under contracts with customers

The revenue is measured on the basis of the transaction price determined for each contract.

The transaction price is the amount of the remuneration to which the Company expects to be entitled, except for the amounts collected on behalf of third parties. In determining the transaction price, the Company takes into account the terms of the contract and its usual commercial practices.

▪ Transaction price and payment terms

The transaction price usually includes a fixed sale price, according to a general or customer price list.

▪ Variable remuneration

The Variable remuneration is included in the transaction price only to the extent that it is highly probable that no significant adjustment will be made to the amount of revenue recognized cumulatively.

Revenue from services

The company reports revenues from services, complying with the commitments under the contract. Revenues from services are reported upon final completion of the services (by sites) recognized as performed.

Other income / revenues

Other income and revenues are recognized when the right to receive them is established.

The Group companies apply IFRS 15 and the management carefully examines its trade practices for possible changes at the time of revenue recognition. No change in the obligations for performance and the

Unless otherwise stated, all amounts are in BGN thousand.

distribution of the price of the contracts and recognition of revenues is needed for the reporting period.

Depending on the nature of the activity and the contracts with the clients, the management has assessed the categories of revenue breakdown and has disclosed them in Note 4.01.

2.10.2. Expenses

The expenses of the Group are recognized at the time of their occurrence and on the basis of the accrual and comparability principles. Expenses are recognized when there is a decrease in future economic benefits associated with a decrease in an asset or an increase in a liability that can be measured reliably. Recognition of expenses for the current period is made when revenue is accrued. An expense is recognized immediately in the statement of comprehensive income when the expense does not create future economic benefits or when and to the extent that future economic benefits do not meet the requirements or cease to meet the requirements for recognition of an asset in the statement of financial position. Expenses are accounted for on an accrual basis and are comparable to recognized revenue. They are measured at the fair value of the remuneration paid or pending for payment.

Expenses for future periods shall be deferred for recognition as current expenses in the period in which the obligations under the contracts to which they refer, would be performed.

Financial expenses consist of interest expenses and other direct costs related to loans as well as bank fees and losses from foreign currency exchange.

2.10.3. Property, plant and equipment

Property, plant and equipment (non-current tangible assets) are presented in the financial statements at acquisition cost (cost price) less accumulated depreciation and impairment losses.

Initial evaluation

Upon initial acquisition, property, plant and equipment are evaluated at acquisition cost (cost price), which includes the purchase price, including customs charges and any directly attributable costs of bringing the asset to working condition. The direct costs are as follows: costs of site preparation, costs of initial delivering and handling, installation costs, costs for personnel remuneration fees related to the project, nonrefundable taxes, etc.

When acquiring property, plant and equipment on a deferred payment basis, the purchase price is equivalent

Unless otherwise stated, all amounts are in BGN thousand.

to the present value of the liability, discounted on the basis of the interest rate on the borrowed resources of the company with a similar maturity and purpose. The difference between the cash price equivalent and the general payment is recognized as interest over the course of the loan unless it is capitalized in accordance with IAS 23.

Evaluation after recognition

The approach chosen by the Group for the subsequent evaluation of property, plant and equipment is the acquisition cost model - less any subsequent depreciation and any accumulated impairment losses.

For all other classes of non-current tangible assets, the company has applied the acquisition cost model.

Depreciation Methods

The Company uses the straight-line method of depreciation of non-current tangible assets. Depreciation of assets begins when they are available for use. The useful life by groups of assets is determined in accordance with: physical wear and tear, specifics of the equipment, future intentions for use and actual obsolescence.

The useful life by classes of assets is as follows:

Vehicles	4 years
Computer equipment	2-5 years
Office equipment	5- 6,67 years
Other non-current tangible assets	6,67 years

The determined useful life of non-current tangible assets is reviewed at the end of each year and, if significant deviations are found against future expectations for the useful life of the assets, it is adjusted prospectively.

Write off of non-current tangible assets

The book value of an item of property, plant and equipment is written off: when it is sold, when no other economic benefits are expected from its use, or when it is identified as missing.

Profits or losses arising on the write off of an item of property, plant and equipment are included in the statement of comprehensive income when the asset is written off (unless IAS 17 requires otherwise in a sale and leaseback). Profits and losses on disposals of non-current assets are determined by deducting the book value of the asset and the selling expenses from the proceeds from the sale (disposal). They are stated

Unless otherwise stated, all amounts are in BGN thousand.

net, to "Other operating income" in the statement of comprehensive income.

The receivable on disposal of an asset of property, plant and equipment is initially recognized at fair value.

2.10.4. Intangible assets

Intangible assets are presented in the financial statements at acquisition price (cost price) less accumulated depreciation and impairment losses.

The Group applies a straight-line method of depreciation of intangible assets with a useful life of 2 years for the software products, 6.67 years for the software platform, 3 years for an ISO certificate.

The book value of the intangible assets is reviewed for impairment when there are events or changes in circumstances that indicate that the book value amount could exceed their recoverable amount. Then the impairment is included as an expense in the statement of comprehensive income.

Initial assessment

Externally generated intangible assets on their acquisition are evaluated at acquisition price, which includes purchase price, import duties, non-refundable taxes and expenses of preparing the asset for its intended use. The direct expenses are: expenses for preparation of the site (the place where the asset will be used), expenses for initial delivery, installation expenses, expenses for fees of persons related to the project, nonrefundable taxes, etc.

Intangible assets are recognized if they meet the definition of intangible assets set out in IAS 38 Intangible Assets, namely:

• − Meets the definition of an intangible asset;
• − Upon its acquisition it can be reliably assessed;
• − Economic benefits are expected from the use of the asset, as evidenced by the availability or plan to obtain sufficient resources to enable the enterprise to obtain the expected economic benefits; the ability to effectively perform its functional role in accordance with the intention of the enterprise regarding its use or there is a clearly defined and specified technical feasibility.

Subsequent expenses

Expenses related to the maintenance of initially established standard efficiency, incurred after the commissioning of intangible non-current assets, are recognized as current at the time of their

Unless otherwise stated, all amounts are in BGN thousand.

implementation. The book value of the intangible asset is adjusted to the extent of the expenses leading to the increase of the expected future economic benefits associated with the use of an intangible asset over the initially determined standard efficiency.

2.10.5. Goodwill

Goodwill is the excess of purchase prices over the fair value of identifiable net assets of company acquires as of the date of acquisition (business combination). Initially, it is presented in the consolidated financial statements at acquisition cost and subsequently it is presented at acquisition cost minus impairment. Goodwill is not amortized.

The goodwill generated as a result of the acquisition of a daughter company is presented in the consolidated statement of financial position as a part of non-current assets and the goodwill generated as a result of acquisition of joint-ventures or associated companies is included in the total value of investment and is reported as "investments in associated companies".

The goodwill associated with the acquisition of associated companies is tested as part of the total value of the investment. The goodwill associated with the acquisition of daughter companies is tested for impairment at least one per year. Losses recognized as a result of impairment of goodwill are not reversable. Profit or loss from the sale of a daughter company include also book value of goodwill associated with this daughter company.

Any goodwill amount recognized in the financial statements is attributable to a certain cash generating object at the time a business combination is completed, and this object is applied when tests for impairment are conducted. For determining the cash-generating objects, are considered only objects that are expected to generate future economic benefits and that are subject to the business combination, which generated the goodwill.

Losses from impairment of goodwill are presented in the statements of comprehensive income as part of "Impairment of non-current assets.

2.10.6. Other long-term capital investments

Other long-term financial investments are non-derivative financial assets in the form of shares and participation of other companies (minority interest) held with a long-term perspective.

Initial valuation

Unless otherwise stated, all amounts are in BGN thousand.

Capital investments are initially recognized at acquisition cost, which is the fair value paid, including direct acquisition cost of the investment (the financial asset). All purchases and sales of capital investments are recognized on the "trading date" of the transaction, i.e., the date on which the company commits to purchase or sell the asset.

Subsequent evaluation

Capital investments owned by the Group are subsequently evaluated at fair value. The results of the subsequent evaluation to fair value are presented in the statement of comprehensive income (in other components of comprehensive income) and respectively in the reserve related to financial assets at fair value, through other comprehensive income. These results are transferred to retained earnings on disposal (sale) of the respective investment.

2.10.7. Investments in Associated companies

Investments in associated companies are reported following the capital method. The share of the Group in the comprehensive income of an associated company is shown on one line in the consolidated statements in a way that the amount of investment reflects the share of the Group in the net assets of the associated company as of the date of the financial statements. The Group recognizes its share in the losses of an associated company up to the amount of its investment, including all internal loans extended, unless it has undertaken an obligation to pay such liabilities on behalf of the associated company.

As of 31.03.2022 the Group reports a share in the profit of associated companies at the amount of BGN 6 thousand. The balance sheet amount of investments in associated companies was increased with the amount of reported profit.

2.10.8. Non-current assets held for sale

Non-current assets are classified as held for sale if their book value will be recovered through sale rather than through continuing use in the Company's operations. This condition is considered to exist only when the sale is highly secure and the relevant non-current assets are available for immediate sale in their present condition.

Non-current assets classified as held for sale are measured at the lower value between the fair value and the book value less the costs to sell.

Unless otherwise stated, all amounts are in BGN thousand.

2.10.9. Inventories

Inventories are accounted at the lower of the two following values: acquisition cost (cost price) and net realizable value.

The costs incurred to bring an inventory to its present condition and location are included in the cost of acquisition (cost) as follows:

• Materials the purchase price and all related costs of delivery;
• Goods the purchase price and all related costs of delivery, customs duties, transport costs, nonrecoverable taxes and other costs incurred in order to bring the goods in ready for use state.

In the use (sale) of inventory, the first-in-first-out method is used.

2.10.10.Financial instruments

Financial assets

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

Initial recognition, classification and evaluation

Upon initial recognition, financial assets are classified into three groups, according to which they are subsequently assessed at depreciated value, at fair value through other comprehensive income and at fair value through profit or loss.

The classification of financial assets upon initial recognition depends on the characteristics of the contractual cash flows of the respective financial asset and the business model of the Company for its management.

The business model of the Company for management of financial assets reflects how the Group manages its financial assets to generate cash flows. The business model determines whether cash flows are the result of contractual cash flows, the sale of financial assets, or both.

Evaluation

The Group initially presents financial assets at fair value, and in the case of financial assets that are not carried at fair value through profit or loss, the direct transaction costs are added. An exception is trade receivables that do not contain a material financing component - they are estimated based on the transaction

Unless otherwise stated, all amounts are in BGN thousand.

price determined in accordance with IFRS 15 and the invoices issued.

Subsequent evaluation

For the purposes of Subsequent evaluation, financial assets are classified into four categories:

• Debt instruments presented at depreciated value
• Debt instruments presented at fair value through other comprehensive income (reclassified to profit or loss);
• Capital instruments presented at fair value through other comprehensive income (without reclassification in profit or loss);
• Financial assets (debt instruments, capital instruments and derivatives) presented at fair value through profit or loss.

During the current period, the Group reports financial assets in one of these categories - financial assets at depreciated value.

Financial assets at depreciated value (debt instruments)

This category is the most significant for the Group.

The Group measures financial assets at depreciated value when both of the following conditions are satisfied:

• the financial asset is held and used within a business model that aims to hold the asset in order to obtain contractual cash flows from it, and
• the terms of the contract of the financial asset generate cash flows at specific dates, which represent only principal payments and interest on the outstanding principal.

The management of the Group has assessed the financial assets representing cash in banks, interest-bearing receivables from related companies, trade receivables and other receivables (i.e., trade loans receivables and others) are held by the Group in order to obtain the agreed cash flows and they are expected to result in cash flows that represent solely principal and interest payments under the business model applied.

Financial assets at depreciated value are subsequently measured using the effective interest rate method (EIR). They are subject to impairment. Profits and losses are recognized in the statement of comprehensive income (in profit or loss for the year) when the asset is written off, modified or impaired.

Unless otherwise stated, all amounts are in BGN thousand.

Write off

A financial asset is written off in the statement of financial position of the Group when:

• the rights to obtain cash flows from the asset have expired, or
• the rights to receive cash flows from the asset have been transferred or the Group has assumed an obligation to pay in full the received cash flows, without significant delay, to a third party through an agreement for transfer. In this case, the Group recognizes also the liability associated with it. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Group has retained.

Continuing involvement, which is in the form of a guarantee on the transferred asset, is measured at the lower of the two values: the initial book value of the asset and the maximum amount of consideration that the Group may be required to pay.

Impairment of financial assets

The Group recognizes an adjustment (provision for impairment) for expected credit losses on all debt instruments that are not accounted at fair value through profit or loss. Expected credit losses are calculated as the difference between the contractual cash flows payable under the terms of the contract and all the cash flows that the Group expects to receive discounted at the initial effective interest rate.

At each accounting date, the Group determines whether the debt instrument is assessed as such with low credit risk using all reasonable and well-grounded information that is available without incurring unnecessary expense or effort. In making this assessment, the Group reviews the internal credit rating of the debt instrument. In addition, the Group assesses whether there is a significant increase in credit risk when contractual payments are overdue for more than 30 days.

The Group considers a financial instrument as default when contractual payments are overdue for more than 60 days. However, in certain cases, it may treat a financial asset as default when internal or external information provides an indication that it is unlikely that the Group will receive the full amount of the outstanding contractual amounts before taking into account any credit improvements held by it. Financial assets are written off when there is no reasonable expectation for collection of contractual cash flows.

To calculate the expected credit losses of trade receivables and assets under contracts with customers, the Group has chosen and applies a simplified matrix-based approach for calculating expected credit losses and does not track subsequent changes in their credit risk. In this approach, it recognizes an adjustment

Unless otherwise stated, all amounts are in BGN thousand.

(provision for impairment) based on the expected credit loss for the entire receivable period at each reporting date. The Group has developed and applies a provisioning matrix based on historical experience with respect to credit losses, adjusted for prognostic factors, specific for the debtors and the economic environment, and correlated with the percentage of credit losses. The collectability of receivables from related companies are assessed on individual basis considering factors as financial needs of each related company and the business development plan for the next periods.

Financial assets are written-off when there is no reasonable expectation of collection of contractual cash flows.

Financial liabilities

Initial recognition, classification and evaluation

Initially, all financial liabilities are recognized at fair value, and in the case of loans and borrowings and trade and other payables, the net of directly related transaction costs.

Subsequent evaluation

Subsequent evaluation of financial liabilities depends on their classification as described below.

Financial liabilities evaluated at depreciation value

This category is essential for the Group. Subsequent to their initial recognition, the Group evaluates interestbearing loans and borrowings at depreciation value using the effective interest method. Profits and losses are recognized in the statement of comprehensive income (in profit or loss for the year) when the corresponding financial liability is derecognized, as well as through depreciation at the effective interest rate method.

Depreciation value is calculated by taking into account any discounts or acquisition premiums, as well as fees or expenses, which are an integral part of the effective interest rate. Depreciation is included as a "financial expense" in the statement of comprehensive income (in profit or loss for the year).

Write off

Financial liabilities are written off when the liability is repaid, terminated or expires. When an existing financial liability is replaced by another of the same creditor under substantially different conditions, or the terms of an existing liability are substantially altered, such exchange or modification shall be treated as derecognition of the original liability and recognition of a new one. The difference with the book value of

Unless otherwise stated, all amounts are in BGN thousand.

a financial liability settled or transferred to another party in cash and/or non-monetary assets is recognized in profit or loss for the period.

2.10.11.Cash and cash equivalent

Cash includes cash on hand and amounts in current accounts, and cash equivalents are short-term deposits with banks whose original maturity is less than 3 months.

The cash flow statement is presented using the direct method.

For the purpose of preparing the cash flow statement:

• ✓ Cash inflows from customers and cash payments to suppliers are presented gross, including VAT;
• ✓ VAT on purchases and sales of non-current assets is stated in the cash flows from operating activities, to the extend it participates and is recovered in the operating cash flows of the Company for the relevant accounting period.
• ✓ Interest on loans and deposits granted/received is included as inflows / payments to financial activities.

Cash and cash equivalents are subsequently presented at depreciated value, without any accumulated adjustments for expected credit losses.

2.10.12.Leasing

Operating lease

At the inception of the contract, the company assesses whether the contract represents or contains a lease. A contract represents or contains elements of a lease if, under that contract, the right to control the use of an asset for a specified period of time is transferred in exchange for consideration. The assessment includes an assessment of the following factors:

• Whether the contract involves the use of an identified asset, this may be stated explicitly or by default, and must be physically identifiable or must represent essentially the entire capacity of a physically separate asset. If the supplier has a substantial right of replacement, then the asset is not identified;
• Whether the company is entitled to receive substantially all the economic benefits from the use of the asset throughout the useful life; and
• Whether the company has the right to manage the use of the asset. The company has this right when

Unless otherwise stated, all amounts are in BGN thousand.

it has decision-making rights concerning the change in the manner and purpose of using the asset. In the rare cases where it is predetermined how and for what purpose the asset will be used, the company has the right to manage the use of the asset if:

• ✓ The company has the right to operate the asset; or
• ✓ The company has designed the asset in a way that determines in advance how and for what purpose it will be used

Financial leasing

The lease contract under which all risks and economic benefit of ownership of the asset are transferred to the company of the Group is classified as a financial leasing and the leased asset is capitalized in the consolidated statement of financial position of the lessee and presented as property, plant and equipment. Upon initial recognition, leased assets are accounted at the lower value of the following two: their current fair value or the present value of the minimum lease payments. The minimum lease payments are apportioned between the finance expenses (interest) and the reduction of the lease liability (principal). Financial expenses are allocated to each period over the lease term so that a constant interest rate is reached on the remaining outstanding portion of the principal under the lease liability. Interest expenses are included in the consolidated statement of comprehensive income as "Financial expenses".

Assets acquired under a financial leasing are depreciated based on the useful life of the asset and within the lease term.

2.10.13.Provisions

Provisions are recognized when the Group has a present (constructive or legal) obligation as a result of a past event, and it is probable that an outflow of resources will be required to settle the obligation. Provisions are estimated on the basis of the best estimate of the management at the date of preparation of the financial statements for the expenses necessary for the settlement of the respective obligation. The estimate is discounted when the maturity of the liability is long-term. When it is expected that part of the resources that will be used to settle the obligation will be recovered from a third party, the company recognizes a receivable, if there is a high degree of certainty of its receipt, its value can be reliably determined as income (credit) on the same position in the Statement of Comprehensive Income, where the provision itself is presented.

Unless otherwise stated, all amounts are in BGN thousand.

The Group accrues provisions for guarantee service of devices sold. The provision is calculated on the basis of best estimate of management about the expected expenses, which the Group will incur in case of guarantee events and based on the past experience about the sold products/ services.

2.10.14.Liabilities to employees

Defined contribution plans

The government of the Republic of Bulgaria undertakes the liability to ensure pension payments on the basis of defined contribution plans. The liability of the Company to pay the amounts booked under the defined contribution plans for the employees is recognized the in statement of comprehensive income at the time of occurrence of the liability.

Paid annual leave

The Group recognize as a liability undiscounted amount of estimated cost of annual paid leave, which is expected to be paid to employees in return to their labor for the past reporting period.

Defined income for retirement

In compliance with the Labor Code, when a labor contract of an employee that obtained the right for pension is terminated, the Company pays a compensation at the amount of two gross monthly salaries, if the employee worked for the Company less than 10 years, or six gross monthly salaries if the employee worked for the Company more than 10 years. The Group estimates that the amount is not significant and therefore it is not included in the financial report.

2.10.15. Share capital

The Group has adopted the financial concept of maintaining the capital. The financial capital maintaining is assessed in nominal monetary units. Profit for the reporting period is considered to be acquired only if the total equity amount at the end of the period exceeds the amount in the beginning of the period, after deducting the distributions to owners or their investments in capital during the period.

Allterco JSCo is a joint-stock company and is obliged to register in the Commercial Register its statutory share capital, which shall serve as a security for its creditors. The shareholders are responsible for the liabilities of the mother-company up to the amount of their shareholding in the capital and may claim the return of that holding only in case of bankruptcy or liquidation proceedings. The mother-company reports

Unless otherwise stated, all amounts are in BGN thousand.

it registered capital at par value of the number of shares registered.

Equity is the residual value of an entity's assets after deducting all its liabilities. This includes:

Registered capital – it is presented in the Statement of financial position according to the number of issued shares with nominal value of each share.

Financial result – it is formed as the difference between the income and expenses accrued for it. This includes:

• a) retained earnings;
• b) uncovered loss;
• c) the net profit or loss for the current year, which is presented in the statement of financial position after deduction of tax expense due.

The Equity is decreased by the dividends paid to the shareholders during the period in which they are distributed (voted by the General Meeting).

In accordance with the requirements of the Commercial Law and the Statute of Allterco JSCo., the company is obliged to form reserves at the expense of:

• − at least one-tenth of the annual profit, until the funds accumulated reach 25 per cent of the share capital;
• − the funds received above the nominal value of the shares issued (premium reserve);

Treasury shares are reported in the statements of financial position at acquisition cost, which is used to decrease the equity of the Group. The profit and losses from the sale of treasury shares are reported in the equity of the Group, as part of the retained earnings.

During the past reporting periods the company made payments to the employees of its Bulgarian subsidiaries in shares.

The payment in shares against labor services is made with shares of the mother-company. The equity instruments are valued at fair value as of the date of share transfer. The expense related to the payment in shares is recognized for the period in which the labor services were rendered.

Reserve from translation of financial statement of foreign operations - arises from the net effects of foreign currency conversion of the subsidiaries' financial statements from their functional currencies into Bulgarian levs for the purpose of consolidation.

Unless otherwise stated, all amounts are in BGN thousand.

Other comprehensive income is formed by the difference between previous book value of financial assets reported at fair value and the fair value of such assets as of the date of the report.

2.10.16.Income tax expenses

Income tax expense represents the sum of the current income taxes and the tax effect on temporary tax differences. The current income tax is determined in accordance with the tax legislation of the respective country. The nominal corporate profit tax rate in Bulgaria for 2021 and 2022 is 10%.

The foreign daughter companies are subject to corporate profit tax in accordance with the local legislation. The applicable tax rates are as follows:

Country	Nominal tax rate
	2022	2021
Germany	15,825%	15,825%
USA	15-35%	15-35 %

Deferred tax assets and / or liabilities are the amounts of recoverable and payable income taxes for future periods in respect of deductible and taxable temporary tax differences.

Temporary tax differences are established by comparing the book value of an asset or liability presented in the Statement of financial position with its tax base when applying the tax rules.

Deferred income taxes are calculated using the balance sheet liability method. Deferred tax liabilities are calculated and recognized for all taxable temporary differences, while deferred tax assets are recognized only if it is probable that they will be recovered and if the company will be able to generate sufficient profit in the future from which they to be deducted.

The effect of recognizing the deferred tax assets and / or liabilities is reflected where the effect of the event that gave rise to them is presented.

For events that affect the statement of profit or loss and other comprehensive income, the effect of deferred tax assets and liabilities is also recognized in the statement of comprehensive income.

For events that are initially reported in equity (revaluation reserve) and deferred tax assets and liabilities are recognized at the expense of equity.

In the Statement of financial position, deferred tax assets and / or liabilities are presented as compensation, as they are subject to a single taxation regime.

As of September 30, 2022 the Group recognize deferred corporate profit taxes only for the Bulgarian

Unless otherwise stated, all amounts are in BGN thousand.

companies and they are estimated using 10% rate, which remains unchanged for 2023.

2.10.17. Earnings per share

The basic earnings per share are calculated by dividing the net profit or loss for the period that is subject to distribution among shareholders of ordinary shares, by the average weighted number of ordinary shares held during the period.

The weighted average number of shares represents the number of ordinary shares hold in the beginning of the period, adjusted by the number of repurchased ordinary shares and the new issued shares during the period multiplied by a time-weighting factor. This factor represents the number of days in which specific shares have been held relative to the total number of days in the period.

Earning of shares with reduced value should not be calculated because there are no shares with reduced value issued.

2.10.18. Judgments that are crucial in applying accounting policies of the Group.

Key high uncertainty estimates and assumptions.

In the process of applying accounting policies, the management of the Group makes judgments that have a material effect on these financial statements. Such judgments by definition are rarely equal to actual results.

As a result of their nature, they are subject to constant review and updating and include historical experience and other factors as expectations for future events that management believes are reasonable in the current circumstances.

The estimates and assumptions that carry a significant risk of a material adjustment in the carrying amounts of assets and liabilities in the next financial year are set out below.

Useful life of property, plant and equipment and intangible assets

The financial statements of property, plant and equipment and intangible assets include the use of estimates of their useful lives and carrying values, which are based on judgments made by the management of the Group.

Impairment of receivables

The Management estimates the amount and timing of expected future cash flows related to receivables based

Unless otherwise stated, all amounts are in BGN thousand.

on experience in current circumstances in the following groups: individual accounts, households and other small consumers and legal receivables. Due to the inherent uncertainty of this assessment, the actual results may differ from those expected. The management of the Group reviews the estimates from previous years against the actual results from the previous year.

In connection with the implementation of IFRS 9 Financial Instruments, the Group have used their accumulated experience in the area of credit losses, and have taken into account current conditions and their forecasts to estimate the expected credit losses on their trade receivables.

2.10.19. Fair values

Fair value is the price that could be obtained from the sale of an asset or could be paid for the transfer of a liability in the ordinary course of trade between market participants at the date of assessment (starting price). Fair value assessment is based on the assumption that the transaction to sell an asset or transfer a liability has been carried out:

• on the principal market of the respective asset or liability, or
• in the absence of a principal market, on the most advantageous market for the asset or liability.

The principal or the most advantageous market should be accessible for the Company.

The fair value of an asset or liability is estimated by making the assumptions that market participants would make when establishing the price of the asset or liability, assuming that they act in their best economic interest.

All assets and liabilities that are measured at fair value or for which fair value disclosure is required in the financial statements, are grouped into categories according to the fair value hierarchy, as described below, based on the lowest level of input data used, which has a significant impact on fair value measurement in general:

• Level 1 quoted (unadjusted) prices in active markets for identical assets or liabilities are used
• Level 2 appraisal methods are applied in which the lowest level of used input data essential for fair value assessment have been observed either directly or indirectly
• Level 3 appraisal techniques are used where the lowest level of used input data essential for fair value assessment are unobserved

For the assets and liabilities that are regularly evaluated at fair value the Company shall review their categorization at the appropriate level of the fair value hierarchy (based on the lowest level of used input data,

AS OF 30 SEPTEMBER 2022

Unless otherwise stated, all amounts are in BGN thousand.

that have a significant impact on the fair value evaluation as a whole) to the end of the reporting period and determine whether there is a need to make a transfer(s) from one level to another.

Unless otherwise stated, all amounts are in BGN thousand.

EXPLANATORY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

3. Notes to the consolidated statement of financial position

3.01. Property, plant and equipment

	Lands	Buildings	Machinery and facilities	Vehicles	Computer equipment	Office equipme nt	Other	Expenses for acquisition of fixed tangible assets	Total
January 01, 2021
Acquisition cost	1 476	3 032	859	458	240	128	151	9	6 353
Accumulated depreciation	-	(92)	(507)	(291)	(183)	(97)	(116)	-	(1 286)
Book value	1 476	2 940	352	167	57	31	35	9	5 067
Acquisitions	-	-	53	-	24	58	142	46	323
Purchase	-	-	53	-	24	58	142	46	323
Decrease (book value)	-	-	-	(3)	(3)	(45)	-	-	(51)
Disposals	-	-	-	-	-	(43)	-	-	(43)
Other way	-	-	-	(3)	-	-	-	-	(3)
Written off book value related to sold investments					(3)	(2)	-	-	(5)
Depreciation for the period	-	(121)	(256)	(94)	(49)	(8)	(13)	-	(541)
Changes in depreciation	-	-	-	3	4	84	51	-	142
Depreciation of written off
assets	-	-	-	3	4	84	51	-	142
December 31, 2021
Acquisition cost	1 476	3 032	912	452	257	57	242	55	6 483
Accumulated depreciation	-	(213)	(763)	(382)	(228)	(21)	(78)	-	(1 685)
Book value at the end	1 476	2 819	149	70	29	36	164	55	4 798
January 01, 2022
Acquisition cost	1 476	3 032	912	452	257	57	242	55	6 483
Accumulated depreciation	-	(213)	(769)	(382)	(228)	(21)	(78)	-	(1 685)
Book value at the end	1 476	2 819	149	70	29	36	164	55	4 798
Acquisitions	-	11	28	2	27	61	2	42	173
Purchase	-	11	28	2	27	61	2	42	173
Decrease (book value)	-	-	-	-	-	-	-	-	-
Disposals	-	-	-	-	-	-	-	-	-
Depreciation for the period	-	(91)	(102)	(33)	(23)	(9)	(21)	-	(279)
Changes in depreciation	-	-	-	-	-	-	-	-	-
Depreciation of written off	-
assets		-	-	-	-	-	-	-	-
September 30, 2022
Acquisition cost	1 476	3 043	940	454	284	118	244	97	6 656
Accumulated depreciation	-	(304)	(865)	(415)	(251)	(30)	(99)	-	(1 964)
Book value at the end	1 476	2 739	75	39	33	88	145	97	4 692

The land and building owned by the Group are pledged in relation with bank financing used for their purchase (see point 3.14).

Unless otherwise stated, all amounts are in BGN thousand.

3.02.Intangible assets

	Software	ISO certificates and intellectual property rights	Trademarks and prototypes	Others	Capitalized R&D expenses	Total
January 01, 2021
Acquisition cost	190	874	2 691	212	1 535	5 502
Accumulated amortization	(190)	(244)	(625)	(34)	-	(1 093)
Book value	-	630	2 066	178	1 535	4 409
Acquisitions	141	5	1 767	-	2 285	4 198
Purchase	6	5	11	-	-	22
Capitalized	-	-	-	-	2 285	2 285
Put into operation	135	-	1 756	-	-	1 891
Disposals	-	(625)	(546)	(141)	(3 695)	(5 007)
Written off book value of assets
related to sold investments	-	(625)	-	(141)	-	(766)
Other way	-	-	(546)	-	(3 695)	(4 241)
Amortization for the period	(17)	(3)	(456)	(8)	-	(484)
Changes in amortization	-	242	298	14	-	554
Amortization of written off assets	-	-	298	-	-	298
Written off amortization of assets
related to sold investments	-	242	-	14	-	256
Book value as of the end	124	7	2 831	29	125	3 116
December 31, 2021
Acquisition cost	331	12	3 614	57	125	4 139
Accumulated amortization	(207)	(5)	(783)	(28)	-	(1 023)
Book value	124	7	2 831	29	125	3 116
January 1, 2022
Acquisition cost	331	12	3 614	57	125	4 139
Accumulated amortization	(207)	(5)	(783)	(28)	-	(1 023)
Book value	124	7	2 831	29	125	3 116
Acquisitions	-	-	-	-	1 235	1 235
Capitalized	-	-	-	-	1 235	1 235
Disposals	-	-	(200)	-	-	(200)
Written off prototypes	-	-	(200)	-	-	(200)
Amortization for the period	(50)	(2)	(407)	(6)	-	(465)
September 30, 2022	-
Acquisition cost	331	12	3 414	57	1 360	5 174
Accumulated amortization	(257)	(7)	(1 190)	(34)	-	(1 488)
Book value	74	5	2 224	23	1 360	3 686

Unless otherwise stated, all amounts are in BGN thousand.

3.03. Assets with right of use

	September 30, 2022			December 31, 2021
	Vehicles	Buildings	Total	Vehicles	Buildings	Total
In the beginning of the period
Acquisition cost	232	9	241	127	9	136
Amortization	(124)	(9)	(133)	(84)	(6)	(90)
Book value	108	-	108	43	3	46
Acquisitions	162	99	261	116	-	116
Operating leasing	162	99	261	116	-	116
Disposals	-	-	-	(11)	-	(11)
Written off	-	-	-	(11)	-	(11)
Amortization for the period	(44)	(5)	(49)	(40)	(3)	(43)
Book value at the end of the period
Acquisition cost	394	108	502	232	9	241
Amortization	(168)	(14)	(182)	(124)	(9)	(133)
Book value	226	94	320	108	-	108

The Group has concluded lease agreements for renting office spaces and vehicles used in its activity.

3.04. Goodwill

Name	September 30, 2022	December 31, 2021
Allterco Robotics Inc., USA	34	34
Allterco Properties EOOD (Solely-owned LLC)	126	126
Total:	160	160

Impairment of goodwill

No impairment of goodwill is recognized as of September 30, 2022.

3.05.Investments in associated companies

During 2021 Allterco participated in the establishment of a new company in China – Allterco Asia Ltd. , with seat and management address Shenzhen, Guangdong Province. The registered capital of the new company is CNY 100 000 as Allterco holds 30% (8 thousand BGN) and has an option to acquire additional up to 50%, reaching up to 80%, if the development of the company meets the expectations of Allterco.

The movement of the investments in associated companies is as follows:

Unless otherwise stated, all amounts are in BGN thousand.

	September 30,	December 31,
	2022	2021
Opening balance at Jan 1	40	-
Acquisition of participation in the capital	-	8
Share in the profit for the period	48	32
Balance as of the end of the period	88	40

3.06. Other long-term capital investments

	September 30, 2022	December 31, 2021
Ordinary registered shares – Link Mobility, in the beginning of the period	2 624	6 566
Decrease	(1 866)	(3 942)
Effect from transactions with financial assets	(355)	(369)
Revaluation of other financial instruments	(1 511)	(3573)
Ordinary registered shares – Link Mobility, at the end of the period	758	2 624

3.07. Long-term trade receivables

In September 2021 the Company sold its investments in ALLTERCO PTE, Singapore, ALLTERCO SDN Malaysia и ALLTERCO CO. LTD Thailand. As part of the terms of the sales contract, the payment of part of the transaction value is deferred. The amount of 1 027 thousand BGN are due after the end of 2023 therefor they are presented in long-term receivables.

The management assess that the value of other long-term receivables presented in the statement of financial position as of September 30, 2022 is equal to their fair value.

3.08. Deferred tax assets

	September 30, 2022	December 31, 2021
Deferred tax assets
Accruals for unused leave	19	19
Provisions for liabilities	30	30
Impairment of receivables	10	25
Total deferred tax assets	59	74
Deferred tax liabilities
Depreciation	(2)	(2)
Total deferred tax liabilities	(2)	(2)

Unless otherwise stated, all amounts are in BGN thousand.

Total deferred tax asset (liability)	57	72
3.09.Inventories
	September 30, 2022	December 31, 2021
Goods	10 294	3 900
Goods in transit	4 457	979
Supplies	1 677	2 227
Materials	1 007	454
Total:	17 435	7 560

As of September 30, 2022 in the consolidated statement of financial position are presented:

• Components for production of devices at the amount of 1 677 thousand BGN, which were ordered by the Group and purchased by the factories that produce devices for the Group. The components are available at the warehouse of the factories and according to the agreements the Group has ownership rights over them
• Goods in transit, which are not in the warehouses of the Group yet but which are owned by the Group on the basis of purchase agreements

The Group policy is to try to maintain optimal quantity of goods equal to a several months forecast of sales. The management of the Group expects that in the near future the level of inventories will continue to increase as a consequence of increasing sales as well as a result of increasing deficit of certain electronic components necessary for the production of devices.

3.10. Trade receivables

	September 30, 2022	December 31, 2021
Receivables from customers	18 905	12 642
Impairment of receivables, net	(527)	(237)
Advances to suppliers	5 800	6 762
Written off receivables on advances	(200)	-
Total	23 978	19 167

Unless otherwise stated, all amounts are in BGN thousand.

	September 30, 2022	December 31, 2021
Impairment at the beginning of the period	237	-
Reversed and written-off impairment	(151)	-
Accrued impairment for the period, net	441	237
Net total:	527	237

3.11. Other receivables

	September 30, 2022	December 31, 2021
TAX RECEIVABLES	3 306	1 884
VAT refund receivable	2 268	1 857
Corporate profit tax advance payments	1 023	2
Customs duties	15	25
OTHER RECEIVABLES	122	28
Deposits with companies and guarantees	114	22
Advances to employees	1	4
Other receivables	7	2
Total:	3 428	1 912

3.12. Cash and cash equivalents

	September 30, 2022	December 31, 2021
Cash on hand	99	92
Cash in current accounts	24 530	30 320
Other cash - debit cards	23	4
Restricted cash (guarantees)	77	125
Cash equivalents	10	-
Total:	24 739	30 541

	September 30,	December 31,
By currency	2022	2021
EUR	8 735	6 180
BGN	7 802	13 298
USD	7 602	11 063
Other	600	-
Total	24 739	30 541

The Group's cash funds are in bank accounts with banks with stable long-term ratings. The Management

AS OF 30 SEPTEMBER 2022

Unless otherwise stated, all amounts are in BGN thousand.

has assessed the expected credit losses on cash funds and cash equivalents. The estimated value is determined as insignificant and is not accrued in the consolidated financial statements of the Group as of 30 September 2022

3.13. Prepaid expenses

	September 30, 2022	December 31, 2021
	Up to one year	Up to one year
Operating activity
Information Services	12	28
Insurances	98	35
Licenses/ certificates	227	-
Memberships	8	34
Subscriptions	5	27
Trade fairs	-	109
Other	12	1
Total	362	234

3.14. Bank loans

Then depreciable portion of bank loans is as follows:

	September 30,	December 31,
	2022	2021
Raiffeisenbank AD, including:	1 687	1 900
up to one year -	291	285
over one year -	1 396	1 615
DSK bank EAD	482	617
up to one year -	259	225
over one year -	223	392
Other short-term financing Allterco Robotics USA	120	62
Total bank loans - non-current portion:	1 619	2 007
Total bank loans - current portion:	670	572

Bank	Raiffeisenbank AD
Date of the contract:	25 August 2017
Agreed loan amount:	1 620 000
Original currency	EUR

AS OF 30 SEPTEMBER 2022

Unless otherwise stated, all amounts are in BGN thousand.

Purpose	Financing up to 90% (excluding VAT) of the final price of all company shares representing 100% of the capital of the joint debtor Allterco Properties EOOD (Solely-owned LLC), designated in the concluded between the Borrower and JFC Developments OOD (Ltd.) Share Transfer Contract into Final Contract
Term	10 February 2028
Collaterals:	Mortgage on real estate, owned by Allterco Properties EOOD (Solely-owned LLC), joint debtor - Allterco Properties EOOD (Solely-owned LLC), pledge of all bank accounts of Allterco JSCo. with the bank

Creditor	DSK Bank AD
Date of the contract:	28 September 2020
Total amount	EUR 450 thousand
Purpose	Financing of 90% of the expenses for purchase of real estate
Currency	EUR
Fixed term	28 September 2024
Collaterals:	Mortgage of real estate owned by Allterco Properties Ltd.

A subsidiary of Allterco has an agreement for bank financing in the form of overdraft, which was not used during the reporting period. Details about the parameters of this financing are presented in point 5.

3.15. Lease

		September 30, 2022		December 31, 2021
	Up to one year	Over one year	Total	Up to one year	Over one year	Total
Finance lease liabilities	42	69	111	31	-	31
Operating lease liabilities	32	104	136	27	80	107
Lease liabilities	74	173	247	58	80	138

Liabilities under lease agreements presented in the consolidated statement of financial position include the liabilities of the Group under rental agreements for offices and vehicles, which are recognized in accordance with the requirements of IFRS 16 Leasing.

Unless otherwise stated, all amounts are in BGN thousand.

3.16. Trade payables

	September 30,	December 31,
	2022	2021
Suppliers	1 142	931
Advances from clients	313	556
Total:	1 455	1 487

3.17. Payables to employees

	September 30,	December 31,
	2022	2021
Payables to employees	350	5
Payables for unused paid leave	170	168
Total:	520	173

	September 30, 2022	December 31, 2021
Liabilities to social security benefits	212	115

3.18. Tax liabilities

	September 30, 2022	December 31, 2021
Corporate tax	1 830	281
Value Added Tax	403	940
Income tax	66	73
Other taxes	1	21
Total:	2 300	1 315

3.19. Other liabilities

	September 30, 2022	December 31, 2021
Liabilities for purchase of shares	565	665
Guarantee service provision	118	300
Guarantees/deposits for rent	61	61
Other liabilities	4	-
Total other liabilities	748	1 026

The General Meeting of Shareholders of Allterco JSCo held on 27 June 2022, decided to distribute a

Unless otherwise stated, all amounts are in BGN thousand.

dividend of BGN 1 799 999.90 (BGN 0.10 per share). At the date of this report, the dividend has been fully paid.

3.20. Registered capital

Allterco JSCo was registered in 2010. The registered capital of the Company as of 30 September 2022 amounts to BGN 17,999,999 (seventeen million nine hundred ninety-nine thousand nine hundred ninetynine) and is distributed in 17,999,999 (seventeen million nine hundred ninety-nine thousand nine hundred ninety-nine) ordinary registered shares with a nominal value of BGN 1 each. The registered capital is fully paid in four installments:

The first issue was made upon the establishment of the Company in the form of a non-monetary contribution in the amount of BGN 50 000, which had as its subject ordinary registered voting shares of the capital of Teravoice AD.

In 2010 a second non-monetary contribution was made in the amount of BGN 5 438 000, which had as its subject shares from the capital of Tera Communications AD.

At the end of 2015, a new issue of 8,012,000 (eight million and twelve thousand) ordinary registered voting shares was issued, with a nominal value of BGN 1 (one) each.

At the end of 2016 the capital of ALLTERCO JSCo was increased with a new issue in the amount of 1,500,000 (one million and five hundred thousand) shares on the basis of a successful initial public offering, according to the Prospectus for public offering of shares, confirmed by the Financial Supervision Commission with Decision № 487 – Е of July 08, 2016 entered in the Commercial Register under No.20161108100414 of November 08, 2016.

In 2020 the capital of the Company was increased by cash contributions in the total amount of 2,999,999 (two million nine hundred ninety-nine thousand nine hundred and ninety-nine) against 2,999,999 (two million nine hundred ninety-nine thousand nine hundred and ninety-nine) subscribed and paid dematerialized ordinary registered voting shares with a nominal value of BGN 1 as a result of a procedure for Public Offering of a new issue of shares. The public offering of shares from the capital increase of Allterco JSCo was carried out in the period September 28, 2020 – October 30, 2020 on the basis of a Prospectus, together with the supplements to it, confirmed by the Financial Supervision Commission with Decision № 148- F of February 18, 2020, Decision № 405-E of June 11, 2020, Decision № 601-E of August

Unless otherwise stated, all amounts are in BGN thousand.

13, 2020 and Decision № 791-E of October 29, 2020.

As of 30 September 2022 the shareholders in the company are:

Name	Number of shares:	% in the capital
Svetlin Todorov	5 847 120	32.48%
Dimitar Todorov	5 847 120	32.48%
Persons holding 5% of the capital
Other physical persons and legal entities	6 305 759	35.04%
Total	17 999 999	100.00%

As of September 30, 2022 the company owns 40 000 treasury shares, representing 0.22% of registered share capital.

3.21. Retained earnings

	September 30, 2022	December 31, 2021
Opening balance	39 394	13 531
Net profit	11 747	15 962
Distribution of dividends	(1 800)	(3 600)
Change due to sale of subsidiaries	-	94
Closing balance at the end of the period	49 341	39 394

3.22. Reserves

	September 30,	December 31,
	2022	2021
Opening balance	1 800	1 500
Reserve from issue of shares	-	300
Balance at the end of the period	1 800	1 800

3.23. Reserve from issue of shares

As of 30 September 2022 the reserves from issue of shares are at the amount of 5 403 thousand BGN. They are formed by the excess of share price of newly issued shares during 2020 over the par value of shares. The excess amount was 6 000 thousand BGN and was decreased by the expenses related to the share issue at the amount of 2967 thousand BGN and by 300 thousand BGN, which were transferred to reserves,

Unless otherwise stated, all amounts are in BGN thousand.

pursuant to a decision of the general meeting of shareholders held on June 28, 2021.

3.24. Other comprehensive income

	September 30, 2022	December 31, 2021
Value at the beginning of the period	1 036	4 849
Reserves transferred to retained earnings	(160)	(240)
Reserves related to financial instruments reported at fair value	(1 648)	(3 573)
Other movements	(10)	-
Value at the end of the period	(782)	1 036

The reserves related to the long-term financial instruments decreased by 1 808 thousand BGN as a result of the revaluation of the long-term financial instruments held at fair value as of 30 September 2022 and due to the sale of part of the capital instruments during the reporting period.

4. Notes to the consolidated statement of comprehensive income

4.01. Sales revenue and cost price of sales

	9 months of 2022					9 months of 2021
	Goods	Services and rents	Total:	Produc tion	Goods	Services and rents	Total:
Sales revenues	57 772	57	57 829	109	38 391	21	38 521
Cost of goods sold	(28 183)	-	(28 183)	(35)	(17 896)	-	(17 931)
Other direct costs	(718)	-	(718)	(64)	(512)	-	(576)
Cost of sales	(28 901)	-	(28 901)	(99)	(18 408)	-	(18 507)
Gross profit	28 871	57	28 928	10	19 983	21	20 014

4.02. Other operating income

	9 months of	9 months of
	2022	2021
Financing / electricity price compensations	17	-
Exchange rate differences	2 668	515
Other operating income	33	40
Total:	2 718	555

Unless otherwise stated, all amounts are in BGN thousand.

4.03. Administrative expenses

	9 months of 2022	9 months of 2021 (reclassified)
Material expense	(161)	(195)
External services	(3 432)	(1 117)
Depreciation	(338)	(748)
Salaries and social security	(9 507)	(4 977)
Other administrative expenses	(524)	(178)
Total:	(13 962)	(7 215)

4.04. Other operating expenses

	9 months of 2022	9 months of 2021
Written off receivables	(1 056)	-
Written off prototypes	(200)	-
Bank fees	(80)	(84)
Impairment of receivables	(441)	(153)
Interest, fines and penalties	(52)	(74)
Total:	(1 829)	(311)

4.05. Financial expenses

	9 months of 2022	9 months of 2021
Loss from operations with financial assets	(119)	-
Proceeds from sale of financial assets	236	-
Carrying amount of financial assets sold	(355)	-
Interest on financial lease	(3)	(2)
Interest on loans	(46)	(54)
Bank fees	(68)	(48)
Total:	(236)	(104)

Unless otherwise stated, all amounts are in BGN thousand.

4.06. Tax Expense/Savings

	9 months of	9 months of
	2022	2021
Current tax expences	(1 826)	(1 308)
Tax effect of temporary tax differences	(16)	(5)
Total:	(1 842)	(1 313)

5. Contingent liabilities and commitments

Contract	Annex	Creditor	Debtor	Joint debtor /Guarantor	Amount/Li mit	Financial conditions	Term	COLLATERAL provided by the borrower
Investment loan August 25, 2017 contract under art. 114 para 10 of the Public Offering of Securities Act	Annex No.1 October 31, 2018	Raiffeisen bank Bulgaria EAD	Allterco JSCo	Allterco Properties EOOD - solidary	1 620 000 EUR	Fixed interest rate for the whole period 3% per year; Management fee	Feb 10, 2028	Mortgage on real estate owned by Allterco Properties EOOD; Pledge of receivables on bank accounts with the bank. Pledge under the law for financial security contracts;
Overdraft September 30, 2019 – contract under art. 114 para 10 of the Public Offering of Securities Act	Annex No.1 of August 28, 2020	Raiffeisen bank Bulgaria EAD	Allterco Robotics EOOD	Allterco JSCo - guarantor	1 000 000 EUR	One-month EURIBOR, +2.5 %, but not less than 2.5%; management commission; commitment commission; commission for issuing guarantees;	Septembe r 29, 2023	Pledge of receivables on accounts;
Contract for standard investment loan No.2757 dated September 28, 2020	none	DSK Bank AD	Allterco Propertie s EOOD	Allterco Trading EOOD – solidary debtor	450 000 EUR	Annual interest rate formed by a variable interest rate of 1m EURIBOR + 2.1% but not less than 2.1%; annual management fee;	Septembe r 28, 2024	Mortgage on real estate owned by Allterco Properties EOOD; Pledge of receivables on bank accounts of Allterco Properties EOOD and Allterco Trading EOOD in DSK Bank.

6. Transactions with related parties

During the reporting period the Group did not engage in transactions with its shareholders or entities, which

Unless otherwise stated, all amounts are in BGN thousand.

could be considered as related parties.

The Company has not entered into transactions with its subsidiaries and associates that are outside its normal business or significantly deviate from market conditions. Transactions in the ordinary course of operations with subsidiaries are excluded for consolidation purposes.

The companies included in the Group are disclosed in item 1.4

Key management

During the reporting period, the members of the Board of Directors received gross remuneration at the total amount of 511 thousand BGN. The paid remuneration is according to the announced Remuneration Policy and the changes made to the number and composition of the members of the Board of Directors, adopted at an extraordinary general meeting of shareholders on 8 April 2022.

As of the end of the reporting period, the Company has no obligations to its key management.

7. Financial instruments by category

The accounting policies for financial instruments are applied to the items listed below

Structure of financial assets and liabilities by categories is as follows:

	September 30, 2022
Financial assets according to the Statement of financial position	Cash	Financial assets reported at depreciated value	Financial assets reported at fair value through other comprehensive income	Financial assets reported at fair value through profit or loss	Total
Cash and cash equivalents	24 739	-	-	-	24 739
Other long term financial assets	-	-	758	-	758
Non-current trade receivables	-	1 027	-	-	1 027
Current trade receivables	-	18 378	-	-	18 378
Deposits and guarantees	-	114	-	-	114
TOTAL FINANCIAL ASSETS	24 739	19 519	758	-	45 016

AS OF 30 SEPTEMBER 2022

September 30, 2022 Financial liabilities according to the Statement of financial position Financial liabilities reported at depreciated value Financial liabilities reported at a specifically determined value Financial liabilities reported at fair value through profit or loss Total Lease 247 - - 247 Bank loans 2 289 - - 2 289 Trade liabilities 1 142 - - 1 142 Liabilities for purchase of shares 565 - - 565 Guarantees 61 - - 61 TOTAL FINANCIAL LIABILITIES 4 304 - - 4 304

Unless otherwise stated, all amounts are in BGN thousand.

	December 31, 2021
Financial assets according to the Statement of financial position	Cash	Financial assets reported at depreciated value	Financial assets reported at fair value through other comprehensive income	Financial assets reported at fair value through profit or loss	Total
Cash and cash equivalents	30 541	-	-	-	30 541
Other long term financial assets	-	-	2 624	-	2 624
Non-current trade receivables	-	2 054	-	-	2 054
Current trade receivables		12 405	-	-	12 405
Deposits and guarantees		22	-	-	22
TOTAL FINANCIAL ASSETS	30 541	14 481	2 624	-	47 646

Financial liabilities according to the Statement of financial position	Financial liabilities reported at depreciated value	Financial liabilities reported at a specifically determined value	Financial liabilities reported at fair value through profit or loss	Total
Leasing	138	-	-	138
Bank loans	2 579	-	-	2 579
Trade liabilities	931	-	-	931
Liabilities for purchase of shares	665	-	-	665
Guarantees	61	-	-	61
Other liabilities	-	-	-	-
TOTAL FINANCIAL LIABILITIES	4 374	-	-	4 374

8. Financial risk management

Unless otherwise stated, all amounts are in BGN thousand.

In the course of their normal business, the Group companies may be exposed to various financial risks, the most significant of which are: market risk (currency risk, risk of changes in fair value and price risk), credit risk, liquidity risk and interest rate risk. The general financial risk management is focused on forecasting the changes in the financial markets to minimize potential adverse effects on financial performance. Financial risks are currently identified, measured and monitored through various control mechanisms to determine adequate measures and to avoid unjustified exposure to any potential financial risk.

Financial risk management is an ongoing process directly supervised by the management of the Group and financial experts. It is carried in accordance with a policy established by the Board of Directors of the Parent-company, which has developed the basic principles of general financial risk management. On the basis of those principals specific procedures for managing the individual specific financial risks are defined.

The various types of financial risks to which Group companies are exposed in the course of their business operations are described below, as well as the approach taken to mitigate them.

Market Risk

а. Currency risk

The Group companies carry out their transactions in Bulgaria, some in the European Union and others in third countries (Asia and USA). The biggest portion of supplies made by the Group companies are in Bulgarian lev (BGN), Euro and US dollars. In order to control the currency risk, a system for planning the supplies from countries inside and outside the European Union is used, as well as procedures for periodic monitoring of movements in exchange rates of foreign currencies and control of forthcoming payments.

The tables below summarize the exposure to currency exchange rates:

		In other
in EUR	in USD	foreign	In BGN	Total
		currency
	BGN'000	BGN'000	BGN'000	BGN'000
8 735	7 602	600	7 802	24 739
1 027	-	-	-	1 027
17 078	359	9	932	18 378
-	-	-	114	114
26 840	7 961	609	8 848	44 258
				247
				2 289
	BGN'000 136 2 169	- 120	- -	111 -

Unified Identification Code (UIC): 201047670

EXPLANATORY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS OF 30 SEPTEMBER 2022

Unless otherwise stated, all amounts are in BGN thousand.

TOTAL LIABILITIES	2 845	348	0	1 111	4 304
Guarantees	-	-	-	61	61
Liabilities for purchase of shares	-	-	-	565	565
Trade payables	540	228	-	374	1 142

			in another
	in EUR	in USD	foreign	in BGN	Total
December 31, 2021			currency
Cash and cash equivalents	6 180	11 063	-	13 298	30 541
Non-current trade receivables	2 054	-	-	-	2 054
Current trade receivables	10 036	1 344	419	606	12 405
Deposits	-	11	-	11	22
TOTAL ASSETS	18 270	12 418	419	13 915	45 022
Lease	18	-	-	120	138
Bank loans	2 517	62	-	-	2 579
Trade payables	370	68	-	493	931
Liabilities for purchase of shares	-	-	-	665	665
Guarantees	-	-	-	61	61
TOTAL LIABILITIES	2 905	130	-	1 339	4 374

Currency sensitivity analysis

The Group companies are not exposed to foreign currency risk with respect to their euro transactions. Currency risk is associated mainly to payments in US dollars and Norwegian krone (NOK). As of 30 September 2022 the Group's current financial assets are 60.7% in EUR , 18% are in USD and 1.4% in NOK.

b. Price risk

The Group companies are exposed to a specific price risk with respect to the prices of the services provided and goods sold. Minimizing the price risk of negative changes in prices is achieved by periodically analyzing and renegotiating contractual terms in order to update prices in the light of market changes.

Allterco JSCo. owns shares of Link Mobility Group that are traded on a regulated market. During 2021 the Company sold part of its shares. The remaining shares are exposed to price risk.

Risk of interest-bearing cash flows

There is no significant concentration of interest-bearing assets in the Group companies, except for loans granted and free cash on current accounts with banks. For this reason, the operating cash flows are to a great extend independent of changes in market interest rates.

Unless otherwise stated, all amounts are in BGN thousand.

At the same time, the cash outflows of the Group companies for the reporting period are exposed to interest rate risk due to the use of bank loans in EUR agreed at a variable interest rate.

Cash in current accounts with banks is subject to interest at interest rates according to the tariffs of the respective banks.

The exposure of the Group companies to changes in market interest rates is constantly monitored and analyzed. Different scenarios of refinancing, renewal of existing interest rates and alternative financing are simulated. The calculations cover significant interest-bearing positions.

September 30, 2022	interest-free	with floating interest rate %	with fixed interest rate %	Total
	BGN'000	BGN'000	BGN'000	BGN'000
Cash and cash equivalents	24 739	-	-	24 739
Current trade receivables	18 378	-	-	18 378
Non-current trade receivables	1 027	-	-	1 027
Deposits	114	-	-	114
TOTAL ASSETS	44 258	-	-	44 258
Lease	-	-	247	247
Bank loans	-	602	1 689	2 289
Trade payables	1 142	-	-	1 142
Liabilities for purchase of shares	565	-	-	565
Guarantees	61	-	-	61
TOTAL LIABILITIES	1 768	602	1 934	4 304

December 31, 2021	interest-free	with floating interest rate %	with fixed interest rate %	Total
	BGN'000	BGN'000	BGN'000	BGN'000
Cash and cash equivalents	30 541	-	-	30 541
Current trade receivables	12 405	-	-	12 405
Non-current trade receivables	2 054	-	-	2 054
Deposits	22	-	-	22
TOTAL ASSETS	45 022	-	-	45 022
Lease	-	-	138	138
Bank loans	-	679	1 900	2 579
Trade payables	931	-	-	931
Liabilities for purchase of shares	665	-	-	665
Guarantees	61	-	-	61

Unless otherwise stated, all amounts are in BGN thousand.

TOTAL LIABILITIES	1 657	679	2 038	4 374

Credit Risk

The financial assets of the Group companies are concentrated mainly in two groups - cash (cash on hand and in bank accounts) and receivables from clients.

Credit risk is basically the risk that the customers of the Group companies will not be able to pay the due amounts in full and in the usual terms. Receivables from customers are presented in the consolidated statement of financial position at fair value. An impairment for doubtful and difficult-to-collect receivables has been accrued, based on previous experience with events leading to losses from uncollectability.

The Group companies do not have a significant concentration of credit risk. Their policy is to negotiate a credit period longer than 60 days only with customers that have a long trading history and cooperation with the Group companies. Payments from customers are made by bank transfers.

Significant part of Group's revenue is generated by mobile operators or other client, which in most cases are large companies with very good credit ratings.

The collectability and concentration of trade receivables is monitored on an ongoing basis, in accordance with the established policy of the Group companies. For this purpose, regularly the Finance and Accounting Departments review the open positions by customers and receipts, and make an analysis of outstanding amounts.

As of 30 September 2022 cash and banks transfers are allocated to several banks, which mitigates the risk related to cash and cash equivalents exposure.

Liquidity Risk

Liquidity risk is the risk that the companies face difficulties in meeting their financial obligations. Part of the Group customers are mobile operators or other big companies that have a very good credit rating and meet their payment deadlines.

The Group companies maintain a conservative liquidity management policy aimed at constantly maintaining an optimum cash reserve and the ability to finance their business. They also use some borrowed credit resources.

To control liquidity risk, the Group companies control the timely payment of liabilities in accordance with

Unless otherwise stated, all amounts are in BGN thousand.

the agreed payment terms with each client.

The Group companies monitor and control the actual and forecasted cash flows and try to match the maturities of assets and liabilities. On an ongoing basis the maturity and timely payment are monitored by accounting department and daily information on available cash and the obligations for future payments is maintained.

30 September 2022	up to 1 month BGN'000	1-3 months BGN'000	3-6 months BGN'000	6-12 months BGN'000	1-2 years BGN'000	2-5 years BGN'000	over 5 years BGN'000	with no maturit y BGN'000	total BGN'000
Cash and cash
equivalents Current trade receivables	- 12 897	- 2 628	- 739	- 2 114	- -	- -	- -	24 739 -	24 739 18 378
Non-current trade receivables	-	-	-	-	1 027	-	-	-	1 027
Deposits	-	-	-	-	-	-	-	114	114
TOTAL ASSETS	12 897	2 628	739	2 114	1 027	-	-	24 853	44 258
	8	12	19	35	86	87	-	-	247
Lease liabilities	171	111	162	263	556	1 026	-		2 289
Bank loans	822	35	64	221	-	-	-	-	1 142
Trade payables
Liabilities for purchase of shares	10	20	30	505	-	-	-	-	565
Guarantees	-	-	-	-	-	-	-	61	61
TOTAL LIABILITIES	1 011	178	275	1 024	642	1 113	-	61	4 304
December 31, 2021	up to 1 month	1-3 months	3-6 months	6-12 months	1-2 years	2-5 years BGN'00	over 5 years BGN'00	with no maturity BGN'00	total
	BGN'000	BGN'000	BGN'000	BGN'000	BGN'000	0	0	0	BGN'000
Cash and cash equivalents Current trade	125	-	-	-	-	-	-	30 416	30 541
receivables Non-current trade	9 048	455	-	2 902	-	-	-	-	12 405
receivables Deposits	- -	- -	- -	- -	1 027 -	1 027 -	- -	- 22	2 054 22
TOTAL ASSETS	9 173	455	-	2 902	1 027	1 027	-	30 438	45 022
Lease liabilities Bank loans	3 48	7 109	10 158	38 256	27 523	53 1 103	- 382	- -	138 2 579
Trade payables	839	17	25	50	-	-	-	-	931
Liabilities for purchase
of shares	10	20	30	605	-	-	-	-	665
Guarantees	-	-	-	-	-	-	-	61	61
TOTAL LIABILITIES	900	153	223	949	550	1 156	382	61	4 374

Unless otherwise stated, all amounts are in BGN thousand.

Capital risk management

With the capital management the Parent Company aims to create and maintain the ability for continuous operations (going concern company) and to ensure the appropriate return on investment to shareholders, as well as to maintain optimal capital structure in order to reduce capital costs.

Allterco JSCo monitors its capital structure using the debt ratio. It is calculated as the ratio between the net debt capital and the total amount of capital. Net debt is defined as the difference between all borrowings (current and non-current) as stated in the consolidated statement of financial position and cash and cash equivalents. The total amount of capital is equal to the equity and the net debt capital.

The table below presents the debt ratios based on the capital structure as of:

	September 30, 2022	December 31, 2021
Total debt capital, incl.:	7 771	6 833
- Bank loans	2 289	2 579
- Lease liabilities	247	138
Reduced by cash and cash equivalents	24 739	30 541
Net debt capital	(16 968)	(23 708)
Total equity	72 959	65 572
Total capital	55 991	41 864
Ratios of indebtedness	0.00%	0.00%

The Group is not in debt for the reporting periods, as cash exceeds the total debt capital.

9. Fair value

Usually, external independent appraisers are used for the assessment of fair value of significant assets. The need of external appraisers is assessed annually by the management of the Company. External appraisers are chosen based on their professional experience, qualities and reputation.

The Group's policy is to disclose in its financial statements the fair value of financial assets and liabilities for which information about market prices is available.

For the purpose of fair value disclosure, the Company determines different classes of assets and liabilities, depending on their nature, characteristics and risk, and on the relevant level in the fair value hierarchy set out in Significant Accounting Policies.

The Company's management has estimated that the fair values of cash and cash equivalents, trade

Unless otherwise stated, all amounts are in BGN thousand.

receivables, trade payables, finance lease and bank loans are close to their book values due to the shortterm nature of these instruments and their timely payment over time.

The table below shows the book value and fair value of financial assets and liabilities, including their levels in the value hierarchy. Fair value information is not presented if the book value is considered reasonably equal to the fair value.

September 30, 2022	Book value	Level 1	Level 2	Level 3
Financial assets
Other long term financial investments	758	758	-	-
Cash and cash equivalents	24 739	-	-	-
Trade receivables	18 378	-	-	-
Long-term trade receivables	1 027	-	-	-
Deposits in companies and guarantees	114	-	-	-
TOTAL ASSETS	45 016	758	-	-
Financial liabilities
Lease	247	-	-	-
Bank loans	2 289	-	2 289	-
Trade payables	1 142	-	-	-
Liabilities for purchase of shares	565	-	-	-
Guarantees	61	-	-	-
TOTAL LIABILITIES	4 304	-	2 289	-

December 31, 2021	Book value	Level 1	Level 2	Level 3
Financial assets
Cash and cash equivalents	30 541	-	-	-
Current trade receivables	12 405	-	-	-
Other long term financial investments	2 624	2 624	-	-
Non-current trade receivables	2 054	-	-	-
Deposits	22	-	-	-
TOTAL ASSETS	47 646	2 624	-	-
Financial liabilities
Lease	138	-		-
Bank loans	2 579	-	2 579	-
Trade payables	931	-	-	-
Liabilities for purchase of shares	665	-	-	-
Guarantees	61	-	-	-
Other liabilities	0	-	-	-
TOTAL LIABILITIES	4 374	-	2 579	-

Unless otherwise stated, all amounts are in BGN thousand.

No transfers have been made during the reporting period.

10. Events after the end of reporting period

There are no corrective events or other significant non-corrective events occurred between the date of this consolidated financial statement and the date of its approval for publication.

In addition to the above on 05.10.2022 the Company has disclosed to the FSC and the Public the following information: Allterco JSCo announces a 49.8% increase on an annual basis on the consolidated sales revenues of IoT devices and related services to 57.7 million BGN (29.5 million EUR) in the nine months to 2022, based on preliminary data. Sales revenue for Shelly-branded IoT devices increased by 51.0%, amounting to 54.5 million BGN, (27.8 million EUR), followed by revenues from sales of MyKi tracking devices, which increased by 32.5% to 3.2 million BGN (1.6 million EUR).

With these revenues Allterco JSCo exceeds the budget and forecast for the nine months to 2022. Compared to the nine months to 2021, the Company's growth rate is increasing, in line with management's expectations for an annual growth rate of 43% for 2022.

On 3.11.2022 Allterco JSCo announced that its forecast was increased for the current 2022 after further speed up of the growth rate in the beginning of the fourth quarter of 2022. Based on the successful development of the business in October 2022 and the solid volume of orders Allterco JSCo raises its initial forecasts for 2022. The company expects incrise of 45-46 milion EUR (initially EUR 43.5 million) and EBIT (earnings before interest and taxes) up to 10-10.5 million EUR (initially 9.6 million EUR) in the financial 2022 year.

On November 11, 2022 Allterco anounced to the FSC and the Public an Invitation for an extraordinary General Meeting of the Shareholders with agenda as follows:

• Item 1. Adoption of decision on amendments in the Remuneration Policy
• Item 2. Adoption of a decision for approval of a remuneration scheme for the provision of variable share-based remuneration to the executive members of the Board of Directors for the period 2022 – 2025 г.
• Item 3. Approval of the Motivated Report of the General Meeting of the Shareholders on transactions within the scope of Art. 114(1), item 1 of POSA, provided as a part of the written materials
• Item 4. Authorization in compliance with Art. 114(1), item 1 of POSA for the the conclusion of a

Unless otherwise stated, all amounts are in BGN thousand.

package of transactions for the acquisition of 100% of the capital of the Slovenian company GOAP Racunalniski inzeniring in avtomatizacija procesov d.o.o. Nova Gorica, business address Ulica Klementa Juga 7, 5250 Solkan, Slovenia, registration number: 5414083000 ("GOAP")

REPORT ON BUSINESS ACTIVITIES of ALLTERCO JSCo

THIRD QUARTER OF 2022

consolidated basis

Pursuant to Art. 100o, Para 4of the Public Offering of Securities Act and Art. Art. 12 of Ordinance No. 2 from 2021 on the prospectuses for public offering and admission to trading on a regulated securities market and on the disclosure of information

These Notes to the Interim Report on the Business Activities of Allterco JSCo on a consolidated basis present information about the company, relevant to the end of first quarter of 2022 for the period 01.01.2022 – 30.09.2022 (the "reporting period').

1. INFROMATION ABOUT THE GROUP

Allterco JSCo is a public listed joint stock company, established in 2010 in the city of Sofia and entered in the Commercial Register at the Registry Agency on 11.02.2010 under UIC (unified identification code): 201047670 and LEI code (identification code of the legal entity) 8945007IDGKD0KZ4HD95 and is established for an unlimited period. Its name is written in Latin: ALLTERCO JSCo.

The company has its registered office and address of management: Republic of Bulgaria, Sofia County, Sofia Municipality, Sofia 1407, 103CherniVrah Blvd. The address for correspondence is the same; Tel: +359 2 957 12 47. The website of the Company iswww.allterco.com.

The Company is public listed within the meaning of the Public Offering of Securities Act and is registered as a public company in the register kept by the FSC with Decision 774 - PD of November 14, 2016 as a result of successfully completed initial public offering of shares from the Company's capital increase.

Since November 22, 2021 the shares of Allterco JSCo are traded on two regulated markets in EU – Bulgarian Stock Exchange and Frankfurt Stock Exchange.

The company operates according to Bulgarian legislation.

The Issuer is part of an economic group, which consists of the parent company Allterco JSCo and its subsidiaries:

1.1.Structure of the economic group at the end of the reporting quarter for 2022

Allterco JSCo has participation in a company in China, Allterco Asia Ltd. (associated company) with headquarters and registered office in Shenzhen, Guangdong Province. The capital of the new company is CNY 100 000, as the participation of Allterco JSCo is 30% with an option to acquire additional up to 50% and reach a controlling stake of up to 80%.

During the reporting period no changes in the economic group of Allterco have been made.

The scope of business of the Allterco JSCo, according to Art. 4 of its Articles of Association is: Acquisition, management, evaluation and sale of share participations in Bulgarian and foreign companies; acquisition, management and sale of bonds; acquisition, evaluation, sale and assignment of licenses for the use of patents and other intellectual and industrial property rights; financing of companies in which Allterco JSCo participates; purchase of goods and other items for resale in their original, manufactured or processed form; sale of goods of own production; foreign trade transactions; commission, forwarding, warehousing and leasing transactions; transport transactions in the country and abroad; transactions of commercial representation and intermediation of local and foreign individuals and legal entities; consulting and marketing transactions; providing management and administration services to local and foreign legal entities; as well as any other commercial transactions not prohibited by law.

As a result of strategic deals, corporate changes and decisions in 2019 and 2021, the core business of the Issuer's Group in the reporting period of 2022 remains the development, production and sale of IoT devices.

Since 2015, the Group has grown organically in the IoT sector through the development and implementation of two main product categories - tracking devices under the brand MyKi and home automation systems under the brand Shelly.

1.2.Management

During the reporting period there has been a change in the Board of Directors. With the resolution of the General Meeting of Shareholders from 08.04.2022 there has been changed the number of the Board seats from three to five, and Mr. Wolfgang Kirsch and Mr. Gregor Bieler joined to the current members.

Pursuant to the resolution of the General Meeting of Shareholders at its first meeting held on 08.04.2022. the Board of Directors elected the following executive members, Chairman and Deputy-Chairman:

• Gregor Bieler Chairman;
• Nikolay Martinov Deputy Chairman;
• Dimitar Dimitrov Executive Director and Representative;
• Wolfgang Kirsch Executive Director and Representative;
• Svetlin Todorov Member of the Board of Directors and Representative;

The representatives represent the Company together or individually.

1.3.Capital structure

As of the end of the reporting period the issued, subscribed, paid-in and registered capital of the Company amounts to BGN 17 999 999 (seventeen million nine hundred ninety-nine thousand nine hundred ninetynine), and is divided into 17 999 999 (seventeen million nine hundred ninety-nine thousand nine hundred ninety-nine) dematerialized ordinary registered voting shares, with a par value of 1 (one) BGN each.

The capital is fully paid in five contributions:

• Non-monetary contribution representing 100% of the shares of Teravoice EAD, with an appraised monetary value of BGN 50,000 (fifty thousand);
• Non-monetary contribution representing 69.60% of the shares of Terra Communications JSCo, with an appraised monetary value of BGN 5,438,000 (five million four hundred and thirty-eight thousand);
• A combination of non-monetary and cash contributions amounting to BGN 8,012,000 (eight million and twelve thousand).
• Cash contributions at the amount of BGN 1,500,000 (one million and five hundred thousand) compared to 1,500,000 (one million and five hundred thousand) subscribed and fully paid-in dematerialized ordinary registered voting shares with a par value of BGN 1 each, as a result of a procedure for Initial Public Offering of a new issue of shares.
• Cash contributions at the amount of BGN 2,999,999 (two million nine hundred ninety-nine thousand nine hundred ninety-nine) against 2,999,999 (two million nine hundred and ninety-nine thousand nine hundred and ninety-nine) subscribed and paid-in dematerialized ordinary registered voting shares with a nominal value of BGN 1 each, as a result of a procedure for Public Offering of a new issue of shares. The public offering of shares from the capital increase of Allterco JSCo was carried out in the period 28.09.2020 - 30.10.2020, on the basis of a Prospectus, together with the supplements thereto, confirmed by the Financial Supervision Commission with Decision № 148- F of 18.02.2020, Decision № 405-E of 11.06.2020, Decision № 601-E of 13.08.2020 and Decision № 791-E of 29.10.2020.

As of 30 June, 2022 the capital structure of ALLTERCO JSCo is as follows:

NAME OF SHAREHOLDER	CAPITAL PERCENTAGE
Svetlin Todorov	32,48 %
Dimitar Dimitrov	32,48 %
Other individuals and legal entities	35,04 %

As of June 30, 2022 the company holds 40 000 treasury shares, representing 0,22% of the registered capital.

1.4.Development and research activities

The company has not carried out activities in the area of research and development and does not plan such in the near future. One of the subsidiaries of Allterco JSCo has carried out such activity during the reporting period, namely: Allterco Robotics Ltd.

2. IMPORTANT EVENTS FOR ALLTERCO JSCo

Detailed information about the important events that occurred during the reporting period for ALLTERCO JSCo, as well as other information that could be important for investors is regularly disclosed by the company in accordance with regulatory requirements. In compliance with the requirement of Art.43a et seq. of Ordinance No. 2 of FSC, in conjunction with Art. 100t, Para 3 of the POSA, the Company discloses the regulated information to the public through selected information media. All information provided to the media in fully unedited text is available at: http://www.x3news.com/. The required information is submitted to the FSC - through the unified system for submission of information electronically, developed and maintained by the FSC - e-Register. The information is also available on the Company's website at: https://allterco.com/en/INVESTORS.

The announced important events that occurred during the reporting period did not have a significant impact on the financial results of the company on consolidated basis.

3. FINANCIAL POSITION AND DEVELOPMENT OF THE BUSINESS ACTIVITIES DURING THE REPORTING PERIOD

3.1.Operating income

As of the end of the reporting period ALLTERCO JSCo reported on consolidated basis net profit at the amount of BGN 11 747 thousand, which is an increase of 16,9 % compared to the same reporting period of the previous year.

As of the end of the reporting period the consolidated revenue from sale of devices increased by 50,1% reaching BGN 57 772 thousand. Other revenue, which consists mostly of positive currency exchange gains, increased by 389,7% during the reporting period.

REVENUE	9 months, 2021 BGN thousand	Change %	9months, 2022 BGN thousand
Revenue from sales of devices	38 500	50.1%	57 772
Revenue from services and rents	21	171.4%	57
Other revenue	555	389.7%	2718
Total operating revenue	39 076	54.95%	60 547
Share in the profit of associated companies	0		48
Profit (loss) from operation with financial assets	250	-100.0%	0
Total	250	-80.8%	48

3.2.Operating expenses

As of the end of the reporting period the total operating expenses of ALLTERCO JSCo increased by 91,0 % compared to the same reporting period of the previous year. This increase is mainly due to the increase of salary and social security expense by 91,0 %, the external services by 207,3 % and other operating expenses by 488,1%. The increase of the other operating expenses is due to the write-off of receivables and R&D related expenses.

The greatest portion of the reported expenses for the period belong to the expenses for salaries and social security 53,2%, followed by external services which share is 19,2% % and sales expenses with a share of 11,6 % The salary expenses include the remuneration of the members of the Board of Directors, which is determined by a decision of the shareholders meeting.

EXPENSES	9 months 2021	Change	9 months 2022
	BGN thousand	%	BGN thousand
Materials	195	-17.4%	161
External services	1 117	207.3%	3 432
Depreciation	748	-54.8%	338
Salaries and social security	4 977	91.0%	9 507
Other administrative expenses	178	194.4%	524
Total administrative expenses	7 215	93.5%	13 962
Sales expenses	1 830	13.6%	2 078
Other operating expenses	311	488.1%	1 829
Total Operating Expenses	9 356	91.0%	17 869

3.3. Financial indicators

LIQUIDITY RATIOS	31.12.2021	30.09.2022
Current ratio	12.52	11.70
Quick ratio	10.93	8.78
Immediate ratio	6.44	4.14
Cash ratio	10.47	8.15

The total liquidity ratio at the end of the reporting period decreased due to the following: the current assets increased by 17,7% compared to the end of 2021, while the current liabilities increased by 26,0%.

The quick liquidity ratio at the end of the reporting period decreased due to the following: the current liabilities increased by 26,0% compared to the end of 2021, while the inventories increased by 130,6%.

The immediate liquidity ratio at the end of the reporting period decreased due to the following: the current liabilities increased by 26,0 % compared to the end of 2021, while trade receivables increased by 25,1%.

The cash ratio at the end of the reporting period decreased due to the following: The current liabilities increased by 26,0 % compared to the end of 2021, while cash decreased by 19,0%.

DEBT RATIOS	31.12.2021	30.09.2022
Debt / Equity	0.10	0.11
Debt / Assets	0.09	0.10
Equity / Debt	9.60	9.39

The change in the debt/equity ratio at the end of the reporting period is due to the following: the Company's total liabilities increased by 13,7 % compared to the end of 2021, and equity increased by 11,3%.

The change in the debt/assets ratio at the end of the reporting period is due to the following: the Company's total assets increased by 11,5% compared to the end of 2021, while the Company's total liabilities increased by 13,7%.

The change in the financial autonomy ratio at the end of the reporting period is due to the following: the total liabilities of the Company increased by 13,7 % compared to the end of 2021, and equity increased by 11,3%.

4. DESCRIPTION OF THE MAIN RISKS AND UNCERTAINTIES

The risks associated with the core business of the Company can generally be divided into systemic (general) and non-systemic (related specifically to its business and the industry in which it operates). Relevant for the Company are also the similar categories of risks inherent in the company business and the industry in which its subsidiaries operate, insofar as they are the main source of the Company's income. Separately, investors in the Company's financial instruments are also exposed to risks related to the investments in securities themselves (derivative and underlying)

4.1.SYSTEMIC RISKS

Systemic risks are related to the market and the macro environment in which the Company operates, which is why they cannot be managed and controlled by the Company's management team. Systemic risks are: political risk, macroeconomic risk, inflation risk, currency risk, interest rate risk, tax risk and unemployment risk.

Description
Political risk is the likelihood of a change of Government, or of a sudden change in its policy, of occurrence of internal political turmoil and adverse changes in European and/or national legislation, as a result of which the environment in which local businesses operate will change negatively, and investors will incur losses. In November 2021, the country held for the second time early parliamentary elections for the Ordinary National Assembly, as a result of which for the political party ruling in last 12 years lost its position in the state governance and a new government is expected to be formed. After a vote of motion of no confidence in the coalition government formed at the end of 2021 in June 2022 followed by early parliamentary elections in October this year, a change in the government of the country is expected.
Political risks for Bulgaria internationally are related to the commitments undertaken to implement serious structural reforms in the country in its capacity as an equal member of the EU, increasing social stability, limiting inefficient spending, on the one hand, as well as the strong destabilization of the countries of The Middle East, military interventions and conflicts in the region of the former Soviet Union, the refugee waves generated by these factors, and the potential instability of other key countries in the immediate proximity in the Balkan peninsula.
Other factors that also affect this risk are the possible legislative changes and in particular those concerning the economic and investment climate in the country.
According to the National Statistical Institute, in March 2022 the total business climate indicator increased by 0.8 percentage points compared to the previous month. An increase in the indicator was observed in the field of industry, retail and services.

		Business climate – total, Source: NSI1	According to the September 2022 ECB expert projections, annual average real GDP growth is expected to reach 3.1% in 2022, followed by a slowdown markedly to 0.9% in 2023 and to rebound to 1.9% in 2024. Compared with the June 2022 Eurosystem staff projections, the outlook for GDP growth has been revised up by 0.3 percentage points for 2022,
			following positive surprises in the first half of the year, and revised down by 1.2 percentage points for 2023 and by 0.2 percentage points for 2024, mainly owing to the impact of
	energy supply disruptions, higher inflation and the related fall in confidence.2
INTEREST RATE RISK	The interest rate risk is related to possible, eventual, adverse changes in the interest rates established by the financial institutions of the Republic of Bulgaria.
	follow a meeting-by-meeting approach.3		During the las months the ECB Governing Council Based on its current assessment, the Governing Council decided to raise the three key ECB interest rates by 75 basis points. Accordingly, the interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility were increased to 1.25%, 1.50% and 0.75% respectively, with effect from 14 September 2022. This major step frontloads the transition from the prevailing highly accommodative level of policy rates towards levels that will support a timely return of inflation to the Governing Council's 2% medium-term target. The Governing Council took this decision, and expects to raise interest rates further, because inflation remains far too high and is likely to stay above its target for an extended period. Future policy rate decisions will continue to be data-dependent and
		Date	Percentage
		01.09.2022	0.00
		01.08.2022	0.00
		01.07.2022	0.00
		01.06.2022	0.00
		01.05.2022	0.00
		01.04.2022	0.00
		01.03.2022	0.00
		01.02.2022	0.00

¹http://nsi.bg/bg/content/14830/общ-показател-на-бизнес-климата

²https://www.ecb.europa.eu/pub/economic-bulletin/html/eb202206.bg.html

³ https://www.ecb.europa.eu/pub/economic-bulletin/html/eb202206.bg.html

	01.01.2022 0.00 *Source: BNB4
INFLATION RISK	Inflation risk is a general rise in prices in which money depreciates and there exists a probability of loss to households and firms.
	The consumer price index (CPI) is an official measure of inflation in the Republic of Bulgaria. It estimates the total relative change in the prices of goods and services used by households for personal (non-production) consumption and the index is calculated by applying the structure of the final cash consumer expenditure of Bulgarian households.
	According to the NSI, the monthly inflation in September is 1.2% and the annual inflation 18.7 %. The inflation was measured by the consumer price index, whereas the monthly inflation applies to September 2022 and the annua inflation applies to September 2022 compared to the same month in the previous year. The inflation as of the beginning of the year (September 2022 compared to September 2021) is 14.0% and the average annual inflation rate for October 2021 to September 2022 compared to October 2020 to September 2021 is 12.8%.5
	The respective month of the previous year The previous month *The inflation measured by the consumer price index, by months, Source: NSI
	According to the harmonized index of consumer prices (HICP) in September 2022 the monthly inflation is 0,7% compared to the previous month and the annual inflation for September 2022 compared to September 2021 is 1,6%. Year-to-date inflation (September 2022 versus December 2021) is 12.0 % and the average annual inflation rate for the period October 2021 to September 2022 compared to the period October 2020 to September 2021 is 10.9 %. 6
	According to Eurostat's flash estimate, inflation reached 9.1% in August 7
CURRENCY RISK	Exposure to currency risk is the dependence and effects of changes in exchange rates. Systemic currency risk is the probability of a possible change in the currency regime of the country (currency board), which would lead either to BGN devaluation or to BGN appreciation compared to foreign currencies.
	Currency risk will have an impact on companies with market shares, the payments of which are made in a currency other than BGN and EUR. Since, according to the current legislation in the country the Bulgarian lev is fixed to the euro in the ratio EUR 1 = BGN

⁴ https://www.bnb.bg/Statistics/StBIRAndIndices/StBIBaseInterestRate/index.htm

⁵ https://nsi.bg/sites/default/files/files/pressreleases/Inflation2022-09_WGJV1YZ.pdf

⁶ https://nsi.bg/sites/default/files/files/pressreleases/Inflation2022-09_WGJV1YZ.pdf

⁷ https://www.ecb.europa.eu/pub/economic-bulletin/html/eb202206.bg.html

	1.95583, and the Bulgarian National Bank is obliged to maintain a level of Bulgarian levs in circulation equal to the bank's foreign exchange reserves, the risk of devaluation of the BGN compared to the European currency is minimal and consists in the eventual early abolition of the currency board in the country. At this stage, this seems unlikely, as the currency board is expected to be abolished upon the adoption of the EUR in Bulgaria as an official mean of payment.
	Theoretically, currency risk could increase when Bulgaria joins the second stage of the European Exchange Rate Mechanism (ERM II). This is a regime in which the country must maintain the exchange rate compared to the EUR within +/- 15% on the background of the central parity. In practice, all countries currently in this mechanism (Denmark, Estonia, Cyprus, Lithuania, Latvia, Malta) are witnessing fluctuations that are significantly less than the allowed ones of ± 15%.
	On July 10, 2020, Bulgaria joined the ERM II exchange rate mechanism, known as the 'euro area's waiting room'. The central rate of the Bulgarian lev is fixed at EUR 1 = BGN 1.95583. Around this central exchange rate of the BGN, the standard range of plus or minus 15 percent will be maintained. Bulgaria joins the exchange rate mechanism with its existing currency board regime, as a unilateral commitment and without additional requirements to the ECB.8 At the same time, our country must enter into close cooperation with the unified banking supervision. The fixed exchange rate of the BGN to the EUR does not eliminate for the Bulgarian currency the risk of unfavorable movements of the euro exchange rate against other major currencies (US dollar, British pound, Swiss franc) on the international financial markets, but at present the company does not consider that such a risk would be material to its business. The company may be affected by currency risk depending on the type of cash flow currency and the type of currency of the company's potential loans.
	The Allterco JSCo Group companies operate in Bulgaria as well as in EU countries and first countries, mainly in the USA and the Asia-Pacific region. At present, the main revenues from the Group's IoT business are in BGN or EUR, and the costs of delivery of goods in this segment are mainly in US dollars and are largely tied to the Chinese yuan, which is why the appreciation of the US dollar or Chinese yuan would have an adverse effect on the business performance. In terms of US dollar exposure, the Group companies are expected to have significant US dollar sales revenue in the US and other non-EU markets in the future, which to some extent balances the Group's net exposure to this major currency.
	To limit the effects of the currency risk, the companies of the Group have introduced a system for planning the deliveries from countries inside and outside the EU, as well as procedures for ongoing monitoring of the movements in the exchange rates of the foreign currencies and control over the forthcoming payments. Currently, the Group companies do not use derivative instruments for hedging the currency risk but, if necessary, the management is ready to enter into such transactions.
Credit risk of the state	Credit risk is the probability of deterioration of Bulgaria's international credit ratings, caused by the government's inability to repay its liabilities regularly. Low credit ratings of the country can lead to higher interest rates, more difficult financing conditions, both for the state and for individual economic entities, including the Issuer. Credit ratings are prepared by specialized credit rating agencies and serve to determine and measure a country's credit risk. Bulgaria's credit rating is presented in the following table: Table 1: Credit risk of Bulgaria

⁸ https://www.ecb.europa.eu/press/pr/date/2020/html/ecb.pr200710~4aa5e3565a.en.html

Credit agency	Date of last change	Long-term rating	Prospects
Standard & Poor's	28.05.2022 9	BBB/A-2	Stable
Fitch	17.06.2022 10	BBB	Positive
Source: Ministry of Finance
	The international S&P Global Ratings Agency affirmed its 'BBB/A-2' long- and short-term foreign and local currency sovereign credit ratings on Bulgaria. The outlook remains stable.
growth over the medium term.	The Rating Agency expects the Russia-Ukraine military conflict to inflict a shock on the Bulgarian economy and as a result the real GDP growth for 2022 will slow down to 1.6% from 4.3% (according to the agency's forecast in November) and the budget deficit will double to 5% of GDP. S&P points out that Bulgaria's strong external and fiscal balance sheets will help mitigate this shock, while the steady inflows of EU transfers will support
	The stable outlook reflects the S&P expectation that Bulgaria's economy will not incur major external or fiscal imbalances. Rather, the shock for the economy resulting from the military conflict will be temporary and economic growth will pick up from 2023, backed by EU transfers. S&P expects that this will contain the increase in general government debt, which will remain low in global comparison.11
	The international credit rating agency Fitch Ratings has affirmed Bulgaria's long-term foreign and local currency Issuer Default Ratings (IDR) at "BBB" with a Positive Outlook.
	Bulgaria's ratings are supported by its strong external and public balance sheets versus 'BBB' peers and a credible policy framework, underpinned by EU membership and a long standing currency-board. This is balanced by unfavorable demographics, which weigh on potential growth and government finances over the long term.
level to expedite the process.	The Positive Outlook reflects the prospect of euro adoption, which could lead to further improvements in external metrics. The authorities remain committed to euro adoption by 2024, with risks around the timeline mainly tied to exogenous factors. The rating agency does not expect a delay of more than one year in euro accession if the country fails to meet convergence criteria in 2023, as it considers that there is a clear commitment at EU
	Fitch Ratings forecasts GDP growth to slow to 3% in 2022 from 4.2% in 2021 as higher inflation and weaker external demand affect consumption and external trade, respectively. Economic performance in 1Q22 held up surprisingly well as private consumption remained resilient, but the rating agency expects activity to weaken as inflationary pressures accentuate throughout 2022. Fitch Ratings continues to expect a modest acceleration of growth in 2023 (to 3.8%) largely due to stronger investment linked to EU Funds. Political uncertainty remains an important downside risk. The renewed prospects of new elections could delay absorption of funds linked to the Recovery and Resilience Plan (RRP), which was finally approved in April. However, the risks around a more substantive slowdown appear contained at present, highlighting the economy's resilience in the last couple of years to both domestic and external shocks.

⁹https://www.minfin.bg/bg/news/11577

¹⁰ https://www.minfin.bg/en/news/11869

¹¹ https://www.minfin.bg/bg/news/11830

	In response to inflation and energy price shock, the government proposed a 2022 budget law revision. It foresees a set of support measures worth around BGN 2.1 billion (2.0% of GDP). Next to VAT rate cuts on some products, increase of tax relief for families with children and fixed compensation for liquid fuel prices, the plan envisages a two-stage pension hike in July and October.
	Fitch Ratings forecasts the budget deficit to widen to 4.9% of GDP in 2022, from 4.1% of GDP in 2021, driven predominantly by support measures. In its view, the deficit will narrow to 2.9% of GDP in 2023 as expenditure pressures recede. Despite wider deficits, Bulgaria's public debt ratio will remain very low compared with EU countries and 'BBB' peers.
	The key factors that could lead to positive rating action/upgrade include progress toward eurozone accession, including greater confidence in Bulgaria meeting membership criteria and an improvement in economic growth potential, Factors that could lead to negative rating action/downgrade include a significant delay in the timeline of eurozone accession or a large adverse macroeconomic shock, which would materially lower medium-term growth prospects compared with Fitch's current expectation.12
Unemployment risk	As a major factor influencing consumers' purchasing power, rising unemployment would reduce demand for IoT products. On the other hand, the demand for staff by the business remains extremely active, so that such a risk appears to be negligible within the next year.
	According to Eurostat, in August 2022 г. 12.921 million people in EU, of which 10,966 million in the Euro Zone, were unemployed. Compared to July 2022 the number of unemployed people decreased by 52 000 people in EU and by 30 000 people in the Euro Zone. Compared to August 2021 the unemployment decreased by 1.682 million people in EU and by 1.358 million people in the Euro Zone.13
	The administrative statistics of the Bulgarian Employment Agency report a registered unemployment rate of 4.3% in August, which is the lowest unemployment rate for this month as of the tart of the administrative statistics of the agency. On annal basis there is a decrease percentage points and compared to June this year there is a slight increase by 0.1% down 0.1 p.p. from the previous month and down 1.2 p.p. from a year earlier. The 14 registered unemployed in August 2022 is 139 782.
Risk associated with the legal system	Although Bulgaria has introduced a number of significant legislative changes since joining the EU and most of the Bulgarian legislation has been harmonized with EU legislation, the legal system in the country is still in the process of reform. Judicial and administrative practices remain problematic and it is difficult to effectively resolve property disputes, breaches of laws and contracts and other. Deficiencies in the legal infrastructure can result in uncertainties arising from the implementation of corporate actions, the implementation of supervision and other issues.
TAX RISK	It is essential for the financial performance of the companies to maintain the current tax regime. There is no guarantee that the tax legislation, which is directly relevant to the core business of the Company, will not be changed in a direction that would lead to significant

¹² https://www.minfin.bg/en/news/11869

¹³ https://ec.europa.eu/eurostat/statistics-

explained/index.php?title=Unemployment_statistics#Unemployment_in_the_EU_and_the_euro_area

¹⁴ https://www.az.government.bg/bg/news/view/bezraboticata-prez-avgust-dostigna-naj-niskata-si-stojnost-za-tozimesec-3900/

unforeseen expenses and, accordingly, would adversely affect its profit. The taxation
system in Bulgaria is still developing, as a result of which a contradictory tax practice may
arise.

4.2.NON-SYSTEMATIC RISKS

Risks related to the industry in which the Group operates

Such risks are: risk of shortage of key personnel, risk of strong competition, risk related to personal data security and hacker attacks, risk of technology change.

Risk of shortage of key personnel

One of the biggest challenges for technology companies, such as the companies of the Group, as well as given the specific scope of their business in the field of telecommunications and engineering and software development, is the shortage of skilled personnel. Insufficient availability of suitable staff in the subsidiaries could adversely affect the future development of the Group due to delays in the development of new products/services and the maintenance of existing ones. On the other hand, the high competition in this sector raises the cost of labor. Thus, the financial position and market share of the Group companies could suffer.

Risk of strong competition

After the sale of most of the telecommunication business of the group, the Group companies operate mainly in the segment of the Internet of Things (IoT). This segment is one of the most modern and promising sectors of the industry, which attracts the interest of many technology giants and start-up companies. The loss or inability to gain market share and the fall in final product prices due to increased competition may have a negative effect on revenue, profit and profit margins. Maintaining a competitive position requires investment in the creation of devices with new utilities, improvement of existing solutions and expansion of market share and it cannot be taken for granted that new developments will be established among the competing ones on the market.

Risk related to personal data security and hacker attacks

The technology industry is characterized by digital transmission of information that could be strictly confidential, containing personal data of users of products, financial information of companies, information about new products and other. The protection of such information is a critical factor for the normal operation of companies in the industry, including of the Group. The sales of the devices and the use by the users of the accompanying mobile applications and cloud services provided by the Group are related to the exchange and storage of personal data. Potential breaches in information security can lead to: i) Loss of customers and/or partners and their migration to competing companies; (ii) Imposing sanctions and lawsuits related to breaches of applicable data protection and privacy laws; iii) Lost or delayed orders and sales; iv) Adverse effects on reputation, business, financial position, profits and cash flows.

Risk of regulatory and specific technical requirements

The supply of IoT devices is related to regulation regarding the certification of products for sale in the respective country. In the European Union, products are required to bear the 'CE' marking, which indicates that the product has been evaluated and meets the requirements of safety, health and environmental protection. In the US, the equivalent is 'UL' certification. For certification purposes, accredited laboratories are assigned compliance tests, which involve significant costs. In addition, specifics in the requirements of local regulators and contractors (especially mobile operators) may require additional tests and certification to be performed, which increases the cost of entering a particular market or particular distribution channel.

Sales of the Group companies' products cover an increasing number of markets, which often have local regulation regarding the certification of similar products in the respective country. Meeting the requirements of local regulation is related to time and resources and may delay the Company in entering new markets or require additional costs in order to meet different standards.

The change in regulatory requirements for devices may involve additional costs for making them compliant with the new requirements, including costs for withdrawing products from the market to making them compliant with these requirements. The Group companies and their local partners regularly monitor planned changes in the legislation and take timely measures to ensure the compliance of products with them.

Eventual changes in the regulations in the telecommunications sector, could have some impact on the operation of the Group as mobile operators are one of the main sales channels for existing MyKi series products. Big part of the devices developed and sold by the companies in the IoT Group use Internet-based technology and can work with the services of any Internet provider. To that effect, the Group is now less dependent on regulations in the field of telecommunications, insofar as the companies in its structure are not providers of telecommunication services and mobile operators are only one of the channels for trade and distribution of IoT devices.

Risk of technology change

The Issuer and its subsidiaries operate in an extremely dynamic segment, in which technologies have a significant impact and are a source of competitive advantage. To that effect, there is a risk of delayed adaptation to new technologies due to lack of knowledge, experience or sufficient funding, which may have a negative impact on the Issuer. The slow adaptation to the new realities may lead to a loss of competitive positions and market shares, which in turn will lead to a deterioration of the Group's performance.

Risks related to the Group's business

Such risks are: operational risk, risk related to business partners, risks arising from new projects and liquidity risk.

Operational risk

Operational risk can be defined as the risk of loss as a result of inadequate or non-functioning internal management procedures. Such risks may be caused by the following circumstances:

• Adoption of wrong operational decisions by the management staff related to the management of current projects;
• Insufficient amount of skilled personnel needed for the development and implementation of new projects;

• Leaving key employees and inability to replace them with new ones;

• Risk of excessive increase in management and administration costs, leading to a decrease in the overall profitability of the Issuer;

• Technical damages leading to prolonged interruption of the provided services may lead to termination of contracts with clients.

The effects of such circumstances would be a decrease in the Issuer's revenues and deterioration of its business performance.

Risk associated with business partners

Production activities in the IoT segment is outsourced, mainly to China, concentrated in several manufacturers. Potential risks associated with key subcontractors are related to the accurate and timely execution of deliveries or termination of business relationships. Although management believes that there is a wide range of alternative suppliers, the possible transfer of production to new partners and diversification of subcontractors may lead to delivery delays and additional costs, which may affect the ability of the Group companies to perform agreed orders from customers and adversely affect the Group's reputation and financial performance.

Risks arising from new projects

The main business activity of Allterco JSCo is related to investments in subsidiaries. There is a risk that some of the subsidiaries will not be able to meet their goals, which will lead to lower or negative return on investment.

The development of new products and services by the subsidiaries of Allterco JSCo is related to the investment in human resources, software, hardware, materials, goods and services. Should new products and services fail to be marketed, such investments would be unjustified. This in turn would have a negative impact on the costs and assets of the Company, as well as on the performance of its business activities. In order to manage the risk arising from new projects, the Group companies perform a market analysis, prepare a financial analysis containing different scenarios, and in some cases discuss with potential customers the concept of the new service/product.

Liquidity risk

The expression of the liquidity risk in relation to the Group is associated with the possibility of lack of timely and/or sufficient available funds to meet all current liabilities. This risk may appear both in case of significant delay of the payments by the debtors of the Company, as well as in case of insufficiently effective management of the cash flows from the operation of the Company.

Some of the Group companies use bank financing in the form of an investment loan, overdraft or revolving credit line, which can be used in case of liquidity problems.

The company pursues a conservative liquidity management policy, through which it constantly maintains an optimal liquidity cash reserve and good ability to finance its business activities. In order to control the risk, the Company monitors the timely payment of incurred liabilities. The company monitors and controls the actual and projected cash flows for periods ahead and maintains a balance between the maturity limits of the assets and liabilities.

5. TRANSACTIONS WITH RELATED OR INTERESTED PARTIES

For the reporting period the Company has not entered into transactions with interested parties in the meaning according to POSA.

The Company has not entered into any transactions with daughter or associated companies that fall beyond their scope of regular business or that significantly deviate from the market terms. The deals concluded by the company with its subsidiaries have been eliminated for the purposes of consolidation.

Key management

During the reporting period, to the members of the Board of Directors have been paid remunerations in total amount of BGN 511 thousand. The amounts paid are in compliance with the approved remuneration policy of the Company and the changes made in the number of seats in the Board and the new members, which were appointed on an extraordinary meeting of shareholders held on April 8, 2022.

At the end of the reporting period, the Company had no payables to its key management personnel.

6. INFORMATION ON NEWLY INCURRED SIGNIFICANT RECEIVABLES AND/OR LIABILITIES FROM THE BEGINNING OF THE YEAR TO THE END OF THE REPORTING QUARTER

There are no newly incurred significant receivables and/or liabilities, except for the temporary financing provided to the American subsidiary Allterco Robotics Inc, US. It is in the form of additional monetary contribution at the amount of 1 million USD and term of 1 year at annual interest rate of 1%.

Historical data on trade
Date	Volume	Turnover	Highest value	Lowest value	Opening value	Closing value
30.09.2022	25488	451478.40	18,850	16,250	18,800	16,700
31.08.2022	95508	1772671.75	20,500	17,800	17,900	18,800
29.07.2022	43301	775046.00	18,550	17,500	18,300	17,950
30.06.2022	34228	633 077,350	19,000	17,600	18,500	18,750
31.05.2022	27401	499 185,550	19,750	17,050	19,750	18,000
29.04.2022	51828	1 042 375,500	21,300	18,750	19,000	19,800
31.03.2022	123107	2 105 993,00	19,500	14,000	18,800	19,000
28.02.2022	55488	1 081 219,70	21,400	16,700	20,000	19,000
31.01.2022	103102	2 073 489,00	25,400	17,500	25,200	19,800

7. INFORMATION ON THE TRADING IN THE SHARES OF ALLTERCO JSCo DURING THE REPORTING PERIOD

Source: Investor.bg

Information on the trading of Allterco JSCo shares during the reporting period on the Frankfurt Stock Exchange is available at https://www.boerse-frankfurt.de/equity/allterco-jsco/price-history/historicalprices-and-volumes

8. EVENTS AFTER THE END OF THE REPORTING PERIOD

After the end of the reporting period, Allterco JSCo submitted to the FSC, the BSE and the public additional information.

Date	NOTIFICATION
05.10.2022	The Company has announced to the FSC and to the Public the following information:
	Allterco JSCo announces a 49.8%* year-on-year increase in IoT revenue from sales of devices and related services to BGN 57.7 million (EUR 29.5 million) in 9M 2022, based on preliminary data. The revenue from sales of Shelly-branded smart home devices increased by 51.0%, amounting to BGN 54.5 million (EUR 27.8 million), followed by the revenue from sales of MyKi tracking devices, which increased by 32.5% to BGN 3.2 million (EUR 1.6 million).
	With these revenues, Allterco JSCo exceeded budget and forecast for 9M 2022 by 5.4%. Compared to 9M 2021 the growth rate of the Company is increasing, in line with the management expectations of an annual growth rate of 43% for 2022.
	The Company will officially disclose consolidated financials for 9M 2022 on 14 November 2022.
	* Changes show only the year-on-year growth of revenue from IoT business and do not reflect revenue from value added services in Asia since the Asian telco business was sold in September 2021.
	** EUR/BGN exchange rate as of 5 October 2022 - EUR 1 = BGN 1.95583
3.11.2022	Allterco JSCo announced that its forecast was increased for the current 2022 after further speed up of the growth rate in the beginning of the fourth quarter of 2022. Based on the successful development of the business in October 2022 and the solid volume of orders Allterco JSCo raises its initial forecasts for 2022. The company expects increase of 45-46 million EUR (initially EUR 43.5 million) and EBIT (earnings before interest and taxes) up to 10-10.5 million EUR (initially 9.6 million EUR) in the financial 2022 year.
	The Company will officially disclose consolidated financials for 9M 2022 on 14 November 2022.
11.11.2022	The Company has announced to the FSC and to the Public an invitation to an Extraordinary General Meeting of the Shareholders with the following agenda:
	Item 1. Adoption of decision on amendments in the Remuneration Policy Item 2. Adoption of a decision for approval of a remuneration scheme for the provision of variable share-based remuneration to the executive members of the Board of Directors for the period 2022 – 2025 г. Item 3. Approval of the Motivated Report of the General Meeting of the Shareholders on transactions within the scope of Art. 114(1), item 1 of POSA, provided as a part of the written materials Item 4. Authorization in compliance with Art. 114(1), item 1 of POSA for the the conclusion of a package of transactions for the acquisition of 100% of the capital

of the Slovenian company GOAP Racunalniski inzeniring in avtomatizacija
procesov d.o.o. Nova Gorica, business address Ulica Klementa Juga 7, 5250
Solkan, Slovenia, registration number: 5414083000 ("GOAP")

9. OTHER INFORMATION AT THE DISCRETION OF THE COMPANY

The company does not experience any negative effect on its activities from the continuing pandemic of COVID-19 and the military conflict in Ukraine. The management expects that these events will not have any negative impact on the business of the Company in the foreseeable future.

On June 30, 2022 the Company bought back 40 000 of its shares, representing 0,22% of its share capital, though an OTC deal and at a price of 19,5 BGN per share. The treasury shares will be used for the potential acquisition of the Slovenian IoT company GOAP d.o.o. Nova Gorica (GOAP). The transaction is still not closed.

On 29 July, 2022 Allterco and the four shareholders (one legal entity and three individuals) of GOAP d.o.o. ("GOAP") signed a binding term sheet on the general terms and conditions for the acquisition of the Slovenian IoT provider. Currently the transaction is not closed and the negotiations are ongoing.

The Company considers that there is no other information that has not been publicly disclosed that would be important to shareholders and investors in making an informed investment decision.

Date: November 14, 2022

For ALLTERCO JSCo:

Dimitar Dimitrov CEO