Arctic Bioscience — Interim / Quarterly Report 2023

Aug 29, 2023

THIS IS ARCTIC BIOSCIENCE

This is Arctic Bioscience 2 Highlights first half year 2023 3 Key Figures 4 Interim Report 5 Income Statement 8 Balance Sheet 9 Cash Flow Statement 11 Notes to the Interim Financial Statements 12 Alternative Performance Measures (APMs) 18

Arctic Bioscience is a biotech company developing and commercializing pharmaceutical and nutraceutical products based on unique bioactive marine compounds.

The company is developing HRO350 – a novel investigational drug candidate. HRO350 is being developed for treatment of patients with mild-to-moderate psoriasis. This is a large patient group in need of new effective medicines with beneficial safety profile.

Arctic Bioscience is establishing a platform technology with potential beyond psoriasis, with properties which may have relevance in other inflammatory diseases, including a novel drug candidate for brain development in extremely premature infants.

Nutraceuticals from Arctic Bioscience are sold globally as bulk ingredients as well as finished goods under the ROMEGA® brand.

To support its long-term growth strategy, Arctic Bioscience engages in significant R&D. Access to raw material and proprietary production processes secure control of the value chain.

Arctic Bioscience is led by a highly skilled team of talents with diverse and highly relevant background.

HIGHLIGHTS FIRST HALF YEAR 2023

The phase IIb HeROPA clinical trial for treatment of patients with mild-to-moderate psoriasis approved by Medicines Authorities in all the five Euro-pean countries and recruiting is progressing well. Read-out expected in H1 2024

Solid financial position with available liquidity totaling NOK 113,8 million by end of H1 2023. Current financing sufficient throughout read-out for the HeROPA clinical trial

Solid growth in the Nutra-segment with an increase in total revenues by 33 % y/y to NOK 19,1 million (14,4) in H1 2023. Revenue prospects for H2 2023 is very positive

Positive gross margin development in H1 2023 with a gross margin of 30,0 % (27,6 %). Adjusted EBITDA of NOK -18,3 million (NOK -14,4 million)

The Group in position to explore future commercial opportunities in the microalgae segment through the acquisition of Arctic Algae AS in Q1 2023

KEY FIGURES

		Arctic Bioscience Group
Amounts in NOK	H1-2023	H1-2022
Total revenue	19 080 525	14 401 951
Gross profit	5 730 477	3 970 643
Gross margin %	30.0 %	27.6 %
EBIT	-22 585 042	-16 218 368
EBITDA	-20 032 914	-14 416 062
Adjusted gross profit *	5 730 477	3 970 643
Adjusted gross margin % *	30.0 %	27.6 %
Adjusted EBIT *	-20 845 111	-16 218 368
Adjusted EBITDA *	-18 292 983	-14 416 062
Cash flow operating activities	-27 718 726	-18 944 351
Cash flow from investment activities	-23 611 356	-31 399 875
Cash flow from financing	20 985 250	749 992
Net cash flow	-30 344 832	-49 594 234
Cash and cash equivalents end of period	113 806 741	177 768 124
	30.06.2023	31.12.2022
Total assets	321 509 747	327 702 041
Total equity	283 407 389	287 279 657
Total liabilities	38 102 357	40 422 384
Equity ratio	88%	88%

* Adjustments in 2023 are made for one off costs during the first half year related to incurred costs internal development project

INTERIM REPORT

All figures relate to the Group. Figures in brackets refer to the corresponding period last year and/or balance figures as of end of last year.

Operational review

Pharma

The main activity in Pharma is to develop a novel, oral drug candidate (HRO350) for the treatment of mild-to-moderate psoriasis in the multibillion USD global psoriasis market. In Q4 2022, the Clinical Trial Application (CTA) for the HRO350 Phase IIb study was submitted to the Medicines Authorities. At start of 2023 the CTA was approved in the UK, and the first patient was included in the trial shortly after. During March the CTA was also approved in the four other countries participating in the trial; Norway, Finland, Germany and Poland. The CTA process took more time than anticipated. The approval of the trial by Medicines Authorities in the five European countries demonstrates international endorsement and the high quality of the drug development plan. These approvals have considerably reduced the implementation risk for the pharmaceutical development program.

The HeROPA phase IIb study will include 519 patients in the five different countries. Clinical trial sites (clinics) are activated in all five countries and recruitment of patients into the trial is well under way. The recruitment start-up period during spring 2023 was slower than expected due to logistical challenges and that the CTA regulatory approval process took more time than anticipated. European countries have thousands of patients with psoriasis who may be eligible for inclusion. Recruitment of a total of 519 patients is not expected to be a challenge. First data readout is expected six months after last patient is included in the trial.

Arctic Bioscience has previously received a positive opinion on its Paediatric Investigational Plan from the European Medicines Agency (EMA) for the psoriasis oral drug candidate, which may represent a significant increase in market potential for HRO350. In addition, Arctic Bioscience has several drug development projects in the pipeline, including a novel drug candidate for support of brain development in extremely premature infants.

Arctic Bioscience also has a research project ongoing to investigate underlying mechanisms of action for HRO350. The research may be relevant for the treatment of other inflammatory diseases and may open up the possibility of new indications for our drug candidate HRO350 in the future – beyond psoriasis.

Nutra

The Group's nutraceutical products are ROMEGA®, a premium phospholipid omega-3 oil based food supplement with a 3:1 ratio of DHA to EPA, and high-quality protein. The Group's strategy for sale of nutraceutical products is multi-dimensional, including B2C, B2B and strategic partner sales.

Revenue development for the nutraceutical products during the first six months of 2023 was strong compared to the same period last year. Actions taken in 2022, like strengthening the Nutra sales & marketing team, and increased focus on the sale of finished goods vs. bulk oil products, have given positive effects in 2023. The company experienced revenue growth in both the B2C and B2B segments. Several new B2B customers with strong brands in their respective markets have launched products with ROMEGA® in the USA and Europe during the first half year of 2023. In the Asian markets we see increasing interest for our products, including our protein products.

The strategic partnership with Kotler (Tromso Nutrition Technology LTD.) in the Chinese market is developing well with extensive marketing efforts and increasing sales. Based on current order backlog, the revenue prospects for the last six months of 2023 are positive.

In Q1-2023 Arctic Bioscience acquired Arctic Algae AS, a biotechnology company specializing in production of micro algae by innovative reactor technologies. This acquisition represents a major opportunity for Arctic Bioscience in continuing designing and extracting marine membrane lipids for application in the different products. The acquired technology is fully scalable and will be the foundation for Arctic Bioscience to expand its product portfolio into marine algal oils, products that have a high growth rate in the nutraceutical marketplace.

Results for H1 2023

The total result for the first half of 2023 was in line with expectations. The Group experienced a 33 % growth in revenues compared to first half of 2022 and established cost focus brings total EBITDA in line with overall budget for the period. The figures are impacted by the development in currencies during this period. The consolidated figures also include effects from Arctic Algae AS from Q2-2023.

Revenues

The revenues come from sale of the nutraceutical products. For the first six months of the year, they totaled NOK 19.1 million (NOK 14.4 million), representing a growth of 33 % year over year. Europe ex. Norway represented the largest market share with 42.5 % of the total revenues. APAC amounted for 22.7 % of the total revenues, while the American market amounted for 19.4 %. The APAC market is expected to increase its portion of the total revenues during the second half of 2023.

Gross profit

Gross profit for the first six months of the year was NOK 5.7 million (NOK 4.0 million), corresponding to a gross margin of 30.0 % (27.6 %). Between the various months of the six months period, the gross margin has been affected by the product mix of goods sold and the development in exchange rates during the period, a timing issue based on sales volume in foreign currencies. The Group has constant focus to ensure that experienced cost increases, especially related to sub-production costs, are represented in our prices to our customers.

Operating costs and EBITDA

Personnel expenses for the first half year totaled NOK 11.0 million (NOK 7.5 million). During the first half of the year, approximately 20 % of the total personnel expenses were capitalized. The increase in personnel expenses is explained with a larger number of headcounts in 2023, and one quarter effect of the consolidated figures from Arctic Algae.

Other operating expenses amounted to NOK 14.7 million (NOK 10.9 million). Operating expenses in the first half of 2023 were below the total budget for the period. Costs related to the pharmaceutical development projects have mainly been capitalized throughout the year.

EBITDA for the first six months of the year was NOK -20.0 million (NOK -14.4 million).

Cash flow

Consolidated net cash flow from operating activities was NOK -27.7 million (NOK -18.9 million), mainly driven by increased accounts receivable and reduced accounts payable, in addition to the negative operating result. The acquisition of Arctic Algae AS in first half year of 2023 did not have a liquidity effect for the group as the transaction, ultimately, was

settled through a debt conversion into shares, but the effects of the acquisition are shown gross in the group's cash flow statement.

Net cash flow from investment activities was NOK -23.6 million (NOK -31.4 million). NOK 12.4 million were related to the development of HRO350, while NOK 12.8 million is related to access of fixed assets as part of the acquisition of Arctic Algae. The acquisition also resulted in access of group goodwill of NOK 2.9 million.

Cash flow from financing activities totaled NOK 21.0 million (NOK 0.75 million) during the period. This was related to a share capital increase and an increase in share premium due to exercise of share options in February 2023, debt conversion into shares of NOK 16.3 million related to the acquisition of Arctic Algae, and new net long-term liabilities to financial institutions of NOK 4.2 million as part of the Arctic Algae transaction.

Total net cash flow during the first half of 2023 ended at NOK -30.3 million (NOK -49.6 million). The level of free liquidity at the end of the period remains solid, with available liquidity totaling NOK 113.8 million (NOK 177.8 million). With effect from August 1st 2023 a credit facility of NOK 30 million has been established to support the nutra business growth potential.

Financial position

– balance sheet as pr. 30.6.2023 The Group's financial position at the end of

the period was strong. Total equity on June 30th 2023 amounted to NOK 283.4 million (NOK 287.3 million). This corresponds to an equity ratio of 88 % (88 %).

Total non-current assets as of June 30th 2023 amounted to NOK 120.8 million (NOK 107.0 million). The increase during the

first half of the year is mainly related to an increase in intangible assets connected to the pharmaceutical development of HRO350 and goodwill from the acquisition of Arctic Algae AS.

The Group has NOK 171.1 million (NOK 198.3 million) in current assets, including NOK 113.8 million in available liquidity (NOK 144.1 million), NOK 35.4 million (NOK 35.5 million) in inventory and NOK 21.9 million (NOK 18.7 million) in total short-term receivables.

After acquiring Arctic Algae AS the Group has a long-term debt of NOK 4.2 million related to financial leasing agreements. Total liabilities amounted to NOK 38.1 million (NOK 40.4 million).

Share information

Arctic Bioscience has been listed on Euronext Growth since February 24th 2021. As of June 30th 2023, the Company had 25 369 552 issued shares, divided between 814 shareholders.

Ronja Capital II AS was the largest shareholder as of June 30th 2023, with 3 087 999 shares, representing 12.17 %. Note 6 includes a list of the 20 largest holders of the Company's shares. Note 4 includes information of changes in equity during the first half year of 2023.

Future prospects

Based on received order intake for the second half of 2023 and general order outlook with new sales prospects, the Board expects a positive development in total revenue for the remaining of the year. Arctic Bioscience aims for a total year over year revenue growth in 2023 of 30-35 %.

The development in gross margin going forward will continue to be influenced by the development in the currency situation. Some delay in roll-over of higher costs from suppliers to customer prices is expected due to agreed sales contracts. This may also impact gross margins going forward. The management has strong focus on cost awareness, and it is expected that the operating costs will be in line with the total budget for the year. Including effects from the acquired Arctic Algae AS during 2023, the expected full year EBITDA will be in the range of negative NOK 37-42 million.

The liquidity situation is closely monitored. Year-end cash position will depend on the progress in the pharmaceutical projects. A process pursuing potential commercial partnerships for HRO350 is ongoing. A subsequent phase III study will be financed with additional funding where the company is working with various options, including potential commercial partners for HRO350.

Arctic Bioscience's main strategic focus is to finalize the HeROPA study for HRO350.

The recruitment period has taken more time than the expected 6 months due to some logistical challenges at the partner hands. The company is working diligently and in collaboration with both the CRO of the project and the different European clinics to ensure efficient recruitment of patients. Recruiting the total of 519 patients is not considered to be a challenge. The last patient included in the study is expected during the autumn 2023. First data readout is expected six months after last patient is included in the trial.

Ørsta, June 30th 2023 August 28th 2023

The Board of Directors of Arctic Bioscience AS

Harald Nordal, Chairman of the Board Jostein Christian Dalland Marita Holstad Per Magne Eggesbø Asbjørn Solevågseide Tore A. F. Tønseth Jan Endre Vartdal Hu Cao

Christer L. Valderhaug, CEO

INCOME STATEMENT

		Arctic Bioscience Group
Amounts in NOK	Note	H1-2023	H1-2022
Operating income and operating expenses
Revenues	1	19 080 525	14 401 951
Total income		19 080 525	14 401 951
Cost of goods sold		13 350 048	10 431 308
Salaries and other personnel expenses		11 010 953	7 471 927
Depreciation and amortisation expenses	2, 3	2 552 128	1 802 306
Other expenses		14 752 438	10 914 778
Total expenses		41 665 567	30 620 319
Operating profit		-22 585 042	-16 218 368
Financial income and expenses
Financial income		2 372 839	1 593 361
Financial expenses		452 310	320 409
Net financial items		1 920 529	1 272 952
Net profit or loss before tax		-20 664 513	-14 945 416
Net profit or loss after tax		-20 664 513	-14 945 416
Net profit or loss	4	-20 664 513	-14 945 416
Earnings pr. share		-0.81	-0.61

BALANCE SHEET

as at 30.6.2023 / 31.12.2022

		Arctic Bioscience Group
Amounts in NOK	Note	30.06.2023	31.12.2022
ASSETS
Non-current assets
Intangible assets
Development	2	116 005 497	104 903 853
Concessions, patents, licenses and trademarks	2	1 944 503	2 139 669
Goodwill	2, 5	2 822 892	0
Total intangible assets		120 772 892	107 043 521
Property, plant and equipment
Building and land	3, 5	14 817 936	19 069 656
Equipment and other movables	3, 5	14 843 903	3 262 326
Total property, plant and equipment		29 661 839	22 331 982
Total non-current assets		150 434 731	129 375 503
Current assets
Inventories		35 373 452	35 462 160
Receivables
Accounts receivable		16 579 788	13 476 176
Other current receivables		5 315 035	5 236 629
Total receivables		21 894 823	18 712 805
Investments
Cash and cash equivalents		113 806 741	144 151 573
Total current assets		171 075 016	198 326 538
TOTAL ASSETS		321 509 747	327 702 041

BALANCE SHEET

as at 30.6.2023 / 31.12.2022

Amounts in NOK		Arctic Bioscience Group
	Note	30.06.2023	31.12.2022
EQUITY AND LIABILITIES
Equity
Paid-in capital Share capital	4, 6	2 536 955	2 437 572
Share premium reserve	4	280 870 434	284 842 085
Total paid-in capital		283 407 389	287 279 657
Total equity		283 407 389	287 279 657
Liabilities
Non-current liabilities
Liabilities to financial institutions	7	4 193 004	0
Total non-current liabilities		4 193 004	0
Current liabilities
Accounts payables		13 955 909	18 253 416
Public duties payables		416 647	1 740 611
Other current liabilities		19 536 797	20 428 357
Total current liabilities		33 909 353	40 422 384
Total liabilities		38 102 357	40 422 384
TOTAL EQUITY AND LIABILITIES		321 509 747	327 702 041

CASH FLOW STATEMENT

		Arctic Bioscience Group
Amounts in NOK	Note	H1-2023	H1-2022
Cash flow from operating activities
Profit/loss before tax		-20 664 513	-14 945 416
Ordinary depreciation	2, 3	2 552 128	1 802 306
Change in inventory		88 708	-4 274 074
Change in accounts receivable		-3 103 612	-2 827 132
Change in accounts payable		-4 297 507	-348 694
Change in other accrual items		-2 293 930	1 648 659
Net cash flow from operating activities		-27 718 726	-18 944 351
Cash flow from investment activities
Payments to buy tangible and intangible assets	2, 3, 5	-23 611 356	-31 399 875
Payments to buy shares and participation in other companies		0	0
Net cash flow from investment activities		-23 611 356	-31 399 875
Cash flow from financing activities
Net new long-term liabilities	5, 7	4 193 004	0
Proceeds from equity	4	16 792 246	749 992
Net cash flow from financing activities		20 985 250	749 992
Net change in cash and cash equivalents		-30 344 832	-49 594 234
Cash and cash equivalents at the start of the period (1.1)		144 151 573	227 362 358
Cash and cash equivalents at the end of the period (30.6)		113 806 741	177 768 124

NOTES TO THE INTERIM FINANCIAL STATEMENTS

GENERAL INFORMATION

Arctic Bioscience AS ("the Company") and its subsidiaries (together "the Group") has its headquarters and registered office at Industrivegen 42 in Ørsta, Norway. The Group consists of Arctic Bioscience AS, Arctic Algae AS, Romega AS, Arctic Nutrition AS and Arctic BioPharma AS. Arctic Algae AS was acquired late Q1-2023, and fully incorporated in the consolidated figures from Q2-2023. The three other subsidiaries are established with minimal capital and have no operations. The Company is listed at Euronext Growth with the ticker ABS.

The Company's Board of Directors approved this consolidated financial report on 28 August 2023. The figures in the statements have not been audited.

The interim consolidated statements do not include all the information and disclosures required in the annual financial statements and should be read in conjunction with the Group's 2022 annual report.

The accounting principles adopted in the preparation of these condensed interim consolidated financial statements are consistent with those followed in the preparation of the Group's annual financial statements for the year ended 31 December 2022, which will be Norwegian GAAP as applied by small enterprises. The interim financial report is prepared according to NRS 11.

NOTE 1: REVENUE SEGMENTS

Arctic Bioscience's revenues come from sale of the company's Romega nutraceutical products via B2C channels in Norway and the sale of bulk oil and protein, customized and private label products via B2B channels globally.

Revenue segments first half year 2023

Amounts in NOK			B2C	B2B	Total revenues
Sales revenue			2 000 703	17 079 822	19 080 525
Amounts in NOK	Norway	Americas	Europe	APAC	Total revenues
Sales revenue	2 937 187	3 703 411	8 111 675	4 328 252	19 080 525
Revenue segments first half year 2022
Amounts in NOK			B2C	B2B	Total revenues
Sales revenue			1 783 899	12 618 052	14 401 951
Amounts in NOK	Norway	Americas	Europe	APAC	Total revenues
Sales revenue	2 770 383	5 347 465	4 232 712	2 051 391	14 401 951

NOTE 2: INTANGIBLE ASSETS

Amounts in NOK	Development	Patents & trademarks	Goodwill	Total
Acquisition cost 1.1.2023	111 124 705	2 731 889	0	113 856 594
Access	12 396 457	0	2 971 465	15 367 922
Departure	0	0	0	0
Acquisition cost 30.06.2023	123 521 162	2 731 889	2 971 465	129 224 516
Accumulated depreciation	-7 515 665	-787 386	-148 573	-8 451 624
Booked value per 30.06.2023	116 005 497	1 944 503	2 822 892	120 772 892
Depreciation H1-2023	1 294 812	195 166	148 573	1 638 551
Life expectancy	7-10 years	5-20 years	5 years
Depreciation plan	Linear	Linear	Linear

In 2023, the group has continued to carry out various development activities. The projects are mainly related to the development of drugs for psoriasis, production process and product development. Several projects have been granted various public grants.

The group capitalizes development costs as these are considered to form the basis for future earnings.

Booked values related to developments and patents are always fraught with risk. Should the group not achieve its objectives related to sale and commercialization of various products, this could lead to write-downs in the accounts. The Company is of the opinion that there are no indicators of the obligation to write down at present, and that the development work in total shows result in line with expectations.

The acquiring of Arctic Algae AS in Q1-2023 identified a commercial added value of NOK 2.97 million not attributable to other balance values at the date of the acquisition. This value is booked as goodwill in the group accounts and will be depreciated over a period of 5 years.

NOTE 3: FIXED ASSETS

Amounts in NOK	Building and land	Equipment and other movables	Total
Acquisition cost 1.1.2023	20 382 817	5 165 619	25 548 436
Access	662 295	12 403 292	13 065 587
Departure	-4 822 150	0	-4 822 150
Acquisition cost 30.06.2023	16 222 962	17 568 911	33 791 873
Accumulated depreciation	-1 405 026	-2 725 008	-4 130 034
Booked value per 30.06.2023	14 817 936	14 843 903	29 661 839
Depreciation H1-2023	91 865	821 712	913 577
Life expectancy	10 -50 years	3 -15 years
Depreciation plan	Linear	Linear

Access of NOK 0.66 million in Building and land, and access of NOK 12.14 million in Equipment and other movables are related to the acquiring of Arctic Algae AS at the time of completion of the transaction.

Departure of NOK 4.82 million in Building and land is received public grant from Innovation Norway related to one of the group's development projects. At time of received payments public grants are entered as a reduction of capitalized costs related to the projects.

NOTE 4: EQUITY

Amounts in NOK	Share capital	Share premium reserve	Sum equity
Equity 01.01.2023	2 437 572	284 842 085	287 279 657
Results H1-2023		-20 664 513	-20 664 513
Capital increases H1-2023	99 383	16 692 863	16 792 246
Equity 30.06.2023	2 536 955	280 870 434	283 407 389

In February 2023 a member of the management group exercised 50 000 share options. On basis of a board authorization granted by the general meeting, the Board resolved to increase the share capital by subscription of 50 000 new shares with a nominal value of NOK 0.10 per share, at a subscription price of NOK 9.845 per share, including a share premium of NOK 9.745. This share capital increase was registered with the Norwegian Register of Business Enterprises March 16th 2023.

Arctic Bioscience acquired a debt to Ronja Capital II AS of NOK 16.3 million through the completed transaction of acquiring Arctic Algae AS from Ronja Capital II AS at end of Q1-2023. The parties of this transaction agreed that the claim may be used as capital contribution in a share capital increase in Arctic Bioscience. In accordance with the Board of Directors proposal, the general meeting resolved on April 21st 2023, to increase the share capital by subscription of 943 833 new shares with a nominal value of NOK 0.10 per share, at a subscription price of NOK 17.27 per share, including a share premium of NOK 17.17. This share capital increase was registered with the Norwegian Register of Business Enterprises May 6th 2023.

NOTE 5: RELATED PARTY TRANSACTIONS

On February 13th 2023 Arctic Bioscience announced the acquisition of Arctic Algae AS, a company fully owned by Ronja Capital II AS, the largest shareholder in Arctic Bioscience AS. The agreed purchase price was NOK 16.3 million. A third-party fairness opinion was conducted by Converto AS to confirm the enterprise value in this transaction. The transaction was thus considered to be at arm's length. The transaction was completed March 29th 2023.

At time of completion of the transaction Arctic Algae AS had non-current assets of NOK 12.8 million, other current receivables of NOK 0.15 million, long-term debt of NOK 4.3 million and current liabilities of NOK 0.39 million. Available cash in the company was NOK 5.1 million.

At completion of the transaction the Company took on debt to Ronja Capital II AS equal to the purchase price. The Company and Ronja Capital II AS had agreed that the claim should be used as capital contribution in a share capital increase in the Company. The debt was converted into equity at an ABS share price of NOK 17.27 per share. The share capital increase was registered with the Norwegian Register of Business Enterprises May 6th 2023.

NOTE 6: SHAREHOLDERS

The share capital in Arctic Bioscience pr. 30.6.2023 consists of:

	Quantity	Denomination	Booked
Ordinary shares	25 369 552	0.10	2 536 955
Sum	25 369 552		2 536 955

Shareholders	Total shares	% owned
Ronja Capital II AS	3 087 999	12.17%
Capra Invest AS	1 544 450	6.09%
MRFK Holding AS	1 313 960	5.18%
Fjarde AP-fondene	1 200 000	4.73%
Altitude Capital AS	1 065 586	4.20%
Hawk Infinity AS	1 045 450	4.12%
Vartdal Holding AS	1 040 286	4.10%
Verdipapirfondet Delphi Nordic	864 462	3.41%
Brødrende Vartdal AS	803 601	3.17%
Kotler Equity Investment Limited	667 330	2.63%
Life Capitol AS	655 420	2.58%
Stette Invest AS	602 375	2.37%
Kjølås Stansekniver AS	574 859	2.27%
Ajea Invest AS	555 359	2.19%
Eggesbø Eiendom AS	520 240	2.05%
Eros AS	520 240	2.05%
Strand Fiskeriselskap AS	473 342	1.87%
Gold Cost Nutrition	450 000	1.77%
Triplenine Vedde AS	340 000	1.34%
Melesio Invest AS	315 000	1.24%
Other	7 729 593	30.47%
Sum	25 369 552	100%

In March 2023 the Board of Directors resolved to extend the share options agreements for the following members of the management group; Daniele Mancinelli (CTO), Hogne Hallaråker (CSO) and Per Christian Sæbø (COO). The exercise price in these agreements was maintained at NOK 9.845 per share, and the duration of the option agreements was extended by 12 months, to March 1st 2024. All options being exercised into shares during the duration period will be subject to a lock-in period of 6 months from the time of exercise, where shares cannot be sold or transferred without the consent of the Board.

NOTE 7: NON-CURRENT LIABILITIES

No part of the long-term liabilities to financial institutions falls due more than 5 years after the end of the accounting period. The long-term liabilities are related to financial leasing agreements. Arctic Bioscience has provided a self-debtor guarantee for these liabilities, for an amount up to NOK 4.55 million.

NOTE 8: EVENTS AFTER THE BALANCE DATE

Through the Company's primary bank a credit facility of NOK 30 million has been established to support the nutra business growth potential. The credit facility has been entered into on ordinary market terms and has a duration of 1 year with annual renewal. The credit facility has been effective from August 1st 2023.

ALTERNATIVE PERFORMANCE MEASURES (APMs)

Alternative performance measures, meaning financial performance measures not included within the applicable financial performance reporting framework, are used by the Company to provide supplemental information by excluding items that in management's view, does not give indications of the periodic operating results. Financial APMs are used to enhance comparability of the results from a period to the next, and management uses these measures internally when driving performance in terms of long- and short-term forecasts. The measures are adjusted Norwegian GAAP for small enterprises measures, and are defined, calculated, and consistently applied in the Group's financial reporting.

Financial APMs should not be considered as substitute for measures of performance in accordance with applicable financial reporting framework.

The Group uses the following APMs in the reporting:

• EBITDA: Operating profit before depreciation, amortization, write-downs and impairments
• Adjusted EBITDA: Operating profit before depreciation, amortization, write-downs and impairment, and special operating items
• EBIT: Operating profit
• Adjusted EBIT: Operating profit before special operating items
• Gross Profit: Total revenue minus cost of goods sold
• Adjusted Gross Profit: Total revenue minus cost of goods sold before special operating items
• Gross Margin %: Gross profit as a % of total revenue
• Adjusted Gross Margin %: Gross profit as a % of total revenue before special operating items

"EBITDA" and "Adjusted EBITDA" are used as APMs to facilitate operating performance comparisons from period to period, and the others are relevant key figures mainly in connection with the mentioned performance measures. The significant items of income and expenditures represent the difference between EBITDA and Adjusted EBITDA and are labeled "Special operating items".

The following table reconciles Adjusted EBITDA to Operating profit and Net income (loss) in condensed consolidated statements of Profit & loss:

	Arctic Bioscience Group
Amounts in NOK	H1-2023	H1-2022
Adjusted EBITDA
Net income	-20 664 513	-14 945 416
Net financial items	1 920 529	1 272 952
Operating profit	-22 585 042	-16 218 368
Depreciation	2 552 128	1 802 306
EBITDA	-20 032 914	-14 416 062
Special operating items	1 739 931	0
Adjusted EBITDA	-18 292 983	-14 416 062
Adjusted EBIT
Adjusted EBITDA	-18 292 983	-14 416 062
Depreciation	2 552 128	1 802 306
Adjusted EBIT	-20 845 111	-16 218 368
Adjusted gross profit
Revenue	19 080 525	14 401 951
Cost of goods sold	13 350 048	10 431 308
Gross profit	5 730 477	3 970 643
Special operating items	0	0
Adjusted gross profit	5 730 477	3 970 643
Adjusted gross margin %	30.0 %	27.6 %
Special operating items include:
Incurred costs development project	1 739 931	0
Cost of goods sold	0	0
Sum	1 739 931	0

Head office: Industrivegen 42, 6155 Ørsta, Norway Oslo office: Gaustadalléen 21, 0349 Oslo, Norway