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Audientes A/S Interim / Quarterly Report 2020
6082_rns_2020-10-22_8440d2f1-b7f3-4c0a-bd20-3b756bc6195c.pdf
Interim / Quarterly Report
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AUDIENTES™
Q3 INTERIM REPORT
01/07 - 30/09, 2020
AUDIENTES
Contents
| Financial Report Q3 2020 | 3 |
|---|---|
| Letter from the CEO | 4 |
| Audientes in brief | 6 |
| Development during the third quarter of 2020, in figures | 8 |
| Financial calendar | 10 |
| Income statement for 2020 | 11 |
| Balance sheet at 30 September 2020 | 12 |
| Cash flow statement | 14 |
| Statement of changes in equity | 15 |
| Notes | 17 |
Audientes A/S
AUDIENTES
Financial Report Q3 2020
Successful IPO enables further product & market development of the Audientes' self-fitting hearing aid for planned market availability medio 2021.
Audientes continues to execute on the product development and business objectives necessary for a successful launch of our self-fitting hearing aid in medio 2021. Key components of our launch strategy are commercial partnerships with regional distributors and retailers. As part of this strategy, we have signed a Letter of Intent (LOI) extension with an Indian retail partner with whom we have been working with on end-user testing for several years, as part of a project co-funded by the Danish Market Development Fund (Markedsmodningsfonden). Additionally, this quarter we began building the marketing and sales organization that will drive the marketing, communications and delivery of our products, as well as establishing our commercial presence in our first target market, India.
The report has not been audited.
Audientes A/S
AUDIENTES
Letter from the CEO
Following our successfully executed and 89% over-subscribed IPO, which raised DKK 40 million from a total of 2,794 new investors, the third quarter of 2020 saw Audientes make substantial progress in several key areas.
Product development
Product development and go-to-market planning are proceeding as outlined in our Company Description from the IPO, as is the recruitment of key personnel to pivotal positions. We have met our product development targets, both in terms of software and hardware enhancements, but also in terms of product design and user experience.
We have engaged an accomplished designer, with deep experience in consumer electronics, to carry out product design enhancements following the results of our last market testing. We also brought on board an expert in User Experience to ensure that customers using the Audientes hearing aid have an outstanding experience. Moreover, the Audientes Smartphone app for Android and iOS has undergone considerable enhancements. We are, therefore, now ready for production on our next product prototypes. These will be available shortly and ready for testing in Q4 with partners and users in India, Germany and Denmark.
We entered a collaboration with students at the Technical University of Denmark on the design and development of an Audientes tinnitus application. And, our ongoing trademarking effort continues to ensure further protection in our priority markets.
Commercial partnerships
Our dialogue with prospective Indian and other channel partners is progressing well, and an existing Letter of Intent (LOI) with a retailer in India that encompasses the testing and reselling of our hearing aid has been extended. We expect to make formal agreements with channel partners in the coming months. Such agreements are an essential element of our launch plans for our self-fitting hearing aid. Our goal is to establish agreements with three types of partners:
- Specialty retailers with hearing aid experience.
- Related health retailers, such as pharmacies and opticians.
- Consumer electronics retailers.
Audientes A/S
AUDIENTES™
Letter from the CEO (cont.)
Organizational growth
During Q3 Audientes hired four new employees. Audientes now has six full-time employees as of September 30, 2020.
Financials
Regarding Audientes' financials, our main expenditures this quarter were investments in the product development of our self-fitting hearing aid, IPO-related brand-building and other marketing activities plus the financial and transaction costs. Expenditures and losses in third quarter of 2020 are overall in line with plans and expectations set out ahead of the IPO.
Audientes has a robust financial position with cash at hand above MDKK 34.7 as of end of Q3 2020.
COVID-19
Due to the uncertainty surrounding the length of the COVID-19 pandemic, it is not possible to quantify the economic impact of the crisis at this stage. Overall, the outbreak has not had a direct impact on the valuation of the company's assets and liabilities in 2020.
Audientes is making continuous progress in our efforts to position our self-fitting hearing as an important tool for people affected by the pandemic. This includes, for example, people in retirement homes who need a new hearing aid solution but who are prevented from visiting a clinic due to lock-down and health risks.
Steen Thygesen, CEO
Audientes A/S - 5
AUDIENTES
Audientes in brief
Audientes has developed a platform of software and hardware technology that, combined, create an innovative hearing aid solution to help the millions of people around the world who suffer from disabling hearing loss. The hearing aid is based on the unique "self-fitting" technology developed by Audientes. Designed with low retail prices and operating costs in mind, the Audientes hearing aid supports both ears by default, which lowers costs further for the many with binaural hearing loss.
Unique to our hearing aid is the self-fitting technology – or built-in hearing clinic - that eliminates the usual process of a hearing test and audiologist consulting, which are costly elements of the value chain. The result is a self-fitting hearing aid that can be sold at retail level "over-the-counter" as users will be able to calibrate the hearing aid themselves without the assistance of a hearing expert or hearing care professional, making setup and maintenance considerably easier than traditional hearing aids. The smart software-assisted setup takes a few minutes and can be done by the user on the hearing aid itself or via a smartphone app.
Audientes A/S
AUDIENTES
Audientes in brief
With the focus on ensuring that the hearing aid is affordable for the middle class in developing countries and for low-income populations in high-income countries, Audientes' hearing aid will cost between DKK 1,400-1,800, i.e. considerably more economically accessible than a set of the more well-known quality digital hearing aids. For millions of people around the world, Audientes' "over-the-counter" hearing aid will be the first step to addressing their hearing loss at a price they are able to afford.
Audientes is progressing on the development of the hearing aid and the associated smartphone app which will be available for both Android and iOS platforms. The company will commence the testing phase in Q4 with final prototype fabrication and market tests with users in Denmark, Germany and India before the product enters the manufacturing phase and then ramps up for mass production.
Going forward, Audientes has a multi-faceted development plan for further hardware and software developments for the next generations of hearing aids, as well as an AI-based analysis of collected user data (subject to GDPR etc. regulations) collected in a cloud platform to continuously improve the hearing aid's functionality and Audientes' knowledge of user preferences. Audientes' Cloud platform enables the storage of hearing test data (audiograms), analytics and information for CRM (Customer Relationship Management), sales and support.
It is the company's expectation to have a production-ready hearing aid in the first half of 2021, then commence sales via our chosen channels with first expected turnover in 2021. Sales are expected to be made both directly to consumers via Audientes own online shop and via e-tailers such as Amazon and Flipkart, as well as via wholesalers and retail chains.
AUDIENTES
Development during the third quarter of 2020, in figures
Regarding the profit and loss account as well as the cash flow statement, Audientes has chosen to disclose full year figures for 2019 as comparatives. The expenditures and commercial activity in Audientes was limited in the same period last year and as such, detailed information for neither Q3 nor the 9 months ending 30 September 2019, are considered to contribute as reasonable comparatives. Therefore, numbers within parentheses refer to the full preceding year, 2019.
For additional information about Audientes financial position and development, please refer to the Company's website (www.audientes.com).
Net sales and operating income
As sales of Audientes products have not yet begun, net sales for the third quarter of 2020 amounted to KDKK 0.00 (KDKK 0.00).
Other operating income for the first quarter amounted to KDKK 0.00 (KDKK 0.05).
Financial development
The result for the third quarter of 2020 amounted to KDKK -3,386 (KDKK -0.314) including one-off IPO-related advisory and other costs.
Liquidity
Audientes cash and cash equivalents amounted to KDKK 34,731 (KDKK 0.077) as of September 30, 2020.
Cash flow amounted to KDKK 34,671 (KDKK 0.0067). Cash flow from operating activities in the third quarter of 2020 amounted to KDKK 0 (KDKK 0). The monthly burn rate (excluding the IPO-related expenditures) is approximately KDKK 300, which is in line with the expectations for the period.
Audientes A/S
AUDIENTES™
Development during the third quarter of 2020, in figures
Solidity
Audientes equity ratio as of September 30th, 2020 amounted to 90.5 percent (51.2 percent).
Equity ratio: Shareholder’s equity divided by the total assets of the company.
The share
There is one class of shares in Audientes A/S. The Company’s share is listed on Nasdaq First North Growth Market under the ticker “AUDNTS”. As of September 30th, 2020, the number of shares amounted to 9,349,010 following the IPO on September 18th.
Earnings per share
Audientes earnings per share in Q3 was DKK -0.71. This is calculated based on the profit for the period (KDDK -3,386) divided by the average number of shares (which has been calculated to 4,753,847 as the company went through several increases in its equity and a change in its nominal price per share from DKK 1 to DKK 0.1).
Policies for the preparation of the interim financial report
Audientes A/S applies the Danish Financial Statements Act for Accounting Class B annual report with addition of a few provisions for reporting class C enterprises in the preparation of its financial reports.
Auditors' review
This interim report has not been reviewed by the Company’s auditors.
Audientes A/S
AUDIENTES™
Financial calendar
The Company prepares and publishes a financial report at the end of each quarter.
Upcoming reports are planned to be released as follows:
| Date | Event |
|---|---|
| October 22, 2020 | Q3 2020 reporting |
| March 18, 2021 | Q4 and Annual Report 2020 |
| April 13, 2021 | Annual General Meeting 2021 |
| May 20, 2021 | Q1 2021 reporting |
| August 19, 2021 | Q2 2021 reporting |
| November 18, 2021 | Q3 2021 reporting |
Further information
Steen Thygesen, CEO
Mobile: +45 53 17 26 10
E-mail: [email protected]
Company
Audientes A/S
Teknikerbyen 5, 2830 Virum, Denmark
www.audientes.com
Board of Directors
Povl André Bang Bendz, Chairman
Gitte Jürgens, Board member
Elsebeth Finnick, Board member
Management
Steen Thygesen, CEO
Hossein Sandfeld Jelveh, CTO
Certified advisor
Kapital Partner ApS
Jesper Ilsøe, Partner
Telefon: +45 89 88 78 46
Mobil: +45 26 80 27 28
Email: [email protected]
KAPITAL PARTNER
Kapital Partner Jernbanegade 4, 3. th.
1608 København V
www.kapitalpartner.dk
Audientes A/S - 10
AUDIENTES
Income statement for 2020
| Note | 01.07.2020-30.09.2020 | 01.01.2020-30.09.2020 | 01.01.2019-31.12.2019 | |
|---|---|---|---|---|
| DKK | DKK | DKK | ||
| Revenue | 0 | 0 | 50,000 | |
| Cost of sales | (445) | (445) | (385) | |
| Other external expenses | (1,926,999) | (2,165,333) | (108,871) | |
| Gross loss | (1,927,444) | (2,165,778) | (59,256) | |
| Staff costs | 1 | (493,853) | (503,365) | (50,500) |
| Operating loss | (2,421,297) | (2,669,143) | (109,756) | |
| Other financial income | 0 | 0 | 1,540 | |
| Other financial expenses | (964,762) | (966,445) | (1,735) | |
| Loss before tax | (3,386,059) | (3,635,588) | (109,951) | |
| Tax on loss for the period | 2 | 0 | 0 | (205,045) |
| Loss for the period | (3,386,059) | (3,635,588) | (314,996) |
Audientes A/S
AUDIENTES
Balance sheet per 30/09/2020
| Note | 30.09.2020 DKK | 31.12.2019 DKK | |
|---|---|---|---|
| Development projects in progress | 8,157,936 | 7,548,641 | |
| Intangible assets | 3 | 8,157,936 | 7,548,641 |
| Deposits | 61,497 | 21,832 | |
| Fixed asset investments | 61,497 | 21,832 | |
| Fixed assets | 8,219,433 | 7,570,473 | |
| Other receivables | 961,230 | 0 | |
| Income tax receivable | 167,968 | 33,923 | |
| Receivables | 1,129,198 | 33,923 | |
| Cash | 34,731,118 | 77,976 | |
| Current assets | 35,860,316 | 111,899 | |
| Assets | 44,079,749 | 7,682,372 |
Audientes A/S
AUDIENTES
Balance sheet per 30/09/2020
| Note | 30.09.2020 DKK | 31.12.2019 DKK | |
|---|---|---|---|
| Contributed capital | 934,901 | 368,730 | |
| Reserve for development costs | 5,067,805 | 4,592,555 | |
| Retained earnings | 33,871,852 | (1,030,079) | |
| Equity | 39,874,558 | 3,931,206 | |
| Deferred tax | 1,327,809 | 1,193,764 | |
| Provisions | 1,327,809 | 1,193,764 | |
| Bank loans | 71,367 | 0 | |
| Trade payables | 154,101 | 132,916 | |
| Other payables | 302,661 | 75,233 | |
| Deferred income | 2,349,253 | 2,349,253 | |
| Short-term liabilities other than provisions | 2,877,382 | 2,557,402 | |
| Liabilities other than provisions | 2,877,382 | 2,557,402 | |
| Equity and liabilities | 44,079,749 | 7,682,372 |
Audientes A/S - 13
AUDIENCES
Cash flow statement for 2020
| 01.07.2020-30.09.2020 DKK | 01.01.2020-30.09.2020 DKK | 01.01.2019-31.12.2019 DKK | |
|---|---|---|---|
| Loss before financial items and tax (EBIT) | (2,421,297) | (2,669,143) | (109,756) |
| Amortisation, depreciation and impairment losses | 0 | 0 | 0 |
| Change in working capital | (851,232) | (641,250) | 290,707 |
| Cash flows from primary activities | (3,272,529) | (3,310,393) | 180,951 |
| Financial income received | 0 | 0 | 1,540 |
| Financial expenses paid | (964,762) | (966,445) | (1,735) |
| Income taxes paid/received | 0 | 0 | 376,671 |
| Cash flows from operating activities | (4,237,291) | (4,276,838) | 557,427 |
| Investment in fixed assets | (609,295) | (609,295) | (550,325) |
| Changes in other non-current assets | (61,497) | (39,665) | (500) |
| Cash flows from investing activities | (670,792) | (648,960) | (550,825) |
| Proceeds from capital increase | 41,376,350 | 41,376,350 | 0 |
| Capital increase costs | (1,797,410) | (1,797,410) | 0 |
| Cash flows from financing activities | 39,578,940 | 39,578,940 | 0 |
| Net cash flows for the period | 34,670,857 | 34,653,142 | 6,602 |
| Cash and cash equivalents beginning of period | 60,261 | 77,976 | 71,374 |
| Net cash flow for the period | 34,670,857 | 34,653,142 | 6,602 |
| Cash and cash equivalents end of period | 34,731,118 | 34,731,118 | 77,976 |
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Statement of changes in equity for the period 01/01/2020 to 30/09/2020
| Contributed capital DKK | Share premium DKK | Reserve for development costs DKK | Retained earnings DKK | Total DKK | |
|---|---|---|---|---|---|
| Equity beginning of period | 368,730 | 0 | 4,592,555 | (1,030,079) | 3,931,206 |
| Capital increase | 566,171 | 40,810,179 | 0 | 0 | 41,376,350 |
| Transferred from premium | 0 | (40,810,179) | 0 | 40,810,179 | 0 |
| Equity costs | 0 | 0 | 0 | (1,797,410) | (1,797,410) |
| Transferred to reserves | 0 | 0 | 475,250 | (475,250) | 0 |
| Loss for the period | 0 | 0 | 0 | (3,635,588) | (3,635,588) |
| Equity end of period | 934,901 | 0 | 5,067,805 | 33,871,852 | 39,874,558 |
Audientes A/S - 15
AUDIENTES
Statement of changes in equity for the period 01/07/2020 to 30/09/2020
| Contributed capital DKK | Share premium DKK | Reserve for development costs DKK | Retained earnings DKK | Total DKK | |
|---|---|---|---|---|---|
| Equity beginning of period | 368,730 | 0 | 4,592,555 | (1,279,608) | 3,681,677 |
| Capital increase | 566,171 | 40,810,179 | 0 | 0 | 41,376,350 |
| Transferred from premium | 0 | (40,810,179) | 0 | 40,810,179 | 0 |
| Equity costs | 0 | 0 | 0 | (1,797,410) | (1,797,410) |
| Transferred to reserves | 0 | 0 | 475,250 | (475,250) | 0 |
| Loss for the period | 0 | 0 | 0 | (3,386,059) | (3,386,059) |
| Equity end of period | 934,901 | 0 | 5,067,805 | 33,871,852 | 39,874,558 |
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AUDIENTES
Notes
| 01.07.2020-30.09.2020 DKK | 01.01.2020-30.09.2020 DKK | 01.01.2019-31.12.2019 DKK | |
|---|---|---|---|
| 1. Staff costs | |||
| Salaries and wages | 886,336 | 886,336 | 110,823 |
| Other social security costs | 2,908 | 2,908 | 12,564 |
| Other staff costs | 4,609 | 14,121 | 18,270 |
| Staff costs transferred to assets | (400,000) | (400,000) | (91,157) |
| 493,853 | 503,365 | 50,500 | |
| 2. Tax on loss for the year | |||
| Change in deferred tax | 0 | 0 | (205,045) |
| Adjustment concerning previous years | 0 | 0 | 0 |
| 0 | 0 | (205,045) | |
| Development costs in progress kr. | |||
| --- | --- | ||
| 3. Intangible assets | |||
| Cost beginning of period | 7,548,641 | ||
| Additions during the period 01.01.2020 to 30.06.2020 | 0 | ||
| Additions during the period 01.07.2020 to 30.09.2020 | 609,295 | ||
| Cost end of period | 8,157,936 | ||
| Carrying amount end of period | 8,157,936 |
Audientes A/S