Elliptic Laboratories ASA — Investor Presentation 2021

Nov 10, 2021

Elliptic Labs Quarterly Presentation — Q3 2021

November 10, 2021

AI Virtual Smart Sensors Empowering the Next Billion Devices

DISCLAIMER – IMPORTANT INFORMATION

The following presentation is being made only to, and is only directed at, persons to whom such presentation may lawfully be communicated ("relevant persons"). Any person who is not a relevant person should not act or rely on this presentation or any of its contents.

This presentation does not constitute an offering of securities or otherwise constitute an invitation or inducement to any person to underwrite, subscribe for or otherwise acquire securities in Elliptic Laboratories AS (The Company). The release, publication or distribution of this presentation in certain jurisdictions may be restricted by law, and therefore persons in such jurisdictions into which this presentation is released, published or distributed should inform themselves about, and observe, such restrictions.

This presentation includes and is based, inter alia, on forward-looking information and contains statements regarding the future in connection with The Company's growth initiatives, profit figures, outlook, strategies and objectives. All forward-looking information and statements in this presentation are based on current expectations, estimates and projections about global economic conditions, the economic conditions of the regions and industries that are major markets for The Company. These expectations, estimates and projections are generally identifiable by statements containing words such as "expects", "believes", "estimates" or similar expressions.

Important factors may lead to actual profits, results and developments deviating substantially from what has been expressed or implied in such statements. Although The Company believes that its expectations and the presentation are based upon reasonable assumptions, it can give no assurance that those expectations will be achieved or that the actual results will be as set out in the presentation.

The Company is making no representation or warranty, expressed or implied, as to the accuracy, reliability or completeness of the presentation, and neither The Company nor any of its directors, officers or employees will have any liability to you or any other persons resulting from your use. This presentation was prepared in connection with the Q3 results released on November 16, 2020. Information contained herein will not be updated.

Agenda

Introduction and Q3 2021 Highlights

Financials

Summary

Q3 HIGHLIGHTS Solid progress in multiple verticals

• Continued improvement of financial performance compared with Q3 2020:
  • Operating revenues up from mNOK 7.1 to mNOK 16.2, a 127.6% increase YoY
  • Q3 revenue (mNOK16.2) exceeded 1H revenue (mNOK12.1)
  • EBITDA improved from mNOK -6.2 to mNOK -0.4
• Private placement successfully raised net mNOK150
• Grew business with existing smartphone customers
• Signed PC Enterprise License Agreement and on target for mass-product launch
• On target to deliver on our first IoT product: Bosch spexor

Elliptic Labs develops Virtual Smart Sensors that use AI, ultrasound, and sensor-fusion to sense you and your surroundings

Sensors touch every aspect of life and drive the digital transformation

Our vision is to build the leading software platform for all sensors, making every device smarter, more human- & environmentally-friendly

We Are the Virtual Smart Sensor Leader for the Consumer Market

Expanding Critical User Experiences into Smartphone, Laptop, IoT & Automotive Markets

Strengthened Market Opportunities

Tight supply chain impacts hardware sensor availability enterprise IoT and pricing, improving our competitive advantage

Increased Business with Xiaomi

Overview:

• Xiaomi, second largest smartphone vendor based on worldwide shipments
• Signed a substantial enterprise license contract
• Becoming Xiaomi's de facto proximity standard

Value:

• Elliptic Labs eliminates sourcing risk while reducing costs
• Xiaomi uses our software AI Virtual Proximity Sensor, replacing infrared hardware sensor
• Hardware-sensor supply constraints still, strengthening our competitive position

Signed more license contracts Smartphone Market

1.4B smartphones use a proximity sensor to turn screen off/on when users are making calls

• Most smartphones use hardware sensors for proximity, which we are replacing with our smart software sensors
• Customers partner with us to reduce supply chain, cost, and to add new innovative features

Q3 Highlights	Target	All Smartphones
Ø Signed license agreements with three smartphone companies Ø Xiaomi	Competing Hardware Sensors: Cost Per Unit	Infrared Sensor \$0.10 – \$0.25
Ø Honor	Our Value Proposition	No supply chain, lower cost & more features
Ø Black Shark Ø Launched with one new Xiaomi smartphone	Our Pricing Model	Per unit or annual license agreement
Ø Mi 11T	Market Opportunity	\$200M – \$350M

PC Market Is the Next Large Vertical

*AMD does not separate revenues from its CPU & Graphics businesses ** Qualcomm does not separate revenues from its IoT business

Source: Canalys PC Market Pulse 2020 and Gartner 2020 Annual WW PC Shipment Report

87 Mu Lenovo

50.5 Mu Dell

16.2 Mu Acer

16,4 Mu

(Millions of units — Mu) Customers

20 Mu

Huawei

Asus

67,8 Mu HP

PC Status – On Target to Deliver in Mass Production

Overview

• First enterprise license contract signed
• Expanding PC sales and support footprint in USA, Taiwan, China and Japan
• An enterprise license agreement enables all departments to purchase under this contract Value:
• Elliptic Labs eliminates sourcing risk while reducing costs
• PC customer acquired our AI Virtual Presence Sensor to replace costly ToF hardware sensors
• Hardware-sensor supply constraints exist, strengthening our competitive position

Strong Interest from PC market

Tight hardware sensor supply chain enhances our position

Signed Enterprise License Agreement Market Impact

• Accelerate interest from other PC vendors
• More visibility and greater interest from the partner eco-system Target

Our value: Our software sensors meet both the price 460M -point and performance needed to broadly deploy presence-sensing capabilities to all tiers of a laptop manufacturer's product lines.

Q3 Status

• Ø Enterprise license agreement signed
• Ø New PC partner added Maxim Integrated Products
  • Inc. streamlining more power reduction solutions

Competing Hardware Sensors: Cost Per Unit Our Value Proposition Market Opportunity Our Pricing Model Time-of-Flight/Radar Sensor \$2.5 – \$4 PC/Laptop/ Tablet No supply chain, lower cost & more features Per unit or annual license agreement \$1100M – \$1800M Total Market Size (Units)

Elliptic Labs KPIs per Q3 2021

Agenda

Introduction

Financials

Summary

Q3 2021 P/L

		Q3 2021	Q3 2020	Δ%	YTD 2021	YTD 2020	Δ%
(Amounts in 000 NOK)	Notes	(Audited)	(Unaudited)		(Audited)	(Unaudited)
Revenue		13 401	3 538	278,7%	19 929	6 144	224,4%
Other operating income		2 813	3 585	-21,5%	8 438	11 327	-25,5%
Total revenue	2	16 213	7 123	127,6%	28 367	17 471	62,4%
Personnel expenses		-13 606	-9 414	-44,5%	-32 023	-30 641	-4,5%
Other operating expenses	3	-2 985	-3 929	24,0%	-8 927	-10 039	11,1%
EBITDA		-377	-6 220	93,9%	-12 582	-23 209	45,8%
Depreciation, amortisation and impairment	4	-2 083	-1 355	-53,7%	-6 215	-4 071	-52,7%
Operating profit		-2 460	-7 575	67,5%	-18 798	-27 280	31,1%
Financial income		590	1 215	51,4%	1 708	1 315	-29,9%
Financial expenses		-788	-1 947	59,5%	-2 808	-3 756	25,2%
Net financial income/(expenses)		-198	-732	73,0%	-1 101	-2 441	54,9%
Profit before tax		-2 658	-8 307	68,0%	-19 898	-29 722	33,1%
Income tax expense		567	1 619	65,0%	4 361	6 320	31,0%
Profit/(loss)		-2 091	-6 688	68,7%	-15 538	-23 402	33,6%
Foreign currency rate changes, may be
reclassified to profit or loss		48	-50	196,0%	51	134	61,7%
Total comprehensive income for the period		-2 043	-6 738	69,7%	-15 486	-23 268	33,4%

Q3 Comments

• Customer revenue significantly up from Q3 2020 and YTD
• Revenue mix from more than one vertical
• Continued improved EBITDA

2021 Guidance Unchanged

• Significantly stronger top line
• Positive EBITDA for the year
• Seasonal effects still in 2021, however less than for 2020

Q3 2021 Balance Sheet and Cash Flow

		Q3 2021	Q3 2020	2020
		30/09/21	30/09/20	31/12/20
(Amounts in 000 NOK)	Notes	(Audited)	(Unaudited)	(Audited)
Non-current assets
Deferred tax assets	7	66 129	62 825	59 807
Intangible assets	4	32 109	20 168	28 241
Right of use assets		3 348	5 581	5 023
Other non-current receivables		4 315	2 097	4 050
Total non-current assets		105 902	90 673	97 121
Current assets
Accounts receivable		10 468	1 301	427
Other current receivables		23 599	18 564	21 451
Cash and cash equivalents	6	208 705	6 617	99 724
Total current assets		242 772	26 482	121 601
Total assets		348 674	117 155	218 722
Equity and liabilities
Share capital		1 031	875	958
Other equity		320 289	58 377	187 146
Total equity		321 320	59 252	188 104
Lease liabilities		1 225	3 553	3 002
Bank borrowings, long-term	7	11 000	15 000	14 000
Total long-term liabilities		12 225	18 553	17 002
Bank borrowings, short-term	7	4 000	28 403	4 000
Trade and other payables		1 770	2 809	989
Tax payable		304	0	205
Current lease liabilities		2 433	979	2 203
Other short-term liabilities		6 621	7 159	6 219
Total current liabilities		15 128	39 350	13 616
Total equity and liabilities		348 674	117 155	218 722

Solid Balance Sheet After Q3 2021

• Cash position increased after capital injection of mNOK 150 in September 2021. Operating cash flow in line with management expectations
• Account receivables and other current receivables is up mNOK 10.7 since Q2 2021
• mNOK 1 reduction of interest-bearing debt in the quarter

Cash Flow from Operations as Expected

• Cash flow from operations negative mNOK 9.5 compared to negative mNOK 2.6 Q3 2020

	Q3 2021	Q3 2020	YTD 2021	YTD 2020
Net cash flow from operations	-9 525	-2 557	-22 119	-19 657
Net cash flow from investments	-2 873	-2 408	-8 410	-7 687
Net cash flow from financing	142 564	-285	139 458	-2 047
Net Change in Cash and Cash Equivalents	130 165	-5 251	108 929	-29 391
Cash and cash equivalents at the beginning of the period	78 492	11 918	99 724	35 873
Effect of foreign currency rate changes on cash and cash equivalents	48	-50	51	134
Cash and cash equivalents at the end of period	208 705	6 617	208 705	6 617

Clear Path Towards Significant Revenue Uplift

• Increase in smartphone revenue from current and new customers
• Laptops to become the largest revenue driver
• Establish Elliptic Labs' technology in IoT markets for long-term revenue growth

Shareholder Structure as per November 5th, 2021

SHAREHOLDER NAME	#Shares	%
Passesta AS (Chairman, Tore Engebretsen)	12 280 480	11,9%
MP PENSJON PK	9 073 950	8,8%
Alden AS (Board Member, Edvin Austbø)	7 403 330	7,2%
Robert Horne	5 028 350	4,9%
J.P. Morgan Bank Luxembourg S.A.	4 716 881	4,6%
Laila Danielsen (CEO)	4 624 150	4,5%
VINTERSTUA AS	4 500 580	4,4%
NORDNET LIVSFORSIKRING AS	2 987 589	2,9%
LARNE OVERSEAS LTD	2 820 000	2,7%
NUNATAK AS	2 553 420	2,5%
VERDIPAPIRFONDET DNB SMB	2 163 210	2,1%
VERDIPAPIRFONDET PARETO INVESTMENT	2 130 890	2,1%
GHIBLI AS	2 050 000	2,0%
Marie Chantal Fabres Scaler	1 600 000	1,6%
BRYHNI.COM AS	1 590 383	1,5%
Danske Invest Norge Vekst	1 512 700	1,5%
Cipriano AS (Board Member, Einar Greve)	1 453 700	1,4%
Nordnet Bank AB	1 447 905	1,4%
INVEN2 AS	1 441 670	1,4%
Danske Bank A/S	1 333 330	1,3%
Other 1,534 Shareholders	30 427 552	29,5%
TOTAL OUTSTANDING SHARES	103 140 070	100,0%

SHAREHOLDER NAME	#Shares	%
Shares owned by Board of Directors	21 214 810	20,6%
Shares owned by Mgmt. and Employees	4 922 470	4,77%
Allocated Options to Employees per 30.09.2021: 397 930 Each option equals 10 shares	3 979 300	3,71%
Outstanding Shares incl. Options	107 119 370

• Enhanced liquidity in the stock
• Significantly increased number of shareholders in 2021
• Increased interest from both retail and institutional marked
• The company is on track to OSE main listing
  • Main listing is set for Q1 2022
  • There is no plans to raise additional capital as part of the listing process

Agenda

Elliptic Labs Well-Positioned for Multi-Vertical Growth

• ü Proven business model with software deployed at large scale delivers an attractive value proposition across multiple verticals
• ü Signed first significant enterprise license agreement with a top-three PC manufacturer
• ü Signed three substantial new agreements with current smartphone customers
• ü Solid AI Virtual Smart Sensor Platform backed by strong IP and partner eco-system increases the entry barrier for competition
• ü Expanding global sales and support for PC and IoT markets
• ü Our target of mNOK 500 revenue within two years reaffirmed

Thank You

Q & A