SoftOx Solutions AS — Interim / Quarterly Report 2018

Jun 7, 2018

Report 1st quarter 2018

SoftOx Solutions AS ("SoftQx") is a medtech company listed on Merkur Market, Oslo Stock Exchange with the ticker "SOFTOX-ME". SoftOx was founded in 2012 and is headquartered in Oslo (Norway), with subsidiaries in Malmö (Sweden) and Copenhagen (Denmark).

After years of research and product development with leading Nordic research institutes SoftOx aims to develop a non-toxic and highly efficient antimicrobial technology to eradicate and prevent biofilm infections.

Highlights for first quarter 2018¹

• Public funding of NOK 16 million over four years from Norwegian Research Council to develop SoftOx Biofilm Eradicator.
• Public funding from EU Phase I, Horizon 2020 programme to develop a business plan for SoftOx' Wound Irrigation Solution. Grant EUR 50.000,-.
• Finished Biocompatibility studies on SoftOx' Wound Irrigation Solution.
• Finished toxicity study for SoftOx's technology in pigs. No delay in wound healing compared with saline water.

Key figures

SoftOx Solutions Group (NOK 1,000)	1Q18	1Q17	2017
Total revenue and other income	0	0	1
Total operating expenses	4 003	2 126	13 170
Operating result	-4 003	-2 126	-13 169
Net result before taxes	-4 010	-2 125	-13 172
Net proceeds from equity issues	0	3 642	33 707
Net cash flow	-5 966	-280	16 796
Cash and cash equivalents at end of period	11 132	22	17 098
Outstanding share, beginning of the period	49 770	43 659	43 659
Outstanding share, end of the period (*)	75 173	45 361	49 770
Employees, end of the period	8	5	6

(*) The share issue in 4Q17 was registered in 1Q18

1 Include also some relevant information from 2. quarter

Operational review

Clinical development

SoftOx has focused on starting up the development of SoftOx Wound Irrigation Solution and SoftOx Biofilm Eradicator. First quarter the company has focused on establishing a quality assurance system to fulfill requirements for medical device, biocompatibility and animal studies to study toxicity and establishing a clinical development plan. Based on this work the company has decided to go forward and apply competent authority and ethical committee for permission to start clinical development in humans. The application will be delivered in third quarter 2018.

Organizational information

The company has moved its offices from Forskningsparken to Hoffsveien 1 A in Oslo and employed one new person on strategic business development. A Danish subsidiary was established during the first quarter of 2018.

Upcoming risk next 3 months

During the next three months the company plans to apply to the Danish health authorities and ethical committee for permission to run clinical trials. If such permission is not granted the company will have to re-apply. Without permission the company will be delayed in its clinical development program.

Financial review

Financial figures in this report are unaudited figures for the SoftOx Solution Group.

Personnel expenses were KNOK 1,411 in the first quarter of 2018, compared to KNOK 922 in the first quarter of 2017.

Other operating expenses were KNOK 2,381 in the first quarter of 2018 compared to KNOK 1,121 in the first quarter in 2017. The increase relates mainly to product development.

At 31.03.18 the Group had cash and cash equivalents of KNOK 11,132.

At 31.03.18 the Group had deferred tax assets of KNOK 7,739, which reflects the deferred tax assets at year end 2017. Tax calculations will be made on full year figures only.

At 31.03.18 the Group had other intangible assets of KNOK 2,522, mainly including the capitalized patent expenses in the Swedish subsidiary.

In the first quarter of 2018 the Group had a negative cash flow of KNOK -5,966. The difference between this net cash flow and KNOK -4,010 in net result before taxes mainly relates to an increase in current assets of KNOK 734, which mainly relates to accrued Skattefunn-grants and to a reduction in current liabilities of KNOK 1,642, which mainly relates to a reduction of accounts payable.

Outlook

For the upcoming twelve months, the company's plans to include clinical development of the SoftOx Wound Irrigation Solution and SoftOx Biofilm Eradicator

Events after 31.03.18

There have not been any substantial financial events affecting the company's P&L after 31.03.2018.

Declaration

We declare that to the best of our knowledge the accounts for the first quarter of 2018 have been prepared in accordance with current accounting standards for the Group and that the disclosures in the accounts provide a true and fair view of the company's and the Group's assets, liabilities, financial position and results as a whole and that the quarterly report, including a description of the most important risk and uncertainty factors facing the Group, gives a true and fair view of the development, results and position of the entity and the Group.

Oslo, 6 th of June 2018

SIGN

Lars Johan Frigstad, Chairman

SIGN

Kristian Almås, Director

SIGN

Olav Trygve Jarlsby, Director

SIGN

Geir Hermod Almås, CEO

Profit and loss statement
SoftOx Solutions Group
NOK 1,000	1Q18	1Q17	2017
Other operating revenues	0	0	1
Total operating revenues	0	0	1
Personnel expenses	1 411	922	4 079
Other operating expenses	2 381	1 121	8 121
Depreciation	211	52	846
Depreciation, goodwill	0	31	124
Total operating expenses	4 003	2 126	13 170
Operating result	-4 003	-2 126	-13 169
Net financial items	-7	1	-4
Net result before taxes	-4 010	-2 125	-13 172
Tax			3 764
Net result after tax			-9 408

Statement of financial position	1Q18	1Q17	2 017
SoftOx Solutions Group
NOK 1,000
Other intangible assets	2 522	1 970	2 869
Deferred tax asset	7 739	4 038	7 802
Goodwill from acquisition of subsidiary	0	93	0
Total intangible assets	10 261	6 101	10 671
Production equipment	409	557	472
Total fixed assets	409	557	472
Total non-current assets	10 670	6 658	11 143
Other receivables	3 531	2 676	2 796
Total receivables	3 531	2 676	2 796
Cash and cash equivalents	11 132	22	17 098
Current assets	14 663	2 699	19 895
Total assets	25 333	9 357	31 037
Share capital	75	46	50
Other paid in equity	47 452	17 417	47 477
Total paid in equity	47 527	17 462	47 527
Other equity	-24 743	-13 610	-20 681
Total equity	22 784	3 852	26 846
Public duties payable	134	254	233
Other current liabilities	650	3 214	760
Accounts payable	1 765	2 038	3 197
Total current liabilities	2 549	5 505	4 191
Total liabiities	2 549	5 505	4 191
Total equity and liabilities	25 333	9 357	31 037

Cash flow statement	1Q18	1Q17	2 017
SoftOx Solutions Group
NOK 1,000
Cash flow from operating activities
Net result before taxes	-4 010	-2 125	-13 172
Tax paid	0	0	0
Depreciation	211	83	969
Change in current assets	-734	-831	-951
Change in current liabilities	-1 642	-874	-2 188
Net cash flow from operating activities	-6 175	-3 747	-15 342
Cash flow from investment activities
Investments in non-current assets	0	-59	-1 486
Net cash flow from investment activities	0	-59	-1 486
Cash flow from financing activities
Proceeds from equity issues	0	3 642	33 707
Other financing activities	0	0	0
Translation differences	209	-115	-83
Net cash flow from financing activities	209	3 527	33 624
Net change in cash and cash equivalents	-5 966	-280	16 796
Cash and cash equivalents at begining of period	17 098	302	302
Cash and cash equivalents at end of period	11 132	22	17 098

Statement of changes in equity
SoftOx Solutions Group
	Share	Other paid	Other	Total
NOK 1,000	capital	in equity	equity	equity
Balance at 01.01.2017	44	13 776	-11 339	2 481
Loss for the period			-9 408	-9 408
Share issues	6	33 701		33 707
Other changes in equity			67	67
Balance at 31.12.2017	50	47 477	-20 680	26 847
Balance at 01.01.2018	50	47 477	-20 680	26 847
Loss for the period			-4 010	-4 010
Share issue registration	25	-25		0
Other changes in equity			-53	-53
Balance at 31.03.2018	75	47 452	-24 743	22 784

Notes to the Quarterly Financial Statement

Note 1 Accounting policies

The financial statements of SoftOx Solution Group for 2017 and 2018 are presented in accordance with the Norwegian Accounting Act and generally accepted accounting principles for small-size companies.