SoftOx Solutions AS — Interim / Quarterly Report 2018

Mar 20, 2019

Report 4 th quarter 2018

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

SoftOx aims to develop a non-toxic and highly efficient antimicrobial technology, which eradicates and prevents biofilm infections, based on years of research and product development with leading Nordic research institutes.

Highlights for the 4 th quarter 2018 and status

• ➢ SoftOx successfully raised NOK 18 million in new share capital in Q4-2018. The share issue was originally NOK 15 million, however, the board decided to accept all subscriptions totaling NOK 18 million. The funds will be used to conclude the first clinical trial and for general corporate purposes.
• ➢ The first clinical study of SoftOx Wound Irrigation Solutions (SWIS) in humans was started at Bispebjerg Hospital/ Rigshospitalet København, and the first patient was treated in December 2018. The clinical study is progressing with more than 50% of the patients now enrolled by medio March 2019.

• ➢ The biocidal- registration- application for the family of SoftOx disinfectants was submitted December 2018 according to the new 2019 Biocidal Products Regulations (BPR) for market approval in the Norwegian, Swedish and Danish market.

• ➢ The SoftOx- hand -disinfection- patentapplication has been expanded geographically to cover Europe, North America and certain South American and Asian geographies in addition to the original US application.

• ➢ Negotiations with Antibac (newly sold to Kiilto Oy) are ongoing.

Key figures

2018	2 017
4 3 2 4	1
21 5 5 1	13 170
-17 228	-13 169
$-17309$	-13 172
600	33 707
$-15956$	16 796
1 1 4 3	17 098
49 770	43 659
3778650	49 770
10	6

Operational review

Product development

The company development plan includes hand disinfectant (SHD), wound irrigation solutions (SWIS) for preventions of infections and infection remover for chronic wounds (SBE).

Development of the SoftOx Wound Irrigation Solution (SWIS) and SoftOx Biofilm Eradicator (SBE) is progressing according to plan. The intended use for SWIS is to prevent infections

in acute wounds and the intended use for SBE is to fight established biofilm infections in chronic wounds. Both products are intended to either reduce or replace the use of antibiotic treatment on skin-related infections.

Major milestones

SoftOx' first-in-man clinical investigation (SWIS-01) was initiated at the Wound Healing Department at Bispebjerg University Hospital (Rigshospitalet) in November 2018 and is progressing with more than 50% of patients

now enrolled. Information about the study can be found at www.clinicaltrials.gov.

Late December 2018 SoftOx submitted the application for SHD according to the new 2019 Biocidal Products Regulations (BPR) for market approval in the Norwegian, Swedish and Danish market from 2019. SoftOx aims to launch SHD in cooperation with a distributor in the Nordic market during 2019.

Organizational information

The Company, including daughter companies, has ten employees at the end of the fourth quarter (whereof two employees on part-time status), totaling nine FTE's.

Upcoming risk next three months

The company will need new financing during second quarter 2019 as previously announced.

Conducting clinical trials have inherent risks. The company has sought to minimize such risks through its design of the clinical study and adhere to applicable standards, including Good Clinical Practice.

The Company is still negotiating with Antibac regarding a distribution agreement for SHD.

Financial review

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

Other operating revenues in 2018 include grants from the Norwegian Research Council under the BIA program.

Personnel expenses increased to KNOK 8,042 in 2018 compared to KNOK 4,079 in 2017, due to the planned increase in staff in the parent company and the Danish subsidiary.

Other operating expenses increased to KNOK 13,140 in 2018 compared to KNOK 8,121 in 2017, due to general expansion of operations.

On 31.12.18 the Group had cash and cash equivalents of KNOK 1,143. Funds from the private placement were received in January,2019.

On 31.12.18 the Group had deferred tax assets of KNOK 7,772, which reflects the deferred tax assets at year end 2017. Tax calculations will be carried out on final audited full year figures.

On 31.12.18 the Group had other intangible assets of KNOK 3,343, mainly including the capitalized patent expenses in the Swedish subsidiary.

In 2018, the Group had a negative cash flow of KNOK 15,956.

Outlook

The Company's plans for the upcoming twelve months include:

• ➢ Finalizing the first-in-man pilot study on SWIS and starting the final pivotal clinical investigation

• ➢ Registration of SHD

• ➢ Finalizing negotiations of a distribution agreement for the Nordic market for SHD.

• ➢ Completing preclinical toxicology and max dose studies on SBE drug candidates

No other substantial financial events have affected the Company's financial position after 31.12.2018.

Declaration

We declare that to the best of our knowledge the accounts for the 4 th 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, …………… 2019

SIGN

Lars Johan Frigstad, Chairman

SIGN

Kristian Almås, Director

SIGN

Olav Trygve Jarlsby, Director

SIGN

Kari Grønås, Director

SIGN

Dag Vangsnes, Director

SIGN

Geir Hermod Almås, CEO

Accounting figures for 2018 are preliminary, unaudited figures.

Profit and loss statement
SoftOx Solutions Group
NOK 1,000	2 0 18	2017
Other operating revenues	4 3 2 4
Total operating revenues	4 3 2 4
Personnel expenses	8 0 4 2	4 0 7 9
Other operating expenses	12 3 9 4	8 1 2 1
Depreciation	1 1 1 5	846
Depreciation, goodwill	O	124
Total operating expenses	21 551	13 170
Operating result	$-17228$	$-13169$
Net financial items	-81	-4
Net result before taxes	$-17309$	$-13172$

Statement of financial position	2 018	2017
SoftOx Solutions Group
NOK 1,000
Other intangible assets	3 343	2 869
Deferred tax asset	7 772	7 802
Goodwill from acquisition of subsidiary	0	0
Total intangible assets	11 115	10 671
Production equipment	327	472
Total fixed assets	327	472
Total non-current assets	11 441	11 143
Other receivables	6 036	2 796
Total receivables	6 036	2 796
Cash and cash equivalents	1 143	17 098
Current assets	7 179	19 895
Total assets	18 620	31 037
Share capital	76	50
Other paid in equity	48 051	47 477
Total paid in equity	48 127	47 527
Other equity	-38 195	-20 681
Total equity	9 932	26 846
Shareholder loans	2 000
Other non-current liabilities	2 000
Public duties payable	1 069	233
Other current liabilities	1 198	760
Accounts payable	4 423	3 197
Total current liabilities	6 689	4 191
Total liabiities	8 689	4 191
Total equity and liabilities	18 620	31 037

Note: The funds from the private placement was received in January2019.

Cash flow statement	2 018	2017
SoftOx Solutions Group
NOK 1,000
Cash flow from operating activities
Net result before taxes	-17 309	-13 172
Tax paid	0	0
Depreciation	1 115	969
Change in current assets	-3 240	-951
Change in current liabilities	2 498	-2 188
Net cash flow from operating activities	-16 936	-15 342
Cash flow from investment activities
Investments in non-current assets	-1 414	-1 486
Net cash flow from investment activities	-1 414	-1 486
Cash flow from financing activities
Proceeds from equity issues	600	33 707
Other financing activities	2 000	0
Translation differences	-206	-83
Net cash flow from financing activities	2 394	33 624
Net change in cash and cash equivalents	-15 956	16 796
Cash and cash equivalents at begining of period	17 098	302
Cash and cash equivalents at end of period	1 143	17 098

Statement of changes in equity
SoftOx Solutions Group
	Share	Other paid	Total
NOK 1,000	capital	in equity	equity
Balance at 01.01.2017	44	13 776	2 481
Loss for the period			-9 408
Share issues	6	33 701	33 707
Other changes in equity			67
Balance at 31.12.2017	50	47 477	26 847
Balance at 01.01.2018	50	47 477	26 847
Loss for the period			-17 309
Share issue registration	25	-25	0
Other changes in equity	0	600	394
Balance at 31.12.2018	75	48 051	9 932

Notes to the Quarterly Financial Statement

Note 1 Accounting policies

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