Year-End Report  January-December 2015 CybAero AB (publ)

The period from January 2015 to December 2015

• Net sales: SEK 4.8 million (SEK 46.8 million)
• EBITDA: SEK -61.1 million (SEK -22.3 million)
• Operating loss: SEK -72.5 million (SEK -33.7 million)
• Loss after tax: SEK -74.0 million (SEK -34.2 million).
• Earnings per share: SEK -3.53 (SEK -2.47)
• The board proposes that no dividend be paid

The period from July 2015 to December 2015

• Net sales: SEK 2.1 million (SEK 26million)
• EBITDA: SEK -36.3 million (SEK -17.6 million)
• Operating loss: SEK -41.9 million (SEK -23.7 million)
• Loss after tax: SEK -43.1 million (SEK -23.7 million).
• Earnings per share: SEK -1,80 (SEK -1,54

Message from the CEO

2015 was characterized by hard, intense work on completing our new platform, the APID One.

Roll-out of the APID One

After years of development, we were very proud to unveil our new APID One product line on March 31, 2015.The unveiling was at the Swedish National Museum of Science and Technology in Stockholm with chairman of the museum’s board and astronaut, Christer Fuglesang, also receiving a unit of our old APID 60. It will eventually be exhibited at the museum and thus become a part of Swedish aviation history.

The APID One is a Remotely Piloted Aircraft System (RPAS), with one of our three new helicopter versions
serving as the core: Ranger, Rescue or Defence. Our systems solve many challenges around the world – from border surveillance and humanitarian aid to the monitoring and inspection of tangible assets. The global UAV market is still in its infancy. With our experience, we can face the major changes in society that are underway, and we can contribute to increasing safety around the world.

First order from AVIC

March 31 was an important day for CybAero. In addition to the launch of the APID One, we received our first call-off order from Chinese AVIC on the same day. The order was for CybAero’s APID One Ranger model and includes five systems for civilian and commercial applications. This was the first order under an eight-year framework agreement which entails AVIC purchasing at least 20 helicopter systems during the first three years and then at least 50 more systems over the next five years. The first systems will be delivered in 2016 with expected additional call-off orders during the year.

A company on the rise

We continued to improve the company and our products and systems during the year. Additional requirements and upgrades postponed delivery to China Customs until early 2016. The unmanned systems we will be delivering will be the first in the world to have landing systems that enable unmanned helicopters to automatically land on vessels in motion. The increased investments in the system and the postponed delivery naturally have a negative impact on both sales and earnings. We are confident that this has been well-invested time and money and that CybAero will now be able to provide a system that is on the cutting edge worldwide in terms of performance and functionality.

With the need to rapidly address the additional requirements and upgrades required by China Customs now behind us and having developed a system that we consider to be at the forefront of the industry, we are now in a position to both grow revenue and cut operating costs by driving for greater efficiencies and streamlining the organization.

Our need to shape our organizational structure in a way that enables us to make the most of our potential is growing as the company expands. In 2015, we made great strides in that direction, and we are seeing strong dedication from employees both new and old. That bodes well for 2016, as we plan to continue expanding our organizational structure by adding more skilled employees. In addition, we are reviewing our organizational structure on an ongoing basis to ensure it is as cost-effective as possible with the right staffing for each function

New major shareholder

U.S.-based investor Subversive Capital LLC became a shareholder of CybAero in September 2015 by first acquiring AeroVironment’s shares and by participating fully in the company’s preferred issue in September 2015. In addition, an extraordinary general meeting on 30 December resolved to conduct a private placement to Subversive Capital, making Subversive Capital our largest owner, with ownership of approximately 11.2%. In conjunction with this meeting, Adam Rothstein and Michael Auerbach from Subversive Capital were elected to CybAero’s board of directors. Their commercial and political experience and networks will help spur CybAero’s continuing growth. In addition to his involvement with Subversive Capital, Michael Auerbach also serves as Senior Vice President of Albright Stonebridge Group (ASG), with which we recently entered into a strategic partnership. ASG is a global strategic advisory firm with vast knowledge of the markets we focus on.

Focus on deliveries

We worked hard on improving and refining our products and systems in 2015. The company’s full focus has been on completing the highly advanced and sophisticated system we will deliver to China Customs, the first client for this system. The delays we have encountered in this project are related to the technical challenges involved in achieving the highest possible functionality and operational safety for the system. We now have a world-class system that opens up interesting business opportunities.

We need to continue working hard and moving quickly to reach and retain a leading position. Our objective is to open up new markets and areas of application, both in established industries and new ones. 2015 was industrious, intense and exciting. In 2016, we will begin to reap the rewards of all our hard work.

Mikael Hult
CEO
CybAero AB

For full report see attached pdf or on our website, www.cybaero.se

Contact persons

Mikael Hult, CEO, CybAero AB, Phone +46 (0) 13-465 29 00
e-post: mikael.hult@cybaero.se

Ulrika Andersson, Interim CFO, CybAero AB, Phone +46 (0) 13-465 29 00
e-post: ulrika.andersson@cybaero.se