Audientes A/S Q4 Year-end Report

Company announcement no. 03-2023
February 28, 2023

Today, Audientes A/S releases its financial results for Q4 and the entire year 2022. Contrary to the earlier quarters in 2022, the company did not continue a quarter-on-quarter increase in sales revenue but achieved in Q4 a sparse result in sales revenue of DKK 0.1 million. This was reflective of a challenging channel environment in India, a required software platform upgrade and slower payment patterns.

A key driver for the missing sales in Q4 is that the majority of potential Ven customers in India have more profound hearing loss than originally expected, affecting sell-through to end-users of Ven and the ramp up of collaborations with several new channel partners, which were therefore postponed to 2023. In Q4, the company took action to develop a software platform upgrade (v2.0), providing a substantial sound experience improvement and increased gain to support up to profound hearing loss. The company is introducing this to the market in Q1 2023 and expects this to improve the sales growth in the future.

Audientes completed in Q4 its new ‘advanced hearable’ product, Companion by Audientes, which has now entered retail in Sweden and Denmark as part of its initial European roll-out. Companion and the Audientes App have been enhanced with six different languages incl. German, Spanish and Japanese supporting the roll-out into many more markets.

A fully subscribed Rights Issue of Units was executed in December, securing DKK 14 million (8 million in net proceeds) in new funding. The associated upcoming TO1 warrant exercise round from March 27 to April 13 may potentially yield up to DKK 10 million. However, due to the current financial climate and Audientes’ current share price level, the gross proceeds from the warrants exercise must be expected to be significantly lower. The company has implemented a range of cost savings and is continuously adjusting the cost drivers to operate in this environment. Audientes announced recently, that it intends to evaluate different alternatives to bring in the required financing in the short-medium term as well as exploring more longer-term structures, such as partnerships, merger, sale of business or its assets, or a strategic investment.

Steen Thygesen, CEO Audientes A/S, comments:

“In the last quarter of 2022, in addition to developing sales opportunities in India, we undertook several major tasks – a substatial upgrade to the software platform delivering higher amplification in Ven to better address relevant customer segments in India; completion of our new product Companion for introduction in global consumer channels; and a planned DKK 14 million Rights Issue of Units. While we ultimately succeeded delivering on all three, the expected Q4 2022 sales revenue did not materialize in any substantial manner. We implemented therefore a further range of cost-savings in Q4 and are continuing our effort on the future capitalization of the company to support our current business plans, complemented by our intent to explore other forms of strategic investment, merger and acquisition of our business or assets.”

Q4 2022 and Full Year 2022 reporting financial highlights

Highlights Q4 2022

• In 2022 revenue amounts to DKK 3.1 million where DKK 0.1 million relates to Q4 2022.
• EBITDA amounts in Q4 2022 to DKK (5.4) million and in 2022 to DKK (13.9) million including a provision of DKK 1.6 million for bad debt and uncertainty concerning trade receivables in India.
• Development costs from before 2019 have been fully amortized in Q4 2022 as considered outdated and replaced with new software etc. with a negative impact on EBIT of DKK 4.8 million.
• Further cost savings initiatives have been executed in end of 2022, however with impact on EBITDA and cash flow in 2023.
• An upgrade to the Ven software platform to increase fitting range and amplification and to improve sound and noise cancellation has been initiated in Q4 2022 with expected availability for Ven and Companion products in products in late Q1.
• New channels developed in India including pharmacies and NGOs, where Ven is available in India and Nepal.
• The new product Companion has in February 2023 been introduced in Northern Europe.
• A fully subscribed Rights Issue of Units was carried out in December 2022, yielding gross proceeds of DKK 14 million. After a partial repayment of existing bridge loans and the associated cost of the transaction, approximately DKK 8 million was yielded to the company.
• By the end of 2022, cash and cash equivalents amounted to DKK 6.9 million.
• The company intends to evaluate different alternatives to bring in the required financing in the short-medium term as well as exploring longer-term structures such as partnerships, merger, sale of business or its assets, or a strategic investment.
• The current Board of Directors will resign at the Extraordinary General Meeting on March 8, 2023 and major shareholders, Hossein Jelveh and Steen Thygesen have - besides themselves - suggested Hiroshi Maeda and Jesper Rohde Andersen as new board members.

Outlook for 2023

Due to the uncertainty around the size of funding in the short-term as well as in the medium-term, the company has decided at the moment not to announce any guidance for the outlook for 2023.

For further information, please contact:

Steen Thygesen, CEO, Audientes A/S

Phone: +45 53 17 26 10

Email: st@audientes.com

Troels Torp, CFO, Audientes A/S

Phone: +45 ‭40 52 18 80‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬

Email: tto@audientes.com

About Audientes A/S

Audientes A/S is a Danish hearing health company specializing in smart, self-fitting and affordable hearing aids and advanced hearables. Audientes’ unique hearing aid solution, Ven™ by Audientes, is available for purchase in the Indian market, online and in retail, and will be introduced to the USA over-the-counter market and other markets in the coming years. Companion by Audientes is an advanced hearable consumer electronics product that is commercially available in Europe and later in 2023 in USA, Japan and other markets.

Audientes’ mission is to make high-quality hearing aids and hearables for hearing improvement or hearing enhancement accessible to everyone who needs them globally. Audientes is listed on Spotlight Stock Market Denmark (AUDNTS) and headquartered in Copenhagen, Denmark with a subsidiary in Hyderabad, India.

For additional information please refer to the company’s websites, www.audientes.com or www.audientes.in