Year-End Report 2016

Fourth quarter of 2016

• Revenue amounted to SEK 0.3 (0.0) million from a few smaller initial projects, one of which was an expansion project related to one of the first project orders. The ConverLight™ product is generating considerable interest among property owners, architects and other players in the flat glass market.
• The net income for the period amounted to SEK -11.7 (-13.0) million, corresponding to
  SEK -0.64 (-2.01) per share. The company is a development company in the process of transforming itself into a sales and production company. Sales are initially low and thus do not cover the company’s total expenses.
• Cash and cash equivalents at the end of the period amounted to SEK 8.5 (10.9) million.
• Reported equity at the end of the period amounted to SEK -36.0 (-10.5) million.
• On October 5, a large number of employees at ChromoGenics were given notice. The company is entering into a new phase as it transforms itself from a development company into a sales and production company. Six staff members were made redundant on November 11 and two staff members had decided to leave the company on their own accord after September 30. The change will create a more cost-effective organization. Restructuring expenses of SEK 1.6 million were charged to earnings. The savings will be realized progressively during the first half of 2017.
• On November 16, an increase to the share capital of SEK 7.9 million from a new share issue was registered, corresponding to 2,921,472 new shares. In total, SEK 4.0 million was paid in September and SEK 3.9 million in October.
• On November 17, 2016, an increase in the share capital was registered through the exercise of three warrant programs. In total, 982,602 options were exercised, corresponding to 982,602 new shares, totaling SEK 2.7 million.
• The total number of shares amounted to 18,828,653 after the above issue and exercise of options, corresponding to share capital of SEK 1,882,865.30.
• On November 21, Micael Hamberg became the Chief Operation Officer (COO) and has primary responsibility for the company’s supply chain. Hamberg will join the management team and focus on customers, quality and delivery precision.
• In July, a loan of SEK 5 million was provided from one of the main owners at an interest rate of 5% and a maturity date of December 31, 2016. In December the maturity date was extended to February 28, 2017. In conjunction with the loan, a floating charge of SEK 5 million was pledged to the lender. The loan, including the interest, was converted to new shares in combination with the issue of new shares that was concluded in the beginning of March.
• As at the balance sheet date, ChromoGenics AB did not have sufficient liquidity to cover its expenses for the next 12 months. A short-term financing from the main owners was completed in December for a total of SEK 18.0 million, of which SEK 9.0 million was paid in December and another SEK 9.0 million was paid in January 2017 to cover the finance need until the completion of the issue of new shares of SEK 117 million when the short-term financing was converted into new shares. For more information, refer to Cash flow and financial position in this report.

January – December 2016

• Revenue amounted to SEK 3.0 (0.0) million. The ConverLight™ product was commercialized during the year and the first deliveries began during the summer. There is considerable interest and a number of discussions and negotiations are ongoing.
• The net income for the period amounted to SEK -49.5 (-43.5) million, corresponding to
  SEK -3.80 (-8.82) per share.
• Following a resolution by an extraordinary general meeting in December 2015, a 27:1 reverse split was registered in January 2016, after which the number of registered shares amounted to 9,820,478.
• At a meeting of the Board of Directors on February 24, 2016, a decision was made regarding the issue of shares. A new share issue brought in SEK 13.8 million, corresponding to 5,104,101 shares. The new share issue was registered in June 2016. The total number of shares after registration was 14,924,579.
• At the Annual General Meeting on June 20, 2016, Anders Brännström was re-elected Chair of the Board and Poul Erik Schou-Pedersen and Claes-Göran Granqvist were re-elected members of the Board. Jerker Lundgren was elected member of the Board. The Meeting resolved to release the Board of Directors and the CEO from liability for the 2015 financial year.

Important events after the end of the period

At an extraordinary general meeting held on January 12, 2017, resolution was passed on the following:

• Change in company category from a private to a public limited liability company
• 2:1 reverse split. The total number of shares after the reverse split is 9,414,326 with a share capital of SEK 1,882,865.30.
• New Articles of Association

• On February 8, 2017, the company announced that it is applying for a listing on Nasdaq First North and published a prospectus with the intention of conducting a new share issue for institutional investors and the general public in Sweden of SEK 117.3 million, excluding a potential over-allocation option of SEK 12.7 million. At the time of the announcement, subscription agreements from major shareholders as well as guarantees through a guarantee consortium had been obtained, representing 82 per cent of the issue and SEK 96 million.
• On February 21, 2017 an announcement was made of a major order to deliver dynamic glass to Fabege's project the Grand Central Sundbyberg, Stockholm.
• On February 22, 2017 an announcement was made of a Prospectus Supplement to the Prospectus dated February 8, 2017.
• On March 3, 2017 it was announced that ChromoGenics’ issue of new shares oversubscribed and that it will provide the company with approximately SEK 119 million, of which 117.3 million correspond to the basic offer. The settlement is expected to be paid on March 8, 2017 to the Company, excluding transaction costs and conversions of shareholder loans and guarantee fees. Excess amounts of 117.3 million, may be subject to normal market stabilization and / or involve the use of over-allotment option. No allocation has thus been made to the consortium that guaranteed the new share issue for approximately SEK 41 million, on top of the subscription agreements, up to a total subscription rate of 90 percent.

 The issue of new shares will provide the company with over 2,000 new shareholders. The number of outstanding shares in ChromoGenics will increase, under the implementation of the basic offer, from 9,414,326 to 23,214,326. Trading in shares and warrants will commence March 23, 2017, provided an approved listing application.
This report discusses the development for the period October-December 2016 compared to the same period in 2015, unless otherwise stated.

Comments from the CEO

After successful development of technology, products and production processes, ChromoGenics is now fully committed to a commercialization, moreover, as a public company.

 
We are extremely pleased that so many have shown interest to subscribe for shares in our company in connection with the issue of new shares of SEK 117 million which was oversubscribed and completed in early March. It feels fantastic to launch the next phase of ChromoGenics. We will create value for both customers and shareholders and other stakeholders through the full-scale launch of our dynamic glass that makes buildings more attractive by saving energy and significantly increasing indoor comfort.

 
Our dynamic ConverLight™ glass offers property owners, architects, construction companies and players in the glass industry cost-efficient solar protection. Daylight and contact with the surroundings raise the level of comfort and well-being. ConverLight™ controls the heat- and light transmission while still offering daylight and a full view of the surroundings. With ConverLight™, customers can lower costs more than with traditional external solar protection, which is exposed to sun and wind and thus requires maintenance. The investment in our technology results in lower maintenance costs, as well as in improved energy efficiency and indoor comfort. Moreover, our technology and business model facilitate efficient, sustainable distribution around the world.

 
If you want to maximize a building’s energy efficiency, it should not have windows, glass facades or glass ceilings. But what we are seeing today is that the trend in architecture is moving in the opposite direction toward more windows and glass. People need daylight and contact with their surroundings to feel good, and property owners and project developers want to offer attractive properties. ChromoGenics’ dynamic glass offers cost-efficient control of heat- and light transmission, which means that energy consumption for cooling can be reduced while at the same time enabling architectural freedom and contact with the surroundings.

 
Demand for dynamic glass is growing due to a greater focus on sustainability. If the EU is to be able to meet the climate target of a 20-percent reduction in energy consumption and greenhouse gas emissions by 2020, it will be necessary to make buildings more energy-efficient. Since a large part of energy consumption as a whole is related to the warming up and cooling down of buildings, the construction sector will play a crucial role in meeting the climate targets. ConverLight™ helps buildings achieve energy certification, such as Miljöbyggnad, LEED and BREEAM.

 
Market surveys show that the market for dynamic glass could dramatically increase in the next few years due to the focus on energy efficiency and new opportunities such as the Internet of Things (IoT). ChromoGenics is in a very interesting phase with many opportunities to position itself as a leader in the market.

 
We have already begun production and sales of our dynamic ConverLight™ glass in the Nordic market. The glass has been installed in both Sweden and Norway and we have received confirmation that our offer works all the way to final installation at the customer site. Through the company’s establishment on the market, we have also learned a lot about delivery and production processes, from which we can benefit in the future.

 
Extensive resources and time have been invested to reach the position we are at today. A recent reorganization of the operations to more clearly focus on sales and production is creating good conditions for continued commercialization and future profitability. We will now target our resources to achieve a rapid expansion by continuing to invest in sales and production. Join us on our journey!

 

Thomas Almesjö, CEO

This information is such that ChromoGenics AB (publ) is obliged to make public pursuant to the EU Market Abuse Regulation and the Securities Markets Act. The information was submitted for publication, through the agency of the contact person set out below, at 09:30 CET on March 8, 2017.
Every care has been taken in the translation of this interim report. In the event of discrepancies, the Swedish original will supersede the English translation.

Contact:
Thomas Almesjö, CEO
Susanne Andersson, CFO & Head of Communication
Tel: +46 18 430 0430
E-mail: info@chromogenics.com

About ChromoGenics

ChromoGenics is a leader in dynamic glass with controllable heat- and light transmission. The company’s unique electrochromic technology ConverLight™, provides sustainable solar control with increased indoor comfort and energy efficiency. In 2016 the company started sales and deliveries to real estate projects in Scandinavia.
ChromoGenics is located in Uppsala and the technology is derived from the world leading research center at Ångström Laboratory at Uppsala University. The company has about 20 employees and the main owners are K-Svets Venture AB and New Energy Solutions II K/S. The plant has been partly financed by a conditional loan from the Swedish Energy Agency. www.chromogenics.com

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