Biolight AB (publ) Interim report, January 1 – June 30, 2012

(NGM: BIOL MTF)

The Board and President of Biolight AB (publ) herewith present the interim report for the first six months 2012.

• Net sales for the second quarter were slightly lower, SEK 1,294 thousand (1,435), but remained stable all in all in the first six months, SEK 3,281 thousand (3,278)
• Net operating loss for the second quarter improved by SEK 1,359 thousand to SEK –2,270 thousand (–3,629).
• The result for the second quarter improved by SEK 1,400 thousand to SEK –2,236 thousand (–3,636).
• Result per share for the second quarter was SEK –0.03 (–0.11), and SEK –0.03 (–0.11) after full dilution.
• The cash flow from operating activities for the second quarter increased by SEK 1,108 thousand to SEK –2,364 thousand (–3,472).
• A new share issue was completed in May and June, providing the company with SEK 22.6 million before issue expenses.

Key ratios

(For table, see attached file)

Letter from Biolight’s CEO Pär Olausson Lidö

Biolight has improved its result for the first six months of the year. Our net sales in the second quarter were slightly lower, but remained stable all in all for the semester. In 2011 and 2012, the company has undergone a major change and streamlining process. This has helped us reduce our costs with only marginal effects on sales.

The Board, along with the executive committee, has set out a new general strategy for the company. The new share issue that was carried out during the spring of 2012 will enable us to implement this strategy and strengthen our organisation through new recruitments. These recruitment efforts have already started. Now that our company is about to embark on bold sales efforts, it is vital that our key staff is gathered in one place. This will allow us to build a more effective and nimble executive committee. Therefore, during the autumn of 2012, we will be centralising our operations to Stockholm.

Operations

Biolight AB is a medical technology company that has developed and commercialised the idea of biological effects of pulsating light. Biolight reduces the healing time for wounds, inflammations and pain and contributes to increased circulation in the body. It thereby leads to reduced care time and lower patient-care costs, while at the same time improving the patient's quality of life. Biolight also reduces recovery time after physical exertion, which in turn enables more effective training and performance.

Biolight’s sales efforts are chiefly focused on slow-healing wounds and equestrian sports.

Biolight offers a patented system consisting of treatment equipment and unique light therapy programs. The treatment is non-pharmaceutical and is applied externally. Biolight generates its revenue by leasing and selling treatment equipment and treatment programs.

On top of our pure sales efforts, Biolight is focusing on further developing its technology and application areas, as well as on clinical trials to verify our method and its effects. New equipment with our new technology is in the process of being CE-certified and our first production prototypes have been produced.

The company was recently ISO13485-certified by Intertek. ISO13485 is a standard for quality management systems in medical equipment.

The Biolight share is listed on the Nordic MTF (Nordic Growth Market AB).

Market and sales

Globally, the wound-care market is large, but it is also conservative and working it takes time. We have been working the wound-care market methodically. These efforts have led to several large players in the geriatric care market evaluating, buying or renting Biolight equipment. Our market penetration efforts continue according to plan.

Biolight helps alleviate inflammation and pain. Physiotherapy and rehabilitation are therefore a potential market. The US Special Forces have been shown to have a sizeable need for effective rehabilitation methods. The company has signed a distributor’s agreement with a US company that markets products to the US military. This distributor has already initiated preparatory marketing efforts in the USA.

Rehabilitation and injury-preventive treatments are a large market. When it comes to injuries that are associated with inflammation, wounds and pain, animals are treated in the same way as humans. The past few years’ efforts in this area have led to Biolight being perceived as a well-known and established brand on the equestrian sports market. In this market, the company’s sales organisation has been restructured from an internal sales force to the use of agents/retailers.

Net sales and results

During the first semester, our organisation has been significantly more cost-effective. However, the re-engineering of our sales organisation has taken longer than expected, which explains the lack of sales growth in the first semester. During the second quarter, our sales efforts have therefore increased considerably. Campaigns, advertisements and planned sales events are being carried out and we have laid the foundation for increased market interest.

Sales processes in the wound-care market continue to be long, but we have signed agreements with a number of municipalities during the first semester and a number of evaluations are ongoing. During the first semester, the company has continued to bear the costs of product development, certification and product registration. Despite this, our performance during the second quarter improved significantly, by SEK 1,400 thousand compared to the same period last year.

Financial position and liquidity

The group’s equity amounted to SEK 19,117 thousand (6,646). At the beginning of the fiscal year, our equity amounted to SEK 5,581 thousand. Our solidity is 86.2% (65.1%). At the beginning of the fiscal year our solidity was 62.4%.

The company does not carry any interest-bearing receivables or debts.

Cash flow

The cash flow from operating activities was SEK –2,364 thousand (–3,472) in the second quarter. This SEK 1,108 thousand improvement can be mainly explained by our stronger operating performance.

Acquisitions and disposals

We have not carried out any acquisitions or disposals during the reporting period.

Investments

Investments in equipment, furniture and fittings were SEK 0 thousand (56) in the second quarter. Sales of fixed assets amounted to SEK 21 thousand (0).

Employees

Our average number of employees during the second quarter was 6, compared to 11 during the same period last year.

The share

Within the authorisation of the Company’s Annual General Meeting, the Biolight Board resolved, on April 20, to carry out a new share issue totalling a maximum of 86,071,966 shares with preferential rights for current shareholders. The subscription price was set at SEK 0.30, and the subscription period ran from May 2 to May 16, 2012.

Through this new issue the share capital in the company increased by SEK 4,531 thousand, to a total of SEK 8,220 thousand. After the issue the number of shares totals 137,005,882. The new issue provided the company with appr. SEK 22.6 million before issue expenses.

Exposure and risk factors

Through its operations, Biolight is exposed to both operational and financial risks. Identifying potential risks and evaluating how to manage them is a continuous process within the company. As the Company is currently in an early commercial phase, the sales development is hard to forecast, and this presents a substantial risk.

The chapter “Riskfaktorer och särskilda överväganden” (Risk Factors and Special Considerations) in our 2011 Annual Report contains a complete description of the risks the Company has identified and how we have chosen to manage them.

Parent company

The Group includes the Parent Company and the wholly-owned subsidiaries Biolight Patent Holding AB and Biodynam AB. We do not carry out any activity in our subsidiaries, so for all intents and purposes, the group’s accounts correspond to the parent company’s accounts. Therefore, no separate accounts for the parent company have been included.

Significant events after the reporting date

In July and the beginning of August, the company’s order volume increased, which we see as a consequence of our increased sales and marketing campaign efforts.

To further strengthen the company’s marketing activity, Andreas Hiis has been recruited as our new Market Manager. He joins the Company on September 1, 2012. Hiis has a nursing degree and has worked in both multinational companies and smaller domestic companies. He has many years’ experience of both domestic and international sales work. Hiis’s previous employer was the medical equipment supplier Carestream, and he was employed as a Nordic product and sales specialist for digital radiology systems.

As a consequence of the Company’s decision to centralise its operations to Stockholm, our present CFO Roy Jonebrant has chosen to leave the company. We are in the process of recruiting a new CFO.

Other

This interim report has not been subject to audit by the Company’s auditor.

Future reports

Biolight’s financial reports are published on Biolight’s web site, www.biolight.se

(For full report, see attached file)

For further information, please contact:

Pär Olausson Lidö, President, tel: +46 8 753 70 89 or +46 702 15 01 11

Biolight AB (publ) is a medical technology company offering solutions to care providers based on the Company’s patented method for using pulsating monochromatic light. The Company’s method reduces healing times and treatment costs. Over the last couple of years, Biolight has focused on a small number of application areas, primarily treatment of slow-healing wounds and injuries. The Biolight share is listed on the Nordic MTF (Nordic Growth Market AB).