Announcement of Rights Issue 2023

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The board of directors of Artificial Solutions has resolved on a partially guaranteed rights issue of approximately SEK 145 million conditional on the approval of the general meeting and renegotiates credit facility

The board of directors of Artificial Solutions International AB ("Artificial Solutions" or the "Company") has today, resolved on a partially guaranteed rights issue of approximately SEK 145 million conditional on the approval of an extraordinary general meeting (the "Rights Issue"). The subscription price has been determined to SEK 1.00 per share where shareholders on the record date of 1 February 2023 will receive one (1) subscription right for each share held. One (1) subscription right will entitle to subscription for twenty-two (22) new shares in the Rights Issue. In total, the subscription commitments from existing shareholders as well as persons from the board of directors and management amount to approximately SEK 29.1 million, corresponding to approximately 20.1 per cent of the Rights Issue. Guarantors have provided guarantee commitments subject to customary conditions which, in aggregate, amount to approximately SEK 66.8 million, which corresponds to approximately 46.2 per cent of the Rights Issue. Together with the subscription commitments, the Rights Issue is secured to approximately SEK 95.9 million, corresponding to approximately 66.3 per cent of the Rights Issue. Notice to the extraordinary general meeting, to be held on 30 January 2023, for a resolution to approve the Rights Issue will be published through a separate press release. In addition, the Company is in the final stages of a renegotiation of its existing credit facility with the lender Capital Four. The Company and Capital Four have agreed that accumulated accrued interest corresponding to SEK 28 million will be written off and that the annual interest rate is adjusted down to 4.00 per cent going forward. These amendments to the credit facility will result in a total debt reduction, upon loan maturity, corresponding to approximately SEK 145 million. The agreement with Capital Four is conditional on that the complete and binding agreement regarding the renegotiated credit facility has been entered before the extraordinary general meeting to be held on 30 January 2023, as well as the completion of the Rights Issue.

”In these challenging times on the capital markets, we are very happy for the support from our shareholders and lenders in our continued growth. The SaaS model we introduced less than two years ago has proven its ability to grow revenues rapidly and our capital need is increasingly met by customers. The rights issue lays a foundation for the company to reach a self-financed position; an important milestone on our growth journey.”, Per Ottosson, CEO, comments.

Summary

• The board of directors of Artificial Solutions has today resolved on the Rights Issue, conditional on the subsequent approval of the general meeting.
• The net proceeds from the Rights Issue are intended to be used for the following purposes listed in order of priority; (i) continued marketing of the Company's SaaS solution Teneo, (ii) continued development of Teneo, (iii) recruitment of key personnel in sales, marketing and technology development, and (iv) financing of the Company's ongoing operations.
• If the Rights Issue is fully subscribed, the Company will receive approximately SEK 144.6 million before deduction of transaction costs.
• The subscription price is SEK 1.00 per share, which corresponds to a discount to the theoretical ex-right price (TERP) of approximately 21 per cent, based on the closing price of Artificial Solutions' share on the Nasdaq First North Growth Market on December 23, 2022.
• All existing shareholders will receive one (1) subscription right for each share owned on the record date on 1 February 2023. One (1) subscription right entitle to subscription for twenty-two (22) new shares.
• The subscription period in the Rights Issue runs from and including 3 February 2023, up to and including 17 February 2023.
• The subscription commitments from existing shareholders and persons from the board of directors and management amount to approximately SEK 29.1 million, corresponding to approximately 20.1 per cent of the Rights Issue. In addition, there are guarantee commitments amounting to approximately MSEK 66.8, which corresponds to 46.2 per cent of the Rights Issue. Together with the subscription commitments, the Rights Issue is secured to approximately SEK 95.9 million, corresponding to approximately 66.3 per cent of the Rights Issue.
• The Company is in the final stages of a renegotiation of its existing credit facility to Capital Four. The Company and Capital Four have agreed that accrued interest corresponding to approximately SEK 28 million will be written off and that the loan will run with a fixed annual interest rate of 4.00 per cent going forward. The agreement with Capital Four is conditional on that the complete and binding agreement regarding the renegotiated credit facility has been entered before the extraordinary general meeting to be held on 30 January 2023, as well as the completion of the Rights Issue.

Background and motive

During the fourth quarter of 2020, the Company announced the introduction of the new business model (SaaS). In accordance with the new business model, the focus will continue to be to increase recurring revenue from existing customers and to acquire new customers with increased revenue. This applies both when the Company works through partners and when the sales team signs agreements with new customers.

The Company remains focused on the largest customers and notes that the solutions built by customers who have been with the Company since the second quarter of 2021 are now growing rapidly. Furthermore, the Company sees several customers with more than one million voice calls through Teneo per month.

The Company is now carrying out the Rights Issue in order to continue developing the Company's platform for Conversational AI, Teneo®, accelerate the Company's growth - in the form of API call volumes and increased recurring revenues and SaaS ARR (Annual Recurring Revenues) with the help of investments in marketing and sales activities and personnel.

Use of proceeds

If the Rights Issue is fully subscribed, the Company will receive approximately SEK 144.6 million before deductions for transaction costs. Given the Company's current business plan and against the above background, the Company will use the net proceeds for the following purposes listed in order of priority:

• Approximately 35 per cent will be used for marketing the company’s SaaS service, Teneo, in line with the Company’s business plan, and further drive the revenue growth through growing and marketing the platform towards new and existing partners and customers.
• Approximately 50 per cent will be used for continued development of the Teneo platform in order to remain a leader and pioneer within the Conversational AI market.
• Approximately 5 per cent will be used for a selective recruitment of key personnel within sales, market and product development.
• Approximately 10 per cent will be used to support the Company’s operational activities and working capital requirements for the Company to reach its financial targets and communicated strategy.

General meeting

Through a separate press release, the board of directors convenes an extraordinary general meeting to be held on 30 January 2023 to approve the Rights Issue and to resolve on a reduction of the share capital, bonus issue and related changes to the Company's articles of association. The reason for the reduction of the share capital, the bonus issue and the changes to the articles of association is to enable the Rights Issue as detailed in the separate notice.

The Rights Issue

Shareholders who are registered in the share register in Artificial Solutions on the record date on 1 February 2023 will receive one (1) subscription right for each share held in the Company. The subscription right entitles the holder to subscribe for new shares with preferential rights. One (1) subscription right entitle the holder to subscription for twenty-two (22) new shares. The subscription price is SEK 1.00 per share, which means that Artificial Solutions will receive gross proceeds of approximately SEK 144.6 million before deduction of transaction costs, provided that the Rights Issue is fully subscribed. In addition, investors are offered the opportunity to sign up for subscription for shares without the support of subscription rights.

Provided that the Rights Issue is fully subscribed, and provided that the extraordinary general meeting resolves in accordance with all of the board of directors' proposals, the number of shares in Artificial Solutions will increase by 144,551,836, from 6,570,538 to 151,122,374 and the share capital will increase by a maximum of SEK 11,000,000, from SEK 500,000 to SEK 11,500,000. The proposed bonus issue will result in an additional increase of the share capital by approximately SEK 111,301,434.

The last day of trading in Artificial Solutions’ shares including the right to receive subscription rights in the Rights Issue is 30 January 2023. The shares are traded excluding the right to receive subscription rights in the Rights Issue as of 31 January 2023. The subscription period, with or without the support of subscription rights, runs from 3 February 2023 up to and including 17 February 2023. Trading in subscription rights will take place on Nasdaq First North Growth Market during the period from 3 February 2023 to 14 February 2023 and trading in BTAs (paid subscribed shares) will take place on Nasdaq First North Growth Market during the period from 3 February 2023 until the registration of the shares with the Swedish Companies Registration Office.

Shareholders who choose not to participate in the Rights Issue will through the Rights Issue have their ownership diluted by up to 95.7 per cent (calculated on the total number of outstanding shares in the Company after completion of the Rights Issue). These shareholders have the opportunity to compensate themselves financially for this dilution effect by selling their received subscription rights.

The complete terms and conditions of the Rights Issue and information about the Company will be presented in a prospectus that is expected to be published on the Company's website around 1 February 2023.

Renegotiation of the credit facility

As previously been communicated, the Company entered a credit facility of SEK 250 million on 15 December 2021 from the lender Capital Four. According to the previous terms, the credit facility ran with an annual and capitalized interest rate (PIK interest) of STIBOR + 9.50 per cent. The entire credit facility, including accrued interest, would at the loan maturity in December 2026, amount to approximately SEK 435 million.

According to the new agreement with Capital Four, all accumulated PIK interest of approximately SEK 28 million will be written off. In addition, the credit facility will continue to run with a PIK interest rate of 4.00 per cent until the maturity date, which corresponds to a total PIK interest of approximately SEK 40 million at the loan maturity in December 2026. The renegotiation of the credit facility will thus result in a total debt reduction of approximately SEK 144.6 million at loan maturity. The entire credit facility, including accrued interest, will at loan maturity in December 2026 amount to approximately SEK 290 million.

The agreement with Capital Four is conditional on that the complete and binding agreement regarding the renegotiated credit facility has been entered before the extraordinary general meeting to be held on 30 January 2023, as well as the completion of the Rights issue.

Subscription commitments and guarantee commitments

Some of the Company's shareholders as well as persons from the board of directors and management, including board member Johan Gustavsson (through companies), CEO Per Ottosson, CFO Fredrik Törgren, CTO Andreas Wieweg and chairman Åsa Hedin, have undertaken to subscribe for shares in the Rights Issue. These subscription commitments amount to, in aggregate, approximately SEK 29.1 million, corresponding to approximately 20.1 per cent of the Rights Issue.

In addition to the subscription commitments, certain guarantors have provided guarantee commitments subject to customary conditions which, in aggregate, amount to approximately SEK 66.8 million, which corresponds to approximately 46.2 per cent of the Rights Issue. Together with the subscription commitments, the Rights Issue is secured to approximately SEK 95.9 million, corresponding to approximately 66.3 per cent of the Rights Issue.

A guarantee fee will be paid to the guarantors, based on current market conditions, of twelve (12.00) per cent of the guaranteed amount in cash. No fee is to be paid for the subscription commitments that have been entered into. Neither the subscription commitments nor the guarantee commitments are secured through bank guarantees, restricted funds, pledged assets or similar arrangements.

Further information regarding the parties who have entered into subscription commitments and guarantee commitments will be presented in the prospectus that will be made public before the commencement of the subscription period.

Lock-up undertakings

Prior to the execution of the Rights Issue, all members of the board of directors and senior management of the Company which are shareholders in the Company, as well as the Company’s principal shareholder Scope, have entered into lock-up undertakings, which, among other things and with customary exceptions, mean that they have undertaken not to sell shares in the Company. The lock-up undertakings expire on the day that falls 90 days after the settlement date in the Rights Issue. Members of the board and other senior management that have entered into subscription undertakings in the Rights Issue have entered into a lock-up undertaking which expires 6 months after the last day of the subscription period.

Furthermore, the Company has undertaken towards Pareto Securities AB, subject to customary exceptions, not to issue additional shares or other share-related instruments for a period of 12 months after the end of the subscription period.

Indicative timeplan

Advisers

Pareto Securities is Sole Manager and Bookrunner, Advokatfirman Schjødt is legal adviser to the Company and Advokatfirman Lindahl is legal adviser to Pareto Securities in connection with the Rights Issue.

For further information, contact

Per Ottosson, CEO, Artificial Solutions
E-mail: per.ottosson@artificial-solutions.com

This information is such information that Artificial Solutions International AB is obligated to make public pursuant to the EU Market Abuse Regulation 596/2014. The information was submitted, through the agency of the contact person above, for publication on 23 December 2022, 17:45 CET.

About Artificial Solutions

Artificial Solutions® is the leading company in conversational AI. The Company enable people to communicate with applications, websites and connected things in everyday, human-like natural language via voice, text, touch or gesture.

The Company’s product Teneo® enables organizations to create, together with developers, sophisticated and highly intelligent conversational AI solutions in 86 languages ​​and dialects for multiple platforms and channels. The ability to analyze and leverage massive amounts of conversational data is fully integrated into Teneo, providing unprecedented insights into customer behavior.

Artificial Solutions' AI technology makes it easy to implement a wide range of conversational AI solutions, such as virtual assistants, conversational bots, speech-based conversational interfaces for smart connected things, and more. The technology is used daily by millions of people in hundreds of implementations in both the private and public sectors worldwide.

Artificial Solutions is listed on the Nasdaq First North Growth Market in Stockholm under the ticker ASAI. Certified Adviser is Erik Penser Bank AB (www.penser.se, tel. +46 (0) 8-463 83 00, e-mail certifidadviser@penser.se). For more information, please visist www.artificial-solutions.com.

Important information

This press release and the information herein is not for publication, release or distribution, in whole or in part, directly or indirectly, in or into the United States, Australia, Belarus, Canada, Hong Kong, Japan, New Zealand, Russia, South Africa, Singapore or any other state or jurisdiction in which publication, release or distribution would be unlawful or where such action would require additional prospectuses, filings or other measures in addition to those required under Swedish law.

The press release is for informational purposes only and does not constitute an offer to sell or issue, or the solicitation of an offer to buy or acquire, or subscribe for, any of the securities mentioned herein (collectively, the “Securities”) or any other financial instruments in Artificial Solutions International AB. Any offer in respect of any of the Securities will only be made through the prospectus that Artificial Solutions International AB expects to publish in due course. Offers will not be made to, and application forms will not be approved from, subscribers (including shareholders), or persons acting on behalf of subscribers, in any jurisdiction where applications for such subscription would contravene applicable laws or regulations, or would require additional prospectuses, filings, or other measures in addition to those required under Swedish law. Measures in violation of the restrictions may constitute a breach of relevant securities laws.

The Securities mentioned in this press release have not been registered and will not be registered under any applicable securities law in the United States, Australia, Belarus, Canada, Hong Kong, Japan, New Zealand, Russia, South Africa or Singapore and may, with certain exceptions, not be offered or sold within, or on behalf of a person or for the benefit of a person who is registered in, these countries. The company has not made an offer to the public to subscribe for or acquire the Securities mentioned in this press release other than in Sweden.

None of the Securities have been or will be registered under the United States Securities Act of 1933, as amended (the “Securities Act”), or the securities laws of any state or other jurisdiction in the United States, and may not be offered, pledged, sold, delivered or otherwise transferred, directly or indirectly. There will not be any public offering of any of the Securities in the United States.

In the EEA Member States, with the exception of Sweden (each such EEA Member State, a “Relevant State“), this press release and the information contained herein are intended only for and directed to qualified investors as defined in the Prospectus Regulation. The Securities mentioned in this press release are not intended to be offered to the public in any Relevant State and are only available to qualified investors except in accordance with exceptions in the Prospectus Regulation. Persons in any Relevant State who are not qualified investors should not take any actions based on this press release, nor rely on it.

In the United Kingdom, this press release is directed only at, and communicated only to, persons who are qualified investors within the meaning of article 2(e) of the Prospectus Regulation (2017/1129) who are (i) persons who fall within the definition of "investment professional" in article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the “Order”), or (ii) persons who fall within article 49(2)(a) to (d) of the Order, or (iii) persons who are existing members or creditors of Artificial Solutions International AB or other persons falling within Article 43 of the Order, or (iv) persons to whom it may otherwise be lawfully communicated (all such persons referred to in (i), (ii), (iii) and (iv) above together being referred to as “Relevant Persons”). This press release must not be acted on or relied on by persons in the UK who are not Relevant Persons.

This announcement does not constitute an investment recommendation. The price and value of securities and any income from them can go down as well as up and you could lose your entire investment. Past performance is not a guide to future performance. Information in this announcement cannot be relied upon as a guide to future performance.

Forward-looking statements

This press release contains forward-looking statements that reflect the Company’s intentions, assessments, or current expectations about and targets for the Company’s future results of operations, financial condition, development, liquidity, performance, prospects, anticipated growth, strategies and opportunities and the markets in which the Company operates. Forward-looking statements are statements that are not historical facts and may be identified by the fact that they contain words such as “believe”, “expect”, “anticipate”, “intend”, “may”, “plan”, “estimate”, “will”, “should”, “could”, “aim” or “might”, or, in each case, their negative, or similar expressions. The forward-looking statements in this press release are based upon various assumptions, many of which are based, in turn, upon further assumptions. Although the Company believes that the expectations reflected in these forward-looking statements are reasonable, it can give no assurances that they will materialize or prove to be correct. Because these statements are based on assumptions or estimates and are subject to risks and uncertainties, the actual results or outcome could differ materially from those set out in the forward-looking statements as a result of many factors. Such risks, uncertainties, contingencies and other important factors could cause actual events to differ materially from the expectations expressed or implied in this release by such forward-looking statements. The Company does not guarantee that the assumptions underlying the forward-looking statements in this press release are free from errors nor does it accept any responsibility for the future accuracy of the opinions expressed in this press release or any obligation to update or revise the statements in this press release to reflect subsequent events. Readers of this press release should not place undue reliance on the forward-looking statements in this press release. The information, opinions and forward-looking statements contained in this press release speak only as at its date and are subject to change without notice. Neither the Company nor anyone else does undertake any obligation to review, update, confirm or to release publicly any revisions to any forward-looking statements to reflect events that occur or circumstances that arise in relation to the content of this press release.

Information to distributors

Solely for the purposes of the product governance requirements contained within: (a) EU Directive 2014/65/EU on markets in financial instruments, as amended (“MiFID II”); (b) Articles 9 and 10 of Commission Delegated Directive (EU) 2017/593 supplementing MiFID II; and (c) local implementing measures (together, the “MiFID II Product Governance Requirements”), and disclaiming all and any liability, whether arising in tort, contract or otherwise, which any “manufacturer” (for the purposes of the MiFID II Product Governance Requirements) may otherwise have with respect thereto, the shares in Artificial Solutions have been subject to a product approval process, which has determined that such shares are: (i) compatible with an end target market of retail investors and investors who meet the criteria of professional clients and eligible counterparties, each as defined in MiFID II; and (ii) eligible for distribution through all distribution channels as are permitted by MiFID II (the “Target Market Assessment”). Notwithstanding the Target Market Assessment, Distributors should note that: the price of the shares in Artificial Solutions may decline and investors could lose all or part of their investment; the shares in Artificial Solutions offer no guaranteed income and no capital protection; and an investment in the shares in Artificial Solutions is compatible only with investors who do not need a guaranteed income or capital protection, who (either alone or in conjunction with an appropriate financial or other adviser) are capable of evaluating the merits and risks of such an investment and who have sufficient resources to be able to bear any losses that may result therefrom. The Target Market Assessment is without prejudice to the requirements of any contractual, legal or regulatory selling restrictions in relation to the Directed Share Issue.

For the avoidance of doubt, the Target Market Assessment does not constitute: (a) an assessment of suitability or appropriateness for the purposes of MiFID II; or (b) a recommendation to any investor or group of investors to invest in, or purchase, or take any other action whatsoever with respect to the shares in Artificial Solutions.

Each distributor is responsible for undertaking its own target market assessment in respect of the shares in Artificial Solutions and determining appropriate distribution channels.