Interim Report 2 2022/23

Phase Holographic Imaging PHI AB (publ)

Lund, December 21, 2022

AUGUST – OCTOBER

MAY – OCTOBER

In Short

• Sales and the number of customer inquiries continue to develop positively.
• The first orders for the fluorescence module have been received.
• The company recently opened a combined sales and development office at the Wake Forest Institute for Regenerative Medicine in Winston-Salem, North Carolina.

CEO Commentary

Sales

The online sales and lead generation strategy continues to deliver. Since the sharp rise in September, customer inquiries have continued to grow. As a result, sales from August to October this year reached 2.7 KSEK — an increase of 50 % compared to any previous corresponding period.

The intensified online marketing has made customers aware of our HoloMonitor products and further established PHI’s non-invasive cell imaging technology, but it has also increased the marketing cost baseline. Fortunately, the marketing baseline is expected to remain relatively stable moving forward. Consequently, the marketing cost per sold unit will thus decrease as sales increase.

The first orders for the fluorescence module have been received. However, some technical issues remain to be verified by our external customer testers before the orders can be delivered. The fluorescent and holographic cell images must overlap perfectly at all times. Occasionally, the cell overlap is off by more than a few millionths of a meter, introducing a measurement error greater than our quality standards permit. Cells are small, very small. One million cells comfortably fit into one cubic millimeter.

Business Development

On the business development side, things have progressed as well.

Together with the Wake Forest Institute for Regenerative Medicine, PHI, BioSpherix, analytics leader SAS and QIAGEN have created a technology development alliance for advancing cell-based biomanufacturing. The alliance aims to develop the AI-based process control tools needed to transform today’s manual manufacturing of cell-based therapies into an automated and cost-effective process. The creation of the alliance has prompted us to establish a sales and development office in Winston-Salem, North Carolina.

North Carolina has 790 life sciences companies and 2 500 related service providers. The biggest names in pharma — Biogen, Novartis, Pfizer and more — have space there, and every day new biotechs are emerging with an NC ZIP code. The region is ranked third in National Institutes of Health funding and is a leader in biologics manufacturing. See this article for more information on the expanding biotech sector in North Carolina.

Introducing new technology can be very rewarding, but it is never straightforward and always takes longer than expected. Nevertheless, the exposure we receive through our collaboration with the Wake Forest Institute for Regenerative Medicine has put us on the biotech map, benefiting our future clinical business but also our current pre-clinical business.

Net Sales and Result

Net sales for the second quarter amounted to 2 732 (1 818) KSEK and operating results before depreciation (EBITDA) to -4 325 (-2 733) KSEK. The net result amounted to -5 304 (-3 901) KSEK.

Investments

With an emphasis on regenerative medicine and the development of fluorescence capability, the company invested 864 (1 246) KSEK in the product, patent, and application development during the period.

Financing

Cash, cash equivalents, and unutilized granted credits amounted to 22 415 (21 261) KSEK by the end of the period. The equity ratio was 34 (-13) %.

Rights issue

The rights issue, which ended on April 13, 2022, was subscribed for a total of approximately 57 MSEK, corresponding to a total subscription ratio of 80 %. Through the rights issue, a total of 6 057 729 shares and 3 365 405 new series of series TO 3 and 1 346 162 warrants of series TO 4 will be newly issued. PHI thus received approximately 57 MSEK before issue costs. As of May 12, 2022, the number of shares in PHI amounts to 20 452 700 with a share capital of 4 090 540 SEK.

Warrants of series TO 3

Each warrant of series TO 3 entitles to subscribe for one (1) new share in PHI during the period from 11 April 2023 to 2 May 2023. The exercise price amounts to 70 % of the volume-weighted average price during a period prior to option redemption, within the interval 0.20 SEK (the company’s quota value) as the lowest, and with 11.90 SEK per new share as the highest exercise price. Upon full exercise of warrants of series TO 3 at the highest exercise price (11.90 SEK per new share), the warrants will provide the company with approximately 40 MSEK before issue costs.

Warrants of series TO 4

Each warrant of series TO 4 entitles to subscribe for one (1) new share in PHI during the period from and including 12 September 2024 to and including 3 October 2024. The exercise price amounts to 70 % of the volume-weighted average price during a period prior to option redemption, within the interval 0.20 SEK as the lowest, and with 15.45 SEK per new share as the highest exercise price. Upon full exercise of warrants of series TO 4 at the highest exercise price (15.45 SEK per new share), the warrants will provide the company with approximately 20.8 MSEK before issue costs.

Convertibles

The convertible loan to Formue Nord Fokus A/S amounts to 20 230 000 SEK with the following terms:

• Number of convertibles: 1 700 000 convertibles, which entails the right to subscribe for 1 700 000 new shares.
• Conversion rates: 11.90 SEK per new share until 2 May 2023 (last day in the exercise period for warrants of series TO 3) and 15.45 SEK per new share from May 3, 2023, until October 16, 2024.
• Conversion period: the convertible holder is entitled during the period from the date of payment to October 16 2024 to convert the loan into shares.
• Maturity: in the event that the entire loan is not converted, repayment of the loan and interest must take place no later than October 16, 2024. The company has the right to repay all or part of the convertible loan at any time until the due date, after which Formue Nord has the opportunity to accept repayment or request conversion according to the above conversion rates.
• Interest: the convertibles run at a quarterly interest rate of 3%.

Dilution of shares

Risks

The company may be affected by various factors, described in the 2021/22 Annual Report. These factors may individually or jointly increase risks for the operation and result of the company.

Accounting Principles

The accounts are prepared in accordance with the Annual Accounts Act and general advice from the Swedish Accounting Standards Board BFNAR 2012:1 Annual accounts and consolidated accounts (K3).

Review

This interim report has not been subject to review by the company’s auditor.

Statements About the Future

Statements concerning the company’s business environment and the future in this report reflect the board of director’s current view of future events and financial developments. Forward-looking statements only express the judgments and assumptions made by the board of directors on the day of the report. These statements have been carefully assessed. However, it is brought to the reader’s attention that these statements are associated with uncertainty, like all statements about the future.

Calendar

• March 30, 2023, Interim Report 3 2022/23

About PHI

Phase Holographic Imaging (PHI) develops and markets instrumentation for non-invasive time-lapse imaging. The company’s HoloMonitor product line is used for long-term quantitative analysis of living cell cultures, particularly in preclinical research and regenerative medicine. PHI is based in Lund, Sweden and Boston, Massachusetts.

On behalf of the Board of Directors
Peter Egelberg, CEO

For additional information please contact:
Peter Egelberg
Tel: +46 703 19 42 74
E-mail: [email protected]
Web: www.phiab.com

Parent company

Income statement (KSEK)

Balance sheet (KSEK)