|Brighter AB (publ) | |Half-year interim report 2014 | | About Brighter AB (publ) Brighter has developed a patented, unique and fully integrated method for simplifying self-care of diabetes resulting in a device that facilitates a normal way of life for millions of diabetics worldwide. The Company's shares are listed on NASDAQOMX First North, more information can be found at NASDAQOMX First North/BRIG. Visit our website and subscribe to press releases: www.brightercompany.com Follow us on: Half-year interim report 1 January - 30 June 2014 * Net sales totalled SEK 751,000 (11,000) * Profit/loss after financial items totalled SEK -3,637,000 (-3,040,000) * Earnings per share before dilution: SEK -0.22 * Earnings per share after dilution: SEK -0.22 Significant events during the period * During the period, Brighter has ordered and taken delivery of tools for the production of different parts that will be used in the production of Brighter One(TM). * Test production of parts has been carried out. * Work with both ISO 13485 certification for production and CE certification of the product has been carried out on a continuous basis. * The Company carried out a private placement of SEK 24,999,996 and rights issue of SEK 10,410,295, whereby the company raised more than SEK 35,000,000 before issue costs of approximately SEK 3,000,000. * Share capital increased by SEK 252,930.65 and currently totals SEK 847,804.70. * Of the raised funds, SEK 8,400,000 has been used for the repayment of loans from ALMI, Innovationsbron and also private financiers - see the offering memorandum (Swedish only) from February 2014 for details. * On 14 March 2014, trading in Brighter AB (publ) shares was transferred from AktieTorget to NASDAQOMX First North. The purpose of this was to broaden ownership and reach out to an international investor base. * On 1 May 2014, Brighter moved to new, more suitable premises in Kista, which in addition to being more economical, also allow for organizational development. * Brighter employed Henrik Norström as COO with overall responsibility for production, sales and marketing. The reason was to ensure his availability for leading the company's overall business in an operational capacity. * Brighter hired Petra Kaur Ljungman as a consultant with responsibility for formulating and planning the marketing of the company's first product launch. The reason was, in addition to her role as an expert in marketing and strategy on the board, to also obtain operational competence during a limited time to establish a marketing strategy and processes. * At the Annual General Meeting, 18 June 2014, three new board members were elected, whereby the founders, Truls Sjöstedt and Michael Frantzén, as well as Henrik Norström, resigned. The three new board members are Afsaneh Ghatan Bauer, Petra Kaur Ljungman and Sara Murby Forste. The intention was to bring in cutting edge expertise within IP, market strategy and organizational development, and also to clearly distinguish the board from operational management. More information about the new board members can be found at brightercompany.com * In June 2014, Brighter acquired a stock company in order to manage the warrants listed below. * The Annual General Meeting decided to issue warrants in two series, Series I, comprised of 200,000 warrants, and Series II, comprised of 800,000 warrants. Series I may be acquired by board members and Series II may be acquired by employees and other key persons. The intention was to create an incentive program for board members, staff and other key personnel. Significant events after the end of the period On August 14, 2014 Brighter was subject to Stage 1 Audit as a part of the process to achieve certification of the quality management system according to ISO 13485. The outcome of the review was positive and the final Stage 2 Audit shall be able to be planned as expected. The patent application that was filed in November 2013 has now received a positive outcome with PRV (Swedish Patent and Registration Office) where the newsworthiness and inventive quality in the application constitutes a good foundation for further positive action towards an approved patent. In July, Brighter and Rubin Medical decided to end their cooperation for the distribution of Brighter One(TM). Brighter has ongoing discussions with potential distributors for several markets. Financial calendar Interim information January - September 2014: 2014-11-14 Year-end report for 2014: 2015-03-27 Interim information January - March 2015: 2015-05-15 This interim report was published at 8:30 am on 15 August 2014 in accordance with the Swedish law (1991:980) regarding trading in financial instruments. . Comments from the CEO It has been a very exciting six months for us at Brighter, with intensive work regarding the establishment of production and certifications. The majority of all tool costs have already been taken now, which is natural, since the tools are a prerequisite for the next step in certification, etc. The company is also debt-free due to the fact that we chose to pay off all our loans. In the spring we moved to more suitable premises in Kista. As of 30 June there were 14 people (consultants and employees) working in our premises. Personally, I am very happy that Henrik Norström chose to take on the role of COO of the company. He has an incredible drive and focus that will be very helpful now that the company is growing. Prior to the launch we searched long and hard for board members with cutting edge competencies to meet the challenges we are facing. In the end, we replaced the majority of the board and it feels great to be able to welcome them to the company. Petra Kaur Ljungman has been invaluable in her efforts to assist us with the launch strategy. Afsaneh Ghatan Bauer has already helped in honing our branding strategy. Sara Murby Forste is the guiding hand that we need in order to deal with the inevitable growing pains that we are facing. Autumn will involve continued intensive work with the launch and production, but also with continuing to strengthen the company's organization with relevant skills and commitment so that we can also take advantage of the new opportunities that are arising for us. Truls Sjöstedt CEO, Brighter AB (publ) Use of the proceeds from the share issue Below, we highlight the use of proceeds from the share issue during the period. So far, R&D, and tools & design have drawn the majority of the funds, but this is natural since we are getting closer to the production phase. It is likely that we will have to use the buffer in this part of the operation. The only notable deviation is the repayment of loans, where Brighter chose to repay all loans, including loans from ALMI and Innovationsbron. Today, Brighter is completely debt-free. Personnel and operating costs are somewhat high, and at the same time, we have had moving costs and other smaller non-recurring costs. This may lead us to draw on the buffer within this cost group. +------------------------------------------------------------------------------- |Source SEK Use SEK Outcome Balance | 2014-06 (SEK) +------------------------------------------------------------------------------+ |Direct share CE-cert, TLV, | |issue 25,000,000 WTP-study, 4,000,000 260,000 3,740,000 | | FDA | +------------------------------------------------------------------------------+ |Preferential 10,000,000 R&D, Tools & 5,500,000 4,890,000 610,000| |share issue Design | +------------------------------------------------------------------------------+ | Demo units 1,500,000 400,000 1,100,000| +------------------------------------------------------------------------------+ | Marketing, | | trade shows, 3,000,000 - SEK 3,000,000| | etc. | +------------------------------------------------------------------------------+ | Personnel & | | operating 5,000,000 2,800,000 2,200,000| | costs | +------------------------------------------------------------------------------+ | IP 1,000,000 SEK 590,000 SEK 410,000| +------------------------------------------------------------------------------+ | Repayment of 4,500,000 8,400,000 -3,900,000| | loans | +------------------------------------------------------------------------------+ | Regional | | investments 5,000,000 - 5,000,000| | (Asia, USA, | | etc.) | +------------------------------------------------------------------------------+ | Fees for | | share issues, 3,000,000 3,000,000 -| | listing, etc. | +------------------------------------------------------------------------------+ | Buffer 2,500,000 - 2,500,000| +------------------------------------------------------------------------------+ |Total 35,000,000 35,000,000 20,340,000 14,660,000| +------------------------------------------------------------------------------+ The share On 14 March 2014, Brighter AB (publ) was listed on NASDAQOMX First North, after previously, as of 3 February 2012, having been listed on AktieTorget. NASDAQOMX First North is a trading platform designated as an MTF (Multilateral Trading Facility). As of 31 March 2014, 16,956,094 shares had been issued. All shares grant equal rights to the company's profits and assets. Brighter's Certified Advisor at Nasdaq OMX First North is Pareto Securities AB. Investments Capitalized expenditures for research and development, equipment and tools, and installations on property owned by others totalled SEK 6,738,000 at the end of the period. This mainly refers to the development work and tools for the production of Brighter's products. Acquisition of the subsidiary, Brighter One AB (SEK 50,000), was carried out in order to be able to handle the warrants (Series I and II, 2014). See the annual general meeting documents which are published at brightercompany.com Risks Risks relating to the operation are described in the Annual Report for the fiscal year 2013 and also in the offering memorandum from February 2014. Financial position At the end of the period, Brighter had an equity/asset ratio of 91.7%. In connection with the repayment of loans to ALMI Företagspartner and Innovationsbron during the period, a mortgage letter for SEK 2 million was de- registered. Leases for two personell cars for a total of SEK 716,560 were signed on 26 March 2014. In August 2014, these were reduced by SEK 80,000 corresponding to the repayment of the governmental environmental car premium. The lease agreement for the company's offices at Norgegatan 2, Kista - was collateralized through a bank guarantee from Danske Bank totalling SEK 205,900 through 30 April 2017. Euroclear AB - A bank guarantee was collateralized through Danske Bank totalling SEK 50,000 through February 2017. Transactions with affiliated parties Up through July 2014, Brighter has paid consulting fees to Adstring AB (Henrik Norström - board member until 18 June 2014) SEK 444,869.21 excluding VAT through April 2014, and Lars Flening Business Consultants (Lars Flening - board Member) SEK 210,780. 80 excluding VAT for consultation services. See the offering memorandum from February 2014 for a detailed description of the assignment. In April 2014, Petra Kaur Ljungman (board member) was hired as a consultant providing advice relating to marketing and branding strategies for the launch of the company's first product. Petra Kaur Ljungman has extensive experience within relevant competence areas that are described in more detail in brightercompany.com. Remuneration is paid in the amount of SEK 80,000 excluding VAT per month on a continuous basis for part-time work (20%). Ghatan Bauer Advokatbyrå (Afsaneh Ghatan Bauer - board member) has been engaged to work with brand advisement and registration. Remuneration is paid in accordance with current account. Personnel Number of employees - 6 (3 women, 3 men) Number of consultants (full-time/part-time) - 6 Insiders' holdings Shares 2013-06-30 Change 30/06/2014 ----------------------------------------------------------------------------- Truls Sjöstedt - CEO & Board member* 4,781,486 + 142,857 4,924,343 Michael Frantzén - Board member* 3,745,310 0 3,745,310 Gert Westergren - Chairman of the Board 237,526 + 142,860 380,386 Lars Flening - Board member 16,862 + 10,107 26,969 Henrik Norström (affiliated) - Board member* 16,764 + 6,980 23,744 Nadezda Ershova - Manager QA/QR 0 + 5,889 5,889 Afsaneh Ghatan Bauer - Board member** 0 0 0 Petra Kaur Ljungman - Board member** 0 0 0 Sara Murby Forste - Board member** 0 0 0 Options 2013-06-30 Change 30/06/2014 ----------------------------------------------------------------------------- Truls Sjöstedt - CEO & Board member* 41,111 + 30,014 71,125 Michael Frantzén - Board member* 0 +30,014 30,014 Gert Westergren - Chairman of the Board 220,000 + 292,459 512,459 Lars Flening - Board member 550,000 + 30,014 580,014 Henrik Norström (affiliated) - Board member* 0 0 0 Nadezda Ershova - Manager QA/QR 0 0 0 Afsaneh Ghatan Bauer - Board member** 0 0 0 Petra Kaur Ljungman - Board member** 0 0 0 Sara Murby Forste - Board member** 0 0 0 * left the Board 18 June 2014 but is still an insider ** took over as board members as of 18 June 2014 Summary Income statement (SEK 000s) 2014-01-01 2013-01-01 2013-01-01 2014-06-30 2013-06-30* 31/12/2013 Operating income -------------------------------------------------------------------------------- Other income 8 11 43 Work performed by the company for its own use 751 0 884 and capitalized Operating expenses -------------------------------------------------------------------------------- Other external costs -1,887 -2,435 -959 Personnel costs -1,399 -527 -1,189 Depreciation and write-down of tangible fixed assets -961 0 -1,133 -------------------------------------------------------------------------------- Operating profit/loss -3,488 -2,951 -2,354 -------------------------------------------------------------------------------- Profit/loss from financial items -141 -89 -429 -------------------------------------------------------------------------------- Interest expense and similar items -141 -89 -429 -------------------------------------------------------------------------------- Profit/loss after financial items -3,629 -3,040 -2,783 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Tax 0 0 0 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Profit for the period -3,629 -3,040 -2,783 -------------------------------------------------------------------------------- Earnings per share, before dilution: -0.22 -0.26 -0.23 Earnings per share, after dilution: -0.22 -0.26 -0.23 Number of shares June 30 2014, before dilution 16,956,094 11,897,481 11,897,481 Number of shares June 30 2014, after dilution 18,149,706 12,708,592 12,708,592 Average number of shares, before dilution 16,312,117 11,897,481 11,897,481 Average number of shares, after dilution 17,505,729 12,708,592 12,708,592 *The income statement for January- June 2013 has been adjusted by SEK -1,690,000 in relation to the one published in 2013. Adjustments refer to work performed by the company for its own use and capitalized, capitalized expenditures for R&D, patents, equipment and depreciation that were incorrectly reported when the report was produced in 2013. Summary of Balance sheet (SEK 000s) 2014-06-30 2013-06-30* 2013-12-31 ------------------------------------------------------------------------- ASSETS ------------------------------------------------------------------------- Fixed assets Tangible fixed assets 702 6 402 Intangible fixed assets 14,759 4,461 8,635 Financial fixed assets 50 0 0 ------------------------------------------------------------------------- Total fixed assets 15,510 4,467 9,036 Current assets Receivables 1,255 423 501 Cash and bank balances 14,659 -140 53 ------------------------------------------------------------------------- Total current assets 15,914 283 554 ------------------------------------------------------------------------- TOTAL ASSETS 31,424 4,750 9,590 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Equity and liabilities ------------------------------------------------------------------------- Equity 28,815 43 309 Long-term liabilities 0 3,337 8,022 Current liabilities 2,610 1,370 1,259 ------------------------------------------------------------------------- TOTAL EQUITY AND LIABILITIES 31,424 4,750 9,590 ------------------------------------------------------------------------- Pledged assets 255 50 50 Contingent liabilities None None None CHANGE IN EQUITY 2014-01-01 2013-01-01 2013-01-01 2014-06-30 2013-06-30 2013-12-31 Opening equity 309 3,082 3,082 ------------------------------------------------------------------------- Profit for the period -3,637 -3,039 -2,781 New share issue (net after issue costs) 32,144 0 Option premiums 0 0 7 ------------------------------------------------------------------------- Equity at end of period 28,815 43 309 ------------------------------------------------------------------------- *The balance sheet for January- June 2013 has been adjusted by SEK -1,690,000 (Fixed Assets) in relation to the one published in 2013. Adjustments refer to work performed by the company for its own use and capitalized, capitalized expenditures for R&D, patents, equipment and depreciation that were incorrectly reported when the report was produced in 2013. Summary of cash flow statement (SEK 000s) 2014-01-01 2013-01-01 2014-06-30 2013-06-30 Cash flow from operating activities before changes in working capital -2,676 -1,647 Changes in working capital Decrease/increase in current receivables -755 1,760 Decrease/Increase in current liabilities 1,351 -1,564 -------------------------------------------------------------- Cash flow from operating activities -2,080 -1,452 -------------------------------------------------------------- Investment activities Acquisition of intangible fixed assets -7,018 -5,804 Acquisition of tangible fixed assets -369 -10 Acquisitions of shares in subsidiaries -50 0 -------------------------------------------------------------- Cash flow from investment activities -7,437 -5,814 -------------------------------------------------------------- Financing activities New share issue (net after issue costs) 32,144 0 Option premiums 0 8 Loans taken 0 7,255 Repayment of loans -8,022 0 -------------------------------------------------------------- Cash flow from financing activities 24,122 7,263 -------------------------------------------------------------- Cash flow for the period 14,606 -3 Opening liquid funds 53 56 -------------------------------------------------------------- Closing liquid funds 14,659 53 -------------------------------------------------------------- Summary of changes in equity CHANGES IN EQUITY 2014-01-01 2013-01-01 2013-01-01 2014-06-30 2013-06-30 2013-12-31 Opening equity 309 3,082 3,082 ------------------------------------------------------------------------ Profit for the period -3,637 -3,039 -2,781 New share issue (net after issue costs) 32,144 0 Option premiums 0 0 7 ------------------------------------------------------------------------ Equity at end of period 28,815 43 309 ------------------------------------------------------------------------ Accounting principles The Interim report for January-June 2014 has been prepared in accordance with BFNAR 2007:1. The transition to the K3 regulations is not expected to have any significant impact. Given that the subsidiary had no activity during the period, no consolidated accounts have been prepared (Annual Accounts Act, Chapter 7, paragraph 2) Review by an Auditor This interim report has not been reviewed by the company's auditors. Certified Advisor Brighter's Certified Advisor at Nasdaq OMX First North is Pareto Securities AB. Submission of Interim Report January - June 2014 Stockholm 15 August 2014 Brighter AB (publ) Board of directors For additional information, please contact: Truls Sjöstedt, CEO Telephone: +46 709 73 46 00 Email: truls.sjostedt@brightercompany.com Henrik Norström, COO/Controller Telephone: +46 733 40 30 45 Email: henrik.norstrom@brightercompany.com Gert Westergren, Chairman of the Board Telephone: + 46 705 55 77 99 Email: gert.westergren@brightercompany.com [HUG#1849102]