New scalable business model enables growth and expansion

October – December 2021

• Net sales for the fourth quarter 2021 amounted to EUR 48,435 (79,629).
• Operating profit (EBIT) for the fourth quarter 2021 amounted to EUR -572,792 (-615,084).
• Profit before appropriations and taxes for the fourth quarter 2021 amounted to EUR -901,294 (-738,323).
• Average number of employees for the fourth quarter 2021 amounted to 14,0 (8,5).

January – December 2021

• Net sales for the full year 2021 amounted to EUR 237,650 (222,009).
• Operating profit (EBIT) for the full year 2021 amounted to EUR -1,892,658 (-1,856,189).
• Profit before appropriations and taxes for the full year 2021 amounted to EUR -2,386,764 (-2,180,835).
• Average number of employees for the full year 2021 amounted to 11,0 (9,0).

Significant events in 2021

Fourth quarter

• Enersize signs letter of intent regarding reverse acquisition with TeraFactory Oy.
• The company enters into a strategic partnership with Sigma Industry Solutions.
• Based on a decision by the Extraordinary General Meeting on November 5, 2021, the company carried out a fully guaranteed rights issue and a directed issue to a small group of investors. The rights issue was subscribed for at 100 percent, and a total of approximately SEK 28 million was raised to the company before issuance costs.
• Enersize receives two patent approvals in China.

Significant events after the period

• Enersize renews strategic partner agreements.

Summary of the Group’s indicators

*To increase comparability, consulting fees have been deducted from material and services when calculating the indicator since the consultant is now a permanent employee of the company.

CEO ANDERS SJÖGREN COMMENTS

Nasdaq First North-listed Enersize helps manufacturing industries become more climate-friendly and energy-efficient by optimizing the energy of their compressed air systems. Here, Enersize's CEO talks about the company's investments in new expertise for continued development and expansion, about new customers, and about the development around the new Enersize, where the transition to SaaS revenues is gaining momentum.

Describe the development during the fourth quarter?
We have focused on recruiting and trimming the new organization that exists, partly a focused sales and marketing department, with the goal of growing the business and acquiring more strategically important partnerships, partly a competent R&D team that will develop the next generation of cloud-based software solution and expand the patent portfolio.

How have the sales gone and what is the result like?
Sales have been lower than in the corresponding period, EUR 48,435 compared to 79,629. Partly due to the transition to long-term subscription contracts, and partly due to renewed Covid restrictions which have made sales work more difficult.
We are starting to see positive results from the scalable business model. In terms of results, we have continued low sales. An operating loss of -572,792 euros is in line with last year. But with better margins, which is because the transition to SaaS revenues is starting to pay off. In summary, we have a different composition of costs where the investment in new skills is visible. Our team now consists of a specialized sales organization with a focus on scalability, and a very competent development organization with a view to the next generation of cloud-based software for compressed air optimization.

What are the most important events of the year?
The most important events of the year are the launch of "the new Enersize" and our scalable business model. A strengthened team with the right skills and good financing, for continued focus on developing the next generation of cloud-based software for compressed air optimization.

The launch of the scalable business model, which is based on long-term subscription contracts, was confirmed by a number of new agreements during the year. Not least with Saint-Gobain ISOVER, which is an important reference customer. We also have a number of new partnerships with Momentum in Sweden, SCOPP in Morocco and the rest of Africa, and Das Korea in South Korea. Partner collaborations are a cornerstone of the scalable business model.

We have made a number of successful recruitments to our R&D team, which will focus on developing the next generation of cloud-based software for compressed air optimization. The hope is also that it will involve new, strategically important patent applications.

At the end of the fourth quarter, we carried out a combined direct and rights issue and raised approximately SEK 28 million before issuance costs. Thus, we have working capital to continue to implement our plan – which is to grow the number of customers / SaaS contracts with the help of our growing partner network.

How would you sum up the past year in a little more detail?
It has been a year of intensive work in packaging and launching the new business model. Everything from crystallizing our pricing model and our message, to targeting our sales offer and recruiting new partner companies for faster expansion. We have developed a process to quickly and smoothly connect new partners and to equip them with the necessary equipment and training. In addition, we have supplemented the organization with important functions in R&D and administration.

What does the market look like?
Compressed air is used on a very large scale by industry worldwide. And we see a very large growth potential for Enersize as companies face major challenges in minimizing their emissions and energy use. Studies show that as much as 50 percent of the energy required to produce compressed air is lost, which is equivalent to more than eight nuclear power plants in Europe alone. This is unknown to most people, but with our expertise and software, companies can minimize leakage and inefficient use and thus save large sums.

What does the future investment needs look like?
It is mainly about continuing to develop the software and streamline the implementation of our software at the customer. But also about having sufficient working capital that we will be able to grow with long-term SaaS contracts, which initially provide lower revenues, but in the long run create ever larger and more predictable revenues. The need for capacity going forward is limited, as the new business model is based on growing through partners.

You have new expertise and competence in place, tell us.
We have hired several competent employees for our R&D department. They will focus on developing the next generation of cloud-based software solution for streamlining compressed air systems. The goal is also that it will lead to a number of new patent applications, which feels especially exciting to me personally based on my background as a doctor of technology in physics.

How has the pandemic affected you?
We have been negatively affected because the restrictions have led to several projects being delayed and neither we nor our partner companies have been able to visit customers.

Focus 2022, what will characterize the year?
Sales! We are positive for 2022 and with new funding in place, we look forward to society reopening as restrictions are lifted in country after country. Of course, there may be setbacks, but as the situation now looks, we assess it positively. The work of fine-tuning the business model continues and we have recently begun to offer our customers profit sharing. This is to lower the threshold for new customers further. We can do this because we know from experience that the savings potential is often so great, and that it can also mean increased income for us.
We and our existing partner companies will place great emphasis on growing the number of customers. We see in front of us that a number of new partner companies will be added, mainly from Europe and Asia. In addition, we will further develop our software and implementation solutions, to enable an increase in our customer base.

Anders Sjögren
CEO, Enersize