The Board of Directors proposes decision on a rights issue of units and a directed issue of convertibles

The Board of Directors of Phase Holographic Imaging PHI AB (”PHI” or ”the Company”) has today, on the 22nd of February 2022, decided to propose that the Extraordinary General Meeting shall decide on a rights issue of units (shares and warrants), which initially can provide the Company with approx. SEK 72.4 million. The proposed rights issue is in writing secured to approx. 80 percent by guarantee commitments. The Board of Directors has also decided to propose that the Extraordinary General Meeting decides on a directed issue of convertibles to Formue Nord Fokus A/S, which shall replace the majority of the outstanding loans the Company has from Formue Nord Markedsneutral A/S. Notice to the Extraordinary General Meeting will be published through a separate press release within this week.

Peter Egelberg, CEO PHI, comments

“PHI is in an exciting growth phase and has during the pandemic taken important steps forward in terms of sales – the transition to online sales and marketing without intermediaries has resulted in the advantage of having direct contact with our customers, which gives us a more detailed understanding of their needs. And on the other hand, direct contact gives our customers a deeper understanding of our products, which also benefits sales. Our assessment is that the trend we have seen in recent quarters will continue and that interest in PHI’s products will increase even more. In addition, we see good opportunities to break new ground in the field of regenerative medicine – an area Big Pharma has entered – where the cells themselves are the treatment. The market for non-destructive analysis of cell cultures is a crucial piece of the puzzle in the development of the treatment of common diseases such as Alzheimer’s and diabetes. We see that we have a significant competitive advantage in regenerative medicine given our innovative and proven technology, proprietary software and cost position.”

Background and motive

Over the past two years, largely due to the pandemic, PHI has invested in digitizing the Company’s distribution chain – a strategic shift that has proven to be very positive, as direct sales and the absence of distributors as intermediaries have contributed increased margins for the Company and lower costs per unit sold.

During the past six months, the Company’s sales have increased by close to 340 %, in comparison to the same period last year. It is the Board’s assessment that this positive sales trend will continue due to the increasingly successful online sales.

In addition, PHI has for several years worked to develop a fluorescence unit for HoloMonitor® where the Company, by integrating two functionalities in the same instrument, is estimated to be able to more than double its market. Following a first proof-of-concept, the first prototype of such an instrument has been manufactured and the fluorescence project is now in a phase of internal and external testing, technical iterations and software development. The Company is preparing for a market launch of the fluorescence unit during the current half year. The module will in a business perspective be the Company’s second hardware platform, and PHI also intends to surround the platform with a new family of software modules (so-called Live Cell Assays) to make the data generated by the platform.

The non-invasive properties of HoloMonitor® have shown that the product is well suited for clinical applications in regenerative medicine, which is why the Board believes that the Company has a significant competitive advantage in the area. According to the board, fully developed regenerative medicine is expected to compete with drugs and surgery in both market size and significance for modern health care systems. As early as August 2021, PHI entered into a partnership with the RegenMed Development Organization (ReMDO) with the aim of establishing the Company’s non-invasive imaging technology as a standard tool to support large-scale production of cell therapies and artificial organs, and the Company plans a number of additional activities related to this area. Among other things, the Company intends to expand collaborations with important industry players, which according to the Board’s assessment will increase the commercial value of PHI’s technology and products and in turn benefit future partnership discussions.

In light of the above, the Board and management of PHI see great opportunities to take the Company further into clinical applications and the planned capitalization is therefore intended to finance the Company’s establishment and progress in regenerative medicine. In addition, part of the capitalization is intended to finance the market introduction of PHI’s fluorescence unit and the continued development of the Company’s digital sales strategy, with expanded activities related to marketing and digitization. The proceeds are also planned to finance the expansion of the Company’s marketing department, as well as partial repayment of existing loans that the Company has with Formue Nord Markedsneutral A/S.

Rights issue of units

The proposed rights issue of units may – provided the Extraordinary General Meeting decides to approve the Board’s decision – in the event of full subscription initially provide the Company with approx. SEK 72.4 million before issue costs, which in the case of fully subscribed initial issue is estimated to amount to approx. SEK 10 million (of which guarantee compensation is approx. SEK 5.8 million paid as cash). The attached warrants come in two series – series TO 3 and series TO 4 – where warrants of series TO 3, with exercise period in April/May 2023, when fully exercised, provide the Company an additional SEK 50.4 million, and where series TO 4, with an exercise period in September/October 2024, can provide the Company with a maximum of approx. SEK 26.2 million.

Use of funds from initial part of the rights issue

Objective to continue strong revenue growth:

Objective to obtain proof-of-concept supported by important opinion leaders:

Use of funds from the exercise of warrants

Objective to obtain GLP/GMP qualifications for regulatory approval and market introduction:

Objective to accelerate sales to biomanufacturing facilities:

Objective to initiate sales to biopsy clinics:

Other:

The planned offer in brief

Directed issue of convertibles

In addition to the above-described proposal for a resolution on a rights issue, the Board of Directors of the Company has also decided to propose to the Extraordinary General Meeting to decide on a directed new issue of convertibles to Formue Nord Fokus A/S. The purpose of the directed issue of convertibles is to have the planned convertible loan replace the part of the existing loan that the Company has with Formue Nord Markedsneutral A/S that is not repaid using the issue proceeds from the proposed rights issue. The directed issue of convertibles is proposed to amount to approx. SEK 20.23 million and is proposed in accordance with the terms below.

Prospectus, teaser and subscription form

Prospectus, teaser and subscription form regarding the planned rights issue will be made available via the Company’s (www.phiab.com) and Sedermera Corporate Finance AB’s (www.sedermera.se) websites by the time of the initiation of the planned subscription period, at the latest.

Advisors

In connection with the rights issue PHI has appointed Sedermera Corporate Finance AB as the financial advisor, Markets & Corporate Law Nordic AB as the legal advisor, and Nordic Issuing as the issuing agent. Shark Communication AB has provided the Company with advice regarding communication.

For more information about the planned capitalization, please contact:

Sedermera Corporate Finance AB
Phone: +46 40-615 14 10
E-mail: info@sedermera.se

For more information about the Company, please contact:

Peter Egelberg, CEO
E­mail: ir@phiab.se
Web: phiab.com

This information is such that PHI is required to publish in accordance with the EU Market Abuse Regulation (EU No. 596/2014). The information was submitted, through the care of the specified contact person, for publication on 22-02-2022 21:47 CET.