iZafe Group AB (publ)

Welcome to our presentation of the Q4 report for 2024 for iSafe Group. With us we have me, Maurice Sandberg, CEO, Anders, CEO, and today we also have the honor of having Oliver with us, who is our analyst from Axelspararna. He has previously taken part in the report and has prepared a number of questions that will be running during this presentation. So Anders, you can start.

Thanks, it's fun to have you with us, Oliver. You can tell us briefly who you are and what you have done to follow the company.

Thank you very much, Anders. Just as Maurice said, my name is Oliver and I work as an analyst at Axelspararna. I have been honored to follow iSafe for the past two years, so it has been very exciting.

And briefly, now that we have been here for two years, do you feel that we are entering another type of field as a company, or what is your outstanding feeling for the company?

Quite early on that I started following you, I communicated a number of orders. During the last few years we have been waiting for the delivery of the number of orders to be delivered. We have started to take part in that in the last few months.

It's fun! Yes, fun. Good. I myself think that we are in a very exciting time where a lot is happening now. I will join you in this interview with some slides that I will show. As I said, we are another type of field in the company. We have developed the product, tested and had no change to get 2,500 units. We have started to change the product. Today we have over 312,000 dispensers, which is what we are really looking for, to help people take the right medicine at the right time. We also see that we are starting to enter a positive trend where we get more machines every month compared to the month before. We see that we have increased by 25% more active doses in January and December. We have partners in nine countries, but I would say that there are four more active countries. We are currently in the Netherlands and Sweden, which is the primary focus. We are growing in the Netherlands, but we also see that Spain will be launching in February. They have developed the Savio Home concept for two years and then Norway will be launched here too.

It is very exciting. It is obvious that the turnover is approaching 8 million SEK. You write in your newsletter that you expect that the 2,500 doses you have sold will be activated within 3-6 months. You also write that the degree of activation is driving the sales. Can you explain this a little bit and what is the outcome of

this? The outcome? The interesting thing about our business model is that we are the product owners and then our partners who buy the products. We are the ones who make the cost-signature. The idea is to have a small margin. Last year we had a slightly reduced price of 1,000 SEK in the Netherlands. Otherwise we have a small margin. Depending on the volume of products we sell to our partners, we make a good margin or a very small margin. They buy the products as a margin to be able to come out with the product over a period of 3-6 months. It is because they should not be empty. We should not build too much margin capital with us, but our partners should do that. Our partners buy the volume on a 3-6 month margin. How do they see that they should deliver the units? Is that a good answer to the question, Oliver?

Absolutely. It is only when the units have been activated that you start to maintain the license income.

Yes, exactly. When they buy the products and have them in stock, we do not factor in any return license income. When they put them out, we factor in an income. That is what builds up our ARR, which is the most important factor. We have sold 2,500 doses to our partners, which is possible to build up our return license income. That is where we have all the margin, where we have almost 95% margin on

average. How high would you say that the activation level is at the moment? Do you have any ballpark?

As I mentioned, we are very close to our first misstable, which has been incredibly important as a product owner on 1000 units in progress. That is where the ballpark is.

Can you tell us something about where the other 1500 units are?

I will come back to that later when we talk about the forecasts. We can see more about how it will look in the future. This is for the year, but also for the coming year. Can you go a little further? Some other factors that are important to know about, linked to what kind of factor we are in. Partly why the medicine is so important now is that the care is in a factor where you need to digitize it. Today, 23% of all misstable treatment occurs due to the fact that the staff is under-manned or stressed. In 8 years, there will be twice as many more to take care of. Everyone understands that this is not sustainable and we have to make a change. Digitalization is on the way, and in the process of digitalization, more people will need this kind of help, which means that we are in a growth phase. What drives these factors is that the dose is built on the fact that you get the medicine in a dosage bag. If we look at the four markets that we are talking about, there is already a market where people get their medicine in a dosage bag. We are just going to add the extra spoon, that is, you put the dosage in the dose, which makes the medicine inaccessible. First, it is time to take the medicine, and then you can just take the medicine you want to take. Here is the market we primarily look at, that we want to take part in.

I think of one thing. It is clear that there are some market trends that are playing in your right hands. Are there any initiatives from the state to drive the development of digital tools for care?

If we look at Sweden, they are lifting up that medicine is one of the three most important parts to introduce. Both SKR and ADDA are looking at how to introduce a medicine machine, so that it is easier to call upon this. We are in the same dialogue as in Tidskede. By 2025, there will probably be a treatment linked to medicine machines from ADDA. So yes, there are parts to this to simplify and quickly introduce a medicine machine.

In the diagram, the use of dosages looks quite low in a country like Spain. What is this about and what alternatives are used instead?

In Sweden, 300,000 people get medicine on a dosage machine. The population is about double in the Netherlands, and there it is about double, 600,000. In Spain, the number 200,000 is the number of people we know who get the medicine packed in dosages from our partner, TE Medi. It is not the whole market in Spain. I don't have numbers on the whole market, but what I know is the market that we control, which is 200,000. Our partner, TE Medi, will look at the pharmacy in the context of delivering these 200,000. I will also add that there is a dosage machine. It will not be all 200,000 who need a dosage machine, but the hope is to have a large portion of the dosage machine. In Spain, the use of medicine on a dosage machine has not been as long as it has been in Sweden and the Netherlands. It is very common to pack in blister cards, which look like a calendar when you press out the dosage from a small pocket. But we see that the dosage market is growing quite well there, and it grows for TE Medi, it grows about 10% per year.

The use of dosages is one thing, but how do you feel about the use of digital tools in care in these other countries? You can imagine that it is quite far ahead, compared to other European countries.

Sweden and Norway are good at it, the Netherlands are absolutely very good at it. I would say that they have almost come longer than what we have done in Sweden. Spain is not at all common, so it will be exciting to see how it goes there. We have hope, but we are also aware that it can take some time to get the market to see these parts. We will have a big launch and we hope that it will be well received. The more it comes out, the more it will be used. We do not have any market management here in Sweden on our consumer version, but we see that we get those who have talked to others and have been recommended.

How do you see the competitive market? You are not completely alone, but I note that Dosell, for example, wins the market in the Netherlands. This is at the expense of other medical robots as well. Which other actors do you see and why do you choose to switch to Dosell?

I would say that it is good that we are more who are driving this development. The competition is only positive. In the Netherlands there is a drug company called Medido, and here in Sweden our biggest is Vondos. There are different parts, both are good in different factors. What we distinguish from focusing on is that it should be as user-friendly as possible. It will take a short time to load and understand it. It should also be easy, it weighs only 2 kg, it is easy to place at home. We integrate it into other solutions, which means that the staff does not need other systems or apps than they already use. We have priced ourselves in a way that makes it more affordable. Both focus on the same thing, deliver the right medicine at the right time. Then we have focused on just that, while the others have other services around them.

Thank

you for the good question. We have come to a stage where we have started to deliver these units. We have started to see actual key numbers every month. It was difficult for us to go out with forecasts, but now we see forecasts where we can see that our markets deliver steady numbers every month. We are still in a early stage, based on this in 5-6 months. Every quarter we will have more data and be able to update this. We see that we made a good increase from 2023 to 2024, at 326%. We see that we will go from starting at almost 2 million in ARR to closing the year at 10 million. There, we will grow relatively steadily with new active units every month. This means that the percentage increase will decrease from year to year. We are based on the partners we have now. We will be able to close in 2029 with 85 million in recurring license revenues. We know that there will be more markets and more partners, but we will update that when we see that they have started. It is difficult for us to know exactly how fast we will find new partners until they are in action. When we know that, we will update the forecasts. We see that we are entering a completely different type of sector as a company. It is exciting to finally be able to show that we are growing every month. And as we grow steadily, the return of license revenues will be very good.

How does it look for the production capacity to deliver these volumes?

We have a very good production partner. As long as we set the volumes we will be able to produce in the next three months, we can produce 200-300 a day if needed, as long as the components are in stock.

What are your purchase routines?

We collect the forecasts from our partners. We need to know how much they need in the next six months. Then we estimate the next six months. Then we have a quarter meeting with our production partner and we have components for the next six months.

As I mentioned in the beginning, there are a couple of interesting orders that I have started to deliver. What are the orders that you have communicated so far? Is the idea that you will grow rather increase your existing collaboration or is it about adding more?

We have now entered a stage where we cannot communicate every little business. As we wrote in the monthly letter, we had two new municipalities in January that started up. We have seven more that will start up before the end of the Q1. This is something that we do not communicate, because it is now more our daily business. The same goes for our partners. What is important now is how we measure on each market and how we grow every month. However, we will communicate if we come out with bigger business and if we have a new partner that guarantees larger volumes. Otherwise, it will be more business on each partner every month. That is why we start this monthly letter, because it happens so much every month. We want to communicate this in the monthly letter and then update and follow this on the quarterly reports.

The result of the movement in the quarter was negative with a handful of millions. Now, as the change starts to take place, how do you see the cost development? How is the cost costume?

We see that we have reduced our costs for our daily burn rate as much as we can. In the process of increasing our license income, we will be positive about the cost costume. From there, the result will be good.

At the beginning of the quarter, you announced a new mission of about 9 million. How will this money be used and how far will it go? How do you see the need for liquidity?

They are there to ensure the production and the sales activities we have with our partners. They will help us in the phase we are in now to become cash flowers positive.

I think I have one final question. The turnover in 2024 was about 8 million, but the trade was about 9.5 million. It is a negative margin. How will this happen?

We have written down some of the law on the old dossier, which we have had some components. We have written down over 1 million. The first delivery of 1000 units was to a discounted price for the market. It was part of the campaign to get started on the market. I will have a better margin in the future. Plus, now that we are producing in larger volumes, we need to look at how we can scale down the production costs. We need to find a better way to buy components in larger volumes to reduce the costs. We need to change some of our suppliers to reduce production costs. We have now come to a stage where we can focus on those parts. We have not been relevant before, because we need to get the product out and get the licenses. We need to get the first big proof of concept, which we now have. Now we can start working on those parts.

I understand. That will be very exciting.

Thank you. It was fun to be able to ask questions. Thank you. I hope that you, just like me, look forward to the upcoming quarter reports and the quarter we take away during the year.

Absolutely. It was fun to be part of.

Good. Thank you very much.

Thank you very much.