HOYLU AB€¦ · INTERIM REPORT Q3 2018 OVERVIEW Page 1 Interim Report Q3 2018 Overview FIRST NINE...

HOYLU AB Interim Report

Q3 2018

TABLE OF CONTENTS

This Interim Report includes:

Interim Report Q3 2018 Overview _____________________________________________________________ 1

Comments from the CEO ________________________________________________________________________ 6

Financial Information ___________________________________________________________________________ 8

Financial Reports First Nine Months 2018 ___________________________________________________ 11

Contact Details __________________________________________________________________________________ 17

All amounts are in thousand kr (KSEK) unless otherwise stated

INTERIM REPORT Q3 2018 OVERVIEW

Page 1

Interim Report Q3 2018 Overview

FIRST NINE MONTHS 2018

• Revenues for the first nine months were SEK 20.4 million (15.8)

• Gross margin was 69 percent (69)

• Operating loss amounted to SEK 22.0 million (-17.7)

• Profit after tax amounted to SEK -22.9 million (-18.0)

• Earnings per share amounted to SEK -1.57 (-2.05)

THIRD QUARTER 2018

• Revenues for the third quarter were SEK 9.0 million (5.9)

• Gross margin was 67 percent (67)

• Operating loss was SEK 5.7 million (-6.8)

• Profit after tax amounted to SEK -6.2 million (-7.1)

• Earnings per share amounted to SEK -0.42 (-0.70)

REMARKS ON THE BALANCE SHEET

• The total assets at the end of the period was MSEK 56.5 (40.7)

• Total cash at the end of the period was MSEK 1.3 (1.3)

• The total accounts receivable at the end of the period was MSEK 10.9 (5.7)

• The total accounts payable at the end of the period was MSEK 9.7 (5.5)

• Total liabilities at the end of the period was MSEK 43.4 (19.9)

• The Equity at the end of the period amounted to MSEK 13.2 (20.8)


Page 2

IMPORTANT EVENTS IN THE THIRD QUARTER

• Entered into a reseller and distribution agreement with Diversified, a full-service systems and media

technology integration company located in New Jersey, US.

• Received written orders and verbal commitments for delivery in Q3 and Q4 valued at about 11 MSEK

from customers such as Holland America Line, Skanska, Daimler, Bene, Barton Malow and LAX

Integrated Express Solutions.

• Entered into a reseller and distribution agreement with ED Corp, a full-service systems and media

technology integration company located in South Korea, with offices in Vietnam, Hong Kong, China,

Singapore and USA.

• Satoshi Nakajima joined Hoylu as Chief Technology Officer and President of Hoylu Japan.

• Received an order from the United States Army for the Hoylu Software and the large format HoyluWall

system as a digital workspace tool for workspace collaboration, process planning and ideation.

• Received an additional order from InterSystems, a US headquartered software solutions company

specializing in Healthcare, Business and Government.

• Received an order from the United States Air Force for Hoylu Software and multiple large format

HoyluWall systems as a digital workspace tool for workspace innovation and collaboration. The Hoylu

software will be used at multiple sites to create joined environments within the division. The order

will be delivered in Q4 2018 and represents a deal value of SEK 3,670,000.


Page 3

We have made several important product updates to expand our reach, offer frequently requested features, and

make it easier for enterprises to adopt Hoylu. Here are just a few of the highlights:

VISUAL PARTICIPANTS IN CONNECTED WORKSPACES™

All Connected Workspaces™ will now

show the active participants within the

workspace as represented by icons in the

upper right part of the screen. The icons

show the signed-in users and will update

in real-time as users come in and out of the

workspace.

BACKGROUNDS & GRIDS

Users can now lock elements to the background

of a workspace, allowing the ability to create

custom templates and forms per page. Any

number of elements can be locked to the

background, which also enables the ability to

create a “snapable” grid for organized work.

IMPROVED IMAGE LIBRARY

Hoylu Suite applications now offer an improved image

library display for importing of images. This makes it more

convenient to add directories of images and elements to the

workspace, and allows for quicker importing. We have also

added support for SVG files.

For any shared workspace, all users who

are viewing the workspace will appear in

the upper right corner of the screen with

their initials as icons.

Selecting any image allows you to select “Background” to place it onto the background of the workspace to customize the page.

A grid can be set with items that are locked in the background. The grid auto-detects and will help align items both horizontally and vertically.


Page 4

EVENTS AND CUSTOMER ACTIVITIES

DIVERSIFIED TRAINING

AIR FORCE DEMO

LG TECH TOUR

AUTODESK PREP


Page 5

DAIMLER VISIT

PROCTER & GAMBLE VISIT

UNIVERSITY of CONNECTICUT HCT DUBAI UNIVERSITY

SKANSKA FUTURE LAB

COMMENTS FROM THE CEO

Page 6

Comments from the CEO

A growing number of organizations chose Hoylu for their collaboration needs. Business momentum increased

in Q3 with SEK 9 million in revenue, an increase of 50% from Q2. Our strategy to work closely with our large

enterprise customers is starting to pay off. We received additional orders from Holland America Line, Daimler,

Skanska, Barton Malow and others as they continue to see positive benefits across their organizations. We also

added several new customers across a variety of industries including construction as LINXS installed Hoylu to

use for a large infrastructure project at LAX airport in Los Angeles. We received orders from both the United

States Army and the United States Airforce for a combined value of more than SEK 4 million and delivery in Q4.

We continued to expand our global partner and reseller network. We signed a reseller agreement with

Diversified US who has more than 30 offices and is serving Fortune 500 customers around the world. We also

signed a reseller agreement with ED Corp, located in South Korea, with offices in Vietnam, Hong Kong, China

and Singapore. ED Corp services 750 school locations with more than 50,000 students and expect to start selling

Hoylu software licenses and subscriptions beginning mid-November. We officially registered Hoylu Japan KK in

Q3 and we were pleased to announce that Satoshi Nakajima joined Hoylu as CTO and President of Hoylu Japan.

With security requirements completed from our large enterprise customers we will shift our focus to growing

the user base of SaaS (Software as a Service) customers. Enterprises can now utilize Azure Active Directory

services to authenticate users within their domain and users will be automatically logged in to Hoylu Connected

Workspaces™, creating a fast and easy experience that company IT organizations can easily implement and

manage.

Our product portfolio is continuously improving, and customers use our products daily for planning, process

flows, mind maps, document reviews, brainstorming, scheduling, and more. We have expanded our reach with

connection from nearly every web-enabled device: from large scale projection walls to laptops to smartphones,

all combined to activate anytime collaboration on a large selection of languages for a personalized experience.

COMMENTS FROM THE CEO

Page 7

FUTURE OUTLOOK

Our momentum continues to build and we will continue our growth focus by strengthening our relationship

with our customers and partners. We have several larger opportunities with existing customers as well as new

opportunities within government institutions, education and global brands. We entered into Q4 with a strong

order backlog and we are therefore confident that the growth will continue. Our goal is to reach EBITDA break

even in Q4.

EVENTS AFTER THE END OF THE PERIOD

• Received an order from Walbridge, a global, full-service construction firm headquartered in Detroit,

MI. The order represents an expansion of Hoylu's business within the construction industry with high-

end architectural design and delivery for a client in the US Automotive industry.

• Announced that it has signed an additional exhibit to the reseller agreement with South Korean

integration company ED Corp. This exhibit sets a forecast of SAAS revenue targeting 1,000 displays at

750 school locations and identifies additional growth of 15,000 student licenses per month.

• Announced that Jon Ullmark will take up position as General Manager for EMEA and deputy CEO for

Hoylu AB starting December 1, 2018. Jon currently serves as a non-executive director and board

member of Hoylu AB. Jon will be based out of Stockholm and report to Stein Revelsby.

• Hoylu’s Board resolved to carry out a directed issue, with derogation from shareholders' pre-emption

rights, of convertible loan notes to chosen shareholders of MSEK 10. The board also resolved,

conditional upon approval from a general meeting, to carry out a rights issue with reparation character

and with pre-emption rights for remaining shareholders of convertible loan notes of up to MSEK 10.

STEIN REVELSBY CHIEF EXECUTIVE OFFICER

NOVEMBER 2018

FINANCIAL INFORMATION

Page 8

Financial Information

REVENUES & PROFITABILITY

Revenues for the first nine months of 2018

amounted to MSEK 20.4 (15.8) and consisted of

revenue from the sale of the Hoylu Suite via resellers

and the sale of the HoyluWall, software product, and

professional services.

Cost of goods and services sold was MSEK 6.4 (4.9)

and EBITDA amounted to MSEK -17.7 (-16.1).

The operating result was MSEK -22,0 (-17.7).

The net result for the first nine months of 2018

amounted to MSEK -22.9 (-18.0).

FINANCIAL POSITION

Cash flow from operating activities in the first nine

months of 2018 amounted to MSEK -10.6 (-14.7).

Cash flow from investment activities amounted to

MSEK -7.3 (-23.0) and the cash flow from financing

activities was MSEK 14.6 (38.9).

Cash-flow for the first nine months of 2018 was

MSEK -3.3 (1.2) and the liquid assets at the end of

the quarter was MSEK 1.3 (1.3).

Hoylu will consider strengthening its working

capital through share issues when necessary to

finance its growth and with the objective to

maximize value creation and minimize dilution for

existing shareholders.

CAPITALIZED EXPENSES

Hoylu continues to capitalize its investments in

research and development efforts associated with

Hoylu’s Anytime Collaboration and Insight products.

During the first nine months of 2018 Hoylu

capitalized product development costs in the

amount of SEK 7.3 million, which represents 19% of

the Company’s total operating costs.

EMPLOYEES & ORGANIZATION

Hoylu has a total headcount of 29; 20 in the US, 8 in

the EU, and 1 in Japan. Hoylu’s headquarters is in

Malmo, Sweden.

Product management and software development

activities are based in Seattle, US.

DEPRECIATION & AMORTIZATION

Intangible and tangible assets are stated at cost less

amortization and depreciation. Expenditures

directly attributable to the cost of the asset is

included in the cost of the asset.

Amortization and Depreciation is linear as follows:

Goodwill 10 years

Other Intangible Assets 5 years

Machinery Equipment 3 years

Furniture & Fixtures 5 years


Page 9

MARKET

The global enterprise collaboration market size is

estimated to grow from USD 26.7 billion in 2016 to

USD 49.5 billion by 2021, at a compound annual

growth rate of 13.2%. (1)

The worldwide market for collaboration software

used in the enterprise is estimated to grow from

USD 7.1 billion in 2015 to USD 8.4 billion in 2020 (2)

While Hoylu’s main market is Europe and the US,

Hoylu has also established relationships with

resellers for the Asian market.

The Company believes enterprises with more than

50 employees will be the main buyers of Hoylu’s

enterprise collaboration solutions. Data from OECD

SDBS database shows a total of approximately

640,000 enterprises with at least 50 employees each

and more in Hoylu’s main markets with a total of

150,000 enterprises in the US alone.

(1)http://www.marketsandmarkets.com/PressReleases/enterpri

se-collaboration.asp

(2) https://www.appsruntheworld.com/top-10-collaboration-

software-vendors-and-market-forecast-2015-2020/

RELATED PARTY TRANSACTIONS

There were no related party transactions during the

period.

FINANCIAL CALENDAR

Interim Report – Q3 2018 9 Nov. 2018

Interim Report – Q4 2018 8 Feb. 2019

Interim Report – Q1 2019 16 May. 2019

Annual General Meeting 16 May. 2019

RISKS AND UNCERTAINTIES

An investment in Hoylu’s shares is associated with

certain risks.

Hoylu’s business is affected, and may be affected, by

numerous factors which are not possible for Hoylu

at all, or in part, to control.

Such factors may adversely affect the Company’s

business, financial position and profits in the future

or may lead to a decrease of the share price and that

the investors could lose part or all of their

investment.

Certain risks are associated with the Company and

other do not have any specific connection to the

Company. Investors should carefully analyze the

specific risk factors as well as other information in

the Company Description prior to deciding whether

to make an investment in the Company or not.

ACCOUNTING PRINCIPLES

The interim report for Hoylu has been prepared in

accordance with the Annual Accounts Act and the

Swedish Accounting Standards Board on annual

report, and consolidated financial statements

BFNAR 2012: 1 (K3) as well as the Swedish

Securities Market Act.

The K3 financial reporting framework is comparable

to International Financial Reporting Standard’s

(IFRS) for Small and Medium enterprises. The

parent company has in preparation of this interim

report applied the same accounting and valuation

principles as Hoylu.


Page 10

AUDITORS REVIEW

This report has not been subject to review by the

Company’s auditor.

SHARE DATA

The Hoylu share is listed on the NASDAQ First North

in Stockholm.

The total number of shares at the end of the period

amounted to 14,865,711.

ABOUT HOYLU

Hoylu delivers innovative solutions to allow global

collaborative teams plan, create and share

information that will enrichen the user experience in

the virtual office. The Hoylu Suite delivers a

comprehensive set of personalized digital

workspaces to enable teams across locations, on any

device, to work smarter and with more fun across

major industries including Engineering, Education,

Pharmaceutical, Construction, Manufacturing,

Graphic Design and many more.

For more information visit: www.hoylu.com or

www.introduce.se/foretag/hoylu

http://www.hoylu.com/

http://www.introduce.se/foretag/hoylu

FINANCIAL REPORTS FIRST NINE MONTHS 2018

Page 11

Financial Reports First Nine Months 2018

CONSOLIDATED INCOME STATEMENT IN SUMMARY

2018 2017 2018 2017 2017

KSEK Jul-Sep Jul-Sep Jan-Sep Jan-Sep Jan-Dec

Net sales 8,979 5,942 20,405 15,831 27,322

Cost of goods and services sold -2,961 -1,969 -6,389 -4,849 -8,632

Gross profit 6,018 3,973 14,017 10,982 18,690

Development, Sales, and Administrative Costs -10,247 -9,939 -31,721 -24,537 -34,589

Other operating income/cost * 0 0 0 -2,529 -2,749

Depreciation/Amortization -1,430 -864 -4,280 -1,638 -2,888

Operating profit/loss -5,659 -6,830 -21,984 -17,722 -21,536

Other financial items -528 -218 -855 -228 -375

Profit before taxes -6,187 -7,048 -22,839 -17,950 -21,911

Taxes 0 -5 -26 -10 -28

Profit/loss for the period -6,187 -7,053 -22,866 -17,959 -21,938

Key ratios:

Gross margin 67.0% 66.9% 68.7% 69.4% 68.4%

Operating margin Neg Neg Neg Neg Neg

Earnings per share before and after dilution -0.42 -0.70 -1.57 -2.05 -2.35

Average number of shares before and after dilution 14,865,711 10,073,332 14,610,003 8,761,481 9,334,444

* Costs related to the IPO (legal and finance)


Page 12

CONSOLIDATED BALANCE SHEET IN SUMMARY

KSEK 9/30/2018 9/30/2017 12/31/2017

Intangible fixed assets 38,430 23,750 29,852

Cumulative Amortization -6,038 -1,335 -2,371


Tangible assets 2,404 2,314 2,429

Cumulative Depreciation -1,019 -271 -470

Tangible assets 1,386 2,043 1,960

Financial fixed assets 7,040 6,454 6,482

Total fixed assets 40,818 30,912 35,923

Inventories 1,728 1,353 1,826

Accounts receivable 10,908 5,655 10,819

Other current assets 1,795 1,508 2,332

Liquid assets, including current investments 1,265 1,294 4,529

Total current assets 15,697 9,809 19,506

Total assets 56,515 40,721 55,429

Total equity 13,153 20,793 27,278

Other long term liabilities 0 5,000 5,015

Total long-term liabilities 0 5,000 5,015

Accounts payable 9,705 5,469 9,428

Other current liabilities ** 33,658 9,459 13,707

Total current liabilities 43,362 14,928 23,136

Total liabilities and shareholders equity 56,515 40,721 55,429

** Primarily consists of various note payables, including the convertible notes of 15.25M that were recently issued


Page 13

CONSOLIDATED CASH FLOW STATEMENT IN SUMMARY

2018 2017 2018 2017 2017

KSEK Jul-Sep Jul-Sep Jan-Sep Jan-Sep Jan-Dec

Operating Profit (Loss) -5,659 -6,830 -21,984 -17,722 -21,536

Depreciation, amortisation 1,430 864 4,280 1,638 2,841

Interest Received 0 0 0 0 0

Interest Pa id -61 61 -409 -1 -435

Taxes 0 -5 -26 -8 -28

Foreign exchange Gain or Loss 0 0 4 -10 66

Incentive Programs 0 0 0 0 124

Trans lation di fferences -535 -153 947 2,103 -1,553

Cash flow from operating activities before changes in

working capital -4,825 -6,063 -17,187 -14,000 -20,520

Change in operating receivables 242 -672 242 -6,763 -13,151

Change in inventory -4 -173 98 -1,353 -1,426

Change in operating liabilities 3,039 -290 6,291 7,378 22,674

Cash flow from operating activities -1,548 -7,198 -10,556 -14,738 -12,424

Intangible assets -2,080 -2,442 -7,276 -14,398 -14,014

Fixed assets 0 -32 0 -1,826 -1,941

Financial fixed assets 0 0 0 -6,762 -6,762

Cash flow from net capital expenditures -2,080 -2,474 -7,276 -22,986 -22,718

Total cash flow before financing activities -3,628 -9,672 -17,832 -37,724 -35,142

New share issue 0 0 10,031 30,349 33,920

Change in financial liabilities 1,111 3,570 4,535 8,570 5,652

Cash flow from financing activities 1,111 3,570 14,566 38,919 39,572

Cash flow for the period -2,517 -6,102 -3,266 1,195 4,430

Liquid assets at the beginning of the period 3,782 7,396 4,531 99 99

Liquid assets at the end of the period 1,265 1,294 1,265 1,294 4,529


Page 14

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

KEY RATIOS

KSEK

Opening balance October 18, 2016 0 0 0 0 0

Profi t/loss from 1 Oct 2016 to 31 Dec 2017 -22,555 -22,555

Incentive Program 124 124

Trans lation Di fferences -1,553 -1,553

Private Placement 100 0 100

Private Placement 200 24,680 24,880

Acquis i tion - We-Inspire 24 3,416 3,440

Convertible Note Convers ion - Nada Yada 352 148 500

Acquis i tion - Creative Minds 33 2,047 2,080



Private Placement 11,306 11,306

Closing balance 31 December 2017 932 11,306 39,108 -1,553 -22,431 27,362

Profi t/loss from Jan 1, 2018 to Sep 30, 2018 -22,672 -22,672

Trans lation Di fferences 1,493 1,493

Private Placement 234 -11,306 15,129 4,058

Convertible Note Convers ion 60 0 2,853 2,913

Closing balance September 30, 2018 1,226 0 57,090 -60 -45,102 13,153

Shareholders

EquityShare Capital

Ongoing Share

Issue

Other Capital

Contributed

Translation

Reserves

Profit/(Loss)

Brought Forward

2018 2017 2018 2017 2017

TSEK Jul-Sep Jul-Sep Jan-Sep Jan-Sep Jan-Dec

Cash flow for the period -2,517 -6,102 -3,347 1,195 4,430

Cashflow / share before and after dilution (SEK) 1 -0.17 -0.61 -0.23 0.14 0.47

9/30/2018 12/31/2017

Equity/assets ratio 23.3% 49.2%

Number of shares 14,865,711 11,299,999

Shareholders equity per share (kr) 0.88 2.41

1 Based on the weighted average number of shares and outstanding warrants for each period.


Page 15

PARENT COMPANY – INCOME STATEMENT IN SUMMARY

2018 2017 2018 2017 2017

TSEK Jul-Sep Jul-Sep Jan-Sep Jan-Sep Jan-Dec

Net sales 2,660 3,669 8,304 4,586 13,430

Cost of goods and services sold -1,069 -1,182 -2,842 -1,364 -4,289

Gross profit 1,591 2,487 5,462 3,223 9,140

Development, Sales, and Administrative Costs -2,258 -3,211 -9,496 -9,022 -14,146

Other operating income/cost *** 0 0 0 -2,529 -2,749

Depreciation/Amortization -384 -274 -1,152 -482 -988

Operating profit/loss -1,051 -998 -5,185 -8,810 -8,743

Other financial items -293 -216 -234 -222 -30

Profit before taxes -1,344 -1,214 -5,419 -9,033 -8,773

Taxes 0 0 0 -5 0

Profit/loss for the period -1,344 -1,214 -5,419 -9,037 -8,773

*** Costs related to the IPO (legal and finance)


Page 16

PARENT COMPANY –BALANCE SHEET IN SUMMARY

KSEK 9/30/2018 9/30/2017 12/31/2017

Intangible fixed assets 8,147 0 8,147

Cumulative Amortization -1,525 0 -708


Tangible assets 1,339 0 1,339

Cumulative Depreciation -615 0 -280

Tangible assets 725 1,171 1,060

Financial fixed assets 12,459 12,459 12,459

Total fixed assets 19,805 17,899 20,957

Inventories 1,314 718 1,409

Accounts receivable 3,802 2,552 7,519

Other current assets 53,817 27,376 32,755

Liquid assets, including current investments 161 543 3,990

Total current assets 59,094 31,189 45,673

Total assets 78,899 49,088 66,630

Total equity 43,914 30,643 42,293

Other long term liabilities 0 5,000 5,000

Total long-term liabilities 0 5,000 5,000

Accounts payable 7,051 4,447 7,191

Other current liabilities **** 27,935 8,997 12,146

Total current liabilities 34,985 13,445 19,337

Total liabilities and shareholders equity 78,899 49,088 66,630

**** Primarily consists of various note payables, including the convertible notes of 15.25M that was recently issued

CONTACT DETAILS

Page 17

Contact Details

HOYLU AB REGISTERED ADDRESS: Tunnbindaregatan 37C 602 21 Norrköping Sweden POSTAL: Tunnbindaregatan 37C 602 21 Norrköping Sweden US ADDRESSES: SEATTLE Hoylu, Inc. 720 4th Ave. Suite 120 Kirkland, WA 98033 LOS ANGELES Hoylu, Inc. 3900 W Alameda Ave, #1200, Burbank, CA 91505 AUSTRIA ADDRESS: w’inspire GmbH Peter-Behrens-Platz2 4020 Linz Austria www.hoylu.com [email protected]

BOARD OF DIRECTORS Mats Andersson, Chairman of the Board Stein Revelsby, Member of the Board, CEO Jon Ullmark, Member of the Board Ian Sandmael, Member of the Board

EXECUTIVE OFFICERS Stein Revelsby, Member of the Board, CEO Karl Wiersholm, CFO Travis Beaven, CPO Neil Fishman, Chief Engineer Christi McCorkle, CMO Satoshi Nakajima, CTO

AUDITOR Per-Arne Pettersson, Deloitte AB

CERTIFIED ADVISOR Mangold Fondskommission AB Engelbrektsplan2 114 34 Stockholm Sweden +46 (0) 503 01 550 [email protected]

MARKETPLACE Nasdaq First North Stockholm Ticker: HOYLU

LEGAL DISCLAIMER Certain statements in this report are forward-looking and the

actual outcomes may be materially different. In addition to the

factors discussed, other factors could have an impact on actual

outcomes. Such factors include developments for customers,

competitors, the impact of economic and market conditions,

regulations, technological developments, exchange rates

fluctuations and market conditions and political risks.

mailto:[email protected]

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