CORRECTION Qlife Q4 2023
Earlier press release did not include the CEO statement and should have been marked with the MAR legend as it contains insider information.
Financial summary – fourth quarter 2023
- Revenue in the period amounted to kSEK 30 (1,097). Revenue includes sales of Egoo.Health devices and capsules for the device. Revenue in Q4 is solely from test orders of CRP capsules and Egoo systems.
- EBITDA for the period amounted to kSEK –9,466 (-16,843), and net loss kSEK –111,547 (-25,413).
- The total cash flow in the fourth quarter amounted to kSEK -6,095 (3,103).
- Earnings per share before/after dilution for the quarter amounted to SEK -0,019 (-1.17), calculated on weighted average number of shares in the period.
Financial summary – January-December 2023
- Revenue in the period amounted to kSEK 244 (17,993). Revenue includes sales of Egoo. Health devices and capsules for the device.
- EBITDA for the period amounted to kSEK -43,987 (-77,664), and net loss kSEK -159,956 (-93,141).
- The total cash flow from January to December amounted to kSEK -13,944 (-57,946).
- Earnings per share before/after dilution for 2023 amounted to SEK -0,46 (-5.46), calculated on weighted average number of shares in the period.
Significant financial events 2023
Auditors from BDO’s wording:
The European Securities and Markets Authority (ESMA) has previously noted in a public report that it is sceptical when an entity states that it has determined that no impairment exists when its market capitalisation is lower than the carrying amount of its listed equity instruments.
The market capitalisation of an entity represents strong external evidence of the value that market participants place on an entity, and therefore its fair value. Consequently, an entity would need to be able to assert that its value in use exceeds its fair value to avoid recording an impairment. (see letter of ceo for company statement)
Significant events – fourth quarter of 2023
- Qlife carries out a rights issue of units of approximately SEK 49.5 million
On December 12rd the board of directors of Qlife Holding AB (“Qlife” or the “Company”) has, subject to approval by the extraordinary general meeting on 16 January 2024, resolved to carry out an issue of 215,187,249 units, consisting of shares and warrants series TO 4 and TO 5, with preferential rights for the Company’s existing shareholders (the “Rights Issue”). Provided that the Rights Issue is fully subscribed, the Company will receive initial proceeds of approximately SEK 49.5 million before the deduction of issue costs. The Rights Issue is covered by guarantee
commitments of SEK 30.1 million, corresponding to approximately 61 percent of the Rights Issue. In order to secure the Company’s financing needs until the completion of the Rights Issue, the Company has secured a bridge financing amounting to SEK 5.0 million (2,5 mSEK in December and 2,5 mSEK after ekstraordinary meeting in 2024).
- Qlife signs a collaboration agreement with major Chinese industry partner Hipro.
On September 14th Qlife signed a Letter of Intent (LOI) with chinese major industry player, Hipro Biotechnology, to introduce Egoo Health to the Chinese market. On December 4th Qlife finalized and signed a comprehensive collaboration agreement with Hipro Biotechnology.
The collaboration consists four major parts:
- Regulatory Approvals: Hipro Biotechnology will navigate the regulatory landscape to secure vital approvals from the China Food and Drug Administration (NMPA) for Egoo Health which consist of the software, hardware and three test capsules. Hipro Biotechnology will cover all associated costs during the approval phase for Egoo Health.
- Commercialization in China: Following regulatory approvals, Hipro Biotechnology will lead the commercialization of Egoo Health in China, which includes marketing, sales, and distribution through Hipro’s distribution network directly to Chinese hospitals, along with overseeing the associated financial responsibilities.
- Hipro Biotechnology, a leading point-of-care diagnostics company with an extensive distribution network to more than 14,000 Chinese hospitals, will be responsible for the marketing, sales, and distribution of Egoo Health to Chinese hospitals. Hipro Biotechnology will solely cover associated costs and Qlife will receive royalties for products sold. Hipro is forecasting into the millions of Egoo tests sold during first full year expected to be 2025.
- Hipro Biotechnology will initially focus on the production of EgooCapsules and EgooCollect blood-to-plasma units. The production of Egoo instrument will remain in Scandinavia until the relationship has fully matured.
Significant events after the end of fourth quarter of 2023
- Qlife Holding announces the outcome of extraordinary general meeting January 16th 2024
The extraordinary general meeting resolved in accordance with the proposal from the board of directors to amend the provisions in the Articles of Association regarding the limits for the company’s share capital. In addition, the extraordinary general meeting resolved to reduce the company’s share capital by SEK 48,417,131.175, without redemption of shares, for allocation to non-restricted equity. The reduction of the share capital entails that the share’s quota value changes from SEK 0.08 to SEK 0.005 per share.
The extraordinary general meeting resolved in accordance with the proposal from the board of directors to approve the board of directors’ resolution of 12 December 2023 on a rights issue of a maximum of 215,187,249 units. Those who are registered as shareholders in the company on the record date 8 February 2024 will receive one (1) unit right per existing share. Three (3) unit rights entitle to subscription of one (1) unit in the company at a subscription price of SEK 0.23 per unit, which corresponds to a subscription price of SEK 0.01 per share. Each unit consists of twenty-three (23) new shares, eight (8) warrants series TO 4 (“TO 4”) and eight (8) warrants series TO 5 (“TO 5”). In total, the issue comprises a maximum of 4,949,306,727 shares, a maximum of 1,721,497,992 TO 4 and a maximum of 1,721,497,992 TO 5. One (1) TO 4 entitles the right to acquire one (1) new share in the company against cash consideration amounting to SEK 0.02 per share. One (1) TO 5 entitles the right to acquire one (1) new share in the company against cash consideration amounting to SEK 0.0225 per share. The TO 4 may be exercised during the period 7–21 June 2024. The TO
5 may be exercised during the period 21 November–5 December 2024
Upon full subscription of all shares that are issued in the rights issue, the share capital will increase with a maximum of SEK 24,746,533.635 (based on the new quota value after resolution by the extraordinary general meeting). Upon full subscription of all warrants series TO 4 that are issued in the rights issue, the share capital will increase with a maximum of SEK 8,607,489.96 (based on the new quota of SEK 0.005 per share). Upon full subscription of all warrants series TO 5 that are issued in the rights issue, the share capital will increase with amaximum of SEK 8,607,489.96 (based on the new quota of SEK 0.005 per share). The subscription period in the Rights Issue runs from and including 12 February 2024 up to and including 26 February 2024.
The extraordinary general meeting resolved in accordance with the proposal from the board of directors to amend the provisions in the Articles of Association regarding the limits for the company’s share capital. In addition, the extraordinary general meeting resolved to increase the company’s share capital by SEK 48,417,131.175 through a bonus issue, without issuing new shares, by transferring a corresponding amount from non-restricted equity.
The full report is attached and can also be found at here: https://qlifeholding.com/en/investors/finansiella-rapporter
Letter from the CEO
Focus on the collaboration with our Chinese partner
During the fourth quarter we signed a collaboration agreement with the Chinese company Hipro Biotechnology. The partnership is a direct result of our new Egoo Innovate-strategy, and during the latest months Qlife and Hipro have worked together to develop our relationship.
Qlife and Hipro fit well together
So far, it is very satisfying to see the good match in terms of both competences and technologies. Qlife brings an advanced micro lab for home use, the ability to innovate and qualified assay mechanical engineers. Hipro brings a highly professional production facility, a proven track record for getting IVD test regulatory approved as well as a big R&D team able to execute clinical studies, developing more biomarkers to the Egoo System faster.
During this initial period, Qlife has had two teams visiting Hipro in China. The collaboration between the technical teams, has progressed very well, I see a lot of respect and motivation from both sides.
Together with Hipro we have set a joint plan and targets that we are following on a continuous basis, and we are working closely with weekly Teams meetings.
Hipro is now working swiftly to conclude how they will go to market with our products. They will start with our system that filters plasma from whole blood. In parallel, they are assessing which test capsules they want to implement first.
Hipro puts resources into the project
I am impressed by the high quality of Hipro’s work. The people are competent and motivated, and the company are not afraid to put resources into the project. Already approximately 40 people from Hipro are involved in the activities in one or another way. I have a continuous contact with the Hipro-management and expect to meet them again already during a conference in February.
Right now, Hipro is also working in detail to secure that they understand everything in and around the Egoo System, and that everything is working the way they expect. Hipro aim to start the work with regulatory approvals during the first half of 2024, and we hope that we will have Egoo on the Chinese market during 2024.
Additionally, it is very satisfying to know that all the work that Hipro is doing to get regulatory approval also can be used for UKCA approval and CE-marking in Europe. It is much faster to do the tests in China than to do it ourselves, which means that we really can leverage the Chinese relationship in different ways.
Therefore, we have slightly changed our strategy regarding regulatory approvals in the UK & EU. We are now working on quickly obtaining data from China to use them in our regulatory work aiming for approvals in UK & Europe. This is a much more cost-efficient way of getting regulatory approvals and possibly means that we can move several more tests through the regulatory process.
UK and potential new partnerships
In UK, we have identified the possibility of self-declaring our Egoo Test Capsules, opening the possibility to sell approved (UKCA) test to hospital-at-home, pharmacies, and health practitioners. UK are still, and for at least 2024, following the IVDD as opposed to the IVDR in the EU. Hence we can self-declare in the UK during this year and have the Egoo System on the UK market, where the general demand is big for new solutions to improve health offerings and in particular biomarker tests.
We see a big potential in the UK market and a great interest in selling Egoo. We have initiated dialogue with multiple potential partners. We expect to launch the Egoo System with multiple tests in the second half of 2024, providing us the opportunity to setup the right and reliable partners. Thanks to the collaboration with Hipro and the access to their highly optimized reagents we now can move new biomarkers forward quickly and implement on Egoo.
Besides the intense collaboration work with Hipro, we are working on other new partnerships, and have some very promising contacts, but it is still early discussions.
Significant financial statement 2023
There have been extensive ongoing discussions with the auditors regarding the valuation of the company.
Their determination suggests that the valuation of the shares of subsidiaries held by the parent company should be adjusted to the stock market value of kSEK 12,911. Concurrently, the receivables from the subsidiary should be zeroed out, amounting to kSEK 116,325, resulting in equity nearing zero at kSEK 773. Additionally, for the group, this entails a negative impact as the value of capitalized development costs will also be written down to kSEK 12,911, representing a total write-down of kSEK 87,201.
The management do not perceive the year-end value as indicative of the true value of the company. The management anticipate that the future value of the company will be significantly higher, particularly through our collaboration with Hipro, which has yet to be substantiated.
Purpose of the upcoming rights issue
After the third quarter, we announced a new rights issue with the target to finance the company until we see sales from China. The rights issue will initially give us financing for the first half of 2024. It then follows by a TO4 warrant in June with the purpose to finance the rest of 2024, followed by a TO5 warrant in November/December 2024 that will take us to the point where we start to see revenues from China and the UK.
Helsingborg, 8 February 2024
Thomas Warthoe, CEO