Irisity

PRESS RELEASE - Irisity AB (publ) completes the acquisition of Ultinous and resolves on new share issues

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As announced on 28 February 2024, Irisity AB (publ) ("Irisity" or the "Company") entered into a binding term sheet to acquire 100 per cent of the shares in Ultinous Zrt ("Ultinous") for a consideration of SEK 45 million on a cash and debt free basis (the "Acquisition"). The Acquisition has been subject to national FDI Regulation requiring approval from Swedish and Hungarian authorities, both of which have been approved. Thus, the Acquisition has today been completed. The Company's Board of Directors has resolved to finance the Acquisition through an issue in kind entailing 9,000,000 new shares in Irisity at a subscription price of SEK 5.00 per share (the "In-kind Issue"). In connection with the Acquisition, and as part of the term sheet, Stockhorn Capital AB (founded by Gustav Andersson and Inna Kaushan) has invested SEK 45 million in Irisity through a directed share issue on the same terms as the In-kind Issue, i.e., SEK 5.00 per share (the "Directed Issue") which has secured the Company's liquidity needs.

Ultinous, founded in 2014, is a Swedish-Hungarian AI company specializing in Nvidia-based AI video analytics, with offices in Budapest and Malmö. Their Ultinous AI Suite offers forensic and real-time video analytics for safety, security, and video-to-data analytics needs, available for both on-prem and cloud environments. Ultinous will enhance Irisity's current product offering by incorporating sophisticated video analytics and creating synergies, while providing a new development hub and access to top-tier talent for global market solutions. The acquisition of Ultinous is expected to create future growth opportunities for both Ultinous as a stand-alone and within the Irisity group.

"We are pleased to announce the closing of the acquisition of Ultinous, which allows us to immediately address the significant AI software growth potential in industrial safety use cases while enhancing our development capabilities with a new hub in Budapest. This strategic acquisition, combined with our ongoing streamlining initiatives, is expected to save costs and improve profitability by optimizing resource management and development efficiency" says Keven Marier, CEO of Irisity.

Financing and terms and conditions

The In-kind Issue

As announced 28 February 2024, the purchase price for all Ultinous shares, on a cash and debt free basis, amounts to SEK 45 million and will be paid by way of the In-kind Issue consisting of 9,000,000 new shares in Irisity at a subscription price of SEK 5.00 per share. The Board of Directors of Irisity has, based on the authorization given by the extraordinary general meeting held on 19 March 2024, today resolved on the In-kind Issue.

The subscription price has been set after arm's length negotiations with the sellers of Ultinous, and it is the Board of Directors' assessment that the subscription price is on market terms and conditions. The reason for deviating from the shareholders preferential rights is that a prerequisite for Irisity to be able to complete the acquisition of Ultinous is that Irisity pays the purchase price by issuing its own shares to the sellers of Ultinous.

The Directed Issue

In connection with the Acquisition, and as part of the term sheet, Stockhorn Capital AB (founded by Gustav Andersson and Inna Kaushan) has invested SEK 45 million in Irisity through the Directed Issue on the same terms as the In-kind Issue, i.e., SEK 5.00 per share. The Board of Directors of Irisity has resolved on the Directed Issue based on the authorization given by the extraordinary general meeting held on 19 March 2024.

As announced 28 February 2024, the Company's Board of Directors has conducted a comprehensive assessment and carefully considered the option of raising capital through a rights issue. However, considering the current market conditions, the Board of Directors believes that, for example, it would pose a risk to the Company's ability to meet its capital needs and maintain an optimal capital structure. The reasons for deviating from raising capital through a rights issue are (i) that the Directed Issue can be carried out in a more time-efficient manner and at a lower cost and with less potential market volatility, (ii) that considering the current market conditions and the market volatility observed, the Board of Directors has assessed that a rights issue would likely require significant underwriting from an underwriting consortium, which would incur additional costs and/or further dilution for shareholders depending on the type of consideration paid for such underwriting commitments, particularly considering the total proceeds of the Directed Issue, (iii) that it would likely need to be made at a lower subscription price given the discount levels for rights issues carried out in the market recently, (iv) unlike the implementation of a rights issue, the Directed Issue means that the Company's shareholder base is complemented with a financially strong owner, which is expected to strengthen Irisity's long-term ability to implement the Company's growth strategy, and (v) that Stockhorn Capital, being a strategic long term investor, will contribute with experience and knowledge. The Board of Directors' overall assessment is that the reasons for implementing the Directed Issue with deviation from the shareholders' pre-emptive rights outweigh the reasons justifying the main rule that new share issues should be carried out with pre-emptive rights for shareholders and that an issuance of new shares with deviation from the shareholders' pre-emptive rights is in the interest of Irisity and all shareholders. The subscription price for the newly issued shares has been determined by the Board of Directors following arm's length negotiations with Stockhorn Capital AB and entails a premium compared to the closing price of the Iristy share of approximately 10 per cent as of the date of the term sheet, 28 February 2024, and approximately 29 per cent as of 28 May 2024. Consequently, the Board of Directors considers that the subscription price is therefore market based.

The net proceeds from the Directed Issue are intended to be used for:

• repayment of Irisity's approximately MSEK 11.7 loan to DBT Capital AB and
• working capital to support Irisity on the continued trajectory of growth and profitability.

As communicated in the Q1 report, the completion of the Directed Issue to Stockhorn has secured the Company's liquidity needs.

Dilution

Through the In-kind Issue, Irisity's share capital will increase by SEK 810,000 to SEK 5,240,694.24 and the number of shares and votes in the Company will increase by 9,000,000 to 58,229,936. Furthermore, through the Directed Issue, Irisity's share capital will increase by SEK 810,000 to SEK 6,050,694.24 and the number of shares and votes in the Company will increase by 9,000,000 to 67,229,936. The total dilution after the In-kind Issue and the Directed Issue will result in a dilution of approximately 26.8 per cent of the number of shares and votes in Irisity.

Lock-up undertakings

The sellers of Ultinous have undertaken not to divest any shares in Irisity for a period of two (2) years from the date of completion of the Acquisition. The lock-up is conditional upon that some of Irisity's existing shareholders, among others Aktiebolaget Westergyllen and Sun Red Beach Growth Partner aps, maintain their shareholding in Irisity for the same period.

Advisors

Irisity has engaged Penser by Carnegie, Carnegie Investment Bank AB (publ) and Advokatfirman Vinge KB as financial and legal advisers, respectively, in connection with the transactions described herein.

For further information:

Keven Marier, Irisity CEO‬‬‬‬‬

Phone: +46 771 41 11 00

E-mail: keven.marier@irisity.com

https://irisity.com

This is information that Irisity AB (publ) is obliged to make public according to the EU's market abuse regulation. The information was submitted for publication, through the contact person above, at 10:00 CEST on 29 May 2024.

About Irisity

Irisity AB (publ) is a world-leader in AI-powered video analytics solutions for enhanced safety and security. As of October 13, 2021, Agent Vi is part of Irisity. Founded in 2006, Irisity has offices in Sweden (HQ), Israel, USA, Singapore, UAE, Colombia, Brazil, Argentina, Australia, United Kingdom. The company is serving a network of integrators, distributors, and technology partners globally.

The Irisity AB (publ) share is listed on Nasdaq First North Growth Market, with the ticker IRIS, the Company's Certified Adviser is Carnegie Investment Bank AB (publ), certifiedadviser@carnegie.se.

Important information

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Forward-looking statements

This press release contains forward-looking statements that reflect the Company's intentions, beliefs, or current expectations about and targets for the Company's future results of operations, financial condition, liquidity, performance, prospects, anticipated growth, strategies and opportunities and the markets in which the Company operates. Forward-looking statements are statements that are not historical facts and may be identified by words such as "believe", "expect", "anticipate", "intend", "may", "plan", "estimate", "will", "should", "could", "aim" or "might", or, in each case, their negative, or similar expressions. The forward-looking statements in this press release are based upon various assumptions, many of which are based, in turn, upon further assumptions. Although the Company believes that the expectations reflected in these forward-looking statements are reasonable, it can give no assurances that they will materialize or prove to be correct. Because these statements are based on assumptions or estimates and are subject to risks and uncertainties, the actual results or outcome could differ materially from those set out in the forward-looking statements as a result of many factors. Such risks, uncertainties, contingencies and other important factors could cause actual events to differ materially from the expectations expressed or implied in this release by such forward-looking statements. The Company does not guarantee that the assumptions underlying the forward-looking statements in this press release are free from errors and readers of this press release should not place undue reliance on the forward-looking statements in this press release. The information, opinions and forward-looking statements that are expressly or implicitly contained herein speak only as of its date and are subject to change without notice. Neither the Company nor anyone else undertake to review, update, confirm or to release publicly any revisions to any forward-looking statements to reflect events that occur or circumstances that arise in relation to the content of this press release, unless it is not required by law or Nasdaq First North Growth Market Rulebook for Issuers.

Information to distributors

Solely for the purposes of the product governance requirements contained within: (a) EU Directive 2014/65/EU on markets in financial instruments, as amended ("MiFID II"); (b) Articles 9 and 10 of Commission Delegated Directive (EU) 2017/593 supplementing MiFID II; and (c) local implementing measures (together, the "MiFID II Product Governance Requirements"), and disclaiming all and any liability, whether arising in tort, contract or otherwise, which any "manufacturer" (for the purposes of the MiFID II Product Governance Requirements) may otherwise have with respect thereto, the shares in the Company have been subject to a product approval process, which has determined that such shares are: (i) compatible with an end target market of retail investors and investors who meet the criteria of professional clients and eligible counterparties, each as defined in MiFID II; and (ii) eligible for distribution through all distribution channels as are permitted by MiFID II (the "Target Market Assessment"). Notwithstanding the Target Market Assessment, Distributors should note that: the price of the shares in the Company may decline and investors could lose all or part of their investment; the shares in the Company offer no guaranteed income and no capital protection; and an investment in the shares in the Company is compatible only with investors who do not need a guaranteed income or capital protection, who (either alone or in conjunction with an appropriate financial or other adviser) are capable of evaluating the merits and risks of such an investment and who have sufficient resources to be able to bear any losses that may result therefrom. The Target Market Assessment is without prejudice to the requirements of any contractual, legal or regulatory selling restrictions in relation to the transaction described herein. Furthermore, it is noted that, notwithstanding the Target Market Assessment, the financial adviser will only procure investors who meet the criteria of professional clients and eligible counterparties.

For the avoidance of doubt, the Target Market Assessment does not constitute: (a) an assessment of suitability or appropriateness for the purposes of MiFID II; or (b) a recommendation to any investor or group of investors to invest in, or purchase, or take any other action whatsoever with respect to the shares in the Company.

Each distributor is responsible for undertaking its own target market assessment in respect of the shares in the Company and determining appropriate distribution channels.

This is a translation of the Swedish version of the press release. In case of discrepancies, the Swedish wording shall prevail.