Modelon

Notice to the extraordinary general meeting for resolution on approval of the Rights Issue, which will be held on 7 June 2024, will be announced through a separate press release.

Summary

• The Board of Directors of Modelon has today resolved on the Rights Issue, conditional on the subsequent approval of the extraordinary general meeting.
• The extraordinary general meeting will be held on 7 June 2024 and the notice will be published through a separate press release.
• The net proceeds from the Rights Issue are intended to be used for the following purposes listed in order of priority: (i) finance efficiency increasing measures, personnel and other costs related to key functions within sales and product development, (ii) strengthen the sales department with further investments in a growth team to increase pipeline development and match customer requirements and (iii) product development and initiatives to meet increasing information security requirements and other general corporate purposes.
• If the Rights Issue is fully subscribed, the Company will receive approximately SEK 50.1 million before deduction of transaction costs.
• In addition to the Rights Issue, and provided that the extraordinary general meeting resolves to approve the proposal and that the Rights Issue is oversubscribed, the Board of Directors is authorized to carry out another issue to meet potential additional demand from investors and thereby broaden the shareholder base in Modelon, which would provide the Company with up to SEK 10 million before transaction costs.
• The subscription price is SEK 9.1 per B-share.
• Those who on the record date 17 June 2024 are registered as shareholders in Modelon will receive one (1) subscription right for each share held.
• Two (2) subscription rights entitle to subscription for one (1) newly issued B-share.
• The subscription period in the Rights Issue runs from and includes 19 June 2024, up to and including 3 July 2024.
• Shareholders who choose not to participate in the Rights Issue will have their ownership diluted by up to approximately 33.3 percent but will have the opportunity to compensate themselves financially for the dilution effect by selling their subscription rights.
• In the event the Company increases the issue amount by SEK 10 million due to additional demand from investors, shareholders who choose not to participate in the Rights Issue will instead see their ownership diluted by up to approximately 37.5 percent.
• The subscription undertakings from existing shareholders, including members of senior management and members of the Board of Directors, amount to approximately SEK 41.8 million, corresponding to approximately 83.3 percent of the Rights Issue. In addition, the Company has received subscription undertakings from new investors for subscription of B-shares without preferential rights, amounting to SEK 3.5 million, which corresponds to approximately 7.0 percent of the Rights Issue. Consequently, the Rights Issue is covered by way of subscription undertakings to a total of approximately SEK 45.3 million, corresponding to approximately 90.3 percent of the Rights Issue.
• The full terms and conditions of the Rights Issue will be available in the prospectus, which is expected to be published around 17 June 2024.
• Due to the Rights Issue, the Board of Directors of the Company has decided to have the auditor review and submit an audit report on the Company's interim report for Q1 2024. The review report will be published on the Company's website in connection with the publication of this press release.

Background and reasons
Since the listing in 2021, the Company has successfully established itself as a global provider of cloud-based system simulation with its flagship product, Modelon Impact. This product has enabled technology companies to effectively digitize important aspects of innovation, product development and operations by creating and working with digital models of their products and systems. This has resulted in benefits such as shorter time to market, lower costs and improved performance and quality. Modelon has attracted several prominent global technology companies as customers since 2021, including MAN Energy Solutions, Engie, Rolls Royce, Siemens Energy and Volvo Autonomous Solutions, among others.
During this period, Modelon has also intensified the development of Modelon Impact and implemented several improvements through six major and several minor updates. Modelon has successfully established Modelon Impact as a cloud-based service (SaaS), which is now the primary delivery model, while a customer-installed cloud solution is still offered for certain market segments. The overwhelming majority of Modelon's customers are large companies with significant opportunities for expansion through upselling. Modelon has experienced consistent annual recurring revenue (ARR) growth, successfully shifting revenue balance to 67% from software in 2023, compared to 32% in 2020.
Despite the positive progress since the listing, the development of the Company's products and organization has suffered from certain delays, which has negatively affected sales growth and development costs. However, Modelon believes that they have now overcome these obstacles and are well equipped for future growth.
In order to meet the increasing demand and improve its position in the market, Modelon plans to carry out the Rights Issue. This capital injection will be used to further improve their products and organization and to meet new challenges and opportunities in the market. In addition, Modelon intends to invest in areas such as IT security and strengthen its sales team and product development organization in order to better meet the needs of customers.

Use of proceeds
If the Rights Issue is fully subscribed to, the Company will receive a maximum of approximately SEK 50.1 million before deduction of transaction costs. Given the Company's current business plan and against the above background, the Company intends to distribute the expected net proceeds in accordance with the below order of priority:

• Finance efficiency increasing measures, personnel and other costs related to key functions within sales and product development – approximately 60 percent.
• Strengthen the sales department with further investments in a growth team to increase pipeline development and match customer requirements – approximately 10 percent.
• Product development and initiatives to meet increasing information security requirements and other general corporate purposes – approximately 30 percent.

Extraordinary general meeting
Through a separate press release, the Company will convene an extraordinary general meeting to be held on 7 June 2024 to approve the Rights Issue.

The Rights Issue
Shareholders who are registered in the share register in Modelon on the record date on 17 June 2024 will receive one (1) subscription right for each share held in the Company. Two (2) subscription rights entitle the holder to subscribe for one (1) newly issued B-share. The subscription price is SEK 9.1 per share, which means that Modelon will receive gross proceeds of approximately SEK 50.1 million before deduction of transaction costs, provided that the Rights Issue is fully subscribed. In addition, investors are offered the opportunity to subscribe for B-shares without the support of subscription rights.
Provided that the Rights Issue is fully subscribed, and provided that the extraordinary general meeting resolves to approve the Rights Issue, the number of shares in Modelon will increase by 5,508,235, from 11,016,471 to 16,524,706 and the share capital will increase by a maximum of SEK 461,326.23, from SEK 922,652.55 to SEK 1,383,978.78.
Shareholders who choose not to participate in the Rights Issue will through the Rights Issue have their ownership diluted by up to approximately 33.3 percent (calculated on the total number of outstanding shares in the Company after completion of the Rights Issue). These shareholders have the opportunity to compensate themselves financially for this dilution effect by selling their received subscription rights.
In addition to the Rights Issue, and provided that the extraordinary general meeting resolves to approve the proposal and that the Rights Issue is oversubscribed, the Board of Directors is authorized to carry out another issue to meet potential additional demand from investors and thereby broaden the shareholder base in Modelon, which would provide the Company with up to SEK 10 million before transaction costs. In the event that the Company increases the issue amount by SEK 10 million, the number of shares in Modelon will increase by a further 1,098,901 and the share capital will increase by a further approximately SEK 92,035.27. In the event that the Company increases the issue amount by SEK 10 million, shareholders who choose not to participate in the Rights Issue will instead have their share diluted by up to approximately 37.5 percent.
The last day of trading in Modelon’s shares including the right to receive subscription rights in the Rights Issue is 13 June 2024. The shares are traded excluding the right to receive subscription rights in the Rights Issue as of 14 June 2024. The subscription period, with or without the support of subscription rights, runs from and including 19 June 2024 up to and including 3 June 2024. Trading in subscription rights will take place on Nasdaq First North Growth Market during the period from 19 June 2024 up to and including 28 June 2024 and trading in BTAs (paid subscribed share) will take place on Nasdaq First North Growth Market during the period from and including 19 June 2024 until the registration of the Rights Issue with the Swedish Companies Registration Office.
The complete terms and conditions of the Rights Issue and information about the Company will be presented in a prospectus that is expected to be published on the Company's website around 17 June 2024.

Subscription undertakings
Modelon has received subscription undertakings from existing shareholders, including members of senior management and members of the Board of Directors, amounting to approximately SEK 41.8 million, corresponding to approximately 83.3 percent of the Rights Issue. In addition, the Company has received subscription undertakings from new investors for subscription of B-shares without preferential right, amounting to SEK 3.5 million, corresponding to approximately 7.0 percent of the Rights Issue. Consequently, the Rights Issue is covered by way of subscription undertakings to a total of approximately SEK 45.3 million, corresponding to approximately 90.3 percent of the Rights Issue. The subscription undertakings are not secured by bank guarantees, escrow funds, pledges or similar arrangements. No commission is paid for the subscription undertakings.
The full terms and conditions of the Rights Issue and further information about the parties that have entered into subscription undertakings will be presented in the prospectus that is expected to be published around 17 June 2024.

Lock-up undertakings
Prior to the execution of the Rights Issue, members of the Board of Directors and senior management of the Company have entered into lock-up undertakings, which, among other things mean that they, with customary exceptions, have undertaken not to sell shares in the Company. The lock-up undertakings expire on the day that falls 180 days after the announcement date of the outcome in the Rights Issue. Further information about the parties that have entered into lock-up undertakings will be presented in the prospectus that is expected to be published around 17 June 2024.
Furthermore, the Company has undertaken towards Pareto Securities AB, subject to customary exceptions, not to issue additional shares or other share-related instruments for a period of 12 months after the end of the subscription period.

Indicative time plan
The following time plan for the Rights Issue is preliminary and subject to change.

Advisers
Pareto Securities AB is Sole Manager and Bookrunner. Advokatfirman Lindahl KB is legal adviser to the Company and Baker & McKenzie Advokatbyrå is legal adviser to Pareto Securities in connection with the Rights Issue.