2017-02-15
COMPANY DESCRIPTION FOR LISTING ON NASDAQ FIRST NORTH
Nasdaq First North is an alternative marketplace operated by an exchange within the Nasdaq group. Companies on Nasdaq First North are not subject to the same rules as companies on the regulated main market. Instead they are subject to a less extensive set of rules and regulations adjusted to small growth companies. The risk in investing in a Company on Nasdaq First North may therefore be higher than investing in a company on the main market. All Companies with shares traded on Nasdaq First North have a Certified Adviser who monitors that the rules are followed. The Exchange approves the application for admission to trading. IMPORTANT INFORMATION TO INVESTORS
This Company Description has been prepared by the Board of Directors of Hoylu in relation to the application for listing on Nasdaq First North. No new shares will be issued in relation to the Listing. This Company Description does not constitute a prospectus for the purposes of the Prospectus Directive (2003/71/EC), and it has not been approved or reviewed by any governmental authority.
Applicable law Swedish law is applicable in relation to this Company Description. Disputes regarding the Company Description and there by applicable legal circumstances shall be handled under Swedish law exclusively.
Risks An investment in shares is associated with certain risks (further described in the section “Risk factors”). When an investor makes an investment decision, he or she must rely on his or her own analysis of Hoylu, including, but not limited to, the merits and risks involved. An investment decision shall be based solely on the information in the Company Description, the documents incorporated herein, and any possible supplements hereto. Potential investors ought to consult their own professional advisors to diligently evaluate an investment consideration. No individual has been authorized to provide any information or make any other statements other than those included in the Company Description, and, if given or made, such information or representation may not be relied upon as having been authorized by the Company nor should the Company be held responsible for such information or statements.
Forward-looking statements Matters discussed in this Company Description may constitute forward-looking statements. The forward-looking state- ments in this Company Description are based upon various assumptions, many of which are based, in turn, upon further assumptions. Such statements are not guarantees of future performance and are subject to inherent risks and uncertainties. Forward-looking statements may be identified by not relating strictly to historical or current facts, or because it may contain words such as “may”, “should”, “expects”, “believes”, “planned”, “preparation”, “estimated”, “intends to”, “forecast”, “seeks” or “could”, or the negative of such terms or other variations thereof or comparable terminology. Such forward-looking informa- tion reflects Hoylu’s Board of Directors’ and management’s current expectations based on current available information and are based on several assumptions that are subject to risks and uncertainties that may be outside of the Board of Directors’ and management’s control. Actual results could differ materially from those expressed or implied in the forward-looking statements. All forward-looking information is based exclusively on the circumstances prevailing at the time it is provided and Hoylu and its Board of Directors have no obligation to (and expressly disclaims any such obligation to) update or alter such forward-looking information, whether as a result of new information, future events or something else. Hoylu and/or any persons acting on Hoylu’s behalf are subject to the reservations contained or referred to in this section.
Financial adviser Remium Nordic AB registered in Sweden with company registration number 556101-9174, is the financial adviser to the Company and has assisted the Company in establishing this Company Description. Remium accepts no responsibility what- soever and makes no representation or warranty, express or implied, for the contents of this Company Description, including its accuracy, completeness or verification or for any other statement made or purported to be made by Remium, or on its behalf, in connection with Hoylu, and nothing in this Company Description is, or shall be relied upon as, a promise or representation in this respect, whether as to the past or future. Remium accordingly disclaims to the fullest extent permitted by law all responsibility and liability whether relating to damages, contract or otherwise which it might otherwise have in respect of this Company Description or any such statement. TABLE OF CONTENT
Risk factors ...... 2
Background and rationale for the listing ...... 6
Letter from the CEO ...... 7
Industry overview ...... 8
Business overview ...... 15
Pro forma accounts ...... 27
Capital structure and other financial information ...... 32
Board of Directors, Executive Officers and Auditor ...... 36
Share capital and ownership structure ...... 40
Legal considerations and supplementary information ...... 43
Tax considerations in Sweden ...... 47
Articles of association ...... 49
Contact details ...... 52
INFORMATION ABOUT THE SHARE CERTAIN DEFINITIONS ISIN code: SE0009581192 ”Hoylu” or ”the Company” refers to Hoylu AB (publ) Short name (ticker): HOYLU (company registration number 559084-6381) or the group in which Hoylu is the parent FINANCIAL CALENDAR ”the Group” refers to the group in which Hoylu is the Interim report 1 jan – 31 mar 2017 May 12, 2017 parent Interim report 1 jan – 30 jun 2017 August 11, 2017 Interim report 1 jan – 30 sep 2017 November 10, 2017 ”Remium” refers to Remium Nordic AB (company Annual general meeting May 16, 2017 registration number 556101-9174) ”MAQS” refers to the law firm MAQS Advokatbyrå Stockholm AB (company registration number 556950-7659) ”CSEC” refers to C Security Systems AB (publ) (company registration number 556849-1368) ”the Listing” refers to the listing of Hoylu’s shares on First North ”the Company Description” refers to this company description which has been prepared in relation to the application for listing of Hoylu’s shares on First North ”Euroclear Sweden” refers to Euroclear Sweden AB (company registration number 556112-8074) ”First North” refers to Nasdaq First North “SEK” refers to Swedish krona, “USD” to US dollars, “EUR” refers to Euro “We-inspire” refers to w’inspire GmbH “VR Global” refers to VR Global, Inc. 2 Company Description for Listing on Nasdaq First North Risk factors
RISK FACTORS
An investment in Hoylu’s shares is associated with certain tified any direct competitors within the Creative Collabo- risks. Hoylu’s business is affected, and may be affected, by ration submarket. There is however a risk that the Creative numerous factors which are not possible for Hoylu at all, or Collaboration market will experience increasing competi- in part, to control. Such factors may adversely affect the tion. If the competition increases, it is possible that Company’s business, financial position and profits in the competing companies may develop equivalent or better future or may lead to a decrease of the share price and products. There is no guarantee that the Company’s prod- that the investors could lose part or all of their investment. ucts would be preferred over competing companies’ Certain risks are associated with the Company and other future products. These uncertainties entail risks that could do not have any specific connection to the Company. have a negative impact on the Company’s business, finan- Investors should carefully analyze the specific risk factors cial position and profits in the future. described below as well as other information in the Company Description prior to deciding whether to make Although no direct competitors currently exists in the an investment in the Company or not. The risk factors are Creative Collaboration submarket, the Company has iden- not described in priority or in any other particular order tified multiple competitors offering technologies and soft- and are not the only risks to which the Company is subject. ware included in Hoylu’s enterprise collaboration solution. Furthermore, the risk factors are not described in detail This may lead to decreasing profit margins and increasing and a complete evaluation must contain any information quality demands on overall products, which may affect the referred to in the Company Description (including infor- Company’s business, financial position and profits. mation referred to apart to the Company Description). Furthermore, the competitors may have greater resources Additionally, there may be other risks that the Company is in terms of financing and knowledge and therefore greater currently not aware of, or deems to be immaterial but capacity to adapt to unexpected changes in the market or which later prove to be material. the global economy. Hence, there is a risk that such changes entail loss of market shares, which in turn may have a negative impact on the Hoylu’s business, financial RISKS RELATED TO THE MARKET position and profits. AND HOYLU Customers Hoylu is operating in highly differentiated markets and its Emerging market customers operate in a wide number of industries. The Hoylu is entering the enterprise collaboration market and customer contracts are of varying nature regarding, inter the Creative Collaboration market, which may be alia, contract length, Services levels, warranties, liability described as a submarket within the enterprise collabora- undertakings, limitation of liability and scope. Due to the tion market. The enterprise collaboration market, espe- nature of the Company’s products and solutions, most cially the Creative Collaboration submarket, is emerging contracts span over a longer period and may be renewed and expected by the Company to grow rapidly over the at maturity. There is a risk that the Company’s customers coming years. If for any reason the enterprise collabora- refrain from renewing contracts at maturity. If the tion market and/or the Creative Collaboration submarket Company fails to renew or to retain contracts on the same experience a decline, this may adversely affect the or more favorable terms, this could have a material Company’s business, financial position and profits. adverse effect on the Company’s business, financial posi- Furthermore, entering emerging markets involves various tion and profits. risks that are difficult to identify and predict. Personnel Competition The success of Hoylu is dependent on a few key individu- Even though competition might exist, Hoylu has not iden- als and their knowhow, experience and creativity. If one or Risk factors Company Description for Listing on Nasdaq First North 3
more of these individuals leave Hoylu and they cannot be rights and/or company secrets in its contracts, this may rapidly replaced, this is likely to have a negative impact on have a material adverse effect on the Company’s business, Hoylu’s business, financial position and profits. Further- financial position and profits. more, Hoylu’s future growth largely depends on the Company’s ability to recruit and retain qualified employ- Hoylu does not, in its opinion, infringe the intellectual ees. The high level of competition for personnel in the property rights of any third party. However, there is a risk technology industry means that there is a risk that person- that Hoylu, for instance as a result of expansion into new nel cannot be recruited at all or that personnel cannot be geographical markets or if third party products are recruited on reasonable terms. integrated in the Company’s products in breach of the Company’s supplier agreements, could come to infringe, Business partners and distribution channels or be accused of infringing, the intellectual property rights Hoylu’s business is largely dependent on the collaboration of a third party. In such cases, Hoylu may get involved in with certain business partners, suppliers and other distri- disputes regarding those intellectual property rights. The bution channels. The products and services of these same applies when any third party could come to infringe, business partners and suppliers are integrated parts of or be accused of infringing, Hoylu’s intellectual property Hoylu’s products and services. The business partners also rights. The outcome of such disputes is often difficult to have important client and customer bases that are difficult predict and the costs may be significant. In the event that for Hoylu to reach without the partnerships. If important Hoylu’s protection of its intellectual property rights is collaborations are terminated, cannot be entered into or insufficient, or if Hoylu is infringing the intellectual prop- are conducted unsatisfactorily, this may adversely impact erty rights of a third party, or if a third party is infringing Hoylu’s business, financial position and profits. Hoylu’s intellectual property rights, this could have a mate- rial adverse effect on the Company’s business, financial M&A risks position and profits. An essential part of Hoylu’s growth strategy is to expand through majority owned acquisitions. Acquisitions often Reputation and brands involve substantial costs for financial, legal and other Hoylu depends on its reputation and the strength of its advisors that are charged even if the acquisition, for some trademarks and brands. These are important for both new reason, cannot be completed. Hoylu intends to continue to and existing customers in their choice of supplier. Quality look at acquisition opportunities to further strengthen its problems, operational or logistical problems and the loss offerings. Consequently, there is a risk that Hoylu incurs of existing customers or suppliers may lead to damage to substantial costs even if the planned acquisitions are not Hoylu’s brands and reputation. Hoylu may also be nega- completed. tively affected if employees or persons linked to the group commit unethical or criminal activities (including but not Further, acquisitions involve high risks related to the limited to, violations of applicable anticorruption or anti- acquired company or business. Although Hoylu normally bribe regulation) or breach the Company’s internal guide- carries out comprehensive financial, legal and business lines and policies, which could lead to customers and reviews of the contemplated target company, there is a suppliers associated with the Company to take measures risk of potential problems and future losses not being which could have a negative impact on Hoylu’s brands and identified in the course of such reviews. The target reputation. company may thus sustain customer and/or supplier losses, tax losses, or other unforeseen costs or losses Financing and future capital requirements following the acquisition that may lead to costs for Hoylu. The management and the Board of Directors actively and There is also a risk that Hoylu may not receive compensa- continually work with the Company’s governance and tion from the seller for such costs, for example due to control, including profit, liquidity and financial position. contractual or legal limitations. Such events may therefore The Board of Directors continually tests the prerequisites have a material adverse effect on the subsidiary’s financial for the continued operations of the Company. However, position, earnings and operations, which also could since Hoylu is currently in a phase of expansion with adversely affect the Company’s business, financial condi- relatively large capital requirements, the Company may tion and results of operation. Further, expected synergies need to raise additional funds in the future in order may not materialize, which could have negative effects on address expansion costs or increased demands on the the Company’s business, financial position and profits. Company’s products. There is a risk that such funding may not be obtained when needed or that funding may not be Intellectual property obtained on acceptable terms. If the Company is unable to Hoylu’s operations are not considered to be directly obtain financing when required, Hoylu may be required to dependent on any single intellectual property right. significantly reduce its activities or, ultimately, suspend its However, there is a risk that competitors and customers, operations. current or future, in different ways, may challenge or circumvent Hoylu’s intellectual property protection, which Credit risk could affect the operations of Hoylu negatively. Similarly, if The Company has a significant economic exposure Hoylu fails to protect its proprietary intellectual property towards its customers. Should one or more of the custom- 4 Company Description for Listing on Nasdaq First North Risk factors
ers be unable to meet obligations for payment to the RISKS RELATED TO LISTED Company, this may adversely affect the Company’s business, financial position and profits. SHARES
Currency risk Increasing cost following the Listing Hoylu has revenues and expenses in multiple currencies. As a listed company Hoylu will be subject to rules and This exposes the Company to two main foreign currency regulations which it must be in compliance with. In order risks. to be compliant, the Company may need to establish certain positions as well as adopt certain policies. This may First, transactions in currencies other than SEK (which is have an impact on the Company´s means and increase its the Company’s accounting currency) expose the costs. Such increased costs may adversely impact Hoylu’s Company for risks related to shortterm currency fluctua- business, financial position and profits in the future. tions. Unfavourable exchange rate fluctuations will result in outstanding receivables or liabilities being depreciated or The market price of the Company share appreciated in relation to the Company’s functional The share price of newly listed shares is often volatile for a currencies, and thus impact the conversion to SEK, which period subsequent to the Listing. The share market in could have a material adverse effect on the Company’s general, and for smaller companies in particular, may be business, financial position and profits. subject to significant price and volume fluctuations, which are not possible to predict out of the companies’ develop- Second, the use of different functional and accounting ments or disclosed results. currencies imposes longterm currency risks. Longterm weakening of the Company’s functional currencies against Hoylu is not able to predict how liquid the First North the SEK results in revenues, expenses and income, includ- market may become and to what extent the interest in ing monetary assets, being reported at the lower amounts investing in the Company´s shares will increase or main- in SEK which could have a material adverse effect on the tain. The distance between the sell and purchase price Company’s business, financial condition and results of may from time to time be significant, making it difficult for operation. shareholders to sell shares at a moment and to a price deemed appropriate. Legal risks Hoylu’s operations are conducted in a number of countries Existing shareholders selling their shares and will thereby be affected by the legislation in each indi- The share price may drop if there is extensive sale of vidual country in which operations are being conducted. It shares in the Company, especially sales made by the is possible that the legislation regarding e.g. taxation, Company’s Board of Directors, senior management or customs and permits will be amended, potentially with major shareholders, or when a larger number of shares are retroactive effect, in such a way that they could have a sold. Sales of large amounts of shares by the majority negative impact on the Company’s business, financial shareholder (please be referred to “Majority shareholder position and profits. with significant influence” below), or the perception that such sales could occur, could lead to a drop of the share price.
New issues In order to, inter alia, raise capital or enable acquisitions, the Company may issue shares and share related instru- ments in the future. Such issues may decrease the propor- tional ownership and share of voting power as well as profit per share of the shareholders in the Company. Moreover, such issues may adversely affect the market price of the shares. Risk factors Company Description for Listing on Nasdaq First North 5
Future dividends Payment of dividends is decided by the general meeting of shareholders. Any future dividends depend on several factors, such as future results, financial position and the Company´s need of investments. Hoylu is in a phase where priority is put on exploiting the growth opportuni- ties that have been identified. As a result, shareholders should not expect to receive any, or very low, dividends in the next few years. Under such circumstances the possible return for the shareholders during the next few years will mainly be reliant to the share price (please be referred to “Dividend policy” for more information).
Majority shareholder with significant influence The Company does not have one sole majority share- holder. However, there are four separate investors who altogether holds an equal number of shares (prior to the Listing, approximately a total of 48.8 % of the shares and votes) in the Company to such amount they can exercise a significant influence over certain matters resolved on general meetings of shareholders, inter alia, appointing Board of Directors, profit distribution, proposal to merge, consolidate or sell all, or some, of the assets, as well as other company transactions.
Also, a majority shareholder may prevent or make it diffi- cult for Hoylu to be acquired through a public takeover bid. A concentration of the ownership may be negative for the other shareholders, which may have other interests than the majority shareholder.
First North The Company´s shares will be listed on First North. First North is a multilateral trading facility (MTF), i.e., not a regulated market. Companies with shares listed on First North are not obliged or required to comply with the same rules as companies with shares traded on a regulated marketplace, but to less extensive rules and regulations. Such rules and regulations are preferably adapted for smaller and growth companies, why an investment in a company listed on First North may imply more risk than an investment in a company with shares traded on a regulated market. 6 Company Description for Listing on Nasdaq First North Background and rationale for the listing
BACKGROUND AND RATIONALE FOR THE LISTING
Hoylu was founded in October 2016 as a subsidiary to CSEC together with the tech entrepreneur Stein Revelsby. The reason for establishing Hoylu as a subsidiary to CSEC was to obtain a sufficient number of shareholders, as required by First North, as the Company had plans on listing its shares in 2017. Stein Revelsby thereafter quickly recruited a senior management team with intentions of creating Creative Collaboration solutions, a submarket of enterprise collaboration.
Despite Hoylu being established as a startup, its management team has focused on the sole purpose of establishing a business able to provide its customers with modern and efficient solutions while maintaining a creative focus. The core business consists of a combination of three strategic assets.
Firstly, Hoylu’s core business builds upon the acquisition of We-inspire, a spin-off from Mi-Lab at the University of Applied Sciences Upper Austria, Campus Hagenberg in Austria. We-inspire is a software company with a portfolio consisting of applications for idea generation and Creative Collaboration. We-inspire also hold a well-established global customer base. The founders and management team of We-inspire joined Hoylu in January 2017.
Secondly, Hoylu has made a strategic investment in VR Global, a New York based software company, which developed a content creation platform for virtual and augmented reality. The strategic investment has resulted in a partnership for the combination of We-inspire’s idea generation and collaboration solutions with the objective to extend presentations and collaboration experiences into virtual and augmented reality.
Thirdly, an asset transfer agreement was carried out in January 2017 regarding the acquisition of the assets in Nada Yada AB, a Swedish consultancy firm with many years of experience with natural and intuitive computer interfaces, large format displays, touch and pen input, as well as an extensive network with leading suppliers in China.
Through the combination of the assets mentioned above, Hoylu’s management sees significant business opportunities in providing the market with unique solutions that go beyond what is currently available. In January 2017 CSEC’s shares in Hoylu were distributed to the shareholders in CSEC on a pro rata basis, whereby for every three shares in CSEC the shareholders received one share in Hoylu. Furthermore, the above- mentioned investments were financed partly by issuing new shares in Hoylu and partly through a private placement of shares to a small group of professional investors in January 2017.
The rationale for listing Hoylu’s shares on First North is primarily to provide Hoylu’s shareholders with liquidity in the shares and to have access to capital and finance the Company’s future growth. Additional benefits are increased media exposure and marketing towards potential customers and partners.
The Board of Directors of Hoylu is responsible for the content of this Company Description. The Board of Directors hereby declares that, having taken all reasonable measures to ensure that, to the Board of Director’s knowledge, the information contained in this Company Description complies with the actual circumstances and that no information has been omitted that could affect its import.
Hoylu AB, Board of directors Stockholm, 23 January 2017 Letter from the CEO Company Description for Listing on Nasdaq First North 7
LETTER FROM THE CEO
The enterprise collaboration is today a USD multi-billion market thanks to digitalization that has expanded the market for almost 30 years. As technology is growing stronger and more efficient, Creative Collaboration is becoming a growing segment as more advanced products enables a new level of creativity. Technical hurdles are still too many and too much time is wasted on connection issues and there are few effortless solutions to capture, share, save and synchronize content, feedback and information from a meeting while remote collabo- ration is mostly limited to audio and video conferencing.
We established Hoylu in October 2016 with a senior management team with many years of experience, working with natural and intuitive computer interfaces, large format displays with touch and pen input and software for Creative Collaboration.
Together we saw an opportunity in the market to improve and simplify how people work in teams. The tradi- tional meeting room scenario is one person using PowerPoint or a similar application to present in 2D to a group of passive listeners.
Most businesses today are spread over large geographic areas, while it is a trend and to accept to and give people more freedom of choice to work in decentralized organizations, the competitive and increasingly dynamic business environment requires quick decision making, proactive management and agile organization. The ability to energize teams and get the best collective output from teams and buyin to products or deliverables, more quickly becomes a competitive advantage.
The ultimate experience of creative work life should be free of technical barriers. Technology should allow for natural and intuitive communication, as if we are all in the same room at the same time, speaking, listening, seeing, writing, sketching, creating, capturing, sharing, saving information and content, ideally in a way so that other people who are not there could contribute and participate interactively on demand or when available.
Hoylu offers solutions within immersive technology for enterprise collaboration, which include communication and presentation by combining software and cutting edge technologies within large format displays, immer- sive audio, virtual and augmented reality and the Internet of Things.
Our goal is to improve and simplify how people work in teams by providing Creative Collaboration solutions that stimulate user interactions and intuitive, real time information sharing. To achieve our goal we acquired We-inspire with its award-winning collaboration solutions and a solid customer base, and made strategic investments in VR Global, a US based software company with a leading content creation platform for virtual and augmented reality. By utilizing virtual and augmented reality we enhance the user experience and the rapidly increasing availability of 3D content. New technology will allow for a merge between the physical and digital universe and make it possible to visualize objects or experience environments, be it a construction site, an office building, a corporate product launch event or a fashion show as if we were present ourselves.
In the coming year, we will focus on direct sales to large global customers. Whilst we have hardware and soft- ware products to sell as is through resellers, we will learn from working directly with selected end customers about their user experience and focus our product development on configuration and packaging of solutions to optimize end user value.
Stein Revelsby, CEO Stockholm, 23 January 2017 8 Company Description for Listing on Nasdaq First North Industry overview
INDUSTRY OVERVIEW
The Company Description includes information concern- Digitalization has also led to a more flexible working ing Hoylu’s future markets and other information and data locations and is less tied to fixed physical locations which related to the business. Unless otherwise indicated, all also requires enhanced solutions for sharing, collaboration, information and data about market, growth, trends and presentation and viewing. size as specified in this Company Description is Hoylu’s overall assessment based on both internal and external sources. Hoylu has strived to use the latest available infor- ENTERPRISE COLLABORATION mation and data from relevant thirdparty sources. Infor- mation and data obtained from various external sources, What is Enterprise Collaboration? has been accurately reproduced in this Company Descrip- Enterprise collaboration systems are socialmedialike soft- tion. Although Hoylu regards these sources as reliable it ware systems in which employees in an organization are cannot be guaranteed that this information is accurate or able to share information, both within the organization complete as Hoylu does not have access to the facts and and with external organizations, and work together in assumptions underlying such market data, or statistical teams from different geographic locations. The systems information and economic indicators contained in these are a combination of software and hardware technologies thirdparty sources. Certain statistics in this Company together with networking capabilities. Enterprise collabo- Description have been compiled by Hoylu, in some cases ration broadly fall into one of several categories as defined on the basis of various assumptions. Market statistics by McKinsey & Company1): presented in this Company Description are uncertain and no guarantee can be given regarding their accuracy. 1. Communication: Tools that enable synchronous and However, as far as Hoylu is aware and can confirm by asynchronous communication, including videoconfer- comparing this to other information published by thirdpar- encing, instant messaging, whiteboarding tools, and ties from which the information has been obtained, no email. material information has been omitted in a way that would render the reproduced information erroneous or 2. Team collaboration: Tools that help teams organize misleading. their work and work product, including file sharing, project planning/management, group calendaring, and event scheduling. MARKET INTRODUCTION 3. Writing/editing: Tools that help teams work together on documents and/or publish documents, including Hoylu operates in the Creative Collaboration market, a wikis and online documents processing tools. submarket of enterprise collaboration. Whether it comes to meetings, workshops, presentations or independent 4. Engaging/networking: Sites and tools that enable work, these tend to be centralized around any kind of social media, networking and blogging. presentation, display or creative workspace such as over- heads, projectors, TV:s, laptops or tablets. Hoylu believes that by using enterprise collaboration and connecting the right people with the right expertise or Due to increased digitalization, solutions are now more information at the right time will help employees to make accessible than ever before, which allow users to work the right business decision, work more efficient and digitally without the limitations of using a mouse and increase productivity in combination with enhanced instead letting them use hands, gestures and digital pens. innovation.
1) Enabling enterprise collaboration, McKinsey & Company, 2013 Industry overview Company Description for Listing on Nasdaq First North 9
Enterprise Collaboration Trends traditional integrator model is under pressure from new The Company has identified five major trends which Hoylu trends in how people work and the trends of large compa- believes will drive the demand for enterprise collaboration nies to simplify procedures. With faster Internet speeds, systems in the future: more capable and easy to use communication devices, together with Cloud-based solutions, many companies 1. Globalization: The global marketplace is becoming can allow employees to work from almost anywhere. increasingly important for successful enterprises and every company is affected by globalization in one way Hoylu has also identified that the emergence of smaller or another – as reported by EY “Faster growth rates companies that often prefer open office facilities with and favorable demographics in key rapidgrowth common nonassigned work spaces and many simple markets will continue to be a feature of the next meeting rooms that do not require complex integrations, decade or so (...) the war for talent will become puts further pressure on the role of the traditional corpo- increasingly fierce, necessitating greater workforce rate audio and video model and the role of the integrator. diversity to secure competitive advantage”. EY also discuss the economies of the world in which it will be Enterprise Collaboration Market Size highly interdependent through trade, investment and In a market report from 2015 it is estimated that the global financial system linkages.1) enterprise collaboration market size will grow from USD 26.7 billion in 2016 to USD 49.5 billion by 2021, at a 2. Increased demand for specialization: The emergence compound annual growth rate of 13.2 %.6) The software of new sophisticated technology in all types of busi- used in enterprise collaboration systems is estimated to ness, generates a demand for knowledge workers with grow from USD 7.1 billion in 2015 to USD 8.4 billion in 2020, new specializations and skills.2) worldwide.7) 3. Innovation necessity: “Innovation has never been more important… or so difficult”. The global economy is Hoylu’s main market is Europe and the US but the becoming more competitive every day which increases Company has 25 resellers worldwide. The Company 3) the demand for enterprises to innovate. believes enterprises with more than 50 employees will be 4. Distributed expertise and partnerships: A report from the main buyers of Hoylu’s enterprise collaboration solu- The Institute of Leadership & Management asserts that tions. Data from OECD SDBS database (2013) shows a companies have increasingly turned to virtual teams as total of approximately 640,000 enterprises with at least means of connecting and engaging geographically 50 employees each and more in Hoylu’s main markets with dispersed workers, lowering the costs associated with a total of 150,000 enterprises in the US alone. global collaboration, contributing to business reach, and enabling greater productivity and efficiency.4) As is apparent in the map below, Europe is the biggest market with more than 490,000 enterprises with at least 5. Digitalization: The Company believes that increased 50 employees each and US is the second largest market in digitalization will demand more efficient and more which Hoylu’s wholly owned subsidiary Hoylu Inc. is secure enterprise collaboration systems. “(…) busi- located. The biggest European submarket is Russia corre- nesses have already realized that they must use digital sponding to approximately 16.0 % of Hoylu’s European channels to engage with their key stakeholders to market. maintain relevance and drive the conversion. However, few realize how fast the change needs to happen, or While the enterprise collaboration market today is most how transformational it needs to be”.5) commonly known for audio, video and sharing solutions, the Company sees an increased demand for possibilities Hoylu believes that all trends will be important for to capture, manage and save content created from meet- increased demand of enterprise collaboration systems. ings or collaborative sessions, summarized and hereinafter Furthermore, efficient and secure enterprise collaboration defined by the Company as “Creative Collaboration”. systems will be increasingly important in the future to meet new demands within the global economy and that increased competitiveness and employees’ innovation will be driven by new enterprise collaboration systems.
The Company also believes that the corporate audio and video industry is in the midst of major changes as the
1) Megatrends 2015 – Making sense of a world in motion, EY, 2015 2) https://www.cebglobal.com/blogs/hr-5-ways-to-find-the-best-knowledge-workers/ 3) The Innovation Game: Why and How Businesses are Investing in Innovation Centers, Capgemini Consulting, 2015 4) ILM Report 2015, Going remote: leading dispersed teams. 5) http://www.ey.com/Publication/vwLUAssets/The_digitisation_of_everything_-_How_organisations_must_adapt_to_changing_consumer_behaviour/$FILE/ EY_Digitisation_of_everything.pdf 6) http://www.marketsandmarkets.com/PressReleases/enterprise-collaboration.asp 7) https://www.appsruntheworld.com/top-10-collaboration-software-vendors-and-market-forecast-2015-2020/ 10 Company Description for Listing on Nasdaq First North Industry overview
UK 31 898 US Germany 149 518 63 046 Russia 76 287 Sweden 5 902 Rest of Europe 314 318
Creative Collaboration same area using projectors and can be mastered wire- Creative Collaboration are solutions that enables creativity lessly with hardware such as tablets, smartphones and to be used in other ways than with pen and paper, offering computers. digital solutions that also let more than one user to work creatively on a project. This submarket to enterprise The large format display area also consists of solutions collaboration is early in its usage and the submarket is not including larger touch tables, hardware with multi-touch completely defined. sensitive displays that are either wall-mounted or set up as a table that could be used by more than one user in a Hoylu believes that the Creative Collaboration market on collaborative way. This allows users do anything from its own has a potential to become a global multi-billion- drawing, writing, sharing pictures or other documents in dollar market where Hoylu has primarily chosen to focus real time. on large enterprise customers. As argued by Craft1), creativity has become a vital and highly valued aspect of As large format displays could be used as a substitute for science, technology, the arts, as well as everyday life by anything from pen and paper to whiteboards, the market the end of the 20th century due to economic, social as potential is deemed to be large, as the demand for digitali- well as technological drivers. zation is believed to be increasing. Looking at the global market for interactive whiteboards only, it is estimated to Hoylu offers customized solutions by combining own be worth around USD 422 million by 2020.2) hardware and software in collaboration with strategic partners, which all together includes touch tables and 3D Audio touch panels with pen support, interactive walls, 3D audio, 3D audio enables spatial sound design, which could be virtual and augmented reality. The Company will initially described as virtual audio for a listener. The sound could focus on delivering tailor made solutions to its customers, appear to come from an angle, other than from the including large format displays, 3D Audio, the internet of speaker. 3D audio is used in nonphysical conferences things, and virtual and augmented reality. (video or audio) and due to technological improvements, the sound can focus on the person speaking while reduc- Large Format Displays ing noise and enhancing the sound during a meeting. Rather than using limited work fields on hardware displays, large format display solutions could be used in making a The market is in early stages and a handful of audio labels common wall into an interactive work surface, letting a have started focusing on the home entertainment market whole team work collaboratively in one single digital area. and others on enterprise solutions for areas that involves Such solutions enable collaborative technology which lets the vehicle industry, enterprise collaboration and virtual users plan, write, move, visualize and jointly work on the reality support.
1) Anna Craft. Creativity and Education Futures: Learning in a Digital Age. Trentham Books, Dec. 2010 2) The Global Interactive Whiteboard (IWB) Market – Trends, Drivers & Projections. Strategy, September 2015 Industry overview Company Description for Listing on Nasdaq First North 11
Forecasts show that the market for audio communication used with different hardware, such as virtual reality glasses monitoring solutions, which 3D audio towards enterprise or tablets. Examples of enterprise users are the production collaborations are focused, could be worth USD 2.1 billion industry, digital map and travel industry among others. by 2020 compared to USD 800 million in 2015 corre- sponding to a compound annual growth rate of 21.9 %.1) The Internet of Things Internet of things (“IoT”) is the concept of connecting Virtual Reality and Augmented Reality hardware in terms of enabling digitalization of information The virtual and augmented reality market is still early in its among and between “things” such as hardware devices. development stages and is mainly divided into hardware The market opportunity has been estimated to reach USD and software where the products are sold both to 11 trillion by 2025 according to research performed by consumers and enterprises. While generally known areas McKinsey in 20153). IoT is for instance used when connect- of usage today consist of video and gaming, the enter- ing hardware devices that is used to interact with Hoylu’s prise usage contains software and hardware being used large format displays. by industries including engineering, healthcare, social, mili- tary and commerce according to Goldman Sachs.2) The Company believes the IoT has the potential to funda- mentally shift how people interact with their surroundings. The purpose of virtual reality is about giving an experience The ability to electronically monitor and manage objects in that lets the user interact with a virtual world. Even though the physical world makes it possible to bring datadriven virtual reality is commonly known to be used within decision making to new realms of human activity: to opti- gaming and video viewing it shows great potential within mize the performance of systems and processes, save enterprise, whereas Goldman Sachs Equity Research time for people and businesses, and improve quality of life. (2016) sees great potential especially within real estate, From monitoring machines on the factory floor to tracking education and military usage. the progress of ships at sea, sensors can help companies get far more out of their physical assets, e.g., improving Augmented reality is the experience between virtual real- the performance and working life of machines and learn- ity and the real world using technology to create images ing how they could be redesigned to do even more. that blend with the real world. Augmented reality can be
1) http://www.prnewswire.com/news-releases/audio-communication-monitoring-market-worth-21453-million-usd-by-2020-531228151.html 2) Goldman Sachs Global Investment Research, Virtual & Augmented Reality, January 13 2016 3) McKinsey&Company, McKinsey Globl Institute, The Internet of Things: Mapping the Value Beyond the Hype, June 2015 12 Company Description for Listing on Nasdaq First North Industry overview
EXAMPLES OF ENTERPRISE USAGE By using augmented reality, the user is allowed to use hardware, such as tablets, in order to visualize an object, using the hardware camera. Augmented reality solutions Real Estate Brokers using Virtual Reality can for example be used for viewing virtual models of a Viewing property such as commercial or common real blueprint, in a device. estate has often been done by visits, watching pictures or recorded video. Virtual reality opens a new possibility for Real Estate – Estimated market value by 2025 real estate brokers to show-case their properties with 360 USD 2.6 billion2) degree viewing of a property, which let anyone wearing virtual reality glasses enter into a virtual world of the Interactive Walls and Touch Tables property. Interactive walls and touch tables can be used anywhere digital presentation would be used, varying from retail, Fortune1) reported that Sotheby’s International began meeting rooms to restaurants. While touch displays could experimenting with virtual reality in 2015, thus taking a be used as ordering solutions in restaurants or stores, step towards property viewing at home and the Company touch tables could also be used in meetings rooms, show- believes that the real estate industry is likely to become rooms as a presentation tool. Exhibitions and museums early adopters of the new technology. also benefit from touch tables to convey information and products. Touch tables complement interactive walls in the Architects using Augmented Reality meeting room for any creative department collaboration. Architects have commonly used two major ways of Touch tables could also be used wider in the hospitality displaying work and ideas. A blueprint is often presented industry. on a paper in two-dimensional view while the display of a ready building or set-up often has been displayed as a miniature scale built model.
[Picture to describe – augmented.com]
1) http://fortune.com/2015/09/09/virtual-reality-real-estate/ 2) Goldman Sachs Global Investment Research, Virtual & Augmented Reality, 13 January 2016 Industry overview Company Description for Listing on Nasdaq First North 13
Interactive Display Market COMPETITION The value of the interactive display market is estimated to be USD 26.9 billion by 2022, growing from USD 9.9 billion Hoylu has not identified any direct competitors within the from 2016 at a compound annual growth rate of 15.5 %. enterprise collaboration submarket, Creative Collabora- Interactive displays provide users, when combined with tion. Although no direct competitors exist, the Company creative solutions, an interactive experience and is has identified multiple competitors offering technologies believed by the Company to have the potential to become and software included in Hoylu’s enterprise collaboration a standardized computing platform.1) solution. Below are a few companies supplying technolo- gies and software used in enterprise collaboration systems. Interactive Display Market – Estimated market value by 2022 USD 26.9 billion Enterprise Collaboration Software
Military, $1.4bn Videogames, $11.6bn Microsoft Corporation
Engineering, $4.7bn Microsoft has more than 200 million users (2015) world- Healthcare, $5.1bn wide and features software solutions such as Microsoft Education, $0.7bn SharePoint, Yammer and LinkedIn. Microsoft is the largest enterprise collaboration software company, offering a vast Real estate, $2.6bn Live events, $4.1bn field of solutions which includes, viewing, editing, sharing, Retail, $1.6bn Video entertainment, $3.2bn communicating (e.g. Outlook and Skype) to enterprise social networking.2)
Source: Goldman Sachs Investment Research. Microsoft held 20.0 % of the total market share among the collaboration software vendors in 2015.2) Virtual Reality Market (Hardware / Software) – Estimated market value by 2025 USD 79 billion Cisco Systems Cisco Systems (“Cisco”) have more than 75,000 employ- Revenue (USD billions) ees serving their main markets being Collaboration and 90 Customer Relationship Management (CRM). The company 80 has a collaboration cloud portfolio that covers meetings 70 online as well as other applications for support and 60 customer service which are hosted via Cisco, their part- 50 ners and service providers.
40
30 Cisco was the second largest company among the collab-
20 oration software vendors in 2015 having an 11.0 % market share.3) 10
0 2017E 2018E 2019E 2020E 2021E 2022E 2023E 2024E 2025E Citrix Citrix are a cloud focused company that lately has seen a Hardware revenue – Base case Software revenue – Base case two digit rise within its SaaS4) business area where their cloud collaboration applications has seen continuing Source: Goldman Sachs Investment Research. growth. The products stretch over the field of collabora- tion space and include products such as GoToMeeting, ShareFile and cloudbased file storage solutions. The company is also working together with Microsoft having partnered up with Microsoft Azure for future products within cloud.
Citrix is the third largest collaboration software vendor in 2015 having a 10.0 % market share.5)
1) http://www.marketsandmarkets.com/PressReleases/interactive-display.asp 2) https://www.appsruntheworld.com/top-10-collaboration-software-vendors-and-market-forecast-2015-2020/ 3) https://www.appsruntheworld.com/top-10-collaboration-software-vendors-and-market-forecast-2015-2020/ 4) Software as a Service 5) https://www.appsruntheworld.com/top-10-collaboration-software-vendors-and-market-forecast-2015-2020/ 14 Company Description for Listing on Nasdaq First North Industry overview
INTERACTIVE WHITEBOARD More than 180 airports all over the world has partnered with NEC and 70.0 % out of London’s leading financial SOLUTIONS companies use NEC Displays.4)
SMART Technologies ULC InFocus Corporation SMART Technologies ULC (“SMART”) is a Canadian Infocus Corporation (“InFocus”) is an American company company supplying varieties of interactive whiteboard founded in 1986 that develops, manufactures and distrib- solutions including both hardware and software and was utes projectors, accessories and large format touch the first company worldwide to introduce an interactive displays together with software. The company also offers whiteboard in 1991. Today SMART solutions include inter- services within enterprise collaboration in form of video active large format displays, collaboration software and calling services. The company was until 2009 listed at services offered worldwide. The company was a publicly NASDAQ New York when it became a subsidiary to Image traded company since 2010 with approximately 800 Holdings Corp. due to a buyout. employees and almost USD 500 million in revenues during fiscal year 20151) until it was acquired by Foxconn Technol- The company has more than 200 employees all over the ogy Group in 2016. world and has communicated a targeted revenue, only in India, worth USD 1 billion during the fiscal year 2017.5) Nureva Nureva INC offers “Innovative solutions for collaboration” and was founded in 2014 by previous founders of SMART. VIRTUAL AND AUGMENTED The award-winning technology company develops solu- REALITY tions for effective group collaboration when virtual infor- mation is required. The company employs approximately 100 people.2) IrisVR IrisVR, Inc. (“IrisVR”) offers enterprise solutions to help Promethean professionals within construction, modeling, architecture Promethean World Ltd (“Promethean”) is a global educa- and engineering to visualize, share and create 3D models tion technology company which provides interactive using virtual reality. The company’s first software, Pros- whiteboards, student response systems for personalized pect, let users convert existing 3D models into virtual learning and digital teaching resources. The company was reality experiences. founded in 1997 and today Promethean employs over 650 people around the world. The company was until the end The company was founded in 2014 and employs around of 2015 listed on the London Stock Exchange. 50 people having raised USD 10 million in total funding until the last quarter in 2016.
LARGE INTERACTIVE DISPLAYS Matterport Matterport, Inc. (“Matterport”) is a US based media WITH TOUCH AND PEN INPUT company that focuses on technology that is combining 3D and virtual reality and is most commonly known for its Microsoft Surface Hub hardware products including real 3D capturing, cloud The Surface Hub is an interactive whiteboard for team hosting for 3D models but also showcase and viewing and collaboration. As reported by Ars Technica, Microsoft’s editing system for 3D and virtual reality. “conference room computer” has been selling above everyone’s expectations and is now a USD billion business. Matterport is today focusing on solutions within real Microsoft was expecting to sell the Surface Hub to 2,000 estate, travel and healthcare and seeks to develop in customers by the end of 2016.3) architecture, construction and entertainment.
NEC The company has since the start in 2011 received more NEC Corporation is a Japanese technology company than USD 61 million in venture capital funding, having more focusing on hardware and software. The company’s focus than 100 employees.6) within large interactive displays is operated from NEC Display Solutions GmbH (“NEC), the European subsidiary, which employs 230 people over 9 sales regions in more than 40 countries spread across the EMEA area.
1) SMART Technologies INC 2015 Annual Report 2) http://www.nureva.com/ 3) http://arstechnica.com/information-technology/2016/12/microsofts-surface-hub-sales-surprisingly-strong-its-a-huge-hardware-hit/ 4) https://www.nec-display-solutions.com/p/hq/en/company.xhtml 5) http://articles.economictimes.indiatimes.com/2015-07-28/news/64957953_1_foxconn-indian-smartphone-market-march-2016 6) https://matterport.com/about/ Business overview Company Description for Listing on Nasdaq First North 15
BUSINESS OVERVIEW
Hoylu creates solutions with focus on user experience and creativity to help people collaborate better and smarter. The company focuses on software for Creative Collaboration combined with input and display technologies. This includes technologies for tying workspaces in different geographic locations together, which give employees the possibility to collaborate intuitively and effortlessly, independently of location.
INTRODUCTION TO HOYLU By combining the above aspects, Hoylu has the potential to gain market shares in the market for collaborative The founders of Hoylu have identified an increased solutions by offering the following unique selling points: demand for Creative Collaboration solutions and at the same time the technology is becoming more and more ● Unique combination of hardware and software for flexi- complex, requiring a multitude of skills in different fields to bility to create, edit, present and share various types of be designed and developed. Instead of focusing on single content creators, current creative processes often involve multi- ● Powerful and easy to use software for Creative Collabo- disciplinary teams of very specialized individuals with ration on tablets, laptops, large displays and interactive different backgrounds, education and skills that work walls together for extended periods of time, often from a range ● Input methods including pen and paper, interactive of different locations and work environments. Through tables and virtual and augmented reality experiences technology, Hoylu believes it can help by bridging the gap with a goal to offer the best experience and simple between analog and digital workpractices and take one usage in combination with learning and creativity important step towards a more fluid and seamless ● Goal to offer the first interactive display and whiteboard collaboration that incorporates different types of media. solution to include collaborative virtual reality and/or augmented reality To achieve this goal, Hoylu will combine different technol- ● Remote collaboration for enterprises working globally ogies and software that will simplify and streamline work to offer solutions for location independent work life. More specifically the Company will focus on: ● Wide range of complementary offerings to address the needs of both individuals, startups and large enterprises ● Software for Creative Collaboration ● Display technologies including flat panels, interactive walls and virtual and augmented reality glasses GOAL ● Complementary audio video and conferencing technologies Hoylu’s goal is to improve and simplify how people work ● User experience and to provide ultimate quality of work life through effortless, location independent collaboration between enterprises. 16 Company Description for Listing on Nasdaq First North Business overview
FINANCIAL TARGETS
Growth target comparison of actual results against these growth targets Some of the main growth drivers of Hoylu’s business are enables Hoylu to evaluate progress and business tied to; alternatives.
(i) Adoption rate of interactive large format displays Hoylu will also be tracking the number of software licenses within the enterprise, and shipped during a reporting period, net of any returns. The number of software licenses actively used in the market is (ii) adoption and rate of use of software applications a clear indicator of Hoylu’s market position within the designed for usage with interactive large format displays. enterprise collaboration and Creative Collaboration market. Again, Hoylu’s growth target for software licenses The number of interactive displays shipped during a shipped represents Hoylu’s desired benchmark compared reporting period, net of any returns, represents a key to the overall market. Hoylu’s continuous and dynamic metric of Hoylu’s overall progress and positioning in the monitoring of the software licenses shipped provides market place. Hoylu’s growth target for interactive Hoylu with the necessary information to monitor customer displays shipped represents Hoylu’s desired benchmark behavior and react quickly to changing market conditions. compared to the overall market and Hoylu’s ongoing
Growth Targets 2017 2018 2019 Interactive Displays Number of shipped units: Interactive Displays 596 2,036 3,044
Software Licenses Number of shipped units: We-inspire Wall Edition 183 316 412 Number of shipped units: We-inspire Display Eddition 915 1,820 3,020 Number of shipped units: We-inspire Personal Eddition 4,575 9,100 15,100
Associated Revenue Goals (in millions – SEK) Interactive Displays 28 95 145 Software Licenses 19 36 55 Total 47 131 200
Margin target Dividend policy Hoylu’s gross profit and gross profit margin are influenced Earnings and free cash flow will be reinvested in the busi- by contract manufacturing costs, sales mix of software ness over the coming years to promote growth. Hoylu’s licenses versus interactive displays, direct sales versus Board of Directors does not expect a cash dividend to be reseller sales, and fluctuations in the foreign currency distributed to the shareholders in the next three years. exchange. Thereafter, the Board of Directors will review the dividend policy. It is Hoylu’s goal to manage the above factors in such a manner that the gross profit margin is at least 50.0 %. Business overview Company Description for Listing on Nasdaq First North 17
Organization
Chief Executive Officer Stein Revelsby
Chief Financial Chief Technology Chief Strategy Chief Software VP Business VP Sales VP Sales North Officer/Legal Officer Officer Architect Development EMEA America Karl Wiersholm Petter Ericson Greg Harper Thomas Seifried Christian Johnsson Mohan Ramani Brian Slade
Software Senior Product VP Sales Development Manager Operations North America team Hins Chen Brett Berto
SALES DISTRIBUTION MODEL (i) Large multinational enterprises, and (ii) influential regional mid-market enterprises, to provide Hoylu has a flexible go-to-market strategy, which consists Hoylu’s reseller partners with product use cases and of both a pursuit of direct OEM/direct house accounts and reference customers to accelerate sales growth. an existing reseller program for partners across the globe. Hoylu’s sales and distribution model will continuously be Hoylu intends to continuously invest in its direct sales monitored and dynamically managed to ensure that the capabilities as well as its channel partners to optimize programs are optimized to allow Hoylu and its reseller Hoylu’s market focus, improve segmentation, and expand partners to reach customers across a variety of industries geographical presence. Hoylu will proactively work with its around the globe. channel partners to ensure that they have compelling business incentives and discounts, along with training, The Company’s OEM/direct house accounts strategy is marketing programs, and technical support through designed to focus and strengthen Hoylu’s reach and Hoylu’s reseller program. impact on; 18 Company Description for Listing on Nasdaq First North Business overview
HOYLU’S OFFER Hoylu combines its own software for collaboration with The Company is expecting the first hardware solutions to hardware and software from its suppliers into a solution be available for market launch during the second quarter for presentation, communication and interactive collabo- of 2017 followed by virtual and augmented reality solu- ration that includes touch tables and touch panels with tions the coming months as a result of the strategic invest- pen support and virtual and augmented reality. ment in VR-Global.
Today the Company is selling Creative Collaboration solu- Hoylu’s solution is modular and can be combined in differ- tions under the We-inspire brand, which will be merged ent ways to fit the needs of different work environments into the Hoylu brand. Touch-tables and touch-panels with and types of businesses. Several existing We-inspire active pen support will be embedded into the solutions customers have implemented multiple of these solutions together with content creation platforms for virtual and to strengthen innovation processes throughout the augmented reality. When launched, the new solutions will customer company. The following table highlights five be sold under the Hoylu brand worldwide with an initial different possible work scenarios, showcasing the wide focus on Europe and the US. range of possibilities of Hoylu’s solution.
MOBILE WORK Hoylu envision that individuals can join and actively participate in meetings using virtual reality glasses. Pen and paper allows for an easy and lightweight solution to share ideas and sketches.
These settings will help to gather inspiration and share news with colleagues as soon as they happen.
PERSONAL WORKSPACE Hoylu’s co-creation software can be used on personal computers, which allows the user to prepare meeting materials and presentations in advance or summarize and followup on meeting results in the comfort of the users own personal workspace. Personal paper notes can easily be digitized and Hoylu will continue to improve sharing of content across different devices. Business overview Company Description for Listing on Nasdaq First North 19
SMALL MEETING SPACE / HUDDLE ROOM Hoylu’s large-format interactive displays with pen and touch input work seamlessly with the Company’s software and allow for sharing from both traditional paper as well as digital content from sources like phones, tables and screens. The solution is customized to fit small, multi- purpose meeting rooms that are equipped with video-conferencing equipment.
Hoylu believes that these informal meeting rooms and spaces are the backbone of every innovative company, since this is where collaboration and innovation happens on a day-to-day basis.
INNOVATION ROOMS / PROJECT SPACES Innovation Rooms is where the We-inspire solution was born. Large interactive walls allow multiple people to create, refine, structure and share ideas in parallel using Hoylu’s software applications. Integrating traditional paper allows beginners to actively participate in the sessions and content can also be presented and shared from digital devices. Integrating virtual and augmented reality applica- tions will bridge the gap between the digital and analog world and yield great benefit for industries like design, engineering and architecture.
Hoylu Innovation Room is the flagship product and can contain all Hoylu’s products.
SHOWROOMS In Hoylu Showrooms Hoylu strive to have a clean, elegant design to make a lasting impression on customers. With the combination of easy to use touch displays and intuitive software Hoylu’s goal is to ensure that user customers can actively participate and feel engaged in the sales process and virtual reality enables a whole new range of possibili- ties to showcase products and projects.
The Company believes that showrooms are prefect to convey an image of a company to the public and underline the innovative character of a business.
To improve these different solutions, Hoylu will have additional dialogs with existing We-inspire partners, such as Bene GmbH, to co-develop the environments mentioned above from both a technology and furniture design perspective. 20 Company Description for Listing on Nasdaq First North Business overview
Image courtesy of Bene GmbH 2016 Business overview Company Description for Listing on Nasdaq First North 21
SOFTWARE OFFERING AND STRATEGIC PARTNERS By combining hardware with software from We-inspire and strategic partners, Hoylu offer solutions with the goal to simplify everyday work.
HOYLU AB Headquarter Convertible bond Location: Malmö, Sweden 10 % Publicly Traded (Nasdaq First North) Employees: 7
Wholly owned Wholly owned subsidiary subsidiary
w’inspire GmbH HOYLU, INC. 100 % 100 % Collaboration Software US Operations Location: Linz, Austria Location: Los Angeles Employees: 2 Employees: 7 Strategic investment
Virtual & Augmented Reality
WE-INSPIRE
We-inspire has being selling its solutions to customers shows a break-down of the current We-inspire customer from various fields since 2013. Previously, We-inspire has base by company size. More than half of the customers primarily offered high-end interactive wall solutions for have more than 1,000 employees and around 1/8th of the innovation labs and showrooms. The solutions are being companies have over 100,000 employees. used in presentation, training and workshop scenarios and are aimed to replace traditional passive projection screens as well as analog meeting room equipment like white- Figure 2: We-inspire customers by company size boards, pin boards and flipcharts.
>100K employees, 16 % <100 employees, 10 % To reach a global customer base as well as many different industries, We-inspire has partnered both with furniture companies as well as several value-added resellers and integrators. Figure 1 shows the type of customers by 10K–100K 100–1,000 employees, 33 % industry. employees, 24 %
1K–10K employees, 17 % Figure 1: We-inspire customers by industry
Misc, 8 % Higher Education & To better support customer workflows and to be able to Public Sector, 20 % Energy & Oil, 4 % create more exposure and deliver software to more users Medical & Pharma, 7 % in these large companies, in 2015 We-inspire started to
Consumer goods & Engineering & develop software for personal tablets, laptops and PCs Food, 8 % Automotive, 12 % (We-inspire personal), which was launched in summer Consulting & R&D, 7 % 2016. With this additional offering, customers can now Real estate, Architecture & also use We-inspire software from their own desk to IT & Electronics, 7 % Construction, 11 % prepare meetings or follow up on meeting results created Media, Design & Arts, 8 % Financial, Legal & Insurance, 8 % on the interactive walls. The goal with this solution is to have a software offering for each employee and We- About 40.0 % of these companies or institutions operate inspire has entered discussions and trials with selected globally with multiple companies having installed multiple wall-customers to install We-inspire software on every solutions in different countries around the globe. Figure 2 employee’s laptop or tablet computer. 22 Company Description for Listing on Nasdaq First North Business overview
Also, to meet the growing demand for a solution for organizations – allowing for a deeper integration in work- smaller meeting rooms (huddle rooms), We-inspire has flows. Going forward, touch-tables and touch-panels with started to work on a dedicated edition of the software for active pen support will also be embedded into the solu- large-format interactive displays (We-inspire display tions together with content creation platforms for virtual edition) which was first shown publicly in beginning of the and augmented reality. fourth quarter of 2016 and will be fully launched in the first quarter of 2017. The software can be used with any touch We-inspire offers several collaborative creation software display which allows customers to use existing infrastruc- solutions with a goal to revolutionize innovation environ- ture and hardware. ments worldwide and to enable more effective teamwork. Available in three editions, the We-inspire software is In addition to the new personal and display editions of the optimized for three different screen sizes. The “personal software, We-inspire has also started to introduce and edition” is perfect for personal laptops, the “display promote an “upgrade program” that allows customers to edition” is designed for large group displays and the “wall continuously upgrade to the latest version of the software edition” includes a unique user interface, which makes it in exchange for a recurring, yearly upgrade fee. perfect for multi-projector interactive walls. The goal is to support todays flexible and collaborative workflows With these new additions to the product portfolio spanning different types of analog and digital media, We-inspire expect to reach both a larger range of demographics as well as work-environments and physical customers as well as more users within the customer locations.
We-inspire We-inspire We-inspire wall edition display edition personal edition
Wall UI with sliding menu, Desktop UI with dockable menu Desktop UI custom filebrowser & dark theme
Fullscreen window with multiscreen Resizable window Resizable window support & gesture controll
80˝– 400˝ 32˝– 100˝ <32˝
Multiuser support Multiuser support Single user support
Multi Stylus and Touch Support Multi Stylus and Touch Support Stylus and Touch Support Business overview Company Description for Listing on Nasdaq First North 23
The solutions are based on over eight years of research in interaction design and collaborative office environments and have been developed in close collaboration with some of the most innovative research labs, automotive, furniture and design companies in the world. The We-inspire software solutions include:
We-inspire Sketch board We-inspire sketch board is a virtual whiteboard or flipchart space for visual thinking. Each sketch board session can consist of hundreds of individual pages which allow the user to create, annotate and present visually in a unique and intuitive way. It offers: ● Easy to use, lightweight interface for fast thinking and idea generation, ● multiple drawing tools including highlighter and pressure sensitive pen, ● 400 page sketching canvas with intuitive navigation, ● support for images and integrated icons, ● support for page templates, ● eraser and selection tools, ● gesture based shortcuts for efficient interactions, ● support for multiple active pens and simultaneous pen and touch interaction, and ● optimized user interface available for large format displays and interactive walls.
We-inspire Pin board We-inspire pinboard was created to increase users space for new ideas. Digital pinboards allow users to collect, structure and organize their ideas and inspirations with the possibility to zoom in or out. It offers: ● Optimized interface to structure content using colors, groups and links, ● interactions to create, edit, duplicate and delete new content, ● links to original sources for images included from websites, ● 400 pinboards in grid view with easy navigation, ● support for images and integrated icons, ● support for page templates, ● support for multiple active pens and simultaneous pen and touch interaction, and ● optimized user interface available for large format displays and interactive walls.
We-inspire Paper We-inspire paper is a software used to digitize content created on traditional paper. The user download PDF- templates directly from within an app and print them using an ordinary printer. Using a digital pen anything the user write will appear in the application in real time. Several pens can be used in parallel and various paper formats support different use cases.
For use in teams, the We-inspire paper app is mostly for: ● Brainstorming and creativity techniques relying on sticky-notes, ● collaborative sketching and planning, ● visual recording, For personal use, the We-inspire paper allows to: ● interactive meeting notes, ● Review paper-files created in workshops, ● interactive Q&A sessions, and ● quickly digitize sketches and handwriting, and ● learning and training scenarios. ● get high-resolution vector information of your strokes. 24 Company Description for Listing on Nasdaq First North Business overview
VR GLOBAL HARDWARE OFFERING VR Global is a New York based company with a global Hoylu offers a whole range of touch displays from 35” to presence. VR Global’s enterprise ready solutions deliver over 65” with premium performance and antiglare and experience seamlessly across mobile, web, virtual and antifingerprint coating benefits. augmented reality platforms. The company offers custom- ized and white labeled applications for real estate, educa- Tap Table 43” tion, entertainment and healthcare. The Tap Table is a premium 43” versatile touch table with 4K resolution for presentation and enterprise collabora- VR Global’s proprietary, patent pending, platform technol- tion. The table is delivered as a complete solution includ- ogy ties together traditional 2D media assets along ing software and is ideally used as a tool for collaborating content such as 360 and 3D photos and videos, rendered in teams, presenting ideas to clients or visualizing complex models and CGI. sales or 3D-projects.
Hoylu has made a strategic investment in VR Global in Hoylu uses premium touch technology with glass bonding form of a convertible bond giving Hoylu an option to and surface coatings for the Tap Table to give the users a convert its bond to 10.0 % of the shares in the company, smooth and responsive touch input and to minimize paral- with further option to increase its holdings up to 30.0 %. lax and glare effects. Several people can collaborate using Hoylu and VR Global will co-operate in the development of both hands and high precision pens simultaneously. software solutions to integrate VR Global’s content crea- tion platform for virtual and augmented reality with Hoylu’s presentation and collaboration solutions. Business overview Company Description for Listing on Nasdaq First North 25
Tap Board 65” The Tap Board is a premium 65” touch and pen display used as a drafting table as a single display or with up to with 4K resolution for intuitive collaboration. It provides an four Tap Boards together. interactive canvas for idea generation, presentation and interactive meetings. Hoylu uses professional grade LCD The Tap Board is supporting both Android and Windows and surface coated antiglare glass on the Tap Board 10 as well as complete BYOD (bring your own device) together with precision capacitive touch and multiple capabilities via Wi-Fi, USB or a proprietary wireless active stylus support. It can be mounted on the wall or accessory to connect any PC or Mac for content sharing.
Tap Shop 32” The Tap Shop is a premium touch display kiosk for instore ecommerce and interactive information, i.e., a solution for merging of retail shops and ecommerce industries. The 32” capacitive touch display is optically bonded and surface coated for increased image quality and contrast. The Tap Shop incorporates a preconfigured Intel NUC PC with ecommerce software that connects directly into the retail shop’s existing ecommerce platform. 26 Company Description for Listing on Nasdaq First North Business overview
COMPANY ORGANIZATION Hoylu’s headquarter is in Malmö, Sweden, with offices in Los Angeles, USA and Linz, Austria. The Company’s prod- uct development is divided between hardware, managed from Sweden and software, managed from Austria. In addition, Hoylu has one full time employee in China for support and follow up of its contract manufacturers. Hoylu owns 100 % of its subsidiaries Hoylu Inc. (US) and We-inspire (Austria). There are currently 16 full-time employees and consultants within the Group. Pro forma accounts Company Description for Listing on Nasdaq First North 27
PRO FORMA ACCOUNTS
PURPOSE OF PRO FORMA PRO FORMA INCOME STATEMENT FINANCIAL STATEMENTS JANUARY 1, 2016 – DECEMBER 31, Hoylu was established in October 2016 and in the end of 2016 December, 2016, the Company signed an agreement to acquire all of the shares of We-inspire headquartered in The income statement for We-inspire was converted from Linz, Austria. The Company’s acquisition of We- EUR to SEK at the average exchange rate of SEK 9.5 as inspire will have a significant impact on the Company’s provided by the Riksbanken for the period 1 January 2016 future earnings and financial position and therefore the – 31 December 2016. disclosure of the pro forma financial statements.
The unaudited pro forma financial information has been FORMATION OF THE PRO FORMA prepared to illustrate the hypothetical effect of the acqui- sition of We-inspire on the Company’s financial position ACCOUNTS and results for the twelve-month period from 1 January The pro forma accounts are based on the audited annual 2016 to 31 December 2016 as if the transaction had been report of We-inspire for the financial year 2015/2016 and undertaken and completed on 1 January 2016. the nonaudited financial figures for the period 1 July 2016 – 31 December 2016, which is incorporated by reference and The pro forma statements are intended to describe a should be read together with the “PRO FORMA hypothetical situation and not the Company’s actual finan- ACCOUNTS”. Since the parent company was established cial position or results. Furthermore, the pro forma finan- in October 2016 no reports are available and the figures cial statements are not representative of how the business for Hoylu AB are therefore based on unaudited financial result will look like in the future. information from the Company’s accounting system.
Hoylu’s auditor’s report of the pro forma accounts can be found on page 30 in the Company Description.
PRESENTATION OF PRO FORMA FINANCIAL STATEMENTS The pro forma income statement is based on We-inspire’s unaudited income statement prepared in accordance to the Swedish Accounting Standard Boards Issued stand- ards K3. The pro forma income statement has been prepared as if the acquisition had occurred on 1 January 2016. 28 Company Description for Listing on Nasdaq First North Pro forma accounts
INCOME STATEMENT PRO FORMA FISCAL YEAR 2016 Pro forma (in Thousands – SEK) Hoylu AB We-inspire adjustments Pro forma Net Revenue 0 4,066 0 4,066 Cost of Goods Sold 0 –1,218 0 –1,218 Gross Profit 0 2,848 0 2,848
Sales, admin and R&D expenses –280 –3,837 0 –4,117 Other Expenses 0 –148 0 –148 Operating Result –280 –1,137 0 –1,417
Other financial expenses 0 23 0 23 Net Income Before Tax –280 –1,114 0 –1,394
Ta x 0 1 0 1 Net Income Before Tax –280 –1,113 0 –1,393
BALANCE SHEET PRO FORMA AS OF 31 DECEMBER 2016 Pro forma (in Thousands – SEK) Hoylu AB We-inspire adjustments Pro forma ASSETS Total Long Term Assets 183 114 0 297 Total Current Assets 25,000 1,782 0 26,782 Cash 99 1,457 0 1,556 TOTAL ASSETS 25,282 3,353 0 28,635
EQUITY & LIABILITIES Total Shareholders Equity 24,820 1,296 0 26,116 Total Long Term Liabilities 0 40 0 40 Total Current Liabilities 462 2,017 0 2,479 TOTAL EQUITY & LIABILITIES 25,282 3,353 0 28,635
CASH FLOW ANALYSIS PRO FORMA FISCAL YEAR 2016 Pro forma (in Thousands – SEK) Hoylu AB We-inspire adjustments Pro forma Cash flow from operating activities 182 –229 0 –47 Cash flow from capital expenditures –183 0 0 –183 Cash flow from financing activities 100 0 0 100 Cash flow for the period 99 –229 0 –130
Cash at the beginning of the period 0 1,686 0 1,686 Cash at the end of the period 99 1,457 0 1,556
Pro forma accounts Company Description for Listing on Nasdaq First North 29
COMMENTS ON THE PRO FORMA CASH FLOW INCOME STATEMENT The cash flow of the Group showed a negative develop- Since the Company was established during the end of ment due to a number of administrative costs with the 2016 and did not carry out any sales during the remaining only cash flow being generated from the establishment of period of the year, the Company’s net revenue in the pro Hoylu (SEK 0.1 million). The total cash at the end of the forma derives solely from revenues in We-inspire. This period resulted in SEK 1.6 million which is the first does not reflect future allocation of revenues and profits. measurable period for the Group.
The revenue in We-inspire for 2016 netted at SEK 4.0 million showing a SEK 2.8 million gross profit. OTHER COMMENTS We-inspire had sales, administrative and R&D costs We-inspire’s main product offering is the We-inspire amounting to SEK 3.8 million. Going forward, most of the software, which has seen high margins and means that sales costs and some of the administrative costs will be Hoylu’s gross margin increases as sales of the We-inspire transitioned to Hoylu. software increase. Furthermore, the sales, admin and R&D expenses associated with additional We-inspire software Hoylu’s costs during 2016 of SEK 0.3 million mainly sales are nominal, meaning that the majority of the consisted of administrative costs associated with the increased gross profit resulting from additional sales of establishment of the Company. We-inspire software will show up as profit on the bottom line.
BALANCE SHEET In 2016 We-inspire’s sales were limited to the sale of the The Company carried out a directed share issue in January product “Wall Edition”. We-inspire’s expanded software 2017 which in the pro forma gave the Company offering (Wall Edition, Display Edition, and Personal SEK 25 million in receivables pending the settlement of Edition) combined with Hoylu’s interactive touch displays the directed share issue. Other assets in Hoylu at the time (the Tap Board and the Tap Table) significantly increases of the pro forma consisted of cash and long term assets Hoylu’s addressable market. Thus, Hoylu’s overall revenue amounting to SEK 0.3 million. Hoylu’s current liabilities is expected to increase, including the revenue generated consists of accounts payables which at the time of the pro from the sale of the high margin We-inspire software, forma amounted to SEK 0.5 million. providing possibilities to grow with profitability.
We-inspire’s total assets amounts to SEK 3.4 million including cash (SEK 1.5 million) and current assets (SEK 1.8 million).
The Group’s consolidated pro forma shows an asset increase due to the directed share issue in Hoylu as well as the equity and liabilities in We-inspire (SEK 3.4 million). 30 Company Description for Listing on Nasdaq First North Pro forma accounts
AUDITOR’S REPORT OF THE PRO FORMA ACCOUNTS Pro forma accounts Company Description for Listing on Nasdaq First North 31 32 Company Description for Listing on Nasdaq First North Capital structure and other financial information
CAPITAL STRUCTURE AND OTHER FINANCIAL INFORMATION
The following information shows Hoylu’s capitalization and Hoylu performed a directed share issue securing SEK 25 indebtedness as of 25 January 2017. Please be referred to million at a pre-money valuation of SEK 12.5, as described “Share capital and ownership structure” for further infor- on page 45, on 3 January 2017 to capitalize the company mation about the Company’s share capital and shares. The for market entry and the acquisition of the shares in information mentioned hereinafter is based on unaudited We-inspire, the assets in Nada Yada and to make a strate- financial information from the Company. gic investment in VR Global. Information regarding the We-inspire and VR Global are to be found under “Business Overview”.
Shareholders’ Equity and Liabilities Net Financial Indebtedness (in millions – SEK) 25 January 2017 (in millions – SEK) 25 January 2017 Total current liabilities 6.3 (A) Cash 11.0 Guaranteed 0.0 (B) Cash equivalents 0.0 Secured 0.0 (C) Trading securities 0.0 Unguaranteed/unsecured 6.3 (D) Liquidity (A)+(B)+(C) 11.0
Total non-current liabilities 0.0 (E) Current financial receivables 0.0 Guaranteed 0.0 (F) Current bank debt 0.0 Secured 0.0 Current portion of Unguaranteed/unsecured 0.0 (G) non-current debt 0.0
Total shareholders' equity 27.2 Other current debt (H) (non-interest bearing) 6.3 Share capital 0.1 Current financial debt Legal reserve 27,1 (I) (F)+(G)+(H) 6.3 Other reserves 0.0 (J) Net current financial indebtedness (I)–(E)–(D) –4.7 (K) Non-current bank loans 0.0 (L) Bonds issued 0.0 (M) Other non-current financial debt 0.0 (N) Non-current financial indebtedness (K)+(L)+(M) 0.0
(O) Net financial indebtedness (J)+(N) –4.7 Use of Proceeds AVG FX Rate 1,00 9,02 9,52 Description SEK USD EURO SEK Total Nada Yada – Asset Acquisition – Partial Payment 1,000,000 1,000,000 VR Global – Strategic Investment 750,000 6,765,000 We-inspire GmbH – Acquisition – Payments 500,000 4,757,500 Hoylu, Inc. – Issuance of Shares 100,000 902,000 Hoylu, Inc. – Intercompany Loan 70,000 631,400 Demo Items 17,802 160,574 Total 14,216,474 Capital structure and other financial information Company Description for Listing on Nasdaq First North 33
Working Capital Statement in January 2017. In connection with the acquisition, and in The Board of Hoylu believes, as of the date of this order to obtain important know-how from Nada Yada AB’s Company Description, that the working capital is sufficient founder Christian Johnsson, Hoylu entered in to an agree- for the current needs over the next 12 months. ment with Nada Yada AB regarding Nada Yada AB’s provi- sion of consultancy services. The consultancy agreement This means that the Company can meet its payment obli- is at arm’s length with customary terms and conditions gations, operate and develop the business to the extent and may be terminated with two months prior written that the Board has planned. To become profitable Hoylu notice. The amount payable to Nada Yada AB under the has developed and packaged an expanded product line consultancy agreement is SEK 130,000 per month. that includes hardware and software products in such a way that Hoylu hope will enable Hoylu to grow and scale Furthermore, in January 2017, the Company acquired all of internationally. Hoylu has also established a sales network the outstanding shares of We-inspire. The consideration together with We-inspires existing network of domestic for We-inspire amounted to a total of EUR 1,155,000 and international reseller partners. By pursuing the global whereof EUR 500,000 was paid in cash, EUR 340,000 market with the expanded product line through the sales was contributed through a note payable and 600,000 network, Hoylu hope to increase revenue and resulting shares in Hoylu were issued and contributed to the sellers margins to enable Hoylu to become profitable. The Board of We-inspire for a value of SEK 5.00 per share. The note of Hoylu expect that the Company will be profitable by the payable carries no interest and is due for payment as end of the third quarter of 2017 and that the Company’s follows: EUR 70,000 on 31 March 2017, EUR 120,000 on working capital is sufficient to finance the Company’s 30 June 2017 and EUR 150,000 on 30 September 2017. operations until this time. Significant Events after 31 December 2016 Investments To the knowledge of the Board of Directors, no significant During the last quarter of 2016 the Company entered into events other than those described under this section and an agreement with VR Global through Hoylu, Inc. whereby under “Share Capital and Ownership Structure” have the Company will make a strategic investment in VR occurred after 31 December 2016 that are expected to Global by way of a USD 750,000 convertible note that the have a material impact on the business other than what is Company may convert into 1,350,000 new shares of VR described above (Acquisitions), except for the subsequent Global representing 10.0 % of the shares of VR Global (the listing process on First North. “1st Convertible Note”). The Company completed the investment of the 1st Convertible Note in January 2017 and Certified Adviser the maturity date of the 1st Convertible Note is three years. Remium, who is a member of and has an agreement with Nasdaq Stockholm AB, is engaged as Hoylu’s Certified Furthermore, the agreement also enables the Company to Adviser. In connection with a listing on First North, compa- make a follow-on investment in VR Global later in 2017, nies are required to engage a Certified Adviser in relation again by way of a USD 1,249,994 convertible note (the “2nd to the application process. The Certified Adviser is obli- Convertible Note”). The maturity date of the 2nd Converti- gated to guide the Company in the process and to monitor ble Note is three years. In the event the Company makes that the Company is in compliance with the rules and the investment, the 2nd Convertible Note is convertible regulations, both during the application process as well as into up to 3,900,000 new shares of VR Global. The when traded on First North. percentage of VR Global shares that the Company may obtain as a result of the conversion of the 2nd Convertible Liquidity Provider Note will be in the 10.0 % to 20.0 % range depending on The Company has entered into an agreement with the valuation of VR Global at the time of the conversion. Remium to act as liquidity provider, which aims to promote liquidity in Hoylu’s shares when traded on First The Company may, in its sole discretion, elect to either North. convert the notes into shares of VR Global or request immediate repayment of the loan amounts, in the event of The agreement runs until further notice from the listing a change of ownership in VR Global. day.
Acquisitions Off Balance Sheet Arrangements The Company, during the last quarter of 2016, entered into The Group is not a party to any offbalance sheet arrange- an agreement with Nada Yada AB whereby the Company ments that have, or are reasonably likely to have, a current agreed to purchase all of the assets of Nada Yada. The or future material effect on the Group’s financial condition, purchase price of SEK 2.5 million was made up of a SEK changes in financial condition, revenue or expenses, 2.0 million cash payment and 100,000 new shares valued results of operations, liquidity, capital expenditure or at SEK 5.00 per share in the Hoylu. The transaction closed capital resources. 34 Company Description for Listing on Nasdaq First North Capital structure and other financial information
KEY BUSINESS METRICS ● Service Revenue is derived from a variety of services such as technical support, software maintenance, instal- In addition to the financial measures presented in Hoylu’s lation, and non-recurring engineering projects. pro forma financial statements, please be referred to page 27, Hoylu utilizes numerous key business metrics to moni- Cost of Goods Sold tor and evaluate its business, measure its performance, Hoylu’s cost of goods sold is comprised of the following: develop financial forecasts and budgets, and make ● Development efforts associated with the maintenance strategic decisions. of Hoylu’s software products.
Interactive Displays Shipped ● Data center costs associated with the distribution and The number of interactive displays shipped represents the hosting of Hoylu’s software products. number of individual interactive displays that are shipped ● Manufacturing costs of Hoylu’s interactive displays during a reporting period, net of any returns. Hoylu carries payable to third-party contract manufacturers. a variety of interactive displays and other peripherals and Hoylu monitors interactive displays shipped monthly, as it ● Third-party logistics costs. is a key indicator of revenue trends for a reporting period. ● Inbound and outbound freight costs and duties. The Company also uses interactive displays shipped to help optimize its fulfillment operations to enhance operat- ● Costs associated with the repair of products under ing efficiencies and thereby improving customer warranty. satisfaction. ● Inventory writedowns to adjust for obsolete inventory. Software Licenses Issued The number of software licenses issued represents the Gross profit and gross profit margin number of individual software licenses that are issued Hoylu’s gross profit and gross profit margin are influenced during a reporting period, net of any returns. The by several factors: Company offers a variety of software licenses and ● The cost of the underlying components and contract monitors software licenses issued monthly, as it is a key manufacturing of interactive displays. indicator of revenue trends for a reporting period. ● The sales mix of software licenses versus interactive Adjusted EBITDA displays; as well as the direct sales versus reseller sales. Adjusted EBITDA is a non-IFRS financial measure that Hoylu ● Foreign currency exchange. calculates as net income (loss), adjusted after excluding the impact of: (i) provision (benefit) for income taxes, (ii) inter- est income, (iii) interest expense, (iv) depreciation and Operating expenses amortization, (v) non-recurring financial expense, and (vi) Hoylu classifies its operating expenses into three catego- stock option expense. The Company uses adjusted EBITDA ries: research and development, sales and marketing, and as a key measure to understand and evaluate its core oper- general and administrative. ating performance and trends, to prepare and approve its annual budget and to develop short- and longterm opera- Research and development expense consists primarily of tional plans. The exclusion of certain expenses in calculating personnel costs, in addition to costs related to product adjusted EBITDA may provide a useful measure for peri- design, testing, facilities and information technology od-to-period comparisons of Hoylu’s business and the systems. Research and development expenses are Company believes that the adjusted EBITDA provides expected to increase in absolute dollars as Hoylu contin- useful information to investors and others in understanding ues to invest in new product solutions, software applica- and evaluating Hoylu’s operating results in the same manner tions, and other offerings. as Hoylu’s management and Board of Directors. Sales and marketing expenses consist of personnel related Components of Hoylu’s Results of Operations costs, including various incentive based components, Revenue costs related to marketing campaigns and public relations, Hoylu’s revenue is comprised of: travel and entertainment costs, information technology ● Software licensing revenue is derived from the sale of systems and other sales and marketing expenses. Sales Hoylu’s software products, directly to Hoylu’s custom- and marketing expenses are expected to increase as ers, as well as through Hoylu’s network of domestic and Hoylu’s sales increase. international reseller partners. General and administrative expense consists of personnel ● Product revenue is derived from the sale of Hoylu’s related costs, costs of professional services, such as interactive large format displays, interactive touch accounting and legal, facilities, insurance, investor rela- tables, peripherals and accessories, along with other tions, information technology systems and other adminis- third party products, directly to Hoylu’s customers, as trative expenses. General and administrative expenses are well as through the Company’s network of domestic expected to increase as Hoylu’s overall business grows. and international reseller partners. Capital structure and other financial information Company Description for Listing on Nasdaq First North 35
Other income (expense) Other income (expense), net consists of interest expense associated with Hoylu’s financing arrangements and inter- est income earned on Hoylu’s cash and investment balances. Hoylu does not utilize derivatives to hedge its foreign exchange risk, as Hoylu believe the risk to be immaterial to its results of operations.
Income tax expense Hoylu is subject to income taxes in Sweden, Austria, and the United States and other foreign jurisdictions in which it conducts business. The foreign jurisdictions have statutory tax rates different from those in the Sweden. Hoylu’s effec- tive tax rates will vary depending on the proportion of foreign income to the income in Sweden as well as the availability of foreign tax credits and changes in tax laws. 36 Company Description for Listing on Nasdaq First North Board of Directors, Executive Officers and Auditor
BOARD OF DIRECTORS, EXECUTIVE OFFICERS AND AUDITOR
The Board of Directors of Hoylu currently consists of four All of the members of the Board are independent in rela- members elected for the period ending at the next Annual tion to the larger shareholders of the Company (i.e. share- General Meeting. The Executive Officers of Hoylu currently holders that directly or indirectly own 10.0 % or more of consists of Stein Revelsby (CEO) and Karl Wiersholm the Company’s shares or votes). Except for Stein Revelsby, (CFO). all of the members of the Board are, in the Board’s opinion, independent in relation to the Company. Stein Revelsby is dependent due to his assignment as CEO of Hoylu. THE BOARD OF DIRECTORS The table below sets out the members of the Board of As set out in the Company’s Articles of Association, the Directors, their year of birth, their position, the year of Board shall consist of not less than three and not more their initial election and their shareholdings. than seven members with a maximum number of seven deputies. The work of the Board is led by its Chairman.
BOARD OF DIRECTORS Name Born Position Elected Holdings Mats Andersson 1948 Chairman 2016 200,000 shares
Stein Revelsby 1962 Member, CEO 2016 225,000 shares (250,000 synthetic options)
Robert Tejme 1961 Member 2016 182,958 shares Jon Ullmark 1975 Member 2016 None
Board of Directors, Executive Officers and Auditor Company Description for Listing on Nasdaq First North 37
MATS ANDERSSON ROBERT TEJME Chairman of the Board Member of the Board Born: 1948. Born: 1961. Education: Economy (DME), law and psychology. Education: BSc in Business and Economics, Stockholm Main occupation: Senior Strategic Advisor. School of Economics. Other current assignments: Chairman of the Board of Main occupation: Entrepreneur. Dafo Brand Aktiebolag, Bluetest Aktiebolag, Cleanwater- Other current assignments: Chairman of the Board and tech CWT AB and Azurans Capital Project Insure AB. CEO of Tejme Invest AB. Chairman of the Board of Member of the Board of Un Invest i Norden AB and C Security Systems AB (publ). ZugDoc AB. Previous assignments (past five years): COO of Hyper Previous assignments: Chairman of the Board of Island Capital AB. Team-Sportia AB, IQS AB and Active Sport Group Shareholding in Hoylu: 182,958 shares. Europe AB. CEO of Anticimex AB. Independent in relation to larger shareholders and in relation to the Shareholding in Hoylu: 200,000 shares. Company. Independent in relation to larger shareholders and in relation to the Company.
STEIN REVELSBY JON ULLMARK Member of the Board, CEO Member of the Board Born: 1962. Born: 1975. Education: MBE, Norwegian School of Management (BI). Education: MSc in Computer Computer Science, Royal Main occupation: CEO of Hoylu. Institute of Technology in Stockholm. Other current assignments: Member of the Board of Main occupation: Area Manager and Non-Executive Abyssinia Resources AS and Belle Epoque AS. Director. Previous assignments (past five years): Member of the Other current assignments: Member of the Board of Board of Cenium AS, Virtualworks Inc. Member of the Azurans Capital Project Insure AB and Dafo Brand Aktie- Board and CEO of Anoto Group (publ). bolag. Deputy board member of re-consider AB. Shareholding in Hoylu: 225,000 shares through Standard Previous assignments (past five years): External CEO of Förvaltning AS and 250,000 synthetic options. C Security Systems AB (publ). Independent in relation to larger shareholders, dependent in relation Shareholding in Hoylu: None. to the Company. Independent in relation to larger shareholders and in relation to the Company. 38 Company Description for Listing on Nasdaq First North Board of Directors, Executive Officers and Auditor
EXECUTIVE OFFICERS OTHER INFORMATION ABOUT THE BOARD OF DIRECTORS AND THE EXECUTIVE OFFICERS All members of the Board and the Executive Officers can be contacted via the Company’s address: Nordenskiölds- gatan 24, 211 19 Malmö, Sweden
None of the members of the Board or the Executive Officers have over the last five years, (i) been convicted of a fraud-related case, (ii) been involved in bankruptcy, liquidation, bankruptcy proceedings or company reconstruction in his capacity as a member of a Board of Directors or as Executive Officers, except that Mats Andersson was Chairman of the Board of Team-Sportia AB from September 2013 to August 2014 when it was undergoing company reconstruction to assist in the recon- STEIN REVELSBY struction and resigned when the reconstruction was Member of the Board, CEO finished (iii) been subject to official incrimination and/or Please be referred to description under “Board of sanctions by statutory or regulatory authorities, or (iv) Directors” above been prohibited by the courts from being a member of a Board of Directors or governing body, or otherwise to do business.
There are no family relationships among any of the members of the Board or the Executive Officers. None of the members of the Board or the Executive Officers have any private interest that is contrary to the interests of Hoylu. The information above does, however, display that Stein Revelsby, Mats Andersson, Robert Tejme and Karl Wiersholm have financial interest through their shareholdings in Hoylu. Karl Wiersholm and Stein Revelsby also have financial interest through holdings of synthetic options.
KARL WIERSHOLM REMUNERATION TO THE MEMBERS CFO OF THE BOARD AND EXECUTIVE Born: 1963. OFFICERS Education: BBA Finance, University of Wisconsin, Juris Doctor (JD), University of San Diego – School of Law and None of the members of the Board or the Executive MS Accountancy, San Diego State University. Officers has, at the date for this Company Description, Other current assignments: Member of the Board of received any compensation from Hoylu, other than the Athletic DNA, Inc. synthetic options incentive program, as described on Previous assignments (past five years): Member of the page 42, that has been assigned as follows: 250,000 to Board of Anoto, Inc. CFO of Anoto Group AB, Athletic Stein Revelsby as CEO, 40,000 to Karl Wiersholm as CFO, DNA, Inc., Doyenz, Inc. Interim CFO of Auction Edge, Inc. 40,000 to Mohan Ramani as VP of Sales EMEA and 10,000 Shareholding in Hoylu: Shareholding in Hoylu: 200,000 to Hins Chen as Senior Product Manager. Further, none of shares and 40,000 synthetic options. the members of the Board or the Executive Officers are Independent in relation to larger shareholders, dependent in relation entitled to any benefits in conjunction with the termination to the Company. of an assignment as a Board member or as an Executive Officer (other than that set out in provisions in the Execu- tive Officer’s employment contracts regarding employ- ment benefits during the period of notice). Board of Directors, Executive Officers and Auditor Company Description for Listing on Nasdaq First North 39
AUDITOR The auditor of Hoylu is Claudio Henriksson, born 1973. Claudio Henriksson is a Certified Public Accountant and partner at Stromson Revisionsbyrå KB. The auditor can be contacted at Stromson Revisionsbyrå KB, Sveavägen 52, 111 34 STOCKHOLM.
The extra general meeting on 6 February 2017 elected Deloitte AB as new auditor with Per-Arne Pettersson as the auditor in charge. The change of auditor will take effect following registration with the Swedish Companies Registration Office in March 2017. 40 Company Description for Listing on Nasdaq First North Share capital and ownership structure
SHARE CAPITAL AND OWNERSHIP STRUCTURE
GENERAL INFORMATION Dividends The dividend is determined by the Annual General Meeting The Company’s share capital shall, as set out in the upon proposal from the Board of Directors. In the coming Company’s Articles of Association, amount to at least SEK years, the Company does not anticipate any dividends to 500,000 and a maximum of SEK 2,000,000, divided into a be issued as the Company’s development and expansion minimum of 4,000,000 and a maximum of 16,000,000 will be given priority. The amounts of possible future divi- shares. At the date of the Company Description, the share dends will depend on several factors, including profits, capital of Hoylu amounts to SEK 676,000, divided into financial position, cash flow and requirements for opera- 8,200,000 shares. The quota value is approx SEK 0.082. tional capital and growth.
All shares have been issued in accordance with Swedish All shares carry equal rights to dividends, as well as to the law. All issued shares have been fully paid and are freely Company’s assets and potential surplus in the event of transferrable. The shares are registered in a central securi- liquidation. Dividends are payable to shareholders regis- ties depository, Euroclear Sweden, in accordance with the tered in the share register maintained by Euroclear Swedish Financial Instruments Accounts Act (Sw. lag Sweden as of the record date adopted by the general (1998:1479) om värdepapperscentraler och kontoföring av finansiella meeting. instrument). The shares are cleared through the electronic securities system operated by Euroclear Sweden. The ISIN Dividends are normally distributed to shareholders for the shares is SE0009581192. through Euroclear Sweden as a cash payment per share, but may also be paid out in another manner. If sharehold- No shares in Hoylu are subject to mandatory offers, ers cannot be reached through Euroclear Sweden, such redemption rights or redemption obligation at the date of shareholders retain their claim to the dividend amount for the Company Description. ten years. Upon expiry of the ten-year period, the dividend amount shall pass to the Company.
CERTAIN RIGHTS ASSOCIATED There are no restrictions on the right to dividends for WITH THE SHARES shareholders with a domicile outside of Sweden. Except for possible limits imposed by the banking and clearing systems, payments to such shareholders are made in the Voting rights same manner as for shareholders with a domicile in At general meetings of shareholders, each share carries Sweden. Normally, withholding tax is deducted from divi- one vote and each shareholder is entitled to vote the full dend payments to shareholders who are not tax residents number of shares that the shareholders holds in the of Sweden. Company. Share capital and ownership structure Company Description for Listing on Nasdaq First North 41
Share Capital The table below summarizes the share capital developments in the Company’s ordinary share capital since 18 October 2016 to the date of the Company Description.
In order to comply with First North’s requirements relating to a share price of at least 50 Eurocent, the extra general meeting of Hoylu resolved to amend the Company’s share capital and number of shares in several increments. Through a number of separate resolutions the Company changed from having a share capital of SEK 676,000 divided upon 16,900,000 shares (with a nominal value of SEK 0.04) to a share capital of SEK 676,000 divided upon 8,200,000 shares (with a nominal value of SEK 0.082439). The Company’s amendment of share capital and number of shares was regis- tered with the Swedish Companies Registration Office on 13 January 2017.
Total Changes in Change in number of share capital Share capi- Quota value Date Event shares shares (SEK) tal (SEK) (SEK) 18 October 2016 Opening balance – 10,000,000 – 100 0.01 30 December 2016 Reverse split –7,500,000 2,500,000 – 100 0.04 3 January 2017 Directed share issue1) 5,000,000 7,500,000 200 300 0.04 23 January 2017 Directed share issue2) 600,000 8,100,000 24 324 0.04 23 January 2017 Directed share issue3) 8,800,000 16,900,000 352 676 0.04 6 February 2017 Changes in number of shares –8,700,000 8,200,000 – 676 Approx. 0.082 1) Directed to a group of professional investors, including Tore Aksel Voldberg (Solon AS), Eigil Spetalen (Kristianro AS), Reidar Fougner (Fougner Invest AS), Edvin Austbø (Alden AS), Hans Othar Blix (Pollex AS), Jens Miöen and Magnus Uppsäll, at a value of SEK 5.00 per share. More information about the investors on page 44 2) Directed to the sellers of We-Inspire at a value of SEK 5.00 per share (as part payment for the shares in We-Inspire). The following sellers of We-inspire Doctor Jakob Franz Leitner, Doctor Thomas Josef Seifried and Daniel Segui subscribed for 200,000 shares each in Hoylu. The fourth seller Magister Katharina Haller received her EUR 300,000 part of the purchase price as a cash payment 3) Directed to Nada Yada AB (as part payment for the assets in Nada Yada AB). 8,700,000 million of the shares issued have been redeemed without repayment to Nada Yada AB (Christian Johnsson) on 6 February 2017. The remaining 100,000 shares were subscribed for at a value of SEK 5.00 per share
Ownership Structure The table below sets out the current ownership structure of Hoylu as per 6 February 2016 and thereafter known changes.
Shareholder (direct or indirect) Shareholding Per cent SKØIEN AS 1,000,000 12,2 % Kristianro AS 1,000,000 12,2 % Fougner Invest AS 1,000,000 12,2 % Alden AS 1,000,000 12,2 % Jens Miöen 600,000 7,3 % Magnus Uppsäll 577,789 7,0 % Christian Johnsson 300,000 3,7 % Stein Revelsby 225,000 2,7 % Mats Andersson 200,000 2,4 % Karl Wiersholm 200,000 2,4 % Greg Harper 200,000 2,4 % Petter Ericsson 200,000 2,4 % Pollex AS 200,000 2,4 % Robert Tejme 182,958 2,2 %
Others 1,314,253 16,0 % Total number of shares 8,200,000 100 % 42 Company Description for Listing on Nasdaq First North Share capital and ownership structure
CONVERTIBLE BONDS The resolution involved offering and assigning synthetic options as follows: 250,000 to Stein Revelsby as CEO, The Company has no outstanding convertible bonds. 40,000 to Karl Wiersholm as CFO, 40,000 to Mohan Ramani as VP of Sales EMEA and 10,000 to Hins Chen as Senior Product Manager. The exercise period for the LOCK-UP AGREEMENTS synthetic options is 36 months and entitles the holders to receive a cash payment from Hoylu, corresponding to the Stein Revelsby (Standard Forvaltning AS), Karl Wiersholm, difference between the market value of a share in Hoylu Greg Harper, Petter Ericsson, Christian Johnsson (Nada and a previously determined value of SEK 7.00, provided Yada AB) and Mats Andersson have undertaken not to sell that the holder is engaged by Hoylu at the time of exercise. or otherwise assign or transfer their shares in the The net amount of capital gains after tax of the synthetic Company for a certain period. According to the lock-up options may be used as set-off payment in connection agreements, these shareholders may not sell or otherwise with future issues of shares or warrants in Hoylu, subject to assign or transfer their shares in the Company without approval by the general meeting. Remium’s prior written consent until a period of 12 months has elapsed after the date of listing of the shares on First North. In total 1,325,000 shares, corresponding to 16.2 % of the total number of shares in the Company prior to the AUTHORIZATION TO RESOLVE ON offer, are covered by the lock-up restrictions. NEW SHARE ISSUES On 6 December 2016 the extraordinary general meeting in Hoylu resolved to authorize the Board of Directors to SHAREHOLDER AGREEMENTS increase the Company’s share capital by new share issues, To the Board of Director’s knowledge, there are no share- to the extent possible under the Company’s articles of holder agreements or similar agreements that could lead association. The authorization is valid until the next annual to a shift of control of the Company. general meeting and was registered with the Swedish Companies Registration Office on 12 December 2016.
SHARE-BASED INCENTIVE LISTING OF THE COMPANY’S PROGRAMS SHARES ON FIRST NORTH Synthetic options are basically bonus agreements which are completely linked to the Company’s share perfor- Hoylu has been approved for listing of its share on First mance. Moreover, synthetic options have a non-dilutive North under the ticker HOYLU and ISIN code effect on the shares and do not by itself grant its holder SE0009581192. The first day of trading on First North is any right to acquire shares in the future. 20 February 2017. All ordinary shares will be subject to trading. In order to create incentive and attract experienced employees, the Board of Directors resolved on 1 February 2017 to implement a synthetic option incentive program. Legal considerations and supplementary information Company Description for Listing on Nasdaq First North 43
LEGAL CONSIDERATIONS AND SUPPLEMENTARY INFORMATION
GENERAL INFORMATION ny’s products and solutions. The final terms and conditions of the license agreement have therefore not yet been Hoylu AB (publ), Swedish Company Registration no finalized. SE- 559084-6381, was established on 18 October 2016 and was registered by the Swedish Companies Registration Partnership agreements Office on 10 November 2016. Hoylu has made a strategic investment in VR Global. The purpose of this investment is for Hoylu to obtain a license to integrate VR Global’s Augmented and Virtual Reality MATERIAL AGREEMENTS technology into Hoylu’s product offerings. Hoylu and VR Global are in the process of: (i) identifying and evaluating Hoylu has a number of strategic supplier, partnership, the technical requirements to integrate the VR Global reseller and customer agreements that are material to the technology; and (ii) negotiating the underlying licensing Company’s business. While the agreements are material, agreement. Hoylu is not dependent on any single agreement. Reseller agreements Supplier agreements Hoylu has entered into reseller agreements covering Hoylu has established relationships with leading manufac- several countries and regions, including the US, the EU and turers of interactive large format displays and interactive Russia. The reseller agreements generally have terms of touch tables in China. These agreements entitle Hoylu to one year with auto-renew clauses unless terminated by integrate and sell the suppliers’ and partners’ products as either party. parts of the Company’s products. Customer agreements We-inspire has a license agreement with Anoto Group AB In addition to Hoylu’s reseller program, the Company is (“Anoto”). The license entitles the We-inspire to utilize engaged in direct sales. Hoylu’s customer list includes Anoto’s digital writing technologies for purposes of some of the most recognized companies in the world, as We-inspire’s products and solutions. The license is exclu- well as mid-market enterprises. sive with regards to use with interactive walls, meaning that We-inspire may not utilize competing products for Customers must agree to Hoylu’s standard End-User purposes of interactive walls and Anoto may not license its License Agreement (the “EULA”) at the time of purchase technologies for use with interactive walls to any third and/or during the installation of the Wi-inspire software. parties. The agreement’s initial term expires on 31 Decem- Additional terms of the agreements with customers may ber 2017 but is automatically extended one additional year vary, inter alia as regards to service level, territorial cover- at a time if not terminated by either party. Should the age, and warranties and liabilities. agreement not be extended it will be terminated. However, Hoylu is not dependent on the specific license agreement and in the event the agreement would be terminated Hoylu has alternative options. There are no restrictions INSURANCE regarding We-inspire’s choice of technology for use with The Board of Directors of Hoylu assesses that the We-inspire’s other products, including, but not limited to Company has insurance coverage appropriate for the large format displays, touch tables and tablets. Company’s current operations. The Board will continually review Company insurance coverage throughout further Furthermore, Hoylu and VR Global are currently negotiat- operational expansion. ing a license agreement which will entitle Hoylu to inte- grate VR Global’s technology platform as part of Compa- 44 Company Description for Listing on Nasdaq First North Legal considerations and supplementary information
DISPUTES AND LEGAL Later in the fall of 2016 a new Delaware Corporation, Hoylu, Inc., based in Los Angeles, Ca., was incorporated by PROCEEDINGS Stein Revelsby and Karl Wiersholm. In January 2017 Hoylu The Company is not, nor has it been a party to any provided the initial funding of USD 100,000 and thereby disputes, legal proceedings or regulatory actions that may acquired 100 % of the issued shares of Hoylu, Inc. Hoylu, have a material effect on the Company’s business, financial Inc. operates the Group’s business in the US, including but position or result, nor does it anticipate any such disputes. not limited to resale and contractual relationships.
In the beginning of 2017 Hoylu acquired 100 % of the TRANSACTIONS ESTABLISHING outstanding shares in We-inspire, based in Linz, Austria. The shares were acquired directly from each of We- THE GROUP inspire’s four former shareholders. We-inspire operates the Hoylu was established in the fall of 2016 as a subsidiary of Group’s business in the EU, including but not limited to CSEC by Stein Revelsby and CSEC. Stein Revelsby thereaf- resale and contractual relationships. ter brought in a senior management team. tpoeSe w Step three Step two Step one Hoylu is established as a subsidiary of the Stein Revelsby with listed company CSEC 51.0 % of the shares 49.0 % of the shares management team
Hoylu’s shares are paid Stein Revelsby with out as dividend to the x 49.0 % of the shares management team shareholders of CSEC Shareholders 51.0 % of the shares
Stein Revelsby with management team 16.3 % of the shares
A group of professional 25 MSEK 66.7 % of the shares investors invest SEK 25 17.0 % of the shares New Investors million in Hoylu Shareholders (7 professional investors)
Stein Revelsby with management team
Step four 16.2 % of the shares We-inspire is acquired which is partly paid by 25 MSEK 61.0 % of the shares New Investors new shares in kind Shareholders 15.6 % of the shares (7 professional investors)
7.3 % of the shares
Information Regarding the Professional Investors 1) Tore Aksel Voldberg is a Norwegian professional investor and a trader born in 1963 2) Eigil Stray Spetalen is an investment professional and the CEO of Kristianro AS and has various board commitments. Born in 1966 3) Reidar Fougner is previously known to be one of the top stockbrokers in Norway working for one of the larger invest- ment banks in Norway. He is today a professional investor, born in 1961. 4) Edvin Austbø, born in 1964, is a financial analyst and one of Norway’s largest private investors with experience from known investment banks. 5) Hans Othar Blix, born in 1965, is a venture capitalist and investor and serves several boards of growth companies as director. Legal considerations and supplementary information Company Description for Listing on Nasdaq First North 45
COMMENTS TO “TRANSACTIONS the investors. The valuation was based on the manage- ment team, their experience, the business plan and the ESTABLISHING THE GROUP” possibility to acquire We-inspire. Looking at Hoylu as an investment case with potential to acquire We-inspire with Summer 2016 revenues around SEK 4.0 million in 2016, the Company and Stein Revelsby initiates discussions with various parties the investors was able to agree on the pre-money valua- regarding the Hoylu project which eventually leads to tion of SEK 12.5 million. contacts with CSEC. The plan is to obtain a sufficient number of shareholders, as required by First North, Hoylu acquires We-inspire, the purchase price amounts to through establishing a subsidiary to CSEC that is subse- EUR 1,155,000 whereof EUR 500,000 is paid in cash, quently distributed to its shareholders. EUR 340,000 is contributed trough a note payable and 600,000 shares in Hoylu that are issued and contributed October 2016 for a value of SEK 5.00 per share. Furthermore, Hoylu On the 17th of October 2017, CSEC announces the collabo- acquired assets in Nada Yada AB against a mixed payment ration and establishes a Swedish limited company with the of cash and shares in Hoylu as described on page 33 under company name Hoylu AB together with Stein Revelsby “Acquisitions”. and the management team. Hoylu becomes a 51.0 % owned subsidiary of CSEC. AGREEMENTS AND The management team starts working with strategy, TRANSACTIONS WITH RELATED collaborations, partners and seeks potential acquisition candidates in order to capitalize Hoylu following CSEC PARTIES distribution and to increase the market potential of Hoylu. Hoylu has not entered any agreements and/or conducted any transactions with related parties other than: (i) the November 2016 employment agreements with Stein Revelsby and Karl CSEC summons to an extraordinary general meeting with Wiersholm as further detailed on page 38, (ii) the consul- the proposal to distribute CSEC’s shares in Hoylu as tancy agreement with Nada Yada AB as further detailed dividend to the shareholders in CSEC. on page 33, and (iii) the agreements regarding synthetic options to Stein Revelsby and Karl Wiersholm as further December 2016 described under “Share-based incentive programs” on The extraordinary general meeting in CSEC resolved to page 42. distribute its shares in Hoylu.
January 2017 INTELLECTUAL PROPERTY RIGHTS CSEC’s shares in Hoylu are distributed as dividend to the shareholders of CSEC and thus ceases being a subsidiary Hoylu has applied for registration of the tradename to CSEC and is instead owned by the management team “Hoylu” (USA, EU, UK, China, Japan) and for trademark of Hoylu 49.0 % and the shareholders of CSEC 51.0 %. registration of the Hoylu Logo (USA, EU, UK, China, Japan). Hoylu carries out a share issue directed to a selected group of professional investors who invest We-inspire has trademark registrations for the word SEK 25.0 million at a pre-money valuation of “w’inspire” (EU), wthe word “w’all” (EU) and for the We- SEK 12.5 million. The valuation of Hoylu in conjunction with inspire logo (EU, NZ, USA, Australia, Singapore and China). the directed share issue was set during negotiations with
GROUP STRUCTURE Subsidiaries Reg.no. Domicile Share of capital/votes (percent) Hoylu, Inc. 6210505 Delaware, United States 100 w’inspire GmbH 402024m Linz, Austria 100 46 Company Description for Listing on Nasdaq First North Legal considerations and supplementary information
CORPORATE GOVERNANCE Since First North is not a regulated market, Hoylu is not required to comply with the Swedish Corporate Govern- ance Code (Sw. Svensk kod för bolagsstyrning). Therefore, the Company has not established Audit, Remuneration or Election Committees.
DOCUMENTS INCORPORATED BY REFERENCE We-inspire’s audited annual reports for the financial year 2014/2015 and 2015/2016, together with We-inspire’s nonaudited financial figures for the period 1 July 2016 – 31 December 2016 are available for inspection during office hours at the Company’s office at Nordenskiölds- gatan 24, 211 19 Malmö, Sweden. These documents are also available in electronic form on Hoylu’s website www.hoylu.com. Tax considerations in Sweden Company Description for Listing on Nasdaq First North 47
TAX CONSIDERATIONS IN SWEDEN
The following is a summary of certain Swedish tax consequences for shareholders holding shares in the Company. The summary is based on the assumption that the shares in the Company will be considered as subject to a market trading (“listed”) from a tax perspective, which is the case if the shares are traded on a regulated market place within the EEA or subject to trading on another market place where information about transactions in the shares are made public on a regular basis. The summary does not address shares held by partnerships or shares held as current assets in business operations. Moreover, the summary does not address the specific rules on tax exempt capital gains and dividends (including nondeductibility for capital losses) in the corporate sector that may be applicable when shares are considered to be held for business purposes (Sw. näringsbetingade andelar) by the shareholder. Neither are the specific rules covered that could be applicable to holdings in companies that are, or have previously been, closely held companies or shares acquired on the basis of such holdings. Moreover, the summary does not address shares or other equityrelated securities that are held on an “investment savings account” (Sw. investeringssparkonto). Special tax rules apply to certain categories of taxpayers, for example, investment companies and insurance companies. The tax treatment of each individual shareholder depends on such investor’s particular circumstances. Each holder of Shares should therefore consult a tax advisor for information on the specific implications that may arise in an individual case, including the applicability and effect of foreign rules and tax treaties.
INDIVIDUALS Capital losses on listed shares are fully deductible against taxable capital gains on shares and on other listed equi- tyrelated securities realized in the same year except for Capital gains taxation shares in securities funds or special funds that invest solely Upon the sale or other disposition of listed shares, a taxa- in Swedish receivables (Sw. räntefonder). 70.0 % of capital ble capital gain or deductible capital loss may arise. Capi- losses exceeding capital gains that can be offset against tal gains are for individuals taxed as capital income at a tax other capital income. For any remaining capital losses rate of 30.0 %. The capital gain or loss is calculated as the after netting against other capital income, a tax reduction difference between the sales proceeds, after deducting is allowed against municipal and national income tax, as sales costs, and the acquisition cost, i.e. the “tax basis”. well as against real estate tax and municipal real estate The tax basis for all shares of the same class and type is charges. A tax reduction of 30.0 % is allowed on the calculated together in accordance with the “average cost portion of such net loss that does not exceed SEK 100,000 method”. Alternatively, shareholders may choose to use and of 21.0 % on any remaining loss. Such net loss cannot 20.0 % of the sales proceeds, after deducting sales costs, be carried forward to future fiscal years. as the tax basis for the sale of listed shares. 48 Company Description for Listing on Nasdaq First North Tax considerations in Sweden
Dividends taxation Withholding tax (“WHT” – Sw. “Kupongskatt”) is normally For individuals, dividends on listed shares are taxed as levied on dividends from a Swedish company to capital income at a rate of 30.0 % is generally withheld on non-Swedish residents. The normal tax rate is 30.0 %. dividends paid to individuals resident in Sweden. The Generally the tax rate is reduced following Tax Treaties, for preliminary tax is withheld by Euroclear Sweden or, avoidance of double taxation, which Sweden has entered regarding nominee-registered shares, by the Swedish into with several countries. nominee. It should be noted that there is an exception from WHT in the situation where the shareholder is a foreign company LIMITED LIABILITY COMPANIES whose shares in the distributing company would have been so called “business related”, had the receiving company been a Swedish resident company (listed shares Capital gains and dividends should have been held for 12 months for the exception to For a limited liability company, all income, including taxa- apply). This implies that the Listing of the Company may ble capital gains and dividends, is taxed as business render that WHT will be levied on dividends to non- income at a tax rate of 22.0 %. Capital gains and capital Swedish residents to a larger extent than today (primarily losses are calculated in the same manner as set forth for shareholders holding less than 10.0 % of the votes in above with respect to individuals. However, deductible the Company). capital losses on shares and other equityrelated securities may only be deducted against taxable capital gains on Non-Swedish resident shareholders are recommended to such securities. Under certain circumstances such capital engage foreign tax expertise as appropriate in order to losses may also be deducted against capital gains in ascertain potential tax issues in their respective home another company in the same group, provided that the countries. companies may exchange taxable and deductible group contributions (the Swedish regime for tax consolidation - Sw. koncernbidragsrätt). A capital loss that cannot be utilized during a given year may be carried forward and offset taxable capital gains on shares and other equityre- lated securities during subsequent fiscal years without any limitation in time.
Shareholders not tax resident in Sweden Shareholders not tax resident in Sweden and who are not operating a business from a permanent establishment in Sweden are normally not liable for Swedish capital gains taxation on the disposal of shares. The fact that the Company will be listed on First North should not make any difference in this respect. Under a specific tax rule individ- uals that are not tax resident in Sweden may, however, be subject to tax in Sweden on the sale of shares if they have been resident or lived permanently in Sweden at any time during the calendar year of such disposal or during any of the preceding ten calendar years and provided that the shares were acquired when the shareholder was tax resident in Sweden. The so called ten year rule applies whether or not the shares have been acquired before or after a person becomes non-resident in Sweden in respect of shares in Swedish companies. However, foreign shares are covered by this rule only if they have been acquired during the time of Swedish residency in order for the ten-year rule to apply. Tax treaties between Sweden and other countries may limit the applicability of this rule. Articles of association Company Description for Listing on Nasdaq First North 49
ARTICLES OF ASSOCIATION
Please note that the English text is an unauthorized translation and that, in case of discrepancy between the Swedish version and the English version, the Swedish version shall prevail.
Hoylu AB – Bolagsordning / Articles Of Association § 6 Styrelse / The board of directors Styrelsen ska bestå av lägst 3 och högst 7 ledamöter § 1 Firma / Company name med lägst 0 och högst 7 suppleanter. Bolagets firma är Hoylu AB (publ). Bolaget är publikt. The board of directors shall comprise no fewer than 3 The company’s name is Hoylu AB. The company is a and no more than 7 directors, with no fewer than 0 and public company. no more than 7 alternate directors.
§ 2 Styrelsens säte / The registered office of the company § 7 Revisorer / Auditors Styrelsen har sitt säte i Malmö kommun. För granskning av aktiebolagets årsredovisning jämte räkenskaperna samt styrelsens och verkställande The registered office of the company is situated in the direktörens förvaltning utses 1 till 3 revisorer och 0 till 3 municipality of Malmö. revisorssuppleanter. § 3 Verksamhet / Objects 1 to 3 auditors, and 0 to 3 alternate auditors, shall be appointed to audit the company’s annual accounts and Bolaget ska, direkt eller indirekt via dotterbolag, accounting, and review the management of the bedriva utveckling och försäljning av interaktiva company by the board of directors and the managing kommunikationslösningar inklusive teknisk hård- och director. mjukvara, storbildskärmar, ljudlösningar, virtuell verklighet såsom 3D-lösningar, internetkopplade § 8 Kallelse / Notice produkter, idka handel med värdepapper samt bedriva därmed förenlig verksamhet. Kallelse till årsstämma samt kallelse till extra bolagsstämma där frågor om ändring av bolagsordnin- The company shall, directly or indirectly through gen kommer att behandlas ska utfärdas tidigast sex subsidiaries, conduct development and sale of interac- veckor och senast fyra veckor före stämman. Kallelse tive communication solutions including technical till annan extra bolagsstämma ska utfärdas tidigast sex hardware and software, screens, sound solutions, veckor och senast två veckor före stämman. Kallelse till virtual reality such as 3D-solutions, internet integrated bolagsstämma ska ske genom annonsering i Post- och products, conduct trade with securities and any Inrikes Tidningar samt på bolagets hemsida. Att related business. kallelse skett ska annonseras i Dagens Industri. § 4 Aktiekapital / Share capital Notice to attend an annual general meeting or extraor- dinary general meeting at which the issue of amend- Aktiekapitalet ska vara lägst 500 000 och högst ment of the articles of association is to be addressed 2 000 000 kronor. shall be given not earlier than six weeks and not later The share capital shall be not less than SEK 500,000 than four weeks prior to the meeting. Notice to attend and not more than SEK 2,000,000. any other extraordinary general meeting shall be given not earlier than six weeks and not later than two weeks § 5 Antal aktier / Number of shares prior to the meeting. Notice to attend a general meet- Antal aktier ska vara lägst 4 225 000 och högst ing shall be published in Post- och Inrikes Tidningar 16 900 000. and on the company’s website. The fact that notice has been given shall be published in Dagens Industri. The number of shares shall be no fewer than 4 225 000 and not more than 16 900 000. 50 Company Description for Listing on Nasdaq First North Articles of association
§ 9 Rätt att delta i bolagsstämma / The right to attend 7. Beslut om general meetings a) fastställande av resultatuträkningen och balans- Aktieägare som vill deltaga i bolagsstämman ska dels räkningen samt i förekommande fall koncernre- (i) vara upptagna i sådan utskrift eller annan fram- sultatsräkning och koncernbalansräkning ställning av hela aktieboken som avses i 7 kap. 28 § 3 b) dispositioner beträffande vinst eller förlust enligt stycket aktiebolagslagen (2005:551), avseende den fastställda balansräkningen förhållanden fem (5) vardagar före stämman, dels (ii) anmäla sitt deltagande till bolaget senast den c) ansvarsfrihet åt styrelseledamöter och verkstäl- tidpunkt och den dag som anges i kallelsen till lande direktören. stämman. Sistnämnda dag får inte vara söndag, 8. Fastställande av arvoden till styrelsen och i vissa fall annan allmän helgdag, lördag, midsommarafton, revisorerna julafton eller nyårsafton och inte infalla tidigare än 9. Val till styrelsen och i förekomande fall av revisorer femte vardagen innan stämman. Aktieägare får vid bolagsstämman medföra ett (1) 10. Annat ärende, som ska tas upp på bolagsstämman eller två (2) biträden, dock endast om aktieägaren enligt aktiebolagslagen (2005:551) eller anmält detta enligt föregående stycke. bolagsordningen Shareholders wishing to attend a general meeting must (i) be recorded in such a transcript or other The annual general meeting shall be held within six (6) manner of the entire shareholders’ ledger as set out months following the end of the financial year. in Chapter 7 Section 28 Subsection 3 of the Swedish The following matters shall be addressed at the annual Companies Act (2005:551), regarding conditions five general meeting: (5) business days prior to the general meeting and (ii) 1. Appointment of a chairman of the general meeting report its participation to the company no later than the time date and time set out in the notice to the 2. Preparation and approval of the voting register general metting. The latter date may not be a Sunday, 3. Appointment of one (1) or two (2) persons to verify other public holiday, Saturday, Midsummer’s Eve, the minutes of the meeting Christmas Eve or New Year’s Eve and may not take place earlier than the fith business day prior to the 4. Determination of whether the general meeting was general meeting. duly convened Shareholders may bring one (1) or two (2) advisors 5. Approval of the agenda to the general meeting, subject to the shareholder 6. Presentation of the annual accounts and, when notifying this according to what is set out above. required, the auditors’ report as well as where appli- cable, the consolidated annual accounts and consoli- § 10 Ärenden på årsstämma / Matters at annual general dated auditors’ report meeting Årsstämman ska hållas inom sex (6) månader efter räken- 7. Resolutions regarding: skapsårets utgång. - adoption of the profit and loss account and balance På årsstämman ska följande ärenden förekomma: sheet as well as where applicable, the consolidated profit and loss account and balance sheet 1. Val av ordförande vid stämman - allocation of the company’s profits or losses in 2. Upprättande och godkännande av röstlängd accordance with the adopted balance sheet 3. Val av en (1) eller två (2) protokolljusterare - discharge from liability for the board of directors 4. Prövning av om årsstämman blivit behörigen and the managing director. sammankallad 8. Determination of fees for the board of directors and 5. Godkännande av dagordning the auditors. 6. Framläggande av årsredovisningen och, när det 9. Appointment of directors and, where applicable, krävs, revisionsberättelsen samt i förekommande fall auditors. koncernredovisning och koncernrevisionsberättelse 10. Any other matter, which pursuant to the Swedish Companies Act or the articles of association of the company, must be passed at a general meeting. Articles of association Company Description for Listing on Nasdaq First North 51
§ 11 Räkenskapsår / Financial year § 13 Tvisters avgörande av skiljemän / Settlement of disputes through arbitration Räkenskapsår är 1 januari – 31 december. Skulle tvist uppkomma mellan bolaget och styrelsen, The financial year shall be 1 January – 31 December. styrelseledamot, verkställande direktör, likvidator eller aktieägare, ska den hänskjutas till avgörande av skiljemän i § 12 Avstämningsförbehåll / Record day provision enlighet med lagen (1999:116) om skiljeförfarande. Den aktieägare eller förvaltare som på avstämningsdagen är införd i aktieboken och antecknad i ett avstämningsreg- In the event of a dispute between the company and the ister, enligt 4 kap. lagen (1998:1479) om kontoföring av board of directors, a director, the managing director, a finansiella instrument eller den som är antecknad på liquidator or a shareholder, the matter shall be determined avstämningskonto enligt 4 kap. 18 § första stycket 6 – 8 by arbitrators in accordance with the Swedish Arbitration nämnda lag, ska antas vara behörig att utöva de Act (1999:116). rättigheter som framgår av 4 kap. 39 § aktiebolagslagen (2005:551).
The shareholder or nominee who, on the record date, is entered in the share register and noted in a central securi- ties depository register pursuant to Chapter 4 of the Swedish Financial Instruments Accounts Act (1998:1479), or any party registered in a central securities depository account pursuant to Chapter 4, section 18, first paragraph, points 6 – 8 of that Act, shall be assumed to be authorised to exercise the rights set forth in Chapter 4, section 39 of the Swedish Companies Act (2005:551). 52 Company Description for Listing on Nasdaq First North Contact details
CONTACT DETAILS
THE COMPANY FINANCIAL ADVISER
Hoylu AB Remium Nordic AB Visiting: Humlegårdsgatan 20 Nordenskiöldsgatan 24 114 46 Stockholm, Sweden 211 19 Malmö Tel: +46 8 454 32 00 Sweden
Registered address: LEGAL ADVISER TO THE COMPANY Vretenvägen 13 171 54 Solna MAQS Advokatbyrå Stockholm AB Sweden Mäster Samuelsgatan 20 103 86 Stockholm, Sweden Postal: Tel: + 46 8 407 09 00 Tunnbindaregatan 37 602 21 Norrköping Sweden AUDITOR
Stromson Revisionsbyrå KB US address: Sveavägen 52 Hoylu, Inc. 111 34 Stockholm 6121 Sunset Blvd. Tel: +46 8 402 16 00 Los Angeles, CA 90028 USA
Austria address: w’inspire GmbH Peter-Behrens-Platz 2 4020 Linz Austria Ineko Finanstryck 2017 / 276421 2017 Finanstryck Ineko
Hoylu AB Nordenskiöldsgatan 24 | 211 19 Malmö | Sweden www.hoylu.com