ARCTIC BLUE BEVERAGES AB: INTERIM REPORT, JAN-SEP 2022

THE INTERIM PERIOD JANUARY – SEPTEMBER 2022

• Revenues (Jan - Sep): SEK 8,177 thousand (SEK 7,292 thousand on corresponding period 2021)
• Increased revenues due to increased delivery volumes
• EBITDA: SEK -28,975 thousand (SEK -9,364 thousand)
• Profit declined mainly due to one-off expenses related to group re-organization (Swedish TopCo) and share issue costs
• EBIT: SEK -30,295 thousand (SEK -10,140 thousand)
• Net result: SEK -30,488 thousand (SEK –10,130 thousand)
• Earnings per share (EPS) -1.78 SEK / share
• Cash and cash equivalents: SEK 694 thousand (30 September 2022)

JULY – SEPTEMBER 2022

• Revenues (Jul - Sep): SEK 2,316 thousand (SEK 4,357 thousand on corresponding period 2021)
• Both net sales value and volumes increased from the corresponding period, the corresponding period was positively affected by one-off corporate subsidies
• EBITDA: SEK -8,316 thousand (SEK -2,171 thousand)
• Profit declined mainly due to lower revenues and higher personnel costs and marketing activities
• EBIT: SEK –8,845 thousand (SEK –2,430 thousand)
• Net result: SEK -8,702 thousand (SEK –2,426)
• Earnings per share (EPS) -0.51 SEK / share

SIGNIFICANT EVENTS DURING JULY – SEPTEMBER 2022

• International Wine and Spirit Competition (IWSC) 2022:
  • Hang Oat Vanilla, Silver Award, RTD category
• New York Wine & Spirits Competition (NYWSC) 2022:
  • Arctic Blue Oat, Silver Award
  • Arctic Blue Gin Rose, Bronze Award
• Arctic Blue Gin Rose, reaches general selection status at Alko (the national beverage retailing monopoly in Finland)
• Distribution agreement with The Got Brothers Empire, to distribute Arctic Blue Beverage’s products Malaysia.
• An agent agreement with Joyhall Inc., to distribute Arctic Blue Beverages products on the Canadian Alberta market
• Received the first order from the distributor ID Shoji, who will start introducing Arctic Blue Beverages products in Osaka, Japan.
• Launched of Arctic Blue Legacy Gin

SIGNIFICANT EVENTS AFTER PERIOD

• Proceeds of approx. 1.6 million SEK before issue costs of exercising series TO1 warrants
• Listing Company products at the major retail chain Calgary Co-op Wine & Spirits and in the premium retail store Prestige Wine & Spirits in Edmonton, Canada
• Growth of distribution footprint to cover over 150 stores with Company’s products in all of Australia’s six states
• The board of directors resolved on a fully secured rights issue of approximately SEK 5.2 million before issue related costs
• Arctic Blue Legacy Gin purchase right sales campaign utilizing NFT technology

REPORT HIGHLIGHTS

”September 15th, 2022 marks a very special day for us as the ultra- premium, limited-edition Arctic Blue Legacy Gin was commercially launched in collaboration with the Finnish design agencies Sarpaneva Design and Infinity Design, and Web3 digital agency Struggle C&C Ltd. The limited-edition Arctic Blue Legacy’s purchase rights will be distributed as unique NFTs.

Sales increase in the third quarter 2022 was 2.3% compared to the same period a year ago. Total sales revenue in the third quarter 2022 has decreased by 9.3% compared to the second quarter in 2022. Sales in the main market, Finland in the third quarter was up 12% compared to the same period a year ago and +2.8% compared to the second quarter in 2022.

The sales to Asia-Pacific i.e. Japan still in some extent suffered from pandemic, however now we are finally progressing with a new potential distributor candidate, ID Shoji. First order is being prepared for shipment and market entry planning underway. In Australia our sales footprint has grown to cover over 150 stores with products in all of Australia’s six states, all the way from Perth in the West to Cairns in the East, including nationwide retailers like Dan Murphys and First Choice’s stores.

We signed a distribution agreement with The Got Brothers Empire, to distribute Arctic Blue Beverage’s products in Malaysia. We also signed an exclusive two-year agent agreement for the Canadian Alberta market with Joyhall Inc. The exclusive agent agreement between Arctic Blue Beverages and Joyhall Inc. covers distribution of Arctic Blue Beverages products on the Canadian Alberta market.

Challenging world- and the economic situation has continued throughout the third quarter 2022 and it has impacted also to our business. Progress in new markets and expansion in current markets has been slower than expected. We have also further delayed some of the product development projects and product launches. Nevertheless, we have been progressing in accordance with our strategy although not in fully planned extent. We have won prizes with our products in major international competitions, which help our products’ visibility, increase awareness and sales globally. Going in to the fourth quarter of the year I am looking forward to closing the negotiations with our potential new distributor ID Shoji and start our collaboration in full speed in Japan.” says Valtteri Eroma, CEO of Arctic Blue Beverages.