Interim report for Q3 2022: Revenue increase of 40% in Q3 and a successful DKK 8 million capital raise

Inside information

Today, LED iBond International’s (LED iBond) Board of Directors approved the interim report for Q3. Martin Løbel, CEO of LED iBond international comments:

“I’m delighted that LED iBond has succeeded in raising DKK 8 million in a difficult market. I’m also pleased to see that we increased our topline by 40% compared to Q3 in the previous year. This is the second quarter in a row where revenue is growing. Q3 underlines the importance of the strategic initiatives in refocusing our smart building sales activities, where Tracy has a strong edge and secondly to develop vertical farming solutions for the longer term. We continue to see increased lead generation from our focused marketing activities that we have given increased priority since the completion of the strategic review in end of Q2, and I’m expecting that more leads and a broader pipeline will results in increased sales”.

Financial key figures

TDKK	Q3 2022	Q3 2021	Change	Q1-Q3 2022	Q1-Q3 2021	Change
Profit & Loss
Revenue	1,001	713	40%	2,725	5,008	-46%
Grants	85	2,072	-96%	85	3,073	-97%
EBITDA	-2,771	-421	-558%	-10,618	-5,720	-86%
EBIT	-5,012	-3,436	-46%	-17,335	-14,797	-17%
Net financial expenses	-307	-158	-94%	-1,123	-1,049	-7%
Profit before tax	-5,319	-3,594	-48%	-18,458	-15,846	-16%
Net profit	-4,149	-2,803	-48%	-14,397	-12,358	-17%
Balance Sheet
Total assets				77,426	95,637
Total equity				56,693	80,216
Net working capital				23,126	45,926
Net interest-bearing debt				8,212	7,445
Cash				4,168	32,084
Cash flow statement
Cash flow from operations	-4,894	-3,141	-56%	-13,293	-8,011	-66%
Cash flow from investments	-1,821	-3,744	51%	-6,723	-12,133	45%
Cash flow from financing	-506	-4,055	88%	-1,550	42,367	-
Cash flow for the period	-7,222	-10,940	34%	-21,566	22,223	-

Business development

• In Q3, the smart building market once again contributed the larger part of company revenue, driven by steady sales of Tracy for the kitchen segment, for solar carports and for canopy panels for industrial use. The first ever indoor parking facility order from By & Havn in Copenhagen was delivered successfully in Q3 and is under installation with expected completion in Q4. LED iBond believes that the TRACY product has a good fit for parking facilities (including retro fit of light in existing parking facilities) in general due to its elegant design, linear formfactor, and easy-to-install, and LED iBond will investigate more of such opportunities moving forward. LED iBond also launched TRACY Interior in black and received the first order from Korea for an indoor lighting project.
• LED iBond still anticipates a significant global potential within the emerging vertical farming market. Well-documented products and dedicated marketing efforts continues to generate leads showing interest in the LED iBond’s growth light solutions which have demonstrated market leading performance in terms of energy efficiency. In general, vertical farming operators are, however, currently still working to develop farming blueprints before committing to larger orders for smart grow lighting. Nevertheless, LED iBond via a strategic partner received an order from an international organization for a pilot vertical mini farm based on LED iBond’s newly developed Growth Panel with adjustable luminosity and spectrum. The pilot farm will determine the optimal growth and lighting recipes for cannabis cultivation used for the pharma industry. The first phase of the farm consists of 32 growth light panels covering approximately 17 square meters of growth area.
   
• As previously announced, LED iBond is looking into the possibility of supplying UV disinfection modules to third-party manufacturers of disinfection equipment. The company continues its dialogue with a US-based equipment manufacturer and have submitted quotation for samples. It is the expectation that UV solutions in the future will be based on LED technology (over Hg-based mercury lamps that EU has banned from March 2027) and LED iBond therefore continues to monitor and investigate UV opportunities even if it may not materialize short term in volume. LED iBond is involved (via its 50% ownership of Baldr Light ApS – see patent update below) in applying for a patent for a new lighting technology capable of generating UV lightning for disinfection purposes based on the TRACY platform.
• Acceleration of top-line growth remains the number one priority. As a result, the company will in the short term continue to focus sales and marketing efforts on selected smart building market segments to boost short-term revenue growth and on vertical farming projects for longer-term growth. In addition, the company continues to operate with tight cost control, with further cost reduction initiatives towards the end of the year.

Financial Development

• In Q3 2022, LED iBond continued the implementation of its strategic review. Revenues amounted to TDKK 1,001 in Q3 2022, an increase of TDKK 288 (40%) relative to the same quarter last year. Compared to Q2 2022 revenues were up by TDKK 91 (10%). YTD, revenue fell from TDKK 5,008 in 2021 to TDKK 2,725 in 2022 because most of the revenue in 2021 was generated by sales to spin-off companies. No revenue from spin-off companies have been realized in 2022.
• Other external costs amounted to TDKK 1,075 in Q3 2022, a decrease of TDKK 737 compared to Q2 2022. Compared to Q3 last year, external costs decreased from TDKK 1,436, corresponding to a decrease of TDKK 361. The decrease is primarily due to lower use of external consultants and insourcing of administrative functions.
• In Q3 2022, staff costs amounted to TDKK 3,078, a decrease of TDKK 1,395 compared to the previous quarter. The decrease is due to a reduction of 6 FTEs in Q3. As of 30 September 2022, the number of FTEs was 15. Compared to Q3 last year, staff costs decreased from TDKK 3,541, corresponding to a decrease of TDKK 463.
• Despite a revenue increase in Q3 2022 of 40% compared to Q3 2021, as well as lower other external expenses and staff costs, EBITDA decreased by TDKK 2,350. The reason for this was fewer grants reported, lower capitalisation of development costs and higher cost of sales.  The same explanation applies to the development in EBIT and profit before tax.
• The net outflow of cash during Q3 2022 amount to TDKK 7,222 compared to TDKK 10,940 during the same quarter last year, a cash improvement of TDKK 3,718. Cash flow from operations deteriorated by TDKK 1,753 primarily due to the development in EBITDA as described above. On the other hand, investments in IPR were lower, improving cash outflow by TDKK 1,923. Cash flow from financing was also improved corresponding to TDKK 3,549. This is due to the fact that in Q3 2021, the company repaid loans.
• Compared to Q2 2022, the total cash flow deteriorated by TDKK 1,051 in Q3 2022. The reason was that in Q2 2022, the company received a grant from EUDP of DKK 2,787.
• At the end of Q3 2022, total equity amounted to TDKK 56,693 (corresponding to a solvency ratio of 73%) compared to TDKK 71,090 (corresponding to a solvency ratio of 75%) on 31 December 2021.
• The cash balance stood at TDKK 4,168 at the end of Q3 2022, as compared to TDKK 11,392 at the end of Q2 2022.

Financial outlook 2022

LED iBond announced its revenue guidance in company announcement no. 57 of 13 July 2022. In Q4 2022, LED iBond expects to complete an EU project. The deferred income from the project is expected to be recorded in Q4. LED iBond therefore maintains its revenue guidance for 2022 of DKK 5-10 million.

Patents and IPR update

• On 27. September 2022, validation of European patent 3532772 (Electricity Supply System - Fam. 6, Tracy) was confirm for the following four countries: Denmark, Germany, France, and Great Britain.

• LED iBond has acquired full ownership of several patent applications from LED Livestock ApS regarding a Teat Cup Steriliser apparatus incorporating UV disinfection. The applications are the following: Danish patent application no. PA 2018 70421 (21 June 2018), International patent application no. PCT/EP2019/066552 (21 June 2019), and all national patent applications from the international patent application (Chinese patent application 201980041488.3; European patent application 19734021.9; Indian patent application 202127002474; Russian patent application 2021101018; US patent application 17/257,368)
• Baldr Light ApS (CVR. 42193208) is owned jointly by LED iBond International A/S (50%) and the US based company Solar-Tectic LLC (50%). The purpose of Baldr light ApS is to develop and apply for a patent for a new lighting technology capable of generating UV lightning for disinfection purposes. On 15. Sep 2022, the international patent application for such a UV lighting technology (WO2022188937) was published under the patent cooperation treaty (PCT).  Link to the application: https://patentscope.wipo.int/search/en/detail.jsf?docId=WO2022188937

Events after the closing date

On 2 November 2022, the company announced the successful capital raise of DKK 8 million. The capital will be used to invest in sales and marketing activities and ensure necessary R&D resources for the continued development of advanced Vertical farming solutions.

LED iBond Spain SL has been sold for an insignificant amount as the company had no activity.

The full interim financial report for Q3 and first 9 months of 2022 is available here: https://ledibond.com/financial-reports/