Allterco : Report on business activities

REPORT ON BUSINESS ACTIVITIES of ALLTERCO JSCo

FORTH QUARTER OF 2022

individual basis

Pursuant to Art. 100o, Para 4of the Public Offering of Securities Act and Art. Art. 12 of Ordinance No. 2 dated 09.11.2021 on the prospectuses for public offering and admission to trading on a regulated securities market and on the disclosure of information

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These Notes to the Interim Report on the Business Activities of Allterco JSCo on an individual basis present information about the company, relevant to the end of fourth quarter of 2022 for the period 01.01.2022 - 31.12.2022 (the "reporting period').

1. INFROMATION ABOUT THE GROUP

Allterco JSCo is a public listed joint stock company, established in 2010 in the city of Sofia and entered in the Commercial Register at the Registry Agency on 11.02.2010 under UIC (unified identification code): 201047670 and LEI code (identification code of the legal entity) 8945007IDGKD0KZ4HD95 and is established for an unlimited period. Its name is written in Latin: ALLTERCO JSCo.

The company has its registered office and address of management: Republic of Bulgaria, Sofia County, Sofia

Municipality, Sofia 1407, 103CherniVrah Blvd. The address for correspondence is the same; Tel: [phone]. The website of the Company iswww.allterco.com.

The Company is public listed within the meaning of the Public Offering of Securities Act and is registered as a public company in the register kept by the FSC with Decision 774 - PD of November 14, 2016 as a result of successfully completed initial public offering of shares from the Company's capital increase.

Since November 22, 2021 the shares of Allterco JSCo are traded on two regulated markets in EU - Bulgarian Stock Exchange and Frankfurt Stock Exchange.

The company operates according to Bulgarian legislation.

The Issuer is part of an economic group, which consists of the parent company Allterco JSCo and its subsidiaries:

1.1.Structure of the economic group at the end of the reporting quarter for 2022

*There is no change in the business group of the Company during the reporting period, but a change has occurred after the end of the reporting period, whereas in January 2023 the Company has closed the 1st stage of the acquisition

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of the Slovenian IoT provider GOAP Računalniški inženiring in avtomatizacija procesov d.o.o. Nova Gorica, ("GOAP" or the "Target Company") which consisted in the acquisition of 60% of the share capital of the Target Company. The transaction is based on Share Purchase Agreements ("SPAs") that were signed with all four GOAP shareholders. The total purchase price for the 1st stage transactions is EUR 2 million.

The remaining 40% of the GOAP share capital belonging to three individual shareholders of GOAP are subject to Option Agreement that was signed together with the SPAs. Under the Option Agreement Allterco will have unconditional call options and the selling shareholders will have conditional put options on two packages of shares (the exercise of each of the sellers' options is conditional upon the achievement of certain minimum criteria of KPI, EBITDA and revenue within the period 2023 - 2025). One option is for 16% of GOAPs share capital and the other option is for 24% of GOAPs share capital. The aggregate price for the shares in case of the exercise of the options depends on the extent to which the conditions therefore are met and may range from EUR 699,999.70 (BGN 1,369,080.41) to EUR 3,449,998.60 (BGN 6,747,610.76).

Allterco JSCo has participation in a company in China, Allterco Asia Ltd. (associated company) with headquarters and registered office in Shenzhen, Guangdong Province. The capital of the new company is CNY 100 000, as the participation of Allterco JSCo is 30% with an option to acquire additional up to 50% and reach a controlling stake of up to 80%.

The scope of business of the Allterco JSCo, according to Art. 4 of its Articles of Association is: Acquisition, management, evaluation and sale of share participations in Bulgarian and foreign companies; acquisition, management and sale of bonds; acquisition, evaluation, sale and assignment of licenses for the use of patents and other intellectual and industrial property rights; financing of companies in which Allterco JSCo participates; purchase of goods and other items for resale in their original, manufactured or processed form; sale of goods of own production; foreign trade transactions; commission, forwarding, warehousing and leasing transactions; transport transactions in the country and abroad; transactions of commercial representation and intermediation of local and foreign individuals and legal entities; consulting and marketing transactions; providing management and administration services to local and foreign legal entities; as well as any other commercial transactions not prohibited by law.

As a result of strategic deals, corporate changes and decisions in 2019 and 2021, the core business of the Issuer's Group in the reporting period of 2022 remains the development, production and sale of IoT devices.

Since 2015, the Group has grown organically in the IoT sector through the development and implementation of two main product categories - tracking devices under the brand MyKi and home automation systems under the brand Shelly.

1.2.Management

During the reporting period there has been a change in the personnel of the Board of Directors. With the resolution of the General Meeting of Shareholders of 08.04.2022 there has been changed the number of the Board members from three to five, where Mr. Wolfgang Kirsch and Mr. Gregor Bieler joint to the current members.

Pursuant to the resolution of the General Meeting of Shareholders at its first meeting held on 08.04.2022. the Board of Directors elects from among its members the following executive members, Chairman and Deputy-Chairman:

• Gregor Bieler - Chairman;
• Nikolay Martinov - Deputy Chairman;

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• Dimitar Dimitrov - Executive Director and Representative;
• Wolfgang Kirsch - Executive Director and Representative;
• Svetlin Todorov - Member of the Board of Directors and Representative; The representatives represent the Company together or individually.
  1.3.Capital structure

As of the end of the reporting period the issued, subscribed, paid-in and registered capital of the Company amounts to BGN 17 999 999 (seventeen million nine hundred ninety-nine thousand nine hundred ninety- nine), and is divided into 17 999 999 (seventeen million nine hundred ninety-nine thousand nine hundred ninety-nine) dematerialized ordinary registered voting shares, with a par value of 1 (one) BGN each.

The capital is fully paid in five contributions:

• Non-monetarycontribution representing 100% of the shares of Teravoice EAD, with an appraised monetary value of BGN 50,000 (fifty thousand);
• Non-monetarycontribution representing 69.60% of the shares of Terra Communications JSCo, with an appraised monetary value of BGN 5,438,000 (five million four hundred and thirty-eight thousand);
• A combination of non-monetary and cash contributions amounting to BGN 8,012,000 (eight million and twelve thousand).
• Cash contributions at the amount of BGN 1,500,000 (one million and five hundred thousand) compared to 1,500,000 (one million and five hundred thousand) subscribed and fully paid-in dematerialized ordinary registered voting shares with a par value of BGN 1 each, as a result of a procedure for Initial Public Offering of a new issue of shares.
• Cash contributions at the amount of BGN 2,999,999 (two million nine hundred ninety-nine thousand nine hundred ninety-nine) against 2,999,999 (two million nine hundred and ninety-nine thousand nine hundred and ninety-nine) subscribed and paid-in dematerialized ordinary registered voting shares with a nominal value of BGN 1 each, as a result of a procedure for Public Offering of a new issue of shares. The public offering of shares from the capital increase of Allterco JSCo was carried out in the period 28.09.2020 - 30.10.2020, on the basis of a Prospectus, together with the supplements thereto, confirmed by the Financial Supervision Commission with Decision № 148- F of 18.02.2020, Decision № 405-E of 11.06.2020, Decision № 601-E of 13.08.2020 and Decision №
  791-E of 29.10.2020.

As of 31 December, 2022 the capital structure of ALLTERCO JSCo is as follows:

	NAME OF SHAREHOLDER			CAPITAL
			PERCENTAGE
	Svetlin Todorov			32,48 %
	Dimitar Dimitrov			32,48 %
	Other individuals and legal entities			35,04 %

As of December 31, 2022 the company holds 40 000 treasury shares, representing 0,22% of the registered capital.

1.4.Development and research activities

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The company has not carried out activities in the area of research and development and does not plan such in the near future. One of the subsidiaries of Allterco JSCo has carried out such activity during the reporting period, namely: Allterco Robotics Ltd.

2. IMPORTANT EVENTS FOR ALLTERCO JSCo

Detailed information about the important events that occurred during the reporting period for ALLTERCO JSCo, as well as other information that could be important for investors is regularly disclosed by the company in accordance with regulatory requirements. In compliance with the requirement of Art.43a et seq. of Ordinance No. 2 of FSC, in conjunction with Art. 100t, Para 3 of the POSA, the Company discloses the regulated information to the public through selected information media. All information provided to the media in fully unedited text is available at: http://www.x3news.com/. The required information is submitted to the FSC - through the unified system for submission of information electronically, developed and maintained by the FSC - e-Register. The information is also available on the Company's website at: https://allterco.com/en/INVESTORS.

The announced important events that occurred during the reporting period did not have a significant impact on the financial results of the company on an individual basis.

3. FINANCIAL POSITION AND DEVELOPMENT OF THE BUSINESS ACTIVITIES DURING THE REPORTING PERIOD

3.1.Operating income

As of the end of the reporting period ALLTERCO JSCo reported on individual basis a profit of BGN 988 thousand, which is a decrease of the loss by 70,0 % compared to the same reporting period of the previous year. The reasons behind the decrease of the profit include increase of the salary expense following the increase of the number of the board members, increase of the operational expenses in relation to the listing of the Company's shares on Frankfurt Stock Exchange and the written off of receivables, as well as the lower dividend income in comparison to the previous year.

As of the end on the reporting period Allterco JSCo does not report revenues from sale of goods and services on individual basis. The Company reports other revenues, 99,6 % of which are from dividend.

In 2022 the Company reports loss from operations with financial assets in the amount of BGN 119 thousand, related to the sale of shares in Link Mobility Group.

In 2021 the Company reports positive differences from operations with financial assets, which includes:

• BGN 49 thousand from sale of shares in Link Mobility Group
• BGN 201 thousand from the sale of participation in 3 subsidiaries

REVENUE	2021	Change	2022
	BGN thousand	%	BGN thousand
Sales revenue	0	0%	0
Other revenue	5 115	-21,5%	4 016
Total operating revenue	5 115	-21,5%	4 016
Profit (loss) from operation with financial assets	250	-148%	-119
Total financial income	250	-148%	-119

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