Interim Management Report

REPORT ON BUSINESS ACTIVITIES of ALLTERCO JSCo

THIRD QUARTER OF 2021

individual basis

Pursuant to Art. 100o, Para 7 in conjunction with Para 4of the Public Offering of Securities Act and Art. Art. 33 and Art. 33а of Ordinance No. 2 dated 17.09.2003 on the prospectuses for public offering and admission to trading on a regulated securities market and on the disclosure of information

1

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 third quarter of 2021 for the period 01.01.2021 - 30.09.2021 (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.

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 2021

During the reporting period Allterco JSCo has participated in the establishment of a company (associated company) in China, Allterco Asia Ltd. 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% in case of good development of the project.

During the reporting period there was change in the economic group of Allterco JSCo. On September 27,2021 the Board of Directors of Allterco JSCo has approved and the Company, as a seller, has signed with Skylight Venture Capital Pte. Ltd., as a buyer, an agreement for the sale of the participations of Allterco JSCo in the subsidiaries ALLTERCO PTE (Singapore), ALLTERCO SDN (Malaysia) and ALLTERCO Co., Ltd. (Thailand)

2

(Share Purchase Agreement (SPA). The transfer of the share ownership is a subject to registration procedures in accordance with applicable laws in each country where each company is registered as a legal entity.

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 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 no changes were made in the Board of Directors of the company.

As of 30.09.2021 members of the Board of Directors are:

• Dimitar Stoyanov Dimitrov;
• Svetlin Iliev Todorov;
• Nikolay Angelov Martinov;

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

3

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 September 30, 2021 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 %

1.4.Development and research activities

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.

4

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 loss of BGN 641 thousand, which is an increase of loss by 17,8 % compared to the same reporting period of the previous year.

As of the end of the reporting period ALLTERCO JSCo does not report on individual basis any revenues from sale of goods and services. The company reports only other revenue in the amount of BGN 8 thousand.

During the 9 months of 2021 the Company reported positive result from operations with financial instruments, which include:

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

REVENUE	9 months of 2020	Change	9 months of 2021
	BGN thousand	%	BGN thousand
Sales revenue	0	0%	0
Other revenue	3	166.7%	8
Total Operating revenue	3	166.7%	8
Interest income	27	-52%	13
Positive results from sale of financial assets	0		250
Total Financial income	27	874%	263

3.2.Operating expenses

As of the end of the reporting period the total operating expenses of ALLTERCO JSCo increased by 62,3 % compared to the same reporting period of the previous year. This increase is mainly due to the increase of the other operating expenses, which for the 9 months of 2021, include written off receivables in the amount of BGN 87 thousand and impairment of receivables in the amount of BGN 153 thousand.

The expenses for remunerations and social security holds the biggest share in the total operating expenses for the period with 36,0 %, followed by the expenses for external services with 32,1% and other operating expenses with 30.9%.

EXPENSES	9 months of 2020	Change	9 months of 2021
	BGN thousand	%	BGN thousand
Material expense	1	100.0%	2
External services	186	39.8%	260
Depreciation	2	50.0%	3
Salaries	245	7.8%	264
Social security	29	-3.4%	28
Other administrative expenses	35	614.3%	250
Total Administrative expenses	498	62.0%	807
Other operating expenses	1	200.0%	3
Total Operating expenses	499	62.3%	810

5