2021 Q3 quarterly report

CELL IMPACT AB (PUBL)

THIRD QUARTER, 2021

p.1

INTERIM REPORT

Third quarter, 2021

CELL IMPACT AB (PUBL)	THIRD QUARTER, 2021	p.2

This English translation of the original document is for convenience purposes only.

In the event of any discrepancy between the Swedish version and the English translation,

the Swedish version shall take precedence.

Third quarter, 2021

Financial summary

Numbers in () indicate the corresponding period from the previous year.

• Total revenues for the first quarter amounted to SEK
  27.5 million (8.5), which is growth of 224 percent for the quarter.
• Operating result was SEK -14.4 million (-5.7).
• The Group's result after financial items was SEK -14.7 million (-6.1).
• Earnings per share attributable to the shareholders of the Parent Company totaled SEK -0.25(-0.12).
• Equity was SEK 149.3 million (52.3) or SEK 2.54 per share (1.01) on the balance sheet date.
• Debt/equityratio was 73% (59%) on the balance sheet date.
• Cash flows from operating activities amounted to SEK -20.2 million (-3.5) during the quarter.
• On the balance sheet date, the Group's cash and cash equivalents totaled SEK 57.5 million (23.6).

Significant events in the period

• August 5, 2021 | Cell Impact Japan Inc. receives order worth SEK 5.3 million.
• 2021-08-09| Extraordinary general meeting of Cell
  Impact AB, Board of Directors authorized to resolve upon issue of shares, warrants and/or convertibles.
• May 5, 2021 | Cell Impact strengthens management with new CHRO.

CELL IMPACT AB (PUBL)	THIRD QUARTER, 2021	p.3

CEO'S MESSAGE

Continued strong growth

During the third quarter, new capacity installed during the previous quarter began contributing to increased production and sales.

Cell Impact achieved net sales of SEK 27.5 million during the third quarter 2021, which is SEK 19.0 million (+224%) higher than in the corresponding quarter of 2020 and SEK 9.7 million (+54%) higher than during the previous quarter in 2021. Our operating result during the quarter was SEK -14.4 million, which is SEK 9.1 million (+39%) higher than in the previous quarter in 2021. The lower loss rate in the operating result is chiefly due to improved productivity.

At the end of the quarter, the company had 106 employees compared with 85 employees during the second quarter and production was carried out mainly in three shifts. During the quarter, our new Chief Operating Officer (COO) Daniel Vallin and HR Manager (CHRO) Karina Sick Larsson started and the company's management team is now more complete than ever.

We continued to experience some equipment delivery delays, but in general we have succeeded well in keeping important delivery promises to customers. We are now entering a calmer period in our development, which means that the need for extra measures and associated costs will decrease.

Strong sales

Our strong sales during the third quarter add to the company's steadily growing sales from previous quarters. We have established an organization that is well-prepared for an increase in production activity. Order intake for new tools, which lays the foundation for future products and additional sales, continued with flow plates, dominating the sales mix.

We strengthened our international sales force during the year which combined with the easing of global pandemic restrictions means we can more actively address the inquiries we already have in our pipeline.

Work on the significant order we received from Plug Power, which includes delivering production equipment during 2021, ongoing production of flow plates during the year and future deliveries, continued according to plan.

Financial targets

The high growth rate for fuel cells and Cell Impact's rising sales means that we are continuing to see good opportunities for achieving our short-term sales tar- gets. As we announced earlier, because of increasingly greater opportunities in our markets, Cell Impact aims to focus on growth rather than profitability and cash flow in the short term. As a result we have replaced our previously-announced EBITDA margin targets with an updated EBITDA margin target of at least 15 percent

in the medium term, and we see strong possibilities of achieving even higher profitability than that in the long term.

Production capacity growing

Some consolidation of Cell Impact's development of production capacity and organization took place during the period after an intensive second quarter that included a number of new recruitments and installing new capacity on a large scale. We continued to improve our employees' expertise, which is gradually helping to boost productivity. We also quickly implemented what we call Phase 1, which includes converting existing demand into business to correctly position Cell Impact for future growth.

In the three years since Cell Impact developed its strategy to manufacture flow plates, a new industrial company has taken form based on our patented forming technology, Cell Impact Forming™. The new organization has solid knowledge of application and manufacturing. We are now entering Phase 2 where we will further enhance Cell Impact's production capacity and offering in line with a growing pipeline of prospects. During Phase 2, we will gradually implement more compact and productive process technologies in line with our internal process development. We will also complete the remaining 2,500 m2 of production space to meet existing and expected customer demand.

Market for fuel cells and electrolyzers

The market for fuels cells is strong and continues to grow. We are now in a period of acceleration where companies that want to be part of the hydrogen value chain must position themselves with an attractive offering that includes cost-efficient scalability. There is also a multiplier effect, which means that the demand for flow plates is considerable even at lower levels of de- mand. At higher levels of demand, demand increases exponentially since fuel cells normally contain several hundred flow plates.

Drivers for fuel cells and electrolyzers that produce green hydrogen

What are the factors driving demand for fuel cells and electrolysis equipment that use flow plates? I have commented on a number of these in previous reports, but would like to highlight the most noteworthy ones.

Mature technology in an exciting stage of develop- ment. Fuel cells and electrolyzers are already-existingproducts and technologies. They are not part of a vision for the future but are being used here and now, and increasingly so. This technology has entered a phase where sales and use take place in symbiosis with

CELL IMPACT AB (PUBL)	THIRD QUARTER, 2021	p.4

continuous development over time much in the same way as the internal combustion engine has developed over decades.

The use of fuel cells and electrolysis should be considered in a larger context of greatly reducing the climate impact from transport and creating storage opportunities for intermittent and renewable energy. In production processes such as steelmaking, hydrogen can replace fossil-based processes. Power grids and sensitive installations can be reinforced with direct or reserve power from fuel cells. And fortunately, this development is already underway - in the near future, we will be able to derive major climate benefits from green hydrogen and fuel cells. As products, fuel cells and electrolyzers are recyclable in existing and proven recycling systems. Hydrogen can be produced locally with equipment that has also been manufactured nearby, using local hydrogen technology to build independent energy systems. Achieving the goals of the Paris Agreement is dependent on hydrogen, as there is no other similar energy carrier that can both store and produce energy sufficiently.

European Green Deal. The EU has identified hydrogen as a strategic energy carrier that will be supported by investments of EUR 430 billion over a 10-year period to roll out green hydrogen production. This is a gigantic package that will help accelerate the development of the hydrogen industry, but it is still a small amount compared with the subsidies that carbon dioxide-based energy production receives today. This is why we can expect to see even more state aid and investment globally as subsidies for climate-destroying energy production are reduced.

According to the International Energy Agency (IEA), in 2019, only France, Japan and Korea had strategies for the use of hydrogen. Today, 17 governments have announced hydrogen strategies, more than 20 others are developing strategies and many companies are looking to benefit from hydrogen business opportunities.

Besides the European Green Deal, according to the Energy Information Administration (EIA), countries with hydrogen strategies have committed at least USD 37 billion to developing and deploying hydrogen tech- nologies, and the private sector has announced an additional investment of USD 300 billion. Putting the hydrogen sector on a path consistent with global net zero emissions by 2050, however, will require USD 1,200 billion in investments between now and 2030, the IEA estimates.

Green hydrogen fuel. The global capacity of electro- lyzers has doubled over the last five years, with about 350 projects currently being developed and another 40 projects in the early stages of development. Should all these projects be realized, the global hydrogen supply from electrolyzers - which creates zero emissions provided the electricity used is clean - would reach 8 million tonnes by 2030. This is a huge increase from to- day's level of less than 50,000 tonnes but well below the 80 million tonnes required in 2030 in the IEA pathway to net zero emissions by 2050.

Cell Impact is positioning itself to grow with these

trends and contribute to scaling up the industry via Cell Impact Forming™ and our cutting-edge expertise in production and application.

Pär Teike, CEO

Karlskoga, October 2021

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Financial performance in summary

	2021	2020	2021	2020	2020
Amounts in SEK million	Jul-Sep	Jul-Sep	Jan-Sep	Jan-Sep	Jan-Dec
Revenue	27.5	8.5	60.8	20.4	29.3
Operating result	-14.4	-5.7	-52.3	-30.7	-43.1
Profit/loss before tax	-14.7	-6.1	-53.2	-31.5	-44.3
Profit/loss after tax, attributable to the shareholders	-14.7	-6.1	-53.2	-31.5	-44.3
of the Parent Company
Cash flows from operating activities	-20.2	-3.5	-54.6	-25.2	-47.6
Earnings per share before and after dilution (SEK)	-0.25	-0.12	-0.90	-0.66	-0.88

	09/30/21	09/30/20	12/31/20
Cash and cash equivalents on the balance sheet date (MSEK)	57.5	23.6	151.9
Debt equity ratio at end of period (%)	73%	59%	83%
Equity/share	2.54	1.01	3.43

Revenue

The Group's net sales for the quarter totaled SEK 27.5 million (8.5, of which the subsidiary

Cell Impact Japan Inc. accounts for SEK 3.2 million). This is higher than during the previous year and an increase in growth of about 224 percent.

Revenues during the quarter refer to the completion of orders received in 2020 and 2021 and new orders received during the quarter.

Performance

The Group's operating result was SEK -14.4 million (-5.7). The company increased investments in human resources to support production and delivery plans, resulting in an increase in personnel costs.