The Bookbuilding will commence immediately following the announcement of this press release. Pricing and allocation of the new shares are expected to take place before the trading on Nasdaq First North Growth Market begins at 09:00 CET on 22 March 2024. The timing of the closing of the Bookbuilding, pricing and allocation are at the discretion of the Company, which may also at any time decide to suspend, shorten or extend as well as to refrain in whole or in part from carrying out the Issue. The Company will announce the outcome of the Issue in a press release after the closing of the Bookbuilding.

Background and reasons for the Issue

The market for both of Smart Eye’s business areas, Automotive and Behavioral Research, remains very strong. During 2023, Smart Eye achieved an organic growth of 33 per cent and the organic growth for the fourth quarter of 2023 as compared to the fourth quarter of 2022 was 50 per cent.

The Company’s net sales during the first quarter of 2024 are expected to be in line with that of the fourth quarter of 2023. Behavioral Research net sales are expected to decrease slightly during the first quarter of 2024 as compared to the fourth quarter of 2023, largely explained by seasonal variation in demand amongst customers, where the first quarter is generally relatively weaker due to the customers’ budget cycles. Automotive net sales are expected to increase slightly during the first quarter of 2024 as compared to the fourth quarter of 2023, with the reservation that the Company does not have full insight into production volumes or license revenues before its customers report them, which occurs 4-6 weeks after the end of each quarter.

Furthermore, the Company assesses that the cash flow during the first quarter of 2024 will be more negative than that of the fourth quarter of 2023, primarily as a result of extraordinary items as well as accrual effects in the Company’s working capital, of which the latter is expected to have the opposite effect on the cash flow in the second quarter of 2024.

The Company’s long-term outlook remains strong. Smart Eye has received 26 new design wins within Automotive during 2024. Thus, Smart Eye has now received a total of 322 design wins from 21 automobile manufacturers, with an estimated combined value throughout the product cycle amount of more than SEK 7,500 million and the total value from potential further design wins with these 21 automobile manufacturers amount to more than SEK 3,950 million. The Company’s largest business area, Behavioral Research, grew organically by 21 per cent during 2023 and the conditions for continued high and profitable growth look very good to a large extent because of the shift toward multimodal physiological measurements for increased insights for complex behaviors.

During the fourth quarter of 2023, the Company received its largest design win yet, where it will deliver its technology directly to the automobile manufacturers without, as is customary, using a Tier 1 distributor. This structure is deemed by the Company to become more common going forward. Moreover, during the first quarter of 2024, the Company received its first five design wins within interior sensing, an application with high potential. In addition, the Company recently announced its first OEM-agreement regarding AIS to one of the largest manufacturers of heavy vehicles. More activity within AIS is, of course, long awaited and very positive for the Company, but at the same time results in an overall product mix that has a somewhat lower gross margin, due to the AIS product involving a not insignificant share of hardware. As a whole, these events are very favorable and creates significant opportunities for Smart Eye in the future.

The strong and increasing customer activity, as well as the risk associated with a potential short-term delay in production volume increases for automotive manufacturers entails that the Company assesses that it is desirable and responsible to increase the financial margin of safety in the short-run, as well as take into account the risk that the timing for the Company to achieve positive cash flow may be pushed back by up to two quarters compared to previously communicated, to the first half of 2025. An increase in the Company’s equity is deemed to be the most cost-effective financing alternative under the current market conditions. The proceeds of the Issue will be used as a liquidity reserve with the purpose of ensuring the financing of the Company’s current business plan until cash flow break-even, as well as allow for flexibility to take advantage of interesting opportunities in the Company’s markets.

Deviation from the shareholders’ preferential right

The Board of Directors has investigated the conditions and carefully considered the possibility of carrying out a rights issue to raise the necessary capital. However, the Company’s Board of Directors considers, in view of the current market conditions, that it would entail a risk that the Company would not be able to meet its capital needs and at the same time maintain an optimal capital structure. The reasons for deviating from raising capital through a rights issue are (i) that the Issue can be carried out in a more time and cost-effective manner and with potentially less market volatility, (ii) that considering the current market conditions and the current market volatility, the Board of Directors has assessed that a rights issue would likely require a significant underwriting from an underwriting consortium, which would incur additional costs and/or further dilution for shareholders depending on the type of consideration paid for such underwriting commitments, particularly considering the total proceeds of the Issue, (iii) that it would likely need to be made at a lower subscription price given the discount levels for rights issues carried out in the market recently, and (iv) unlike the implementation of a rights issue, the Issue means that the Company’s shareholder base is complemented with strong new owners. Through the Issue, Smart Eye’s long-term ability to carry out the ramp-up of operations is expected to strengthen and that the Company can cover its financing needs until the current and potential additional customers begin to generate sufficient revenues to cover the Company’s costs. The Board of Directors’ overall assessment is that the reasons for carrying out the Issue with deviation from the shareholders’ preferential rights outweigh the reasons that justify the main rule to issue shares with preferential rights for existing shareholders, and that an issuance of new shares with deviation from the shareholders’ preferential rights is in the interest of the Company and all shareholders. Since the subscription price in the Issue is determined through a bookbuilding procedure, it is the Board’s assessment that the subscription price will reflect current market conditions and demand and is therefore deemed to be market based.

Lock-up

In connection with the Issue, chairman of the Board Anders Jöfelt, member of the Board Mats Krantz and the Company’s chief executive officer Martin Krantz, whom are large shareholders in Smart Eye, have undertaken to not sell shares in Smart Eye during a period of 360 calendar days following the settlement date, provided, however, that each of these persons shall have the right to sell up to five per cent of their respective holdings for the purpose of covering any tax and/or repayment of loans. Furthermore, the other members of the Board of Directors and executive management of the Company, have undertaken to, subject to customary exceptions, not sell shares in Smart Eye for a period of 180 calendar days after the settlement date. Additionally, the Company has agreed to a commitment, with customary exceptions, not to carry out any additional issuances for a period of 180 calendar days after the settlement date.

Advisers

In conjunction with the Issue, the Company has engaged Carnegie Investment Bank as Sole Bookrunner and Advokatfirman Vinge as legal adviser.

For further information, please contact
Martin Krantz, CEO Smart Eye AB
Phone: +46 70-329 26 98
Email: martin.krantz@smarteye.se

This is information that Smart Eye Aktiebolag (publ) is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact person set out above, at 2024-03-21 18.10 CET.
 
About Smart Eye
Smart Eye is the leading provider of Human Insight AI, technology that understands, supports and predicts human behavior in complex environments. The company is on a mission to bridge the gap between humans and machines for a safe and sustainable future. Supported by Affectiva and iMotions – companies it acquired in 2021 – Smart Eye’s multimodal software and hardware solutions provide unparalleled insight into human behavior.

In automotive, Smart Eye’s driver monitoring systems and interior sensing solutions improve road safety and the mobility experience. The company’s eye tracking technology and iMotions biosensor software platform are also used in behavioral research to enable advanced research in academic and commercial sectors. In media analytics, Affectiva’s Emotion AI provides the world’s largest brands and market researchers with a deeper understanding of how consumers engage with content, products, and services.
 
Founded in 1999, Smart Eye is a global company headquartered in Sweden, with customers including NASA, Nissan, Boeing, Honeywell, Volvo, GM, BMW, Polestar, Geely, Harvard University, more than 1,300 research organizations around the world, 70 per cent of the world’s largest advertisers, 28 per cent of the Fortune Global 500 companies.
 
Visit www.smarteye.ai for more information.

Visit our investor web for more financial information: https://smarteye.se/investors/
 
Smart Eye is listed on the Nasdaq First North Growth Market. The Company’s Certified Adviser is Carnegie Investment Bank AB (publ).
 
 
Important information
The release, announcement or distribution of this press release may, in certain jurisdictions, be subject to restrictions by law. The recipients of this press release in jurisdictions where this press release has been published or distributed shall inform themselves of and follow such restrictions. The recipient of this press release is responsible for using this press release, and the information contained herein, in accordance with applicable rules in each jurisdiction. This press release does not constitute an offer to sell or an offer, or the solicitation of an offer, to acquire or subscribe for shares issued by the Company in any jurisdiction where such offer or invitation would be illegal prior to registration, exemption from registration or qualification under the securities laws of such jurisdiction. This announcement is not a prospectus for the purposes of Regulation (EU) 2017/1129 (the “Prospectus Regulation”) and has not been approved by any regulatory authority in any jurisdiction. The Company has not authorized any offer to the public of shares or other securities in any member state of the EEA and no prospectus has been or will be prepared in connection with the Issue. In any EEA Member State, this communication is only addressed to and is only directed at qualified investors in that Member State within the meaning of the Prospectus Regulation.

This press release does not constitute or form part of an offer or solicitation to purchase or subscribe for securities in the United States. The securities referred to herein may not be sold in the United States absent registration or an exemption from registration under the US Securities Act of 1933, as amended (the “Securities Act”), and may not be offered or sold within the United States absent registration or an applicable exemption from, or in a transaction not subject to, the registration requirements of the Securities Act. There is no intention to register any securities referred to herein in the United States or to make a public offering of the securities in the United States. The information in this press release may not be announced, published, copied, reproduced or distributed, directly or indirectly, in whole or in part, within or into the United States, Australia, Canada, Hong Kong, Japan, New Zeeland, Singapore, South Africa, South Korea the United States or in any other jurisdiction where such announcement, publication or distribution of the information would not comply with applicable laws and regulations or where such actions are subject to legal restrictions or would require additional registration or other measures than what is required under Swedish law. Actions taken in violation of this instruction may constitute a crime against applicable securities laws and regulations.

In the United Kingdom, this document and any other materials in relation to the securities described herein is only being distributed to, and is only directed at, and any investment or investment activity to which this document relates is available only to, and will be engaged in only with, “qualified investors” who are (i) persons having professional experience in matters relating to investments who fall within the definition of “investment professionals” in Article 19 (5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the “Order”); (ii) high net worth entities falling within Article 49 (2)(a) to (d) of the Order (all such persons together being referred to as “relevant persons”); or (iii) such other persons to whom such investment or investment activity may lawfully be directed pursuant to the Order. In the United Kingdom, any investment or investment activity to which this communication relates is available only to, and will be engaged in only with, relevant persons. Persons who are not relevant persons should not take any action on the basis of this press release and should not act or rely on it.

This announcement does not identify or suggest, or purport to identify or suggest, the risks (direct or indirect) that may be associated with an investment in the new shares. Any investment decision to acquire or subscribe for shares in connection with the Issue must be made on the basis of all publicly available information relating to the Company and the Company’s shares. Such information has not been independently verified by the financial advisor. The financial advisor is acting for the Company in connection with the transaction and no one else and will not be responsible to anyone other than the Company for providing the protections afforded to its clients nor for giving advice in relation to the transaction or any other matter referred to herein.

The information in this press release may not be forwarded or distributed to any other person and may not be reproduced at all. Any forwarding, distribution, reproduction or disclosure of this information in its entirety or in any part is prohibited. Failure to follow these instructions may result in a breach of the Securities Act or applicable laws in other jurisdictions.

This press release does not constitute an invitation to warrant, subscribe, or otherwise acquire or transfer any securities in any jurisdiction. This press release does not constitute a recommendation for any investors’ decisions regarding the Issue. Each investor or potential investor should conduct a self-examination, analysis and evaluation of the business and information described in this press release and any publicly available information. The price and value of the securities can decrease as well as increase. Achieved results do not provide guidance for future results. Neither the contents of the Company’s website nor any other website accessible through hyperlinks on the Company’s website are incorporated into or form part of this press release.

Forward-looking statements
This press release contains forward-looking statements that reflect the Company’s intentions, beliefs, or current expectations about and targets for the Company’s future results of operations, financial condition, liquidity, performance, prospects, anticipated growth, strategies and opportunities and the markets in which the Company operates. Forward-looking statements are statements that are not historical facts and may be identified by words such as “believe”, “expect”, “anticipate”, “intend”, “may”, “plan”, “estimate”, “will”, “should”, “could”, “aim” or “might”, or, in each case, their negative, or similar expressions. The forward-looking statements in this press release are based upon various assumptions, many of which are based, in turn, upon further assumptions. Although the Company believes that the expectations reflected in these forward-looking statements are reasonable, it can give no assurances that they will materialize or prove to be correct. Because these statements are based on assumptions or estimates and are subject to risks and uncertainties, the actual results or outcome could differ materially from those set out in the forward-looking statements as a result of many factors. Such risks, uncertainties, contingencies and other important factors could cause actual events to differ materially from the expectations expressed or implied in this release by such forward-looking statements. The Company does not guarantee that the assumptions underlying the forward-looking statements in this press release are free from errors and readers of this press release should not place undue reliance on the forward-looking statements in this press release. The information, opinions and forward-looking statements that are expressly or implicitly contained herein speak only as of its date and are subject to change without notice. Neither the Company nor anyone else undertake to review, update, confirm or to release publicly any revisions to any forward-looking statements to reflect events that occur or circumstances that arise in relation to the content of this press release, unless it is not required by law or Nasdaq First North Growth Market Rulebook for Issuers.

Information to distributors
Solely for the purposes of the product governance requirements contained within: (a) EU Directive 2014/65/EU on markets in financial instruments, as amended (“MiFID II”); (b) Articles 9 and 10 of Commission Delegated Directive (EU) 2017/593 supplementing MiFID II; and (c) local implementing measures (together, the “MiFID II Product Governance Requirements”), and disclaiming all and any liability, whether arising in tort, contract or otherwise, which any “manufacturer” (for the purposes of the MiFID II Product Governance Requirements) may otherwise have with respect thereto, the shares in the Company have been subject to a product approval process, which has determined that such shares are: (i) compatible with an end target market of retail investors and investors who meet the criteria of professional clients and eligible counterparties, each as defined in MiFID II; and (ii) eligible for distribution through all distribution channels as are permitted by MiFID II (the “Target Market Assessment”). Notwithstanding the Target Market Assessment, Distributors should note that: the price of the shares in the Company may decline and investors could lose all or part of their investment; the shares in the Company offer no guaranteed income and no capital protection; and an investment in the shares in the Company is compatible only with investors who do not need a guaranteed income or capital protection, who (either alone or in conjunction with an appropriate financial or other adviser) are capable of evaluating the merits and risks of such an investment and who have sufficient resources to be able to bear any losses that may result therefrom. The Target Market Assessment is without prejudice to the requirements of any contractual, legal or regulatory selling restrictions in relation to the Issue. Furthermore, it is noted that, notwithstanding the Target Market Assessment, the financial advisor will only procure investors who meet the criteria of professional clients and eligible counterparties.

For the avoidance of doubt, the Target Market Assessment does not constitute: (a) an assessment of suitability or appropriateness for the purposes of MiFID II; or (b) a recommendation to any investor or group of investors to invest in, or purchase, or take any other action whatsoever with respect to the shares in the Company.

Each distributor is responsible for undertaking its own target market assessment in respect of the shares in the Company and determining appropriate distribution channels.

This is a translation of the Swedish version of the press release. In case of discrepancies, the Swedish wording shall prevail.