The Board of Directors of Episurf Medical AB (publ) ("Episurf Medical", "Episurf" or the "Company") (Nasdaq Stockholm: EPIS B) has today resolved, subject to approval at an extraordinary general meeting (the "Extraordinary General Meeting"), to carry out a rights issue of units with preferential rights for existing shareholders of a maximum of approximately SEK 29.4 million (the "Rights Issue"). Each unit ("Unit") consists of six (6) shares of series B and three (3) warrants of series TO14 B. Each existing share in the Company, regardless of series, held on the record date for the Rights Issue entitles to one (1) unit right. Four (4) unit rights entitle to subscription of one (1) Unit at a subscription price of 0.18 SEK per Unit. The Rights Issue is subject to subscription and guarantee intentions, subscription commitments and guarantee commitments of 100 percent, corresponding to approximately SEK 29.4 million, from existing shareholders, members of the Company's board and management and external investors. The Rights Issue is thereby fully secured. The purpose of the Rights Issue is mainly to raise the capital required to complete the 510(k) process with the US Food and Drug Administration ("FDA") regarding Episealer^® MTP and to carry out preparatory activities for commercialization, as well as to support the sales of Episealer^® Patellofemoral System in the US as well as other products outside the US. The Rights Issue is subject to approval at the Extraordinary General Meeting expected to be held on August 4, 2025. Notice of the Extraordinary General Meeting will be issued separately.

"The capital raise strengthens Episurf's commercial capabilities in the US and key European markets for our existing portfolio, while creating good conditions to complete the FDA review during the year and successfully launch Episealer^® MTP thereafter. The transition to a distributor-based business model is proceeding according to plan and we are seeing strong growth in the number of surgeons in the US using the Episealer^® Patellofemoral System. Combined with the cost-saving program we communicated earlier today, we are taking major steps towards a financially stronger Episurf. We therefore look forward to the rest of the year, which will be important for Episurf." says Pål Ryfors, CEO Episurf Medical.

Summary of the Rights Issue

• Each existing share of series A or B in the Company held on the record date for the Rights Issue entitles to one (1) unit right. Four (4) unit rights entitle the subscription of one (1) Unit.
• Each Unit consists of six (6) new shares of series B and three (3) warrants of series TO14 B. This means that a maximum of 979,597,038 new shares of series B can be issued through the Rights Issue and that a maximum of 489,798,519 new shares of series B may be issued through the exercise of warrants of series TO14 B.
• The subscription price has been set at SEK 0.18 per Unit, representing SEK 0.03 per share of series B and no consideration per warrant of series TO14 B.
• Each warrant of series TO14 B will entitle to subscription of one (1) new share of series B at a subscription price of SEK 0.03 per share during the period February 9 - 20, 2026.
• Through the Rights Issue, Episurf can receive maximum proceeds of approximately SEK 29.4 million before deductions for costs attributable to the Rights Issue, which are estimated to amount to approximately SEK 5.7 million, of which approximately SEK 2.9 million consists of guarantee remuneration. If TO14 B are fully exercised, Episurf can receive an additional maximum SEK 14.7 million before costs.
• The Rights Issue is covered by subscription and guarantee intentions, subscription commitments and guarantee commitments of 100 percent, corresponding to approximately SEK 29.4 million, from existing shareholders, members of the Company's board and management and external investors. Subscription commitments and intentions to subscribe amount to approximately SEK 5.2 million, corresponding to approximately 17.8 percent, and guarantee commitments and intentions to enter into guarantee commitments amount to approximately SEK 24.2 million, corresponding to approximately 82.2 percent. The subscription and guarantee intentions, totaling approximately SEK 3.7 million, corresponding to 12.7 percent, have been submitted by members of the Company's board of directors and senior executives with shareholdings in the Company. Members of the Company's board of directors and management are prevented, under applicable market abuse rules, from entering into commitments to subscribe for Units in the Rights Issue, as a result of the Company being in a so-called closed period until the publication of the interim report for the second quarter of 2025, and are expected to enter into commitments after the closed period has ended.
• The subscription period in the Rights Issue runs from August 8, 2025 to August 22, 2025.
• Unit rights that are not utilized for subscription during the subscription period will become invalid and lose their value. Trading in unit rights is planned to take place on Nasdaq Stockholm from August 8, 2025 to August 19, 2025.
• The Rights Issue results in a maximum dilution of 60.0 percent of the capital and approximately 60.0 percent of the votes in the Company after the Rights Issue. In addition, the dilution upon full exercise of warrants of series TO14 B amounts to a maximum of approximately 23.1 percent of the capital and approximately 23.1 percent of the votes in the Company after such exercise. See below for further information regarding possible additional dilution as a result of guarantors of the Rights Issue choosing to receive guarantee compensation in the form of Units.
• The record date for the right to receive unit rights in the Rights Issue is August 6, 2025. The last trading day in Episurf's share including the right to receive unit rights is August 4, 2025. The first trading day excluding the right to receive unit rights is August 5, 2025.
• A prospectus will be prepared in connection with the Rights Issue and published around August 5, 2025.
• The Board's resolution on the Rights Issue is conditional on approval at the Extraordinary General Meeting intended to be held on August 4, 2025. Notice of the Extraordinary General Meeting will be issued separately.
• In the event that not all Units have been subscribed for with the support of unit rights, the board of directors shall, within the framework of the maximum amount of the Rights Issue, resolve on the allotment of Units subscribed for without the support of unit rights (i.e. without preferential right), whereby allotment shall take place in the following order:
  • firstly, to those who have subscribed for Units with the support of unit rights, regardless of whether the subscriber was a shareholder on the record date for the Rights Issue or not, and in the event of oversubscription, pro rata in relation to the number of Units subscribed for with the support of unit rights, and to the extent that this cannot be done, by drawing lots;
  • secondly, to those who have subscribed for Units without support of unit rights, and in the event of oversubscription, pro rata in relation to the number of Units notified for such subscription in the notification, and to the extent that this cannot be done, by drawing lots; and
  • thirdly, to certain shareholders and other investors who have entered into guarantee commitments, pro rata in relation to the guaranteed amount of each guarantor, and to the extent that this cannot be done, by drawing lots.

Background and motive

Episurf is a Swedish medtech company in orthopedics with a proprietary portfolio of individually customizable implants and associated surgical instruments that, with advanced 3D imaging technology, enable customized solutions from the planning stage to the completed surgery for patients with persistent joint pain. The individual customization and the high quality of the Company's products mean that Episurf addresses the current gap in treatment options for osteoarthritis patients between early biological interventions and total knee replacements, which means that even younger (middle-aged) patients are suitable for surgical solutions. In addition to knee replacements (Episealer^® Knee) and patellofemoral implants for pain between the kneecap and the femur (Episealer^® Patellofemoral System), Episurf offers ankle implants (Episealer^® Talus). Also, under regulatory review is an implant for the big toe joint (Episealer^® MTP) which is intended to be launched in close connection with a potential 510(k) approval from the FDA, which the Company expects to receive in 2025.

Episurf implemented a first cost-saving program in 2024, which reduced the Company's costs by approximately SEK 20 million. An important part of the program has been a transition from an in-house sales force to a geographically broader system based on selected distributor partners - including exclusive distributors of DePuy Synthes in the USA and, since February 2025, Joint Operations in several European countries (Germany, Austria, the UK and Ireland), with the possibility of adding more markets. In July 2025, a second cost-saving program was announced, which aims to reduce the Company's costs by another up to SEK 20 million to form a financially stronger Episurf.

With a growing and active network of distributors, Episurf is now entering a phase of accelerated growth with sales as the main focus. The increase in sales will primarily come from an expansion of operations in the USA, where the Company's Episealer^® Patellofemoral System is showing increasing demand among surgeons, while the upcoming Episealer^® MTP is expected to contribute to sales in the coming years and in the long term has the potential to become one of the Company's most important products. Since the main treatment method for patients with joint injuries in the big toe joint is a joint fusion, it is the Company's judgement that a solution that enables maintained joint function has great potential to become a preferred treatment. In Europe, the distributor Joint Operations will drive sales growth going forward. Sales growth in both main markets will come through more surgeons adopting the Company's product catalog and through an increased number of operations per surgeon and year. Clinically, Episurf can demonstrate strong clinical results, which is fundamental to convincing surgeons to use new systems.

The purpose of the Rights Issue is to finance the completion of the 510(k) process with the FDA regarding the Episealer^® MTP and to carry out preparatory activities for commercialization, as well as to support the sales of the Episealer^® Patellofemoral System in the US as well as other products outside the US. The Offering enables Episurf to drive its growth initiatives until the end of the first quarter of 2026 and upon full utilization of warrants of series TO14 B into the third quarter of 2026.

Upon full subscription of the Rights Issue, the Company will receive net proceeds of approximately SEK 23.7 million. The net proceeds are intended to be used for the following purposes:

• Completion of the 510(k) process with the FDA regarding the Episealer^® MTP and preparatory activities for commercialization (approximately 33 percent),
• Support sales activities of the Episealer^® Patellofemoral System in the US (approximately 33 percent), and
• Support sales activities outside the US (approximately 33 percent).

Upon full exercise of warrants of series TO14 B, the Company will receive additional net proceeds of approximately SEK 14.7 million. Such net proceeds are intended to be used for the following purposes:

• Support sales activities of Episealer^® MTP (approximately 33 percent),
• Support sales activities of Episealer^® Patellofemoral System in the US (approximately 33 percent), and
• Support sales activities outside the US (approximately 33 percent).

Subscription and guarantee intentions, subscription commitments and guarantee commitments

The Company has received subscription commitments and subscription inentions from existing shareholders, including members of the Company's board and management, totaling approximately SEK 5.2 million, corresponding to approximately 17.8 percent of the Rights Issue. No remuneration will be paid for the subscription commitments. The subscription commitments also include an undertaking to vote for approval of the Rights Issue at the Extraordinary General Meeting.

The Company has also received intentions to enter into agreements and entered into agreements with certain existing and external investors for guarantee commitments amounting to approximately SEK 24.2 million, corresponding to approximately 82.2 percent of the Rights Issue. Accordingly, the Rights Issue comprises subscription commitments and guarantee commitments amounting to in aggregate approximately SEK 29.4 million, corresponding to 100 percent of the Rights Issue. The guarantee commitments are, where applicable, conditional on upon the guarantor obtaining, prior to the Extraordinary General Meeting, an exemption from the obligation of mandatory bid that may arise upon fulfilment of the guarantee commitment. In the event that the guarantor does not obtain an exemption from the obligation of mandatory bid, the guarantor shall, within the framework of the guarantee commitment, be allotted a maximum number of Units such that no bid obligation arises. For guarantee commitments, a cash remuneration will be paid in accordance with the guarantee agreements of twelve (12) percent of the guaranteed amount, or alternatively twelve (12) percent of the guaranteed amount in the form of newly issued Units.

The subscription and guarantee intentions, totaling approximately SEK 3.7 million, corresponding to 12.7 percent, have been submitted by members of the Company's board of directors and senior executives with shareholdings in the Company. Members of the Company's board of directors and management are prevented, under applicable market abuse rules, from entering into commitments to subscribe for Units in the Rights Issue, as a result of the Company being in a so-called closed period until the publication of the interim report for the second quarter of 2025, and are expected to enter into commitments after the closed period has ended.

The subscription commitments and guarantee commitments are not secured by bank guarantees, escrow funds, pledges or similar arrangements.

Extraordinary General Meeting

The Board of Directors' resolution on the Rights Issue is conditional on approval at the Extraordinary General Meeting intended to be held on August 4, 2025. The Board of Directors will also propose that the Extraordinary General Meeting resolves to amend the Company's articles of association as regards the limits for the share capital and the number of shares. Notice of the Extraordinary General Meeting will be issued separately.

Prospectus

The full terms and conditions for the Rights Issue and information about the Company will be presented in a prospectus, prepared in accordance with the simplified disclosure regime for secondary issuances, which is expected to be published around August 5, 2025.

Change in share capital, number of shares, and dilution

Before the execution of the Rights Issue, the Company's share capital amounts to SEK 6,530,646.92 allocated on 653,064,692 shares, of which 473,357 are shares of series A and 652,591,335 are shares of series B.

Through the Rights Issue, the number of shares in Episurf will increase by a maximum of 979,597,038 shares of series B, to a maximum of 1,632,188,373 shares of series B and a maximum of 1,632,661,730 shares in aggregate. The share capital will increase by a maximum of SEK 9,795,970.38, to a maximum of SEK 16,326,617.30. For existing shareholders who do not participate in the Rights Issue, this will result in a dilution effect upon full subscription of approximately 60.0 percent of the capital and 60.0 percent of the votes in the Company after the Rights Issue.

Upon full exercise of warrants of series TO14 B, the number of shares of series B will increase by 489,798,519, to a maximum of 2,121,986,892 shares of series B and a maximum of 2,122,460,249 shares in aggregate. The share capital will increase by a maximum of SEK 4,897,985.19, to a maximum of SEK 21,224,602.49. For existing shareholders, this means a dilution effect upon full exercise of approximately 23.1 percent of the capital and approximately 23.1 percent of the votes in the Company after such exercise.

If all investors who have entered into or intend to enter into guarantee commitments, and who has not in advanced waived the right to choose Units as remuneration, choose to receive their guarantee remuneration in Units, and provided that all warrants of series warrants of series TO14 B that are part of such Units are exercised, the number of shares will increase by 55,011,402 shares of series B and the share capital will increase by approximately SEK 550,114.02, which, provided that the Rights Issue is fully subscribed, will correspond to a dilution effect of approximately 2.2 percent of the shares and approximately 2.2 percent of the votes in the Company.

Preliminary timetable for the Rights Issue

Advisors

Episurf has engaged DNB Carnegie SME as financial advisor and Snellman Attorneys Ltd as legal advisor in connection with the Rights Issue.

For more information, please contact:
Pål Ryfors, CEO, Episurf Medical
Tel:+46 709 62 36 69
Email: pal.ryfors@episurf.com

This information is information that Episurf Medical AB is required to disclose pursuant to the EU Market Abuse Regulation 596/2014. The information was submitted, through the agency of the above contact person, for publication at 20:15 CEST on July 2, 2025.

About Episurf Medical

Episurf Medical is endeavoring to bring people with painful joint injuries a more active, healthier life through the availability of minimally invasive and individualised treatment alternatives. Episurf Medical's Episealer^® individualised implants and Epiguide^® surgical drill guides are developed for treating localised cartilage injury in joints. Episurf Medical's μiFidelity^® system enables implants to be cost-efficiently tailored to each individual's unique injury for the optimal fit and minimal intervention. Episurf Medical's head office is in Stockholm, Sweden. Its share (EPIS B) is listed on Nasdaq Stockholm. For more information, go to the company's website: www.episurf.com.

Important information

The release, announcement or distribution of this press release may, in certain jurisdictions, be subject to restrictions. The recipients of this press release in jurisdictions where this press release has been published or distributed shall inform themselves of and follow such legal 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, or a solicitation of any offer, to buy or subscribe for any securities in Episurf Medical in any jurisdiction, neither from Episurf Medical nor from someone else.

This press release 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. A prospectus, prepared in accordance with the simplified disclosure regime for secondary issuances as set forth in the Prospectus Regulation, regarding the Rights Issue described in this press release will be prepared and disclosed by the Company prior to the commencing of the subscription period.

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 Company. The information contained in this announcement relating to the Rights Issue is for background purposes only and does not purport to be full or complete. No reliance may be placed for any purpose on the information contained in this announcement or its accuracy or completeness. DNB Carnegie SME are acting for Episurf Medical in connection with the Rights Issue and no one else and will not be responsible to anyone other than Episurf Medical for providing the protections afforded to its clients nor for giving advice in relation to the Rights Issue or any other matter referred to herein. DNB Carnegie SME are not liable to anyone else for providing the protection provided to their customers or for providing advice in connection with the Rights Issue or anything else mentioned herein.

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 Rights Issue 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 US, the United Kingdom, Australia, Belarus, Canada, Hong Kong, Israel, Japan, New Zeeland, Russia, Singapore, South Africa, South Korea, Switzerland 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" (within the meaning of the Prospectus Regulation as it forms part of domestic law in the United Kingdom by virtue of the European Union (Withdrawal) Act 2018) 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"); or (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"). 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.

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 and the group's future results of operations, financial condition, liquidity, performance, prospects, anticipated growth, strategies and opportunities and the markets in which the Company and the group 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 required by law or Nasdaq Stockholm's rule book for issuers.