CEO's message

Continued development of our production capacity

During the quarter, we demonstrated that we have significantly reduced our cost base, received confirmation of the impressive nature of our operations and showed that we are ready for high-volume manufacturing.

The Group’s net sales for the third quarter of 2024 amounted to SEK 5.6 million (9.3), down 40 percent year-on-year. This was also lower than in the preceding quarter, which in itself is confirmation of our comments at the time that sales may vary between quarters.

During the quarter, we continued to deliver in our existing partnerships, with a strong focus on our ability to provide highly specialized services that support our customers in developing high-efficiency flow plates that are adapted to our cost-effective production process.

The Group’s operating loss for the quarter amounted to SEK –17.7 million (–23.7). Despite lower net sales, our result improved, mainly due to our continued efforts to adapt our costs to our activity level.

Financing deemed sufficient for 2025

The cost-saving programs that we implemented in 2023 have now taken full effect. Our cash position declined only about SEK 4 million in the quarter, which is a considerably lower rate of decrease and thus a major improvement compared to previous quarters. Cash flows from operating activities for the quarter, which were significantly higher compared with the same quarter last year, were positive, mainly as a result of lower costs and a favorable working capital trend.

At the end of the quarter, trading in warrants under the rights issue conducted in December 2023 was concluded. The subscription of new shares resulted in an additional capital contribution for the company of approximately SEK 18 million before issue costs.

Given the capital contribution that the company received in the recently completed share issue, our current assessment is that the company is sufficiently financed for 2025. This provides us with good prospects to continue developing our operations and our production facility, making us more attractive as a partner and supplier.

Further development of the Phase II program

During the quarter, we signed a collaboration agreement with Andritz Soutec AG to jointly develop a machine for galvo welding of bipolar flow plates. The agreement streamlines Cell Impact’s production flow and optimizes the conditions for delivering flow plates on a large scale. The new welder can weld one flow plate per second, which matches the capacity offered by Cell Impact Forming™.

The galvo welder is being developed in Switzerland and the plan is that it will be installed when and where the need arises. This is thus a further step in the realization of our Phase II program aimed at increasing productivity and profitability. As we add new process steps to our production lines, we are automating manufacturing to reduce production costs.

Another example of why it is important that we continue to develop our production capacity was the transaction we announced at the end of October. We signed an agreement with an existing customer for the delivery of titanium flow plates. The agreement pertained to a follow-up order from previous prototype series and the order value amounted to SEK 600,000.

“Together with all our dedicated employees, I look forward to continuing to develop Cell Impact and contributing to the global transition to a more sustainable society.”

Strong market position

Our business and market position have evolved from a proven track record of assisting our customers with unique technical solutions and unparalleled know-how. This allows us to help improve the flow plate design to facilitate large-scale production and achieve higher quality in a more cost-effective manner. We also hold a unique position when it comes to being able to demonstrate the long service life of our tools. Tests show that our tools can withstand more than two million impacts.

During the quarter, we met with customers and potential customers in Asia and Europe, where we received confirmation of the uniqueness of our offering. We have an established production facility and can cost-effectively produce high-quality, high-efficiency flow plates in large volumes.

For all applications

The projects we conduct together with customers – both design projects and the development of prototypes – are necessary steps on the road to large-scale flow plate production, which can take place in Karlskoga or closer to our customers.

We offer attractive solutions both for fuel cells and for electrolyzers. In fact, we are established in virtually all geographic markets, with flow plates both for fuel cells and for electrolyzers – and in all application areas. We have produced flow plates for various applications – and both for proton exchange membrane (PEM) plates and for solid oxide fuel cells (SOFC) – in:

• Material handling
• Stationary applications
• Automotive industry
• Marine applications
• Aviation industry

As we previously communicated, we have a business model that works and a production facility that is ready for large volumes.

We are developing the company, together

Finally, I would like to thank you for your confidence in appointing me as CEO after serving as acting CEO since January 1, 2024. Together with all our dedicated employees, I look forward to continuing to develop Cell Impact and contributing to the global transition to a more sustainable society. We are prepared.

Daniel Vallin, CEO
Karlskoga, October 2024