Comments by the CEO from Interim report Q4 2020

COMMENTS BY THE CEO

We continue to see strong demand for the OXE, the company increased its Order Book by 38% to SEK 139.3 m at the end of Q4 (45% organic growth excluding exchange rate differences) – all of which are targeted to be delivered during 2021 - see bar chart below in respect to order book development in the last 15 months.

As explained in my previous interim report, we expected subdued sales for this quarter due to lack of completed units available, and as a result, net turnover amounted to SEK 4.8 m (SEK 40.1 m) for Q4 whilst achieving a gross profit of SEK 1.1 m (SEK 4.0 m) with a gross margin of 23% (10%). As for the full financial year, we achieved a positive gross profit of SEK 5.5 m (-3.6 m) or gross margin of 14% (-4%) for the first time in the Company’s history. We expect to see a more positive gross margin development in the coming year as the higher margin OXE300 product is introduced to the market.

Our strategic decision of moving the OXE200 production away from UFAB took place during Q2 of the year and we have since initiated the start of assembly of OXE200 series in January 2021 at the chosen facility based in Albany, Georgia in the South East of the US with Outboard Network Manufacturing (ONM) as our assembly partner.

Our preparation for series production of the OXE300 with our assembly partner, PanLink, with its operations in Poland, has progressed well. We continue to build a number of pre-series engines in Ängelholm and have delivered to a number of customers in the US and the Middle East for demonstration purposes. We have delivered production series parts to Poland during this reporting period. Since then, the company has started a controlled production ramp-up in February 2021.

The Company has continued to monitor its Distribution network - there has been some new appointments as well as terminations, which has led the Company to re-purchase engines, and selling them onwards to new distributors – this has meant no new net sales but has led to improvements in reducing its accounts receivables balance.

We continue with our preliminary assessment of BMW’s 4-cylinder two-litre turbo diesel engine for marine application – to power its next-generation OXE200 series. We expect to develop a prototype version for sea trials at the end of Q1 2021. Other development work continues in accordance to plan especially with electric outboard solutions.

Myron Mahendra, Chief Executive Officer