eip-2023-12-31-en

Table of contents


Letter from the CEO ...................................................................................................................................	3
Director’s report ..........................................................................................................................................	5
Corporate Governance report ..............................................................................................................	11
ESG Report ....................................................................................................................................................	20
1 CONSOLIDATED FINANCIAL STATEMENTS .....................................................................................	26
Consolidated statement of comprehensive income ......................................................................	26
Consolidated statement of financial position ...................................................................................	27
Consolidated statement of changes in equity ..................................................................................	28
Consolidated cash flow statement .......................................................................................................	29
2 NOTES TO THE CONSOLIDATED FINANCIAL ACCOUNTS .........................................................	31
Note 1 – Accounting principles ..............................................................................................................	31
Note 2 – Revenue .......................................................................................................................................	32
Note 3 – Government grants ..................................................................................................................	33
Note 4 – Other operating expenses ......................................................................................................	33
Note 5 – Financial income and financial expenses .........................................................................	33
Note 6 – Tax ..................................................................................................................................................	34
Note 7 – Intangible assets ........................................................................................................................	36
Note 8 - Property, plant and equipment .............................................................................................	37
Note 9 – Investments in subsidiaries ......................................................................................................	37
Note 10 – Trade receivables and other current receivables .........................................................	37
Note 11 – Cash and cash equivalents .................................................................................................	38
Note 12 – Employee benefits expenses ...............................................................................................	38
Note 13 – Share option program ...........................................................................................................	38
Note 14 – Share capital and shareholder information ....................................................................	40
Note 15 – Interest-bearing liabilities .......................................................................................................	41
Note 16 – Leasing .......................................................................................................................................	42
Note 17 – Financial risk factors ................................................................................................................	42
Note 18 – Other current liabilities ...........................................................................................................	44
Note 19 – Events after the balance sheet date ................................................................................	44
Note 20 - Alternative Performance Measures ....................................................................................	44
3 FINANCIAL STATEMENTS OF THE PARENT COMPANY ...............................................................	46
Income statement .....................................................................................................................................	46
Financial Position at 31 December .......................................................................................................	47
Cash flow statement .................................................................................................................................	49
Note 1 – Accounting principles ..............................................................................................................	50
Note 2 - Revenue .......................................................................................................................................	54
Note 3 – Payroll expenses, number of employees, remunerations, loans to employees etc. ..................................................................................................................................................................	55
Note 4 – Intangible assets ........................................................................................................................	55
Note 5 - Property, plant and equipment .............................................................................................	56
Note 6 – Leasing .........................................................................................................................................	56
Note 7 - Other operating expenses ......................................................................................................	57
Note 8 – Specification of financial income and expenses ............................................................	57
Note 9 – Taxes ..............................................................................................................................................	58
Note 10 – Subsidiaries ................................................................................................................................	58
Note 11 – Debtors and liabilities .............................................................................................................	59
Note 12 – Restricted cash ........................................................................................................................	59

Elliptic Laboratories AS Group – Financial statements 2023


Note 13 – Shareholder’s equity ..............................................................................................................	59
Note 14 – Balance with group companies etc. ................................................................................	59
Note 15 – Share capital and shareholder information ....................................................................	60
Note 16 – Pensions ......................................................................................................................................	60
Note 17 – Government grants ................................................................................................................	60
Note 18 – Related-party transactions ...................................................................................................	60
Note 19 – Events after the balance sheet date ................................................................................	60
Directors' Responsibility Statement ........................................................................................................	61
4 AUDITOR'S REPORT .............................................................................................................................	62


Elliptic Laboratories ASA Group – Financial statements 2023	Page 2

Letter from the CEO

Pioneering the Future with AI Virtual Smart

Sensors

As we close another chapter in our journey, it is my

pleasure to reflect on the progress and

achievements of Elliptic Labs throughout 2023. The

year was defined by significant strategic, technical,

and commercial advancements, reinforcing our

position as an industry leader that is setting the

market standard with our AI Virtual Smart Sensor

platform.

Strategic and Commercial Milestones

In 2023, Elliptic Labs continued to shape the future of

AI Virtual Smart Sensors, solidifying its leadership

across the PC/laptop and smartphone ecosystems.

Our AI software platform has been recognized by

industry giants such as Microsoft, Intel, Qualcomm,

and Cirrus Logic through our pivotal role in the MIPI

Alliance, and it is fully aligned with the new industry

standards and architectures defined by this industry-

wide collaboration. Our place in this alliance means

Elliptic Labs is setting the future standards for our field.

Our commercial achievements this year include

notable expansions in our customer base. We have

secured contracts with four of the top-six PC/laptop

OEMs and have added three new smartphone OEMs

as well. These partnerships testify not only to our

technological prowess but also to the trust and value

we bring to our customers' entire product portfolios.

Technological Leadership

As the market leader in AI Virtual Smart Sensors, our

commitment to innovation has never been stronger.

We have close to two hundred granted and pending

patents, and our AI Virtual Human Presence Sensor and technologies for seamless

interoperability and contextual awareness are at the forefront of the industry. Our defining role

in the MIPI Alliance further ensures that our software platform remains aligned with the latest

architectures and components in the ecosystem, enabling us to deliver advanced AI

capabilities across a wide range of devices.

Financial Performance

There was a delay in laptop revenues at the end of 2023 due to the timing of launches in the

market. Despite a challenging market backdrop in consumer technology, our revenue

increased by 34% to NOK 70 million in 2023. We attribute this growth both to our expansion in

the PC market, which also saw us begin shipping with one of our four major customers, and to

our continued success in the smartphone sector. Elliptic Labs launched on 17 different laptop

models and 21 smartphone models in 2023. Our expanded commercial position has set the

foundation for incremental revenue growth going into 2024. The diversification of our revenue

streams and the addition of new OEM partners underscore the health and potential growth of

our business.

Looking Ahead

Entering 2024, we find ourselves in an enviable ecosystem position, with a solid commercial

foundation and a lean and scalable organization. While the company is already on a clear

growth trajectory, we are expecting even higher growth in the years to come due to our

strategic partnerships, commercial progress, and funding. We remain on track to reach our

revenue target of NOK 500 million by 2025.

Future Vision

Innovation and business development in the global technology space require partnership and

collaboration, market understanding, expertise, creativity, determination, and grit. As such, I


Elliptic Laboratories ASA Group – Financial statements 2023	Page 3

Image for 2023 Annual Report with Quote.jpg

want to extend my gratitude to our employees, partners, and shareholders for their continued

support and belief in our vision — to build the leading AI software platform for all user

experiences and to make every device smarter, greener, and more user-friendly. Elliptic Labs'

2023 achievements are our collective success, showcasing our resilience and commitment to

innovation. As we look to the future, Elliptic Labs' focus remains on strengthening its market

position, expanding its technological leadership, and delivering value to its stakeholders.

Together, we are poised for remarkable achievements in the years to come.

Thank you for your unwavering support!


Elliptic Laboratories ASA Group – Financial statements 2023	Page 4

Board of Directors’ Report

In 2023, Elliptic Labs continued its commercial expansion in the laptop sector by

equipping its AI Virtual Human Presence Sensor on 17 new Lenovo PC models. It also

renewed agreements for more than 20 upcoming PC model launches across four of

the world’s top-six PC OEMs.

The company further extended its reach in the mobile industry by launching its AI

Virtual Proximity Sensor on a total of 21 smartphone models this year across both new

and existing customers.

Elliptic Labs has achieved significant accomplishments with its innovative AI Virtual

Smart Sensor Platform. This software-based solution has paved the way for adoption in

various industries.

Highlights from 2023:

Strategic Movements:

• Signed software license contracts with 3 of the top-5 smartphone OEMs

• Established the first Proof of Concept (PoC) for a new operating system (OS) with an

existing customer in the PC market

• Joined the MIPI-alliance as a key contributor to new architecture and industry

standards

• Expanded presence by signing new contracts with leading PC/laptop customers and

existing smartphone customers

• New functionalities for AI Virtual Smart Sensor Platform developed to enhance device-

to-device interoperability across systems and devices

• PoCs initiated with top PC OEMs for the AI Virtual Smart Sensor Platform to deliver

seamless user experiences, later converted in to license agreement

Technology and Product Launches:

• AI Virtual Human Presence Sensor technology launched on a total of 17 Lenovo

ThinkPad models.

• The AI Virtual Smart Sensor Platform featured in several new smartphone models from

various manufacturers:

◦ TECNO: 2 models including Phantom V Fold and Phantom V Flip

◦ vivo: 2 models including Y78 +, Y100

◦ Xiaomi: 4 models including Note 12S, Note 13, Note 13 Pro, and K70e

◦ HONOR: 8 models including Honor 90, X50i+, V Purse, 100, and others

◦ Oppo: 3 model including Find N3 Flip, S18 and S18 Pro

◦ Motorola: 2 models including Razr 40 and Razr 40 Ultra.

Continued smartphone OEM launches

In 2016, Elliptic Labs launched its AI Virtual

Proximity Sensor to market for the first time

on the Xiaomi Mix smartphone. Since then,

the company has established a leading

market position in the smartphone segment

with such proven performance that OEMs

now rapidly adopt Elliptic Labs AI Virtual

Proximity Sensor.

As of the end of 2023, Elliptic Labs has

launched on a total of 96 smartphone

models and its software has been

deployed on more than 500 million

devices. Elliptic Labs is well-placed with

high exposure to Asian end-user markets.

End-market demand for smartphones was

weak at the end of 2022 with low short-

term visibility for 2023, resulting in reduced

up-front commitments. This trend continued

into 2023, as the global smartphone market

declined 4%. Though the market

decreased, Elliptic Labs has nonetheless

achieved more contracts with more OEMs

and launched more products than ever

before across its 2 main verticals. There are

encouraging signs of market stabilization

for 2024 1.

Broad adoption in the laptop market

Elliptic Labs continued to expand into the

laptop market in 2023, building on its


Elliptic Laboratories ASA Group – Financial statements 2023	Page 5

1 https://www.canalys.com/newsroom/worldwide-smartphone-market-2023

several-year cooperation alongside CPU

makers. Elliptic Labs has strong partnerships

with Intel, AMD, and Qualcomm, ensuring

the Company has technological access to

significant share of the laptop market.

During 2023, Elliptic Labs launched 17 new

laptop models with Lenovo, bringing its

total number of Lenovo models launched

to 18. Thus far in 2024, an additional 8

models have been launched, increasing

the total to 26 as of the publication of this

report. These models include the top-of-

the-line Lenovo ThinkPad X1 Carbon. This

state-of-the-art deployment showcases

Elliptic Labs' ability to succeed across both

low-end and top-tier computers.

In the laptop market, Elliptic Labs is

competing against single-purpose

hardware sensors that have a higher price

point compared to the hardware sensors

being used in smartphones. In addition to

its initial AI Virtual Human Presence Sensor,

the Company has developed multiple

products applicable for adoption in the

laptop market. The combination of higher

pricing and wide roll-out across multiple

products outlines the vast potential for the

Company in this market.

To capture this large potential and ensure

long-term access to the PC market, Elliptic

Labs has signed enterprise license

agreements with global OEMs and has

continued to improve and innovate its AI

Virtual Smart Sensor Platform.

In addition to Elliptic Labs' entry into the

laptop vertical and subsequent expansion

with new customers and models, Elliptic

Labs secured a proof-of-concept

agreement with a leading PC

manufacturer, aimed at introducing an

innovative product to enhance device

interoperability. This was followed by a

licensing agreement for this product with

the same manufacturer, announced in

early October. The partnership aims to

facilitate seamless device integration,

driven by Elliptic Labs' AI Virtual Smart

Sensor Platform, which integrates AI/

machine learning and ultrasound with

sensor fusion technologies.

This initiative is expected to redefine user

interactions with technology, allowing

Elliptic Labs' OEM partners to offer new user

experiences and expand their ecosystems.

Elliptic Labs is excited to collaborate with its

partners to bring this new technology to

the market, improving technological

integration and convenience across

multiple devices.

Positioned for long-term growth

Beyond laptops and smartphones, the IoT

and automotive markets represent

additional opportunities for Elliptic Labs.

The company sees potential for long-term,

sustainable demand in the IoT space and

will continue positioning itself to best

capture these opportunities. This involves

solidifying its world-leading proprietary

technology, executing strong commercial

craftsmanship, and attracting and

retaining talents.

Research and development

In 2023, the Group had 30 newly granted

and pending patents, for a total of 199

granted and pending patents.

Elliptic Labs expects to continue to develop

disruptive technology and to enhance its

existing offerings. Research and

Development ("R&D") is an important part

of the Group’s business operations and of

Elliptic Labs’ strategy to reach its financial

ambitions and build shareholder value.

Elliptic Labs executes on its long-term vision

of being the leading software platform

making devices smarter, greener, and

more human-friendly.

Financial review

Profit and loss

(Figures for 2022 in parentheses)

Revenue

Total revenue and other operating income

for the full year 2023 increased 34% to

mNOK 69,6 (52,1).

Revenue from contracts with customers

represented 98% of the total revenue and

other operating income in 2023, compared

to 100% in 2022.

Revenues from contracts with customers

increased 31% to mNOK 68,3 (52,1). Despite

the macroeconomic climate of weaker

smartphone and computers sales, the

company grew in both segments in 2023.


Elliptic Laboratories ASA Group – Financial statements 2023	Page 6

In 2023, revenue from contracts with

customers was diversified and included a

46% (40%) contribution from smartphones,

54% (53%) from PC/Laptops, and 0% (7%)

from IoT.

Other operating income was mainly

represented by grants and amounted to

mNOK 1,3 (0,0) in 2023.

Operating costs and EBITDA

Total operating expenses amounted to

mNOK 103,2 in 2023 (82,9), excluding

depreciation and amortization. Employee

benefits expenses was the largest cost

area, accounting for mNOK 80,6 (62,8),

including mNOK 9,8 (12,5) in expenses

related to the Group's share option plan.

Other operating expenses amounted to

mNOK 22,6 (20,1). The increase reflects the

Group's expanding activities in general, as

well as higher prices on commodities and

services such as electricity and heating.

The Group also moved offices during the

year, which incurred some one-time costs

related to the move. Additionally, other

operating expenses includes a positive

effect of mNOK 6,4 in 2023 related to

recoveries of previously written-off

receivables in 2018.

The full-year cost increase reflects a

significantly higher activity level and

increased personnel cost related to new

hires. During 2023, the company increased

its headcount with 13 (14) full-time

employees (FTEs) for a total of 85 (72) FTEs

at year end 2023. Personnel costs were also

affected by changes in foreign exchange

rates.

EBITDA-loss amounted to mNOK -33,5,

compared to a loss of mNOK -30,8 in 2022.

The current cost base reflects an

organization ready to take on the

projected growth in the company's

business plan, as seen in Elliptic Labs'

financial targets.

Depreciation and amortization

Depreciation and amortization amounted

to mNOK 16,2 (11,3) for the full year 2023.

The increase mainly reflects higher

amortization of patents and capitalized

development intangibles. For 2023,

amortization of internally developed R&D

and patents overall amounted to mNOK

12,2 (8,7) and depreciation of leased assets

to mNOK 3,9 (2.7).

Operating profit (EBIT)

The operating loss for 2023 was mNOK -49,7

(-42,1). The increase reflects higher

operating expenses.

Net financials

Net financial income was mNOK 2,9 (2,8)

for the full year 2023, with financial income

representing mNOK 12,2 (17,3) and

financial expenses representing mNOK 9,3

(14,5). The primary factors for financial

items are agio/disagio, due to currency

fluctuation.

Results

Loss before tax was mNOK -46,9 (-39,3),

whereas net loss after tax was mNOK -38,0

(-33,0).

Cash flow

(Figures for 2022 in parentheses)

Cash flow from operating activities

amounted to mNOK -45,5, compared to

mNOK -17,3 in 2022, due mainly to negative

operating profit and change in net

outstanding account receivable in the

period.


Elliptic Laboratories ASA Group – Financial statements 2023	Page 7

Cash flow from investment activities was

mNOK -21,0, compared to mNOK -21,1 in

2022. This reflects Capitalized development

cost, and the increase reflects new hires in

the R&D department.

Cash flow from financing activities was

mNOK 2,2 (-2,3).

Cash and cash equivalents at the end of

the period were mNOK 115,6 (178,2),

sufficient to carry out Elliptic Labs' business

plan.

Financial position

(Figures for 2022 in parentheses)

Assets

Total non-current assets amounted to

mNOK 164,3 (123,7). Deferred tax assets

accounted for mNOK 77,7 (68,8). Intangible

assets accounted for mNOK 57,8 (47,6).

Right of use assets accounted for mNOK

19,4 (2,3). The increase is mainly due to the

company moving into new offices in Oslo

on a long-term lease, which is recognized

as a right-to-use asset and a lease liability

in accordance with IFRS 16.

Current assets amounted to mNOK 185,6

(225,6). Cash and cash equivalents of

mNOK 115,6 (178,2) represented the

majority of the current assets.

Equity and liabilities

Total equity amounted to mNOK 307,1

(325,6).

Total liabilities amounted to mNOK 42,8

(23,7). The increase relates to the new

lease agreement under IFRS 16. The

company continues to repay its debt.

Parent company results

(Figures for 2022 in parentheses)

The parent company Elliptic Laboratories

ASA had a net loss of mNOK -38,9 in 2023

(-33,8) allocated to other equity. At

31 December 2023, the parent company’s

total assets were mNOK 344,7 (346,8) and

total equity was mNOK 300,9 (320,4).

Going concern

The Board of Directors confirms that the

annual financial statements for 2023 have

been prepared on the basis of a going-

concern assumption, and that this

assumption has been made in

accordance with section 3-3a of the

Norwegian Accounting Act.

Corporate Governance

Elliptic Labs has established principles and

procedures for sound Corporate

Governance, including risk management

and internal controls, rules of procedure for

the Board of Directors and management,

and equal treatment of shareholders. The

company has formalized its framework

according to the Norwegian Code of

Practice for Corporate Governance.

Elliptic Labs has a Directors and Officers

Liability Insurance policy on behalf of the

members of the Board of Directors and

CEO. The insurance additionally covers any

employee acting in a managerial capacity

and includes subsidiaries owned with more

than 50%. The insurance policy is issued by

a reputable, specialized insurer with an

appropriate rating. Please see Elliptic Labs’

Corporate Governance report for further

details.

Transparency Act

In June 2021, the Norwegian Parliament

passed the Transparency Act with the

purpose of promoting companies' respect

for fundamental human rights and decent

working conditions in connection with the

production of goods and services, and to

ensure the general public is informed

about how companies handle violations of

fundamental human rights and decent

working conditions.

The act applies to large enterprises that are

domiciled in Norway, which offer goods

and services inside or outside Norway. The

last published Transparency Act Report was

published in 2023 for the financial year

2022. and can be found on

www.ellipticlabs.com/investors. Once the

report for 2023 is finalised the report will be

published on our website.

Risks and uncertainty factors

Operational risks

The technology in the markets in which the

Group operates is rapidly evolving and has

been through a series of disruptive

changes. The Group firmly believes that its

AI Virtual Smart Sensor technology will drive

such a shift across several verticals, but it is

difficult to predict market trends such as

how large the market for the Group’s

products will be, which sensors will be

adopted, and when. If the market for the

Group’s products does not evolve as the

Group anticipates, this could have a

materially adverse effect on the Group’s

business, prospects, financial position, and

results of operations.


Elliptic Laboratories ASA Group – Financial statements 2023	Page 8

Financial risks

To date, Elliptic Labs has experienced

negative cash flow from operations and

has not achieved profitability except in

certain quarters.

The Group will need to increase its

revenues in order to achieve profitability.

However, if/when the Group does achieve

profitability, it still cannot assure that it will

continue to sustain or increase profitability

on a quarterly or annual basis. Both the

smartphone industry and the PC industry

are dominated by a few large producers,

meaning that the Group is largely

dependent on a few customers.

Elliptic Labs operates in countries with

currencies other than the Group’s

presentation currency NOK and is exposed

to changes in foreign currency rates.

The Group has limited exposure to changes

in interest rate levels due to its limited long-

term borrowings of mNOK 2,0 from

Innovation Norway.

Based on the current cash position of

mNOK 115,6 and projections for the

operating cash flow and capital

requirements for the existing business, the

Board of Directors sees limited liquidity risk

as the Company will have ample liquidity

to support its existing business activities

going forward.

Geopolitical risks

The war in Ukraine and current conflicts in

the middle east currently has no direct

impact on Elliptic Labs' current operations.

The company continues to monitor the

situation.

Environmental risks

No material environmental risks have been

identified that will have substantial impact

on Elliptic Labs' operations.

Events after the balance sheet date

In early 2024, Elliptic Labs signed a new

software license agreement with a Hong

Kong-based smartphone OEM to

implement its AI Virtual Proximity Sensor

INNER BEAUTY® in future smartphone

models. The company also expanded an

existing contract with Transsion, a top-5

global smartphone OEM, to include the AI

Virtual Proximity Sensor in multiple

upcoming smartphone deployments.

In February 2024, a change in the Board of

directors occurred as Tore Engebretsen

resigned from his role as Chairperson of the

Board of Directors, with Svenn-Tore Larsen

taking over the position until the Annual

meeting 2024. Elliptic Labs participated in

the 2024 Intel Client Ecosystem Symposium,

indicating its continued strategic

relationship with Intel in the PC and laptop

sectors.

Later in March, Elliptic Labs secured a new

contract with Xiaomi to incorporate its AI

Virtual Proximity Sensor INNER BEAUTY® in

various future Xiaomi smartphone models,

continuing an eight-year partnership that

spans over 57 shipped models.

Technology Deployment in 2024

Elliptic Labs' technology was implemented

in numerous devices throughout 2024, with

the following launches:

Smartphone Launches in 2024 (Total: 17

models):

January 2024: HONOR X50 GT, HONOR X50

Pro, Xiaomi Note 13 Pro 4G, Xiaomi POCO

X6 Pro, HONOR X8B, TECNO Spark 20 Pro+

February 2024: TECNO Camon 30 Pro,

TECNO Camon 30 Premiere

March 2024: vivo V30, vivo V30 Pro, Lava

Blaze Curve, Infinix Note 40, Infinix Note 40

Pro, Infinix Note 40 Pro 5G, Infinix Note 40

Pro+ 5G, Xiaomi Civi 4 Pro

April 2024: Redmi Turbo 3

Laptop Launches in 2024 (Total: 13 models):

February 2024: Lenovo ThinkPad T14 Gen 5

(first launch), Lenovo ThinkPad T14 Gen 5

(second launch), Lenovo ThinkPad T14s

Gen 5 (first launch), Lenovo ThinkPad T14s

Gen 5 (second launch), Lenovo ThinkPad

T16 Gen 3

March 2024: Lenovo ThinkPad X1 Carbon

Gen 12, Lenovo ThinkPad X13 Gen 5,

Lenovo ThinkPad X13 2-in-1 Gen 5, Lenovo

ThinkPad X1 2-in-1 Gen 9 14"

April 2024: Lenovo ThinkPad P1 Gen 7,

Lenovo ThinkPad P16v i Gen 2, Lenovo

ThinkPad P16s i Gen 3, Lenovo ThinkPad

P14s i Gen 5.

In late April 2023; A former client failed to

meet the agreed-upon payment of

$425.000USD for software delivered in 2022.

Elliptic Labs deems the dispute as a breach

of contract and has thus decided to

pursue the payments through the ICC,

International Court of Arbitration, as

regulated in the contract. The arbitration

court proceeding was held on February 29,

2024, with expected award from ICC

before summer 2024.


Elliptic Laboratories ASA Group – Financial statements 2023	Page 9

Outlook

Elliptic Labs enters 2024 in a stronger

position than ever, with a wide customer

base across multiple verticals and a

broadened product offering. The company

will continue to build on the strong

momentum it gained from its laptop

market entry in 2022, fueled by a strong

technology and a healthy cash balance.

Although the company expects a

continued variations in quarter-to-quarter

revenue recognition in the short term, it

expects revenue will ramp up during the

year.

Laptops are expected to contribute to the

majority of the growth towards Elliptic Labs’

target of NOK 500 million in 2025. Achieving

this target will be supported by continued

traction in the smartphone market and the

exploration of new frontiers in the IoT

space.

The company will carefully manage its

organization to capture growth

opportunities, and its investments in

technology development will continue at

current levels.

Longer term, Elliptic Labs aims to become

the de facto standard for human presence

detection in the laptop and broader

market, as the company’s technology

reduces cost and risk while adding

functionalities and improving user privacy.

Oslo, 24rd of April 2024

The Board of Directors of Elliptic Laboratories ASA


Svenn-Tore Larsen Chairman	Edvin Austbø Board Member	Ingrid Elvira Leisner Board Member


Berit Svendsen Board Member	Laila B. Danielsen CEO


Elliptic Laboratories ASA Group – Financial statements 2023	Page 10

Corporate Governance Report

Implementation and Reporting on Corporate Governance

Elliptic Laboratories ASA (the "Company" or "Elliptic Labs"; together with its subsidiaries, the

"Group") was listed on the Oslo Stock Exchange on 4 March 2022. The Company has adopted

and implemented a corporate governance regime, with processes, procedures and tools that

follow the Public Limited Liability Companies Act (the "NPLCA") , the Accounting Act, the

Auditors Act, the Securities Trading Act, the EU Regulation No 596/2014 on Market Abuse

(“MAR”), the Issuer Rules for the Oslo Stock Exchange, as well as the Norwegian Code of

Practice for Corporate Governance, last updated 14 October 2021 (the “Code”), available on

https://nues.no/. Neither the Company's board of directors (the "Board" or the "Board of

Directors") nor the general meeting have adopted any resolutions which are deemed to have

a materially adverse effect on the Company's corporate governance regime.

The Board adopted the Company's corporate governance policy on 10 January 2022, as well

as inter alia rules of procedure for the Board, instructions for the audit committee, instructions

for the remuneration committee, and manuals for the handling of inside information and other

disclosure obligations applicable to companies with shares listed on the Oslo Stock Exchange.

Furthermore, the extraordinary general meeting held on 18 January 2022 approved the

Company's guidelines for the determination of salaries and other remuneration to executive

personnel, and the annual general meeting held on 23 May 2022 established a nomination

committee and approved instructions for the committee. The Company is reporting in

accordance with the NPLCA and the Code.

In the view of the Board, good corporate governance requires an open and trustful

cooperation between everyone involved in and with the Group, such as shareholders, the

Board, the Company's management, employees, customers, suppliers, public authorities, and

the society in general. The Board focuses on ensuring that Elliptic Labs has a sound corporate

governance in line with applicable legislation and regulation, stock-exchange rules, and the

Code, to support achievement of the Company’s core objectives on behalf of its shareholders

and to create a strong, sustainable company. Elliptic Labs' compliance with these corporate

governance principles are reviewed by the Board on an annual basis.

Deviations from the Code: None.

Business

The Company is a global enterprise targeting the smartphone, laptop, IoT, and automotive

markets. The Company’s patented artificial intelligence (AI) software platform combines

ultrasound and sensor-fusion algorithms to deliver intuitive 3D gesture, proximity-, and presence-

sensing experiences. Its scalable AI Virtual Smart Sensor Platform™ creates software-only

sensors that are sustainable, eco-friendly, and already deployed on hundreds of millions of

devices around the world. The Company is headquartered in Norway with presence in the USA,

China, South Korea, Taiwan, and Japan.

The Company's objective is defined as follows in the Company's articles of association (the

"Articles of Association"):

"The objective of the company is to develop, market and sell solutions and services for

interaction, imaging, and information exchange between people and technical devices, and

everything related thereto, as well as to participate and invest in other companies."

The Board has defined objectives, strategies, and risk profiles for the Group's business activities,

including that the Company creates value for its shareholders in a sustainable manner. The

Company's objectives, strategies, and risk profiles are evaluated annually. Furthermore, it is the

Board's responsibility from time to time to identify and assess which aspects of sustainability are

relevant to the Group's business. The Company has established guidelines and a code of

conduct addressing corporate social responsibility, including matters that relate to human

rights, employee rights, working environment, discrimination and social matters, the

environment and environmental impact and prevention of corruption. These are reviewed on

an annual basis and are described in the Company's ESG report included in the annual report

as required under the Accounting Act.

The Company's objectives and principal strategies are further described in the Company's

annual reports and on the Company's website: https://www.ellipticlabs.com.


Elliptic Laboratories ASA Group – Financial statements 2023	Page 11

Deviations from the Code: None.

Equity and Dividends

Equity

The Board is responsible for ensuring that the Group is adequately capitalized relative to the risk

and scope of operations and that the capital requirements set forth in laws and regulations are

met.

The Company shall at all times have an equity capital at a level appropriate to its objectives,

strategy, and risk profile. The Board shall continuously monitor the Group's capital situation and

shall immediately take adequate steps if the Company's equity or liquidity is less than

adequate.

At 31 December 2023, the Company's equity was NOK 307,1 million, which is equivalent to 88%

of total assets. The Board considers the Company’s equity level to be satisfactory. The Board

continuously considers the suitability of the Company’s equity level and financial strength,

considering its objectives, strategy, and risk profile.

Dividend policy

The Company is in a growth phase and is not able to pay any dividends and has consequently

not established any clear dividend policy to date. Beyond the growth phase, it is the

Company’s ambition to pay dividends to shareholders as soon as it considers itself to be in a

position to do so. There can be no assurances that in any given period will be proposed or

declared, or if proposed or declared, that the dividend will be as contemplated by the above.

The Company may revise its dividend policy from time to time.

Any future proposal by the Board of Directors to declare dividends will be subject to applicable

laws and will be dependent on several factors, including the Company’s financial condition,

results of operations, capital requirements, contractual restrictions, general business conditions,

and other factors that the Board of Directors may deem relevant. In addition to legal

requirements, the Board of Directors will, when deciding to propose any dividend, take into

consideration capital expenditure plans, restrictions under the Group’s debt facilities, financing

requirements, and maintaining the appropriate strategic flexibility.

The Company has not paid any dividend during the previous financial years, and to date 2024.

Share capital increases and issuance of shares

Under the NPLCA, the general meeting may authorize the Board of Directors to increase the

Company's share capital. Such authorizations should be restricted to defined purposes and not

last longer than until the next annual general meeting. An exception may be made for

authorizations made in connection with the Company's equity incentive programs, which may

be authorized for up to two years.

At the annual general meeting held on 23 May 2023, the Board was granted an authorization

to increase the share capital of the Company in one or more rounds, by up to NOK 104,074 in

connection with investments within the Company's business area, to offer share subscription to

potential strategic investors or partners, and to strengthen the Company's capital. The Board

was further granted an authorization to increase the share capital in one or more rounds by up

to NOK 104,074 in connection with the Company's share option program and other incentive

schemes in the Company.

The authorizations are valid until the annual general meeting in 2024, in all cases expiring on 30

June 2024. The authorizations allow for the shareholders' preemption rights to be set aside (see

below).

Following the annual general meeting in 2023, the Board has utilized the authorization in

connection with the Company's share option program and other incentive schemes to carry

out the following share capital increases:

• On 14 July 2023, the Board resolved to increase the share capital in connection with

the exercise of options through the Company's incentive program. The share capital

was increased by NOK 4,825.00 through the issuance of 482,500 new shares, each with

a par value of NOK 0.01. Following the registration of the share capital increase, the

Company's total share capital was NOK 1,045,567.10, divided into 104,556,710 shares,

each with a par value of NOK 0.01.

• On 24 November 2023, the Board resolved to increase the share capital in connection

with the exercise of options through the Company's incentive program. The share

capital was increased by NOK 2,812.60 through the issuance of 281,260 shares, each

with a par value of NOK 0.01. Following the registration of the share capital increase,


Elliptic Laboratories ASA Group – Financial statements 2023	Page 12

the Company's total share capital was NOK 1,048,379.70, divided into 104,837,970

shares, each with a par value of NOK 0.01.

Following the two share capital increases, the remaining amount of the above mentioned

Board authorization to increase the Company's share capital was NOK 96,436.40. The

authorization given in connection with investments within the Company's business area, to offer

share subscription to potential strategic investors or partners, and to strengthen the Company's

capital has not been used.

When the general meeting is considering proposals for board authorizations to increase the

Company's share capital for different purposes, each authorization shall be considered and

resolved separately. Board authorizations shall furthermore be limited in time and shall not last

longer than until the Company's annual general meeting the following year.

Deviations from the Code: None other than as stated above.

Equal Treatment of Shareholders

The Company has one class of shares. Each share in the Company carries one vote, and all

shares carry equal rights, including the right to participate in general meetings.

Preemption rights to subscribe

According to the NPLCA, the Company's shareholders have preemption rights in share offerings

against cash contribution. Such pre-emption rights may, however, be set aside, either by the

general meeting or by the Board, if the general meeting has granted a board authorization

which allows such deviation. The Board is currently authorized to waive the shareholders' pre-

emptive rights in connection with share capital increases, and the Board intends to propose

that the annual general meeting in 2024 grants similar authorizations (see above). Any

resolution to set aside preemption rights must be justifiable when taking into account the

common interests of the Company and the shareholders, and such justification will be publicly

disclosed through a stock exchange notice by the Company.

Since the annual general meeting in 2023, the Company has waived the shareholders' pre-

emptive rights to subscribe for new shares on two occasions, namely the aforementioned share

capital increases resolved by the Board on 14 July and 24 November 2023. The deviations from

the shareholders' pre-emptive rights were necessary to attain the purpose of such share capital

increases and were considered by the Board to be in the common interest of the Company

and its shareholders.

Trading in own shares

Under the NPLCA, the general meeting may authorize the Board of Directors to repurchase the

Company’s shares. Such authorizations should not last longer than to the next annual general

meeting. An exception may be made for authorizations made in connection with equity

incentive programs, which may be authorized for up to two years.

At the annual general meeting held on 23 May 2023, the Board was granted an authorization

to acquire the Company's own shares on one or more occasions, with a total par value of up

to NOK 52,037. Shares acquired pursuant to this authorization shall either be subsequently

cancelled by way of a share capital decrease, included in the Company's incentive program,

or used in connection with the Company's investment or as settlement in acquisitions. The

purchase price per share shall not be less than NOK 0.01 and not more than NOK 200. The

authorization is valid until the Company's annual general meeting in 2024, and will in all cases

expire on 30 June 2024.

The Board authorization to acquire its own shares has not been used.

The Board authorization is not limited to a single defined purpose, as the resolution by the

general meeting mentions several purposes. The Board however believes that it is in the best

interest of the Company, the Company's shareholders and other stakeholders that the Board

has flexibility to use the authorization as considered necessary and advantageous at the

Board's discretion.

In the event of a future share buy-back program, the Board will aim to ensure that all

transactions pursuant to such a program will be carried out either through the trading system at

Oslo Børs or at prevailing prices at Oslo Børs and in accordance with MAR. In the event of such

program, the Board will take the Company's and shareholders' interests into consideration and

aim to maintain transparency and equal treatment of all shareholders. If there is limited liquidity

in the Company's shares, the Company shall consider other ways to ensure equal treatment of

all shareholders.


Elliptic Laboratories ASA Group – Financial statements 2023	Page 13

Deviations from the Code: None other than as stated above.

Shares and Negotiability

The shares of the Company are freely transferable. There are no restrictions on transferability of

shares pursuant to the Articles of Association.

Deviations from the Code: None.

General Meetings

Notification

The notice for a general meeting, with reference to or attached supporting information on the

resolutions to be considered at the meeting, as well as a proxy form, shall be sent to all the

Company's shareholders with known addresses, and made available on the Company's

website and on NewsWeb, no later than 21 days prior to the date of the general meeting. The

Board will seek to ensure that the resolutions and supporting information are sufficiently detailed

and comprehensive to allow shareholders to form a view on all matters to be considered at the

meeting.

Deadlines for shareholders to give notice of their attendance at general meetings shall be set

as close to the date of the relevant general meeting as possible. It is noted that, due to

amendments in statutory law which entered into effect 1 July 2023, such notice must have

been received by the Company no later than two business days prior to the general meeting

for shareholders whose shares are registered on a nominee account. Pursuant to the Articles of

Association, the Board may decide that also other shareholders who wish to participate in the

general meeting must give the Company prior notice. The Board may, before the notice to

general meeting has been sent, set a later deadline for notification of attendance.

Furthermore, pursuant to amendments in statutory law, only those who own shares in the

Company on the fifth business day before the general meeting (the record date) have the

right to attend and to vote for their shares as of the record date.

The Articles of Association have been amended to reflect the amendments in statutory law.

The notice of the Company's annual general meeting held on 23 May 2023 was sent and made

available in accordance with the requirements and principles prevailing at such time.

Participation and execution

The Board of Directors uses its best efforts to schedule and facilitate general meetings in a

manner that ensures that all shareholders may exercise their rights to participate in and vote at

general meetings, thereby making the general meeting an effective forum for the views of

shareholders and the Board of Directors. In accordance with the NPLCA, the Company is

required to hold its annual general meeting of shareholders each year on or prior to 30 June.

The general meeting is chaired by the chair of the Board or a person appointed by him. Having

the chair of the Board (or such other appointed person) chairing the general meetings

simplifies the preparations for the general meetings significantly. This represents a deviation

from the Code, which states that the general meetings should be chaired by an independent

person. However, it is the Company’s opinion and experience that its procedures for the

chairing and execution of the general meetings have proven satisfactory.

The Company encourages shareholders to attend the general meeting. It is also the intention

to have representatives of the Board and the chair of the nomination committee attend the

general meeting. The Company will, however, normally not have the entire Board attend the

meeting, as this is considered unnecessary. This represents a deviation from the Code, which

states that arrangements shall be made to ensure attendance by all Board members.

The annual general meeting in Elliptic Labs held on 23 May 2023 was held as a digital meeting,

in accordance with section 5-8 of the NPLCA. A total of 33.36% of the outstanding shares were

represented. In accordance with the Code, shareholders were allowed to vote separately on

each candidate proposed for election to the Board.

Deviations from the Code: None other than as stated above.


Elliptic Laboratories ASA Group – Financial statements 2023	Page 14

Nomination Committee

The Articles of Association set out that the Company shall have a nomination committee

consisting of between two and four members, elected by the general meeting for a term of

two years. The nomination committee shall consider and recommend resolutions at the general

meeting on the following matters:

• Candidates for election of members to the Board and to the nomination committee;

and

• the proposed remuneration of the Board and the members of the nomination

committee.

The nomination committee shall propose candidates to the Board and the nomination

committee and justify its proposal on an individual basis. Further guidelines for the duties of the

nomination committee are set out in the guidelines adopted by the annual general meeting in

2022, including that the nomination committee and the Company shall provide suitable

arrangements for shareholders to submit proposals for candidates for election.

The nomination committee currently comprises two members: Einar Greve (chair) and Thomas

Raaschou, elected by the annual general meeting in 2022 for the period until the annual

general meeting in 2024. Consequently, the composition of the nomination committee will be

on the agenda for the annual general meeting in 2024.

None of the nomination committee members are members of the Board or the Company's

management. All members of the committee are independent of the Board and the

Company's management. The nomination committee is of the opinion that the composition of

the committee reflects the common interest of all the Company’s shareholders.

The nomination committee’s recommendation of candidates for the annual general meeting

in 2024, including the reasoning for the recommendation, will be appended to the notice of

the meeting as published on the Company’s website and on NewsWeb.

In 2023, the nomination committee held 4 meetings.

Deviations from the Code: None.

Board of directors: Composition and independence

Pursuant to the Articles of Association, the Board shall consist of between four and seven

members.

The Board's composition shall ensure that it can attend to the common interests of all

shareholders in the Company and meet the Company's need for expertise, capacity, and

diversity. Attention should be paid to ensure that the Board can function effectively as a

collegiate body.

The composition of the Board should ensure that it can operate independently of any

particular interests. The majority of the shareholder-elected Board members shall be

independent of the Company's management and material business contacts. At least two of

the shareholder-elected Board members shall be independent of the Company's main

shareholder(s).

The Board shall not comprise members from the Company's management. If the Board does

include such persons, the Company shall give an explanation of this and implement

consequential adjustments to the organization of the work of the Board, including the use of

board committees to help ensure more independent preparation of matters for discussion by

the Board.

The chair of the Board shall be elected by the general meeting. Members to the Board shall be

elected for a period of one year at a time. The annual report shall specify which members are

considered to be independent. The Company encourages Board members to own shares in

the Company.

The Board of Directors is comprised of the below listed persons for the period from the annual

general meeting in 2023 to the annual general meeting in 2024, apart from Tore Engebretsen

who resigned from the Board in February 2024. Save for Tore Engebretsen, all current board

members are expected to be proposed re-elected by the nomination committee at the

annual general meeting in 2024, for the period until the annual general meeting in 2025, in

addition to the proposed election of one new board member. The proposed composition of

the Board will be included in the nomination committee's recommendations which will be

published in connection with the notice of the Company's annual general meeting.


Elliptic Laboratories ASA Group – Financial statements 2023	Page 15

• Tore Engebretsen (chair) has served since 2010 (resigned from the Board in February

2024)

• Svenn-Tore Larsen (member) has served since 2015 (Interim Chair since February 2024)

• Edvin Austbø (member) has served since 2015

• Berit Svendsen (member) has served since 2019

• Ingrid Leisner (member) has served since 2022

All of the members of the Board are independent of the Company's executive management

and material business contacts. Except for Tore Engebretsen, the former chair of the Board,

who is not considered independent of Passesta AS, a company holding approximately 12.3% of

the Company's shares, all of the Board members are independent of the Company’s main

shareholders (i.e. shareholders holding 10% or more of the Company's shares). As such, the

composition of the Board complies with the Code.

Deviations from the Code: None.

The Work of the Board of Directors

Board Instructions

The Board is responsible for the overall management of the Company and shall supervise the

Company's business and the Company's activities in general.

The NPLCA regulates the duties and procedures of the Board. In addition, the Board has

adopted supplementary rules of procedures providing further details on inter alia the duties of

the Board and the chief executive officer (the "CEO"), the division of work between the Board

and the CEO, notices of Board proceedings, administrative procedures, minutes, board

committees, transactions between the Company and the shareholders and related parties and

matters or confidentiality.

The Board shall produce an annual plan for its work, with particular emphasis on objectives,

strategy and implementation. The CEO shall at least once a month, by attendance or in

writing, inform the Board about the Company's activities, position, and profit trend.

The Board's consideration of material matters in which the chair of the Board is, or has been,

personally involved, shall be chaired by another Board member. The Board shall evaluate its

performance and expertise annually.

In 2023, the board held 13 Board meetings.

The audit committee

The Company's audit committee is governed by sections 6-41 to 6-43 of the NPLCA and

separate instructions adopted by the Board. The members of the audit committee are

appointed by and among the members of the Board. A majority of the members shall be

independent of the Company's business, of which at least one member shall have

qualifications within accounting or auditing. Board members who are also members of the

management (if any) cannot be members of the audit committee.

The purpose of the audit committee is inter alia to ensure:

• he integrity of the Company's financial statements, financial reporting processes,

internal controls and risk assessment and risk management policies, and of the

compliance system; and

• the performance of the Company's internal control function.

The audit committee reports and makes recommendations to the Board of Directors, but the

Board retains responsibility for implementing such recommendations. The audit committee shall

comprise of two Board members who are appointed for a two-year term. The appointed

members of the audit committee are Ingrid Leisner (chair) and Berit Svendsen (member). Both

members are independent of the Company. The composition of the Company’s audit

committee is fully compliant with the requirements for qualifications and competence in

accounting and auditing set out in the NPLCA and the recommendations in the Code.

In 2023, the audit committee held 5 meetings.


Elliptic Laboratories ASA Group – Financial statements 2023	Page 16

The remuneration committee

The Company shall have a remuneration committee in order to ensure thorough and

independent preparation of matters relating to compensation paid to the executive personnel.

The remuneration committee's duties shall be governed by separate instructions adopted by

the Board. The members of the remuneration committee shall be appointed by and among

the Board members and shall be independent of the Company's management.

The remuneration committee shall prepare, subject to approval by the Board and the general

meeting as required under applicable law:

• a policy on determination of salaries and other remuneration for executive personnel in

accordance with the NPLCA section 6-16 a;

• an annual report on salaries and other remuneration for executive personnel in

accordance with the NPLCA section 6-16 b; and

• other matters relating to remuneration and other material employment issues in

respect of the executive personnel

The Board of Directors has established a remuneration committee consisting of two members,

elected by and among the Board, both of whom have been appointed for a two-year term.

The current members of the remuneration committee are Edvin Austbø (chair) and Berit

Svendsen (member), who will serve until 2024.

In 2023, the remuneration committee held 4 meetings.

Deviations from the Code: None.

Risk Management and Internal Control

Risk management and internal control are given high priority by the Board, which is responsible

for ensuring that adequate systems for risk management and internal control are in place. The

control system consists of interdependent areas which include risk management, control

environment, control activities, information, and communication and monitoring.

The Company's management is responsible for establishing and maintaining sufficient internal

control over financial reporting. Company-specific policies, standards and accounting

principles have been developed for the annual and quarterly financial reporting of the Group.

The CEO and the Chief Financial Officer supervise and oversee the external reporting and the

internal reporting processes. This includes assessing financial reporting risks and internal controls

over financial reporting of the Group. The Company's consolidated financial statements are

prepared in accordance with IFRS® Accounting Standards as adopted by the EU.

The Board shall ensure that the Company has sound internal control and systems for risk

management, including compliance with the Company's corporate values, ethical guidelines,

and guidelines for corporate social responsibility. The Company's code of conduct describes

the Company's ethical commitments and requirements related to business practice and

personal conduct. If employees experience situations or matters that may be contrary to rules

and regulations or the Company's code of conduct, they are urged to raise their concern with

their immediate superior or another manager in the Company.

The Board shall undertake a complete annual review of risks related to the Group's business,

with particular focus on the Company's most important areas of exposure to risk, to be carried

out together with the review of the annual financial statements. The audit committee shall assist

the Board on an ongoing basis in monitoring the Company's system for risk management and

internal control. In connection with the quarterly financial statements, the audit committee shall

present to the Board reviews and information regarding the Company's current business

performance and risks.

Remuneration of the Board of Directors

The remuneration to the members of the Board shall be decided by the Company's general

meeting, and should reflect the Board's responsibility, expertise, time commitment, and the

complexity of the Company's activities. The remuneration should not be linked to the

Company’s performance, and the members of the Board should not be awarded share

options.

The annual report shall provide details of all elements of the remuneration and benefits of each

member of the Board, which includes a specification of any remuneration in addition to normal

fees to the members of the Board.


Elliptic Laboratories ASA Group – Financial statements 2023	Page 17

Members of the Board and/or companies with which they are associated should not take on

specific assignments for the Company in addition to their appointment as a member of the

Board. If they do nonetheless take on such assignments, this should be disclosed to the full

Board. The remuneration for such additional duties should be approved by the Board.

For the period from the annual general meeting in 2023 up to the annual general meeting in

2024, the general meeting resolved, in accordance with the nomination committee's

recommendation, that the members and the chair of the Board of Directors each receive NOK

290 000 and NOK 370 000 in remuneration, respectively.

At the annual general meeting in 2023, the Company changed its practice going forward, to

resolve remuneration to the members of the Board for the one-year period as of and from the

respective annual general meeting. The nomination committee's recommendation for

remuneration to the members and the chair of the Board of Directors will be disclosed in

connection with the notice of the annual general meeting in 2024, and will be subject to a

resolution by the annual general meeting.

Please see Remuneration Report for further details.

Deviations from the Code: None.

Salary and Other Remuneration for Executive Personnel

The total remuneration of the Company's executive personnel consists of a base salary,

variable remuneration, other benefits in kind, and pension schemes. Performance-related

remuneration of the executive management in the form of bonus programs, share-based

incentives, or similar shall be linked to value creation in the Company over time. Such

arrangements shall incentivize performance and be based on quantifiable factors that the

employee may influence. As recommended in the Code, the performance-related

remuneration is subject to an absolute limit. Share-based incentive schemes are limited by a

maximum number of shares in the Company that can be allocated.

The Board of Directors has established a remuneration committee (see further details on the

composition of the committee above). The primary purpose of the remuneration committee is

to assist the Board of Directors in matters relating to remuneration of the executive

management of the Group, as well as reviewing recruitment policies, career planning and

management development plans, and preparing matters relating to other material

employment issues in respect of the executive management.

The remuneration committee shall report and make recommendations to the Board of

Directors, but the Board retains responsibility for implementing such recommendations. The

Company's guidelines regarding the determination of salaries and other remuneration of

executive personnel prepared in accordance with section 6-16 a of the NPLCA were approved

by the extraordinary general meeting on 18 January 2022.

Please see Remuneration report for further details on the remuneration of the executive

personnel.

Deviations from the Code: None.

Information and Communications

The Board has adopted a separate manual on disclosure of information, which sets forth the

Company's disclosure obligations and procedures. The Board will seek to ensure that market

participants receive correct, clear, relevant, and up-to-date information in a timely manner,

taking into account the requirement for equal treatment of all participants in the securities

market.

The Company will each year publish a financial calendar, providing an overview of the dates

for major events, such as the Company's annual general meetings and publication of interim

reports.

The Company shall have procedures for establishing discussions with main shareholders to

enable the Board to develop a balanced understanding of the circumstances and focus of

such shareholders. Such discussions shall be done in compliance with the provisions of

applicable laws and regulations.


Elliptic Laboratories ASA Group – Financial statements 2023	Page 18

All information distributed to the Company's shareholders will be made available on the

Company's website and on NewsWeb no later than at the same time as it is sent to

shareholders.

Deviations from the Code: None.

Take-overs

The Company does not have separate guidelines on how to respond in the event of a

takeover bid. This represents a deviation from the Code, which recommends to have such

guidelines in place. The Board has not established written guiding principles for how it will act in

the event of a takeover bid, as such situations are normally characterized by concrete and

one-off situations, which make guidelines challenging to prepare.

In the event the Company becomes the subject of a takeover bid, the Board shall seek to

ensure that the Company's shareholders are treated equally and that the Company's business

is not unnecessarily interrupted. The Board shall also ensure that the shareholders have sufficient

information and time to assess any such offer.

There are no defense mechanisms against takeover bids in the Articles of Association, nor have

other measures been implemented to specifically hinder acquisitions of shares in the Company.

In the event a takeover were to occur, the Board will consider the relevant recommendations

in the Code and whether the concrete situation entails that the recommendations in the Code

can be complied with or not.

Deviations from the Code: None other than as stated above.

Auditor

The Company’s auditor, PricewaterhouseCoopers AS, was appointed in 2017 and is regarded

as independent in relation to Elliptic Labs. The Board of Directors receives an annual

confirmation from the auditor that the requirements regarding independence and objectivity

have been satisfied.

The Board will require the Company's auditor to annually present to the audit committee a

review of the Company's internal control procedures (including weaknesses identified by the

auditor, if any, and proposals for improvement), as well as the main features of the plan for the

audit of the Company.

Furthermore, the Board will require the auditor to participate in meetings of the Board that deal

with the annual financial statements, in which the auditor shall report on (i) any material

changes in the Company’s accounting principles and key aspects of the audit, (ii) any material

estimated accounting figures, and (iii) all material matters which have been subject to a

disagreement between the auditor and the Company's executive management, if any.

At least one Board meeting with the auditor shall be held each year in which no member of

the Company's management is present.

The audit committee shall review and monitor the independence of the Company's auditor,

including in particular the extent to which services other than auditing provided by the auditor

or the audit firm represents a threat to the independence of the auditor.

The remuneration to the auditor for statutory audit will be approved by the annual general

meeting.

Deviations from the Code: None.


Elliptic Laboratories ASA Group – Financial statements 2023	Page 19

SUSTAINABILITY REPORT

Elliptic Labs and Sustainability

Elliptic Labs develops AI Virtual Smart Sensors™ that use AI, ultrasound, and sensor fusion to

detect people and their surroundings. Its mission is to make every device smarter, more human,

and environmentally friendly.

Our sustainability vision

Elliptic Labs’ vision is to build the leading software platform for all sensors, making every device

smarter and more human- and environmentally friendly. Elliptic Labs’ software allows its

customers to replace a physical hardware sensor with a virtual one, thereby reducing their

environmental footprint due to no production of hardware, no distribution or need for

warehousing, nor need for maintenance or service. This is highly attractive to Elliptic Labs’

customers, many of whom aim to be carbon negative, or at least carbon neutral. Moreover,

Elliptic Labs' AI Virtual Smart Sensor Platform enables devices to reduce power consumption

and component waste, further augmenting the positive impact of Elliptic Labs’ software on the

environment.

Business description

Elliptic Labs is a global enterprise targeting the smartphone, laptop, IoT, and automotive

markets. Founded in 2006 as a research spin-off from University of Oslo, the Company’s

patented artificial intelligence (“AI”) software platform combines ultrasound and sensor-fusion

algorithms to deliver intuitive 3D gesture-, proximity-, and presence-sensing experiences. Its

scalable AI Virtual Smart Sensor Platform creates software-only sensors that are sustainable,

eco-friendly, and already deployed in hundreds of millions of devices around the world. Elliptic

Labs is the only software company that has delivered detection capabilities using AI software,

ultrasound, and sensor fusion deployed at scale.

Elliptic Labs carried out an initial public offering in the Euronext Growth market in October 2020

and transferred to the Oslo Stock Exchange main list in Q1 2022. It is headquartered in Oslo,

Norway with presence in the USA, China, South Korea, Taiwan, and Japan. Its technology and

intellectual property (“IP”) are developed in Norway and solely owned by the Company.

Business model

Elliptic Labs focuses on developing applications from its patented AI platform, which combines

ultrasound and sensor-fusion algorithms to deliver intuitive 3D gesture-, proximity-, and

presence-sensing experiences.

The Group’s AI Virtual Smart Sensor Platform can bring touchless 3D gestures, presence, and

vitals detection to any modern device that possesses a microphone and a speaker. The AI

Virtual Smart Sensor Platform rapidly and efficiently integrates various combinations of Elliptic

Labs’ AI Vrtual Smart Sensors into customer products.

The applications of these sensors are found in smartphones, laptops, smart speakers, smart

televisions, smart appliances, automotives, and smart hygiene.

Elliptic Labs uses a partnering and collaboration strategy. It leverages its partners’ sales

organizations to identify and drive sales opportunities and also works with its ecosystem partners

to embed its AI Virtual Smart Sensor Platform into their respective platforms. Finally, Elliptic Labs

collaborates with these partners to create new standards for ultrasound and AI virtual smart

sensors. The platform partners include Intel, Qualcomm, Samsung, Cadence, MediaTek,

Knowles, and others. Go-to-market partnerships promote Elliptic Labs’ solutions to potential new

platform partners and include companies such as Infineon, ARM, AAC Technologies, Cirrus

Logic, and Texas Instruments.

Key sustainability topics for Elliptic Labs

The Group’s survival and successful growth depends on its ability to:

a. develop new products and technologies that address the increasingly sophisticated

and varied needs of prospective customers


Elliptic Laboratories ASA Group – Financial statements 2023	Page 20

b. respond to technological advances and emerging industry standards and practices

on a cost-effective and timely basis by improving existing products and technologies

Since the Group’s products are used as components in finished products, the demand, as well

as the production of, such products are important.

From a sustainability perspective, therefore, the key risks are centered around:

a. Raw material costs, which could rise due to physical climate risks or changes related to

policies and other regulatory issues. These could indirectly impact the Group through

the impact it has on the Group's customers.

b. The Group must have access to skilled and motivated employees to continue to run its

operations successfully and to reach its strategic and operational objectives. The

Group’s future development is therefore to a large extent dependent on the Group

being successful in attracting, developing, and retaining employees with appropriate

skills.

c. Data protection and data security regulations are important, as the Group develops

technology that processes personal data related to individuals (and often customers).

Moreover, the Group deals with business partners that integrate its technology in their

products and services, which exposes the Group to data protection laws and

regulations in multiple jurisdictions.

d. Supply-chain disruptions (e.g., due to physical climate change, regulations, or other

transitional changes) could impact the Group’s customers and thus indirectly impact

Elliptic Labs.

On the other hand, a key driver for Elliptic Labs is its ability to contribute to reducing the

environmental footprint of its customers and users. The key opportunities are therefore related

to:

a. An increased focus by customers and other market participants on obtaining solutions

that decrease their carbon footprint

b. A product portfolio that reduces the environmental footprint of its customers through

replacing hardware sensors with software, which reduces component waste

c. Presence-detecting capabilities that assist in decreasing the amount of power

consumed by the devices that include the Group’s sensors

Environment

Elliptic Labs is a small organization where nearly all employees work in office locations. The

environmental footprint is low as office locations are centrally located letting employees easily

use public transport, cycle, or walk to the office. We focus on efficient office locations with

smart solutions for heating, ventilation, and lighting. The main direct impact the Group has on

the environment is through:

a. Electricity usage

b. Business travel in connection with sales and marketing

c. IT equipment and software

The Group has not yet conducted any review to quantify the environmental impact of these

activities, primarily since these represent a small proportion of the company’s cash costs.

In the summer of 2023, Elliptic Labs moved its headquarters to new office premises in Oslo,

Norway, which are certified according to BREEAM NOR Excellent and BREEAM In-Use Excellent

standards.

BREEAM (Building Research Establishment Environmental Assessment Method) is an international

sustainability assessment method for buildings, infrastructure, and communities. Developed by

the Building Research Establishment (BRE), it is one of the world's leading sustainability

assessment methods. BREEAM evaluates and scores the environmental performance of a

building or community across various categories, such as energy, water, materials, waste,

pollution, health and well-being, management, and ecology. The method encourages

stakeholders to consider sustainable solutions from a project's inception, fostering innovation in

sustainable practices. It also serves as a benchmark that inspires others in the industry to strive

for higher environmental standards, contributing to a global movement towards sustainability.

Elliptic Labs aimed to minimize its environmental footprint by investing in an office that utilized

natural lighting and which supported recycling efforts. By moving to this new office, it


Elliptic Laboratories ASA Group – Financial statements 2023	Page 21

transitioned to a modern building that has earned Smart Building Certification (https://

smartbuildingcollective.com/building).

Elliptic Labs is delighted to adopt and implement well-defined sustainable initiatives and

measures. These include intelligent management of lighting, heating, waste, recycling,

ventilation, and the use of cleaning practices that limit the transmission of infections.

By purchasing all the furniture for the new office second-hand, we made a step towards

reducing our carbon footprint, contributing to the circular economy in our own way. This

decision helped us avoid the emissions associated with the production and disposal of new

furniture, resulting in significant CO2 savings. It's a practical example of how we, as a company,

are making efforts to utilize resources more efficiently and to reduce waste, aligning with the

principles of sustainable growth.

People

Elliptic Labs is a dynamic organization in constant development. Its diverse workforce forms the

basis of the Group’s success. By constantly securing safe and wholesome working conditions

and a positive work environment for its employees, Elliptic Labs aims to preserve and build on

healthy, motivated employees and a strengthened internal culture.

Demographics in Elliptic Labs as of end 2023 (figures for 2022 are given in parentheses):

• 85 (72) employees whereas 10 (12) female

▪ 6 (5) in the USA whereas 2 female

▪ 30 (25) in APAC whereas 3 female

▪ 49 (42) in Norway whereas 5 female

• Number of nationalities for all employees globally is 13 (15)

The working environment has been good in 2023. The company elected a Safety

representative (Verneombud) in January 2023 and safety controls has been carried out as

planned and with focus on moving into a new office location in July 2023. There has not been

necessary to implement any specific actions. There have been no injuries or accidents in 2023.

Elliptic Labs had 1.3% (1,3%) absence due to sick leave in 2023.

The Group has a female CEO, Laila Danielsen. The Group has 88% (83%) male employees and

12% (17%) female employees as of the end of 2023.

The Executive leadership team consists of 29% (40%) female and 71% (60%) male members.


Elliptic Laboratories ASA Group – Financial statements 2023	Page 22

The Board of Directors consisted of 40% (40%) female and 60% (60%) male members in 2023.

The company is continuously working to improve its gender equality by addressing new

initiatives to attract more female candidates for open positions, as well as assessing what it can

do to retain female employees and facilitate a great working environment for all.

During 2023, the company has signed an agreement with ADA (at Norwegian University of

Science and Technology, Trondheim, Norway) to support and motivate female engineering

students within tech to not drop out of their study program. This is an important contribution to

ensure a higher number of female engineers.

Elliptic Labs launched in 2023 a new digital HR system (BOB) which provides everyone with an

overview of the total workforce, as well as abilities for DEI reporting and attention.

Elliptic Labs has a Code of Conduct for all employees stating that ethical and professional

behavior is part of our DNA. The code sets out expectations for the personal conduct and

business practice of the Group’s employees to develop a company culture that meets its

vision, mission, and core values.

The Code specifies zero tolerance for discrimination, harassment, or bullying based on any

protected legal category (e.g., age, gender, sexual orientation, disability, race, nationality,

political opinions, religion, or ethnic background). These things will not be tolerated in Elliptic

Labs in any form — verbal, physical, or visual. Any incidents are encouraged to be reported to

relevant supervisor, Human Resources, or both. All incident reports will be treated with the

upmost confidentiality in mind and with no reprisal for the notifier. Reminders and awareness

around these important areas are addressed frequently in townhall meetings.

Furthermore, the Code specifies that Elliptic Labs employees shall not under any circumstances

cause or contribute to the violation of human or labor rights. Rather, they must respect the

personal dignity, privacy, and rights of everyone they interact with in the course of their

employment at Elliptic Labs.

At Elliptic Labs, employees mostly conduct standard office work, so no major safety initiatives

have been deemed necessary other than ensuring that employees have well-equipped office

spaces and generally balanced working conditions.

Governance matters

Elliptic Labs’ Code of Conduct has governance sections that deal with matters such as:

a. Insider information and trading

b. Sensitive information and confidentiality

c. Personal data and privacy

d. Conflicts of interest

e. Corruption, bribery, and money laundering

f. Safeguarding of property and assets

There is zero tolerance for all forms of corruption and the company makes active efforts to

ensure that it does not occur in its business activities. Elliptic Labs is firmly opposed to all forms of

money laundering.

The Group established a Corporate Governance Policy 2022 in line with the Norwegian

Corporate Governance Code.

For additional information regarding the corporate governance in Elliptic Labs, we refer to the

section covering disclosures pursuant to the Norwegian Corporate Governance Code. The

Group has no dedicated governance structure for ESG matters as the organization is small.

Important governance issues for the Group include:

As a Norwegian public limited company listed on the Oslo Stock Exchange, the Group is

subject to the following sustainability legislation:

a. The Norwegian Accounting Act 3-3c, which requires the company to report on

environmental and social impact, working environment, equality , human rights, and

anti-corruption.

b. The Norwegian Equality and Anti-Discrimination Act, which requires the company to

investigate, assess, and report on discrimination- and equality risk in the company.


Elliptic Laboratories ASA Group – Financial statements 2023	Page 23

c. The Norwegian Transparency Act, which requires the company to carry out due

diligence in accordance with the OECD Guidelines for Multinational Enterprises and

publish an annual account of human rights and decent working conditions across its

supply chain (entered into force 1 July 2022).

d. The EU Taxonomy and the Corporate Sustainability Reporting Directive (CSRD) have

been implemented in Norwegian legislation. The Group currently do not meet the

thresholds for CSRD Reporting.

The Group deals globally with business partners that integrate the Group's technology in their

products and services.

The Group's software does not process any external personal information and thus has limited

exposure towards data protection laws and regulations. The company operates in multiple

jurisdictions which impose stringent requirements and potentially high penalties for material

non-compliance.

The relevant data protection laws and regulations in the jurisdictions where the Group has

operations:

a. In the EU and EEA, the main regulation is the General Data Protection Regulation (EU)

2016/679 (“GDPR”) and its local law implementations, including the Norwegian Data

Protection Act of 15 June 2018 no. 38.

b. Japan also has a well-developed data protection legislative framework in the Act No.

57 of 2003 on the Protection of Personal Information (“APPI”) as well as an extensive set

of sectoral guidelines. The APPI has been amended both in 2015 and 2020, and Japan

obtained an adequacy decision from the European Commission in 2018.

c. In 2021, China adopted a Personal Information Protection Law (“PIPL”) which, together

with the Chinese Data Security Law from earlier in 2021 and the Cybersecurity Law from

2017, comprise the legal framework for information security and data protection in

China.

The laws and regulations mentioned above, as well as several other relevant data protection

laws and regulations, impose obligations on data controllers in terms of accountability,

transparency, data subject rights such as access and deletion, cross-border transfers of

personal data, and information security.

For the Group, this applies to employee information and relevant communication with vendors

or suppliers. The Group's software does not collect, monitor, or call back information.

Failure to comply with relevant data protection legislation or privacy-related contractual

obligations may result in decreed corrective actions, fines, litigation or public statements

directed towards the Group as developers of the technology. Violations of the GDPR could

lead to administrative fines up to 4% of the Group's global annual turnover or mEUR 20,

whichever is higher.

Any failure to comply with relevant data protection laws could furthermore cause the Group's

business partners to lose trust in the Group's technological solutions. Any violations of data

protection laws by the Group's business partners may also have an adverse effect on the

Group's business, both in terms of direct costs and revenue losses due to reputational damage.

In December 2023, the European Union made a significant advancement regarding the

regulation of artificial intelligence. The EU lawmakers reached a political agreement on the

draft Artificial Intelligence (AI) Act, marking a pivotal step in establishing the world's first binding

horizontal regulation on AI. This draft AI Act aims to create a common framework for the

development, deployment, and use of artificial intelligence systems within the EU, including:

a. Harmonized rules for the placing on the market, the putting into service, and the use of

artificial intelligence systems (“AI systems”) in the EU.

b. Prohibitions of certain AI practices considered harmful or posing a high risk to safety or

fundamental rights.

c. Specific requirements for high-risk AI systems, along with obligations for operators of

such systems.

d. Harmonized transparency rules for AI systems intended to interact with natural persons,

emotion-recognition systems, and biometric-categorization systems, as well as AI

systems used to generate or manipulate image, audio, or video content. Additionally,

it introduces rules on market monitoring and surveillance.


Elliptic Laboratories ASA Group – Financial statements 2023	Page 24

The adoption 2&3 of the AI Act 4 will regulate the development and use of AI systems to ensure

their lawfulness, safety, and trustworthiness, significantly impacting how companies operate

within the EU. Despite the proposal's potential amendments, the legislative consensus

underlines the necessity for intervention. The Company continues to closely monitor

developments to understand how the AI Act might affect its operational or legislative business

environment following the political agreement.


Elliptic Laboratories ASA Group – Financial statements 2023	Page 25

2 https://hbr.org/2024/02/the-eus-ai-act-and-how-companies-can-achieve-

compliance#:~:text=Most%20violations%20of%20the%20act,data%20to%20infer%20private

%20information)

3 https://iapp.org/news/a/eu-countries-vote-unanimously-to-approve-ai-act/

4 https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:52021PC0206

Consolidated financial statements

Consolidated statement of comprehensive income

For the financial period ended 31 December 2023 and 31 December 2022.


(Amounts in 000 NOK)	Notes	2023	2022

Revenues from contracts with customers		68 321	52 062
Other operating income		1 312	0
Total revenue and other operating income	2	69 632	52 062

Employee benefits expenses	12	-80 552	-62 802
Other operating expenses	4	-22 599	-20 073
EBITDA	20	-33 519	-30 814

Depreciation and amortization	7, 8, 16	-16 224	-11 317
Operating expenses		-119 375	-94 193

Operating profit		-49 743	-42 131

Financial income	5	12 191	17 317
Financial expenses	5	-9 306	-14 488
Net financial income/(expenses)		2 886	2 829


Profit/(loss) before tax		-46 857	-39 302

Income tax expense	6	8 856	6 303

Profit/(loss)		-38 001	-32 999

Other comprehensive income:
Foreign currency rate changes, may be reclassified to profit or loss		151	416
Other comprehensive income, net of tax		151	416

Total comprehensive income for the period		-37 850	-32 583

Loss for the period is attributable to:
Equity holders of the parent company		-37 850	-32 583

Earnings per share outstanding		-0,36	-0,31
Earnings per share fully diluted		-0,36	-0,31


Elliptic Laboratories ASA Group – Financial statements 2023	Page 26

Consolidated statement of financial position


(Amounts in 000 NOK)	Notes	31/12/2023	31/12/2022
Non-current assets
Deferred tax assets	6	77 685	68 837
Intangible assets	7	57 814	47 574
Right of use assets	16	19 447	2 256
Property, plant and equipment	8	460	—
Other non-current receivables		8 861	5 038
Total non-current assets		164 266	123 704

Current assets
Current trade receivables	10	60 612	40 495
Other current receivables	10	9 448	6 905
Cash and cash equivalents	11	115 582	178 219
Total current assets		185 642	225 619

Total assets		349 909	349 324

Equity and liabilities
Share capital	14	1 048	1 041
Other equity		306 060	324 581
Total equity		307 109	325 622


Non-current lease liabilities	16	15 874	523
Non-current borrowings	15	2 000	6 000
Total non-current liabilities		17 874	6 523

Current borrowings	15	4 000	4 000
Trade and other current payables		3 855	1 668
Current tax liabilities		—	—
Current lease liabilities	16	3 990	2 184
Other current liabilities	18	13 080	9 327
Total current liabilities		24 926	17 179

Total equity and liabilities		349 909	349 324

Oslo, 24rd of April 2024

The Board of Directors of Elliptic Laboratories ASA


Svenn-Tore Larsen Chairman	Edvin Austbø Board Member	Ingrid Elvira Leisner Board Member


Berit Svendsen Board Member	Laila B. Danielsen CEO


Elliptic Laboratories ASA Group – Financial statements 2023	Page 27

Consolidated statement of changes in equity

Attributable to owners of Elliptic Laboratories ASA.


2023 (Amounts in 000 NOK)	Share capital	Other paid in capital	Other equity	Translation reserve	Total equity
Shareholders’ equity at 01.01.2023	1 041	345 514	-21 109	175	325 622

Profit (loss) for the period	—	—	-38 001	—	-38 001
Other comprehensive income for the period	—	—	—	151	151
Total comprehensive income for the period	—	—	-38 001	151	-37 850

Transactions with owners:
Capital increase through issuance of ordinary shares	8	9 488	—	—	9 495
Transactions costs related to issuance of ordinary shares, net of tax	—	—	—	—	—
Employee share schemes	—	—	9 842	—	9 842
Shareholders’ equity at 31.12.2023	1 048	355 002	-49 268	326	307 109

For a more detailed description of the most significant transactions in 2023 please see section

Share capital increases and issuance of shares in the Corporate Governance report .


2022 (Amounts in 000 NOK)	Share capital	Other paid in capital	Other equity	Translation reserve	Total equity
Shareholders’ equity at 01.01.2022	1 038	342 545	-574	-240	342 769

Profit (loss) for the period	—	—	-32 999	—	-32 999
Other comprehensive income for the period	—	—	—	416	416
Total comprehensive income for the period	—	—	-32 999	416	-32 583

Transactions with owners:
Capital increase through issuance of ordinary shares	2	2 970	—	—	2 972
Transactions costs related to issuance of ordinary shares, net of tax	—	—	—	—	—
Employee share schemes	—	—	12 464	—	12 464
Shareholders' equity at 31.12.2022	1 041	345 514	-21 109	175	325 622


Elliptic Laboratories ASA Group – Financial statements 2023	Page 28

Consolidated statement of cash flows

For the financial period ended 31 December 2023 and 2022.


(Amounts in 000 NOK)	Notes	2023	2022
Cash flow from operating activities
Profit/(loss) before tax		-46 857	-39 302
Adjustment for:
Taxes paid in the period		9	745
Depreciation and amortization	7, 8, 16	16 224	11 317
Share-based payments	13	9 842	12 464
Net finance items	5	-3 369	-4 290
Items classified as investing or financing activities	3, 6	-1 031	455
Change in current trade receivable		-20 118	-11 469
Change in trade payables		2 187	-1 361
Change in other accruals		-2 396	14 100
Net cash flows from operating activities		-45 509	-17 341

Cash flow from investing activities
Purchase of property, plant and equipment	8	-514	—
Capitalized development costs	7	-25 099	-23 327
Interest received	5	4 642	2 236
Net cash flows from investing activities		-20 971	-21 091

Cash flow from financing activities
Payments of lease liabilities, classified as financing activities	16	-5 007	-3 205
Repayments of current borrowings	15	-4 000	-4 000
Proceeds from issuing shares	14	9 495	2 972
Paid interest on loan	5	-589	-571
Paid interest on lease liabilities	5	-1 356	-664
Proceeds from government grants	3	3 663	3 208
Net cash flows from financing activities		2 206	-2 260

Net Change in Cash and Cash Equivalents		-64 274	-40 692
Cash and cash equivalents at the beginning of the period		178 219	218 151
Effect of foreign currency rate changes on cash and cash equivalents		151	416
Exchange rate effects bank		1 486	344
Cash and cash equivalents at the end of period		115 582	178 219

This section sets out an analysis of net debt and the movements in net debt for each of the

periods presented.


(Amounts in 000 NOK)	2023	2022
Cash and cash equivalents	-115 582	-178 219
Non-current borrowings	2 000	6 000
Current borrowings	4 000	4 000
Lease liabilities	19 865	2 706
Net debt	-89 717	-165 513


Elliptic Laboratories ASA Group – Financial statements 2023	Page 29


Net debt 01.01.	-165 513	-201 009
Net change in cash and cash equivalents	64 274	40 692
Net cash flows related to borrowings	-4 000	-4 000
Net cash flows related to lease liabilities	-5 007	-2 541
Initial recognition of lease liabilities	21 848	1 346
Remeasurement of lease liabilities	317	759
FX effects	-1 637	-760
Net debt	-89 717	-165 513


Elliptic Laboratories ASA Group – Financial statements 2023	Page 30

2 Notes to the consolidated financial

accounts

Note 1–Accounting principles

1.1 General information

Elliptic Laboratories ASA and its subsidiaries, Elliptic Laboratories Inc and Healthy Pointers AS

(together “Elliptic Labs” or the “Group”) develop and sell technical solutions, which enable the

interaction and information exchanges between individuals and technical devices, based on

ultrasound software technology. Such devices are mobile phones, devices within the IoT-

market and various other devices that could deploy the Group’s software technology to

enhance the user experience. Investments in and cooperation with other companies are also

part of the Group’s purpose.

The domicile of the Group is Oslo, Norway. The Group’s head office is at Hausmannsgate 21,

0182 Oslo.

1.2 Summary of material accounting principles

The principal accounting policies applied in the preparation of these consolidated financial

statements are set out below. These policies have been consistently applied to all the years

presented, unless otherwise stated.

Basis of preparation

The consolidated financial statements of the Group have been prepared in accordance with

IFRS® Accounting Standards as adopted by the EU, as required for financial years beginning 1

January 2023.

The consolidated financial statements have been prepared under the historical cost

convention, as modified by derivatives at fair value through profit or loss.

The preparation of financial statements in conformity with IFRS requires the use of certain critical

accounting estimates. It also requires management to exercise its judgement in the process of

applying the Group’s accounting policies.

These consolidated financial statements have been prepared under the assumption of a going

concern.

Consolidation

Subsidiaries are all entities over which the Group has control. Control of an entity occurs when

the Group is exposed to, or has rights to, variable returns from its involvement with the entity

and has the ability to affect those returns through its power over the entity. Subsidiaries are fully

consolidated from the day on which control is transferred to the Group. They are

deconsolidated from the date that control ceases.

Inter-company transactions, balances and unrealised gains on transactions between Group

companies are eliminated. Unrealised losses are also eliminated. When necessary, amounts

reported by subsidiaries have been adjusted to conform with the Group’s accounting

principles.

Foreign currency translation

a) Functional and presentation currency

Items included in the financial statements of the individual entities within the Group are

measured using the currency of the primary economic environment in which the entity

operates (the “functional currency”). The consolidated financial statements are presented in

Norwegian Kroner (NOK), which is the Group’s presentation currency.

New accounting standards and amendments.

No other standards and amendments had significant effect for the Group.

New standards and amendments not yet adopted

Certain amendments to accounting standards have been published that are not mandatory

for 31 December 2023 reporting periods and have not been early adopted by the group. These

amendments are not expected to have a material impact on the entity in the current or future

reporting periods and on foreseeable future transactions.


Elliptic Laboratories ASA Group – Financial statements 2023	Page 31

Note 2–Total revenue and other operating income

Revenues from contracts with customers have the following distribution as recognized over

time or at point in time:


(Amounts in 000 NOK)	2023	2022
Revenue recognised over time	—	—
Revenue recognised at point in time	68 321	52 062
Total revenue	68 321	52 062

Revenues from contracts with customers consists of two significant revenue streams:

License for IP and subsequent royalties are recognized at point in time when the software has

been made available to the customer, and then in increments as minimum production

thresholds are met if royalty-based revenue exceed the minimum fixed fee if any. For the

financial years 2023 and 2022, the majority of the contracts from which revenue was

recognized were of the minimum fixed fee character, but a growing share of reported revenue

comes from royalty on shipped units, and is expected to increase going forward.

Some contracts include multiple performance obligations, such as an engineering service and

the subsequent licensing of IP, which are accounted for as separate performance obligations.

In this case, the transaction price will be allocated to each performance obligation based on

the stand-alone selling prices. Where these are not directly observable, they are estimated

based on expected cost plus margin.

In case of fixed-price contracts, the customer pays the fixed amount based on a payment

schedule. If the services rendered by Elliptic Laboratories exceed the payment, a contract

asset or a receivable is recognised. If the payments exceed the services rendered, a contract

liability is recognised.

Development and testing of software (Proof of concept) is considered as a separate

performance obligation and is recognized over time based on the actual services provided to

the end of the reporting period as a proportion of the total services to be provided. No such

revenue has been recognized in 2022 or 2023.

As at 31.12 all recognized revenues are unconditional as the related performance obligations

have been satisfied.

Revenues from contracts with customers have the following distribution between the different

market verticals:


(Amounts in 000 NOK)	2023	2022
Smartphones	32 006	20 439
PC/Laptops	36 315	28 097
IoT	—	3 526
Total revenue	68 321	52 062

Other operating income consists in total of government grants, which are recognized over time

on a systematic basis over the periods in which the entity recognizes expenses for the related

costs for which the grants are intended to compensate.

In late April 2023; A former client has failed to meet the agreed-upon payment of $425.000USD

for software delivered in 2022. Elliptic Labs deems the dispute as a breach of contract and has

thus decided to pursue the payments through the ICC, International Court of Arbitration, as

regulated in the contract. The arbitration court proceeding was held on February 29, 2024, with

expected award from ICC before summer 2024.


Elliptic Laboratories ASA Group – Financial statements 2023	Page 32

Note 3–Government grants

The table below sets forth the treatment of government grants.


(Amounts in 000 NOK)	2023	2022
Recognized as income from other sources	1 312	—
Reduction of capitalized patents	—	4
Reduction of capitalized development	3 011	3 659
Recognized as payroll cost reduction	1 291	646
Recognized as other cost reduction	448	441
Total government grants	6 062	4 750

Government grants are recognised when there is reasonable assurance that the grant will be

received and all attached conditions will be complied with. When the grants relate to an

expense item, it is normally recognised as a reduction of the expense on a systematic basis

over the periods that the related costs, for which it is intended to compensate, are expensed.

When the grant relates to an asset, it is presented in the statement of financial position by

deducting the grant in arriving at the carrying amount of the asset. The grant is recognised in

the income statement over the useful life of a depreciable asset as a reduced depreciation

expense.

For some projects, government grants are recognised as "other income" on the basis that the

expense would have been incurred regardless of the grant.

Note 4–Other operating expenses

Other operating expenses consists of the following entries:


(Amounts in 000 NOK)	2023	2022
Sales and marketing expenses	8 717	5 385
Short-term lease expenses	1 700	966
Electricity, heating and other property expenses	3 165	1 399
Consultants	5 008	3 527
Auditor	1 312	1 087
Legal	1 759	1 361
Patents	1 144	578
IT/Software	3 515	4 430
Other expenses	3 131	1 782
Recoveries of previously written-off receivables in 2018	-6 404	—
Government grants recognized as other cost reduction	-448	-441
Total other operating expenses	22 599	20 073

Note 5–Financial income and financial expenses


(Amounts in 000 NOK)	2023	2022
Financial income
Interest income	4 642	2 236
Foreign Exchange gains	7 550	15 081
Total financial income	12 191	17 317

Financial expenses
Interest expense on bank loan	589	571
Lease interest expense	1 356	664
Other Financial expenses	483	1 461
Foreign Exchange losses	6 878	11 792
Total financial expenses	9 306	14 488


Elliptic Laboratories ASA Group – Financial statements 2023	Page 33

Note 6–Tax


(Amounts in 000 NOK)	2023	2022

Current tax liabilities	—	—
Other items	-9	—
Change in deferred tax assets	-8 848	-6 303
Total tax (income)/expense	-8 856	-6 303

Below is a specification of the tax effects of temporary differences and losses carried forward:

Deferred tax:	2023	2022
Intangible assets	—	—
Receivables	—	—
Other	—	—
Total deferred tax relating to temporary differences	—	—
Carrying value deferred tax liabilities	—	—


Elliptic Laboratories ASA Group – Financial statements 2023	Page 34


(Amounts in 000 NOK)	2023	2022
Deferred tax assets:
Intangible assets	2 416	1 808
Receivables	—	—
Other	92	77
Losses carried forward	76 908	68 322
Total deferred tax assets relating to temporary differences and losses carried forward	79 415	70 208
Non-recognised deferred tax assets relating to losses and precluded interest deductions carried forward	-1 731	-1 370
Carrying value deferred tax assets	77 685	68 837

Explanation of the change in the deferred tax:	2023	2022
Carrying value deferred tax at 01.01	—	—
Change in deferred tax liability	—	—
Carrying value deferred tax at 31 December	—	—

Explanation of the change in the deferred tax assets:	2023	2022
Carrying value deferred tax assets at 01.01	68 837	62 534
Change in deferred tax assets	8 848	6 303
Carrying value deferred tax assets at 31 December	77 685	68 837

Losses carried forward as of 31.12
Expiration year	n.a	n.a
Unlimited carry forward period	75 178	66 952
Total losses carried forward	75 178	66 952


Reconciliation of tax expense	2023	2022
Profit before tax	-46 857	-39 302
22 % tax in 2023	-10 309	-8 646
Tax effect of:
Permanent differences (mainly non-taxable income)	1 292	1 851

Change in prior year estimates	-9	—
Other/currency	169	492
Calculated tax expense/ (Income)	-8 856	-6 303

Significant estimates

The deferred tax assets include an amount of mNOK 75,2 which relates to carried forward tax

losses of Elliptic Laboratories ASA. Elliptic Laboratories ASA has incurred the losses over the last

several years mainly due to expenses relating to research and development activities which do

not meet the capitalization criteria. An expense of mNOK 9,7 has been recognized in the

income statement related to research and development activities in Elliptic Laboratories Group

in 2023. The Group has concluded that the deferred tax assets will be recoverable using the

estimated future taxable income based on profitability in near-future, its scalable business

model, entered into contracts with customers and expectations for future growth of business

opportunities based on already established customer relations in several market verticals.

Elliptic Laboratories ASA is expected to generate taxable income from 2024 onwards, and the

carried forward tax loss is expected to be utilized within a few years. The losses can be carried

forward indefinitely and have no expiry date.

At the end of 2022 the Group expected to generate taxable income in 2023. However,

slowdown in end-user demand for the Groups customers, economic uncertainties throughout


Elliptic Laboratories ASA Group – Financial statements 2023	Page 35

the year adversely affected demand in the smartphone and PC/laptop market. The

challenging market conditions resulted in a lower-than-expected revenue growth rate for 2023.

Note 7–Intangible assets


(Amounts in 000 NOK)	Patents	Trademark	Capitalized developme nt	Total intangible assets
Cost at 01.01.2023	19 646	24	57 937	77 607
Additions	2 768	—	19 699	22 467
Cost at 31.12.2023	22 413	24	77 636	100 073

Accumulated amortization charges 01.01.2023	11 836	6	18 190	30 032
Amortization charges	639	—	11 587	12 226
Accumulated amortization charges 31.12.2023	12 475	6	29 778	42 258

Net booked value as at 31.12.2023	9 938	18	47 859	57 814

Cost at 01.01.2022	17 213	24	40 705	57 942
Additions	2 432	—	17 232	19 664
Cost at 31.12.2022	19 646	24	57 937	77 607

Accumulated amortization charges 01.01.2022	11 322	6	10 049	21 377
Amortization charges	514	—	8 141	8 655
Accumulated amortization charges 31.12.2022	11 836	6	18 190	30 032

Net booked value as at 31.12.2022	7 810	18	39 747	47 574

Useful life:	5	5	5
Amortization method:	Straight-line	Straight-line	Straight-line

The Group has significant development cost relating to intangible assets which do not meet the

capitalization criteria. An expense of mNOK 9,7 (6,2) has been recognized in the income

statement related to research and development activities in Elliptic Laboratories Group in 2023.

Additions has been reduced with mNOK 3,0 (3,7) as a result of government grants.


Elliptic Laboratories ASA Group – Financial statements 2023	Page 36

Note 8–Property, plant and equipment


(Amounts in 000 NOK)	Furniture and fixtures	Total tangible assets

Cost at 01.01.2023	—	—
Additions	514	514
Disposals	—	—
Cost at 31.12.2023	514	514

Accumulated depreciation charges 01.01.2023	—	—
Current year depreciation	54	54
Accumulated depreciation charges at 31.12.2023	54	54

Net booked value as at 31.12.2023	460	460

Useful life:	5
Amortization method:	Straight-line

Cost related to furniture and other fixtures for new HQ in Oslo has been recognized as an asset

in Property, plant and equipment in accordance with IAS 16.

Note 9–Investments in subsidiaries


Subsidiaries	Country	Business office	Voting percentage		Ownership percentage
			2023	2022	2023	2022
Healthy Pointers AS	Norway	Oslo	100%	100%	100%	100%
Elliptic Laboratories Inc	USA	San Francisco	100%	100%	100%	100%

Note 10–Trade receivables and other current

receivables


(Amounts in 000 NOK)	2023	2022
Ageing of trade receivable:
Up to 3 months	55 930	40 495
More than 3 months	4 682	—
Total trade receivable	60 612	40 495

Nominal value of trade receivables	60 612	40 495
Impairment of trade receivables	—	—
Total trade receivable	60 612	40 495

Other current receivables:
Prepaid costs	3 086	1 252
Other current receivables	6 362	5 653
Total other current receivables	9 448	6 905

The Group measures the loss allowance for trade receivables at an amount equal to lifetime

expected credit losses. To measure the expected credit losses, trade receivables have been

grouped based on shared credit risk characteristics and the days past due. The expected loss

rates are based on the payment profiles of sales before 31 December 2023 or 1 January 2023

respectively and the corresponding historical credit losses experienced within this period. The


Elliptic Laboratories ASA Group – Financial statements 2023	Page 37

historical loss rates are adjusted to reflect current and forward-looking information on

macroeconomic factors affecting the ability of the customers to settle the receivables. The

Group has identified the probability of a customer’s bankruptcy to be the most relevant factor

and accordingly adjusts the historical loss rates appropriately.

The lifetime expected credit losses is immaterial and has not been accounted for.

Note 11–Cash and cash equivalents


(Amounts in 000 NOK)	2023	2022
Cash and cash equivalents	115 582	178 219

Of which are restricted cash:
Restricted bank deposits for employee tax withholdings	2 812	1 782
Not restricted cash	112 770	176 438

Note 12–Employee benefits expenses

Employee benefit expenses are set forth in the table below.


(Amounts in 000 NOK)	2023	2022
Salary expenses	80 538	62 120
Social security cost	8 016	5 327
Pension costs	2 930	2 019
Option costs	9 842	12 464
Other costs	3 227	2 410
Government grants	-1 291	-646
Capitalized development	-22 710	-20 891
Total employee benefits expenses	80 552	62 802
Average number of employees	75	68

Option costs are further specified in note 13.

Pensions to Norwegian employees

Norwegian companies are required to have occupational pension schemes according to the

law on compulsory occupational pension. The Norwegian companies’ pension schemes meet

the requirements of this act. Total compensation expensed during the year for the CEO and

other executives are disclosed in the separate remunerations report.

The average Dollar exchange rates were 10.6 and 9.6 for 2023 and 2022, respectively.


Remuneration to the auditor
(Amounts in 000 NOK)	2023	2022
Statutory audit (including technical assistance - annual accounts)	787	570
Other attestation services	293	341
Tax advice (including technical assistance corporate tax papers)	231	—
Other assistance	—	176
Total expensed auditor fees, ex. VAT	1 312	1 087

Note 13–Share option program

As of 31 December 2023, the Group has option programs that includes a total of 58 employees

in parent and subsidiary companies. The employees must work in the Group to be entitled to

exercise the options at the time of vesting. The options are expected to be settled in shares.

The purpose of the establishment of the options program is to attract and retain key personnel.

For options that are share settled, the fair value of the options at grant date is measured using

the Black-Scholes model and expensed over the vesting period. Because of Elliptic Labs lack of

share price history, comparable companies (peers) has been chosen based on industry

affiliation. The volatility for each peer is calculated as the annualized standard deviation on the


Elliptic Laboratories ASA Group – Financial statements 2023	Page 38

continuously compounded rates of return on the historic share price equal to the expected

lifetime of the Restricted Share Units.


	2023	2022
Granted in (shares)	2 625 000	2 339 547
Contractual life*	4,65	4,83
Strike price*	13,54	22,20
Share price*	11,87	21,65
Expected lifetime*	2,65	2,83
Volatility*	40,76%	34,07%
Interest rate*	3,43%	1,87%
Dividend*	0,00	0,00
FV per instrument*	2,88	5,15

*Weighted average parameters at grant of instrument

Specifications of options held by the executive management as of 31 December 2023 is

disclosed in the Remuneration report.


	2023	Weighted Average Strike Price	2022	Weighted Average Strike Price
Outstanding at the beginning of the period	5 264 574	16,82	3 355 230	12,98
Exercised	-772 130	12,46	-269 260	10,23
Forfeited	-288 530	17,71	-160 943	17,53
Granted	2 625 000	13,54	2 339 547	22,20
Outstanding at the end of the period	6 828 914	16,00	5 264 574	16,82
Vested Closing Balance	3 764 624	16,41	2 537 245	15,35
Option program expensed for the year	9 841 748		12 494 225


Outstanding / vested total options overview
Strike price	Outstanding instruments 31.12.2023	Weighted Average remaining contractual life (yrs)	Vested instruments Vested instruments 31.12.2023
10,00	300 000	1,00	300 000
11,10	815 000	2,11	543 340
12,16	100 000	2,34	66 000
13,32	200 000	4,50	—
13,40	2 225 000	4,00	741 652
15,00	710 210	1,72	541 190
16,76	120 000	4,50	—
17,84	250 000	2,47	166 650
22,00	2 108 704	3,00	1 405 792
	6 828 914		3 764 624

In 2022 the board of directors decided on a new long-term share option program in which

upward to 2.5% of outstanding shares may be distributed yearly to the employees.

The employee option plan is regarded as equity settled share-based payments. The fair value

of options granted under the share option plan is recognised as an employee benefits expense


Elliptic Laboratories ASA Group – Financial statements 2023	Page 39

with a corresponding increase in equity. The total amount to be expensed is determined by

reference to the fair value of the options granted.

The total expense is recognised over the vesting period, which is the period over which all of

the specified vesting conditions are to be satisfied. At the end of each period, the entity revises

its estimates of the number of options that are expected to vest based on the non-market

vesting and service conditions. It recognises the impact of the revision to original estimates, if

any, in profit or loss, with a corresponding adjustment to equity.

Note 14–Share capital and shareholder information

As of 31.12.2023, the share capital amounts to NOK 1 048 379,70, consisting of 104 837 970

shares at a face value of NOK 0,01 per share.

Shares held by the Board of Directors as of 31 December 2023 is disclosed in the Remuneration

report.

Overview of the largest shareholders as of 31 December 2023:


Shareholder name	Ordinary shares	Ownership
PASSESTA AS	12 800 480	12,2%
MP PENSJON PK	8 897 913	8,5%
ALDEN AS	7 403 330	7,1%
VERDIPAPIRFONDET DNB SMB	5 683 364	5,4%
HORNE	5 028 350	4,8%
Other shareholders (less than 5% ownership)	65 024 533	62,0%
Total	104 837 970	100,0%


Shares as of 31.12	2023	2022
Number of issued shares	104 837 970	104 074 210
Number of shares outstanding	104 837 970	104 074 210


2023	Number of shares	Average number of shares	Number of days
Outstanding shares at 01.01	104 074 210	104 074 210	364
Capital increase July	482 500	217 716	162
Capital increase November	281 260	24 694	32
Outstanding shares at 31.12	104 837 970	104 316 620

2022	Number of shares	Average number of shares	Number of days
Outstanding shares at 01.01	103 841 880	103 841 880	365
Capital increase June	208 990	117 378	205
Capital increase July	23 340	9 912	155
Outstanding shares at 31.12	104 074 210	103 969 170


(Amounts in 000 NOK)	2023	2022
Profit & loss for the year due to holders of ordinary shares	-38 001	-32 999
Average number of shares - basic	104 317	103 969
EPS – Basic, NOK per share	-0,36	-0,31


Elliptic Laboratories ASA Group – Financial statements 2023	Page 40

Note 15–Interest-bearing liabilities


Amounts in 000 NOK	2023	2022
Non-current liabilities due > 1 year
Non-current borrowings	2 062	6 339
Interest expense and fees	-62	-339
Non-current borrowings net of loan costs	2 000	6 000

Non-current liabilities due < 1 year
Current borrowings	4 367	4 543
Interest expense and fees	-367	-543
Current borrowings net of loan costs	4 000	4 000

Current liability due < 1 Year
Overdraft credit facility	—	—
Interest expense and fees	—	—
Current liability net of loan costs	—	—

The fair value of the liability is considered to be equal to its book value according to the

amortised cost as shown above.


Loan Facility	Loan origination date	Principle in local currency	Floating interest loan	Termination date	Carrying value
31.12.2023
(Amount in 000 NOK)
Innovasjon Norge	27.03.2015	NOK	8,20% effective interest	10.06.2025	6 000
Loan Facility	Loan origination date	Principle in local currency	Floating interest loan	Termination date	Carrying value
31.12.2022
(Amount in 000 NOK)
Innovasjon Norge	27.03.2015	NOK	6,59% effective interest	10.06.2025	10 000

The following table shows the undiscounted payment profile of the Group’s debt, based on the

remaining loan period at the balance sheet date. Payment profile on debts to credit institutions

per 31 December 2023:


Amounts in NOK	2024	2025	Total
Innovasjon Norge	4 000	2 000	6 000
Interests	367	62	428
Total installment	4 367	2 062	6 428

Payment profile on debts to credit institutions per 31 December 2022:


Amounts in NOK	2023	2024	2025	Total
Innovasjon Norge	4 000	4 000	2 000	10 000
Interests	543	290	48	882
Total installment	4 543	4 290	2 048	10 882


Elliptic Laboratories ASA Group – Financial statements 2023	Page 41

Note 16–Leasing


The balance sheet shows the following amounts relating to leases (Amounts in 000 NOK)	2023	2022

Right of use assets:
Property	19 447	2 256
Total	19 447	2 256

Lease liabilities:
Current	3 990	2 184
Non-current	15 874	523
Total	19 865	2 706

Additions to the lease liabilities and right-of-use assets in 2023 was mNOK 1,3 (0).


Amounts recognised in the statement of profit or loss (Amounts in 000 NOK)	2023	2022

Depreciation charge of right-of-use assets:
Property	3 944	2 662
Total	3 944	2 662

Lease expenses:
Interest expense	1 356	664
Expenses relating to short-term leases	1 817	1 392
Expenses relating to leases of low-value	1 486	621
Total	4 659	2 677


Net lease payments recognised in profit and loss	3 303	2 013

The following table shows the undiscounted payment profile of the Group’s lease liabilities,

based on the remaining lease period at the balance sheet date per 31.12.23:


Amounts in 000 NOK	2024	2025	2026	2027	2028	Total
Installments	3 969	3 927	4 412	4 961	2 577	19 846
Interests	1 683	1 368	1 054	685	358	5 147
Total installment	5 652	5 295	5 466	5 645	2 935	24 994

Note 17–Financial risk factors

Overview

Through its activities, the Group will be exposed to different types of financial risks: market risk,

credit risk and liquidity risk. This note presents information related to the Group’s exposure to

such risks, the Group’s objectives, policies and procedures for risk management and handling,

as well as the Group’s management of capital. Additional quantitative information is included

in these consolidated financial statements.

The Group’s overall risk management plan is to ensure the ongoing liquidity in the Group,

defined as being able to meet its obligations at any time. This also includes being able to meet

the financial covenants related to the Group’s borrowings.

Risk management of the Group is maintained by a central Finance Function in accordance

with the guidelines approved by the Board. The Group’s Finance Function identifies, measures,

mitigates and reports on financial risks in close cooperation with the various operating units. Risk

management policies and procedures are reviewed regularly to take into account changes in

the market and the Group’s activities.


Elliptic Laboratories ASA Group – Financial statements 2023	Page 42

Capital management

The Group’s main goal is to maximize shareholder value while ensuring the Group’s ability to

continue operations, as well as to make sure that covenant criteria are met (see note 15

interest-bearing liability re. financial covenant requirements). The Group has a target to

maintain a capital structure that gives the Group an optimal capital binding given the current

market situation. The Group makes the necessary changes to their capital structure based on

an ongoing assessment of the business’ financial situation and future prospects in the short and

medium term.


Financial instruments by category
Financial instruments as of 31 December 2023	Financial assets measured at amortised cost	Financial Liabilities measured at amortised cost	Total
(Amounts in 000 NOK)	Financial assets measured at amortised cost	Financial Liabilities measured at amortised cost	Total
Other current receivables	9 448	—	9 448
Current trade receivables	60 612	—	60 612
Cash and cash equivalents	115 582	—	115 582
Total financial assets	185 642	—	185 642

Borrowings	—	6 000	6 000
Trade and other current payables	—	3 855	3 855
Total financial liabilities	—	9 855	9 855


Financial instruments as of 31 December 2022	Financial assets measured at amortised cost	Financial Liabilities measured at amortised cost	Total
(Amounts in 000 NOK)	Financial assets measured at amortised cost	Financial Liabilities measured at amortised cost	Total
Other current receivables	6 905	—	6 905
Current trade receivables	40 495	—	40 495
Cash and cash equivalents	178 219	—	178 219
Total financial assets	225 619	—	225 619

Borrowings	—	10 000	10 000
Trade and other current payables	—	1 668	1 668
Total financial liabilities	—	11 668	11 668

a) Market risk

Market risk can be defined as the risk that the Group’s income and expenses, future cash flows

or fair value of financial instruments will vary as a result of changes in market prices. The market

risk is monitored continuously by the Group.

Foreign exchange risk

The Group operates internationally and is exposed to changes in foreign currency exchange

rates. The Group monitors the risk closely and on a monthly basis. For risk management

purposes, the Group has identified three types of currency exposures:

• Exposure to sales of products in different currencies: All of the Groups revenue are in

the Parent company, mainly in USD and EUR.

• Exposure to payroll costs and operating expenses in different currencies: The Group’s

business model is such that the subsidiaries’ sales and operating expenses are incurred

in local currency, which are mainly US dollars and some Chinese yen.

b) Credit risk

Credit risk is managed at the Group level. Credit risk is monitored closely.


Elliptic Laboratories ASA Group – Financial statements 2023	Page 43

c) Liquidity risk

The Group’s liquidity risk is characterized by a potential risk of not being able to meet

obligations to vendors and loan creditors. The ability to service the debt depends on the

Group’s cash flow from operating activities. The Group regularly monitors the cash flow

situation by setting up cash flow forecasts based on the forecasts of the liquidity reserves,

including cash equivalents and borrowing facilities.

To be able to maintain a sufficient flexibility in the source of funding, the Group has borrowing

facilities of mNOK 6,0 in 2023 (10,0 in 2022). The Group had cash and cash equivalents of mNOK

115,6 in 2023 (178,2 in 2022).

See also note 15 interest-bearing liability information on funding sources and payment profile.

Note 18–Other current liabilities

Other current liabilities consist of the following items:


Amounts in 000 NOK	2023	2022
Accrued vacation pay	6 064	4 945
Accrued costs	2 255	1 278
Accrued public taxes	4 760	3 104
Total other current liabilities	13 080	9 327

Note 19–Events after the balance sheet date

The 4th of January Elliptic Labs announced it had signed software license contract with new Top-5

Smartphone OEM Customer.

The 26th of January Elliptic Labs announced that it signed Proof of Concept Contract with Existing Laptop

Customer for an alternative operating system.

The 27th of February Elliptic Labs announced AI Virtual Human Presence SensorTM Launches on ThinkPadTM X

and T Series Laptops

The 1st of March Elliptic Labs Announced First Launch on a Foldable Smartphone Transsion Tecno Phantom

V Fold

The 16th of March Elliptic Lab announced signed License Contract with a New Top-5 Smartphone OEM

In late April; A former client has failed to meet the agreed-upon payment of $425.000USD for software

delivered in 2022. Elliptic Labs deems the dispute as a breach of contract and has thus decided to pursue

the payments through the ICC International Court of Arbitration as regulated in the contract.

Note 20–Alternative Performance Measures (APMs)

Earnings before interest, taxes, depreciation and amortizations (EBITDA) is defined as an

alternative performance measure.. EBITDA is a key performance indicator that the Group

considers relevant for understanding the generation of profit before investments in fixed assets.


(Amounts in 000 NOK)	2023	2022
Revenues from contracts with customers	68 321	52 062
Other operating income	1 312	—
Total revenue and other operating income	69 632	52 062

Employee benefits expenses	-80 552	-62 802
Other operating expenses	-22 599	-20 073
EBITDA	-33 519	-30 814

Last twelve months (LTM) refers to the timeframe of the immediately preceding 12 months.


Elliptic Laboratories ASA Group – Financial statements 2023	Page 44


	Q4 2023	Q3 2023	Q2 2023	Q1 2023	LTM
(Amounts in 000 NOK)
Revenues from contracts with customers	9 216	21 874	33 180	4 050	68 321
EBITDA	-18 419	-2 915	8 222	-20 407	-33 519


Elliptic Laboratories ASA Group – Financial statements 2023	Page 45

Financial statements of the parent

company

Income statement

For the financial period ended 31 December.


(Amounts in 000 NOK)	Notes	2023	2022

Revenues from contracts with customers		68 321	52 062
Other operating income		1 312	—
Total revenue and other operating income	2	69 632	52 062

Employee benefits expenses	3	-65 750	-51 120
Depreciation, amortisation	4, 5, 6	-16 224	-11 317
Other operating expenses	7	-38 301	-32 482
Total operating expenses		-120 275	-94 919

Operating profit		-50 643	-42 857

Other financial income	8	12 223	17 259
Other financial expense	8	-9 306	-14 488
Net financial income/(expenses)		2 917	2 771

Profit/(loss) before tax		-47 726	-40 086

Income tax expense	9	8 848	6 303

Net profit/(loss) for the year		-38 878	-33 783




Total comprehensive income for the period	-38 878	-33 783

Allocated as follows:
Other equity	-38 878	-33 783
Total allocated	-38 878	-33 783


Elliptic Laboratories ASA Group – Financial statements 2023	Page 46

Financial Position at 31 December


ASSETS (Amounts in 000 NOK)	Notes	31/12/2023	31/12/2022

Intangible assets	4	57 804	47 564
Deferred tax asset	9	77 685	68 837
Total intangible assets		135 489	116 401

Property, plant and equipment	5	460	—
Right of use assets		19 447	2 256
Total tangible assets		19 907	2 256

Investments in subsidiaries	10	1	1
Other non-current financial assets		8 861	5 038
Total financial non-current assets		8 861	5 038

TOTAL NON-CURRENT ASSETS		164 257	123 695

Current trade receivables	11	60 612	40 495
Other receivables		8 938	6 411
Total receivables		69 550	46 906

Cash and cash equivalents	12	110 941	176 185

TOTAL CURRENT ASSETS		180 492	223 091

TOTAL ASSETS		344 749	346 786


Elliptic Laboratories ASA Group – Financial statements 2023	Page 47

Financial Position at 31 December


EQUITY AND LIABILITIES (Amounts in 000 NOK)	Notes	31/12/2023	31/12/2022

Share capital	13	1 048	1 041

Other equity		299 834	319 383

TOTAL EQUITY		300 883	320 424

Non-current lease liabilities		15 874	523
Other non-current borrowings	11	2 000	6 000
Other non-current borrowings		17 874	6 523

Liabilities to group companies	14	2 226	4 032
Trade creditors		3 855	1 668
Current tax liabilities	9	—	—
Current lease liabilities		3 990	2 184
Other current liabilities		15 921	11 955
Total current liabilities		25 992	19 839

TOTAL LIABILITIES		43 866	26 362

TOTAL EQUITY AND LIABILITIES		344 749	346 786

Oslo, 24rd of April 2024

The Board of Directors of Elliptic Laboratories ASA


Svenn-Tore Larsen Chairman	Edvin Austbø Board Member	Ingrid Elvira Leisner Board Member


Berit Svendsen Board Member	Laila B. Danielsen CEO


Elliptic Laboratories ASA Group – Financial statements 2023	Page 48

Cash flow statement

For the financial period ended 31 December 2023 and 2022.


(Amounts in 000 NOK)	Notes	2023	2022
Cash flow from operating activities:
Profit/(loss) before tax		-47 726	-40 086
Adjustment for:
Taxes paid in the period		—	—
Depreciation, amortisation	4, 5, 6	16 224	11 317
Share based payments	3	9 842	12 464
Net finance items	8	-3 400	-4 232
Items classified as investing or financing activities	9, 17	-1 031	455
Change in current trade receivables		-20 118	-11 469
Change in trade payables		2 187	-1 361
Change in other accruals		-3 940	18 733
Net cash flow from operating activities		-47 962	-14 179

Cash flow from investing activities:
Purchase of property, plant and equipment	5	-514	—
Capitalized development costs	4	-25 099	-23 327
Interest received	8	4 639	2 197
Net cash flow from investing activities		-20 974	-21 131

Cash flow from financing activities:
Repayments of current borrowings	11	-4 000	-4 000
Payments of lease liabilities, classified as financing activities	6	-5 007	-3 205
Proceeds from issuing shares	13	9 495	2 972
Paid interest on loan	8	-589	-571
Paid interest on lease liabilities	8	-1 356	-664
Proceeds from government grants	17	3 663	3 208
Net cash flow from financing activities		2 206	-2 260

Net Change in Cash and Cash Equivalents		-66 729	-37 569
Cash and cash equivalents at the beginning of the period		176 185	213 410
Exchange rate effects bank		1 486	344
Cash and cash equivalents at the end of period		110 941	176 185


Elliptic Laboratories ASA Group – Financial statements 2023	Page 49

Note 1- Accounting principles

1.1 General information

The preparation of financial statements in compliance with the Accounting Act requires the

use of estimates. The application of the company's accounting principles also require

management to apply assessments. Areas which to a great extent contain such assessments, a

high degree of complexity, or areas in which assumptions and estimates are significant for the

financial statements, are described in the notes.

The annual accounts have been prepared in accordance with simplified application of

international accounting standards according to section 3-9 of the Norwegian Accounting Act.

1.2 Summary of significant accounting principles

The principal accounting policies applied in the preparation of these financial statements are

set out below. These policies have been consistently applied to all the years presented, unless

otherwise stated.

Revenues

Revenue from providing services is recognised in the accounting period in which the services

are rendered.

Revenue from licenses which give a right to use is recognised at point in time and licenses

which give a right to access is recognised over time. Royalty based revenue is recognised as

sales occur when exceeding the minimum fixed fee.

For fixed-price contracts, revenue is recognised based on the actual service provided to the

end of the reporting period as a proportion of the total services to be provided. This is

determined based on the actual cost spent relative to the total cost.

Some contracts include multiple performance obligations, such as an engineering service and

the subsequent licensing of IP, which are accounted for as separate performance obligations.

In this case, the transaction price will be allocated to each performance obligation based on

the stand-alone selling prices. Where these are not directly observable, they are estimated

based on expected cost plus margin.

Estimates of revenues, costs or extent of progress toward completion are revised if

circumstances change. Any resulting increases or decreases in estimated revenues or costs are

reflected in profit or loss in the period in which the circumstances that give rise to the revision

become known by management.

In case of fixed-price contracts, the customer pays the fixed amount based on a payment

schedule. If the services rendered by Elliptic Laboratories exceed the payment, a contract

asset or a receivable is recognised. If the payments exceed the services rendered, a contract

liability is recognised.

If the contract includes a royalty for mobile devices sold, revenue is recognised in the amount

to which Elliptic Laboratories has a right to invoice.

Government grants

Government grants are recognised when there is reasonable assurance that the grant will be

received and all attached conditions will be complied with. When the grants relate to an

expense item, it is normally recognised as a reduction of the expense on a systematic basis

over the periods that the related costs, for which it is intended to compensate, are expensed.

When the grant relates to an asset, it is presented in the statement of financial position by

deducting the grant in arriving at the carrying amount of the asset. The grant is recognised in

the income statement over the useful life of a depreciable asset as a reduced depreciation

expense.

Classification of balance sheet items

Assets intended for long term ownership or use have been classified as fixed assets. Assets

relating to the trading cycle have been classified as current assets. Other receivables are

classified as current assets if they are to be repaid within one year after the transaction date.

Similar criteria apply to liabilities. First year's instalment on long term liabilities and long-term

receivables are, however, not classified as short-term liabilities and current assets.

Purchase costs

The purchase cost of assets includes the cost price for the asset, adjusted for bonuses, discounts

and other rebates received, and purchase costs (freight, customs fees, public fees which are


Elliptic Laboratories ASA Group – Financial statements 2023	Page 50

non-refundable and any other direct purchase costs). Purchases in foreign currencies are

reflected in the balance sheet at the exchange rate at the transaction date.

For fixed assets and intangible assets purchase cost also includes direct expenses to prepare

the asset for use, such as expenses for testing of the asset.

Intangible assets

"Acquired intangible assets are capitalized on the basis of the costs incurred to acquire and

put the asset into use. Development costs that are directly attributable to the design and

testing of identifiable and unique software products controlled by the Company are

recognised as intangible assets when the following criteria are met:

• it is technically feasible to complete the software so that it will be available for use

• management intends to complete the software and use or sell it

• there is an ability to use or sell the software

• it can be demonstrated how the software will generate probable future economic

benefits

• adequate technical, financial and other resources to complete the development

and to use or sell the software are available, and

• the expenditure attributable to the software during its development can be

reliably measured.

Expenses for other intangible assets are reflected in the balance sheet providing a future

financial benefit relating to the development of an identifiable intangible asset can be

identified and the expenses can be reliably measured. Otherwise such expenses are expensed

as and when incurred. R&D expenses in the balance sheet are depreciated on a straight-line

basis over the asset's expected useful life."

Leases

Contracts may contain both lease and non-lease components. The Company allocates the

consideration in the contract to the lease and non-lease components based on their relative

stand-alone prices. Lease terms are negotiated on an individual basis and contain a wide

range of different terms and conditions. The lease agreements do not impose any covenants

other than the security interests in the leased assets that are held by the lessor. Leased assets

may not be used as security for borrowing purposes.

Assets and liabilities arising from a lease are initially measured on a present value basis. Lease

liabilities include the net present value of the following lease payments:

• fixed payments (including in-substance fixed payments), less any lease incentives

receivable

• variable lease payment that are based on an index or a rate, initially measured using

the index or rate as at the commencement date

• amounts expected to be payable by the Company under residual value guarantees

• the exercise price of a purchase option if the Company is reasonably certain to

exercise that option, and

• payments of penalties for terminating the lease, if the lease term reflects the Company

exercising that option.

Lease payments to be made under reasonably certain extension options are also included in

the measurement of the liability. The lease payments are discounted using the interest rate

implicit in the lease. If that rate cannot be readily determined, which is generally the case for

leases in the Company, the lessee’s incremental borrowing rate is used, being the rate that the

individual lessee would have to pay to borrow the funds necessary to obtain an asset of similar

value to the right-of-use asset in a similar economic environment with similar terms, security and

conditions.

To determine the incremental borrowing rate, the Company:

• where possible, uses recent third-party financing received by the individual lessee as a

starting point, adjusted to reflect changes in financing conditions since third party

financing was received

• uses a build-up approach that starts with a risk-free interest rate adjusted for credit risk

for leases held by the Company, which does not have recent third-party financing,

and

• makes adjustments specific to the lease, e.g. term, country, currency and security.


Elliptic Laboratories ASA Group – Financial statements 2023	Page 51

The Company is exposed to potential future increases in variable lease payments based on an

index or rate, which are not included in the lease liability until they take effect. When

adjustments to lease payments based on an index or rate take effect, the lease liability is

reassessed and adjusted against the right-of-use asset. Lease payments are allocated between

principal and finance cost. The finance cost is charged to profit or loss over the lease period so

as to produce a constant periodic rate of interest on the remaining balance of the liability for

each period.

Right-of-use assets are measured at cost comprising the following:

• the amount of the initial measurement of lease liability

• any lease payments made at or before the commencement date less any lease

incentives received

• any initial direct costs, and

• restoration costs.

Right-of-use assets are generally depreciated over the shorter of the asset's useful life and the

lease term on a straight-line basis. If the Company is reasonably certain to exercise a purchase

option, the right-of-use asset is depreciated over the underlying asset’s useful life. While the

Company revalues its land and buildings that are presented within property, plant and

equipment, it has chosen not to do so for the right-of-use buildings held by the Company.

Payments associated with short-term leases of equipment and vehicles and all leases of low-

value assets are recognized on a straight-line basis as an expense in profit or loss. Short-term

leases are leases with a lease term of 12 months or less. Low-value assets comprise IT equipment

and small items of office furniture.

Cash and cash equivalents

In the statement of cash flows, cash and cash equivalents includes cash in hand, deposits held

at call with banks and other short-term highly liquid investments with original maturities of three-

months or less.

Fixed assets

Fixed assets are reflected in the balance sheet and depreciated to residual value over the

asset's expected useful life on a straight-line basis. If changes in the depreciation plan occur

the effect is distributed over the remaining depreciation period. Direct maintenance of an

asset is expensed under operating expenses as and when it is incurred. Additions or

improvements are added to the asset's cost price and depreciated together with the asset.

The split between maintenance and additions/improvements is calculated in proportion to the

asset's condition at the acquisition date. Leased assets are reflected in the balances sheet as

assets if the leasing contract is considered a financial lease

Asset impairments

Impairment tests are carried out if there is indication that the carrying amount of an asset

exceeds the estimated recoverable amount. The test is performed on the lowest level of fixed

assets at which independent cashflows can be identified. If the carrying amount is higher than

both the fair value less cost to sell and recoverable amount (net present value of future use/

ownership), the asset is written down to the highest of fair value less cost to sell and the

recoverable amount.

Previous impairment charges, except write down of goodwill, are reversed in later periods if the

conditions causing the write-down are no longer present.

Long term contracts

Work in progress on long term fixed-price contracts is valued according to the percentage of

completion method. The degree of completion is calculated as expenses incurred as a

percentage of estimated total expense. Total expenses are reviewed on a regular basis. If

projects are expected to result in losses, the total estimated loss is recognised immediately.

Debtors

Trade debtors are recognised in the balance sheet after provision for bad debts. The bad

debts provision is made on basis of an individual assessment of each debtor to cover expected

losses. Significant financial problems at the customers, the likelihood that the customer will

become bankrupt or experience financial restructuring and postponements and insufficient

payments, are considered indicators that the debtors should be written down.

Other debtors, both current and long term, are recognised at the lower of nominal and net

realisable value. Net realisable value is the present value of estimated future payments. When


Elliptic Laboratories ASA Group – Financial statements 2023	Page 52

the effect of a write down is insignificant for accounting purposes this is, however, not carried

out. Provisions for bad debts are valued the same way as for trade debtors.

Foreign currencies

Receivables and liabilities in foreign currencies are taken to income at the exchange rate on

the balance sheet date.

Liabilities

Liabilities, except for certain liability provisions, are recognised in the balance sheet at nominal

amount.

Pensions

The company has various pension schemes. The pension schemes are financed through

payments to insurance companies, except for the early retirement pension scheme (AFP). The

company has a defined contribution plan.

Defined contribution plan

With a defined contribution plan the company pays contributions to an insurance company.

After the contribution has been made the company has no further commitment to pay. The

contribution is recognised as payroll expenses. Prepaid contributions are reflected as an asset

(pension fund) to the degree the contribution can be refunded or will reduce future payments.

The early retirement pension scheme (AFP) is an unsecured defined benefit multi-enterprise

scheme. Such a scheme is de facto a defined benefit plan, but is for accounting purposes

treated as a defined contribution plan as the result of the administrator of the scheme not

providing sufficient information to calculate the liability in a reliable manner.

Share based payments

Share-based compensation benefits are provided to employees via the share option plan.

Information relating to the options scheme is set out in note 15.

Employee options

The employee option plan is regarded as equity settled sharebased payments. The fair value of

options granted under the share option plan is recognised as an employee benefits expense

with a corresponding increase in equity. The total amount to be expensed is determined by

reference to the fair value of the options granted.

The total expense is recognised over the vesting period, which is the period over which all of

the specified vesting conditions are to be satisfied. At the end of each period, the entity revises

its estimates of the number of options that are expected to vest based on the non-market

vesting and service conditions. It recognises the impact of the revision to original estimates, if

any, in profit or loss, with a corresponding adjustment to equity.

Taxes

The tax charge in the income statement includes both payable taxes for the period and

changes in deferred tax. Deferred tax is calculated at relevant tax rates on the basis of the

temporary differences which exist between accounting and tax values, and any carryforward

losses for tax purposes at the year-end. Tax enhancing or tax reducing temporary differences,

which are reversed or may be reversed in the same period, have been eliminated. The

disclosure of deferred tax benefits on net tax reducing differences which have not been

eliminated, and carryforward losses, is based on estimated future earnings. Deferred tax and

tax benefits which may be shown in the balance sheet are presented net.

Deferred tax is reflected at nominal value.


Elliptic Laboratories ASA Group – Financial statements 2023	Page 53

Note 2–Total revenue and other operating income

Revenues from contracts with customers have the following distribution as recognized over

time or at point in time:


(Amounts in 000 NOK)	2023	2022
Revenue recognised over time	—	—
Revenue recognised at point in time	68 321	52 062
Total revenue	68 321	52 062