Second Quarter and First Half Year Results 2021

Oslo, Norway — Elliptic Labs, a global AI software company and leader in AI Virtual Smart Sensors for the smartphone, laptop, Internet of Things (IoT), and automotive industries, reports progress from Q2 last year and operating revenues up from NOK 6,3M Q2 2020 to NOK 7,6M Q2 2021: a 20% increase YoY. 1H 2021 also saw an increase from H1 2020 from NOK 10,3M to NOK 12,1M. We currently foresee seasonality this year, revenue for 2H 2021 is expected to be higher than 1H 2021. EBITDA has improved from Q2 2020 NOK -5,9M to NOK -3.7M Q2 2021 following the development in increased revenue. The EBITIDA im-proved from Q2 2020 NOK -10,3M to NOK -12.2M. Cash flow from operations is in line with expectations at NOK -12,8M for the quarter, a decrease from NOK 11M YoY.

The development is in line with management expectations, and we see increased demand for our software in multiple verticals.

Highlights from the second quarter:

• Signed license agreement with a Bosch company, grow Platform GmbH, on their IoT device "spexor" for their energy and building segment
• Launched smartphones with a major new customer: Honor, and with our current customer Xiaomi
• Added more Proof-of-Concept (PoC) with current leading PC/laptop customer and added PoC with our first ODM based in Taiwan
• Solid progress on all PoCs with other PC/laptop manufacturers
• Secured our first PoC in yet a new vertical market, Smart TV
• Announced collaboration with Qualcomm to optimize Elliptic Labs machine-learning algorithms on Qualcomm's Snapdragon 8cx, 8c, and 7c based systems to make our AI Virtual Smart Sensors even more attractive to leading PC OEMs
• Expanded partnership with Cirrus Logic to enable our AI Virtual Smart Sensor Platform to be more power-efficient across a broader set of devices
• Two patents granted, adding to an already strong patent portfolio — we are the leader in patents using ultrasound virtual smart sensors in the consumer electronics market. Today, our portfolio consists of over 100 patents granted/pending.

"In Q2 we reached major milestones, entering into several new vertical markets while continuing to build on market momentum for the broader adoption of our AI Virtual Smart Sensor Platform," said CEO Laila Danielsen. "We continue to see a tight global supply chain, higher hardware component prices, and our customers struggling to source hardware parts. Fortunately, our all-software solution allows our customers to bypass issues that stem from hardware sensor supply chain constraints. Our global chipset partners are also aligning their short- and long-term roadmaps with our AI Virtual Smart Sensor Platform. Consequently, partner and customer interest in engaging with Elliptic Labs continues to be strong. This quarter, we succeeded in converting some of our Proof-of-Concept agreements into license agreements in new vertical and geographical markets. We signed a license agreement with a Bosch company — grow platform GmbH — for their latest smart security device, and in July 2021 we secured our first Enterprise License Agreement with one of the world's top three PC manufacturers."

We re-confirm our 2021 expectations that are based on the robust demand for our AI software platform, in particular from the smartphone and PC markets. We are excited about the opportunities ahead and very confident in our long-term strategy as we continue to execute and scale with current and new customers.