Press release, 21 August 2024 at 8:00 EEST

Solar Foods is planning a listing on the Nasdaq First North Growth Market Finland marketplace

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The Finnish protein production revolutioniser Solar Foods Oyj (hereinafter “Solar Foods” or “the Company”) is planning a listing and application for admission of shares to trading on the Nasdaq First North Growth Market Finland marketplace maintained by Nasdaq Helsinki Ltd. The planned listing would be carried out in September as a technical listing, i.e. no share issue or sale will be arranged in connection with it.

Solar Foods is a global leader in sustainable protein production, solving the global food production problem by offering a completely new alternative to existing animal and plant proteins. Solar Foods’ first product is the naturally occurring single-cell protein Solein®, which can be used as a food raw material with high protein content. In the long term, Solein production improves the global availability of protein and increases price and quality stability of food raw materials by disconnecting food production from agriculture. The main raw materials for production are carbon dioxide and electricity. Solein production uses fossil-free energy, which results in the lowest environmental impact and based on research the smallest carbon footprint compared to all other known protein sources. The Company has verified Solein’s functionality in a wide range of food categories, such as dairy, meat and egg substitutes. Solein is suitable for all diets and does not contain any known allergens.

The Company’s business model is to produce new food raw materials for the global market using both existing and new microbial strains under development. This requires investments in R&D, sales and marketing, as well as in the production capacity of Solein. As the Company has already scaled its production technology to demonstration scale, it also has the potential to license both hydrogen fermentation technology and production organisms for the food industry.

The purpose of the listing of Solar Foods is to enable the Company to grow its business to a global scale.

• Global growth strategy. The aim is to implement a growth strategy that includes scaling of production technology, launching factory projects based on it, introducing new production organisms and products to the market, and strategic acquisitions to accelerate technology development.
• Recognition and credibility. Solar Foods believes it is the first alternative protein technology company to seek public listing. The Company estimates that the listing will increase its credibility in the eyes of key stakeholders (customers, financiers, current and future personnel).

The Company already includes significant well-known investors such as Fazer, Lifeline Ventures, Bridford Group, Agronomics, CPT Capital, Voima Ventures (VTT Ventures), and significant family office investment companies.

With previous oversubscribed Springvest funding rounds, the Company has over 2,000 shareholders, enabling it to complete a technical listing.

In addition, the Company has strong public financial support. Of the EUR 110 million potential grant notified to the Company under the EU rule on State aid, approximately EUR 34 million has been granted through an existing grant decision, with EUR 76 million remaining subject to the submission and approval of a new grant application.

Target markets and growth drivers

Solar Foods is positioned as a revolutioniser of the global market for protein products, offering a completely new alternative to existing animal and plant proteins. Solar Foods’ customer base consists of food companies, which are under increasing pressure to find new sustainable, reliable and price-stable sources of food raw materials to meet their strategic environmental goals. In the Company’s view, Solein solves this problem, which creates a strong demand potential for it. The Company’s technology is a strategic platform technology that can be utilised to commercialise various products.

The Company believes the following megatrends support the Company's preconditions to create a completely new alternative to animal and plant proteins on the market for protein products:

• Climate change and biodiversity loss. As climate change progresses, the ability to produce food regardless of climatic conditions will become highlighted. A significant part of the world's surface area is already used for agriculture, and the land available for agriculture can no longer be sustainably expanded. On the contrary, there is pressure to reforest agricultural land to grow global carbon sinks. In addition to energy production, food production is the most significant environmental modifier and the main reason for biodiversity loss.
• Population growth. The world population is expected to grow to 10 billion by 2050. Solar Foods believes that providing a sufficiently nutritious diet for a growing population requires new solutions for food production already today.
• Change in consumer behaviour. Consumers are increasingly taking climate and environmental factors into account in their purchasing decisions and are striving to reduce the consumption of traditional products. Food companies need to find new sustainable protein sources that can not only replace animal proteins but also genuinely reform their food offering.
• Geopolitics. The importance of self-sufficiency in food production is emphasized due to geopolitical reasons. The global food supply chain is quite fragile and concentrated: For example, three countries account for over 80% of the world’s soy production, so even a small crisis will have a significant impact on global protein availability or at least the price. Prevailing geopolitical tensions have put food self-sufficiency at the top of many countries' list of priorities. In addition, countries are using legislation to find new solutions to tackle climate change, biodiversity loss and sustainable food production.

Solar Foods' strengths

• Proven technology and product. The Company has concretely proven the functionality of its technology and production process for 5 years on a pilot scale. In addition, scaling production to industrial scale has been verified at Factory 01. Solein’s functionality in food products has been tested with product prototypes, some of which have been sold in Singapore. Foods that use Solein have also been extensively tested by consumers, and the taste profile and properties of the product are suitable for many foods.
• Patented technology and strong competition protection. The Company believes it is the only player in the world to commercialize a completely new food protein and a technology platform for its production, hydrogen fermentation based on its own hydrogen production. The Company has filed over 160 patent applications, of which 28 have been granted so far. Strong patent protection, R&D investments, demanding construction of a commercial-scale production facility, and challenging food licensing processes make the barriers to entry into the industry very high.
• The Solein product can be endlessly replicated. The Company expects to be able to replicate and expand its production without reliance on individual raw material suppliers or the limited availability of some raw materials. Furthermore, the Company’s fermentation technology is not based on utilising any critical element. By disconnecting food production from agriculture, Solar Foods improves the price and quality stability and availability of food raw materials.
• The product has competitive features compared to other protein sources. The Company estimates that Solein has the lowest carbon footprint compared to all other known protein sources if fossil-free energy is used in production. The production of Solein does not require arable land, and it can be produced anywhere where renewable energy is available, such as in the desert or in space. In large-scale production, the Company estimates that Solein’s cost will be competitive with any other protein.
• Prerequisites for a highly profitable business. Solar Foods aims to build a highly profitable business based on the technology platform it has developed. This can be achieved by scaling production capacity, reducing production Solein's costs and ensuring premium pricing through product categories with strong brands and high price points. After the technology development phase, the Company estimates that the commercial factories will generate strong and predictable cash flow, as production is not dependent on long raw material supply chains or their strategic supply risks. The working capital tied up in the process is low.

Solar Foods' strategy for the next few years

After the successful deployment of demonstration factory Factory 01, the Company's next strategic phase will prepare for global scale-up and commercialization of production.

Securing new food approvals is critical to commercialization. The Company has a valid novel food authorisation in Singapore. The Company expects to achieve so-called self-affirmed GRAS (Generally Recognized as Safe) status in the United States during 2024, which will enable sales to start in the United States. The Company aims to start sales in the United States from the second half of 2024. This is expected to have significant benefits in similar approval processes in other markets. The Company is currently undergoing a novel food authorisation process in the EU and the UK. In the EU, the Company expects to obtain novel food authorisation in 2026. In addition, the Company is continuously assessing launching novel food authorisation processes for new products.

Alongside the food approval processes, the Company is preparing strategic launch and partnership agreements with major food and biotechnology companies. The aim is to develop Solein products together with customers and commercialise them in different markets. Through food approvals and strategic partnerships, the Company aims to implement an investment in Factory 02. This facility will have a profitable production scale.

The Company’s growth over the next few years is primarily based on two factory projects:

• Demonstration plant. The planned capacity of Factory 01, which was commissioned in 2024, is approximately 160 tons per year for Solein. The factory’s production will be sold to customers’ test marketing campaigns and to pilot new products. The Company assessed that the implementation of these steps is a prerequisite for obtaining sales contracts for Factory 02. The actual investment of the plant was over EUR 40 million.
• Commercial scale production facility. Factory 02’s production capacity for Solein is estimated to be over 50-100 times higher than Factory 01, which the Company estimates would generate net sales of EUR 80-200 million. The Company estimates that the production cost of Solein on the Factory 02 scale excluding depreciation and financing costs is currently around EUR 4.3–5.2 per kilogram and estimates that it will fall further in the future thanks to technological developments. The investment cost of Factory 02 is estimated to be EUR 150-420 million depending on the production capacity and the country of investment. Investment costs will be specified as planning progresses. The Company expects that investment decisions will be made by 2026 at the latest.

After the implementation of the first profitable industrial-scale production plant, the Company aims to continue global scaling of production. The Company is also developing new products alongside the current Solein. As part of its strategy, the Company will also assess the possibility of licensing its technology to potential partners. In licensing agreements, the Company’s net sales would be based on a license fee based on the customer’s production. This business model would not tie up capital and would improve the Company's profitability.

Financial information

The Company's equity ratio was 48% at the end of 2023 (2022: 23%) and net debt was EUR 11.9 million (15.9). At the end of 2023, the Company’s cash assets amounted to EUR 16.4 million (9.5) and approximately EUR 24 million on 30 June 2024. In 2023, the Company had not yet launched the commercialisation of its product. In 2023, Solar Foods' operating loss (EBIT) was EUR 6.8 million (3.2) and net sales was EUR 4,987 (0.0).

Advisors

Carnegie Investment Bank AB acts as the financial advisor to Solar Foods and as the Certified advisor under the First North rules. Solar Foods’ legal advisor is DLA Piper Finland Attorneys Ltd. and Miltton Ltd and Inderes Oyj act as communications advisors.

Press conference

Solar Foods will arrange a press conference (in Finnish) today, 21 August 2024 at 10.00 EEST. Solar Foods CEO Pasi Vainikka and Nasdaq Helsinki's CEO Henrik Husman will speak at the event. You can participate in the event via the following link: https://solarfoods.videosync.fi/2024-infotilaisuus

More information:

Pasi Vainikka, CEO, pasi@solarfoods.com, tel. +358 10 579 3286

Requests for interviews: Laura Sinisalo, Chief Experience Officer, laura@solarfoods.com, tel. +358 10 579 3285

About Solar Foods

Solar Foods produces protein using carbon dioxide and electricity. Solein® production, independent of weather and climate conditions, liberates global protein production from the constraints of traditional agriculture. Solar Foods was founded in Finland in 2017. solarfoods.com

IMPORTANT INFORMATION

The distribution of this release may be restricted by law in certain jurisdictions and persons into whose possession any document or other information referred to herein comes should inform themselves about and observe any such restriction. Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdiction. This release is not made, and no copies of this release may be distributed or transmitted in whole or in part, directly or indirectly, in or into the United States, Australia, South Africa, Hong Kong, Japan, Canada, Singapore or New Zealand, or to any other country or territory where publication or distribution would be illegal. The Company or its Certified Advisor shall not be liable if such restrictions are violated by any person.

As stated in the release, the Company is planning listing i.e. applying its shares for admittance to trading on the Nasdaq First North Growth Market Finland marketplace, maintained by Nasdaq Helsinki Ltd. The planned listing would be carried out as a direct listing, i.e. no share issue or sale will be organized in connection with it.

The information contained in this release is provided for background purposes only and does not purport to be full or complete. No reliance should be placed on the information contained in this release or its accuracy, correctness or completeness for any purpose. The information contained in this release may change.

As noted above, the Company will not offer securities to the public in the contemplated possible listing. This release should not be interpreted as an offer to sell or subscribe or a solicitation to buy or subscribe for the Company's securities, and no securities will be sold in areas where the offering, purchase or sale of the securities in question would be illegal prior to their registration or an exception to the registration obligation or other approval in accordance with the securities laws of the respective areas. Investors should not purchase securities referred to in this release based on this release. Investors should familiarize themselves with the information contained in the company description that the Company may within permitted territories later publish or distribute for the purpose of listing in accordance with the rules of the Nasdaq First North Growth Market Finland. This release is not a company description according to the rules of the Nasdaq First North Growth Market Finland.

This release is not an offer to sell securities in the United States, and the securities may not be offered or sold in the United States unless they have been registered in accordance with the U.S. Securities Act of 1933, as amended, and the rules and regulations issued thereunder, or unless there is an exemption from the registration requirement. The Company does not intend to register any securities in the United States or offer the securities to the public in the United States. In any member state of the European Economic Area that has implemented Regulation (EU) No. 2017/1129 of the European Parliament and of the Council on the prospectus to be published in connection with the offering of securities to the public or admission to trading on a regulated market and repealing Directive 2003/71/EC ("Prospectus Regulation"), no measures have been taken and will not be taken to offer securities to the public in such a way that it would require the publication of the prospectus referred to in the Prospectus Regulation. In this paragraph, the expression "offering securities to the public" means communication directed at individuals in any form and through any channel, which provides sufficient information about the terms of the offer and the securities offered, so that the investor can make a decision about buying or subscribing to these securities. This release is neither an offer of securities to the public in the United Kingdom in respect of the securities referred to in this release. No prospectus has been or will be accepted in the United Kingdom.

The contents of this release have been prepared by, and are the sole responsibility of, the Company. The certified advisor (Certified Adviser), according to the Nasdaq First North Growth Market Finland rules or anyone of its directors, officers, employees, advisers or agents accepts any responsibility or liability whatsoever for or makes any representation or warranty, express or implied, as to the truth, accuracy or completeness of the information in this release (or whether any information has been omitted from this release) or any other information relating to the Company, its subsidiaries or associated companies, whether written, oral or in a visual or electronic form, and howsoever transmitted or made available or for any loss howsoever arising from any use of this release or its contents or otherwise arising in connection therewith.

Forward-looking statements

Matters discussed in this release may constitute forward-looking statements. Forward-looking statements are statements that are not historical facts and may be identified by words such as “believe”, “expect”, “anticipate”, “intend”, “may”, “plan”, “estimate”, “will”, “should”, “could”, “aim” or “might”, or, in each case, their negative, or similar expressions. The forward-looking statements in this release are based upon various assumptions, many of which are based, in turn, upon further assumptions. Although the Company believes that the expectations reflected in these forward-looking statements are reasonable, it can give no assurances that they will materialise or prove to be correct. Because these forward-looking statements are based on assumptions or estimates and are subject to risks and uncertainties, the actual results or outcome could differ materially from those set out in the forward-looking statements as a result of many factors. The Company does not guarantee that the assumptions underlying the forward-looking statements in this release are free from errors nor does it accept any responsibility for the future accuracy of the opinions expressed in this release or any obligation to update or revise the statements in this release to reflect subsequent events or circumstances. Undue reliance should not be placed on the forward-looking statements in this release. The information, opinions and forward-looking statements contained in this release speak only as at its date and are subject to change without notice. The Company does not undertake any obligation to review, update, confirm or to release publicly any revisions to any forward-looking statements to reflect events that occur or circumstances that arise in relation to the content of this release.