Hello, and a warm welcome to today's broadcast with Certec, presenting its report for the second quarter of 2026. Joining us are CEO, Erik Herlyn, and CFO, Jörgen Svanström.

Welcome to you both. Towards the end of the broadcast, we will open up for a Q&A session.

If you have any questions, please submit them via the form found to the right of the broadcast. With that said, I hand it over to you guys.

I will be back when it's time for the Q&A. The floor is yours.

Thank you very much, Elliot, for for, enabling us to present the report. In the next 20 to 30 minutes, Jörgen and I will will present the the core strategy of the company where we are striving towards.

We will focus on the main activities and achievements during the second quarter of this year, followed by an outlook where we want to, go in the future, primarily in the security direction. Then, of course, we will, go into some more details on the financials.

Maybe let's start with with slide two on the, general overview and the strategy of of where we are. I think we are we are all aware that we have got a a proven platform, the X8 is a very stable platform with a hybrid propulsion, and that is really our IP, that we can fly for 3.5 hours endurance, and up to carry up to 10 kilo payload.

That enables a complete new suite of applications, in primarily in the defense, but also in the in the commercial, sector. And, the the hardware sales and the recurring revenue is growing, with the system sale per unit is typically between $200,000 and $900,000 US, and that has been, proven by by several sales in the past.

That is consisting of the drone itself that we consider as the enabler to generate that revenue because payload and software can be sold because we have a platform that is so, long in the air. Recurring revenue is is very important because that that gives a constant stream of cash.

We are actually quite proud that within five years, we've been able to develop a highly complex drone system, make it very stable, developed by engineers from mainly from manned aviation. Today, we're, flying with several armies and navies across Europe, having in total about 15 clients using it, on a on a day-by-day base.

This is, a very fast development. We've put about $20 million US into it, but, we're we're very proud that that we were able to achieve that so far.

That, if we can see is going right into in the next slide is go is in a in a very fast-growing market. We can So the the UAV the global UAV market is is double-digit, and and that is probably a conservative assessment of a of a third party.

Just as a recap, where are we with our drone? The the X8 X8, through long endurance is right between the commodity drones, the typical full electric multicopters that are usually limited depending on the on the weight they they have and what they carry, is about 30 minutes, maybe 50 minutes, and a few kilos.

If that is not enough, clients usually go the other way, they go to the helicopters, the manned or unmanned helicopters that are far more expensive and far more complex to operate. We're right in that niche.

That is that is, a very strong, game-changing technology that we have. The challenge for us is also to make clients aware that that technology exists.

The defense market is slow, we are aware of that. We're we're doing we we call it elephant hunting, we're looking for big contracts, and that takes time.

Defense procurement is is, is is slow, and we have to we have to, acknowledge that, but the tickets in the defense space are very big. And, the core rationale we have for our clients is that the economics to fly our drone is just so much better as flying a much larger helicopter or or other, complex system.

If we if we move to the to the next slide, we can we can see where we are in the in the, in the security demand. You've seen that we've invited for an Extraordinary General Meeting to move more into the security space.

Some people might wonder, okay, why are they doing that? We have to bear in mind the infrastructures in Europe are at risk.

We're facing a lot of, drone overflights from over critical infrastructures. These are power plants, these are railyards, these are data centers that can be very easily, attacked.

At this point of time, we see that the conventional way of protecting these infrastructures within Europe within regular security, guards walking around with a with a torch, is just not made for these kind of of cyberattacks, for these kind of drone attacks that are much faster and much more aggressive than we've seen in the past. At the same time, the the security market is showing a lot of labor pressure.

The the salaries are, are are, are floored by, regulatory, rules. The the whole security market is highly competitive and and low margin.

At the same time, we believe it is not very efficient. So, with these new threats, we believe that newer technologies can be game-changing in in that market.

What we see, what we can contribute to that market in the future is we have got the UAV and the autonomy technology, available. We have developed one of the most complex systems, multirotor systems in the market, and therefore we've got that, we've got that technology under control.

We are using, and we we are fully aware of the of the defense and the technology relationship, we know exactly what kind of electronic warfare equipment, sensors, and software is used in the defense space to protect those critical infrastructures. It is it is a very normal course if we look back in history that defense technology is later on used in the commercial sector.

If we look at GPS or other technologies, they were originally developed for the, defense market, and is later on used primarily for the commercial market. We see that this, development will also happen.

That is why we do not want to develop all that technology on our own. The the main, value proposition is to use existing technology from our own, our own software mainly, but also third-party hardware, sensors, drones, drone-in-a-box systems that we can bring to the table.

On the other side, we're looking at different security platforms at the moment, and they have the access, and the the security service expertise. They know exactly what is required, what the client needs, what the client is expecting, and they have the network and the access to to those, clients because they're already delivering the service to to these.

We believe that bringing the technology into the security market, not by just providing and and developing a technology, there are others who did that already, but for going full steam and pushing that into the market can be, can be can be very successful. The, drone-in-a-box system that we're looking at at the moment, is is typically that we monitor areas, perimeters, it could be, a square kilometer or even larger if we look at power plants or others, with regular flights that are much more efficient than guards.

Just imagine a drone flying over an area looking from the sky with an infrared camera or several cameras with other electronic warfare equipment on board, that can do so much more than a security guard walking around. We analyze through our own software that data, and that could be a lot of data generated, and then fast do a fast respond.

That would be again by by human teams. In the end, we would, we would be an addition to the, existing services in the market.

If we look into the, next slide, we can we can, see how we, did in the in the second quarter. Maybe want to move to the to the, next slide.

The the key, achievements during the second quarter was the, the basis of the of the market growth. The the defense expenditures again have been going up dramatically, and that is that is really driving those markets.

The the the market is asking for European products, there is a huge imbalance of of, demand from the market and also the the offerings of companies that are available. We have launched the X8 Pro in Q2, coming from 3 kilos to 7 kilos, flying for 2.5 hours is a massive achievement.

That has been actually done by a lot of intelligence, using new propulsion, using new electronics, improving the software. We were able now to to, offer multiple sensors.

Now we can fly with several sensors at the same time and process the data already within the drone and provide actionable data down to the to the, to the, to the pilot. They have actually actionable intelligence, real time.

That they These are the achievements after the the the first quarter that was, mainly, driven by the by the listing. This is really the first quarter, the second quarter is the first quarter that we have a standalone, new, listed, company.

So, we have I think we are also quite proud that we've been able to onboard, more, integrators. We're now contracted and and our pilots are flying at the moment, while we speak, at the Black Sea for for clients in in that region.

It's one of the largest European integrator, that has assigned already two projects, to us that we are both delivering at the moment and that we believe, could could be very interesting for the future. So, we are also preparing now for a large, NATO exercise taking place in the Atlantic.

It's a four-week naval exercise in in Portugal, and we're sponsored by, several, NATO nations, and you can see the details in in today's news release that we just published. So, during those weeks we will be actually at at, four different and in week of 38 we will be at four different exercises at the same time.

This is This is really the the highlights that we are working on. So, yeah, I think the the highlights is is really the commercial validation.

We're now working a lot more with, with our clients also on the on the commercial side, we've sold, a system to, to Copperbelt, which was which was about half a million. We have got caught caught quite some attention in in a public, demonstration where about 100 attendees, politicians, clients, we were in several, TV channels, newspapers, and so on.

We have We are working quite close with Spectrem Drone, the Canadian service provider doing methane gas, detection. They're detecting at the moment with our drone a pipeline, going all the way from Canada, from Alberta, down to the refineries in Houston.

There's quite heavy, activity with our drone here, and and it's so far it's working, flawlessly. That client Copperbelt I mentioned earlier, we've got full beyond visual line of sight approval.

I think that's the fourth or fifth, BVLOS approval that we've achieved or that our clients have achieved already. Now they're able and and allowed to fly 50-kilometer-long power line stretches all across the, the, jungle and mountainous areas that are hardly accessible, in in Zambia.

As mentioned, the the X8 Pro upgrade, it's a it's a huge improvement, and it's The one thing is that we can carry more. The other thing is that we can carry the same, but have a lot of, spare power.

Particularly when we're flying for for naval clients, even if we just have 3 kilos or 4 kilos on board, we've got a lot of contingency power to take off and land in, strong wind conditions, sea states, and and others. We're also making advances on the X12 development.

We have a, German integrator of a of a 12-kilo, directional finder that is heavily pushing us to develop that system, because, the X8 is is not capable of carrying 12 kilos for for a reasonable time. It could carry it, it it did carry it, but only very short.

The X12 will be able to carry 20 kilo for a 3-hour period. We're using, a European-made engine for that, the the engine, that we're using for the X8 at this point of time is actually coming from the US.

There are there are demands from from NATO clients to even limit, the supply from the from North America. That is also one reason why we're pushing to to get the engine from, from from the US.

We've expanded quite a lot, we've hired new people, primarily on the on the technical side. We've also hired a chief commercial officer recently, and just, very shortly after we hired him, we had to experience that we do not agree on the on the, on the strategy in sales, we decided to make a quick decision and to bring that to an end.

So, we we have gained some of some some contacts that we are very glad of, that we are continuing, but we're not doing that with the with the CCO, anymore. So, and that you've you've probably seen that we've, taken him off the, off the website already.

The outlook is really we want to expand. We are looking for the large contracts in defense, and that is why the revenue can be very volatile.

It can be very low in one quarter, and it can be very high in the next quarter. That may continue for another few quarters in the in the future because our our main goal is not is not to get, the the small contracts.

Our goal is to work with the large integrators because we know that number one is that they can bring us to the clients for the very big contracts. The large integrators are not interested in in small contracts, they are hunting for the very big, and we want to be part of that.

That comes along with small contracts to to get to know each other, to to test things, just as we are doing now, and and you will read more about that in the in the future. We can we can actually, offer an integrated solution together with these, integrators.

We consider our drone and this the electronic warfare or the commercial payload, and the software as a solution. However, from a client perspective, a drone is always just a part of a surveillance system that is accompanied by by, ground support, by vehicles, by a much larger, surveillance system.

So, the the, we will looking to see some more traction at REPMUS. That's the next big, step that will, start actually in the coming days and will end on, September 25.

We have an EGM scheduled for September 17 to vote on the Articles of Association. And, the the priorities really is to convert the existing strong pipeline that you've seen the in the sales update into sales, to execute that and deliver successfully, and expand the the partnerships.

We have strong partners, but we will hopefully add more in the in the future, we can industrialize that and and scale, in the future. So, that's really what what we are, looking into.

Maybe I can hand over to Jörgen, CFO of XER Technologies, to comment on the on the financials of Q2, or H1.

Thanks, Erik. I suppose most of you have already seen the figures, but I think we should highlight that the revenue is SEK 6 million for the first half year, which is much more than last year's same period.

Looking at Q2, the revenue that we did have in Q2 was mostly for projects we did with clients, and sometimes clients want to test things or extended demonstration, and we are able to invoice for that. I'd say also that if you look at other external costs for Q2, and compare it to the first half year, we have to first realize that SEK 14.3 million is more of an accounting cost related to the reverse takeover, a non-cash accounting effect.

Then if you look at Q2, it's more in line with what we feel is the normal run rate, of course, that we have. Staff costs also a little bit affected by one-offs.

I would say if you're looking for a run rate, it's a few million less than the first half year total. Yeah.

That gives us a net result of minus 37.8 million. I'd say that a lot of that is affected by the reverse takeover.

Q2 is more of a real sort of quarter than the half-year result. If we look at the cash flow, we can say that, of course, we have a positive cash flow for the period half year, but that is, of course, because we did a share issue in conjunction with the reverse takeover.

That was cash. We took in 36 million roughly, and then, of course, we also acquired about 15 million.

That was the remaining cash in the companies we did the reverse takeover with. I'd say that, of course, the real cash flow is not positive 27.

If you look at the operating activities, we have minus 18 million then for the first half year. We hope to improve this, of course, but mainly with revenues, of course.

Right, Erik, I think it's time for the Q&A session.

Sure. If there are questions, please go ahead.

Perfect. Thank you for that presentation.

Really interesting. We now open up for a short Q&A session.

As mentioned earlier, if you have any questions, please submit them via the form found to the right of the broadcast. We can begin with the first question, which is that operating costs more than doubled to SEK 47 million for the half year.

How much of that is one-off tied to the reverse takeover and listing, and what's the underlying monthly cost base going forward?

I'd say that, like I said, we have already a little bit more than 14 million in accounting costs, I'd say that if you look at Q2, that's more of a real sort of run rate that we have. I think it's difficult to say what is the real run rate because we are also building a few drones because we need drones ourselves as well to use for demonstrations and so on, to participate and also for projects that we do, that we don't sell.

It's a difference if we don't build anything, and if we build anything. There's really no real burn rate per se.

I'd say a naked burn rate, I don't know, Erik, maybe 12 million, 13 million per quarter is a good gauge.

Yeah.

Without any revenue, of course.

We are currently building up 10 drones, and we've purchased most of the materials for that, and that has an impact on the financials of the Q2 because some of these components have half year delivery time. We've received some of the components that are building now.

In the expectations, of course, that we will sell them.

Yes, thank you for that.

I just want to add as well that, of course, we still have some development costs that we capitalize. I think the burn rate is maybe at least a little bit more true than what the actual operating cost is from an accounting perspective.

That's why I talk about the cash more than the operating cost per se.

Yes. Let's see.

The next question is regarding the potential 230 million, the mining package in North America, do you currently have the production capacity to deliver that order if it materializes, and would it require a production ramp-up? If a ramp-up is needed, what would the approximate cost and timeline be?

A large portion of the volume of that is actually also payload that we purchase and also that the delivery is going into several milestones within two years. Yes, we do have the capacity to produce all of that in house.

We would have to obviously purchase the material to build the drones and to purchase the third-party payload and software. Bear in mind that we ask at these kind of contracts for 50% payment at signing of the contract, which typically covers all of these costs.

Yes, thank you for that. More broadly, look at the pipeline and expected growth over the coming years, do you see a need to scale production capacity regardless, and how do you plan to finance any such expansion?

The expansion of the production would work that we have suppliers abroad, and who would produce actually pre-assemblies. We would still have the final assembly here in Switzerland that does not take too much time.

Once we've got the subassemblies, the engine system, the cable harness, the electronics, the PCBs, and so on, the assembly here in Switzerland would not require much expansion. If so, we could do that relatively easy, even in the same building.

We do not see any challenges here. It is more about building up the most economic portfolio of sub-suppliers who can produce these subassemblies.

One of these subassembly provider is in Italy who is doing at quite low cost and good quality.

Also I think to build the sourcing to match the scale.

Yeah.

The vendors will align with our needs.

Yeah. In the defense space, what is expected is that countries ask assembly in their own countries.

If Spain, for instance, is ordering 20 drones, they will expect the final assembly within Spain. That is something that we've prepared in our production process all the steps for, that we can actually relocate the final assembly into those countries.

That is what we're doing at the moment for our drone as well that is going into a conflict zone in Eastern Europe. That is actually not manufactured in Switzerland for that reason and for export restrictions from Switzerland.

We have experience in that.

Yes. The X12 program has now started testing a European-made dual-use engine.

How dependent is the X8 Pro today on non-European components, and how important is a fully European supply chain for tenders you're in?

I think that's a very important question. I think the critical thing is that no component where information is processed must be from non-European.

You've probably seen, I think it was last week, where the UK Armed Forces found out that some of their drone EO/IR systems were passing on information to China directly. This is because some of the components of a camera were from a Chinese manufacturer.

This is highly sensitive subject. The other components are less restrictive.

For instance, the electric motors. This is more a question of the security of the supply chain where then a dual sourcing from Europe is required, but armed forces are not asking for a European electric motor at this point of time.

To come back to the question, from the components, between 5% and [10%?] of the component cost is non-European at this point of time.

Yes, thank you for that. You appointed a chief commercial officer on April the 1st and parted ways in Q3 over a lack of alignment with commercial strategy.

Can we go a little bit in depth about that disagreement and who owns the sales today?

Okay. Salespeople are sometimes wild people, and I think you want wild people as salespeople.

Sometimes this can go too far, and we've therefore decided after very short period of time to terminate the agreement and do the sales as we did before David Hänchell the CCO was around. The sale is currently under the responsibility from Gökmen Çetin, who did that before over years, and he is supported by several other individuals from our company who are doing that as a part of their assignment.

Are we looking into additional salespeople? Yes.

I will take it slow. I will work with people that I do know and have experience with, and I do trust in the future going forward.

It may take time until we have a new sales staff on board. What we're looking more for is we're trying to convert the existing leads into revenue.

That's our main goal for the moment. Having a business development manager is not the most important thing for us.

It is to have an experienced salesperson, and that is what we have with Gökmen. We've hired recently another person for sales and marketing who seems to be very very good and very successful, and we've just upgraded him for the 1st of September.

Thank you for that. Now for the final question.

You're calling an Extraordinary General Meeting to amend the Articles of Association, and you mention evaluating whether to apply your defense and EW expertise to protecting commercial infrastructure. Are the two connected, and does broadening the business risk pulling focus away from the defense pipeline?

We want to continue with the current setup of XER with the products, the clients, with the projects for use cases as it is. There should not be any change on that.

What we're looking into is leveraging our know-how and our technology into the security market because we truly believe that there is an opportunity for a game-changing company. Somebody will do it, and it's a question of who and when.

We definitely do not want to take any focus away from XER at this point of time.

Yes, perfect. That was the last question for today.

With that, we wrap up the broadcast. A big thank you to Erik and Jörgen for the presentation, and thank you to everyone who submitted questions and followed along.

Now we'll finish off with Erik having some closing words.

Thank you very much for your trust and your interest in our company. I think it is highly interesting because we're in an extremely fast-growing market which is defense.

We are in the drone sphere that is a hotbed of purchasing at this point of time. We have the product, it's proven, it is working, and we have the clients that we are working with, more than a dozen.

Now it's all about scaling, and we need some time for that. I'm looking forward together with you as investors to take that journey.

Thank you very much.