The Board of Directors of DUG Foodtech has resolved on a directed set-off issue of approximately SEK 7 million

8 November, 2024, Lund, Sweden

The Board of Directors of DUG Foodtech AB (publ) (“DUG Foodtech” or the “Company”) has today, November 8, by virtue of authorization granted by the extraordinary general meeting on October 15, 2024, resolved on a directed set-off issue of 20,595,384 shares at a subscription price of SEK 0.34 per share (the “Set-Off Issue”). Of the issued shares, 19,536,561 shares are directed to lenders and 1,058,823 shares to a guarantor in the recently completed rights issue, for which the Company announced the outcome on November 6 (the “Rights Issue”). Payment will be made through set-off against the Company’s debt, consisting of the respective loan amounts of the lenders totaling approximately SEK 6.6 million, and the guarantor’s claim for guarantee compensation of SEK 0.36 million. The subscription price in the Set-Off Issue corresponds to the subscription price in the Rights Issue. The purpose of the Set-Off Issue, and the reason for deviating from shareholders’ preferential rights, is to strengthen the Company’s balance sheet by reducing DUG Foodtech’s debt with the goal of making the Company debt-free, as well as to fulfill the Company’s obligations to the guarantor in accordance with the guarantee commitment entered into in connection with the Rights Issue.

During 2023 and 2024, the Company has taken out loans from its major shareholders, board members, senior executives, and external investors totaling approximately SEK 16 million. The loans carried a monthly interest rate of 1.5 percent and, as of today, amount to approximately SEK 18.2 million. Through the Rights Issue, DUG Foodtech will raise approximately SEK 16.3 million before issuance costs of approximately SEK 3.6 million, after set-offs of around SEK 11.7 million. Of these costs, approximately SEK 1.4 million is attributable to guarantee compensation, and SEK 2.5 million to the repayment of remaining bridge loans. Of the set-offs of approximately SEK 11.7 million, SEK 11.2 million consists of the loans taken out in 2023 and 2024 as mentioned above. After the Set-Off Issue and the repayment of bridge loans upon receipt of proceeds from the Rights Issue, DUG Foodtech is intended to be debt-free.

Part of the Set-Off Issue is directed towards lenders who are also major shareholders (Kenneth Eriksson, Svarta Tornet Invest AB, and Anders Hättmark) and external investors (Birgitta Möllerström, Henric Blomsterberg, Kerstin Lindell, Martin Linde, Ironblock AB, and Torsion Invest AB), all of whom have a long-term commitment to DUG Foodtech. The reasons for deviating from the shareholders’ pre-emption rights are that the set-off of the lenders’ claims strengthens their long-term commitment to the Company, further strengthens the shareholder base, and improves the Company’s balance sheet with the aim of making the Company debt-free. In light of this, and the fact that repayment of the claims of approximately SEK 6.6 million with the proceeds within the framework of the Rights Issue would mean that the Company cannot carry out all activities to the same extent as the issue proceeds are allocated to, and since the Set-Off Issue has been carried out on terms advantageous to the Company and its shareholders, in a shorter time and at a significantly lower cost and discount than if the Company had carried out an additional rights issue, the Board of Directors considers that the set-off of the lenders’ claims within the framework of the Set-Off Issue is the most beneficial option for the Company and its shareholders.

In connection with the announcement of the Rights Issue, it was communicated that the Rights Issue was covered by bottom guarantee commitments of a total of approximately SEK 11.3 million. In accordance with the guarantee commitments entered into in connection with the Rights Issue, guarantors are entitled to guarantee compensation corresponding to fifteen (15) percent of the guaranteed amount in cash or eighteen (18) percent in shares. The Board of Directors has received a request for guarantee compensation in the form of shares from one guarantor (Mats-Ola Andersson) and has resolved that part of the Set-Off Issue will be directed to the guarantor by set-off of a claim on the Company of SEK 0.36 million. The reason for deviating from shareholders’ pre-emption rights is to fulfill the Company’s obligations to the guarantor under the guarantee commitment entered into in connection with the Rights Issue. Furthermore, the Board considers it beneficial for the Company’s financial position and in the interest of the shareholders to utilize the option to pay the guarantee compensation in shares rather than in cash, as it frees up funds that strengthen the Company’s working capital and allows the Company to use a larger portion of the issue proceeds from the Rights Issue in a manner described in the information memorandum published on October 21, 2024.

The Set-Off Issue comprises a maximum of 20,595,384 shares at a subscription price of SEK 0.34 per share, which corresponds to a premium of approximately 2,4 percent in relation to the closing price on Nasdaq First North Growth Market on November 8, 2024. The subscription price in the Set-Off Issue has been negotiated with the lenders at arm’s length and corresponds to the subscription price in the Rights Issue according to as agreed with the guarantors. The Board of Directors considers the subscription price to be market-based. Payment will be made through set-off of claims against the Company, consisting of the respective claims of existing shareholders, external investors, and the guarantor, as follows:

Through the Set-Off Issue and before the registration of the Rights Issue, the number of shares in the Company will increase by 20,595,384 shares, from 41,264,885 shares to 61,860,269 shares, and the share capital will increase by SEK 1,318,104.576, from SEK 2,640,952.64 to SEK 3,959,057.216. After the registration of the Rights Issue and the Set-Off Issue, the number of shares in the Company will amount to 144,390,039, and the share capital will amount to SEK 9,240,962.496. For existing shareholders who do not participate in the Set-Off Issue, this will result in a dilution effect of approximately 33.3 percent of votes and capital in the Company before the registration of the Rights Issue, and a dilution of approximately 14.3 percent after the registration of the Rights Issue.

This press release contains information that DUG Foodtech AB (publ) is obliged to make public pursuant to the EU Market Abuse Regulation (EU nr 596/2014). The information was submitted for publication, through the agency of the contact person, on 2024-11-08 at 22:15 CET.

For further information, please contact:

DUG Foodtech AB (publ)

Helene Nielsen, CEO

Phone: +46 732 22 76 35

E-mail: helene.nielsen@dugfoodtech.com

About DUG Foodtech AB (publ)

DUG Foodtech should be the natural choice for all actors in the transition to plant-based foods. The company’s business concept is to use its own patented methods, innovative solutions and know-how to develop and sell products that the market demands. Changes are required for the food industry to reach its set climate goals. The company is contributing by its investment in plant-based foods with a low climate footprint, raw materials that are easily grown and available, and health benefits for the end consumer. The company and its well-established partners in priority markets and channels provide the conditions to grow in a global market, valued at USD 100 billion. The share is listed on Nasdaq First North and is traded under the name DUG. Read more at ir.dugdrinks.com. Mangold Fondkommission AB is the company’s Certified Adviser and can be contacted by phone: +46 8 5030 15 50 or e-mail: ca@mangold.se.

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