Nexstim : Financial Document

Table of Contents

NEXSTIM GROUP CONSOLIDATED FINANCIAL STATEMENTS

1. Income Statement
2. Balance Sheet
3. Cash Flow Statement
4. Notes to the Consolidated Financial Statements

PARENT COMPANY FINANCIAL

STATEMENTS

1. Income Statement
2. Balance Sheet
3. Cash Flow Statement
4. Notes to the Parent Company Financial Statements

34 Auditor's Report

BOARD OF DIRECTORS AND

MANAGEMENT TEAM

1. Board of Directors
2. Management Team

General Description of the Company

Founded in Finland in 2000, Nexstim is a growth-oriented medical technology company operating in the international market. Nexstim has developed a world-leadingnon-invasive brain stimulation technology for navigated transcranial magnetic stimulation (nTMS) with highly sophisticated 3D navigation providing accurate and personalized targeting of the TMS to the specific area of the brain. Nexstim has subsidiaries in the United States (Nexstim, Inc.) and in Germany (Nexstim Germany GmbH).

Key Figures of 2023

G R O W T H O F C O M P A R A B L E

N E T S A L E SN E T S A L E S

EUR 7.2 M 20.9%

Key Events of 2023

• Improving cost-efficiency through a new global team structure
• Launching the NBS 6 system in the European and United States markets
• Progress in expanding network of partnership clinics
• Best second half of the year result in the history of the company (EUR 4.7 M, 2022: EUR 2.7 M)

Our mission  

We enable personalized and effective diagnostics and therapies for challenging brain diseases and disorders.

Our innovations create a possibility for a better life.

Our vision  

With our technological know-how and superior services,

• we ensure the best treatments for our patients,
• deliver the greatest value for our customer hospitals, clinics, and business partners,
• and long-term growth in shareholder value for our investors.

Our values 

• Science and clinical evidence
• Financial success
• Passion and commitment
• Ethics and responsibility

CEO's Review

Focusing on Competitive Advantage

In 2023, Nexstim focused on profitable growth of net sales,

the launch of a new product, as well as expanding its network of partner clinics.

In line with our strategy to the end of 2024, Nexstim

will continue to provide patients with personalized and effective treatment and diagnostics for severe brain diseases and disorders."

Mikko Karvinen

CEO

STRATEGIC FOCUS ON GROWTH AND PROFITABILITY

In line with our main strategic objective, we have continued to focus on profitable revenue growth, and we were on track for the full year. To our disappointment we did not achieve our target of a positive EBITDA for the full fiscal year 2023, with a loss of EUR -0.5 (2022: 1.3) million. To ensure a positive profitability trend, during the first half of 2023 we conducted change negotiations in the company as part of the transition to a global team organization, which will in future serve Nexstim's customers better and more efficiently and deliver long-term shareholder value growth. The therapeutic application areas we have chosen (MDD, major depression and chronic pain) are indications where our unique technology is already delivering clear clinical results and contributing to the profitability of our customers' operations. We are also continuing discussions on new strategic partnerships to further scale the use of our technology in care.

Our other main strategic objective for 2023 was the launch of the new NBS 6 system, enabling easy-to-use hardware and future

add-on modules in the same hardware. The development and launch of the new product generation are an essential part of Nexstim's strategy for the 2020-2024 period. The first NBS 6 systems were successfully delivered to customers in the US in late 2023, and we will continue to develop the product during 2024, with the strategic goal of also launching diagnostic applications as part of the new NBS 6 system.

Our third main strategic objective for 2023 was to expand the network of Nexstim exclusive partner clinics, primarily in the US and Europe. This would involve installing Nexstim systems in neuroscience clinics, following our renewed strategy and working primarily with our partners. The new partnerships will focus on strategic investments in service organizations, particularly in the broad US market. We were pleased to announce a second strategic partnership late in the year with Dr. Nadkarni's clinic in New Jersey, USA. We are currently in collaborative discussions with potential partner clinics in the US and are working hard to attract new partner clinics to grow our network.

Nexstim has successfully expanded its global distribution partner network over the

past few years … The technological leadership of our products, their ease of use and the scalability of additional modules create an attractive platform

for growth through partnerships."

Mikko Karvinen

CEO

RECORD-BREAKING SECOND HALF OF THE YEAR

The end of 2023 was record-breaking for Nexstim in terms of net sales and operating result. In the second half of 2023, we achieved total net sales of EUR 4.7 (2022: 2.7) million with an increase of 73.5%. This growth was driven, in particular, by system sales of EUR 2.3 (2022: 0.7) million in the Diagnostics business, with a staggering 230.7% growth year-on-year. With this strong growth, we also achieved a profitable second half for the first time, with an operating result of EUR 0.2 (2022: -1.5) million and a net profit of EUR 0.1 (-1.9) million.

During the second half of 2023, we continued to focus on projects important to the company's strategic competitive advantage, such as enabling the company's future growth and improving cost efficiency through our new global team structures. We also received the first system orders and deliveries for our new NBS 6 in the US market, demonstrating the strong competitiveness of our system in the world's largest market. I would like to thank Nexstim's customers, employees, partners, and investors for making this record-breaking end of the year possible.

PLANNING THE NEW STRATEGY PERIOD

In line with our strategy to the end of 2024, Nexstim will continue to provide patients with personalized and effective treatment and diagnostics for severe brain diseases and disorders. We have already started the process of updating our strategy and we will share more about this as we move forward, but I believe that our strategy will continue to build on strong growth in both diagnostics and therapy. The growth and profitability performance of both our Diagnostics and Therapy businesses will play a key role in our efforts to minimize our future capital requirements on our journey towards continued profitability.

Nexstim has successfully expanded its global distribution partner network over the past few years, and we believe that further significant growth, particularly in the Diagnostics business, can be achieved through increasingly broad marketing and distribution partnerships. Through such strategic distribution partnerships, it is possible to cost-effectively reach an increasing number of customers with information about Nexstim's systems and services, as well as potential

representation in markets where it would not be as quickly and economically feasible to build on its own. The technological leadership of our products, their ease of use and the scalability of additional modules create an attractive platform for growth through partnerships.

Letter from the Chair

Final Strech of the Strategy Period

Dr. Leena Niemistö has been Nexstim's Chair of the Board of Directors since 2019.

With extensive experience of the healthcare industry and corporate management, her personal mission is to help Finnish healthtech companies to develop precise and cost-effective diagnostic and treatment methods for patients suffering from chronic disorders.

Nexstim's Board of Directors continues its work with great enthusiasm

also in 2024, emphasizing close cooperation with management. Preparations for the new strategy period starting in 2025 will be an essential part of our work towards

an even better future of Nexstim."

Dr. Leena Niemistö

"Nexstim is in a good place for the final year of the current strategy period after being able to strengthen its position in all business areas in the past years. In 2023, Nexstim made progress in expanding the network of Nexstim exclusive clinics and succeeded at its usual system and service sales. Nexstim's reinforced position in these areas, combined with cost efficiency, brings stability and increases shareholder value. In 2024, the company's strategy relies on financial success and the ongoing commercialization of the NBS 6 system.

Nexstim's unique technology is what sparks interest in the company for many. The NBS 6 system, launched in 2023, brings a new dimension to the usability of Nexstim's clinically established technology. The product reflects the company's vision by creating value for patients, customers, and shareholders.

Product development is a long-term effort and an important topic from a strategic perspective. It is essential for Nexstim to follow TMS research, and we constantly estimate the potential of possible new indications as well as other development opportunities of the technology platform.

Nexstim's Board of Directors continues its work with great enthusiasm also in 2024, emphasizing close cooperation with management. Preparations for the new strategy period that starts in 2025 will be an essential part of our work towards an even better future of Nexstim."

C O M P A R A B L E

G R O S S M A R G I N

EUR 3.1 M

C O M P A R A B L E

G R O S S M A R G I N

EUR 4.7M

C O M P A R A B L E

G R O S S M A R G I N EUR 4.4 M

2023 C O M P A R A B L E

N E T S A L E S

EUR 7.2 M

C O M P A R A B L E

G R O S S M A R G I N

EUR 5.6 M

There has been a considerable change in profitability in the past years, and the company is positioned well to continue its work from the point of view of both financials and strategic competitive advantage. Nexstim's current strategy period that started in 2020 will end in 2024.

• The net sales and gross margin for the period 2022 have been adjusted for the license fee (approx. EUR 3.5 million) for the technology license agreement with Magnus Medical and for the period 2021 for the margin (approx. EUR 0.8 million) from the development of two prototype systems.

As a result of persistent work, Nexstim has succeeded at creating stable Diagnostics and Therapy businesses in

a challenging and highly regulated field.

2024 KEY STRATEGIC OBJECTIVES

• 1. Profitable growth: to increase comparable net sales and improve operating result for the financial year, while minimizing future capital needs.
• 2. Technology leadership: launch of the new NBS 6 diagnostics product, enabling easy-to-use systems and future add-on modules in the same hardware.
• 3. Strategic partnerships: expanding Nexstim's network of partners and clinics, primarily in the US and Europe.

Technology and Business Areas

Over 230 diagnostics systems and over 80 systems that include therapy functionalities have been delivered to

TECHNOLOGY

• Transcranial magnetic stimulation (TMS) is a non- invasive neuromodulation technique whereby pulses of electromagnetic fields target and interact with specific brain regions from outside the head.
• Nexstim's navigated TMS technology uses sophisticated navigation tools and 3D modelling which enables it to consider the unique shape and conductivity of each patient's brain. It uses this information to determine the location and orientation of the maximum induced E-field in the brain. Based on this, the system user can give the stimulation to the intended spot with accuracy in the millimeter range.
• In addition, the advanced algorithms of Nexstim's nTMS technology enable the stimulation dose to be quickly and accurately determined for each patient using their own neurophysiological readings.

Diagnostics

Business

One of the most crucial pieces of information needed for neurosurgery is the tumor's or other brain lesion's location in relation to the essential functions and their connections in the patient's brain. nTMS mapping with Nexstim's system is used when the tumor is thought to be close to important motor and language areas in the patient's brain. These brain maps are useful when deciding the treatment option.

Key authority approvals (NBS System 5):

• FDA-approvedfor presurgical mapping of the speech and motor cortices of the brain
• CE-markedfor presurgical mapping of the speech and motor cortices of the brain

Therapy

Business

If pharmaceuticals are not working or a non-drug option is wanted, nTMS conducted with Nexstim's system might be the answer for treatment of major depressive disorder or for chronic neuropathic pain.

Key authority approvals

(NBT® System 2 and NBS System 6):

• FDA-approvedfor the treatment of major depressive disorder (MDD)
• CE-markedfor the treatment of major depressive disorder (MDD) and chronic unilateral neuropathic pain

facilities worldwide for neuro­ surgical planning, multiple therapies, and research.

Customers have the possibility of acquiring a system that has either diagnostic or therapy functionalities, or a system combination that enables the delivery of both diagnostic and therapeutic applications in the same system.