Interim Report Image Systems AB January - September 2026

Completed rights issue strengthens liquidity reserves
The third quarter was characterized by continued cautious investment appetite and lengthy decision-making processes, primarily within RemaSawco. As a result, the Group’s net sales and earnings declined year-on-year. Motion Analysis, however, increased both net sales and profitability, and its growing order backlog for subscription and support services strengthens the base for future recurring revenue.

Low net sales continued to weaken liquidity. A rights issue was therefore completed during the quarter, raising approximately MSEK 21.4 before issue costs. The issue strengthens the Group’s short-term liquidity reserves and will primarily finance ongoing and planned development projects within RemaSawco, improving its ability to capture business opportunities when the market recovers. Retaining expertise, development capacity, delivery capability and customer satisfaction is essential.

Operating cash flow remained negative during the quarter. The focus is on cost control, improved cash flow and greater profitability, while priority development initiatives continue.

CEO’s comments
Jan Molin – CEO and President

Continued focus on profitability and cash flow
Our customers remained cautious in the third quarter, although performance differed markedly between the Group’s two business units. Group order intake was MSEK 30.8 (34.2) and net sales were MSEK 25.5 (41.4). Low sales within RemaSawco weighed on Group earnings, while Motion Analysis increased both net sales and profitability. Group profitability remains weak, requiring sustained focus to reverse the trend and improve cash flow.

Continued weakness in the sawmill market requires adjustments within RemaSawco
RemaSawco’s customers continue to operate in a challenging market. Weak construction activity in Europe and high raw material prices relative to sawn timber prices constrain sawmill profitability and investment capacity. Order intake was slightly below the same quarter last year, while net sales declined significantly.

The efficiency programme implemented in the second quarter, including workforce reductions, is expected to take full effect from the fourth quarter of 2026. The adjustment aims to reduce costs while retaining our ability to develop and deliver solutions that strengthen customers’ competitiveness.

Sawmills’ need to extract more value from raw materials is central to our offering. Product development therefore continues, with a focus on areas including our modular 3D and X-ray scanner, automated log measurement and quality grading.

Motion Analysis strengthens revenue and profitability
Motion Analysis continued to perform positively during the quarter, despite lengthy customer decision-making processes. Net sales increased to MSEK 12.6 (9.0) and earnings improved. Although order intake was slightly lower year-on-year, the order backlog for subscription and support services increased to MSEK 49.8 (38.7). This supports our strategy of building a larger base of recurring revenue.

A new software version focused on the aerospace industry was launched during the quarter. Working closely with customers, we develop functions that simplify analysis and streamline workflows. Together with a higher proportion of direct sales in priority markets, this supports continued growth and improved profitability.

Completed rights issue strengthens short-term liquidity reserves
A rights issue completed during the quarter raised approximately MSEK 21.4 before issue costs. The issue was oversubscribed, and I would like to thank our shareholders for their confidence.

The capital injection strengthens the Group’s short-term liquidity reserves. The proceeds will primarily finance ongoing and planned development projects within RemaSawco and improve our ability to meet customers’ investment needs when the sawmill market recovers.

At quarter-end, the Group’s available cash and cash equivalents, including undrawn overdraft facilities, totalled MSEK 30. Operating cash flow remained negative. We therefore monitor developments closely and prioritize cost control and improved cash flow. We have strong offerings in our respective markets, and the Group’s focus is to translate both companies’ strengths into better earnings and cash flow. A carefully balanced approach to development is the best way to achieve this.

THE GROUP’S DEVELOPMENT IN THE THIRD QUARTER

Order intake, net sales and profit

Order intake amounted to MSEK 30.8 (34.2). Order backlog as of September 30, 2026, amounted to MSEK 76.5 (77.4).

Net sales amounted to MSEK 25.5 (41.4).

Gross margin amounted to 81 (71) percent.

EBITDA amounted to MSEK -0.1 (7.1).

Other external charges increased year-on-year, mainly due to higher consultancy costs. Personnel costs decreased compared with the same period last year, reflecting a reduction in the number of employees.

Depreciation/amortization amounted to MSEK –7.3 (-6.2). During the year, amortization of several development projects commenced upon commercial launch.

Net financial items amounted to MSEK -0.5 (-0.3), with the change attributable to external financing.

Profit after tax amounted to MSEK -7.8 (0.7).

Financial position, investments and cash flow

The Group’s investments in non-current assets during the quarter totalled MSEK 4.2 (3.5), of which
MSEK 3.8 (2.5) related to capitalized development projects. Development projects are capitalized in both business units.

Operating cash flow during the quarter amounted to MSEK -10.4 (7.3). Solidity as of September 30, 2026, was 47 (58) percent. The debt/equity ratio was 0.2 (0.0) times.

Net debt as of September 30, 2026, amounted to MSEK 21.7 (3.0), primarily due to increased borrowings.

Available cash and cash equivalents, including undrawn overdraft facilities, amounted to MSEK 30.0 (27.9) as of September 30, 2026.

Rights issue

During the third quarter, Image Systems completed a share issue with preferential rights for existing shareholders. The issue was resolved by the Board on July 17, 2026, and approved by an Extraordinary General Meeting on August 12, 2026.

The subscription price was SEK 0.60 per share. The issue was subscribed to approximately 122 percent and raised approximately MSEK 21.4 before issue costs. The rights issue increased the number of shares and votes by 35 683 127. As of September 30, 2026, the total number of shares and votes in Image Systems was 124 890 945.

The issue aimed to strengthen the Group’s short-term liquidity reserves and enable continued development initiatives within RemaSawco. The proceeds are primarily intended to finance ongoing and planned development projects and improve the ability to capture business opportunities when the sawmill market recovers.

THE GROUP’S DEVELOPMENT DURING THE INTERIM PERIOD

Order intake amounted to MSEK 76.8 (91.9). Order backlog as of September 30, 2026, amounted to MSEK 76.5 (77.4).

Net sales amounted to MSEK 73.2 (129.9). Capitalized development expenditure amounted to MSEK 11.8 (8.1) and relates to both business units.

Gross margin amounted to 82 (68) percent.

EBITDA amounted to MSEK -8.0 (12.6). The decline in earnings was mainly attributable to low order intake and net sales within the RemaSawco business unit.

Depreciation/amortization amounted to MSEK –21.3 (-17.8). During the year, amortization of several development projects commenced upon commercial launch. Net financial items amounted to MSEK -1.6 (-0.5), with the change attributable to external financing.

Profit after tax amounted to MSEK -30.5 (-5.3).

ROLLING 12-MONTH ORDER INTAKE, REVENUE AND EBITDA
The Group’s rolling 12-month EBITDA margin in the third quarter was -10.0 percent. The Group’s long-term target of consistently delivering a 15 percent EBITDA margin requires growth in net sales. The pace of Motion Analysis’s transition to a business model with a higher proportion of subscription and support agreements may also affect how quickly this long-term target is reached.

BUSINESS UNIT: REMASAWCO
RemaSawco provides solutions to optimize production in the sawmill industry. Its product portfolio includes proprietary software that uses laser, 3D scanning, X-ray and automation to measure and analyze logs and boards throughout the sawmill process, maximizing value recovery, minimizing waste and increasing customer profitability.

Performance during the period
Market conditions remained challenging for Swedish sawmills in the third quarter. Weak construction activity in Europe held back demand for sawn timber, while high raw material prices relative to selling prices continued to squeeze profitability. Several sawmills announced production cuts and structural adjustments. Lower production can improve the balance between supply and demand, but no broad recovery in demand is yet evident. Overall, the market remained uncertain, with a clear focus on cost efficiency and better use of raw materials. Despite this, we are seeing some emerging optimism in meetings with customers, offering some hope of an approaching turnaround.

Order intake declined slightly year-on-year to MSEK 16.8 (18.3), as sawmills’ investment appetite remained low. Net sales fell to MSEK 12.9 (32.4) and EBITDA to MSEK -3.6 (7.4), corresponding to a margin of -25.2 (22.2) percent. The efficiency programme, including workforce reductions, implemented in the previous quarter is expected to take full effect from the fourth quarter of 2026.

Product development
In the weak economic environment, product development that improves customer efficiency and profitability is prioritized. Development of the new 3D and X-ray scanner, automated log quality grading and hardware platform standardization continued during the quarter. We continue to integrate AI into products and internal processes to increase customer value, streamline development and reduce time to market.

BUSINESS UNIT: MOTION ANALYSIS
Motion Analysis Systems offers software for the analysis of high-speed film and is the world leader in this niche. The software is sold under the product names TEMA and TrackEyeⓇ.

Performance during the period
Despite current market conditions, with longer customer decision-making processes and challenges in certain geographic markets, Motion Analysis performed satisfactorily during the quarter. Order intake declined slightly to MSEK 14.0 (15.9), while net sales increased to MSEK 12.6 (9.0) and EBITDA rose to MSEK 4.8 (0.6), corresponding to a margin of 32.4 (5.7) percent. The order backlog for subscription services continued to grow to MSEK 49.8 (38.7). Overall, the strategy of transitioning to a subscription-based business model has proved successful.

The business unit continued to invest in sales and marketing activities to drive additional sales and increase the proportion of direct sales in our key markets.

The new software solution is a strategically important part of the business unit’s growth agenda. Work is underway to help customers accelerate their adoption and make the most of the solution. Together with a higher share of subscription revenue and a stronger presence in priority markets, this is expected to be a significant driver of future growth and improved profitability.

Product development
During the quarter, another software release was launched, this time focused on the aerospace industry. It builds on rigid body analysis and advanced multi-camera analysis. Closer work with customers has provided insights that have led to a greater focus on automation and more efficient workflows. Several initiatives are also underway to add further AI-based functionality to the solution.

OTHER INFORMATION

Parent Company
The Parent Company’s revenue for the third quarter was MSEK 0.7 (1.5). Operating profit was
MSEK -1.9 (-0.9), and profit after tax was MSEK -1.9 (-0.9). Investments in non-current assets were MSEK 0.0 (0.0). Available cash and cash equivalents as of September 30, 2026, were MSEK 11.3 (0.2). Parent Company equity as of September 30, 2026, was MSEK 132.4 (112.7), and solidity was 98 (98) percent.

Significant events after the period
No significant events to report.

Personnel
The average number of employees during the quarter was 72 (74). The number of employees at the end of the period was 74.

Shares and share capital
The rights issue increased the number of shares and votes by 35 683 127 to 124 890 945 as of September 30, 2026. Share capital increased by SEK 3 568 312.70 to SEK 12 489 094.50.

Accounting policies
Image Systems applies International Financial Reporting Standards (IFRS) as adopted by the EU. The Group’s interim report is prepared in accordance with IAS 34 Interim Financial Reporting and the Swedish Annual Accounts Act. Disclosures under IAS 34 Interim Financial Reporting are provided in the notes and elsewhere in the interim report.

The interim report for the Parent Company, Image Systems AB, is prepared in accordance with the Swedish Annual Accounts Act and the Swedish Financial Reporting Board’s recommendation RFR 2 Accounting for Legal Entities.

Image Systems applies the ESMA (European Securities and Markets Authority) Guidelines on Alternative Performance Measures. Definitions of indicators are provided on page 16 and relevant reconciliations on page 15.

Risks and uncertainties
The Group’s significant risks and uncertainties include business risks related to agreements with customers and suppliers, and other external factors such as exchange rate movements. The Group’s significant financial and business risks are described in the management report and Note 3 of the 2025 Annual Report. No significant new or changed risks or uncertainties were identified during the quarter.

This interim report has been reviewed by the Company’s auditors.

Financial Calendar

Long-term financial objectives
Image Systems aims to create long-term value growth for its shareholders. To achieve this, the Board of Directors has set long-term financial objectives:

EBITDA >15%

Solidity >50%

Dividend 20% of profit after tax

The Board of Directors and the Chief Executive Officer confirm that the interim report provides a true and fair overview of the Parent Company’s and the Group’s operations, financial position and performance, and describes the material risks and uncertainties facing the Parent Company and the companies included in the Group.

Linköping, October 23, 2026

Financial reports are available on the Company’s website http://www.imagesystemsgroup.se

Questions will be answered by:

Jan Molin, CEO and President

telephone +46 (0)13-200 100, e-mail jan.molin@imagesystems.se

Image Systems AB, Snickaregatan 40, 582 26 Linköping, Sweden. Corporate registration number 556319–4041

DISCLAIMER
This document is an unofficial translation. In the event of any conflict in interpretation between the English and the original Swedish version, the Swedish version shall take precedence and be considered the authoritative text.