Prospectus. Aqualis ASA

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1 Prospectus Aqualis ASA (A public limited liability company organised under the laws of Norway) Org.no Listing of New Shares, issued to the Aqualis Offshore Ltd shareholders as consideration for the Contribution in Kind Offering and listing of Offer Shares, each with a par value of NOK 1, at a subscription price of NOK 1.60 per Offer Share with tradable subscription rights for existing shareholders of Aqualis ASA as per the end of 8 October 2013 Offering of up to Employee Offer Shares at a subscription price of NOK 1.60 Subscription Period for the Offerings and trading in Subscription Rights: From and including 15 October 2013 to 29 October 2013 at 16:30 hours (CET) Manager: 11 October 2013

2 IMPORTANT INFORMATION Please refer to section 18 Definitions and Glossary of terms for definitions of terms used throughout this Prospectus, which also apply to the preceding pages. This Prospectus has been prepared in order to provide information about Aqualis ASA ( Aqualis or the Company ) and its business in relation to the listing of New Shares and offer and listing of Offer Shares, and to comply with the Norwegian Securities Trading Act of June 29, 2007 no. 75 (the Norwegian Securities Trading Act ) and related secondary legislation, including EC Commission Regulation (EC) no. 809/2004 implementing Directive 2003/71/EC (and amendments thereto, including the 2010 PD Amending Directive) regarding information contained in prospectuses (the Prospectus Directive ). This Prospectus has been prepared solely in the English language. Note that the Company s former name was Clavis Pharma ASA, and that the change of name was effective from 8 October For further information see section 9.1 in this Prospectus. The Company has furnished the information in this Prospectus. The Company has engaged Carnegie AS as manager ( Carnegie or the "Manager") for the Transaction and the Rights Issue. Neither the Company nor the Manager has authorised any other person to provide investors with any other information related to the Transaction and the Rights Issue and neither the Company or the Manager will assume any responsibility for any information other persons may provide. Unless otherwise indicated, the information contained herein is current as of the date hereof and the information is subject to change, completion and amendment without notice. In accordance with Section 7-15 of the Norwegian Securities Trading Act, every significant new factor, material mistake or inaccuracy that is capable of affecting the assessment of the Shares arising after the time of approval of this Prospectus and before the date of listing of the Offer Shares on Oslo Børs will be published and announced promptly as a supplement to this Prospectus. Neither the publication nor distribution of this Prospectus shall, however, under any circumstances create any implication that there has been no change in the Group s affairs since the date hereof or that the information herein is correct as of any time since its date. An investment in the Company involves inherent risks. Potential investors should carefully consider the risk factors set out in section 2 Risk Factors and the information set out in section 4 "Cautionary note regarding forward looking statements" in addition to the other information contained herein before making an investment decision. An investment in the Company is suitable only for investors who understand the risk factors associated with this type of investment and who can afford a loss of their entire investment. The contents of this Prospectus are not to be construed as legal, business or tax advice. Each prospective investor should consult with its own legal adviser, business adviser and tax adviser as to legal, business and tax advice. In the ordinary course of their respective businesses, the Manager and certain of their respective affiliates have engaged, and will continue to engage, in investment and commercial banking transactions with the Group. The Shares are subject to restrictions on transferability and resale and may not be transferred or resold except as permitted under applicable securities laws and regulations. Investors should be aware that they may be required to bear the financial risks of an investment in the Shares for an indefinite period of time. Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdiction. Without limiting the manner in which the Company may choose to make any public announcements, and subject to the Company s obligations under applicable law and regulations, announcements relating to the matters described in this Prospectus will be considered to have been made once they have been received by Oslo Børs and distributed through its information system. The distribution of this Prospectus and the offer and sale of the New Shares and Offer Shares in certain jurisdictions may be restricted by law. The Company and the Manager require persons in possession of this Prospectus, in possession of Subscription Rights or considering subscribing for Offer Shares to inform themselves about, and to observe, any such restrictions. This Prospectus does not constitute an offer of, or an invitation to subscribe or purchase, any of the Offer Shares in any jurisdiction in which such offer or subscription or purchase would be unlawful. No one has taken any action that would permit a public offering of the Shares, the Subscription Rights or the Offer Shares to occur outside of Norway. Furthermore, the restrictions and limitations listed and described herein are not exhaustive, and other restrictions and limitations in relation to the Transaction, Rights Issue and/or the Prospectus that are not known or identified by the Company and the Manager at the date of this Prospectus may apply in various jurisdictions as they relate to the Prospectus. For other selling and transfer restrictions, see section 17 Selling and Transfer Restrictions 2

3 TABLE OF CONTENTS 1. EXECUTIVE SUMMARY RISK FACTORS STATEMENT OF RESPONSIBILITY CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS THE TRANSACTION THE RIGHTS ISSUE PRESENTATION OF AQUALIS ASA PRESENTATION OF AQUALIS OFFSHORE THE GROUP FOLLOWING THE TRANSACTION FINANCIAL INFORMATION BOARD OF DIRECTORS, MANAGEMENT AND EMPLOYEES SHARE CAPITAL SHAREHOLDER MATTERS AND NORWEGIAN COMPANY AND SECURITIES LAW LEGAL MATTERS NORWEGIAN TAXATION ADDITIONAL INFORMATION SELLING AND TRANSFER RESTRICTIONS DEFINITIONS AND GLOSSARY OF TERMS APPENDICES Appendix A ARTICLES OF ASSOCIATION... Appendix B INTERIM FINANCIAL INFORMATION FOR AQUALIS OFFSHORE LTD FOR THE SIX MONTHS PERIOD ENDED 30 JUNE Appendix C FINANCIAL STATEMENTS FOR STANDARD ENGINEERING AS FOR THE YEAR ENDED 31 DECEMBER Appendix D SUBSCRIPTION FORM FOR THE RIGHTS ISSUE... Appendix E SUBSCRIPTION FORM FOR THE EMPLOYEE OFFERING... Appendix F INDEPENDENT ASSURANCE REPORT ON THE PRO FORMA FINANCIAL INFORMATION... Appendix G INDEPENDENT REPORT ON FAIR VALUE OF AQUALIS OFFSHORE... 3

4 1. EXECUTIVE SUMMARY Summaries are made up of disclosure requirements known as "Elements". These elements are numbered in Sections A E (A.1 E.7). This summary contains all the Elements required to be included in a summary for this type of securities and issuer. Because some Elements are not required to be addressed, there may be gaps in the numbering sequence of the Elements. Even though an Element may be required to be inserted in the summary because of the type of securities and Issuer, it is possible that no relevant information can be given regarding the Element. In this case a short description of the Element is included in the summary with the mention of "not applicable". Section A Introduction and warnings Element Description Disclosure requirement of Element A.1 Warnings This summary should be read as an introduction to the Prospectus. Any decision to invest in the Offer Shares should be based on consideration of the Prospectus as a whole by the investor. Where a claim relating to the information contained in the Prospectus is brought before a court, the plaintiff investor might, under the national legislation in its Member State, have to bear the costs of translating the Prospectus before the legal proceedings are initiated. Civil liability attaches only to those persons who have tabled the summary including any translation thereof, but only if the summary is misleading, inaccurate or inconsistent when read together with the other parts of the Prospectus or it does not provide, when read together with the other parts of the Prospectus, key information in order to aid investors when considering whether to invest in such securities. A.2 Resale and final placement by financial intermediates Not applicable. No resale will take place. No financial intermediaries will be used for the final placement of the offer. Section B - Issuer Element Description of Element B.1 Legal and commercial name of the Issuer B.2 Domicile and legal form of the Issuer, the legislation under which the Issuer operates and its country of incorporation B.3 Key factors relating to current operations and activities, Disclosure requirement Aqualis ASA Aqualis ASA is a public limited liability company pursuant to the Norwegian Public Limited Liability Companies Act, incorporated under the laws of Norway. The Company was established on 30 August The Company s organisation number is , and its currently registered office is Sjølyst Plass 2, 0278 Oslo, Norway with telephone number: Aqualis was up until early 2013 a clinical-stage oncology focused pharmaceutical company with a portfolio of novel anti-cancer drugs in development. These patented New Chemical Entities (NCEs) were novel, improved versions of wellestablished and commercially successful drugs (parent drugs), developed using the Company's Lipid Vector Technology (LVT), and were believed to have better 4

5 main categories of products sold and principal markets efficacy than the parent drugs and a similar side effect profile. Aqualis has been focusing on two key late stage drug candidates: CP-4126 and Elacytarabine. However, both drug candidates failed to show any improvements compared to existing drugs in their respective studies and development work was terminated. B.4a Significant recent trends affecting the Issuer and the industries in which it operates Following the discontinuation of development of elacytarabine in April 2013, and of CP-4126 in November 2012, the Company has no drug candidates in clinical development and has suspended all R&D activities. As a result, most of the employees have left the Company and it has only 2 employees at the date of this Prospectus. Aqualis still has a large portfolio of patents relating to the LVT-technology and the Company will sell or out-license some or all of these patents should the opportunity arise. In addition the Company has a licensing agreement, which was entered into in May 2011, with Translational Therapeutics, Inc. ( TT ), an early-stage private biopharmaceutical company based in Massachusetts, USA, for the development and commercialisation of CP CP-4033 is a LVT derivative of ribavirin, currently in the preclinical state of development. TT is developing CP-4033 for use in the treatment of aggressive thyroid cancer, and will evaluate the potential of CP-4033 for in the treatment of other solid tumours. Under the terms of the agreement, TT is responsible for all future development of CP-4033 and Aqualis may receive future milestones, should TT sub-license CP-4033, and royalty payments on potential future sales. The Company also has a licensing agreement with Mt. Sinai School of Medicine, New York, for the possible development of the pre-clinical compound CP-4200, a LVT derivative of azacytidine. Going forward, the Company will try to maximize the value of these assets by closely following the licensees development of potential drug candidates, and through further out-licensing or sale of existing patents and patent applications. On 27 September 2013, Aqualis signed a final share purchase agreement ( SPA ) to acquire 100% of the shares in Aqualis Offshore Ltd ( Aqualis Offshore ). The Transaction was approved by the EGM on 8 October While existing pharmaceutical activities will remain as a separate business area within the Company, the Transaction represents a change in strategic direction for the Company to include a new business area of specialist marine and engineering consultancy services to the offshore oil and gas industry. The Group s new marine and offshore activities will be carried out through Aqualis Offshore. Its target market is the offshore oil and gas and marine segments in which it focuses on high-end niche consultancy. Aqualis Offshore s strategy is, through its specialist marine and engineering consultancy services, to operate through a growing network of global offices. As it expands globally, Aqualis Offshore pursues high growth ambitions focusing on developing economies and emerging markets. The Group s strategy is to expand the marine and offshore activities through the establishment of new offices globally and through a significant increase in the number of employees, and through potential acquisitions of similar businesses. Please see section 8.3 for a more detailed discussion of the strategic plans for Aqualis Offshore. Not applicable; the Company is not aware of trends, uncertainties, demands, commitments or events that could possibly have a material effect on the Issuer s prospect since the end of the last financial year to the date of this Prospectus. 5

6 B.5 Group/Issuer s position within the group B.6 Persons having an interest in the Issuer s capital or voting rights Not applicable; the Company has no subsidiaries as of the date of this Prospectus. The following shareholders owned more than 5% of the issued share capital as of 7 October 2013: Tycoon Industrier AS (3,000,000 Shares, representing 8.89% of total share capital), Strata Marine & Offshore AS (2,000,000 Shares, representing 5.92% of total share capital), Anko Invest AS (1,870,382 Shares, representing 5.54% of total share capital) and Kristianro AS (1,716,444 Shares, representing 5.08% of total share capital). As far as the Company is aware of, there is no other natural or legal person other than the above mentioned, which directly or indirectly has a shareholding in the Company above 5 per cent which is noticeable under Norwegian law. Shareholders with ownership exceeding 5 per cent must comply with disclosure obligations according to the Norwegian Securities Trading Act Section 4.2. B.7 Selected historical key financial information The selected financial information set forth below should be read in conjunction with the Company s published financial statements and its accompanying notes. The following financial figures have been derived from the Company s audited financial statements as of, and for each of the three years ended 31 December 2012, 2011 and 2010 and from the unaudited condensed financial statements for the three and six month periods ended 30 June 2013 and Statement of comprehensive income Three months ended 30 June Six months ended 30 June Year ended 31 December NOK 1, (unaudited) (unaudited) (unaudited) (unaudited) (audited) (audited) (audited) Revenue Government grants Total operating income Payroll and payroll related costs Depreciation Other operating costs... (4 759) Operating loss... (8 230) (30 616) (83 986) (59 996) ( ) ( ) ( ) Finance income Finance costs Loss before tax... (5 536) (29 201) (80 586) (55 924) (95 706) ( ) ( ) Income tax expense Loss for the period... (5 536) (29 201) (80 586) (55 924) (95 706) ( ) ( ) Source: The Company s Q interim financial report and annual reports 2012, 2011 and

7 Statement of financial position NOK 1, (unaudited) (unaudited) (audited) (audited) (audited) ASSETS Production and lab equipment Total non-current assets Trade receivables Other receivables Cash and cash equivalents Total current assets Total assets EQUITY AND LIABILITIES Share capital Share premium reserve Other paid-in capital... (1 450) Loss for the period... (80 586) (55 924) (95 706) ( ) ( ) Total equity Deferred revenue Borrowings Other non-current liabilities Total non-current liabilities Trade payables Deferred revenue Other current liabilities Total current liabilities Total liabilities Total equity and liabilities Source: The Company s Q interim financial report and annual reports 2012, 2011 and

8 Cash flow statement NOK 1,000 Three months ended 30 June (unaudited) (unaudited) Six months ended 30 June (unaudited) (unaudited) 2012 (audited) Year ended 31 December 2011 (audited) 2010 (audited) Cash flow from operating activities Loss before income tax... (5 536) (29 201) (80 586) (55 924) (95 706) ( ) ( ) Non-cash adjustment to reconcile profit before tax to cash flow: Estimated value of employee share (4 758) (1 450) options... Loss on disposal of plant & equipment... Depreciation Unrealised foreign currency (467) 182 (472) (gains)/losses... Changes in working capital: Changes in trade receivables and (4 945) (491) (12 648) (2 447) trade creditors... Changes in deferred income... - (10 052) - (20 104) (77 063) (40 207) Changes in other accruals... (48 196) 313 (21 650) (5 986) (645) Net interest (income/expense)... (2 481) (1 542) (3 431) (4 130) (8 075) (6 585) (4 229) Net cash flow from operating (64 395) (37 869) ( ) (82 424) ( ) ( ) activities... Cash flow from investing activities Proceeds for sale of plant & equipment... Purchase of fixed assets (1 393) (1 281) - Interest received Net cash flow from investing activities... Cash flow from financing activities Proceeds from share issue Proceeds from exercise of share options... Transaction costs on share issue (6 749) (6 828) (2 017) (6 378) Proceeds from borrowings Repayment of borrowings... (20 000) - (20 000) - Interest paid... (357) (487) (838) (977) (1 596) (1 919) (1 357) Net cash flow from financing (20 357) (20 838) activities... Net change in cash and cash (83 683) (32 132) ( ) ( ) equivalents... Cash and cash equivalents beginning period... Net foreign exchange difference (182) 472 (186) 8133) (79) (1 265) Cash and cash equivalents end period... Source: The Company s Q interim financial report and annual reports 2012, 2011 and There have been no significant changes in the financial or trading position of the Company since 30 June 2013, with exception of the transaction described in this Prospectus. B.8 Pro forma financial information The unaudited pro forma condensed financial information has been prepared to show how the acquisition of Aqualis Offshore and the Rights Issue might have affected Aqualis financial position as of 30 June 2013 had it occurred on the balance sheet date. The unaudited pro forma condensed income statement for the period 1 January 2013 to 30 June 2013 has been compiled as if the Transaction occurred on 1 January No pro forma condensed financial information has 8

9 been prepared for the year ended 2012, as Aqualis Offshore was incorporated in December In connection with the acquisition, the Company will carry out a fully underwritten rights issue of 33.7 million new shares at an issue price of NOK 1.6 per share (the Rights Issue). The unaudited pro forma condensed financial information has been prepared for illustrative purposes only. The pro forma adjustments are based on available information and certain assumptions. Because of its nature, the unaudited pro forma condensed financial information addresses a hypothetical situation and, therefore, does not represent what the Group s actual financial position or results of operation or the financial position had, if the transaction actually occurred on those dates. It also does not represent the financial position or results for any future period. The unaudited pro forma financial information must not be considered final or complete, as they may be amended in future publications of the unaudited pro forma condensed information. Investors are cautioned not to place undue reliance on this unaudited pro forma condensed financial information. The unaudited pro forma condensed financial information as of and for the six months ended June 30, 2013 is compiled based upon the unaudited consolidated financials for the six months ended June 30, 2013 for the Company and Aqualis Offshore (please see section 9.6 for further details). Unaudited pro forma income statement for the six months ended 30 June 2013 Aqualis (unaudited) Aqualis Offshore (unaudited) Pro forma adjustments (unaudited) Notes to the pro forma adjustments (unaudited) Pro forma consolidated (unaudited) NOK 1, Government grants Operating revenue Other revenue Total operating income Payroll and payroll related costs Depreciation & impairment Other operating expenses (1) Operating profit/(loss)... (83 986) (5 349) (1 200) (1) (90 535) Financial income Financial expenses Loss before tax... (80 586) (5 416) (1 200) (87 202) Income tax expense Non-controlling interest... (110) (110) Profit/(loss) for the period... (80 586) (5 526) (1 200) (87 312) Total comprehensive income... (80 586) (5 526) (1 200) (87 312) Note: The income statement for Aqualis Offshore has been translated from USD to NOK based on a foreign exchange rate NOK/USD of 5.79, which is based on Norges Bank s historical average exchange rate for the first six months

10 Unaudited pro forma balance sheet as of 30 June 2013 NOK 1,000 Aqualis (unaudited) Aqualis Offshore (unaudited) Pro forma adjustments (unaudited) Notes to the pro forma adjustments (unaudited) Pro forma consolidated (unaudited) ASSETS Plant and equipment Goodwill (2) Total non-current assets (2) Trade receivables Other receivables Cash and cash equivalents (3) Total current assets (3) Total assets EQUITY AND LIABILITIES Share capital (4) Share premium (4) Other paid-in capital... (1 450) (4) Loss for the period... (80 586) (5 748) (4) (82 029) Equity attributable to equity holder (5 145) of the parent... Non-controlling interest (-82) (5) - Total equity... 59,498 (5 063) Deferred revenue Borrowings Other long-term liabilities Total non-current liabilities Trade payables Deferred revenue Other current liabilities (6) Total current liabilities Total liabilities Total equity and liabilities Note: The balance sheet for Aqualis Offshore has been translated from USD to NOK based on a foreign exchange rate NOK/USD of 6.03, which is based on Norges Bank s historical exchange rate as of 30 June B.9 Profit forecast or estimate B.10 Qualifications in the audit report B. 11 Working capital Not applicable Ernst & Young AS has audited the Company s annual accounts for the financial years 2012, 2011 and 2010, and the Auditor s reports for these three years were issued without qualifications. Not applicable. In the opinion of the Company, its working capital is sufficient to cover the Group s present requirements, that is, for a period of at least 12 months 10

11 from the date of this Prospectus. Section C Securities Element Description of Element C.1 Type and class of securities being offered/security identification numbers Disclosure requirement The Rights Issue comprises an offering of offer shares ( Offer Shares ) at a subscription price of NOK 1.60 (the Subscription Price ) per Offer Share, corresponding to gross proceeds of NOK The Eligible Shareholders will be granted one Subscription Right for each (1) Share owned by such Eligible Shareholder on the Record Date. Eligible Shareholders will be allowed to subscribe for more Offer Shares than the number of Subscription Rights held by Eligible Shareholders. C.2 Currency NOK In addition, and in connection with the Rights Issue, the Board proposed to the EGM to conduct an offering of shares directed towards the employees of both the Company and Aqualis Offshore at the same issue price as in the Rights Issue in order to facilitate further employee ownership in the Company (the Employee Offering, and together with the Rights Issue, the Offerings ). The Employee Offering comprises an offering of up to employee offer shares ( Employee Offer shares, and together with the Offer Shares the Offering Shares ) at a subscription price of NOK 1.60, corresponding to gross proceeds of up to NOK The Offering Shares, upon delivery, will be registered with VPS under ISIN NO C.3 Number of shares and per value C.4 Right attached to the securities The Company s current share capital is NOK 33,755,515 divided into 33,755,515 ordinary shares, each with a nominal value of NOK The Company has one class of shares, and each share carries one vote. All the shares are validly issued and fully paid. The rights attached to the Offering Shares will be the same as those attached to the Company s existing Shares. The Offering Shares will be issued electronically and will rank pari passu with existing shares in all respects from such time as the share capital increases in connection with the issuance of the Offering Shares are registered in the Norwegian Register of Business Enterprises. The holders of the Offering Shares will be entitled to dividend from and including the date of registration of the share capital increase in the Norwegian Registry of Business Enterprises. There are no particular restrictions or procedures in relation to the distributions of dividends to shareholders who are resident outside Norway, other than an obligation on part of the Company to deduct withholding tax as further described in Section 15. Pursuant to the Norwegian Public Limited Companies Act, all shares have equal rights to the Company s profits, in the event of liquidation and to receive dividend, unless all the shareholders approve otherwise. C.5 Restrictions on free transferability A Subscriber will not under any circumstances be entitled to sell or transfer its Offer Shares until such Subscriber has paid these in full and the share capital increase in connection with the Rights Issue has been registered in the Norwegian Register of Business Enterprises. Upon payment of the Offer Shares and registration of the Offer Shares in the Norwegian Register of Business Enterprises, the Offer Shares will be freely transferable. 11

12 The Employee Offer Shares issued in connection with the Employee Offering are subject to a lock-up period of 12 months. C.6 Listing and admission to trading The Company s Shares are listed on Oslo Stock Exchange. Assuming that payments from all Subscribers are made when due, delivery of the Offering Shares is expected to take place on or about 8 November 2013, however, delivery of the Offering Shares will take place at the latest on 15 November Assuming that payments from all Subscribers are made when due, it is expected that the share capital increase will be registered in the Norwegian Register of Business Enterprises on or about 8 November 2013, however, such registration will take place at the latest on 15 November All of the Offering Shares will be object for an application for admission to trading on Oslo Børs. Assuming timely payment by all Subscribers, the Company expects that the Offer Shares will be listed on Oslo Børs on or about 8 November The Shares will not be sought or admitted to trading on any other regulated market than Oslo Børs. C.7 Dividend policy The Company has not paid any dividends to date as the Company has been in a pre-commercial phase with ambitious development plans. Going forward, the Company plans to grow, both organically and through acquisitions, and potential profits are to be reinvested in the Company. Hence, it does not expect to make any dividend payments in the next few years. Section D Risks Element Description of Element D.1 Key risks specific to the Issuer or its industry Disclosure requirement Key risk factors related to the Company - If product liability lawsuits are brought against the Company, it could incur substantial liabilities Financial risk - Limited access to funds - Interest rate risk - Foreign exchange risk - Risk related to tax issues - Loan covenants - Liquidity risk Risks relating to Aqualis Offshore - Dependence on the level of demand from oil & gas and offshore companies for Aqualis Offshore s services - Future economic downturns - Competitive industry - Political and regulatory risk - Risk related to managing Aqualis Offshore s growth - Access to key personnel and resources - Lack of qualified engineers - Customer concentration - Cancellation of contracts - Contracts expiring and contract renewals - Counterparty risk - Environmental risk - Insurance - Accidents 12

13 - Legal claims and disputes - Limited operating history as a financial entity and unaudited financial information - Seasonality D.3 Key risks specific to the securities An investment in the Offer Shares involves certain risks associated with the characteristics, specification and type of the securities which could lead to substantial or total losses the subscriber would have to bear in the case of selling their Shares. Those risks include and comprise, inter alia, the following: - The market price of the Shares has been and may continue to be highly volatile, and investors may not be able to resell Shares at or above the Subscription Price - There is no certainty that the Company s listing on Oslo Stock Exchange will be maintained - Shareholders not participating in future offerings of Shares or other equity investments may be diluted - The issue of additional securities by the Company in connection with future acquisitions, any Share incentive or option plan or otherwise may dilute all other shareholdings - Future sales of Shares could reduce the market price of the Shares and adversely affect the Company's ability to raise additional capital - The Company does not expect to pay any cash dividends for the foreseeable future. Investors in the Offering may never obtain a return on their investment - The Company has broad discretion in the use of the net proceeds from the Rights Issue and may not use them effectively - The limited liquidity in the trading market for the Shares could have a negative impact on the market price and ability to sell Shares - The Company's investors outside of Norway are subject to exchange rate risk - Holders of Shares that are registered in a nominee account may not be able to exercise voting rights and other shareholder rights as readily as shareholders whose Shares are registered in their own names with the VPS - The ability of shareholders of the Company to make claims against the Company in their capacity as such following registration of the share capital increase in the Register of Business Enterprises is severely limited under Norwegian law Section E Offer Element Description of Disclosure requirement Element E.1 Net proceeds Transaction costs and all other directly attributable costs in connection with the Rights Issue and Employee Offering will be borne by the Company and are estimated to approximately NOK 2.8 million, thus resulting in net proceeds of approximately NOK 59.2 million. E.2a Use of proceeds The Company intends to use the net proceeds it receives from the Offerings on working capital and general corporate purposes, which may include acquisitions that grow the Group's business, although the Company has no current understandings, commitments or agreements to do so. The Company cannot predict with certainty all of the particular uses for net proceeds received by the Company from the Offerings or the amounts that it will actually spend. The amount, allocation and timing of actual uses of net proceeds will vary depending on numerous factors, including the relative success and cost of developing Aqualis Offshore to sustainable business. As a result, management will have broad discretion in the application of the net proceeds, and investors 13

14 will be relying on the Company's judgment regarding the application of the net proceeds from the Offerings. E.3 Terms and conditions of the offer The Eligible Shareholders will be granted one Subscription Right for each (1) Share owned by such Eligible Shareholder on the Record Date. Eligible Shareholders will be allowed to subscribe for more Offer Shares than the number of Subscription Rights held by Eligible Shareholders. The number of Subscription Rights granted to each Eligible Shareholder will be rounded down to the nearest whole Subscription Right. The Subscription Rights will be transferable and listed on the Oslo Stock Exchange during the Subscription Period. The Subscription Rights will be transferred to the Eligible Shareholders VPS-accounts on 15 October The Subscription Rights must be used to subscribe for Offer Shares before the expiry of the Subscription Period (i.e. 29 October 2013 at 16:30 hours (CET)). Subscription Rights that are not exercised before 16:30 hours (CET) on 29 October 2013 will have no value and will lapse without compensation to the holder. The Subscription Period in the Rights Issue will commence 09:00 hours (CET) on 15 October 2013 and expire at 16:30 hours (CET) on 29 October The Subscription Period may be extended by the Board, but may not in any event be later than 5 November The Subscription Price for one (1) Offer Share is NOK The Subscription Price is identical to the price offered to the shareholders of Aqualis Offshore. The Subscribers will not incur any costs related to the subscription for, or allotment of, the Offer Shares. Subscription for Offer Shares must be made by submitting a correctly completed subscription form, attached as Appendix D hereto, (the Subscription Form ) to the Manager during the Subscription Period. Online subscriptions must be submitted, and accurately completed Subscription Forms must be received by the Manager by 16:30 hours (CET) on 29 October Subscriptions are binding and irrevocable, and cannot be withdrawn, cancelled or modified by the subscriber after having been received by the Manager. There is no minimum subscription amount for which subscriptions in the Rights Issue must be made. Over-subscription, i.e. subscription for more Offer Shares than the number of Subscription Rights held by the subscriber entitles the subscriber to be allocated, and subscription without Subscription Rights will be allowed. Allotment of the Offer Shares is expected to take place on or about 1 November The following allocation criteria will be used for allotment of Offer Shares in the Rights Issue: 1. Allocation will be made to subscribers on the basis of granted and acquired subscription rights which have been validly exercised during the subscription period. Each subscription right will give the right to subscribe for and be allocated one (1) new share; 2. If not all subscription rights are validly exercised in the subscription period, subscribers having exercised their subscription rights and who have over-subscribed will have the right to be allocated remaining new shares on a pro rata basis based on the number of subscription rights exercised by the subscriber. In the event that pro rata allocation is not possible, the Company will determine the allocation by lot drawing; 14

15 3. Any remaining new shares not allocated pursuant to the criteria in items 1 and 2 above, will be allocated to subscribers not holding subscription rights. Allocation will be sought made pro rata based on the respective subscription amounts, provided, however, that such allocations may be rounded down to the nearest thousand NOK. 4. Any remaining new shares not allocated pursuant to the criteria in items 1, 2 and 3 above will be subscribed by and allocated to the underwriters or investors appointed by the underwriters to the extent the underwriters have not fulfilled their underwriting obligations by on certain market terms subscribing for shares in the subscription period, based on and in accordance with their respective underwriting obligations. General information regarding the result of the Rights Issue is expected to be published on or about 30 October in the form of a stock exchange release through The Employee Offer Shares may be subscribed for by employees in both the Company and Aqualis Offshore Ltd (or their respective subsidiaries) and the minimum subscription per employee subscriber shall be 10,000 shares. The Employee Offer Shares issued are subject to a lock-up period of 12 months, as further described in section 6.7 below. The subscription period will commence 09:00 hours (CET) on 15 October 2013 and expire at 16:30 hours (CET) on 29 October The subscription period may be extended by the Board, but may not in any event be later than 5 November The subscription period may not be closed earlier than 16:30 hours (CET) on 29 October The Subscription Price for one (1) Employee Offer Share is NOK 1.60, i.e. the same subscription price as in the Rights Issue and the Transaction. The subscribers will not incur any costs related to the subscription for, or allotment of, the Employee Offer Shares. Subscription for Employee Offer Shares must be made by submitting a correctly completed subscription form, attached as Appendix E hereto to the Manager during the subscription period. Accurately completed subscription forms must be received by the Manager by 16:30 hours (CET) on 29 October Subscriptions are binding and irrevocable, and cannot be withdrawn, cancelled or modified by the subscriber after having been received by the Manager. Allocation of the Employee Offer Shares shall be made by the Board of Directors. E.4 Material interest in the offer The Manager and its affiliates have provided from time to time, and may provide in the future, investment and commercial banking services to the Company and its affiliates in the ordinary course of business, for which they may have received and may continue to receive customary fees and commissions. The Manager does not intend to disclose the extent of any such investments or transactions otherwise than in accordance with any legal or regulatory obligation to do so. The Manager, its employees and any affiliate may currently own existing Shares in the Company, and employees of the Manager may obtain allotment in the Rights Issue. Furthermore, the Manager will receive a commission in connection with the Rights Issue and, as such, has an interest in the Rights Issue. Reference is made to section 6.13 Expenses related to the Offerings. E.5 Manager/Lock- Carnegie AS has been retained as manager for the Company in connection with 15

16 up the Rights Issue. For a period of two years following the closing date (the "Lock-Up Period"), each of the Sellers agrees not to transfer or place any encumbrances on any of the New Shares that it has received pursuant to the SPA unless consented to in writing in advance by the Company. Such consent can be withheld for any reason, at the Company s discretion. Following the expiry of the Lock-Up Period, the Sellers may dispose of their New Shares without restrictions (other than what otherwise follows from applicable laws), save for the Restricted New Shares, which shall be subject to lock-up restrictions for a period of three years following the closing date (the "Extended Lock-Up Period"). At the expiry of the Extended Lock-Up Period, the Lock-Up Restrictions on ¼ of each Management Shareholders' Restricted New Shares shall be released, with an additional ¼ of their Restricted New Shares being released with the expiry of each subsequent one-year period. Further, a Subscriber will not under any circumstances be entitled to sell or transfer its Offer Shares until such Subscriber has paid these in full and the share capital increase in connection with the Rights Issue has been registered in the Norwegian Register of Business Enterprises. Upon payment of the Offer Shares and registration of the Offer Shares in the Norwegian Register of Business Enterprises, the Offer Shares will be freely transferable. The Employee Offer Shares issued in connection with the Employee Offering are subject to a lock-up period of 12 months. E.6 Dilution The Rights Issue will result in an immediate dilution of approximately 50 per cent for Eligible Shareholders who do not participate in the Rights Issue. Based on the total number of Shares in the Company following the Transaction and the Offerings, the dilutive effect for Eligible Shareholders who do not participate in the Rights Issue will be approximately 71 per cent. E.7 Estimated expenses Transaction costs and all other directly attributable costs in connection with the Rights Issue and Employee Offering will be borne by the Company and are estimated to approximately NOK 2.8 million. 16

17 2. RISK FACTORS An investment in the Offer Shares involves a number of risks. Potential investors should carefully consider each of the following risks and all of the information set forth in this Prospectus before deciding to invest in the Offer Shares. If any of the following risks and uncertainties actually occurs, the Company's cash flows, business, results of operations and financial position could be adversely affected. In that case, the trading price of the Shares could decline and potential investors could lose all or part of their investments. The order in which the risks are presented does not necessarily reflect the likelihood of their occurrence or the magnitude of their potential impact on the Company's cash flows, business, results of operations and financial position. 2.1 RISK FACTORS RELATED TO THE COMPANY If product liability lawsuits are brought against the Company, it could incur substantial liabilities. The Company faces an inherent risk of product liability as a result of past clinical testing of its former product candidates. Any such product liability claims may include allegations of defects in manufacturing, defects in design, failure to warn of dangers inherent in the product, negligence, strict liability, and a breach of warranties. If the Company cannot successfully defend itself against product liability claims, the Company may incur substantial liabilities. Even successful defence would require significant financial and management resources. Regardless of the merits or eventual outcome, liability claims may result in: - injury to the Company s reputation; - initiation of investigations by regulators; - costs to defend the related litigation; - a diversion of management s time and the Company s resources; - substantial monetary awards to trial participants or patients; To mitigate this risk, the Company carries product liability insurance which it considers adequate for its past clinical development activities. Although the Company maintains such insurance, any claim that may be brought against the Company could result in a court judgment or settlement in an amount that is not covered, in whole or in part, by the Company s insurance or that is in excess of the limits of the Company s insurance coverage. The Company s insurance policies also have various exclusions, and the Company may be subject to a product liability claim for which the Company has no coverage. The Company will have to pay any amounts awarded by a court or negotiated in a settlement that exceed the Company s coverage limitations or that are not covered by the Company s insurance, and the Company may not have, or be able to obtain, sufficient capital to pay such amounts. 2.2 RISK FACTORS RELATED TO THE RIGHTS ISSUE AND OWNERSHIP OF THE SHARES The market price of the Shares has been and may continue to be highly volatile, and investors may not be able to resell Shares at or above the Subscription Price The market price of the Shares could fluctuate significantly in response to a number of factors, including the following: - actual or anticipated variations in operating results - changes in financial estimates or recommendations by stock market analysts regarding the Company - announcements by the Company of significant acquisitions, partnerships, joint ventures or capital commitments - sales or purchases of substantial blocks of Shares - additions or departures of key personnel - future equity or debt offerings by the Company and its announcements of these offerings - general market and economic conditions Moreover, in recent years, the stock market in general has experienced large price and volume fluctuations and these broad market fluctuations may adversely affect the share price, regardless of its operating results There is no certainty that the Company s listing on Oslo Stock Exchange will be maintained The Company wishes to maintain the listing of its Shares on Oslo Børs following the Transaction as the Company believes it satisfies all the major listing requirements and that this is in the best interest of all the 17

18 shareholders of the Company. However, no assurance can be given that Oslo Børs will draw the same conclusion and that the listing will be maintained Shareholders not participating in future offerings of Shares or other equity investments may be diluted Shareholders not participating in future offerings of Shares or other equity instruments may be diluted. Unless otherwise resolved or authorised by the general meeting of the Company, shareholders in Norwegian public companies such as the Company have pre-emptive rights proportionate to the aggregate amount of the Shares they hold with respect to new Shares and other equity investments issued by the Company. However, shareholders that do not exercise such pre-emptive right may experience dilution of their shareholding The issue of additional securities by the Company in connection with future acquisitions, any Share incentive or option plan or otherwise may dilute all other shareholdings The Company may seek to issue additional equity or convertible equity securities to fund future acquisitions and other growth opportunities or in connection with share incentives and option plans. Exercising options may also cause a dilution of existing shareholders. To the extent that the Company issues additional securities, the existing shareholders' ownership interest in the Company at that time may be diluted Future sales of Shares could reduce the market price of the Shares and adversely affect the Company's ability to raise additional capital Sales of substantial amounts of the Shares, or the perception that such sales could occur, could have an adverse effect on the market value of the Shares and the Company's ability to raise capital through future capital increases The Company does not expect to pay any cash dividends for the foreseeable future. Investors in the Rights Issue may never obtain a return on their investment The Company has never paid dividends to its shareholders and does not intend to pay any dividends for the foreseeable future. Anyone considering investing in the Offer Shares should not rely on such investment to provide dividend income. Instead, the Company plans to retain any earnings to maintain and expand its existing operations. In addition, any future debt financing arrangement may contain terms prohibiting or limiting the amount of dividends that may be declared or paid on the Shares. Accordingly, investors must rely on sales of their Shares after price appreciation, which may never occur, as the only way to obtain return on their investment The Company has broad discretion in the use of the net proceeds from the Rights Issue and may not use them effectively While the Company intends to use the net proceeds from the Rights Issue as described in section 6.1 "Purpose and use of proceeds", the amount, allocation and timing of actual uses of net proceeds will vary based on a number of factors. As a result, management will have broad discretion in the application of the net proceeds from the Rights Issue and could spend the proceeds in ways that do not improve the Company's results of operations or enhance the value of the Shares. The failure by management to apply these funds effectively could result in financial losses that could have a material adverse effect on the Company's business and cause the price of the Shares to decline. Pending their use, the Company may invest the net proceeds from the Rights Issue in a manner that does not produce income or that loses value The limited liquidity in the trading market for the Shares could have a negative impact on the market price and ability to sell Shares The Company s Shares are currently listed on Oslo Stock Exchange. This, however, does not imply that there will always be a liquid market for the Company s Shares, which have also historically had a relatively low liquidity. An investment in the Shares may thus be difficult to realise. Investors should be aware that the value of the Shares may be volatile and may go down as well as up. In the case of low liquidity of the Shares, or limited liquidity among the Company s shareholders, the share price can be negatively affected and may not reflect the underlying asset value of the Company. Investors may, on disposing of the Shares, realise less than their original investment or lose their entire investment. 18

19 2.2.9 The Company's investors outside of Norway are subject to exchange rate risk The Shares are traded in NOK and any investor outside of Norway who wishes to invest in the Offer Shares, or to sell Shares, will be subject to an exchange rate risk which may cause additional costs to the investor Holders of Shares that are registered in a nominee account may not be able to exercise voting rights and other shareholder rights as readily as shareholders whose Shares are registered in their own names with the VPS Beneficial owners of Shares that are registered in a nominee account (e.g., through brokers, dealers or other third parties) may not be able to vote such Shares unless their ownership is re-registered in their names with the VPS prior to the Company's general meetings. The Company cannot guarantee that such beneficial owners of Shares will receive the notice for a general meeting in time to instruct their nominees to either effect a reregistration of their Shares or otherwise vote their Shares in the manner desired by such beneficial owners. Further, beneficial owners of Shares that are registered in a nominee account may not be able to exercise other shareholder rights under the Norwegian Public Limited Companies Act (such as e.g. the entitlement to participate in a rights offering) as readily as shareholders whose Shares are registered in their own names with the VPS The ability of shareholders of the Company to make claims against the Company in their capacity as such following registration of the share capital increase in the Register of Business Enterprises is severely limited under Norwegian law Once the capital increase relating to any Shares (including the Offer Shares) has been registered in the Register of Business Enterprises, purchasers of those Shares have limited rights against the Company under Norwegian law. All Subscribers in the Rights Issue will be deemed to have acknowledged that the ability of shareholders of the Company to make claims against the Company in their capacity as such following registration of the share capital increase in the Register of Business Enterprises is severely limited under Norwegian law. 2.3 FINANCIAL RISK Limited access to funds The Company may be dependent on obtaining future financing and/or new equity to enable the contemplated future growth of the Group. No assurance can be given that it will be able to obtain future financing as well as to refinance its existing loans on acceptable terms and conditions, nor that it will be able to raise new equity capital Interest rate risk Increasing interest rates may affect the Group s business, financial condition, results of operation and liquidity Foreign exchange risk The functional currency of the Group is NOK, while the functional currency of Aqualis Offshore is USD, which may give rise to foreign currency translation gains or losses. Aqualis Offshore has secured income under contracts in currencies other than USD, such as NOK, GBP and EUR. This income, relative to USD, will be affected by changes in currency exchange rates or exchange control regulations when Aqualis Offshore does not hedge an exposure to these currencies. It may also incur losses as a result of an inability to collect revenues because of a shortage of convertible currency available to the country of operation, controls over currency exchange or controls over the repatriation of income or capital. Currency exchange rates are determined by forces of supply and demand on the currency exchange markets, which again are affected by the international balance of payments, economic and financial conditions, government intervention, speculation and other factors. If Aqualis Offshore is not able or fails to take actions to limit its exposure to local currencies, changes in currency exchange rates relative to the USD will affect the USD value of Aqualis Offshore s assets and thereby impact upon its total return on such assets Risk related to tax issues As at 31 December 2012, the Company had a total tax loss carry forward of NOK million, which can be carried forward indefinitely. The Company has not recognized a tax asset on the balance sheet due to the uncertainty of future taxable profits. Even if the Company should generate future taxable profits through the acquisition of Aqualis Offshore, or other businesses, the usability of its tax loss carried forward to reduce the 19

20 amount of tax payable in the future is highly uncertain. The tax loss carried forward can most likely be used to reduce the amount of tax payable related to the healthcare business only Loan covenants Failure to comply with financial covenants and other covenants and obligations in the Group s facilities with banks or in other financing agreements may result in an event of default under the facility, which could result in the Group having to repay all amounts outstanding under its facilities. These covenants could materially and adversely affect the Group s ability to finance its further operations, its ability to expand, to pursue its business strategies and otherwise conduct its business Liquidity risk The operation of the Group s business requires significant capital, and there can be no assurance that it will be able to obtain the necessary liquidity to meet its financial liabilities as they fall due. The Group s future liquidity needs depend on a number of factors, and is subject to uncertainty with respect to inter alia future earnings, outcome of legal claims and disputes etc. A limited liquidity position may have an adverse effect on the Group s business, financial condition, results of operation and liquidity, and as a worst case, force the Company to cease its operations. The following risk factors relate to the operations of Aqualis Offshore. These risk factors should also be taken into account when considering an investment in the Offer Shares as the business of Aqualis Offshore will constitute a significant part of the Company following the Transaction. For more information regarding the Transaction, please see section 5 in this Prospectus. 2.4 RISKS RELATING TO AQUALIS OFFSHORE Dependence on the level of demand from oil and gas and offshore companies for Aqualis Offshore s services Aqualis Offshore s business and operations will over time depend on the level of activity and capital spending by oil & gas and offshore companies. The demand for Aqualis Offshore s services is affected by declines in maritime and offshore activity associated with depressed oil and natural gas prices. The demand for offshore exploration, development and production has been closely linked to the price of oil and gas. Even the perceived risk of a decline in the oil or natural gas prices often causes exploration and production companies to reduce their spending. Historically, oil and natural gas prices have been very volatile depending on the actual and expected changes in the supply of, and demand for, oil and gas, changes in economic growth and political uncertainty in oil producing countries. There is a risk associated with a possible long-term drop in the oil price, affecting the profitability of the development of new offshore fields. Any prolonged periods of reduced capital expenditures by oil and gas and offshore companies would likely reduce the demand for the services offered by Aqualis Offshore. Furthermore, Aqualis Offshore is also heavily involved in day to day offshore operations which provide recurring day to day income. Generally, as overall conditions in the oil and gas and offshore industries deteriorate, demand for the services offered by Aqualis Offshore may decrease Future economic downturns The offshore oil and gas industries are exposed to the general global economic activity. A worldwide economic downturn could reduce the availability of credit to fund offshore business operations globally. This could again lower the demand for Aqualis Offshore s services and lead to an austerity approach from the oil and gas and offshore companies. Furthermore, a sustained or deep recession could further limit economic activity and thus result in an additional decrease in energy consumption, which in turn could cause Aqualis Offshore s revenues and margins to decline and limit its future growth prospects Competitive industry The global offshore consultancy market is highly competitive which may limit Aqualis Offshore s ability to maintain or increase its market share. Its current and future competitors may have greater financial and other resources and may be better positioned to withstand and adjust to changing market conditions. Hence, Aqualis Offshore may not be able to maintain its competitive position in the market. Additionally, Aqualis Offshore also competes with several smaller companies capable of performing effectively on a regional or local basis. These competitors may be able to better withstand economic and/or industry downturns and compete on the basis of 20

21 price, all of which could affect Aqualis Offshore s position in the market which, in turn, could lead to reduction in revenues and profit margins Political and regulatory risk Changes in the political, legislative, fiscal and/or regulatory framework governing the activities of Aqualis Offshore, the oil and gas companies, oil service companies, offshore companies, construction yards and/or important suppliers or service providers on which Aqualis Offshore depend, could have a material impact on its business, the markets in which it operates, and its financial condition Risk related to managing Aqualis Offshore s growth As Aqualis Offshore executes on its strategy, it expects that there will be a need for additional managerial, operational, marketing, financial and other resources. As a result, members of management would face added responsibilities, including: - Identifying, recruiting, maintaining, motivating and integrating additional skilled personnel; - Managing Aqualis Offshore's internal development efforts effectively while complying with its contractual obligations to customers, suppliers, partners, and other third parties; and - Improving Aqualis Offshore's managerial, development, operational and finance systems. Aqualis Offshore s results of operations, financial condition and business as a whole will depend, in part, on its ability to manage its future growth effectively. Hence, it must manage its growth efforts and hire, train and integrate additional management, administrative and marketing personnel as required. However, no assurance can be given that Aqualis Offshore will successfully identify and retain these personnel. If Aqualis Offshore is unable to accomplish these tasks, it could be prevented from successfully obtaining its growth. The scalability of Aqualis Offshore s business will be an important factor going forward Access to key personnel and resources Aqualis Offshore s business and prospects depend to a significant extent on the continued services of its key personnel in its various business areas. Hence, Aqualis Offshore is dependent on its ability to retain key personnel to ensure successful integration of new personnel into existing operations. The loss of any of the members of its senior management or other key personnel or the inability to attract or retain a sufficient number of qualified employees could adversely affect its business and results of operations Lack of qualified engineers The current market for attracting highly qualified engineers is challenging and the challenging market affects Aqualis Offshore as it is dependent on the highly skilled employees. Due to the lack of skilled and qualified engineers, Aqualis Offshore may not be able to identify and attract, nor retain, qualified engineers in the future. This could adversely affect its business and results of operations Customer concentration Aqualis Offshore is, to some extent, dependent upon a few large customers within the marine and offshore oil and gas industries. Even if these companies are large and financially solid, there is no guarantee that the financial solidity will continue in the future. Aqualis Offshore s financial condition and results of operations could be materially damaged if these customers interrupt or curtail their activities terminate their contracts with Aqualis Offshore; fail to renew existing contracts or refuse to award new contracts to Aqualis Offshore while, at the same time, Aqualis Offshore is not able to enter into new contracts with new customers at comparable terms Cancellation of contracts The cancellation (due to late delivery, non-performance or otherwise) or postponement of one or more contracts can have a material adverse impact on the earnings of Aqualis Offshore Contracts expiring and contract renewals There can be no assurance that Aqualis Offshore will be able to renew its existing contracts of employment or that any such future agreements will be on terms equally favourable to Aqualis Offshore as is currently the case. During depressed market conditions, a customer may no longer need services that are currently under contract or may be able to obtain comparable service at a lower rate. As a result, customers may seek to renegotiate the 21

22 terms of their existing contracts or avoid their obligations under those contracts. Hence, Aqualis Offshore s inability to compete successfully may reduce its profitability Counterparty risk If Aqualis Offshore s contracting counterparties are unable or unwilling to honour their contractual obligations, Aqualis Offshore may have to seek alternative employment for its personnel. There is no guarantee that it will be able to obtain the same rates from another party Environmental risk Environmental and energy matters have been the focus of increased scientific and political scrutiny and are subject to various legal requirements. Legal requirements concerning these issues could potentially reduce demand for oil and natural gas which, again, could affect the demand for Aqualis Offshore s services. Furthermore, the activities of Aqualis Offshore are subject to environmental rules and regulations pursuant to international conventions and national legislation in relevant jurisdictions. Failure to comply with environmental rules and regulations may cause damage to the external environment, suspend operations and may result in fines, penalties and/or claims by authorities and customers. To the extent Aqualis Offshore is held liable for such breach of environmental rules and regulations, it may have an adverse effect on its operations and financial conditions Insurance Aqualis Offshore s business is subject to a number of risks, including human error or misjudgements. There is no assurance that insurance or indemnifications agreements will adequately protect Aqualis Offshore against liability from all the consequences of such events. The occurrence of an event for which Aqualis Offshore is not fully insured or indemnified against, could result in substantial losses. In addition, Aqualis Offshore may not be able to procure adequate insurance coverage at commercially reasonable rates in the future and any particular insurance claim may not be reimbursed Accidents An accident involving one or more of Aqualis Offshore s personnel, and most importantly its consequence and indirect effect, could adversely affect its business, financial condition, results of operation and liquidity Legal claims and disputes The numerous hazards inherent in Aqualis Offshore s business increase its exposure to additional claims and disputes in the ordinary course of business which could materially adversely affect its business, financial condition, results of operation and liquidity Limited operating history as a financial entity and unaudited financial information Aqualis Offshore has a limited operating history as a financial entity. Hence, this Prospectus contains limited financial information for Aqualis Offshore since its inception Seasonality Aqualis Offshore s business is seasonal in certain parts of the world. Many of its customers reduce demand for Aqualis Offshore s services during the winter months, hurricane seasons or monsoon periods due to the possibility of adverse weather conditions. As a result, Aqualis Offshore s revenues and profitability typically are lower during these times. Consequently, the existence of any condition that adversely affects Aqualis Offshore s operations would have a negative effect on its results of operations for the full year. 22

23 3. STATEMENT OF RESPONSIBILITY The Board of Directors of Aqualis accepts responsibility for the information contained in this Prospectus and hereby declares that, having taken all reasonable care to ensure that such is the case, the information contained in this Prospectus is, to the best of their knowledge, in accordance with the facts and contains no omissions likely to affect its import. Oslo, 11 October 2013 The Board of Directors of Aqualis ASA Martin Nes Chairman Øystein Stray Spetalen Board member Yvonne Litsheim Sandvold Board member Synne Syrrist Board member 23

24 4. CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS This Prospectus includes forward-looking statements, including, without limitation, projections and expectations regarding the Company s future financial position, business strategy, plans and objectives. All forward-looking statements included in the Prospectus are based on information available to the Company, and views and assessments of the Company, as of the date of this Prospectus. Except as required by the applicable stock exchange rules or applicable law, the Company does not intend, and expressly disclaims any obligation or undertaking, to publicly update, correct or revise any of the information included in this Prospectus, including forward-looking information and statements, whether to reflect changes in the Company's expectations with regard thereto or as a result of new information, future events, changes in conditions or circumstances or otherwise on which any statement in this Prospectus is based. When used in this document, the words anticipate, believe, estimate, expect, seek to, "will", "may", "intends", "assumes" or other words of similar meaning and similar expressions or the negatives thereof, as they relate to the Company, its subsidiaries or its management, are intended to identify forward-looking statements. The Company can give no assurance as to the correctness of such forward-looking statements and investors are cautioned that any forward-looking statements are not guarantees of future performance. Such forward-looking statements involve known and unknown risks, uncertainties and other factors, which may cause the actual results, performance or achievements of the Company and its subsidiaries, or, as the case may be, the industry, to materially differ from any future results, performance or achievements expressed or implied by such forwardlooking statements. Such forward-looking statements are based on numerous assumptions regarding the Group s present and future business strategies and the environment in which the Company and its subsidiaries operate. Given the aforementioned uncertainties, prospective investors are cautioned not to place undue reliance on any of these forward-looking statements. 24

25 5. THE TRANSACTION 5.1 BACKGROUND AND OVERVIEW On 4 September 2013, the Company announced that following an evaluation of various strategic options after the negative outcome of the CLAVELA Phase III trial, it has decided to diversify its business activities by creating a new business unit, to cover the specialist marine and engineering consultancy market, through an proposed acquisition of Aqualis Offshore Ltd. ( Aqualis Offshore ) (the Transaction ). On 27 September 2013, Aqualis signed a final share purchase agreement ( SPA ) to acquire 100% of the shares in Aqualis Offshore for a consideration of NOK 70 million on an equity basis with settlement in Aqualis shares ( New Shares ) valued at NOK 1.60 per share. As of 30 June 2013, Aqualis Offshore had a net debt position of USD 1.35 million. The issue of New Shares was approved by the extraordinary general meeting of the Company ( EGM ) on 8 October The New Shares to be issued to the shareholders of Aqualis Offshore in connection with the Transaction will be subject to an extensive lock-up period. 35 million New Shares have a lock-up period of two years, while the remaining 8.75 million New Shares, held by the management and employees of Aqualis Offshore, have a lockup period of 3-6 years. For further information, see section 5.6 below. The Transaction represents a change in strategic direction for the Company to include a new business area of specialist marine and engineering consultancy services to the offshore oil and gas industry. The existing healthcare activities will remain as a separate business area within the Company. Additionally, in order to secure growth capital for the new business area, while facilitating equal treatment of all shareholders, the EGM held 8 October 2013 resolved to carry out a new share issue of NOK 54 million with pre-emptive rights for shareholders of Aqualis (the "Rights Issue"). The subscription price in the Rights Issue will be NOK 1.60 per share. The Rights Issue is fully underwritten by large shareholders of the Company and Aqualis Offshore. The existing shareholders of Aqualis Offshore are Ferncliff and associated companies (51%), and employees of the company (49%). Ferncliff is owned by Øystein Stray Spetalen, a Board member of the Company, and the CEO of Ferncliff, Martin Nes, the Chairman of the Board of Directors of the Company. 5.2 EXCHANGE RATIO AND NEW SHARES Aqualis will issue New Shares to the Aqualis Offshore shareholders (the Sellers ) as consideration for the Transaction. Upon closing of the Transaction, the Aqualis Offshore shareholders will have an ownership in Aqualis of 56 per cent. The exchange ratio between Aqualis and Aqualis Offshore of 44:56 (the Exchange Ratio ) of the combined company is based on the relative value of Aqualis and Aqualis Offshore s respective businesses which has been agreed between the parties. When determining the value of Aqualis Offshore, the Company has, together with its Manager, carried out a valuation of Aqualis Offshore of where several valuation techniques were used, among them a comparison of expected earnings multiples versus similar companies and a discounted cash flow analysis. Following the Transaction and the Rights Issue, and assuming that the shareholders of the Company will subscribe according to their pro rata share in the Rights Issue, the existing shareholders of Aqualis will hold approximately 61% of the Shares in the Company, not including Ferncliff's and associated companies' New Shares received in connection with the Transaction. 5.3 CONDITIONS FOR COMPLETION OF THE TRANSACTION The Transaction was subject to satisfactory due diligence and the signing of a definite share purchase agreement, as well as shareholder approval at the EGM in Aqualis held 8 October As of the date of this Prospectus, these conditions are satisfied. 5.4 THE EXTRAORDINARY GENERAL MEETING At the EGM held 8 October 2013 the following resolution regarding the issuance of the New Shares to the shareholders of Aqualis Offshore was proposed and approved. 25

26 1. The Company's share capital shall be increased with NOK 43,750,000 by issuance of 43,750,000 new shares of nominal value NOK 1 each. 2. The new shares shall be subscribed by the persons and companies listed in the attachment to the notice of the general meeting, with the number of shares per subscriber stated therein. 3. The subscription price in the share issue shall be NOK 1.60 per share. The subscription amount shall be settled by the Company acquiring all 100,000 shares in Aqualis Offshore Ltd from the subscribers (equal to 100% of the share capital of Aqualis Offshore Ltd), meaning that the subscribers will receive approximately 437 shares in the Company for each share held in Aqualis Offshore Ltd. 4. Subscription for the new shares shall take place on a separate subscription form no later than 10 October The share contribution shall be settled simultaneously with subscription for the new shares, re clause 7 of item 4 of the agenda. 6. The existing shareholders' preferential right to subscribe for new shares is set aside; cf. the Norwegian Public Limited Liability Companies Act section The new shares will give full shareholder rights in the Company, including the right to dividends, from the time the share capital increase is registered with the Norwegian Register of Business Enterprises. 8. Section 4 of the Company's Articles of Association shall be amended to reflect the new share capital and number of shares following the share capital increase. 5.5 ISSUE OF THE NEW SHARES The Sellers shall, subject to the terms and conditions in the SPA, on the closing date, subscribe for the New Shares, which shall be settled as contribution in kind (No. tingsinnskudd). An expert report relating to the in kind contribution has been prepared; cf. Sections and 10-2 cf. Section 2-6 of the Norwegian Public Limited Liability Companies Act, which is attached as Appendix G hereto. It is expected that the share capital increase pertaining to the New Shares will be registered in the Norwegian Register of Business Enterprises at the same time as the Offering Shares in connection with the Rights Issue and Employee Offering, which is on or about 8 November The New Shares are expected to be issued to the Sellers on or about 8 November LOCK-UP AGREEMENTS For a period of two years following the closing date (the "Lock-Up Period"), each of the Sellers agrees not to transfer or place any encumbrances on any of the New Shares that it has received pursuant to the SPA unless consented to in writing in advance by the Company. Such consent can be withheld for any reason, at the Company s discretion. Following the expiry of the Lock-Up Period, the Sellers may dispose of their New Shares without restrictions (other than what otherwise follows from applicable laws), except for the New Shares held by the management of Aqualis Offshore ( Management Shareholders ), which shall be subject to lock-up restrictions for a period of three years following the closing date (the "Extended Lock-Up Period"). At the expiry of the Extended Lock-Up Period, the Lock-Up Restrictions on ¼ of each Management Shareholders' New Shares shall be released, with an additional ¼ of their New Shares being released with the expiry of each subsequent one-year period. 5.7 SHAREHOLDERS RIGHTS RELATING TO THE NEW SHARES The rights attached to the New Shares will be the same as those attached to the Company s existing Shares. The New Shares will be issued electronically and will rank pari passu with existing Shares in all respects from such time as the share capital increases in connection with the issuance of the New Shares are registered in the Norwegian Register of Business Enterprises. The holders of the New Shares will be entitled to dividend from and including the date of registration of the share capital increase in the Norwegian Registry of Business 26

27 Enterprises. The New Shares shall be listed on the Oslo Stock Exchange prior to being delivered (or upon delivery) to the Sellers. Pursuant to the Norwegian Public Limited Companies Act, all shares have equal rights to the Company s profits, in the event of liquidation and to receive dividend, unless all the shareholders approve otherwise. Please see section 13 on more details regarding shareholding in a Norwegian Public Limited Company. 5.8 ADVISORS Carnegie AS has acted as financial advisor to Aqualis in connection with the Transaction. The Company s legal counsel is Advokatfirmaet Schjødt AS. 5.9 EXPENSES RELATED TO THE TRANSACTION Transaction costs and all other directly attributable costs in connection with the Transaction will be borne by the Company and are estimated to approximately NOK 1.2 million DILUTION The immediate dilutive effect of the Transaction for the Company s shareholders will be approximately 56 per cent. Prior to the Transaction Subsequent to the Transaction Ordinary shares... 33,755,515 77,505,515 Number of existing shares in % of new number of shares % 27

28 6. THE RIGHTS ISSUE AND THE EMPLOYEE OFFERING 6.1 PURPOSE AND USE OF PROCEEDS In order to secure growth capital for the new business area resulting from the acquisition of Aqualis Offshore while facilitating equal treatment of all shareholders, the Board proposed to the EGM to carry out a new share issue of NOK million with pre-emptive rights for shareholders of Aqualis (the Rights Issue ). The subscription price in the Rights Issue, which is fully underwritten by large existing shareholders of the Company and Aqualis Offshore, has been set at NOK 1.60 per share. Transferable subscription rights will be issued and listed on the Oslo Stock Exchange. In addition, and in connection with the Rights Issue, the Board proposed to the EGM to conduct an offering of shares directed towards the employees of both the Company and Aqualis Offshore at the same subscription price as in the Rights Issue in order to facilitate further employee ownership in the Company (the Employee Offering, and together with the Rights Issue, the Offerings ). The Company intends to use the net proceeds from the Offerings on general corporate purposes, which may include acquisitions to grow the Group's business, although the Company has no current understandings, commitments or agreements to do so. The Company cannot predict with certainty all of the particular uses for the net proceeds from the Offerings or the amounts that it will actually spend. The amount, allocation and timing of actual uses of net proceeds will vary depending on numerous factors, including the relative success and cost of developing Aqualis Offshore to a sustainable business. As a result, management will have broad discretion in the application of the net proceeds, and investors will be relying on the Company's judgment regarding the application of the net proceeds from the Offerings. 6.2 OVERVIEW The Rights Issue comprises an offering of offer shares ( Offer Shares ) at a subscription price of NOK 1.60 (the Subscription Price ) per Offer Share, corresponding to gross proceeds of NOK The Rights Issue will be directed towards the Company s shareholders as of close of the Oslo Stock Exchange on 8 October 2013, as registered in the Norwegian Central Security Depository (VPS) on 11 October 2013 (the Record Date ) who are not resident in a jurisdiction where such offering would be unlawful, or for jurisdictions other than Norway, would require any filing, registration or similar action (the Eligible Shareholders ). The Rights Issue is fully underwritten by certain large shareholders in the Company and Aqualis Offshore. The Employee Offering comprises an offering of up to employee offer shares ( Employee Offer Shares, and together with the Offer Shares the Offering Shares ) at a subscription price of NOK 1.60, corresponding to gross proceeds of up to NOK Resolution regarding the Offerings At the EGM held 8 October 2013 the following resolution regarding the fully underwritten Rights Issue was proposed and approved. 1. The Company's share capital is increased with NOK 33,755,515 by issuance of 33,755,515 new shares of nominal value NOK 1 each. 2. Shareholders in the Company as per the end of 8 October 2013 (as registered in the Norwegian Central Securities Depository (VPS) 11 October 2013) shall have preferential rights to subscribe for the new shares pro rata to their existing holding of shares in the Company as per the end of 8 October 2013 (as registered in VPS 11 October 2013). Subscription rights will not be awarded based on the shares subscribed for in the share capital increase against contribution in kind resolved by the general meeting on the same date as the rights issue. The subscription rights shall be tradable and listed on Oslo Børs. Over-subscription and subscription without subscription rights is permitted. 3. The Company shall issue a prospectus approved by the Norwegian prospectus authority in connection with the rights issue. Unless the Company's board of directors decides otherwise, the prospectus shall not be registered with or approved by any foreign authorities. The new shares cannot be subscribed for by investors in jurisdictions in which it is not permitted to offer new shares to the investors in question without 28

29 the registration or approval of a prospectus (unless such registration or approval has taken place pursuant to a resolution by the board of directors). With respect to any shareholder that in the Company's view is not entitled to subscribe for new shares due to limitations imposed by laws or regulations of the jurisdiction where such shareholder is a resident or citizen, the Company (or someone appointed or instructed by it) may sell such shareholder's subscription rights against transfer of the net proceeds from such sale to the shareholder. 4. Allocation of new shares shall be made by the board of directors. The following allocation criteria shall apply: 4.1. Allocation will be made to subscribers on the basis of granted and acquired subscription rights which have been validly exercised during the subscription period. Each subscription right will give the right to subscribe for and be allocated one (1) new share If not all subscription rights are validly exercised in the subscription period, subscribers having exercised their subscription rights and who have over-subscribed will have the right to be allocated remaining new shares on a pro rata basis based on the number of subscription rights exercised by the subscriber. In the event that pro rata allocation is not possible, the Company will determine the allocation by lot drawing Any remaining new shares not allocated pursuant to the criteria in items 4.1 and 4.2 above, will be allocated to subscribers not holding subscription rights. Allocation will be sought made pro rata based on the respective subscription amounts, provided, however, that such allocations may be rounded down to the nearest thousand NOK Any remaining new shares not allocated pursuant to the criteria in items 4.1, 4.2 and 4.3 above will be subscribed by and allocated to the underwriters or investors appointed by the underwriters to the extent the underwriters have not fulfilled their underwriting obligations by on certain market terms subscribing for shares in the subscription period, based on and in accordance with their respective underwriting obligations. 5. The subscription price shall be NOK 1.60 per share. The subscription amount shall be paid in cash. 6. The subscription period shall commence on 15 October 2013 and end at 16:30 (CET) on 29 October 2013, provided however, that the subscription period, if the prospectus is not approved in time to maintain the subscription period stated above, shall commence at the latest on the fourth trading day on Oslo Børs after such approval has been obtained and end at 16:30 (CET) on the 14th day thereafter. Any shares not subscribed for within the subscription period and which will thus be allocated to the underwriters shall be subscribed for by these within five (5) business days after expiry of the subscription period. 7. The due date for payment of the new shares is 7. November 2013 or 7 business days after the expiry of the subscription period if the subscription period is postponed according to sub-item 6 above. When subscribing for shares, subscribers with a Norwegian bank account must through completion of the subscription form grant a power of attorney to debit a stated bank account in Norway for an amount equal to the allotted number of shares. Upon allotment, the manager or someone appointed by the manager will debit the subscriber's account for the allotted amount. The debit will take place on or around the due date of payment. Subscribers without a Norwegian bank account shall pay the subscription amount to a separate bank account. 8. The new shares will give full shareholder rights in the Company, including the right to dividends, from the time the share capital increase is registered with the Norwegian Register of Business Enterprises. 9. Section 4 of the Company's Articles of Association shall be amended to reflect the new share capital and number of shares following the share capital increase. 10. As consideration for an underwriting guarantee with underwriters, who on certain customary conditions will subscribe for all shares not subscribed for and allotted in the rights issue or fulfil their underwriting obligation by subscribing for shares within the subscription period, an amount in NOK equal to 2% of the guaranteed amount will be paid by the Company to the underwriters." 29

30 The EGM approved the following resolution with regards to the Employee Offering. 1. The Company's share capital is increased with NOK 5,000,000 by issuance of 5,000,000 new shares of nominal value NOK 1 each. 2. The shares may be subscribed for by employees in both the Company and Aqualis Offshore Ltd (or their respective subsidiaries). 3. Allocation of new shares shall be made by the board of directors. The following allocation criteria shall apply: Full allocation of subscribed shares up to a maximum of 30,000 shares per subscriber. In the event that total subscriptions exceed the 5,000,000 shares covered by this resolution, the allocation above 30,000 shares per subscriber will be on a pro rata basis based on the number of shares subscribed for. 4. The subscription price in the rights issue shall be NOK 1.60 per share. The minimum subscription per subscriber shall be 10,000 shares. The subscription amount shall be paid in cash. 5. The shares issued are subject to a lock-up period of 12 months. 6. The subscription period shall commence on 15 October 2013 and end at 16:30 (CET) on 29 October 2013, provided however, that the subscription period, if the prospectus referred to under agenda item 4 in this notice is not approved in time to maintain the subscription period stated above, shall commence at the latest on the fourth trading day on Oslo Børs after such approval has been obtained and end at 16:30 (CET) on the 14th day thereafter. 7. The due date for payment of the new shares is 7 November 2013 or 7 business days after the expiry of the subscription period if the subscription period is postponed according to sub-item 6 above. When subscribing for shares, subscribers with a Norwegian bank account must through completion of the subscription form grant a power of attorney to debit a stated bank account in Norway for an amount equal to the allotted number of shares. Upon allotment, the manager or someone appointed by the manager will debit the subscriber's account for the allotted amount. The debit will take place on or around the due date of payment. Subscribers without a Norwegian bank account shall pay the subscription amount to a separate bank account. 8. The new shares will give full shareholder rights in the Company, including the right to dividends, from the time the share capital increase is registered with the Norwegian Register of Business Enterprises. 9. Section 4 of the Company's Articles of Association shall be amended to reflect the new share capital and number of shares following the share capital increase Timetable The timetable below provides certain indicative key dates for the Offerings. Last day of trading including right to participate in Rights Issue... 8 October 2013 Shares trading excluding right to participate in Rights Issue... 9 October 2013 Subscription period for the Offerings commences October 2013 First day of trading of Subscription Rights October 2013 End of trading of Subscription Rights October 2013 Subscription period for the Offerings ends October 2013 Allocation... 1 November 2013 Payment date... 7 November 2013 Registration of share capital increase... On or about 8 November 2013 Delivery of the Offering Shares... On or about 8 November 2013 Listing and commencement of trading on Oslo Stock Exchange... On or about 8 November Underwriting The Company has in connection with the Rights Issue entered into an underwriting agreement (the Underwriting Agreement ) with Strata Marine & Offshore AS, Gross Management AS, AS Ferncliff and Anko Invest AS (jointly, the Underwriters ), pursuant to which the Underwriters have undertaken to underwrite the subscription of the total amount of NOK 54 million in the Rights Issue ( Total Underwriting Commitment ). 30

31 To the extent the Underwriter is a direct or indirect shareholder in the Company, each of the Underwriters have also irrevocably undertaken, on the terms and subject to the conditions set forth in the Underwriting Agreement, on the first day of the Subscription Period, to use the Subscription Rights allocated to it as a shareholder to subscribe and pay for the number of Offer Shares which equals its pro rata entitlement as a shareholder. The Underwriters have, on a pro rata basis and limited to their respective underwritten amounts as set out in the table below, undertaken to subscribe and pay for the Offer Shares not subscribed for during the Subscription Period. Underwriting obligation Underwriting obligation Underwriter Address In % (in shares) (in NOK) Strata Marine & Offshore AS... Sjølyst Plass 2, 0278 Oslo 16,571,313 26,514, % Gross Management AS... Sjølyst Plass 2, 0278 Oslo 9,560,500 15,296, % AS Ferncliff... Sjølyst Plass 2, 0278 Oslo 6,373,702 10,197, % Anko Invest AS Tennfjord, Haram i Møre og Romsdal 1,250,000 2,000, % Total 33,755,515 54,008, % The Underwriters shall receive an underwriting fee of 2% of the Underwriting obligation. 6.3 TERMS AND CONDITIONS OF THE RIGHTS ISSUE Subscription Rights The Rights Issue comprises transferrable subscription rights ( Subscription Rights ), where each Subscription Right grants the right to subscribe for one (1) Offer Share. The Eligible Shareholders will be granted one Subscription Right for each (1) Share owned by such Eligible Shareholder on the Record Date. Eligible Shareholders will be allowed to subscribe for more Offer Shares than the number of Subscription Rights held by Eligible Shareholders. See section for allotment criteria. NO FRACTIONAL OFFER SHARES WILL BE ISSUED. Fractions will not be compensated, and all fractions will be rounded down to the nearest integer that provides issue of whole numbers of said securities to each participant. The Subscription Rights will be transferable and listed on the Oslo Stock Exchange during the Subscription Period. The Subscription Rights will be transferred to the Eligible Shareholders VPS-accounts on 15 October The Subscription Rights must be used to subscribe for Offer Shares before the expiry of the Subscription Period (i.e. 29 October 2013 at 16:30 hours (CET)). Subscription Rights that are not exercised before 16:30 hours (CET) on 29 October 2013 will have no value and will lapse without compensation to the holder. Holders of Subscription Rights should note that subscriptions for Offer Shares must be made in accordance with the procedures set out in this Prospectus and that holding of Subscription Rights in itself should not represent a subscription of Offer Shares. Subscription Rights of Existing Shareholders resident in jurisdictions where the Prospectus may not be distributed and/or with legislation that, according to the Company s assessment, prohibits or otherwise restricts subscription for Offer Shares (the Ineligible Shareholders ) will initially be credited to such Ineligible Shareholders VPS accounts. Such credit specifically does not constitute an offer to Ineligible Shareholders. The Company will instruct the Manager to, as far as possible, withdraw the Subscription Rights from such Ineligible Shareholders VPS accounts, and sell them from and including 23 October 2013 until 29 October 2013 at 16:30 hours (CET) for the account and risk of such Ineligible Shareholders. The Manager will use commercially reasonable efforts to procure that the Subscription Rights withdrawn from the VPS accounts of Ineligible Shareholders are sold on behalf of, and for the benefit of, such Ineligible Shareholders during said period, provided that (i) the Manager is able to sell the Subscription Rights at a price at least equal to the anticipated costs related to the sale of such Subscription Rights, and (ii) the relevant Ineligible Shareholder has not by 16:30 hours (CET) on 22 October 2013 documented to the Company through the Manager a right to receive the Subscription Rights withdrawn from its VPS account, in which case the Manager shall re-credit the withdrawn Subscription Rights to the VPS account of the relevant Ineligible Shareholder. The 31

32 proceeds from the sale of the Subscription Rights (if any), after deduction of customary sales expenses, will be credited to the Ineligible Shareholder s bank account registered in the VPS for payment of dividends, provided that the net proceeds attributable to such Ineligible Shareholder amount to or exceed NOK 10. If an Ineligible Shareholder does not have a bank account registered in the VPS, the Ineligible Shareholder must contact the Manager to claim the proceeds. If the net proceeds attributable to an Ineligible Shareholder are less than NOK 10, such amount will be retained for the benefit of the Company. There can be no assurance that the Manager will be able to withdraw and/or sell the Subscription Rights at a profit or at all. Other than as explicitly stated above, neither the Company nor the Manager will conduct any sale of Subscription Rights not utilised before the end of the Subscription Period. Note: This Prospectus does not constitute an offer of, or a solicitation of an offer to purchase, any of the Offer Shares in any jurisdiction or in any circumstance in which such offer or solicitation would be unlawful. This Prospectus may not be sent to any person in an Ineligible Jurisdiction, and the crediting of Subscription Rights to an account of the shareholders of the Company or other person in an Ineligible Jurisdiction does not constitute an offer to such persons to subscribe for Offer Shares and Ineligible Persons may not exercise Subscription Rights Subscription period The Subscription Period in the Rights Issue will commence 09:00 hours (CET) on 15 October 2013 and expire at 16:30 hours (CET) on 29 October The Subscription Period may be extended by the Board, but may not in any event be later than 5 November An extension, if any, will be announced by a press release through and on the Company s webpage In case of extension of the Subscription Period, all relevant deadlines will be extended accordingly. The Subscription Period may not be closed earlier than 16:30 hours (CET) on 29 October The Subscription Rights are fully tradable and transferrable, and will be listed on the Oslo Stock Exchange with ticker AQUA T and registered in VPS with ISIN NO Trading in the Subscription Rights on the Oslo Stock Exchange may take place from and including 15 October 2013, and until 16:30 hours (CET) on 29 October Persons intending to trade in Subscription Rights should be aware that the exercise of Subscription Rights by holders who are located in jurisdictions outside Norway may be restricted or prohibited by applicable securities laws Subscription price The Subscription Price for one (1) Offer Share is NOK The Subscription Price is identical to the price offered to the shareholders of Aqualis Offshore. The subscribers will not incur any costs related to the subscription for, or allotment of, the Offer Shares Subscription procedure Subscription for Offer Shares must be made by submitting a correctly completed subscription form, attached as Appendix D hereto, (the Subscription Form ) to the Manager during the Subscription Period. The Prospectus is available at and and at the offices of the Manager and the Company. Norwegian subscribers domiciled in Norway can in addition download the Prospectus on and and subscribe for Offer Shares through VPS' internet service. Online subscriptions must be submitted, and accurately completed Subscription Forms must be received by the Manager by 16:30 hours (CET) on 29 October Correctly completed Subscription Forms must be received by the Manager no later than 16:30 hours (CET) on 29 October 2013 at the following address, fax number or address: Carnegie AS Grundingen 2, Aker Brygge PO Box 684 Sentrum 0106 Oslo, Norway Fax: Tel: None of the Company or the Manager may be held responsible for postal delays, unavailable fax lines, internet lines or servers or other logistical or technical problems that may result in subscriptions not being received in time or at all by the Manager. Subscription Forms received after the end of the Subscription Period and/or 32

33 incomplete or incorrect Subscription Forms and any subscription that may be unlawful may be disregarded at the sole discretion of the Company and/or the Manager without notice to the subscriber. Subscriptions are binding and irrevocable, and cannot be withdrawn, cancelled or modified by the subscriber after having been received by the Manager. The subscriber is responsible for the correctness of the information filled into the Subscription Form. By signing and submitting a Subscription Form or subscribing through VPS internet service, the subscribers confirm and warrant that they are eligible to subscribe for Offer Shares under the terms set forth herein. There is no minimum subscription amount for which subscriptions in the Rights Issue must be made. Oversubscription, i.e. subscription for more Offer Shares than the number of Subscription Rights held by the subscriber entitles the subscriber to be allocated, and subscription without Subscription Rights will be allowed. Multiple subscriptions (i.e., subscriptions on more than one Subscription Form) are allowed. Please note, however, that two separate Subscription Forms submitted by the same subscriber with the same number of Offer Shares subscribed for on both Subscription Forms will only be counted once unless otherwise explicitly stated in one of the Subscription Forms. In the case of multiple subscriptions through the VPS online subscription system or subscriptions made both on a Subscription Form and through the VPS online subscription system, all subscriptions will be counted Allocation Allotment of the Offer Shares is expected to take place on or about 1 November Allocation of Offer Shares will be made in accordance with Subscription Rights exercised in the Subscription Period. The following allocation criteria will be used for allotment of Offer Shares in the Rights Issue: 1. Allocation will be made to subscribers on the basis of granted and acquired subscription rights which have been validly exercised during the subscription period. Each subscription right will give the right to subscribe for and be allocated one (1) new share. 2. If not all subscription rights are validly exercised in the subscription period, subscribers having exercised their subscription rights and who have over-subscribed will have the right to be allocated remaining new shares on a pro rata basis based on the number of subscription rights exercised by the subscriber. In the event that pro rata allocation is not possible, the Company will determine the allocation by lot drawing. 3. Any remaining new shares not allocated pursuant to the criteria in items 1 and 2 above, will be allocated to subscribers not holding subscription rights. Allocation will be sought made pro rata based on the respective subscription amounts, provided, however, that such allocations may be rounded down to the nearest thousand NOK. 4. Any remaining new shares not allocated pursuant to the criteria in items 1, 2 and 3 above will be subscribed by and allocated to the Underwriters or investors appointed by the Underwriters to the extent the Underwriters have not fulfilled their underwriting obligations by on certain market terms subscribing for shares in the subscription period, based on and in accordance with their respective underwriting obligations. General information regarding the preliminary result of the Rights Issue is expected to be published on or about 30 October 2013 in the form of a stock exchange release through All Subscribers being allotted Offer Shares will receive a letter from the Manager confirming the number of Offer Shares allotted to the Subscriber and the corresponding amount which will be debited the Subscriber s account. This letter is expected to be mailed on or about 4 November PAYMENT OF THE OFFER SHARES When subscribing for Offer Shares, each Subscriber with a Norwegian bank account must provide a one-time authorisation to the Manager to debit a specified bank account with a Norwegian bank for the amount (in NOK) payable for the Offer Shares allotted to such Subscriber. It is expected that the amount will be debited on or about 7 November 2013 (the Payment Date ). However, there must be sufficient funds in the specified bank account from and including 6 November The Manager is only authorised to debit such account once, but 33

34 reserves the right to make up to three debit attempts, and the authorisation will be valid for up to seven working days after the Payment Date. If there are insufficient funds on the specified bank account or it is impossible to debit the specified bank account for the amount that the Subscriber is obligated to pay, or payment is not received by the Manager according to other instructions, the Subscriber s obligation to pay for the Offer Shares will be deemed overdue. Subscribers who do not have a Norwegian bank account must ensure that payment for their Offer Shares is made on or before 10:00 hours (CET) on 7 November 2013 and should contact the Manager in this respect. For late payments, penalty interest will accrue at a rate equal to the prevailing interest rate, pursuant to the Norwegian Act on Interest on Overdue Payment of December 17, 1976 no. 100, which at the date of this Prospectus is 9.50% per annum. If a Subscriber fails to comply with the terms of payment, the Offer Shares will, subject to the discretion of the Manager, not be delivered to the Subscriber, and the Manager reserves the right, at the risk and cost of the Subscriber (however, so that the Subscriber will not be entitled to any profit therefrom), to cancel the Subscription and to re-allot or otherwise dispose of the allocated Offer Shares on such terms and in such manner as the Manager may decide in accordance with Norwegian law. The original Subscriber remains liable for payment of the Subscription Price for the Offer Shares allocated to the Subscriber together with any interest, cost, charges and expenses accrued, and the Company or the Manager may enforce payment for any such amount outstanding. 6.5 TERMS AND CONDITIONS OF THE EMPLOYEE OFFERING Overview The Employee Offering comprises an offering of up to 5,000,000 Employee Offer Shares at NOK 1.60 per share. The Employee Offer Shares may be subscribed for by employees in both the Company and Aqualis Offshore (or their respective subsidiaries). The minimum subscription per employee shall be 10,000 shares. The Employee Offer Shares are subject to a lock-up period of 12 months, as further described in section 6.7 below Subscription period The subscription period in the Employee Offering is identical to the Subscription Period in the Rights Issue as further described in section above. Thus, the subscription period will commence 09:00 hours (CET) on 15 October 2013 and expire at 16:30 hours (CET) on 29 October The subscription period may be extended by the Board, but may not in any event be later than 5 November An extension, if any, will be announced by a press release through and on the Company s webpage In case of extension of the subscription period, all relevant deadlines will be extended accordingly. The subscription period may not be closed earlier than 16:30 hours (CET) on 29 October Subscription price The Subscription Price for one (1) Employee Offer Share is NOK 1.60, i.e. the same subscription price as in the Rights Issue, cf. section above, and the Transaction. The subscribers will not incur any costs related to the subscription for, or allotment of, the Employee Offer Shares Subscription procedure Subscription for Employee Offer Shares must be made by submitting a correctly completed subscription form, attached as Appendix E hereto to the Manager during the subscription period. The Prospectus is available at and and at the offices of the Manager and the Company. Norwegian subscribers domiciled in Norway can in addition download the Prospectus on and Correctly completed subscription forms must be received by the Manager no later than 16:30 hours (CET) on 29 October 2013 at the following address, fax number or address: 34

35 Carnegie AS Grundingen 2, Aker Brygge PO Box 684 Sentrum 0106 Oslo, Norway Fax: Tel: None of the Company or the Manager may be held responsible for postal delays, unavailable fax lines or servers or other logistical or technical problems that may result in subscriptions not being received in time or at all by the Manager. Subscription forms received after the end of the subscription period and/or incomplete or incorrect subscription forms and any subscription that may be unlawful may be disregarded at the sole discretion of the Company and/or the Manager without notice to the subscriber. Subscriptions are binding and irrevocable, and cannot be withdrawn, cancelled or modified by the subscriber after having been received by the Manager. The subscriber is responsible for the correctness of the information filled into the subscription form Allocation and payment Allocation of the Employee Offer Shares shall be made by the Board of Directors. The following allocation criteria shall apply: Full allocation of subscribed shares up to a maximum of 30,000 shares per subscriber. In the event that total subscriptions exceed the 5,000,000 shares covered by this resolution, the allocation above 30,000 shares per subscriber will be on a pro rata basis based on the number of shares subscribed for. All subscribers being allotted Employee Offer Shares will receive a letter on or about 4 November 2013 from the Manager containing information regarding the number of Employee Offer Shares allotted to the subscriber and payment instructions. The payment for the Employee Offer Shares falls due 10:00 CET on 7 November If payment is not received by the Manager by 10:00 CET on 7 November 2013 the subscriber s obligation to pay for the Employee Offer Shares will be deemed overdue. For late payments, penalty interest will accrue at a rate equal to the prevailing interest rate, pursuant to the Norwegian Act on Interest on Overdue Payment of December 17, 1976 no. 100, which at the date of this Prospectus is 9.50% per annum. 6.6 DELIVERY AND LISTING OF THE OFFERING SHARES All Subscribers subscribing for Offering Shares must have a valid VPS account (established or maintained by an investment bank or Norwegian bank that is entitled to operate VPS accounts) to receive Offering Shares. Assuming that payments from all Subscribers are made when due, delivery of the Offering Shares is expected to take place on or about 8 November 2013, however, delivery of the Offering Shares will take place at the latest on 15 November Assuming that payments from all Subscribers are made when due, it is expected that the share capital increase will be registered in the Norwegian Register of Business Enterprises on or about 8 November 2013, however, such registration will take place at the latest on 15 November All of the Offering Shares will be object for an application for admission to trading on Oslo Børs. Assuming timely payment by all Subscribers, the Company expects that the Offering Shares will be listed on Oslo Børs on or about 8 November The Shares will not be sought or admitted to trading on any other regulated market than Oslo Børs. 6.7 TRANSFERABILITY OF THE OFFERING SHARES A Subscriber will not under any circumstances be entitled to sell or transfer its Offer Shares until such Subscriber has paid these in full and the share capital increase in connection with the Rights Issue has been registered in the Norwegian Register of Business Enterprises. Upon payment of the Offer Shares and registration of the Offer Shares in the Norwegian Register of Business Enterprises, the Offer Shares will be freely transferable. The Employee Offer Shares issued in connection with the Employee Offering are subject to a lock-up period of 12 months. 35

36 6.8 VPS REGISTRATION The Offering Shares will be registered with VPS under ISIN NO The Offering Shares will not be delivered to the Subscribers' VPS accounts before they are fully paid, registered with the Norwegian Register for Business Enterprises and registered in the VPS. See section 12.5 for information regarding the Company s registrar. 6.9 SHARE CAPITAL FOLLOWING THE OFFERINGS The Company s total number of issued Shares following the Transaction, the Rights Issue and the Employee Offering will be , each with a nominal value of NOK 1.00 per Share SHAREHOLDERS RIGHTS RELATING TO THE OFFERING SHARES The rights attached to the Offering Shares will be the same as those attached to the Company s existing Shares. The Offering Shares will be issued electronically and will rank pari passu with existing shares in all respects from such time as the share capital increases in connection with the issuance of the Offering Shares are registered in the Norwegian Register of Business Enterprises. The holders of the Offering Shares will be entitled to dividend from and including the date of registration of the share capital increase in the Norwegian Registry of Business Enterprises. There are no particular restrictions or procedures in relation to the distributions of dividends to shareholders who are resident outside Norway, other than an obligation on part of the Company to deduct withholding tax as further described in Section 15. Pursuant to the Norwegian Public Limited Companies Act, all shares have equal rights to the Company s profits, in the event of liquidation and to receive dividend, unless all the shareholders approve otherwise. Please see section 13 regarding shareholding in a Norwegian Public Limited Company DILUTION The Rights Issue will result in an immediate dilution of approximately 50 per cent for Eligible Shareholders who do not participate in the Rights Issue. Based on the total number of Shares in the Company following the Transaction and the Offerings, the dilutive effect for Eligible Shareholders who do not participate in the Rights Issue will be approximately 71 per cent PUBLICATION OF INFORMATION RELATING TO THE OFFERINGS Publication of information related to any changes in the Offerings and the amount subscribed, will be published on under the Company s ticker AQUA, and will also be available on the Company s website The announcement regarding the amount subscribed is expected to be made on or about 30 October EXPENSES RELATED TO THE OFFERINGS Transaction costs and all other directly attributable costs in connection with the Rights Issue and Employee Offering will be borne by the Company and are estimated to approximately NOK 2.8 million, thus resulting in net proceeds of approximately NOK 59.2 million INTEREST OF NATURAL AND LEGAL PERSONS INVOLVED IN THE RIGHTS ISSUE The Manager and its affiliates have provided from time to time, and may provide in the future, investment and commercial banking services to the Company and its affiliates in the ordinary course of business, for which they may have received and may continue to receive customary fees and commissions. The Manager does not intend to disclose the extent of any such investments or transactions otherwise than in accordance with any legal or regulatory obligation to do so. The Manager, its employees and any affiliate may currently own existing Shares in the Company, and employees of the Manager may obtain allotment in the Rights Issue. Furthermore, the Manager will receive a commission in connection with the Rights Issue and, as such, has an interest in the Rights Issue. Reference is made to section 6.13 Expenses related to the Offerings. 36

37 6.15 PARTICIPATION OF MEMBERS OF THE COMPANY S MANAGEMENT AND BOARD OF DIRECTORS IN THE RIGHTS ISSUE The Underwriter AS Ferncliff is wholly owned by the Company s board member Øystein Stray Spetalen whereas the Underwriters Gross Management AS and Strata Marine & Offshore AS are both partly owned by Mr. Spetalen. Thus, Mr. Spetalen is obligated to subscribe for Offer Shares as outlined in section above. Other than the Underwriting Agreement mentioned above and in section 6.2, the Company is not aware of whether any other members of the Company s Management or Board of Directors intend to subscribe for Offer Shares in the Rights Issue, or whether any person intends to subscribe for more than 5% of the Offer Shares ADVISORS The Manager for the Rights Issue is Carnegie AS, Grundingen 2, PO Box 684 Sentrum, 0106 Oslo, Norway. The legal advisor is Advokatfirmaet Schjødt AS, Ruseløkkveien 14, PO Box 2444 Solli, 0201 Oslo, Norway GOVERNING LAW AND JURISDICTION This Prospectus is subject to Norwegian law, unless otherwise indicated herein. Any dispute arising in respect of this Prospectus is subject to the exclusive jurisdiction of Oslo City Court. 37

38 7. PRESENTATION OF AQUALIS ASA 7.1 GENERAL Aqualis ASA is a public limited liability company pursuant to the Norwegian Public Limited Liability Companies Act, incorporated under the laws of Norway. The Company was established on 30 August The Company s organisation number is , and its currently registered office is Sjølyst Plass 2, 0278 Oslo, Norway with telephone number: As of the date of this Prospectus, the Company has no subsidiaries. 7.2 HISTORICAL BACKGROUND AND COMPANY DEVELOPMENT The Norwegian industrial company, Norsk Hydro, developed the Lipid Vector Technology ( LVT ) in the 1990 s, by combining its lipid expertise with pharmaceutical know-how, and was able to invent new drug candidates through chemical synthesis of various lipids with existing drugs. In 2001, Norsk Hydro partnered with the venture capital firm, NeoMed Management, to spin-off all LVTrelated assets and activities and the Company was founded and incorporated as Conpharma AS in August The Company acquired all technology rights from Norsk Hydro, with Norsk Hydro retaining residual rights to receive certain payments from the Company. The Company s name was changed to Clavis Pharma AS in In 2006, the Company completed a private placement and a subsequent initial public offering, and its shares were listed on the Oslo Børs. The Company s name was changed to Aqualis ASA on 8 October By 2009, the Company had developed two late-stage drug candidates, elacytarabine, for the treatment of patients with relapsed or refractory acute myeloid leukaemia, and CP-4126, for the treatment of patients with pancreatic cancer. These two drug candidates were ready to start pivotal clinical trials, and in late 2009 Aqualis reached a significant milestone when the Company entered into a global licensing agreement with Clovis Oncology Inc. for the final development of the drug candidate CP Large international pivotal clinical trials for the two drug candidates were started during 2010, and in November 2012 and April 2013 the Company announced the results of these studies for CP-4126 and elacytarabine respectively. The results showed that there were no meaningful difference in overall survival between these drug candidates and the drugs used in the control arms. As a result all further development of these two drug candidates was stopped. Following the discontinuation of development of elacytarabine and CP-4126 the Company had no drug candidates in clinical development, and decided to suspend all further R&D activities related to the LVTtechnology. As a result, most of the employees have left the Company and Aqualis has only two employees at the date of this Prospectus. The Company still has a large portfolio of patents relating to the LVT-technology, as well as two licensing agreements, and the Company will continue to optimise the value of these assets through existing and potential new partnerships. The table below summarises the important events in the history and development of the Company. 38

39 Year Key milestones & events Pre Starting position: Approximately 10 years of R&D conducted by Norsk Hydro to develop LVT Company founded as ConPharma AS Second round of venture financing from MVM Life Science Partners, Braganza AS and others Change of name to Clavis Pharma ASA Share offering and IPO of NOK 242 million and listing on the Oslo Børs Positive Phase II date for elacytarabine in relapsed or refractory AML NOK 137 million share offering Licence agreement with Clovis Oncology for CP-4126 for Europe and Americas CLAVELA elacytarabine phase III trial commenced LEAP CP-4126 pivotal trial commenced Licence agreement with Clovis Oncology for CP-4126 expanded to include global rights NOK 175 million share offering Negative outcome of LEAP CP-4126 pivotal trial Negative outcome of phase III CLAVELA trial Change of name to Aqualis ASA 7.3 BUSINESS DESCRIPTION AND PRINCIPAL ACTIVITIES Aqualis was up until early 2013 a clinical-stage oncology focused pharmaceutical company with a portfolio of novel anti-cancer drugs in development. These patented New Chemical Entities (NCEs) were novel, improved versions of well-established and commercially successful drugs (parent drugs), developed using Company's Lipid Vector Technology (LVT), and were believed to have better efficacy than the parent drugs and a similar side effect profile. The Lipid Vector Technology (LVT) is the result of extensive innovative research carried out over more than a decade at Norsk Hydro. It involves the chemical linking of specific lipids to selected parent drugs. The new molecule created is a New Chemical Entity (NCE) that may be patented. The Company acquired and further developed the LVT technology and intellectual property through substantial additional preclinical understanding, manufacturing know-how and clinical development. The Company has been focusing on two key late stage drug candidates: CP-4126: A novel, patented, LVT derivative of the anti-cancer drug gemcitabine; the current standard treatment for pancreatic cancer. Gemcitabine is also widely used in combination with other chemotherapy agents for the treatment of other cancers, including non-small cell lung (NSCLC), ovarian, gastro-intestinal and breast cancer. In developing CP-4126, the Company had partnered globally with Clovis Oncology, Inc. (Clovis Oncology). In November 2012, Aqualis announced the results of the 360-patient pivotal Phase II LEAP study of CP-4126 versus gemcitabine in metastatic pancreatic cancer. The study was conducted by Clovis Oncology, Inc. and did not meet its primary or secondary endpoints, as it showed no difference in overall survival between patients treated with CP-4126 or gemcitabine. Consequently, all development work with CP-4126 was terminated by both the Company and Clovis Oncology in late 2012 following these results. CP-4126 was licensed to Clovis Oncology worldwide, and Clovis Oncology was responsible for the majority of the development and regulatory costs. The Company retained an option to co-promote the product in Europe. All rights to CP-4126 have been returned to Aqualis following the termination of all development activities related to CP Elacytarabine a novel, patented LVT derivative of the anti-cancer drug cytarabine that was believed to have the potential to improve treatment outcomes in patients with haematological malignancies (leukaemia), such as acute myeloid leukaemia (AML), acute lymphocytic leukaemia (ALL) and lymphomas. Cytarabine is the current standard treatment for patients suffering from these conditions. In April 2013, the Company announced the results of the Phase III CLAVELA study investigating elacytarabine in patients with relapsed or refractory AML. The trial showed that there was no significant difference in overall survival (OS) between the two arms where patients were randomised to receive either elacytarabine, or investigator s choice of treatment. Due to the negative outcome of the CLAVELA trial, the Company decided not to commit any further resources to studies of elacytarabine in the treatment of patients with AML, or in any other indications. 39

40 CLAVELA was a 380-patient Phase III open-label randomised, controlled trial comparing elacytarabine with the investigator s choice of treatment in patients with relapsed or refractory AML. The study was conducted at 75 clinical sites in the USA, Canada, Europe and Australia. The primary endpoint of the study was overall survival and the objective was to demonstrate superiority of elacytarabine over current therapies. Patients were randomised to each arm of the study and the difference in OS and other parameters, including response rates, duration of response, and safety profile of elacytarabine, was measured. The enrolment target for CLAVELA was reached in December Following the discontinuation of development of elacytarabine in April 2013, and of CP-4126 in November 2012, the Company has no drug candidates in clinical development and has suspended all R&D activities. As a result, most of the employees have left the Company and Aqualis has only 2 employees at the date of this Prospectus. The staffing situation will be reviewed as the Company evaluates new investment opportunities within the healthcare industry (ref. below). The Company still has a large portfolio of patents relating to the LVT-technology and the Company will sell or out-license some or all of these patents should the opportunity arise (refer to Section 7.4 for further details on patents). In addition, the Company has a licensing agreement, which was entered into in May 2011, with Translational Therapeutics, Inc. ( TT ), an early-stage private biopharmaceutical company based in Massachusetts, USA, for the development and commercialisation of CP CP-4033 is a LVT derivative of ribavirin, currently in the preclinical state of development. TT is developing CP-4033 for use in the treatment of aggressive thyroid cancer, and will evaluate the potential of CP-4033 for in the treatment of other solid tumours. Under the terms of the agreement, TT is responsible for all future development of CP-4033 and Aqualis may receive future milestones, should TT sub-license CP-4033, and royalty payments on potential future sales. The Company also has a licensing agreement with Mt. Sinai School of Medicine, New York, for the possible development of the pre-clinical compound CP-4200, a LVT derivative of azacytidine. Going forward, the Company will try to maximize the value of these assets by closely following the licensees development of potential drug candidates, and through further out-licensing or sale of existing patents and patent applications. The Company will continue to review new investment opportunities within the healthcare industry to see whether further investments should be made in new technologies and/or development projects through external parties. 7.4 PATENTS AND INTELLECTUAL PROPERTY RIGHTS The Company has a patent portfolio that offers composition of matter protection for a large number of specific LVT compounds that includes more than 165 approved patents in ten patent families. The patents and patent application owned by the Company cover processes, products, formulation and product application. More specifically, seven patent families are specific to LVT nucleoside derivatives for use in the treatment of cancer and viral infections. The eighth patent family is an umbrella patent providing broad coverage of the technology exemplified for a range of different drug classes used within seven therapeutic areas. The ninth patent family is related to 1.3-dioxolane derivatives for use in the treatment of cancer. Troxacitabine is the most known compound in this class. The tenth patent family is related to steroids and their use in the treatment of cancer and inflammatory diseases. None of the granted patents is currently subject to any proceedings in which its validity is being challenged, nor, so far as the Company is aware, have any objections been raised to any of the pending applications which are likely to prevent claims being granted which are of a sufficiently broad scope to protect the Company's commercial position. The Company is not aware of any third-party infringement of any of its patent rights. The Company s key patent and patent applications are summarized in the following table: 40

41 Aqualis patent portfolio Key compounds Therapeutic area Priority date Elactyrabine CP-4126 CP-4126 intravenous formulation Elacytarabine intravenous Anticancer, cytarabine derivatives Anticancer, cytarabine derivatives Anticancer 2009 Anticancer 2010 Expiry year without extension US 2014** ROW 2016** US 2018 ROW Pending grant 2031 Pending grant Expiry year including potential extension* US 2019 ROW 2021 JPN 2021 US 2023 ROW 2023 JPN 2023 formulation * Possible extension: Hatch Waxman term extension in the US: 50% of the period used on clinical studies (IND) relating to the patent, plus the period used on the NDA review. Extension period not to exceed 5 years and the total remaining patent time, including extension, not to exceed 14 years SPC (Supplementary Protection Certificate) in rest of the world (ROW): An SPC period of a maximum of five (5) years can be awarded to extend the patent expiry date of a particular active ingredient used in a medicinal product with a marketing authorisation. The SPC is awarded in order to compensate the long time spent and the delay between the grant of a patent and the commercialisation of the product due to the extensive documentary work needed in order to seek marketing authorisation. An SPC must be applied for in each territory. ** Orphan drug status granted for elacytarabine in AML in the US and EU ensuring seven and ten years of market exclusivity respectively, following a regulatory approval of the product. It has been the Company s policy to require its employees, consultants, outside scientific collaborators, sponsored researchers and other advisors to execute confidentiality agreements upon the commencement of employment or consulting relationships with the Company. These agreements provide that all confidential information developed or made known to the individual during the course of the individual s relationship with the Company is to be kept confidential and not disclosed to third parties except in specific circumstances. In the case of employees, the agreements provide that all inventions conceived by the individual shall be the Company s property and all employment contracts include a reference to the Norwegian Act in Inventions made by the Employees of 17 April 1970 no. 21. There can be no assurance, however, that these agreements will provide meaningful protection or adequate remedies for our trade secrets in the event of unauthorised use or disclosure of such information. n.a. n.a. 7.5 PROPERTY AND EQUIPMENT As of the date of this Prospectus, the Company has no plant or production and lab equipment. The Company has a leasing contract for its main office, which expires on 31 January Aqualis main office measures approximately 1,000m². However, due to the significant downscaling of the Company s operations, the Company relocated to new offices in early October 2013, and the Company expects to be able to terminate the existing leasing contract before expiry. Total plant and equipment in Aqualis Offshore per 30 June 2013 amounted to USD 117 thousand, consisting of mainly leasehold improvements, office furniture and computer hardware and software. 7.6 SIGNIFICANT CHANGES IN THE COMPANY S FINANCIAL OR TRADING POSITION SINCE 30 JUNE 2013 Except for the Transaction and the contemplated Offerings, there have been no significant changes in the financial or trading position of the Company which has occurred since 30 June

42 8. PRESENTATION OF AQUALIS OFFSHORE 8.1 COMPANY OVERVIEW Aqualis Offshore Ltd ( Aqualis Offshore ) is incorporated under the Companies Act 2006 as a private company. Aqualis Offshore was incorporated on 17 December The company s registered business address is located at 5 New Street Square, EC4A 3TW London, United Kingdom, with telephone number The company s webpage is LEGAL STRUCTURE Aqualis Offshore Ltd is the holding company of the group which consists of four wholly-owned and two partly owned subsidiaries as illustrated below. The activities in the holding company are mainly related to overhead, management and group services. The subsidiary, Aqualis Offshore AS (Norway), is owned 60% by Aqualis Offshore and 40% by local employees. Aqualis Offshore has a 49% ownership in Aqualis Offshore Marine Services LLC (Dubai), while the remaining 51% is owned by an Emirati sponsor. In the Kingdom of Saudi Arabia ( KSA ) / Bahrain, Aqualis Offshore operates through an agency agreement with Arabian Establishment for Trade & Shipping Ltd ( AET ). Aqualis Offshore Ltd (Holding) 100% 49% 100% 100% 100% 60% Aqualis Offshore Pte Ltd (Singapore) Aqualis Offshore Marine Services LLC (Dubai) Aqualis Offshore Inc (Houston) Aqualis Offshore UK Ltd (London) Aqualis Offshore Serviçõs Ltda (Brazil) Aqualis Offshore AS (Norway) 100% Aqualis KSA / Bahrain 8.3 BUSINESS OBJECTIVES AND STRATEGY Aqualis Offshore s vision is to become recognized by industry leaders in its areas of expertise as a respected quality service provider to the offshore industry through the provision of pragmatic marine and engineering solutions to its clients. Aqualis Offshore s mission is to become the preferred solution provider to its clients such that the majority of its work is the result of repeat business and client recommendations. Through this strategy, Aqualis Offshore is to grow such that it extends both its footprint and service coverage into new regions. Aqualis Offshore s target market is the offshore oil and gas and marine segments in which it focuses on highend niche consultancy. It specializes in marine and engineering solutions and is involved in the full life cycle of offshore assets, i.e. from concept to demolition. Aqualis Offshore has highly experienced personnel consisting of selected specialists with long track record from the industry. Its integrated marine and engineering staff has multi-faceted capability yielding high efficiency. Further, as an independent company, Aqualis Offshore faces no external pressure and provides unbiased consultancy. It has no ownership in any assets or equipment. Finally, it offers a large portfolio of service-offerings to a wide client base, including: operators, rig and vessel owners, contractors, suppliers, underwriters and financial institutions. Aqualis Offshore s strategy is, through its specialist marine and engineering consultancy services, to operate through a growing network of global offices. As it expands globally, Aqualis Offshore pursues high growth ambitions primarily focusing on developing economies and emerging markets. Within developing economies, Aqualis Offshore services the high-end niche markets with a goal to be recognized for its high-quality product and services. The company aims to be ISO 9001 accredited early 2014 once the mandatory minimum trading time lines have been completed. In order to incentivize and align interest internally, Aqualis Offshore offers opportunities for wide employee ownership and focuses on maintaining excellent retention of its high-value staff. 42

43 8.4 BUSINESS OVERVIEW Aqualis Offshore provides marine and engineering solutions to the offshore oil and gas industry worldwide. Its multi-disciplinary engineering and marine teams are recognized in the industry for their competence and experience. Aqualis Offshore works closely with clients to understand their requirements, identify solutions and to execute their projects and marine operations in a timely, cost effective and safe manner. Aqualis Offshore specializes in the following engineering and marine services; - FEED and basic design for new-build and vessel upgrades - Deep and shallow water installation engineering and related marine operations - Marine operations and surveying including rig moving and tow master services - Vessel construction supervision and owner representation - Third party approvals on behalf of owners and underwriters such as marine warranty and audits of dynamic positioning systems The company s services are split into eight business lines as further described below. With offices strategically located near the world s major shipping and offshore energy centres, Aqualis Offshore has a strong global presence. The company is headquartered in London, UK and has regional subsidiaries in the following locations: Norway (Oslo/Sandefjord), USA (Houston), UAE (Dubai), Brazil (Rio de Janeiro), Singapore and KSA (Dammam). This widespread global presence allows the business to respond quickly when high-end marine or engineering consultancy is required. Although some of the offices have special focus on certain areas of operations, all service offerings are provided across all regions. HQ Regional subsidiaries Offices strategically located near the world s major offshore energy centers Engineering Solutions Aqualis Offshore provides a unique solutions-based approach to engineering. Its engineers are aim to work with the client as a one-stop-shop to find efficient solutions to their engineering projects. Due to its independence, Aqualis Offshore, is able to concentrate on cost-effective solutions that are fit for purpose and tailored to suit the specific needs and constraints of the client. Its offshore engineering expertise covers the life-cycle of an offshore facility from concept and basic design through to installation and marine operations and ultimately onto ageing asset integrity management and, finally, the decommissioning phase. Aqualis Offshore is involved in both the shallow and deep water ends of the offshore oil and gas industry and operates in the major centres of the offshore industry. Aqualis Offshore s team of highly qualified engineers can provide unique solutions for many platform types including Mobile Offshore Drilling Units (MODU), Wind Turbine Installation Vessels and Lift boats, Mobile 43

44 Offshore Production Units (MOPU), fixed offshore installations as well as FPSO, FSO, FLNG and other floating structures. These solutions range from: - Concept Design - Basic Design - FEED and Pre-FEED solution - Upgrade and modification Engineering - Advanced engineering solutions Transportation & Installation Aqualis Offshore s multi-disciplined teams of engineers, surveyors and master mariners have many years of experience in the offshore industry. It specializes in complicated marine operations and can provide valuable early planning and advice to optimize the solutions with regards to: - Vessel and equipment selection - Structural design - Offshore procedures Subsequent engineering comprises analysis and design associated with all temporary phases of a marine operation from load-out and transportation to installation or discharge/offload of high value offshore assets. Such calculations include: - Vessel ballasting - Global and local vessel strength - Vessel motions and stability - Grillage and sea fastening design - Dynamic lifting and rigging - Hydrodynamic analysis - Jacket launch and upending - Dynamic analysis for float-over installations - Geotechnical analysis etc. - Production of appropriate documentation Aqualis Offshore also offers offshore operation supervision and support from its qualified and experienced marine superintendents and project engineers. The company draws on the services of external companies where supplementary skills or input are required, e.g. metocean data for transportation assessment and planning Marine Warranty Aqualis Offshore provides independent third party review and approval of offshore projects on behalf of underwriters. The staff has extensive experience in a wide range of offshore activities from simple marine operations to complex and challenging offshore projects. Typical activities include: - Document reviews - Verification of engineering calculations - Suitability surveys of offshore marine spreads - Approval of towages, heavy lifts and installations - Subsea operations - Decommissioning and removal of offshore structures - Acting as Marine Advisors to oil companies and their contractors Rig Moving Aqualis Offshore offers a full range of rig moving support services and its teams are fully experienced with both jack-up and floating units. The company offers full engineering assessments for site specific location approvals for jack-ups and provides marine warranty surveyors and rig movers / tow masters for offshore attendance during rig moves. The following services are provided: 44

45 - Site specific rig deployment consultancy - Pre-contract rig suitability engineering analyses - Geotechnical Leg penetration analyses - Site Specific Location Approvals - Mooring analyses - Marine Warranty Services - Dry transportation approvals and consultancy - Towage approvals - Provision of Towmaster services - Turnkey rig moves - General rig moving consultancy - Training courses Construction Supervision Aqualis Offshore provides site teams to work with the client throughout the construction or conversion of an offshore asset. The project team monitors the project to ensure that it is carried out in accordance with the contract, the specifications, client s expectations, flag and class requirements. Aqualis Offshore provides teams of engineers and inspectors of various disciplines to be utilized at different stages of the project. In addition, dedicated planning and document control functions are provided throughout the duration of the construction phase. Key project control activities include: - Development and implementation of project procedures - Review of machinery and equipment purchase orders and specifications - Development and implementation of project execution plans - Monitoring of work progress and testing activity - Monitoring of quality control of each activity throughout the construction - Attendance at formal safety meetings - Attendance at Factory Acceptance testing (FAT) - Audits of subcontractor's facilities - Attendance during sea trials and inclining experiments - Reporting to the CLIENT on a weekly and monthly basis - Tracking of site queries, observing safety policy, monitoring quality control measures - Maintaining electrical & mechanical completion and commissioning records and database - Monitoring and reporting on extras and credits Dynamic Positioning Aqualis Offshore provides an experienced multidisciplinary team of engineering and operational resources to support the Dynamic Positioning (DP) industry. It aims to assist its clients to operate and validate according to their units specific industrial mission. Furthermore, the Group aims to provide clients with independent technical reviews to enhance safe operations. It can also provide analyses of cranes, bilge and ballast systems, pipelay systems, and many more complex systems. Aqualis Offshore s DP services include: - FME(C)A - DP FMEA Proving & Annual Trials - DP Design Review/ Redundancy Analysis - DP Suitability/Condition Surveys - DP Gap Analysis - Development of WSOG & ASOG - DP Incident Investigation - DP Manuals & Procedures - DP Operator Competence Assessment & Verification - DP Project Management & Sea Trials Management. - Planning for DP Conversions & Life Extensions - CMID & OVID Surveys 45

46 - Witness FAT s & CAT s Marine Consultancy Aqualis Offshore aims to assist its clients in finding practical solutions to their marine operations and projects and / or protect their interests when sub-contracting or making asset investments. Aqualis Offshore offers the following services within marine consultancy: - Provision of Towmasters and Rigmovers - Provision of Marine Advisors - Dry transportation consultancy and operations - Pilotage operations - Rig move procedures - Suitability surveys - Pre-charter audits / surveys - Pre-purchase surveys - Bollard pull certification - Drafting and review of offshore project related procedures - Mooring patterns - Anchor handling procedures - Witnessing equipment trials and tests - DP inspections and audits Technical due diligence services As part of Aqualis Offshore s construction services and prior to any involvement with the construction phase or even during a construction project, it can assist with the due diligence process to provide the following services: - Yard Audits - Pre-contract evaluation - Post contract evaluation - Equipment procurement assessment - Construction monitoring / site attendance - Financial review and assessment - Payment milestone audits - Risk assessment and management - Design review Aqualis Offshore s independence and in depth of experience of asset type and construction facilities allows it to act as a trusted advisor on all aspects of any construction contract either pre- or post-execution. 8.5 FACTORS AFFECTING AQUALIS OFFSHORE Aqualis Offshore s business and operations will over time be affected by various factors including the following: - The level of activity and capital spending by oil & gas and offshore companies as it affects the demand for Aqualis Offshore s services - Economic fluctuations - Industry competition - Political- and regulatory amendments - Access to competent personnel, resources and customers - Demand fluctuations related to seasonality 8.6 CUSTOMERS Aqualis Offshore already has a diverse client base comprising the following types of companies: National Oil Companies ( NOCs ) (e.g. Petrobras, ONGC, Statoil, Saudi ARAMCO), International Oil Companies ( IOCs ) (e.g. Shell, Chevron Lundin, Newfield), rig owners (e.g. Seadrill, Vantage, Awilco, Hercules Offshore), vessel owners (e.g. Tidewater, Posh Teresea, Ezion), underwriters (e.g. Zurich, Beazley, Gard, QBE), shipyards (e.g. Samsung Heavy Industries, Lamprell), offshore contractors (e.g. Technip, Nexans, Fugro, Saipem, ENI) and financial institutions (e.g. ABN-AMRO, Mantiq). Aqualis Offshore s wide customer base means that, going 46

47 forward, its business model is, in general, not dependent upon any key customers or any key segment of the industry since it is neither dedicated to new investment phases or day to day operations, but both. Nevertheless it should be noted, as of the date of this Prospectus, the company, which is still in the early phases of developing business, does have a construction monitoring contract which constitutes a significant part of its current backlog. 8.7 PRINCIPAL MARKETS AND COMPETITIVE POSITION Aqualis Offshore s strategy is, through its specialist marine and engineering consultancy services, to operate through a growing network of global offices. As it expands worldwide, Aqualis Offshore pursues high growth ambitions primarily focusing on developing economies and emerging markets. Aqualis Offshore s competitive landscape is affected by a consolidated global supply side. The main competitors and global industry players include: DNV GL Group (merger between Det Norske Veritas and GL Group, owner of GL Noble Denton), LOC Marine & Engineering Consultants, Global Maritime, Mathews Daniel and Braemar Offshore. 8.8 ORGANISATION Executive Management The table below sets forth the members of Aqualis Offshore s Executive Management as of the date of this Prospectus. Name Position Business address David Wells Chief Executive Officer 150 Minories, EC3N 1LS London, UK Christian Opsahl Chief Financial Officer Sjølyst Plass 2, 0278 Oslo, Norway Dr. Bader Diab Director of Engineering and North America Katy Freeway #150, Houston TX 77024, US Phil Lenox Director Asia Pacific 51 Goldhill Plaza #12-08, Singapore Dr. Andrew Theophanatos Director South Americas Rua Teofilo Otoni, 15 sala 916 Centro, RJ, Brazil Reuben Segal Director Middle East Office 609, SIT Tower, Dubai Silicon Oasis, Dubai Santosh George Group QHSE Manager Office 609, SIT Tower, Dubai Silicon Oasis, Dubai Bjørn Håvard Brænden Director Norway Østre Kullerød 5, 3241 Sandefjord, Norway Brief biographies of the members of the Executive Management David Wells, Chief Executive Officer David Wells is a Master Mariner and has more than 30 years of experience in the offshore sector with particular focus on offshore operations, MWS and marine consultancy. He is a specialist on jack up operations, location approvals and all aspects of rig moving. He has more recently been involved in senior management duties. Mr. Wells is based in London. Christian Opsahl, Chief Financial Officer Christian Opsahl has extensive international finance, investment banking and private equity experience within the global financial markets, together with industrial experience from companies servicing the offshore oil and gas markets. Mr. Opsahl is based in Norway and London. Dr. Bader Diab, Director of Engineering and North America Dr. Bader Diab is a structural and global performance engineer. He has 25 years offshore engineering global experience covering both shallow and deep water sectors with extensive structural design experience of MODUs, mooring systems, motions, installation engineering and familiarity with shipyards. Dr. Bader Diab is based in Houston. Phil Lenox, Director of Asia Pacific Phil Lenox is a structural engineer and has over 40 years of onshore/offshore experience with both contractors and consultancies including conceptual design, detailed structural analysis and design through to construction and installation. He specialises transportation and installation projects including use of HLVs, topside floatovers and has extensive MWS experience. Mr. Lenox is based in Singapore. Dr. Andrew Theophanatos, Director of South Americas Dr. Andrew Theophanatos is a naval architect with over 30 years of experience in offshore engineering and project management around the world and latterly in Brazil. He specialises on offshore engineering projects in 47

48 both consultancy and MWS capacities for services related to all recent deepwater field development projects. Dr. Andrew Theophanatos is based in Rio de Janeiro, Brazil. Reuben Segal, Director of Middle East Reuben Segal is a naval architect and has 19 years of experience in the offshore and shipping sectors covering both engineering design and ship surveying. He has extensive recent global business development experience with focus on Design and Construction of offshore oil and gas assets including MODU and MOPU units from FEED through to yard delivery. Mr. Segal is based in Dubai, UAE. Santosh George, Group QHSE Manager Santosh George specialist QHSE consultant and auditor with extensive risk analysis experience covering shipyards and offshore assets together with implementation of Group Management systems and ISO accreditations. Mr. George is based in UAE. Bjørn Håvard Brænden, Director of Norway Bjørn Håvard Brænden is a naval architect and marine engineer with 20 years of experience in engineering design and as project manager for projects involving ships, semi submersibles, offshore service vessel, tankers and conversions to FSU/FPSO including offshore construction and installation experience. Mr. Brændend is based in Norway EMPLOYEES As of the date of this Prospectus, Aqualis Offshore has 37 permanent employees across the following regions: Singapore (9); UAE (9); Norway (10); Brazil (5); USA (3) and UK (1). In addition, it has seven independent working contractors who are not permanently employed. During 2013, another 33 employees will commence employment, out of which 23 will become full-time employees. Aqualis Offshore s business and prospects depend to a significant extent on the continued services of its key personnel in its various business areas. Hence, Aqualis Offshore is dependent on its ability to retain key personnel to ensure successful integration of new personnel into existing operations. 8.9 FINANCIAL INFORMATION Introduction The following financial figures have been derived from Aqualis Offshore s unaudited financial statements as of, and for the six month period ended 30 June Accounting principles The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU and valid as of 31 December

49 8.9.3 Interim condensed consolidated income statement Six months ended 30 June USD 1, (unaudited) Revenue Cost of sales... (598) Gross loss... (286) Administration expenses... (637) Operating loss... (923) Finance cost... (12) Finance income... 1 Loss before tax... (935) Taxation... - Non-controlling interest... (19) Loss for the period... (954) Source: Aqualis Offshore unaudited financial statements for the six months ended 30 June Balance sheet USD 1, (unaudited) ASSETS Plant and equipment Goodwill... 8 Total non-current assets Trade and other receivables Prepayments Other debtors Cash and cash equivalents Total current assets Total assets EQUITY AND LIABILITIES Issued capital Retained earnings... (954) Equity attributable to equity holders of parent... (854) Non-controlling interest Total equity... (840) Interest bearing loans and borrowings Total non-current liabilities Accounts payable and accrued liabilities 644 Taxes and social securities Total current liabilities Total liabilities Total equity and liabilities Source: Aqualis Offshore unaudited financial statements for the six months ended 30 June

50 9. THE GROUP FOLLOWING THE TRANSACTION 9.1 CHANGE OF NAME In conjunction with the acquisition of Aqualis Offshore, the EGM held 8 October 2013 resolved to amend the Company s name from Clavis Pharma ASA to Aqualis ASA in order to better reflect the underlying operations following the Transaction, which will consist of two business units; healthcare and marine and offshore services. 9.2 LEGAL STRUCTURE The illustration below sets out the legal structure of the Company following the acquisition of Aqualis Offshore. The combined company will consist of the holding company Aqualis ASA and the wholly-owned subsidiary, Aqualis Offshore Ltd (the Group ). Aqualis ASA 100% Aqualis Offshore Ltd 9.3 STRATEGY The Transaction represents a change in strategic direction for the Company to include a new business area of specialist marine and engineering consultancy services to the offshore oil and gas industry. The existing pharmaceutical activities of Aqualis will remain as a separate business area within the Group. Aqualis ASA Business areas Healthcare Marine & Offshore Healthcare activities The Group has a large portfolio of patents relating to the LVT-technology, as well as licensing agreements for the potential development of the compounds CP-4033 and CP-4200, and the Group will try to maximize the value of these assets by closely following the licensees development of potential drug candidates, and through further out-licensing or sale of existing patents and patent applications. The Group will continue to review new investment opportunities within the business segment to see whether further investments should be made in new technologies and/or development projects. Marine and offshore activities The Group s new marine and offshore activities will be carried out through Aqualis Offshore. Aqualis Offshore s target market is the offshore oil and gas and marine segments in which it focuses on high-end niche consultancy. Aqualis Offshore s strategy is, through its specialist marine and engineering consultancy services, to operate through a growing network of global offices. As it expands globally, Aqualis Offshore pursues high growth ambitions primarily focusing on developing economies and emerging markets. The Group s strategy is 50

51 to expand the marine and offshore activities through the establishment of new offices globally and through a significant increase in the number of employees, and through potential acquisitions of similar businesses. Please see section 8.3 for a more detailed discussion of the strategic plans for Aqualis Offshore. 9.4 ORGANISATION Board of Directors There will be no changes to the Company s Board of Directors following the Transaction. For further information regarding the Board of Directors see section Executive Management The table below sets forth the Executive Management following the Transaction. Name of director Position Business address: Gunnar Manum CEO Sjølyst Plass 2, 0278 Oslo, Norway Christian Opsahl CFO Sjølyst Plass 2, 0278 Oslo, Norway David Wells CEO of Aqualis Offshore Ltd 150 Minories, EC3N 1LS London, UK Ole Henrik Eriksen CBO Healthcare Sjølyst Plass 2, 0278 Oslo, Norway For more information regarding the members of Aqualis Executive Management following the Transaction, please see section and SHARE CAPITAL Following the Transaction, the Rights Issue and the Employee Offering as further described in section 5 and 6, the Company s total issued share capital will be NOK , divided into Shares, each with a nominal value of NOK The Company will have one class of shares, equal in all respects. Each Share will carry one vote and the rights attached to the Shares will be the same as those attached to the Company s existing Shares. 9.6 UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION General information and purpose of the unaudited pro forma consolidated financial information On 27 September 2013, the Company announced that the Board of Directors of the Company had signed a final share purchase agreement to acquire 100% of the shares in Aqualis Offshore for a consideration of NOK 70 million, to be settled through the issuance of new shares in Aqualis at an issue price of NOK 1.60 per share. In connection with the issue of new shares to the shareholders of Aqualis Offshore, the Company will carry out a fully underwritten rights issue of shares at an issue price of NOK 1.60 per share. The unaudited pro forma condensed financial information has been prepared to show how the acquisition of Aqualis Offshore and the Rights Issue might have affected Aqualis financial position as of 30 June 2013 had it occurred on the balance sheet date. The unaudited pro forma condensed income statement for the period 1 January 2013 to 30 June 2013 has been compiled as if the Transaction occurred on 1 January No pro forma condensed financial information has been prepared for the year ended 2012, as Aqualis Offshore was incorporated in December In connection with the acquisition, the Company will carry out a fully underwritten rights issue of 33.7 million new shares at an issue price of NOK 1.6 per share (the Rights Issue). The unaudited pro forma condensed financial information has been prepared for illustrative purposes only. The pro forma adjustments, as described in more detail below, are based on available information and certain assumptions. Because of its nature, the unaudited pro forma condensed financial information addresses a hypothetical situation and, therefore, does not represent what the Combined Group s actual financial position or results of operation or the financial position had, if the transaction actually occurred on those dates. It also does not represent the financial position or results for any future period. The unaudited pro forma financial information must not be considered final or complete, as they may be amended in future publications of the unaudited pro forma condensed information. Investors are cautioned not to place undue reliance on this unaudited pro forma condensed financial information. 51

52 9.6.2 Basis for preparation The unaudited pro forma condensed financial information as of and for the six months period ended June 30, 2013 is compiled based upon the unaudited consolidated financials for the six months period ended June 30, 2013 for the Company and Aqualis Offshore. The pro forma adjustments are made by the Company s management based on currently available information and certain assumptions. The pro forma adjustments relate to the effects of the Company s purchase accounting for Aqualis Offshore (see Section "Purchase Accounting") including the issue of new shares in connection with the rights issue. The Company has for the purposes of the pro forma financial information performed a preliminary purchase price allocation for the acquisition as if the transaction has occurred. This allocation has formed the basis for the presentation of the fair value adjustments for assets and liabilities in the pro forma statement. The final allocation may significantly differ from this allocation as a result of e.g. changes to the value of the purchase consideration due to changes to the Aqualis share price and the value for potential new sales contract that Aqualis Offshore has entered into before the transaction has occurred. The unaudited pro forma condensed financial information does not give effect to any (i) integration cost that may be incurred as a result of the acquisition, (ii) synergies, cost savings or operating efficiencies that may result from the acquisition; or (iii) restructuring costs that may be incurred to integrate the acquired activities. The unaudited pro forma condensed financial information has been compiled based on accounting principles consistent with those of the Company (IFRS as adopted by EU). Please refer to section 10.1 "Accounting Policies" for a description of the accounting policies of Aqualis. The Group will not adopt any new policies in 2013 as a result of the acquisition or otherwise, with the exception of IFRS 3 and IAS 27, which will be adopted from 1 January The unaudited pro-forma financial information has been prepared under the assumption of going concern. The unaudited pro forma condensed financial information for the Company does not include all of the information required for financial statements under IFRS, and should be read in conjunction with the historical information of Aqualis. The unaudited pro forma condensed financial information has been compiled in connection with the listing of the shares of Aqualis ASA on Oslo Børs (Oslo Stock Exchange) to comply with the Norwegian Securities Trading Act and the applicable EU-regulations including EU Regulation No 809/2004 pursuant to section 7-7 of the Norwegian Securities Trading Act. This information is not in compliance with SEC Regulation S-X, and had the securities been registered under the U.S. Securities Act of 1933, this unaudited pro forma financial information, including the report by the auditor, would have been amended and/or removed from the Prospectus Purchase accounting Aqualis will acquire 100% of the shares in Aqualis Offshore, and the consideration to the shareholders of Aqualis Offshore will be shares in Aqualis. The acquisition will be accounted for as a business combination under IFRS 3 by Aqualis. It has been assessed that Aqualis is the acquirer in this transaction mainly based on the following: Firstly, it is Aqualis that issues its equity interests as consideration to the shareholders of Aqualis Offshore in this transaction and secondly, the shareholders of Aqualis retains the majority voting rights in the Group. Aqualis Offshore's assets and liabilities will be measured at fair value as of the date of acquisition. Aqualis assets and liabilities will remain at historical cost or its existing book value. The Company has, for the purposes of the pro forma consolidated financial information presented below, performed a preliminary purchase price allocation and estimated the fair value of Aqualis Offshore s assets and liabilities. The consideration for the Acquisition is NOK 70 million, with the issue of 43.8 million New Shares at a share price of NOK 1.60 per share. The share price of NOK 1.60 is based on the approximate value of the book value of the net assets of Aqualis at the time of entering into Letter of Intent to acquire Aqualis Offshore, which was approximately in line with the market capitalization of the Company in the period prior to the announcement of the possible acquisition. The share price of NOK 1.60 will be used for the formal share issue and capital increase ( tingsinnskudd ). However, for accounting purposes, the actual share price on the date of closing the acquisition will be used to calculate the purchase price for the capital increase. For the purpose of the pro forma consolidated financial information presented in this Prospectus, an estimated share price of NOK 1.90 has been used for calculating the purchase price, which reflects the current share price adjusted for the dilutive effects of the share issues in connection with the Transaction and the Rights Issue. The final allocation may differ from 52

53 this preliminary allocation and this could materially have affected the pro forma income statement and the presentation in the pro forma statement of financial position. NOK 1,000 Aqualis Offshore (unaudited) Fair value adjustments (unaudited) Fair value of assets and liabilities (unaudited) ASSETS Plant and equipment Goodwill Total non-current assets Trade receivables Other receivables Cash and cash equivalents Total current assets Total assets LIABILITIES Deferred revenue Borrowings Other long-term liabilities Total non-current liabilities Trade payables Deferred revenue Other current liabilities Total current liabilities Total liabilities Total net assets... (5 062) Non-controlling interest... (82) - (82) Total net assets attributable to Aqualis... (5 145) The preliminary purchase price allocation identified fair value adjustments on other current-liabilities and goodwill only. In addition, there will be an adjustment to the final purchase price allocation considering the net loss in Aqualis Offshore from 1 July and until time of control. 53

54 9.6.4 Unaudited pro forma income statement for the six months ended 30 June 2013 Aqualis (unaudited) Aqualis Offshore (unaudited) Pro forma adjustments (unaudited) Notes to the pro forma adjustments (unaudited) Pro forma consolidated (unaudited) NOK 1, Government grants Operating revenue Other revenue Total operating income Payroll and payroll related costs Depreciation & impairment Other operating expenses (1) Total operating expenses (1) Operating profit/(loss)... (83 986) (5 349) (1 200) (1) (90 535) Financial income Financial expenses Loss before tax... (80 586) (5 416) (1 200) (87 202) Income tax expense Non-controlling interest... (110) (110) Profit/(loss) for the period... (80 586) (5 526) (1 200) (87 312) Total comprehensive income... (80 586) (5 526) (1 200) (87 312) Note: The income statement for Aqualis Offshore has been translated from USD to NOK based on a foreign exchange rate NOK/USD of 5.79, which is based on Norges Bank s historical average exchange rate for the first six months

55 9.6.5 Unaudited pro forma balance sheet as of 30 June 2013 Aqualis (unaudited) Aqualis Offshore (unaudited) Pro forma adjustments (unaudited) Notes to the pro forma adjustments (unaudited) Pro forma consolidated (unaudited) NOK 1, ASSETS Plant and equipment Goodwill (2) Total non-current assets (2) Trade receivables Other receivables Cash and cash equivalents (3) Total current assets (3) Total assets EQUITY AND LIABILITIES Share capital (4) Share premium (4) Other paid-in capital... (1 450) (4) Loss for the period... (80 586) (5 748) (4) (82 029) Equity attributable to equity holder (5 145) of the parent... Non-controlling interest (-82) (5) - Total equity... 59,498 (5 063) Deferred revenue Borrowings Other long-term liabilities Total non-current liabilities Trade payables Deferred revenue Other current liabilities (6) Total current liabilities Total liabilities Total equity and liabilities Note: The balance sheet for Aqualis Offshore has been translated from USD to NOK based on a foreign exchange rate NOK/USD of 6.03, which is based on Norges Bank s historical exchange rate as of 30 June Notes to the unaudited pro forma financial information Pro forma adjustments: (1) The pro forma adjustment to other operating expenses for the six month ended 30 June 2013 represents NOK 1.2 million (ex VAT) in estimated transaction costs for the acquisition. There is no tax effect related to this pro forma adjustment as the Company currently is not in a tax position and has not recorded a deferred tax asset related to tax losses carried forward. This pro forma adjustment will not have a continuing impact. (2) The acquisition of Aqualis Offshore is considered to be a business combination under IFRS 3 and consequently all assets acquired and liabilities assumed are accounted for at its fair value at the acquisition date. Based on a preliminary purchase price allocation, it is assessed that the carrying amount of assets and liabilities in Aqualis Offshore represents its fair value at the acquisition date, with 55

56 the exception of other current liabilities which has been increased by NOK 1.2 million to recognize the estimated earn-out payable in relation to the Aqualis Offshore AS acquisition (ref. section for further comments). Based on the preliminary purchase price allocation, Aqualis has allocated fair value adjustments as described in section (i.e. goodwill of NOK 89.5 million). In addition, the Company has made a pro forma adjustment to goodwill of NOK 4.3 million (increase) to reflect the estimated net loss of Aqualis Offshore for the period from 1 July to the expected acquisition date, net of non-controlling interest (ref. below). In accordance with IFRS, goodwill is not amortized but assessed for impairment; no impairment has been recorded. These pro forma adjustments will have continuing impact. (3) Adjustments to cash and cash equivalents relate to the pro forma effect of the fully underwritten rights issue of NOK 51.2 million (net proceeds), less NOK 1.2 million (ex VAT) in estimated transactions costs in connection with the acquisition as described in note 1 above. No interest income has been included in the unaudited pro forma income statement. These pro forma adjustments will have continuing impact. (4) Since Aqualis is the acquiring party, the shareholders' equity in Aqualis Offshore amounting to NOK 0.6 million will be eliminated upon consolidation, while the par value of the consideration shares issued to the shareholders of Aqualis Offshore of NOK 43.8 million and the par value of the fully underwritten rights issue of NOK 33.8 million increases the share capital by NOK 77.5 million. Changes to share premium of NOK 43.7 million represents the share premium of NOK 0.6 per share on the two before mentioned equity issues, net of estimated transaction costs of NOK 2.8 million (ex. VAT). There is no tax effect related to the adjustment for transactions costs as the Company currently is not in a tax position and has not recorded a deferred tax asset related to tax losses carried forward. The adjustment to other paid-in capital is the difference between the agreed purchase price of NOK 70 million (based on a share price of NOK 1.60) and the estimated purchase price for accounting purposes of NOK 83.1 million (based on an estimated share price of NOK 1.90 at closing date). The adjustment to the loss for the period is the estimated transaction costs for the acquisition of NOK 1.2 million (ex. VAT) million and the elimination of the estimated loss in Aqualis Offshore on consolidation, including a negative minority interest as noted in (5). (5) The pro forma consolidated non-controlling interest is negative NOK 0.2 million, which has been offset against loss for the period. (6) The pro forma adjustment to other current liabilities represents a NOK 4.6 million estimated net loss of Aqualis Offshore for the period from 1 July to the expected acquisition date, and the estimated earn-out payable of NOK 1.2 million noted in (2). Some key accounting principles of Aqualis are not described in the Company s latest annual report as these were not considered relevant at the time: Basis for consolidation: Subsidiaries are consolidated from the date of acquisition, being the date the Company obtains control and continue to be consolidated until the date when such control ceases. The financial statements of the subsidiaries are prepared for the same reporting period as the parent company, using consistent accounting policies. All intra-group balances, transactions, unrealised gains and losses resulting from intragroup transactions are eliminated in full. Business combinations and goodwill: Business combinations are accounted for using the acquisition method. The cost of an acquisition is measured as the aggregate of the consideration transferred measured at acquisition date fair value and the amount of any non-controlling interest in the acquiree. The Company measures the noncontrolling interest in the acquiree at the proportionate share of the acquiree s identifiable net assets (net liability). Acquisition-related costs are expensed as incurred and included in operating expenses. When the Company acquires a business, it assesses the financial assets and liabilities assumed for appropriate classification and designation in accordance with the contractual terms, economic circumstances and pertinent conditions as at the acquisition date. Goodwill is initially measured at cost, being the excess of the aggregate of the consideration transferred and the amount recognised for non-controlling interest over the net identifiable assets acquired and liabilities assumed. After initial recognition, goodwill is measured at cost less any accumulated impairment losses. 56

57 9.6.7 Auditor s assurance report on the unaudited pro forma condensed financial information Ernst & Young AS assurance report on the unaudited pro forma financial information is attached as Appendix F to this Prospectus. 57

58 10. FINANCIAL INFORMATION Annual reports including audited historical financial information and audit reports in respect of 2012, 2011 and 2010 together with the financial reports for the first six months of 2013 and 2012 for the Company may be found at the Company s website, The financial statements for 2012, 2011 and 2010 have been audited by Ernst & Young AS, the Company s statutory auditor, and the audit reports were issued without any qualifications. The interim financial reports for the second quarter 2013 and 2012 are unaudited SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU and valid as of 31 December The IFRS principles have been applied consistently for 2012, 2011 and 2010, both for the annual and interim reports. Please see 2012 Annual Report page 30 to 34 for the Company s accounting policies, incorporated by reference to this Prospectus. The Company s significant accounting policies can be found at the following link: HISTORICAL FINANCIAL INFORMATION The following financial information has been derived from the Company s audited financial statements as of, and for each of the three years ended 31 December 2012, 2011 and 2010 and from the unaudited condensed financial statements for the three and six month periods ended 30 June 2013 and The selected financial information set forth below should be read in conjunction with the Company s published financial statements and its accompanying notes. The information incorporated by reference in this Prospectus shall be read in connection with the crossreference list set out in section Statement of comprehensive income The Company s income statements for the three years ended 31 December 2012, 2011 and 2010 and the three and six month periods ended 30 June 2013 and 2012 are set out below. Three months ended 30 June Six months ended 30 June Year ended 31 December NOK 1, (unaudited) (unaudited) (unaudited) (unaudited) (audited) (audited) (audited) Revenue Government grants Total operating income Payroll and payroll related costs Depreciation Other operating costs... (4 759) Operating loss... (8 230) (30 616) (83 986) (59 996) ( ) ( ) ( ) Finance income Finance costs Loss before tax... (5 536) (29 201) (80 586) (55 924) (95 706) ( ) ( ) Income tax expense Loss for the period... (5 536) (29 201) (80 586) (55 924) (95 706) ( ) ( ) Basic and diluted earnings per share (NOK) (0.2) (0.9) (2.4) (1.7) (2.9) (5.1) (4.5) Source: The Company s Q interim financial report and annual reports 2012, 2011 and

59 Statement of financial position Set out below is the Company s statement of financial position for the three years ended 31 December 2012, 2011 and 2010, and for the three and six months period ended 30 June 2013 and NOK 1, (unaudited) (unaudited) (audited) (audited) (audited) ASSETS Production and lab equipment Total non-current assets Trade receivables Other receivables Cash and cash equivalents Total current assets Total assets EQUITY AND LIABILITIES Share capital Share premium reserve Other paid-in capital... (1 450) Loss for the period... (80 586) (55 924) (95 706) ( ) ( ) Total equity Deferred revenue Borrowings Other non-current liabilities Total non-current liabilities Trade payables Deferred revenue Other current liabilities Total current liabilities Total liabilities Total equity and liabilities Source: The Company s Q interim financial report and annual reports 2012, 2011 and Cash flow statement The table below summarises the Company s statement of cash flow for the three years ended 31 December 2012, 2011 and 2010 and for the three and six months ended 30 June 2013 and

60 NOK 1,000 Cash flow from operating activities Loss before income tax... Three months ended 30 June (unaudited) (unaudited) Six months ended 30 June (unaudited) (unaudited) Year ended 31 December 2012 (audited) 2011 (audited) (5 536) (29 201) (80 586) (55 924) (95 706) ( ) 2010 (audited) Non-cash adjustment to reconcile profit before tax to cash flow: Estimated value of employee share options... (4 758) (1 450) Loss on disposal of plant & equipment Depreciation Unrealised foreign currency (gains)/losses... (467) 182 (472) Changes in working capital: Changes in trade receivables and trade (4 945) (491) (12 648) (2 447) creditors... Changes in deferred income... - (10 052) - (20 104) (77 063) (40 207) Changes in other accruals... (48 196) 313 (21 650) (5 986) (645) Net interest (income/expense)... (2 481) (1 542) (3 431) (4 130) (8 075) (6 585) (4 229) Net cash flow from operating activities... (64 395) (37 869) ( ) (82 424) ( ) ( ) ( ) Cash flow from investing activities Proceeds for sale of plant & equipment Purchase of fixed assets (1 393) (1 281) - Interest received Net cash flow from investing activities Cash flow from financing activities Proceeds from share issue Proceeds from exercise of share options Transaction costs on share issue (6 749) (6 828) (2 017) (6 378) Proceeds from borrowings Repayment of borrowings... (20 000) - (20 000) - Interest paid... (357) (487) (838) (977) (1 596) (1 919) (1 357) Net cash flow from financing activities... (20 357) (20 838) Net change in cash and cash equivalents... Cash and cash equivalents beginning period... (83 683) (32 132) ( ) ( ) Net foreign exchange difference (182) 472 (186) 8133) (79) (1 265) Cash and cash equivalents end period Source: The Company s Q interim financial report and annual reports 2012, 2011 and

61 Statement of changes in equity The table below shows the audited reconciliation of equity as of 31 December 2012, 2011 and NOK 1,000 Share capital Share premium reserve Other paid-in capital Retained earnings Total equity Equity as at Total comprehensive income ( ) ( ) Issue of share capital: Private placement Exercise of share options Transaction costs... - (6 378) - - (6 378) Total issue of share capital Share-based payment transactions Equity as at ( ) Equity as at ( ) Allocation of prior year loss... - ( ) (10 569) Total comprehensive income ( ) ( ) Issue of share capital: Private placement Subsequent issue Exercise of share options Transaction costs... - (2 017) - - (2 017) Total issue of share capital Share-based payment Equity as at ( ) Equity as at ( ) Allocation of prior year loss... - ( ) (12 155) Total comprehensive income (95 706) (95 706) Issue of share capital: Private placement Subsequent issue Exercise of share options Transaction costs... - (6 828) - - (6 828) Total issue of share capital Share-based payment Equity as at (95 706) Source: The Company s annual reports 2012, 2011 and

62 The table below shows the unaudited reconciliation of equity as of 30 June 2013 and NOK 1,000 Share capital Share premium reserve Other paid-in capital Retained earnings Total equity Equity as at ( ) Allocation of prior year loss... ( ) (12 155) Total comprehensive income (55 924) (55 924) Issue of share capital: Private placement Exercise of share options Transaction costs... - (6 749) - - (6 749) Total issue of share capital Share-based payment transactions Equity as at (55 924) Equity as at (95 706) Allocation of prior year loss... (83 177) (12 529) Total comprehensive income (80 586) (80 586) Issue of share capital: Private placement Subsequent issue Exercise of share options Transaction costs Total issue of share capital Share-based payment (1 450) - (1 450) Equity as at (1 450) (80 586) Source: The Company s Q interim financial report 10.3 AUDITOR The Company s auditor since 2003 has been Ernst & Young AS, Dronning Eufemias gate 6, Oslo, Norway. The Company s auditor is member of The Norwegian Institute of Public Accountants. Ernst & Young AS has audited the Company s annual accounts for the financial years 2012, 2011 and 2010, and the Auditor s reports for these three years were issued without qualifications. Ernst & Young AS has issued an Independent Assurance report on the unaudited pro forma condensed financial information included as Appendix F. Ernst & Young AS has not audited, reviewed or produced any report on any other information provided in this Prospectus SEGMENT REPORTING Most of the Company's resources have historically been allocated to the development of new potential anticancer drugs. All the R&D projects have been based on the same proprietary technology (LVT), and are within the cancer segment. The Company's activities are therefore organised as one operating unit for internal reporting purposes MANAGEMENT DISCUSSION AND ANALYSIS The three and six month periods ended 30 June 2013 and 2012 Profit and loss Total operating income amounted to NOK 0.2 million in the second quarter 2013, compared to NOK 10.7 million in the same quarter last year. The operating income for the first six months of 2013 was NOK 0.8 million, compared to NOK 23.8 million for the same period last year. The operating income for the quarter mainly consists of government grants. In the second quarter last year the operating income also consisted of 62

63 deferred up-front fees recognised as income. The total remaining balance of deferred up-front fees, which related to the licensing agreement with Clovis Oncology, was recognised as income in Total operating expenses were NOK 8.4 million in the second quarter, compared to NOK 41.3 million in the same quarter last year. Other operating expenses, including R&D, were positive NOK 4.7 million in the second quarter, compared to NOK 29.4 million last year. The significant lower costs in the second quarter this year, compared to last year, reflect the closure of the Company s R&D activities in the second quarter A reversal of previously accrued R&D expenses of NOK 14 million, relating to the closure of the CLAVELA study resulted in a positive amount of other operating expenses for the quarter. The total operating expenses for the first six months of 2013 were NOK 84.8 million, compared to NOK 83.8 million for the same period last year. Net financial income was NOK 2.7 million in the second quarter 2013, compared to net financial income of NOK 1.4 million in the same quarter last year. The net financial income consists mainly of interest earned on money market funds and bank deposits, net of interest payable on a long-term loan from Innovation Norway. The long-term loan from Innovation Norway was repaid in June 2013, resulting in a reversal of the premium payable at maturity in 2016, and accrued to date, of NOK 1.9 million. The Company incurred a net loss of NOK 5.5 million for the second quarter 2013, compared to a net loss of NOK 29.2 million in the second quarter The net loss for the first six months of 2013 was NOK 80.6 million, compared to NOK 55.9 million in the same period last year. Balance sheet Total assets amounted to NOK 93.7 million as of 30 June 2013, compared to total assets of NOK million as of 30 June Cash and cash equivalents amounted to NOK 86.6 million as of 30 June 2013, compared to NOK million at 30 June Cash flow The Company had a net negative cash flow of NOK 83.7 million for the second quarter 2013, compared to a net negative cash flow of NOK 32.1 million in the second quarter of The net cash flow for the first six months of 2013 was negative NOK million, compared to positive NOK 84.5 million in the same period last year, after net proceeds from a private placement of new shares of NOK million in January Financial year 2012 Profit and loss Total operating income amounted to NOK 85.0 million in 2012, compared to NOK 43.5 million for The operating income mainly consists of deferred up-front fees recognised as income, as well as government grants. Following the decision by Clovis Oncology and Aqualis to terminate all development work on CP-4126, the Company has no further development commitments in relation to the non-refundable up-front fees received from Clovis Oncology in 2009 and 2010, and the total balance of deferred up-front fees was recognised as income during The amount recognised during 2012 was NOK 77.1 million, compared to NOK 40.2 million in Total operating costs for 2012 were NOK million, of which R&D costs amounted to NOK million. The corresponding number was NOK million in 2011, of which R&D costs amounted to NOK million. The decrease in R&D costs is largely a result of no material costs incurred on the development of CP and CP-4200 during Net financial income for 2012 was NOK 8.3 million, compared to NOK 5.6 million in The net financial income consists of interest earned on money market funds and bank deposits, net of interest on long-term loans and a minor net foreign exchange loss. The Company incurred no tax and the net loss amounted to NOK 95.7 million for 2012, compared to a net loss of NOK million in Balance sheet At 31 December 2012, total assets amounted to NOK million and the Company had interest-bearing debt of NOK 21.6 million, all of which were long-term. This compares to total assets of NOK million at the end of 2011, and the reduction mainly reflects the investments in R&D and other operating expenses during Cash and cash equivalents amounted to NOK million at 31 December 2012, representing 94% of total assets. 63

64 As of 31 December 2012, total equity amounted to NOK million, compared to NOK 62.0 million at the end of The equity ratio at year end was 60%, compared to 28% at the end of the previous year. Cash flow The Company s net cash outflow from operating activities amounted to NOK million in 2012, compared to a net cash outflow of NOK million in In early 2012 the Company carried out a private placement of NOK million. This contributed to the net cash flow from financing activities of NOK million in 2012, compared to a net cash flow from financing activities of NOK 17.6 million in Interest received on cash deposits and money market funds resulted in a total cash flow from investing activities of NOK 8.7 million in 2012, compared to NOK 7.2 million in Cash and cash equivalents at 31 December 2012 were NOK million, compared to NOK million at 31 December Financial year 2011 Profit and loss Total operating income amounted to NOK 43.5 million in 2011, of which the recognition of deferred revenue accounted for NOK 40.2 million. The corresponding figures for 2010 were NOK 29.6 million and NOK 24.1 million, respectively. Total operating costs for 2011 were NOK million, of which R&D costs amounted to NOK million. The corresponding number was NOK million in 2010, of which R&D costs amounted to NOK 80.8 million. The increase is largely a result of costs incurred on the CLAVELA trial that started recruiting patients in mid-2010, as well as CMC (chemical, manufacturing & control) work for elacytarabine. Net financial income for 2011 was NOK 5.6 million, compared to NOK 3.4 million in The net financial income consists of interest earned on money market funds and bank deposits, net of interest on long-term loans and a minor net foreign exchange loss. The Company incurred no tax and the net loss amounted to NOK million for 2011, compared to a net loss of NOK million in Balance sheet At 31 December 2011, total assets amounted to NOK million and the Company had interest-bearing debt of NOK 20.0 million. This compares to total assets of NOK million at the end of 2010, and the reduction mainly reflects the investments in R&D and other operating expenses during Cash and cash equivalents amounted to NOK million at 31 December 2011, representing 97% of total assets. As of 31 December 2011, total equity amounted to NOK 62.0 million, compared to NOK million at the end of The equity ratio at year end was 28%, compared to 50% at the end of the previous year. Cash flow The Company s net cash outflow from operating activities amounted to NOK million in 2011, compared to a net cash outflow of NOK 55.1 million in In early 2011 the Company carried out a share offering of NOK 21 million, directed at those shareholders that did not participate in the private placement of NOK 154 million completed at the end of This contributed to the net cash flow from financing activities of NOK 17.6 million in 2011, compared to a net cash flow from financing activities of NOK million in Interest received on cash deposits and money market funds resulted in a total cash flow from investing activities of NOK 7.2 million in 2011, compared to NOK 5.6 million in Cash and cash equivalents at 31 December 2011 were NOK million, down from NOK million at 31 December Financial year 2010 Profit and loss Total operating income amounted to NOK 29.6 million in 2010, of which the recognition of deferred revenue accounted for NOK 24.1 million. The corresponding figures for 2009 were NOK 7.6 million and NOK 1.7 million, respectively. During 2010 the Company received an up-front fee of NOK 59.5 million, which for accounting purposes has been deferred and will be recognised as income over a period of 37 months, starting in November Total operating costs for 2010 were NOK million, which was in line with guidance communicated to the market in early The corresponding number was NOK 90.3 million in The increase is largely a result of costs incurred on the CLAVELA trial that was initiated during 2010, as well as an increase in the number of employees to support the Company s increased R&D activities. Net financial income for 2010 was NOK 3.4 million, compared to NOK 3.8 million in The net financial income consists of interest earned on money market funds and bank deposits, net of interest on long-term loan 64

65 and an unrealised net foreign exchange loss. The Company incurred no tax and the net loss amounted to NOK million for 2010, compared to a net loss of NOK 79.0 million in Balance sheet At 31 December 2010, total assets amounted to NOK million and the Company had interest-bearing debt of NOK 20 million. This compares to total assets of NOK million at the end of 2009 and the increase during the year mainly reflects the equity issue carried out towards the end of The Company had no interest-bearing debt at 31 December Cash and cash equivalents amounted to NOK million at 31 December 2010, representing 99.7% of total assets. As at 31 December 2010, total equity amounted to NOK million, compared to NOK million at the end of The equity ratio at year end was 50.0%, compared to 54.7% at the end of the previous year. Cash flow The Company s net cash outflow from operating activities amounted to NOK 55.1 million in 2010, compared to a net cash inflow of NOK 4.5 million in The Company carried out a private placement of shares during 2010 of NOK 154 million, and received an interest-bearing loan of NOK 20 million from Innovation Norway. This contributed to the net cash flow from financing activities of NOK million in 2010, compared to a net cash flow from financing activities of NOK million in Interest received on cash deposits and money market funds resulted in a total cash flow from investing activities of NOK 5.6 million in 2010, compared to NOK 3.8 million in Cash and cash equivalents at 31 December 2010 were NOK million, up from NOK million at 31 December Comments on Aqualis Offshore s financial position The six month period ended 30 June 2013 Profit and loss Total revenue amounted to USD 312,849 for the six months ended 30 June 2013 and total cost of sales was USD 598,410. Further, Aqualis Offshore suffered an operating loss of USD 923,042 in the period. Net financial loss for the six months ended 30 June totalled USD 953,601. Balance sheet Total assets amounted to USD 2.2 million as of 30 June Cash and cash equivalents amounted to USD 991,420 as of 30 June Cash flow Aqualis Offshore had a net positive cash flow of USD 991,420 for the six months ended 30 June 2013 after net proceeds from a shareholder loan and an issue of share capital of USD 2.0 million and USD 100,000, respectively INVESTMENTS Historical investments The Company s main historical investments have been related to the development of its new drug candidates, including chemical and pharmaceutical development as well as preclinical and clinical studies with the purpose of documenting the safety, efficacy and applicability to treat certain diseases. The main historical cost has been related to the development of the Company s two lead candidates, elacytarabine and CP In accordance with the applicable accounting principles, no R&D costs have yet been capitalised. Total investments in R&D, including R&D related payroll and payroll related costs, amounted to NOK million in 2012, NOK million in 2011 and NOK 80.8 million in R&D costs for the first half of 2013 amounted to NOK 47.3 million compared to NOK 44.5 million for the equivalent period in The Company has not incurred any material R&D costs in the period from 30 June 2013 and up until the date of this Prospectus Investments in progress Following the discontinuation of the development of elacytarabine in April 2013 and of CP-4126 in November 2012, as further described in section 7.3, the Company has no other drug candidates in clinical development and all R&D activities have been terminated. As a result, the Company s operations have been significantly reduced to minimize operating expenditure going forward and preserve cash. 65

66 As discussed in section 5 in this Prospectus, the Company has entered into an agreement to acquire 100% of the outstanding shares in Aqualis Offshore for a consideration of NOK 70 million with settlement in Aqualis Shares. The Company will issue shares to the shareholders of Aqualis Offshore, valued at NOK 1.60 per share. Except for the transaction agreement above, neither Aqualis nor Aqualis Offshore have any investments in progress as of the date of this Prospectus, and they are not committed to any future investments CAPITALISATION AND INDEBTEDNESS The following tables below set forth information about the Company s capitalisation and indebtedness as of 30 June The tables should be read together with the financial statements and the notes related hereto, as well as the information included in this section 10 Financial Information and section 9.6 Unaudited Pro Forma Consolidated Financial Information. The information provided in the capitalisation and indebtedness statements below is extracted from the quarterly financial statements for the second quarter NOK 1, (unaudited) Shareholders Equity Share Capital Share Premium Legal Reserves... - Other Reserves... - Other Equity... (82 036) Total Equity (A) Indebtedness Current debt Guaranteed loans... - Secured loans... - Unguaranteed/unsecured... - Total current debt... - Non-current debt Guaranteed loans... - Secured loans... - Unguaranteed/unsecured... - Total non-current debt... - Total indebtedness (B)... - Total capitalisation (A+B)

67 The table below sets forth the Company s net indebtedness as of 30 June NOK 1, (unaudited) A. Cash B. Cash equivalents C. Trading securities... - D. Liquidity (A+B+C) E. Current financial receivables F. Current bank/bond debt... - G. Current portion of non-current debt... - H. Other current financial debt I. Current financial debt (F+G+H) J. Net current financial indebtedness (I-E-D) K. Non-current bank loans... - L. Bonds issued... - M. Other non-current loans... - N. Non-current financial indebtedness (K+L+M... - O. Net financial indebtedness (J+N) As of the date of this Prospectus, there have not been any significant changes to the Company s capitalisation and indebtedness since 30 June 2013, except for the contemplated Transaction and the Offerings. Net proceeds from the contemplated Offerings will further improve the Company s financial condition. Given full subscription in the Employee Offering, the gross proceeds from the Offerings are expected to be approximately NOK 62 million. For more information regarding the Offerings, please see section 6. The Company does not consider itself to have any indirect or contingent liabilities as of the date of this Prospectus. Except from the earn-out agreement related to Aqualis Offshore s acquisition of Aqualis Offshore AS described in further detail in section , Aqualis Offshore does not have any indirect or contingent liabilities CAPITAL RESOURCES The Company has principally funded its operations through the sale of Shares to its investors as well as up-front fees received from Clovis Oncology in relation to the license agreement for CP As at 30 June 2013, the Company has received gross proceeds of NOK million from the issuance and sale of its equity securities, including exercises of options granted to employees. Since the signing of the Clovis Oncology Agreement in November 2009 and November 2010, the Company has received an aggregate amount of NOK million (USD 25 million) from Clovis Oncology in the form of up-front fees. As at 30 June 2013, the Company had cash and cash equivalents of NOK 86.6 million, representing 92.5% of total assets per 30 June 2013, of which NOK 2.7 million constitutes restricted cash. Cash and cash equivalents comprised the following as of 30 June 2013: NOK 1, (unaudited) (audited) Cash at banks Money market funds Other cash deposits Total

68 The majority of the cash at banks is held in Norwegian kroner DEBT STRUCTURE Aqualis ASA As of the date of this Prospectus the Company has no interest bearing debt. The former NOK 20 million unsecured interest bearing loan from Innovation Norway was repaid in full in June Per 30 June 2013 the Company had current liabilities of NOK 34.2 million, consisting of trade payables in the amount NOK 3.7 million and other current liabilities of NOK 30.4 million. Other current liabilities consist of the following: NOK 1, (unaudited) (audited) Withholding tax Social security taxes Allowance for holiday pay Other accrued expenses Total Other accrued expenses consist mainly of R&D expenses incurred, but not yet invoiced Debt structure following the Transaction Following the Transaction, the Group s debt will consist of the following: NOK 1, (unaudited) Interest bearing loans and borrowings Total non-current liabilities Trade payables Deferred revenue Other current liabilities Total current liabilities Total liabilities The information in the table above is derived from the consolidated unaudited pro forma balance sheet as set out in section in this Prospectus. Aqualis Offshore has a borrowing facility of up to NOK 3 million and a revolving borrowing facility of up to USD 4 million. As per 30 June 2013, NOK 2 million was drawn of the NOK 3 million facility, whereas USD 2 million was drawn of the USD 4 million facility. Another loan tranche of USD 2 million was drawn 10 July Please see section for a more detailed description WORKING CAPITAL In the opinion of the Company, its working capital is sufficient to cover the Group s present requirements, that is, for a period of at least 12 months from the date of this Prospectus TAX LOSS CARRYFORWARDS As at 31 December 2012, the Company had a total tax loss carry forward of NOK million, which can be carried forward indefinitely. The Company has not recognised a tax asset on the balance sheet due to the uncertainty of future taxable profits. The tax loss carried forward can most likely only be used to reduce the amount of tax payable related to the healthcare activities. 68

69 10.12 STATEMENT OF CASH FLOW INFORMATION For a summary of the statements of cash flows, see section Operating activities Net cash flow from operating activities for the year ended 31 December 2012 of NOK (162.3) million resulted primarily from the Company s net loss of NOK 95.7 million adjusted for the portion of up-front fees recognised as income during the period (NOK 77.1 million) and normal changes in working capital. Net cash flow from operating activities for the year ended 31 December 2011 of NOK (158.1) million resulted primarily from the Company's net loss of NOK million adjusted for the portion of up-front fees recognised as income during the period (NOK 40.2 million), and normal changes in working capital. Net cash flow from operating activities for the six months ended 30 June 2013 amounted to NOK (118.1) million compared to NOK (82.4) million for the equivalent period in These figures primarily reflect net loss of NOK 80.6 million and NOK 55.9 million for the first six months of 2013 and 2012 respectively Investing activities The cash provided by (used in) investing activities for the year ended 31 December 2012 and 2011 of NOK 8.7 million and NOK 7.2 million respectively, primarily reflects the interest received on cash deposits and investments in money market funds of NOK 10.1 million and NOK 8.5 million respectively, net of purchase of some minor production equipment (2012: NOK 1.4 million, 2011: NOK 1.3 million). Net cash flow from investing activities for the six months ended 30 June 2013 amounted to NOK 2.5 million compared to NOK 5.1 million for the equivalent period in These figures primarily reflect interest received on cash deposits and investments in money market funds Financing activities The cash provided by financing activities for the year ended 31 December 2012 of NOK million was primarily due to the issuance of Shares in a private placement of NOK million in January The cash provided by financing activities for the year ended 31 December 2011 of NOK 17.6 million was due primarily to the issuance of Shares in a subsequent repair offering of NOK 21.0 million, following a private placement in Net cash flow from financing activities for the six months ended 30 June 2013 amounted to NOK (20.8) million, compared to NOK million for the equivalent period in The negative cash flow in 2013 is primarily due to the repayment of the interest bearing loan of NOK 20 million from Innovation Norway in June The positive net cash flow for the first six months of 2012 is primarily due to the issuance of Shares in the private placement of NOK million in January

70 11. BOARD OF DIRECTORS, MANAGEMENT AND EMPLOYEES 11.1 BOARD OF DIRECTORS Overview In accordance with Norwegian law, the Board is responsible for administering the Company s affairs and ensuring that the Company s operations are organised in a satisfactory manner. The Company s Articles of Association provide that the Board of Directors shall consist of a minimum of three and a maximum of eight members. As of the date of this Prospectus, the Company s Board of Directors consists of the following: Name of director Director since Current term expires Business address: Martin Nes c/o Ferncliff, Sjølyst Plass 2, 0278 Oslo Yvonne Litsheim Sandvold c/o Frognerbygg AS, Sørkedalsveien 7, 0369 Oslo Øystein Stray Spetalen c/o Ferncliff, Sjølyst Plass 2, 0278 Oslo Synne Syrrist Rundhaugveien 5A, 0495 Oslo * Synne Syrrist acted as Deputy Board member in the period from to until she became a full-time Board member Brief biographies of the Board members Martin Nes, Chairman Mr. Nes is Chief Executive Officer and Partner of the investment firm Ferncliff TIH AS. Mr. Nes has extensive corporate experience from various companies and board positions. Mr. Nes has previously worked for the Norwegian law firm Wikborg Rein, both in their Oslo and London offices and for the shipping law firm Evensen & Co. Mr. Nes joined Ferncliff TIH AS in March Mr. Nes holds a law degree from the University of Oslo and a master of laws degree from the University Of Southampton, England. Mr. Nes is a Norwegian citizen and resides in Oslo, Norway. Current directorships and senior management position... Previous directorships and senior management positions last five years... Tycoon Industrier AS (chief executive officer), Ferncliff TIH AS and Ferncliff TIH 1 AS (chief executive officer), Hanekamb Invest AS (chairman), Ricin Invest AS (chairman), Aqualis Offshore AS (chairman), S.D. Standard Drilling Plc. (chairman), AS Simask (board member), Strata Marine & Offshore AS (board member), Allum Holding AS (board member), Saga Tankers ASA (board member), Aqualis Offshore Ltd. (board member), S.D. Standard Drilling Ltd. Pte. (board member) Ferncliff Asset Management AS (chairman of the board), Clavis Pharma ASA (board member), Ferncliff Investment Funds Plc. (board member), RigInvest AS (board member), Maross Invest AS (board member), Offshore Driller 1 Ltd. (board member), Offshore Driller 2 Ltd. (board member), Offshore Driller 3 Ltd. (board member), Offshore Driller 4 Ltd. (board member), Offshore Driller 5 Ltd. (board member), Strata AS (board member) Yvonne Litsheim Sandvold, Board member Ms. Sandvold is the Chief Operating Officer of Frognerbygg AS, and has extensive experience from the Norwegian real estate industry. Ms. Sandvold currently serves on the Board of several private companies. Ms. Sandvold holds a cand. psychol. degree from the University of Oslo. Ms. Sandvold is a Norwegian citizen and resides in Oslo, Norway. 70

71 Current directorships and senior management position... Frognerbygg AS (chief operating officer and deputy board member), YLS Næringseiendom AS (chief executive officer and chairman of the board), Bjørn Farmanns gate 8 AS (chief executive officer and chairman of the board), Octopus Eiendom AS (chairman of the board), AS Naturbetong (deputy board member), Sandvold Holding AS (deputy board member), Seilduksgt. 17 AS (deputy board member), Bogstadveien 62 AS (deputy board member), Schønings gate 7 AS (deputy board member), Aksjevold AS (Deputy board member). Previous directorships and senior management positions last five years... None Øystein Stray Spetalen, Board member Mr. Spetalen is chairman and owner of investment firm Ferncliff TIH AS. He is an independent investor. He has worked in the Kistefos Group as an investment manager, as corporate advisor in different investment banks and as a portfolio manager in Gjensidige Forsikring. Mr. Spetalen is a chartered petroleum s engineer from NTNU. Mr. Spetalen is a Norwegian citizen and resides in Oslo, Norway. Current directorships and senior management position... Previous directorships and senior management positions last five years... Gardermoen Media AS (chief executive officer), Ferncliff TIH 1 AS (chairman), Saga Tankers ASA (chairman), Tycoon Industrier AS (chairman), Tymar AS (chairman), Gross Management AS (chairman), Ferncliff TIH AS (chairman), Ferncliff (chairman), Dasut AS (chairman), AS Simask (chairman), Unified AS (chairman), Krøs AS (chairman), Tycoon Trading 2 AS (chairman), Allum Holding AS (chairman), Renewable Energy Corporation AS (board member), Hydrogen Technologies Holding AS (board member), Namdalen Træsliberi AS (board member), Van Severen & Co AS (board member), Bangdal Brug AS (board member), Skorovas Gruber AS (board member), Visitfonna AS (board member), Grøndalselva AS (board member), Strata Marine & Offshore AS (board member), Vallhall Fotballhall AS (board member), Sjølyst Kontorfellesskap AS (board member), Vallhall Fotballhall KS (board member), Vallhall Fotballhall Drift AS (board member), Namdal Skoger AS (board member), Namdal Bruk AS (board member), Namdal Kraft AS (board member), Spectrum ASA (board member), Gardermoen Media AS Jetfly KS (chairman), Jetfly AS (chairman), Strata AS (chairman), Ferncliff Asset Management Holding AS (chairman), Singapore Drilling AS (chairman), Connect Venture AS (chairman), Maross Invest AS (chairman), AS Ferncliff (chairman), Global Små Mellomstore Bedrifter AS (chairman), Televekst AS (chairman), Sirius Simask AS (chairman), Standard Drilling ASA (chairman), Ferndrill Managament AS (chairman), Pesoss AS (chairman), Gyoss Invest AS (chairman), Ferncliff Invest AS (board member), Gardermoen Media AS (board member), Global Geo Services ASA (board member), Standard Holding AS (board member), HT Lufttransport AS (board member), Unionen AS (board member), Aktiv Kapital ASA (board member), Kverneland ASA (board member), Norske Skog ASA (board member), Standard Drilling ASA (board member), Bank 2 ASA (board member), B2 Holding AS (board member), Salmar ASA (board member), Altinex ASA (board member), Allum Marine AS / Noble Denton Sandefjord AS (board member), VIF ASA (board member) Synne Syrrist, Board member Ms. Syrrist is an independent business consultant, and has extensive experience as a non-executive director of both private and public companies. She was previously a partner and financial analyst at First Securities and financial analyst at Elcon Securities ASA. Ms. Syrrist currently serves on the Board of several public companies, including Norwegian Property ASA, Awilco Drilling Ltd and Eidesvik Offshore ASA. Ms. Syrrist holds an MSc from the Norwegian University of Science and Technology, and qualified as an authorised financial analyst at the Norwegian School of Economics and Business Administration. Ms. Syrrist is a Norwegian citizen and resides in Oslo, Norway. 71

72 Current directorships and senior management position... Awilco Drilling Ltd (board member), Awilco LNG ASA (board member), Eidesvik Offshore ASA (board member), Castelar Corporate Finance AS (board member), Global Rig Company ASA (board member), Norwegian Property ASA (board member), DNB ShippingInvest I ASA (chairman), IP SkipsHolding I AS (chairman), IP Shipping I AS (chairman), IP Skipseiende 2 AS (chairman), LPG Ships 1 AS (chairman) Previous directorships and senior management positions last five years... Cecon ASA (member of the board of directors), Nordisk Energiforvaltning ASA (member of the board of directors), Nordisk Industriutvikling AS (member of the board of directors), Faktor Eiendom ASA (member of the board of directors), Copeinca ASA (member of the board of directors), Wavefields Inseis ASA (member of the board of directors), Ocean HeavyLift ASA (member of the board of directors), Camposol Holding Plc (member of the board of directors), Camposol AS (member of the board of directors), DNB NOR Skipseiende 3 AS (chairman of the board of directors), DNB NOR Skipseiende 4 AS (chairman of the board of directors), DNB NOR Skipseiende 5 AS (chairman of the board of directors), DNB NOR Skipseiende 6 AS (chairman of the board of directors), DNB NOR Skipseiende 7 AS (chairman of the board of directors), DNB NOR Skipseiende 8 AS (chairman of the board of directors), DNB NOR Profesjonell Shippinginvestor I AS (chairman of the board of directors), Sector Epsilon AS (member of the board of directors), Cetix Group AS (member of the board of directors), Vetro Solar AS (member of the board of directors), Gregoire ASA/AS (member of the board of directors), Scana Industrier ASA (member of the board of directors) 11.2 EXECUTIVE MANAGEMENT As of the date of this Prospectus, Gunnar Manum and Ole Henrik Eriksen are the only members of the Company s Executive Management. Gunnar Manum, Acting CEO and CFO Mr. Manum joined Aqualis in April 2007 and serves currently as the Company s Chief Financial Officer and acting Chief Executive Officer. Prior to joining the Company, he was a senior advisor at Handelsbanken Capital Markets, Corporate Finance, for eight years. Mr. Manum has long and wide ranging experience from several managerial positions within finance and accounting at Stolt Sea Farm (now part of Marine Harvest) and PricewaterhouseCoopers, Australia. He holds a MCom in Finance and Accounting from the University of New South Wales, Sydney. His business address is Sjølyst Plass 2, 0278 Oslo. Ole Henrik Eriksen, CBO Healthcare Mr. Eriksen was part of the establishment of Aqualis (Clavis Pharma) in August 2001 as the first CEO and is currently responsible for the Company s healthcare activates, as Chief Business Officer. Prior to that he had 18 years of experience as scientist, Director, VP and CEO in the pharmaceutical and diagnostic imaging industry, including Nycomed Imaging (now part of GE Healthcare), Medinnova, NeoRad AS and Alertis Medical AS. Mr. Eriksen holds a M.Sc. in Organic Chemistry. His business address is Sjølyst Plass 2, 0278 Oslo. For a description of the Executive Management following the Transaction, please see section CONFLICTS OF INTERESTS, FAMILY RELATIONSHIP, DIRECTORSHIPS ETC. To the Company s knowledge, there are no potential conflicts of interests between any duties to the Company, of any of the Board members or members of the Executive Management and their private interests and or other duties, except as described below. Martin Nes, Chairman of the Board Mr. Nes is currently the chief executive officer of Ferncliff TIH AS which as of the date of this Prospectus, directly or indirectly, holds approximately 15% of total shares outstanding, and is thus not considered as independent from the Company s larger shareholders. Mr. Nes is also the CEO of Ferncliff TIH AS which owns 51% of Aqualis Offshore. 72

73 Øystein Stray Spetalen, member of the Board Mr. Spetalen owns Ferncliff TIH AS which as of the date of this Prospectus, directly or indirectly, holds approximately 15% of total shares outstanding, and is thus not considered as independent from the Company s larger shareholders. Ferncliff TIH AS which also owns 51% of Aqualis Offshore. Furthermore, Mr. Spetalen owns Strata Marine & Offshore. In connection with the sale of Aqualis Offshore AS, Strata Marine & Offshore is entitled to an earn-out consideration further described in , and there might potentially be a conflict of interest regarding this earn-out agreement. If Mr. Spetalen could affect the distribution and amount of business coming into the different subsidiaries of Aqualis Offshore, which the Company believes he is not able to do as a Board member of the Company, he could potentially assign business in favour of Aqualis Offshore AS, and thus affect the earn-out payment. There are no family relations between any of the Company s Board members or Executive Management DETAILS OF ANY CONVICTIONS FOR FRAUDULENT OFFENCES, BANKRUPTCY ETC. No member of the Board of Directors or the Executive Management have for at least the previous five years preceding the date of this Prospectus been; Convicted in relation to any fraudulent offences; Involved in any bankruptcies, receiverships or liquidations when acting in the capacity of member of an administrative, management or supervisory body; Subject to any official public incrimination and/or sanctions by statutory or regulatory authorities (including designated professional bodies), or been disqualified by a court from acting as a member of the administrative, management or supervisory body of an issuer or from acting in the management or conduct of the affairs of any issuer REMUNERATION AND BENEFITS Remuneration of the Board The table below sets out the remuneration paid to the Board of Directors in Name Board fee (NOK 1,000) Anders P. Wiklund... Geir Stormorken Annette Clancy Hilde Furberg Karol Sikora Robert J. Spiegel Hilde H. Steineger Total... 1, Remuneration of the Executive Management The table below sets out the remuneration paid to the Executive Management in Name Salary Pension Other² Share options Total contributions Olav Hellebø¹... 2, ,088 6,317 Ole Henrik Eriksen... 1, ,990 Nicholas Adams... 1, ,176 2,782 Athos Gianella-Borradori... 2, ,524 4,083 Gunnar Manum... 1, ,003 Tone Veiteberg... 1, ,774 Total... 10,052 1, ,591 18,951 ¹Resigned 20 May 2013 ²Car allowance

74 Termination benefits At the date of this Prospectus, no member of the administrative, management or supervisory bodies has contracts with the Company providing benefits upon termination of employment Share option plan The Board of Aqualis has established an Employee Share Option Plan. Under the option plan options may be granted to all employees with a minimum of 80% part-time employment. The exercise price of the options is equal to the market price of the shares on the date of grant. Options are conditional on the employee completing one year of service (vesting period). The contractual life of each option granted is normally three years. The options are expected to be settled through the issue of shares, although as an alternative the Company is at liberty to make cash compensation. The fair value of the options is estimated at the date of granting the options using the Black-Scholes valuation model, taking into account the terms and conditions upon which the options were granted. The terms and conditions of the options granted cannot be altered during the life of the options. 463,000 options were granted in 2012 at a WAEP of NOK per share. 502,000 options were granted in 2011 at a WAEP of NOK and 527,000 options were granted during 2010 at a WAEP of NOK The total share options outstanding as of 30 June 2013 have a WAEP of NOK and the exercise period for the share options is from as of today to 1 April NOK 1, June Number of Number of WAEP (NOK) options options WAEP (NOK) Outstanding at the beginning of the year Granted Exercised ( ) Forfeited... ( ) Expired... ( ) Outstanding at the end of period Exercisable at the end of period As of the date of this Prospectus only 240,000 options are outstanding. These share options have a WAEP of NOK and the exercise period for the share options is from as of today and to 31 December CORPORATE GOVERNANCE Audit committee The Board has appointed an audit committee, and the function of the audit committee is to prepare matters to be considered by the Board and to support the Board in the exercise of its management and supervisory responsibilities relating to financial reporting, statutory audit and internal control. The current audit committee consists of the members of the Board of Directors as further described in section Remuneration committee The remuneration committee, appointed by the Board, makes proposals to the Board on the employment terms and conditions and total remuneration of the CEO, and other members of Executive Management, as well as the details of the employee share option plan. These proposals are also relevant for other management entitled to variable salary payments. The current remuneration committee consists of the members of the Board of Directors as further described in section Corporate Governance compliance The Company s corporate governance guidelines, called Clavis Pharma ASA Corporate Governance Policy (the CCGP ), were adopted by the Board at the board meeting on 24 April 2006 and last revised by the Board on 22 March The CCGP is based on, and complies with, the Norwegian Code of Practice for Corporate Governance issued by the Norwegian Corporate Governance Board, latest edition of 23 October The CCGP includes the following separate guidelines and routines, as attachments to the main corporate governance guidelines: 74

75 - Instructions to the election committee - Instructions to the remuneration committee - Instructions to the Board - Instructions to the CEO - Routines for the safe handling of inside information 11.7 EMPLOYEES Number of employees As of 30 June 2013, the Company had 8 permanent employees. The significant reduction in number of employees compared to year end 2012 is related to the downscaling of operations as further described in section 7.3. At year end in 2012, 2011, and 2010 the corresponding numbers of employees were 34, 30 and 29 respectively. As of the date of this Prospectus, there are only two permanent employees in the Company. However, post the Transaction described in this Prospectus, the total number of employees in the Group will increase as Aqualis Offshore employs an additional 37 people. For further information regarding employees in Aqualis Offshore, please see section PENSIONS AND OTHER OBLIGATIONS Pensions The Company has a defined contribution plan. A defined contribution plan is a pension plan under which the Company pays fixed contributions into a separate entity. The Company has no legal or constructive obligations to pay further contributions if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior periods. For defined contribution plans, the Company pays contributions to publicly or privately administered pension insurance plans on a mandatory, contractual or voluntary basis. The Company has no further payment obligations once the contributions have been paid. The contributions are recognised as when they are due. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in the future payment is available. Total expenses in relation to the Company s defined contribution plan amounted to NOK 3.0 million for 2012, NOK 2.9 million for 2011 and NOK 2.1 million for Loans and guarantees The Company has no outstanding loans or guarantees to any member of the Executive Management SHAREHOLDINGS Board of Directors The table below presents the overview of Shares and options owned by the Board of Directors as of the date of this Prospectus: Number of Shares Number of options Martin Nes Yvonne Litsheim Sandvold Øystein Stray Spetalen... 5,000,000¹ 0 Synne Syrrist ¹ Consisting of 3,000,000 Shares held through Tycoon Industrier AS and 2,000,000 Shares held through Strata Marine & Offshore AS, both companies controlled by Mr. Spetalen. 75

76 Following the Transaction and the issuance of the New Shares, Mr. Spetalen will own a total of 27,312,500 Shares in the Company through companies controlled by him. The Shares resulting from the Transaction will be subject to a lock-up period as further described in section Executive Management As of the date of this Prospectus, Gunnar Manum owns 120,000 options and no Shares and Ole Henrik Eriksen owns 120,000 options and 80,170 Shares.. 76

77 12. SHARE CAPITAL 12.1 OVERVIEW The Company s current share capital is NOK 33,755,515 divided into 33,755,515 ordinary shares, each with a nominal value of NOK The Company has one class of shares, and each share carries one vote. All the shares are validly issued and fully paid. There were 30,568,091 outstanding Shares issued by the Company as of 1 January 2012 and 33,755,515 outstanding Shares issued by the Company as of 31 December Following the Transaction and the Offerings, the Company s total number of issued Shares will be 116,261,030, each with a nominal value of NOK 1.00 per Share SHARE CAPITAL HISTORY The following table sets out the development of the Company's share capital since 2006 and until the date of this Prospectus. Date Type of change Share capital increase (NOK) Share capital (NOK) Subscription price per share (NOK) Par value per share (NOK) Issued shares Total shares Private placement 148,150 8,116, B: 14, , Private placement 139,600 8,256, C: 13, , Share split 1:10 0 8,256, ,256, Private placement 4,879,560 13,136, ,879,560 13,136, Public Offering 439,560 13,575, ,560 13,575, Private placement 10,750,000 24,325, ,750,000 24,325, Private placement 650,000 24,975, ,000 24,975, Share option plan 40,000 25,015, ,000 25,015, Share option plan 256,000 25,271, ,000 25,271, Share option plan 50,000 25,321, ,000 25,321, Share option plan 40,000 25,361,650 16, ,000 25,361, Private Placement Tranche 2,115,000 27,476, ,115,000 27,476, Private Placement Tranche 2,285,000 29,761, ,285,000 29,761, Public Offering 600,000 30,361, ,000 30,361, Private Placement 174,041 30,535, ,041 30,535, Share option plan 32,400 30,568, ,400 30,568, Private Placement 2,862,124 33,430, ,862,124 33,430, Share option plan 116,600 33,546, ,600 33,546, Share option plan 208,700 33,755, ,700 33,755, OWN SHARES As of the date of this Prospectus, the Company does not own any treasury shares. The Board has not been granted any authorisation to acquire treasury shares SHAREHOLDER AGREEMENTS The Board is not aware of any shareholder agreements by and among the Company s shareholders relating to the Company STOCK EXCHANGE LISTING, SHARE REGISTRAR AND SECURITIES NUMBER Aqualis ASA is a Norwegian public limited liability company and the Shares are issued pursuant to the Norwegian Public Limited Companies Act. The Shares are listed on Oslo Børs under the ticker symbol AQUA. The Shares belong to the OB Match liquidity category and they are registered in the Norwegian Central Securities Depository (VPS). The 77

78 Company's registrar is Nordea Bank Norge ASA, Securities Services/Issuer Services, P.O. Box 1166 Sentrum, N-0107 Oslo. The Shares carry the securities number ISIN NO OUTSTANDING AUTHORIZATIONS At the EGM held 8 October 2013, the Company was granted an authorisation to increase the Company s share capital with NOK by issuance of new shares in connection with the acquisition of Aqualis Offshore, and NOK by issuance of new shares in connection with the Rights Issue, and NOK by issuance of new shares in connection with the Employee Offering. The authorisations are set out in section 5.4 and respectively. In addition, the EGM granted the Board an authorisation to increase the share capital with up to NOK , which is approximately 10% of the existing share capital following the registration of the capital increases pertaining to the Transaction, the Rights Issue and the Employee Offering. The authorisation is set out below. The Board is granted authorization to increase the share capital with up to NOK 11,626,000, which is approximately 10 % of the existing share capital after the completion of the capital increases proposed in item 3, 4 and 5, by issuing up to 11,626,000 shares through one or several share capital increases. The authorization to acquire shares shall be used for one or more of the following purposes: (i) (ii) (iii) In connection with investments, mergers and acquisitions; and/or to provide the Company with financial flexibility; and/or issue of shares in connection with the Company s share/option plan for employees Price and conditions for subscription will be determined by the Board on issuance, according to the Company's needs and the shares' market value at the time. Shares can be issued in exchange for cash settlement or contribution in kind. The existing shareholders pre-emptive rights to subscribe shares can be deviated from in connection with the effectuation of this authorization. The Board s authorization is valid until the Annual General Meeting in 2014, but shall in any event expire at the latest 15 months from the date of this General Meeting. The Board is at the same time given authorization to make the necessary amendments to the articles of association on execution of the authorization SHARE OPTIONS The Company has granted options to employees as part of an incentive program. The incentive program is described in section CONVERTIBLE INSTRUMENTS AND WARRANTS As of the date of this Prospectus, the Company has no outstanding convertible instruments or warrants DIVIDEND POLICY The Company has not paid any dividends to date as the Company has been in a pre-commercial phase with ambitious development plans. Going forward, the Company plans to grow, both organically and through acquisitions, and potential profits are to be reinvested in the Company. Hence, it does not expect to make any dividend payments in the next few years SHAREHOLDERS The table below sets out the Company s 20 largest shareholders as registered in VPS as of 7 October

79 Name Number of shares Percentage (%) Tycoon Industrier AS... 3,000, Strata Marine & Offshore AS... 2,000, Anko Invest AS... 1,870, Kristianro AS... 1,716, Gislerød Magne , VPF Nordea Kapital , Argentum Secondary AS , Nordnet Pensjonsforsikring , Ilmarinen Mutual Pension Insurance , MP Pensjon PK , Scope Properties Limited , Fremont AS , Fraternita AS , VPF Nordea Avkastning , Enki Energy Technologies AS , Verdipapirfondet DNB SMB , Condora , Oculomotorius AS , Coremed AS , Nordnet Bank AB , The following shareholders owned more than 5% of the issued share capital on 7 October 2013: Tycoon Industrier AS (3,000,000 Shares, representing 8.89% of total share capital), Strata Marine & Offshore AS (2,000,000 Shares, representing 5.92% of total share capital), Anko Invest AS (1,870,382 Shares, representing 5.54% of total share capital) and Kristianro AS (1,716,444 Shares, representing 5.08% of total share capital). Shareholders with ownership exceeding 5% must comply with disclosure obligations according to the Norwegian Securities Trading Act section 4-3. For more detailed description please see section As far as the Company is aware of, there is no other natural or legal person other than the above mentioned, which indirectly or directly has a shareholding in the Company above 5% which must be notified under Norwegian law. To the knowledge of the Company, no person, entity or group directly or indirectly controls the issuer to such extent that special measures is considered necessary to ensure abuse of such control. 79

80 13. SHAREHOLDER MATTERS AND NORWEGIAN COMPANY AND SECURITIES LAW The following is a summary of certain information relating to the Shares and certain shareholder matters, including the Company s Articles of Association and a summary of applicable Norwegian law in effect as of the date of this Prospectus. The summary does not purport to be complete and is qualified in its entirety by the Company s Articles of Association and Norwegian law. Under Norwegian law, all shares are to provide equal rights in a company. However, Norwegian law permits a company s articles of association to provide for different types of shares (e.g., several classes of shares). In such case, a company s articles of association must specify the different rights, preferences and privileges of the classes of shares and the total par value of each class of shares. The Company s Articles of Association provide for a single class of shares with equal rights. There are no restrictions affecting the right of Norwegian or non-norwegian residents or citizens to own the Shares. The Company s Articles of Association do not contain any provisions restricting the transferability of Shares THE GENERAL MEETING OF SHAREHOLDERS Under Norwegian law, a company s shareholders are to exercise supreme authority in the Company through the general meeting. In accordance with Norwegian law, the annual general meeting of the Company s shareholders is required to be held each year on or prior to June 30. The following business must be transacted and decided at the annual general meeting: approval of the annual accounts and annual report, including the distribution of any dividend; any other business to be transacted at the general meeting by law or in accordance with the Company s Articles of Association Pursuant to Section 5-6 of the Norwegian Public Limited Companies Act, the annual general meeting of shareholders shall also deal with the Board of Directors declaration concerning the determination of salaries and other remuneration to senior executive officers pursuant to Section 6-16a of said Act. In addition to the annual general meeting, extraordinary general meetings of shareholders may be held if deemed necessary by the Board. An extraordinary general meeting must also be convened for the consideration of specific matters at the written request of the Company s auditors or shareholders representing a total of at least 5% of the share capital. Norwegian law requires that written notice of general meetings be sent to all shareholders whose addresses are known at least three weeks prior to the date of the meeting, unless the articles of association stipulate a longer period. The Company s Articles of Association do not include any provision on this subject. The notice shall set forth the time and date of the meeting and specify the agenda of the meeting. It shall also name the person appointed by the Board to open the meeting. See Article 9 of the Company s Articles of association for further details. A shareholder may attend the general meeting either in person or by proxy. The Company will include a proxy form with its notices of general meetings. A shareholder is entitled to have an issue discussed at a general meeting if such shareholder provides the Board with notice of the issue within seven days before the three week notice period, together with a proposal to a draft resolution or a basis for putting the matter on the agenda VOTING RIGHTS Subject to the terms of a company s articles of association to the contrary, Norwegian law provides that each outstanding share shall represent a right to one vote. All of the Company s Shares have an equal right to vote at general meetings. No voting rights can be exercised with respect to treasury shares held by a company. 80

81 In general, decisions that shareholders are entitled to make under Norwegian law or the Company s articles of association may be made by a simple majority of the votes cast. In the case of elections, the persons who obtain the most votes are elected. However, certain decisions, including but not limited to resolutions to: authorise an increase or reduction in the Company s share capital, waive preferential rights in connection with any share issue, approve a merger or demerger, and amend the Company s Articles of Association, must receive the approval of at least two-thirds of the votes cast and two-thirds of the share capital represented at the general meeting. Further, certain types of changes in the rights of the Company's shareholders require the consent of all shareholders or 90% of the share capital represented at a general meeting, as well as the majority required for amendments to the Company s Articles of Association. There are no quorum requirements for general meetings. In general, in order to be entitled to vote at a general meeting, a shareholder must be registered as the owner of shares in the Company s share register kept by the VPS, or alternatively, report and show evidence of the shareholder s share acquisition to the Company prior to the general meeting. Under Norwegian law, a beneficial owner of shares registered through a VPS-registered nominee may not be able to vote the beneficial owner s shares unless ownership is re-registered in the name of the beneficial owner prior to the relevant general meeting. Investors should note that there are varying opinions as to the interpretation of Norwegian law in respect of the right to vote nominee-registered shares. For example, Oslo Børs has in a statement made on 21 November 2003 taken the position that nominee-shareholders may vote in general meetings if they actually prove their shareholding prior to the general meeting ADDITIONAL ISSUANCES AND PREFERENTIAL RIGHTS If the Company issues any new Shares, including bonus shares (i.e. new Shares issued by a transfer from funds that the company is allowed to use to distribute dividend), the Company s Articles of Association must be amended, which requires a two-thirds majority of the votes cast as well as at least two-thirds of the share capital represented at a general meeting. In connection with an increase in the Company s share capital by a subscription for Shares issued against contribution in cash, Norwegian law provides the Company s shareholders with a preferential right to subscribe for the new Shares on a pro rata basis in accordance with their then-current shareholdings in the Company. Said preferential rights may be waived by a resolution at a general meeting passed by two-thirds of the votes cast and share capital represented. The general meeting may, in a resolution supported by at least two-thirds of the votes cast and share capital represented, authorize the Board to issue new Shares. Such authorisation may be effective for a maximum of two years, and the nominal value of the Shares to be issued may not exceed 50% of the nominal share capital as at the time the authorization is registered. The shareholders preferential right to subscribe for Shares issued against consideration in cash may be set aside by the Board only if the authorization includes such possibility for the Board. Any issue of Shares to shareholders who are citizens or residents of the United States upon the exercise of preferential rights may require the Company to file a registration statement in the United Stated under U.S. securities law. If the Company decides not to file a registration statement, these shareholders may not be able to exercise their preferential rights. Under Norwegian law, bonus shares may be issued, subject to shareholder approval and provided, amongst other requirements, that the transfer is made from funds that the Company is allowed to use to distribute dividend. Any bonus issues may be effectuated either by issuing Shares or by increasing the nominal value of the Shares outstanding. If the increase in share capital is to take place by new Shares being issued, these new Shares must be allocated to the shareholders of the Company in proportion to their current shareholdings in the Company MINORITY RIGHTS Norwegian law contains a number of protections for minority shareholders against oppression by the majority, including but not limited to those described in this and preceding and following paragraphs. Any shareholder 81

82 may petition the courts to have a decision of the Board or general meeting declared invalid on the grounds that it unreasonably favours certain shareholders or third parties to the detriment of other shareholders or the Company itself. In certain grave circumstances, shareholders may require the courts to dissolve the Company as a result of such decisions. Shareholders holding in the aggregate 5% or more of the Company s share capital have a right to demand that the Company holds an extraordinary general meeting to discuss or resolve specific matters. In addition, any shareholder may demand that the Company places an item on the agenda for any general meeting as further described in section 13.1 above LEGAL CONSTRAINTS ON THE DISTRIBUTION OF DIVIDENDS Dividends may be paid in cash or in some instances in kind. The Norwegian Public Limited Liability Companies Act (as amended 1 July 2013) provides several constraints on the distribution of dividends: Pursuant to section 8-1 of the Norwegian Public Limited Liability Companies Act the Company may only distribute dividend to the extent that the Company's net assets following the distribution covers (i) the Company's share capital, (ii) the reserve for valuation differences and (iii) the reserve for unrealized gains. In the amount that may be distributed, a deduction shall be made for the aggregate nominal value of treasury shares that the Company has purchased for ownership or as security before the balance day. It shall also be made a deduction for credit and collateral etc. according to sections 8-7 to 8-10 from before the balance day which after these provisions shall lay within the scope of the funds the company may distribute as dividend. It shall however not be made a deduction for credit and collateral etc. that is reimbursed or settled before the time of decision, or credit to a shareholder to the extent that the credit is settled by a netting in the dividend. The calculation of the distributable equity shall be made on the basis of the balance sheet in the approved annual accounts for the last financial year, but so that the registered share capital as of the date of the resolution to distribute dividend shall apply. Following the approval of the annual accounts for the last financial year, the General Meeting may also authorise the Board of Directors to declare dividend on the basis of the Company's annual accounts. Dividend may also be distributed by the General Meeting based on an interim balance sheet which has been prepared and audited in accordance with the provisions applying to the annual accounts and with a balance sheet date not further into the past than six months before the date of the General Meeting's resolution. Dividend may only be distributed to the extent that the Company after the distribution has a sound equity and liquidity. The amount of distributable dividends is calculated on the basis of the Company s separate financial statements and not on the basis of the consolidated financial statements of the Company and its subsidiaries. Distribution of dividends is resolved by a majority vote at the General Meeting, and on the basis of a proposal from the Board. The General Meeting cannot distribute a larger amount than what is proposed or accepted by the Board. The Norwegian Public Limited Liability Companies Act does not provide for any time limit after which entitlement to dividends lapses. Subject to various exceptions, Norwegian law provides a limitation period of three years from the date on which an obligation is due. There are no dividend restrictions or specific procedures for non-norwegian resident shareholders to claim dividends. For a description of withholding tax on dividends applicable to non-norwegian residents, see Chapter 15 Norwegian taxation MANDATORY TAKEOVER BIDS, SQUEZZE OUT, ETC. The Norwegian Securities Trading Act requires any person, entity or consolidated group who becomes the owner of Shares representing more than 1/3 of the voting rights of the Company to, within four weeks, make an unconditional general offer for the purchase of the remaining Shares in the Company. A mandatory offer obligation may also be triggered where a party acquires the right to become the owner of Shares which, aggregated with the party's own shareholding, represent more than 1/3 of the voting rights in the Company, and Oslo Børs decides that acquiring such rights must be regarded as effectively being an acquisition of the Shares in question. 82

83 The mandatory offer obligation ceases to apply if the person, entity or consolidated group sells the portion of the Shares that exceeds the relevant threshold within four weeks of the date on which the mandatory offer obligation was triggered. In the mandatory offer, all shareholders shall be treated equally and the price to be paid per Share shall be at least as high as the highest price paid or agreed by the acquirer during the last 6 months prior to the date the threshold was exceeded. However, if it is clear that the market price was higher when the mandatory offer obligation was triggered, the Norwegian Securities Trading Act states that the offer price shall be at least as high as the market price. If the acquirer acquires or agrees to acquire additional Shares at a higher price prior to the expiration of the mandatory offer period, the acquirer is obliged to restate its offer at such higher price. The offer must be made in cash or contain a cash alternative at least equal in value to any non-cash offer. Pursuant to the Norwegian Securities Trading Act section 6-6, a repeated bid obligation applies when passing 40% and 50% of the votes of the Company. In the event of a failure to make a mandatory offer or to sell the portion of the Shares that exceeds the threshold within four weeks, Oslo Børs may force the acquirer to sell the Shares exceeding the threshold by public auction. Moreover, a shareholder who fails to make an offer may not, as long as the mandatory offer obligation remains in force, exercise rights in the Company, such as voting at a general meeting, without the consent of a majority of the remaining shareholders. The shareholder may, however, exercise its rights to dividends and preemption rights in the event of a share capital increase. If the shareholder neglects its duty to make a mandatory offer, Oslo Børs may impose a cumulative daily fine that runs until the circumstance has been rectified. Any person, entity or consolidated group who has passed any of the above-mentioned relevant thresholds for a mandatory offer without triggering such an obligation due to an applicable exemption, and who has therefore not previously made an offer for the remaining Shares in the Company in accordance with the mandatory offer rules, is, as a main rule, obliged to make a mandatory offer in the event of a subsequent acquisition of Shares in the Company (subsequent offer obligation). Pursuant to the Norwegian Public Limited Companies Act, compulsory acquisition (squeeze out) of the remaining shares may be initiated by a purchaser who has acquired 90 per cent or more of the shares (and corresponding voting rights). If the shareholders being squeezed out do not accept the purchaser s offer price, the price shall be determined through a valuation by the court. The purchaser will anyhow obtain title to the shares immediately. Each of the minority shareholders have a corresponding right to require that the majority shareholder representing 90 per cent or more of the shares/votes, acquire their shares. Unless agreed, the price shall be determined through a valuation by the court DISCLOSURE OBLIGATIONS If a person s, entity s or consolidated group s proportion of the total issued shares and/or rights to shares in a company listed on a regulated market in Norway (with Norway as its home state, which will be the case for the Company) reaches, exceeds or falls below the respective thresholds of 5%, 10%, 15%, 20%, 25%, 1/3, 50%, 2/3 or 90% of the share capital or the voting rights of that company, the person, entity or group in question has an obligation under the Securities Trading Act to notify Oslo Børs and the issuer immediately. The same applies if the disclosure thresholds are passed due to other circumstances, such as a change in the Company s share capital. The disclosure obligation also requires an investor to disclose agreements giving an investor voting rights over another party s shares if the total holding of shares and voting rights cross any of the mentioned thresholds RIGHTS OF REDEMPTION AND REPURCHASE OF SHARES The Company has not issued redeemable shares (i.e., shares redeemable without the shareholder s consent). The Company s share capital may be reduced by reducing the par value of the Shares. Such a decision requires the approval of two-thirds of the votes cast and share capital represented at a general meeting. Redemption of individual Shares requires the consent of the holders of the Shares to be redeemed. The company may purchase its own Shares if an authorization to the Board to do so has been given by the shareholders at a general meeting with the approval of at least two-thirds of the aggregate number of votes cast and share capital represented. The aggregate nominal value of treasury shares so acquired and held by the Company is not permitted to exceed 10% of the Company s share capital, and treasury shares may only be acquired if the Company s distributable equity, according to the latest adopted balance sheet, exceeds the consideration to be paid for the shares. The authorization by the shareholders at the general meeting cannot be 83

84 given for a period exceeding 18 months. At the date of this Prospectus, the Company has not granted such authorization to the Board and does not hold any treasury shares. A Norwegian public limited company may not subscribe for its own shares SHAREHOLDER VOTE ON CERTAIN REORGANISATIONS A decision to merge with another company or to demerge requires a resolution of the Company s shareholders at a general meeting passed by at least two-thirds of the votes cast and share capital represented. A merger plan or demerger plan signed by the Board along with certain other required documentation must be sent to all shareholders and registered with the Register of Business Enterprises at least one month prior to the general meeting DISTRIBUTION OF ASSETS ON LIQUIDATION Under Norwegian law, a company may be liquidated by a resolution of the company s shareholders in a general meeting passed by the same vote as required with respect to amendments to the Articles of Association. The shares rank equally in the event of a return on capital by the Company upon liquidation or otherwise ARTICLES OF ASSOCIATION The Memorandum and Articles of Association of Aqualis as last amended on 8 October 2013 are as follows: Article 1. Name The name of the company is Aqualis ASA. The Company is a public limited liability company. Article 2. Registered Office The Company s registered office is located in the City of Oslo. Article 3. Purpose The Company's purpose is to offer services to the marine and offshore industry and related industries, and to develop pharmaceuticals and other healthcare products and all activities related hereto, on its own or through ownership in other companies Article 4. Share capital The Company s share capital is NOK 33,755,515 divided into 33,755,515 shares at a par value of NOK 1. The shares shall be registered with the Norwegian Central Securities Depository. Article 5. Board of Directors The Board of the Company shall be composed of 3-8 members. The Board will be elected for two years at the time and the members of the Board may be re-elected. If as a result of a Board vote there is an equality of votes, the Chairman of the Board shall have the casting vote. Article 6. Election Committee The Company shall have an Election Committee. The committee shall consist of three members. The members of the Committee shall be elected by the Company s General Meeting, who also appoints the Committee s Chairperson. The General Meeting shall also adopt the rules of procedure for the Committee s work. Article 7. Signature The company s signature is held jointly by two of the members of the Board. The Board may grant power of procuration. Article 8. Ordinary Shareholders Meeting 84

85 The ordinary shareholders meeting is to be held annually by the end of June. The notice to the shareholders meeting shall be dispatched at the latest two weeks prior to the meeting being held. The notice shall give an itemised agenda of items to be considered. The following items must be considered at the shareholders meeting; 1. Adoption of the profit and loss accounts and the balance sheet, including the declaration of dividend. 2. Stipulation of remuneration to the Board and approval of remuneration to the state authorised accountant. 3. Election of the Chairman of the Board, members of the Board and state authorised accountant. 4. Other matters specified by statute for consideration by the shareholders meeting. Article 9. Electronic distribution of annual accounts and other documents for shareholders meetings Documents relating to matters which shall be considered at a general meeting need not be sent to the shareholders if the documents have been made available to the shareholders on the Company s website. This also includes documents that according to law shall be incorporated into or be attached to the notice of the general meeting. A shareholder may require that documents which shall be considered at a general meeting are sent to the shareholder. Article 10. Approval of advance voting at a shareholder meeting The Board may decide that the shareholders may vote in writing, including by way of electronic communication, in a period before the general meeting. Voting in writing requires an adequately secure method to authenticate the sender. 85

86 14. LEGAL MATTERS 14.1 LEGAL PROCEEDINGS The Company is not aware of any governmental, legal or arbitration proceedings, including any such proceedings which are pending or threatened, during a period covering at least the previous 12 months which may have, or have had in the recent past significant effects on the Company s financial position or profitability RELATED PARTY TRANSACTIONS Aqualis ASA On 27 September 2013, the Company signed a final share purchase agreement to acquire Aqualis Offshore Ltd. for a consideration of NOK 70 million on an equity basis with settlement in Aqualis shares valued at NOK 1.60 per share. The Company s board member Øystein Stray Spetalen is the owner of Ferncliff TIH AS which together with associated companies own and control 51% of the shares in Aqualis Offshore. Furthermore, Martin Nes, the Company s Chairman of the Board, is the chief executive officer of Ferncliff TIH AS. Aqualis Offshore s assets and liabilities were measured at fair value at the date of acquisition. An independent auditor has prepared a report on the fair value of Aqualis Offshore, which is attached as Appendix G to this Prospectus Aqualis Offshore Ltd Earn-out agreement In June 2013, Aqualis Offshore acquired 60% of the shares in Aqualis Offshore AS from Strata Marine & Offshore AS, for a purchase price of NOK 1. The remaining 40% of the shares in Aqualis Offshore AS are owned by the employees of that company. In addition to the initial purchase price, Strata Marine & Offshore is entitled to an earn-out consideration equal to 60% of five times the net profit of Aqualis Offshore AS for the year ending 31 December Aqualis Offshore may elect to pay the earn-out consideration in May 2014, 2015 or 2016 based on the net profit for the previous financial year, with a minimum amount of NOK 1,125,000 plus an annual interest rate of 1 year LIBOR plus 2% from 1 September and until payment of the earn-out consideration. A provision for an estimated future earn-out payment of NOK 1.2 million has been included in the pro forma consolidated balance sheet. Strata Marine & Offshore is owned by the board member Øystein Stray Spetalen. Borrowing facility Aqualis Offshore AS has a borrowing facility of up to NOK 3 million with Strata Marine & Offshore. The amount drawn is payable in full on 31 August 2017, and carries an annual nominal interest rate of 3 months NIBOR plus 2%. The loan is subordinate to other debt, and is made on terms at least equivalent to those that prevail in arm s length transactions. Revolving borrowing facility Aqualis Offshore has a revolving borrowing facility of up to USD 4 million with a syndicate of lenders. The borrowing facility expires on 4 April 2018, and carries an annual nominal interest rate of 3 months USD LIBOR plus 2%. The lenders may demand early repayment if the existing shareholders of Aqualis Offshore cease to control, directly or indirectly, at least 50% of the shares of the company. 90% of the borrowing facility is provided by companies owned by Øystein Stray Spetalen, a board member of the Company. The loan is made on terms at least equivalent to those that prevail in arm s length transactions. The Company and Aqualis Offshore have not entered into any other related party transactions during the period covered by the historical financial information MATERIAL CONTRACTS Except for the share purchase agreement to acquire Aqualis Offshore Ltd. mentioned above in section 14.2 and 5.1, the Company has not entered into any contracts of material importance for the Company s business. 86

87 15. NORWEGIAN TAXATION The following is a summary of certain Norwegian tax considerations relevant to the acquisition, ownership and disposition of shares by holders that are residents of Norway for purposes of Norwegian taxation ("resident Shareholders") and holders that are not residents of Norway for such purposes ("non-resident Shareholders"). The summary is based on applicable Norwegian laws, rules and regulations as they exist as at the date of this Prospectus. Such laws, rules and regulations may be subject to changes after this date, possibly on a retroactive basis for the same tax year. The summary does not purport to be a comprehensive description of all the tax considerations that may be relevant to the Shareholders and does not address foreign tax laws. Each Shareholder should consult with and rely upon their own tax advisor to determine the particular tax consequences for him or her and the applicability and effect of any Norwegian or foreign tax laws and possible changes in such laws TAXATION OF DIVIDENDS Resident corporate Shareholders Norwegian corporate shareholders (i.e. limited liability companies and similar entities resident in Norway for tax purposes) are generally exempt from tax on dividends received on shares in Norwegian limited liability companies and similar entities. However, 3% of dividend income is deemed taxable as general income at a flat rate of 28%, implying that dividends distributed from the Company to resident corporate Shareholders are effectively taxed at a rate of 0.84% Resident personal Shareholders Dividends distributed to personal Shareholders who are individuals resident in Norway for tax purposes, are taxed as ordinary income for the Shareholder. Personal shareholders tax resident in Norway are in general liable for tax on their worldwide income. General income is taxed at a flat rate of 28%. However, personal Shareholders are entitled to deduct a calculated allowance when calculating their taxable dividend income. The allowance is calculated on a share-by-share basis, and the allowance for each share is equal the cost price of the share multiplied by a determined risk-free interest rate based on the effective rate after tax of interest on treasury bills (Norwegian: "statskasseveksler") with three months maturity. The risk-free interest rate will be fixed annually for the use of shareholders holding shares on 31 December in the income year in question. The Directorate of Taxes announces the risk free-interest rate in January the year after the income. The risk-free interest rate for 2012, announced in January 2013, was 1.1%. The tax-free allowance will be calculated on each individual share, not on a portfolio basis. Any part of the calculated allowance one year exceeding dividend distributed on the same share ("excess allowance") can be carried forward and set off against future dividends received on, or capital gains upon realisation of the same share. Furthermore, excess allowance can be added to the cost price of the share and included in basis for calculating the allowance on the same share the following year Non-resident Shareholders Dividends distributed to Shareholders not resident in Norway for tax purposes are in general subject to withholding tax at a rate of 25%, unless otherwise provided for in an applicable tax treaty (or exemptions for EEA shareholders apply, see below). The company distributing the dividend is responsible for the withholding of tax. Norway has entered into tax treaties with approximate 80 countries. In most tax treaties the withholding tax rate is reduced to 15%. Non-resident Shareholders, who have been subject to a higher withholding tax than applicable in the relevant tax treaty, may apply to the Norwegian tax authorities for a refund of the excess withholding tax deducted.. The application is to be filed with the Central Office Foreign Tax Affairs (in Norwegian: "Sentralskattekontoret for utenlandssaker"). A not resident personal Shareholder resident in EEA may apply individually to Norwegian tax authorities for a refund of an amount corresponding to the calculated tax-free allowance on each individual share, see section above regarding resident personal Shareholder. Dividends paid to a non-resident Shareholder in respect of nominee registered shares will be subject to withholding tax at the general rate of 25 %, unless the nominee, by agreeing to provide certain information 87

88 regarding beneficial owners, has obtained approval for reduced treaty-rate withholding from the Central Office Foreign Tax Affairs. In the case where a non-resident Shareholder is engaged in business activities in Norway and the shares with respect to which the dividend is paid are effectively connected with such activities, the dividend will be taxed in the same manner as dividend paid to a resident Shareholder, i.e. dividends distributed to a non-resident Shareholder will be taxed at an effective rate of 0.84% TAXATION UPON REALIZATION OF SHARES Resident corporate Shareholders Norwegian corporate Shareholders are generally exempt from tax on capital gains upon the realization of shares in Norwegian limited liability companies and similar entities. Losses upon the realization and costs incurred in connection with the purchase and realization of such shares are not deductible for tax purposes Resident personal Shareholders Sale, redemption or other disposal of shares is considered a realization for Norwegian tax purposes. A capital gain or loss generated by a personal Shareholder through realization of shares is taxable or tax deductible in Norway. Such capital gain or loss is included in or deducted from the basis for computation of general income in the year of realization. General income is taxable at a rate of 28% and losses are deductible against general income. The taxable gain or loss is calculated per share as the difference between the consideration received and the cost price of the share, including any costs incurred in relation to the acquisition or realization of the share. Any unused allowance on a share may be set off against capital gains related to the realization of the same share, but may not lead to or increase a deductible loss i.e. any unused allowance exceeding the capital gain upon the realization of the share will be annulled. Furthermore, unused allowance may not be set of against gains from realization of other shares. If a Shareholder disposes of shares acquired at different times, the shares that were first acquired will be deemed as first sold (the FIFO-principle) when calculating a taxable gain or loss. Costs incurred in connection with the purchase and sale of shares may be deducted in the year of sale Non-resident Shareholders Gains from the sale or other disposition of shares by a non-resident Shareholder will not be subject to taxation in Norway unless (i) the shares are effectively connected with business activities carried out or managed in Norway, or (ii) the shares are held by an individual who has been a resident of Norway for tax purposes with unsettled/postponed exit tax calculated on the shares at the time of cessation as Norwegian tax resident NET WEALTH TAX A resident Shareholder that is a joint stock company or a similar entity is exempted from net wealth tax. For other resident Shareholders, the shares will form part of the basis for the calculation of net wealth tax. The marginal net wealth tax rate is 1.1% of the value assessed. Listed shares are valued at 100% of their quoted value on 1 January in the assessment year. A non-resident Shareholder is not subject to Norwegian net wealth tax with respect to the shares, unless his shareholding is effectively connected with a business carried out by the Shareholder in Norway INHERITANCE TAX When shares are transferred either through inheritance or as a gift, such transfer may give rise to inheritance or gift tax in Norway if the deceased, at the time of death, or the donor, at the time of the gift, is a resident or citizen of Norway or if the shares are effectively connected with a business carried out through permanent establishment in Norway. However, in the case of inheritance tax, if the deceased was a citizen but not a resident of Norway, Norwegian inheritance tax will not be levied if inheritance tax, or a similar tax, is levied by the deceased's country of residence. In the case of listed shares, the basis for the tax calculation is the market value of the shares. 88

89 15.5 STAMP DUTY There is currently no Norwegian stamp duty or transfer tax on the transfer or issuance of shares. 89

90 16. ADDITIONAL INFORMATION 16.1 DOCUMENTS ON DISPLAY Copies of the following documents will be available for inspection at the Company s business address at Sjølyst Plass 2, 0278 Oslo, Norway for a period of twelve months from the date of this Prospectus. The Company s Articles of Association and Certificate of Incorporation The Company s financial statements as of, and for the years ended, 31 December 2012, 2011 and 2010 Interim financial statements for the Company for Q Interim financial statements for Aqualis Offshore for the six months ended 30 June 2013 Independent assurance report on pro forma financial information Independent report on fair value of Aqualis Offshore Ltd 16.2 DOCUMENTS INCORPORATED BY REFERENCE The information incorporated by reference in this Prospectus should be read in connection with the cross reference list as set out in the table below. Except as provided in this section, no other information is incorporated by reference into this Prospectus. Section in Prospectus Incorporated by reference Reference document and link 10 Clavis Pharma ASA Q report 10 Clavis Pharma ASA annual report, accounting principles, notes and auditor s report for the financial year aqualis.no/investors/reports-andpresentations/annual-reports Clavis Pharma ASA annual report, accounting principles, notes and auditor s report for the financial year 2011 Clavis Pharma ASA annual report, accounting principles, notes and auditor s report for the financial year aqualis.no/investors/reports-andpresentations/annual-reports aqualis.no/investors/reports-andpresentations/annual-reports 16.3 STATEMENT REGARDING SOURCES The Company confirms that when information in this Prospectus has been sourced from a third party it has been accurately reproduced and as far as the Company is aware and is able to ascertain from the information published by that third party, no facts have been omitted which would render the reproduced information inaccurate or misleading. 90

91 17. SELLING AND TRANSFER RESTRICTIONS 17.1 GENERAL The grant of Subscription Rights and issue of Offer Shares upon exercise of Subscription Rights and the offer of unsubscribed Offer Shares to persons resident in, or who are citizens of countries other than Norway, may be affected by the laws of the relevant jurisdiction. Eligible Shareholders should consult their professional advisers as to whether they require any governmental or other consent or need to observe any other formalities to enable them to exercise Subscription Rights or subscribe for Offer Shares. The Company does not intend to take any action to permit a public offering of the Offer Shares in any jurisdiction other than Norway. Receipt of this Prospectus will not constitute an offer in those jurisdictions in which it would be illegal to make an offer and, in those circumstances, this Prospectus is for information only and should not be copied or redistributed. Except as otherwise disclosed in this Prospectus, if an Eligible Shareholder receives a copy of this Prospectus in any territory other than Norway, the Eligible Shareholder may not treat this Prospectus as constituting an invitation or offer to it, nor should the Eligible Shareholder in any event deal in the Offer Shares, unless, in the relevant jurisdiction, such an invitation or offer could lawfully be made to that Eligible Shareholder, or the Subscription Rights and Offer Shares could lawfully be dealt in without contravention of any unfulfilled registration or other legal requirements. Accordingly, if an Eligible Shareholder receives a copy of this Prospectus, the Eligible Shareholder should not distribute or send the same, or transfer the Subscription Rights and/or Offer Shares to any person or in or into any jurisdiction where to do so would or might contravene local securities laws or regulations. If the Eligible Shareholder forwards this Prospectus into any such territories (whether under a contractual or legal obligation or otherwise), the Eligible Shareholder should direct the recipient s attention to the contents of this section Except as otherwise noted in this Prospectus and subject to certain exceptions: (i) the Subscription Rights and Offer Shares being granted or offered, respectively, in the Rights Issue may not be offered, sold, resold, transferred or delivered, directly or indirectly, in or into, Member States of the EEA that have not implemented the Prospectus Directive, Australia, Canada, Hong Kong, Japan, the United States or any other jurisdiction in which it would not be permissible to offer the Subscription Rights and/or the Offer Shares (the Ineligible Jurisdictions ); (ii) this Prospectus may not be sent to any person in any Ineligible Jurisdiction; and (iii) the crediting of Subscription Rights to an account of an Ineligible Shareholder or other person in an Ineligible Jurisdiction or a citizen of an Ineligible Jurisdiction (referred to as Ineligible Persons ) does not constitute an offer to such persons of the Subscription Rights or the Offer Shares. Ineligible Persons may not exercise Subscription Rights. If an Eligible Shareholder takes up, delivers or otherwise transfers Subscription Rights, exercises Subscription Rights to obtain Offer Shares or trades or otherwise deals in the Subscription Rights and Offer Shares, that Eligible Shareholder will be deemed to have made or, in some cases, be required to make, the following representations and warranties to the Company and any person acting on the Company s or its behalf: (i) (ii) (iii) (iv) (v) (vi) the Eligible Shareholder is not located in an Ineligible Jurisdiction; the Eligible Shareholder is not an Ineligible Person; the Eligible Shareholder is not acting, and has not acted, for the account or benefit of an Ineligible Person; the Eligible Shareholder is located outside the United States and any person for whose account or benefit it is acting on a non-discretionary basis is located outside the United States and, upon acquiring Offer Shares, the Eligible Shareholder and any such person will be located outside the United States; the Eligible Shareholder understands that the Subscription Rights and Offer Shares have not been and will not be registered under the US Securities Act and may not be offered, sold, pledged, resold, granted, delivered, allocated, taken up or otherwise transferred within the United States except pursuant to an exemption from, or in a transaction not subject to, registration under the US Securities Act; and the Eligible Shareholder may lawfully be offered, take up, subscribe for and receive Subscription Rights and Offer Shares in the jurisdiction in which it resides or is currently located. The Company and any persons acting on behalf of the Company, including the Manager, will rely upon the Eligible Shareholder s representations and warranties. Any provision of false information or subsequent breach of these representations and warranties may subject the Eligible Shareholder to liability. 91

92 If a person is acting on behalf of a holder of Subscription Rights (including, without limitation, as a nominee, custodian or trustee), that person will be required to provide the foregoing representations and warranties to the Company with respect to the exercise of Subscription Rights on behalf of the holder. If such person cannot or is unable to provide the foregoing representations and warranties, the Company will not be bound to authorize the allocation of any of the Subscription Rights and Offer Shares to that person or the person on whose behalf the other is acting. Subject to the specific restrictions described below, if an Eligible Shareholder (including, without limitation, its nominees and trustees) is outside Norway and wishes to exercise or otherwise deal in or subscribe for Subscription Rights and/or Offer Shares, the Eligible Shareholder must satisfy itself as to full observance of the applicable laws of any relevant territory including obtaining any requisite governmental or other consents, observing any other requisite formalities and paying any issue, transfer or other taxes due in such territories. The information set out in this section 17.1 is intended as a general guide only. If the Eligible Shareholder is in any doubt as to whether it is eligible to subscribe for the Offer Shares, that Eligible Shareholder should consult its professional adviser without delay. Subscription Rights will initially be credited to financial intermediaries for the accounts of shareholders who hold Shares registered through a financial intermediary on the Record Date. Subject to certain exceptions, financial intermediaries, which include brokers, custodians and nominees, may not exercise any Subscription Rights on behalf of any person in the Ineligible Jurisdictions or any Ineligible Persons and may be required in connection with any exercise of Subscription Rights to provide certifications to that effect. Subject to certain exceptions, financial intermediaries are not permitted to send this Prospectus or any other information about the Rights Issue in or into any Ineligible Jurisdiction or to any Ineligible Persons. Subject to certain exceptions, exercise instructions or certifications sent from or postmarked in any Ineligible Jurisdiction will be deemed to be invalid and Offer Shares will not be delivered to an addressee in any Ineligible Jurisdiction. The Company reserves the right to reject any exercise (or revocation of such exercise) in the name of any person who provides an address in an Ineligible Jurisdiction for acceptance, revocation of exercise or delivery of such Subscription Rights and Offer Shares, who is unable to represent or warrant that such person is not in an Ineligible Jurisdiction and is not an Ineligible Person, who is acting on a non-discretionary basis for such persons, or who appears to the Company or its agents to have executed its exercise instructions or certifications in, or dispatched them from, an Ineligible Jurisdiction. Furthermore, the Company reserves the right, with sole and absolute discretion, to treat as invalid any exercise or purported exercise of Subscription Rights which appears to have been executed, effected or dispatched in a manner that may involve a breach or violation of the laws or regulations of any jurisdiction. Notwithstanding any other provision of this Prospectus, the Company reserves the right to permit a holder to exercise its Subscription Rights if the Company, at its absolute discretion, is satisfied that the transaction in question is exempt from or not subject to the laws or regulations giving rise to the restrictions in question. Applicable exemptions in certain jurisdictions are described further below. In any such case, the Company does not accept any liability for any actions that a holder takes or for any consequences that it may suffer as a result of the Company accepting the holder s exercise of Subscription Rights. No action has been or will be taken by the Manager to permit the possession of this Prospectus (or any other offering or publicity materials or application or subscription form(s) relating to the Rights Issue) in any jurisdiction where such distribution may lead to a breach of any law or regulatory requirement. Neither the Company nor the Manager, nor any of their respective representatives, is making any representation to any offeree, subscriber or recipient of Subscription Rights and/or Offer Shares regarding the legality of an investment in the Subscription Rights and/or the Offer Shares by such offeree, subscriber or purchaser under the laws applicable to such offeree, subscriber or recipient. Each Eligible Shareholder should consult its own advisers before subscribing for Offer Shares or purchasing Subscription Rights and/or Offer Shares. Eligible Shareholders are required to make their independent assessment of the legal, tax, business, financial and other consequences of a subscription for Offer Shares. A further description of certain restrictions in relation to the Subscription Rights and the Offer Shares in certain jurisdictions is set out below UNITED STATES The Subscription Rights and the Offer Shares have not been and will not be registered under the US Securities Act or with any securities regulatory authority of any state or other jurisdiction of the United States and may not 92

93 be offered, sold, taken up, exercised, resold, transferred or delivered, directly or indirectly, within the United States. There will be no public offer of the Subscription Rights and Offer Shares in the United States. A notification of exercise of Subscription Rights and subscription of Offer Shares in contravention of the above may be deemed to be invalid. The Subscription Rights and Offer Shares are being offered and sold outside the United States in reliance on Regulation S under the US Securities Act. Accordingly, this document will not be sent to any shareholder with a registered address in the United States. In addition, the Company and the Manager reserve the right to reject any instruction sent by or on behalf of any account holder with a registered address in the United States in respect of the Subscription Rights and/or the Offer Shares. Until 40 days after the commencement of the Rights Issue, any offer or sale of the Offer Shares within the United States by any dealer (whether or not participating in the Rights Issue) may violate the registration requirements of the US Securities Act. The Subscription Rights and the Offer Shares have not been approved or disapproved by the United States Securities and Exchange Commission, any state securities commission in the United States or any other United States regulatory authority nor have any of the foregoing authorities passed upon or endorsed the merits of the offering of the Subscription Rights and Offer Shares or the accuracy or adequacy of this document. Any representation to the contrary is a criminal offense in the United States. Each person to which Subscription Rights and/or Offer Shares are distributed, offered or sold outside the United States will be deemed, by its subscription for Offer Shares or purchase of Offer Shares, to have represented and agreed, on its behalf and on behalf of any Eligible Shareholder accounts for which it is subscribing for Offer Shares or purchasing Subscription Rights and/or Offer Shares, as the case may be, that: (i) (ii) it is acquiring the Subscription Rights and/or the Offer Shares from the Company or the Manager in an "offshore transaction" as defined in Regulation S under the US Securities Act; and the Subscription Rights and/or the Offer Shares have not been offered to it by the Company or the Underwriters by means of any "directed selling efforts" as defined in Regulation S under the US Securities Act EEA SELLING RESTRICTIONS In relation to each Member State of the EEA other than Norway, which has implemented the Prospectus Directive (each a Relevant Member State ), with effect from and including the relevant implementation date, an offer to the public of any Offer Shares which are the subject of the Rights Issue contemplated by this Prospectus may not be made in that Relevant Member State, other than the Rights Issue in Norway as described in this Prospectus, once the Prospectus has been prepared and published in accordance with the Prospectus Directive as implemented in Norway, except that an offer to the public in that Relevant Member State of any Offer Shares may be made at any time with effect from and including the relevant implementation date under the following exemptions under the Prospectus Directive, if they have been implemented in that Relevant Member State: (i) (ii) (iii) to legal entities which are qualified investors as defined in the Prospectus Directive; to fewer than 100, or, if the Relevant Member State has implemented the relevant provisions of the 2010 PD Amending Directive, 150, natural or legal persons (other than qualified investors as defined in the Prospectus Directive), as permitted under the Prospectus Directive, subject to obtaining the prior consent of the Manager for any such offer; or in any other circumstances falling within Article 3(2) of the Prospectus Directive; provided that no such offer of Offer Shares shall require the Company or any Manager to publish a Prospectus pursuant to Article 3 of the Prospectus Directive or supplement a prospectus pursuant to Article 16 of the Prospectus Directive. For the purposes of this provision, the expression an offer to the public in relation to any Offer Shares in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the offer and any Offer Shares to be offered so as to enable an Eligible Shareholder to decide to subscribe for any Offer Shares, as the same may be varied in that Relevant Member State by any measure implementing the Prospectus Directive in that Member State and the expression Prospectus Directive means 93

94 Directive 2003/71/EC (and amendments thereto, including the 2010 PD Amending Directive, to the extent implemented in the Relevant Member State), and includes any relevant implementing measure in each Relevant Member State and the expression 2010 PD Amending Directive means Directive 2010/73/EU. The EEA selling restriction is in addition to any other selling restrictions set out in this Prospectus NOTICE TO AUSTRALIAN ELIGIBLE SHAREHOLDERS This Prospectus is not a disclosure document under Chapter 6D of the Corporations Act 2001 (Cth) (the Australian Corporations Act ), has not been lodged with the Australian Securities and Investments Commission and does not purport to include the information required of a disclosure document under Chapter 6D of the Australian Corporations Act. Accordingly: a) the offer of the Subscription Rights and Offer Shares in Australia may only be made to persons who are "sophisticated Eligible Shareholders" (within the meaning of section 708(8) of the Australian Corporations Act) or to "professional Eligible Shareholders" (within the meaning of section 708(11) of the Australian Corporations Act) or otherwise pursuant to one or more exemptions contained in section 708(8) of the Australian Corporations Act, so that it is lawful to offer, or invite applications for, the Subscription Rights and Offer Shares without disclosure to persons under Chapter 6D of the Australian Corporations Act; and b) this Prospectus may only be made available in Australia to persons as set forth in clause (a) above. If you acquire Subscription Rights or Offer Shares, then you (i) represent and warrant that you are a person to whom an offer of securities can be made without a disclosure document in accordance with subsections 708(8) or (11) of the Australian Corporations Act and (ii) agree not to sell or offer for sale any Offer Shares in Australia within 12 months after their issue to the offeree or invitee under this Prospectus, except in circumstances where disclosure to Eligible Shareholders under Chapter 6D would not be required under the Australian Corporations Act. No person receiving a copy of this Prospectus and/or receiving a credit of Subscription Rights to an account in VPS with a bank or financial institution in Australia may treat the same as constituting an invitation or offer to such person nor should such person in any event deal in Subscription Rights in VPS unless such an invitation or offer could lawfully be made to such person without contravention of any registration or other legal requirements. In such circumstances, this document is to be treated as received for information only and should not be copied or redistributed NOTICE TO CANADIAN ELIGIBLE SHAREHOLDERS The Offer Shares have not been and will not be qualified by a prospectus for sale to the public in Canada under applicable Canadian securities laws, and accordingly, any offer or sale of the Subscription Rights or Offer Shares in Canada must be made pursuant to an exemption from the applicable prospectus and registration requirements, and otherwise in compliance with applicable Canadian laws NOTICE TO HONG KONG ELIGIBLE SHAREHOLDERS The contents of this Prospectus have not been reviewed by any regulatory authority in Hong Kong. You are advised to exercise caution in relation to the Rights Issue. If you are in any doubt regarding any of the contents of this Prospectus, you should obtain independent professional advice. This Prospectus does not constitute an offer or sale in Hong Kong of the Offer Shares and no person may offer or sell in Hong Kong, by means of this Prospectus other than to (a) professional Eligible Shareholders within the meaning of Part I of Schedule 1 to the Securities and Futures Ordinance of Hong Kong (Cap. 571) ( SFO ) and any rules made under the SFO ( professional Eligible Shareholders ) or (b) in other circumstances which do not result in the document being a prospectus as defined in the Companies Ordinance of Hong Kong (Cap. 32) ( CO ) or which do not constitute an offer or invitation to the public for the purposes of the CO or the SFO. No person shall issue or possess for the purposes of issue, whether in Hong Kong or elsewhere, any advertisement, invitation or document relating to Subscription Rights or Offer Shares which is directed at, or the contents of which are likely to be accessed or read by, the public in Hong Kong (except if permitted to do so under the securities laws of Hong Kong) other than with respect to those Subscription Rights or Offer Shares which are or are intended to be disposed of only to persons outside Hong Kong or only to such professional Eligible Shareholders. 94

95 Existing shareholders agree not to offer or sell in Hong Kong any Offer Shares other than (a) to professional Eligible Shareholders; or (b) in other circumstances which do not result in the document offering for sale the Offer Shares being a prospectus as defined in the CO or which do not constitute an offer to the public within the meaning of the CO or the SFO. Existing shareholders also agree not to issue or have in their possession for the purposes of issue, whether in Hong Kong or elsewhere, any advertisement, invitation or document relating to the Subscription Rights or the Offer Shares, which is directed at, or the contents of which are likely to be accessed or read by, the public in Hong Kong (except if permitted to do so under the securities laws of Hong Kong) other than with respect to the Subscription Rights or the Offer Shares which are or are intended to be disposed of only to persons outside Hong Kong or only to professional Eligible Shareholders NOTICE TO JAPANESE ELIGIBLE SHAREHOLDERS The Rights Issue hereby has not been and will not be registered under the Financial Instruments and Exchange Law of Japan (the Financial Instruments and Exchange Law ). Accordingly, each Underwriter has represented, warranted and agreed that the Offer Shares to which it each subscribes will be subscribed by it as principal and that, in connection with the offering made hereby, it will not, directly or indirectly, offer or sell any Offer Shares in Japan or to, or for the benefit of, any resident of Japan (which term as used herein means any person resident in Japan, including any corporation or other entity organised under the laws of Japan) or to others for re-offering or resale, directly or indirectly, in Japan or to, or for the benefit of, any resident of Japan, except pursuant to an exemption from the registration requirements of, and otherwise in compliance with, the Financial Instruments and Exchange Law and other relevant laws and regulations of Japan NOTICE TO SWISS ELIGIBLE SHAREHOLDERS This Prospectus is not being publicly distributed in Switzerland. Each copy of this document is addressed to a specifically named recipient and may not be passed on to third parties. The Subscription Rights or Offer Shares are not being offered to the public in or from Switzerland, and neither this document, nor any other offering material in relation to the Subscription Rights or Offer Shares may be distributed in connection with any such public offering. 95

96 18. DEFINITIONS AND GLOSSARY OF TERMS The following definitions and glossary apply in this Prospectus unless otherwise dictated by the context, including the foregoing pages of this Prospectus. Aqualis Aqualis Offshore Board Carnegie CCGP CEO CET Clavis Pharma Clovis Oncology Commission Regulation (EC) No 809/2004 Company EEA EGM Employee Offering EU EUR Excess allowance GBP Group IFRS Ineligible Jurisdiction Ineligible Persons ISIN ISO 9001 IPO Aqualis ASA Aqualis Offshore Ltd. The board of directors of the Company Carnegie AS Clavis Pharma ASA Corporate Governance Policy Chief Executive Officer Central European Time Clavis Pharma ASA Clovis Oncology, Inc. Commission Regulation (EC) No 809/2004 of 29 April 2004 implementing Directive 2003/71/EC of the European Parliament and of the Council, as amended from time to time Aqualis ASA European Economic Area Extraordinary General Meeting Offering of up to shares directed towards the employees of both the Company and Aqualis Offshore European Union Euro, the single currency of the European Union member states participating in the European Monetary Union The calculated allowance one year exceeding dividend distributed on the same share Pound Sterling, the lawful currency of the United Kingdom The combined company post Transaction consisting of Aqualis ASA and the wholly owned subsidiary, Aqualis Offshore Ltd. International Financial Reporting Standards Jurisdictions where the Prospectus may not be distributed and/or with legislation that, according to the Company's assessment, prohibits or otherwise restricts subscription for Offer Shares. Shareholders resident in jurisdictions where the Prospectus may not be distributed and/or with legislation that, according to the Company s assessment, prohibits or otherwise restricts subscription for Offer Shares. Securities number in the Norwegian Central Securities Depository (VPS) ISO 9001:2008 (International Organization for Standardization): Standard setting out the requirements of a quality management system. Initial Public Offering LOI Letter of Intent to acquire 100% of the shares in Aqualis Offshore entered into on 4 September, Manager New Shares NOK Non-resident Shareholders Norwegian Public Limited Companies Act Carnegie AS new shares to be issued as consideration for the Transaction Norwegian Kroner, the lawful currency of the Kingdom of Norway Shareholders that are not residents of Norway The Norwegian Public Limited Liability Companies Act of 13 June 1997 no. 45, as amended from time to time (Allmennaksjeloven) Norwegian Securities Trading Act The Norwegian Securities Trading Act of June 29, 2007 no. 75 Offerings Offering Shares Offer Shares Oslo Børs Rights Issue and Employee Offering Offer Shares together with Employee Offer shares offer shares to be issued in the Rights Issue Oslo Børs ASA (the Oslo Stock Exchange) Prospectus This Prospectus dated 11October 2013 Prospectus Directive Directive 2003/71/EC of the European Parliament and of the Council of 4 November 2003, as amended from time to time Registrar Resident Shareholders Rights Issue Securities Trading Act Sellers Senior Executives Nordea Bank Issuer Services Shareholders that are residents of Norway for purposes of Norwegian taxation New share issue in Aqualis of NOK million with pre-emptive rights for shareholders of Aqualis The Norwegian Securities Trading Act of 29 June 2007 no. 75 as amended from time to time ( Verdipapirhandelloven ) Aqualis Offshore shareholders Chief Executive Officer and other senior executives of Aqualis ASA 96

97 Shareholder A holder of a Share Shares The ordinary shares in the capital of Aqualis, each with a par value of NOK 1 Sophisticated Eligible Shareholders SPA Subscription Rights Total Underwriting Commitment Transaction Underwriters US USD VPS VPS account Persons who are within the meaning of section 708(8) of the Australian Corporations Act). Share Purchase Agreement to acquire 100% of the shares in Aqualis Offshore, signed 27 September, subscription rights in the Rights Issue NOK 54 million in the Rights Issue Aqualis acquisition of Aqualis Offshore Ltd. Strata Marine & Offshore AS, Gross Management AS, AS Ferncliff and Anko Invest AS United States of America United States Dollars, the lawful currency of the United States of America. The Norwegian Central Securities Depository, which organises the Norwegian paperless securities registration system (Verdipapirsentralen). An account with VPS for the registration of holdings of securities 97

98 APPENDIX A: ARTICLES OF ASSOCIATION OFFICE TRANSLATION For information purposes only Articles of Association Aqualis ASA (as per October 2013) Article 1. Name The name of the company is Aqualis ASA. The company is a public limited company. Article 2. Registered Office The Company s registered office is located in the City of Oslo. Article 3. Purpose The Company's purpose is to offer services to the marine and offshore industry and related industries, and to develop pharmaceuticals and other healthcare products and all activities related hereto, on its own or through ownership in other companies Article 4. Share-capital The Company s share capital is NOK 33,755,515 divided into 33,755,515 shares at a par value of NOK 1. The shares shall be registered with the Norwegian Central Securities Depository. Article 5. Board of Directors The Board of the Company shall be composed of 3-8 members. The Board will be elected for two years at the time and the members of the Board may be reelected. If as a result of a Board vote there is an equality of votes, the Chairman of the Board shall have the casting vote. Article 6. Election Committee The Company shall have an Election Committee. The committee shall consist of up to three members. The members of the Committee shall be elected by the Company s General Meeting, who also appoints the Committee s Chairperson. The General Meeting shall also adopt the rules of procedure for the Committee s work. Article 7. Signature The company s signature is held jointly by two of the members of the Board. The Board may grant power of procuration.

99 OFFICE TRANSLATION For information purposes only 2 Article 8. Ordinary Shareholders Meeting The ordinary shareholders meeting is to be held annually by the end of June. The notice to the shareholders meeting shall be dispatched at the latest two weeks prior to the meeting being held. The notice shall give an itemised agenda of items to be considered. The following items must be considered at the shareholders meeting; 1. Adoption of the profit and loss accounts and the balance sheet, including the declaration of dividend. 2. Stipulation of remuneration to the Board and approval of remuneration to the state authorised accountant. 3. Election of the Chairman of the Board, members of the Board and state authorised accountant. 4. Other matters specified by statute for consideration by the shareholders meeting. 9. Electronic distribution of annual accounts and other documents for shareholders meetings Documents relating to matters which shall be considered at a general meeting need not be sent to the shareholders if the documents have been made available to the shareholders on the Company s website. This also includes documents that according to law shall be incorporated into or be attached to the notice of the general meeting. A shareholder may require that documents which shall be considered at a general meeting is sent to the shareholder. 10. Approval of advance voting at a shareholder meeting The Board may decide that the shareholders may vote in writing, including by way of electronic communication, in a period before the general meeting. Voting in writing requires an adequately secure method to authenticate the sender.

100 APPENDIX B: INTERIM FINANCIAL INFORMATION FOR AQUALIS OFFSHORE LTD FOR THE SIX MONTH PERIOD ENDED 30 JUNE 2013 Aqualis Offshore Limited Unaudited interim condensed consolidated financial statements for the six months ended 30 June 2013

101 Aqualis Offshore Ltd Interim condensed consolidated income statement for the six months ended 30 June 2013 Notes Period ended 30June 2013 US$ Revenue 312,849 Cost of sales (598,410) Gross loss {285,561) Administration expenses (637,481) Operating loss {923,042) Finance Cost Finance Income (12,406) 826 loss before taxation (934,622) Taxation Non-controlling Interest {18,978) Profit /(loss) for the period and total comprehensive income/(loss) for the period (953,601) The income statement has been prepared on the basis that all operations are continuing operations.

102 Aqualis Offshore Ltd Interim condensed consolidated statement of changes in equity For the six months ended 30 June 2013 Share capital US$ Retained earnings US$ Non controlling Interest Total equity US$ For the period ended 30 June 2013 Issue of share capital during the period 100, ,000 Profit (loss) for the period (953,601) (953,601) Non-controlling Interest 13,662 13,662 Balance at 30 June ,000 {953,601) 13,662 {839,939}

103 Aqualis Offshore Ltd Interim condensed consolidated statement of financial position as at 30 June June 2013 Assets Non-current assets Plant and equipment Goodwill US$ 116,973 7,975 Total non-current assets 124,949 Current assets Trade and other receivables Prepayments Other debtors Cash and cash equivalents 557, , , ,420 Total current assets 2,047,927 Total assets 2,172,876 Equity and liabilities Issued capital 100,000 Retained earnings (953,601) Equity attributable to equity holders of the parent (853,601) Non-controlling interest 13,662 Total equity (839,939) Non-current liabilities Interest bearing loans and borrowings 2,343,913 Total non-current liabilities 2,343,913 Current liabilities Accounts payable and accrued liabilities 643,776 Taxes and social securities 25,125 Total current liabilities 668,901 Total liabilities 3,012,814 Total equity and liabilities 2,172,876

104 Aqualis Offshore Ltd Interim condensed consolidated statement of cash flows For the six months ended 30 June June 2013 US$ Operating activities Profit/(loss) before tax from continuing operations Adjustments to reconcile profit before tax to net cash flows: Depreciation and impairment of property,plant and equipment Amortisation and impairment of intangible assets Finance income Finance costs Worl<ing capital adjustments: Increase in trade and other receivables and prepayments Decrease in trade and other payables Cash flows from operating activities Interest received Interest paid Net cash flows from operating activities (934,622) 4,128 (826) 12,406 (747,136) 504,031 (1,162,018) 826 (12,406) (1,173,599) Investing activities Purchase of property, plant and equipment Acquisition of a subsidiary,net of cash acquired Net cash flows used in investing activities (79,254) 144,273 65,019 Financing activities Shareholders' loan Issue of share capital 2,000, ,000 Net (decrease)/increase in cash and cash equivalents Net foreign exchange difference Cash and cash equivalents at 1January Cash and cash equivalents at 30 June 991, ,420

105 Notes to interim condensed consolidated financia l statements The fai r va lu es of th e id e nt ifiable assets and liabilities of Aqua lis Norway as at th e date of acquisi tion were: Assets Property, plant and equipme nt Cash Trade receivables Other debtors 30 June 2013 US$ 41, , ,131 5,241 Uabi litles Trade payab!es Other creditors 448 (509,195) Total identifiable net assets/(net liabiliti es) (13,292) Total iden tifiable ne t asset s at fai r value Minority Interest of aquisition of business Good will arising on acquisi tion ( proyisional)' Purchase consideration transferred nil nil 5,317 7,975 Minority lnterest as per ba lance sheet Minority Interest of aquisitoi n of business Profit during the year 5,317 (18,978) (13,662) Operating profit/loss Operating profit is stated after (charging)/cred i tlng: Depreciation charge (Galn) /loss on foreign exchange transact ons Revenue and other Income Sales revenue Other income Tota l sa les revenue 30 June 2013 US$ 4,128 18, June ,352 US$ 312, ,849 Fixed assets Leasehold Furniture & Computers & Im provements Equipment Softwares Total US$ Cost 45,100 56,331 27, ,428 Accum ulated de preciaton (9,734) (2,721) (12,4S5) Net Book Value 30/06/ ,100 46,597 25, ,973 Trade and oth e r receivabl es 30 Jun e 2013 US$ Trade receivables Unbille d revenue Othe r receivables 453, , ,343 1,056,508 Tr ade and other payables Tra de paya bles Accruals and deferred incom e Other taxes and social securites 30 June 2013 US$ 159, ,670 25, ,900 long term liabilities 30 Ju ne 2013 US$ Amounts owed to related unde rtaki ngs Norway loan with Strata (2,000,000) (343,913) (2,343,913) Issu e d sh are ca pital 100,000 Ordinary share of $1each 30 June 2013 US$ 1 00,000

106 Notes to interim condensed consolidated financial statements Details of Receivable & Payables by countries Total $ AO Limited $ UK $ Brazil $ Singapore $ USA $ Norway $ Trade receivables 453, ,377 49, ,553 Unbilled revenue 103, ,475-26,759 Other receivables 499, ,623 9, ,403-58,803 60,629 1,056, ,623 9, ,255 49, ,115 60,629 Dubai $ Trade payable 159,106 92, ,934 10,084 37,943 7,840 Accruals and deferred income 484,670 61,991 5, , ,220 13,978 88,954 4,235 Other taxes and social securities 25,125 25, , ,421 5, , ,154 24, ,897 12,075

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119 APPENDIX E: SUBSCRIPTION FORM FOR THE EMPLOYEE OFFERING AQUALIS ASA EMPLOYEE OFFERING OCTOBER/NOVEMBER 2013 In order for employees to be certain to participate in the Employee Offering, Subscription Forms must be received no later than 29 October 2013 at 16:30 CET. The subscriber bears the risk of any delay in the postal communication, busy facsimiles and data problems preventing orders from being received by the Manager. SUBSCRIPTION FORM Properly completed Subscription Forms must be submitted to the Manager as set out below: Carnegie AS Grundingen 2, Aker Brygge NO-0106 Oslo Tel: Fax: General information: The terms and conditions for the Employee Offering in Aqualis ASA (the Company ) of up to 5,000,000 employee offer shares (the Employee Offer Shares ) pursuant to resolution by the Company s extraordinary general meeting on 8 October 2013 (the EGM ) are set out in the prospectus dated 11 October 2013 (the Prospectus ). Terms defined in the Prospectus shall have the same meaning in this Subscription Form. Notice of and minutes from the EGM (with enclosures), the Company s Articles of Association and annual accounts for the last three years, are available at the Company s registered office. In case of any discrepancies between the Subscription Form and the Prospectus, the Prospectus shall prevail. Subscription Period: The subscription period is from and including 15 October 2013 to 16:30 CET on 29 October 2013 (the "Subscription Period"). Neither the Company nor the Manager may be held responsible for delays in the mail system or for Subscription Forms forwarded by facsimile that are not received in time by the Manager. It is not sufficient for the Subscription Form to be postmarked within the deadline. The Manager has discretion to refuse any improperly completed, delivered or executed Subscription Forms or any subscription which may be unlawful. Subscription Forms that are received too late or are incomplete or erroneous are therefore likely to be rejected without any notice to the subscriber. The subscription for Employee Offer Shares is irrevocable and may not be withdrawn, cancelled or modified once it has been received by the Manager. Minimum subscription per subscriber shall be 10,000 shares. Multiple subscriptions are allowed. The Employee Offer Shares issued in connection with the Employee Offering are subject to a lock-up period of 12 months, meaning that the subscriber may not sell, deliver, transfer or grant options over the subscribed shares during this period. Each subscriber grants the Company or any person appointed by the Company, the irrevocable authority to enter transfer restrictions upon the VPS account of each subscriber of as an encumbrance on the account in favour of the Company. Subscription price: The subscription price for one (1) Employee Offer Share is NOK Allocation: The following allocation criteria shall apply: Full allocation of subscribed shares up to a maximum of 30,000 shares per subscriber. In the event that total subscriptions exceed the 5,000,000 shares covered by the resolution, the allocation above 30,000 shares per subscriber will be on a pro rata basis based on the number of shares subscribed for. All subscribers being allotted Employee Offer Shares will receive a letter on or about 4 November 2013 from the Manager containing information regarding the number of Employee Offer Shares allotted to the subscriber and payment instructions. Payment: The payment for the Employee Offer Shares falls due 10:00 CET on 7 November 2013, and the entire subscription amount must be transferred to Carnegie AS on or before this date. DETAILS OF THE SUBSCRIPTION Subscriber s VPS account Number of Employee Offer Shares subscribed (For broker: Consecutive no.) Σx Subscription price per Employee Offer Share NOK 1.60 Total Subscription amount to be paid NOK Place and date Must be dated in the Subscription Period Binding signature. The subscriber must have legal capacity. When signed on behalf of a company or pursuant to an authorisation, documentation in the form of a company certificate or power of attorney should be attached INFORMATION ON THE SUBSCRIBER VPS account number Forename Surname/company In the case of changes in registered information, the account operator must be contacted. Your account operator is: Street address (for private: home address): Post code/district/country Personal ID number/organisation number Norwegian Bank Account for dividends Nationality Daytime telephone number

120 ADDITIONAL INFORMATION FOR THE SUBSCRIBER Regulatory Issues: In accordance with the Markets in Financial Instruments Directive ( MiFID ) of the European Union, Norwegian law imposes requirements in relation to business investments. In this respect the Manager must categorize all new clients in one of three categories: eligible counterparties, professional and non-professional clients. All subscribers in the Rights Issue who are not existing clients of the Manager will be categorized as non-professional clients. Subscribers can, by written request to the Manager, ask to be categorized as a professional client if the subscriber fulfils the applicable requirements of the Norwegian Securities Trading Act. For further information about the categorization, the subscriber may contact the Manager on telephone The subscriber represents that he/she/it is capable of evaluating the merits and risks of an investment decision to invest in the Company by subscribing for Offer Shares, and is able to bear the economic risk, and to withstand a complete loss, of an investment in the Offer Shares. Selling and Transfer Restrictions: The attention of persons who wish to subscribe for Offer Shares is drawn to section 17 Selling and Transfer Restrictions of the Prospectus. The making or acceptance of the Rights Issue to or by persons who have registered addresses outside Norway or who are resident in, or citizens of, countries outside Norway, may be affected by the laws of the relevant jurisdiction. Those persons should consult their professional advisers as to whether they require any governmental or other consents or need to observe any other formalities to enable them to subscribe for Offer Shares. It is the responsibility of any person outside Norway wishing to subscribe for Offer Shares under the Rights Issue to satisy himself/herself as to the full observance of the laws of any relevant jurisdiction in connection therewith, including obtaining any governmental or other consent which may be required, the compliance with other necessary formalities and the payment of any issue, transfer or other taxes due in such territorries. The Subscription Rights and Offer Shares have not been registered and will not be registered under the United States Securities Act of 1933, as amended (the U.S. Securities Act ) or under the securities law of any state or other jurisdiction of the United States and may not be offered, sold, taken up, exercised, resold, delivered or transferred, directly or indirectly, within the United States. There will be no public offer of the Subscription Rights and Offer Shares in the United States. The Subscription Rights and Offer Shares have not been and will not be registered under the applicable securities laws of Australia, Canada, Hong Kong, Japan or Switzerland and may not be offered, sold, resold or delivered, directly or indirectly, in or into Australia, Canada, Hong Kong, Japan or Switzerland except pursuant to an applicable exemption from applicable securities laws. This Subscription Form does not constitute an offer to sell or a solicitation of an offer to buy Offer Shares in any jurisdiction in which such offer or solicitation is unlawful. Subject to certain exceptions, the Prospectus will not be distributed in the United States, Australia, Canada, Hong Kong, Japan or Switzerland. Except as otherwise provided in the Prospectus, the Subscription Rights and the Offer Shares may not be transferred, sold or delivered in the United States, Australia, Canada, Hong Kong, Japan or Switzerland. Exercise of Subscription Rights and subscription of Offer Shares in contravention of the above restrictions and those set out in the Prospectus may be deemed to be invalid. Execution Only: The Manager will treat the Subscription Form as an execution-only instruction. The Manager is not required to determine whether an investment in the Offer Shares is appropriate or not for the subscriber. Hence, the subscriber will not benefit from the protection of the relevant conduct of business rules in accordance with the Norwegian Securities Trading Act. Information Exchange: The subscriber acknowledges that, under the Norwegian Securities Trading Act and the Norwegian Commercial Banks Act and foreign legislation applicable to the Manager there is a duty of secrecy between the different units of the Manager as well as between the Manager and the other entities in the Manager s group. This may entail that other employees of the Manager or the Manager s group may have information that may be relevant to the subscriber and to the assessment of the Offer Shares, but which the Manager will not have access to in its capacity as Manager for the Rights Issue. Information Barriers: The Manager is a securities firm that offers a broad range of investment services. In order to ensure that assignments undertaken in the Manager s corporate finance department are kept confidential, the Manager s other activities, including analysis and stock broking, are separated from the Manager s corporate finance department by information walls. The subscriber acknowledges that the Manager s analysis and stock broking activity may act in conflict with the subscriber s interests with regard to transactions of the Shares, including the Offer Shares, as a consequence of such information walls. Mandatory Anti-Money Laundering Procedures: The Rights Issue is subject to the Norwegian Money Laundering Act No. 11 of March 6, 2009 and the Norwegian Money Laundering Regulations No. 302 of March 13, 2009 (collectively the Anti-Money Laundering Legislation ). Subscribers who are not registered as existing customers with the Manager must verify their identity in accordance with the requirements of the Anti-Money Laundering Legislation, unless an exemption is available. Subscribers who have designated an existing Norwegian bank account and an existing VPS account on the Subscription Form are exempted, unless verification of identity is requested by the Manager. The verification of identity must be completed prior to the end of the Subscription Period. Subscribers that have not completed the required verification of identity may not be allocated Offer Shares. Further, in participating in the Rights Issue, each subscriber must have a VPS account. The VPS account number must be stated on the Subscription Form. VPS accounts can be established with authorised VPS registrars, which can be Norwegian banks, authorised securities brokers in Norway and Norwegian branches of credit institutions established within the EEA. Establishment of a VPS account requires verification of identity before the VPS registrar in accordance with the Anti-Money Laundering Legislation. Non-Norwegian investors may, however, use nominee VPS accounts registered in the name of a nominee. The nominee must be authorized by the Financial Supervisory Authority of Norway. Terms and Conditions for Payment by Direct Debiting - Securities Trading: Payment by direct debiting is a service the banks in Norway provide in cooperation. In the relationship between the payer and the payer s bank the following standard terms and conditions will apply: a) The service Payment by direct debiting securities trading is supplemented by the account agreement between the payer and the payer s bank, in particular Section C of the account agreement, General terms and conditions for deposit and payment instructions. b) Costs related to the use of Payment by direct debiting securities trading appear from the bank s prevailing price list, account information and/or information given by other appropriate manner. The bank will charge the indicated account for costs incurred. c) The authorization for direct debiting is signed by the payer and delivered to the beneficiary. The beneficiary will deliver the instructions to its bank who in turn will charge the payer s bank account. d) In case of withdrawal of the authorization for direct debiting the payer shall address this issue with the beneficiary. Pursuant to the Norwegian Financial Contracts Act, the payer s bank shall assist if the payer withdraws a payment instruction that has not been completed. Such withdrawal may be regarded as a breach of the agreement between the payer and the beneficiary. e) The payer cannot authorize payment of a higher amount than the funds available on the payer s account at the time of payment. The payer s bank will normally perform a verification of available funds prior to the account being charged. If the account has been charged with an amount higher than the funds available, the difference shall immediately be covered by the payer. f) The payer s account will be charged on the indicated date of payment. If the date of payment has not been indicated in the authorization for direct debiting, the account will be charged as soon as possible after the beneficiary has delivered the instructions to its bank. The charge will not, however, take place after the authorization has expired as indicated above. Payment will normally be credited the beneficiary s account between one and three working days after the indicated date of payment/delivery. g) If the payer s account is wrongfully charged after direct debiting, the payer s right to repayment of the charged amount will be governed by the account agreement and the Norwegian Financial Contracts Act. Overdue and missing payments: Overdue and late payments will be charged with interest at the applicable rate from time to time under the Norwegian Act on Interest on Overdue Payment of 17 December 1976 no. 100, currently 9.50% per annum. If a subscriber fails to comply with the terms of payment, the Offer Shares will, subject to the restrictions in the Norwegian Public Limited Companies Act and at the discretion of the Manager, not be delivered to the subscriber. The Manager, on behalf of the Company, reserves the right, at the risk and cost of the subscriber to, at any time, cancel the subscription and to re-allocate or otherwise dispose of allocated Offer Shares for which payment is overdue, or, if payment has not been received by the third day after the Payment Date, without further notice sell, assume ownership to or otherwise dispose of the allocated Offer Shares on such terms and in such manner as the Manager may decide in accordance with Norwegian law. The subscriber will remain liable for payment of the subscription amount, together with any interest, costs, charges and expenses accrued and the Manager, on behalf of the Company, may enforce payment for any such amount outstanding in accordance with Norwegian law. 2

121 APPENDIX D: SUBSCRIPTION FORM FOR THE RIGHTS ISSUE AQUALIS ASA RIGHTS ISSUE OCTOBER/NOVEMBER 2013 In order for investors to be certain to participate in the Rights Issue, Subscription Forms must be received no later than 29 October 2013 at 16:30 CET. The subscriber bears the risk of any delay in the postal communication, busy facsimiles and data problems preventing orders from being received by the Manager. SUBSCRIPTION FORM Properly completed Subscription Forms must be submitted to the Manager as set out below: Carnegie AS Grundingen 2, Aker Brygge NO-0106 Oslo Tel: Fax: NORWEGIAN SUBSCRIBERS DOMICILED IN NORWAY CAN IN ADDITION SUBSCRIBE FOR SHARES AT General information: The terms and conditions for the Rights Issue in Aqualis ASA (the Company ) of 33,755,515 offer shares (the Offer Shares ) pursuant to resolution by the Company s extraordinary general meeting on 8 October 2013 (the EGM ) are set out in the prospectus dated 11 October 2013 (the Prospectus ). Terms defined in the Prospectus shall have the same meaning in this Subscription Form. Notice of and minutes from the EGM (with enclosures), the Company s Articles of Association and annual accounts for the last three years, are available at the Company s registered office. In case of any discrepancies between the Subscription Form and the Prospectus, the Prospectus shall prevail. Offer Shares and Subscription Rights: The Rights Issue comprises 33,755,515 transferrable subscription rights ( Subscription Rights ), where each Subscription Right grants the right to subscribe for one (1) Offer Share. Over-subscription and subscription without Subscription Rights are allowed and no fractional Offer Shares will be issued. The Subscription Rights will be tradeable and listed on the Oslo Stock Exchange during the Subscription Period with ticker AQUA T. Subscription Period: The subscription period is from and including 15 October 2013 to 16:30 CET on 29 October 2013 (the "Subscription Period"). Neither the Company nor the Manager may be held responsible for delays in the mail system or for Subscription Forms forwarded by facsimile that are not received in time by the Manager. It is not sufficient for the Subscription Form to be postmarked within the deadline. The Manager has discretion to refuse any improperly completed, delivered or executed Subscription Forms or any subscription which may be unlawful. Subscription Forms that are received too late or are incomplete or erroneous are therefore likely to be rejected without any notice to the subscriber. The subscription for Offer Shares is irrevocable and may not be withdrawn, cancelled or modified once it has been received by the Manager. Multiple subscriptions are allowed. Over-subscription and subscription without subscription rights is permitted. Subscription price: The subscription price for one (1) Offer Share is NOK Right to subscribe: The Subscription Rights will be issued to the Company s shareholders as per the end of 8 October 2013 (as registered in VPS on 11 October 2013) who are not resident in a jurisdiction where such offering would be unlawful or for jurisdictions other than Norway ( Eligible Shareholders ). Each Eligible Shareholder will receive one (1) Subscription Right for every share owned as of the close of trading on 8 October 2013 ( Record Date ), Subscription Rights not used to subscribe for the Offer Shares (in full or partly) will lapse without any compensation upon expiry of the Subscription Period and will consequently be of no value. The number of Subscription Rights allocated to each Eligible Shareholder will be rounded down to the nearest whole Subscription Right. Allocation: The allocation criteria are set out in the Prospectus dated 11 October All Subscribers being allotted Offer Shares will receive a letter on or about 4 November 2013 from the Manager confirming the number of Offer Shares allotted to the Subscriber. Payment: The payment for the Offer Shares falls due 10:00 CET on 7 November By signing the Subscription Form, each Subscriber having a Norwegian bank account authorises the Manager to debit the bank account specified by the Subscriber below for payment of the allotted Offer Shares for transfer to the Manager. The Manager reserves the right to make up to three attempts to debit the Subscribers accounts in the period up to 14 November 2013 if there are insufficient funds on the account on previous debit dates. Subscribers not having a Norwegian bank account must ensure that payment for their Offer Shares with cleared funds is made on or before 10:00 CET 7 November 2013 and should contact the Manager in this respect for further details and instructions. DETAILS OF THE SUBSCRIPTION Subscriber s VPS account Number of Subscription Rights Number of Offer Shares subscribed (incl. oversubscription): (For broker: Consecutive no.) 1 SUBSCRIPTION RIGHT GIVES THE RIGHT TO BE ALLOCATED 1 OFFER SHARE Σx Subscription price per Offer Share NOK 1.60 Total Subscription amount to be paid NOK SUBSCRIPTION RIGHT S SECURITIES NUMBER: ISIN NO IRREVOCABLE AUTHORISATION TO DEBIT ACCOUNT (MUST BE COMPLETED) My Norwegian bank account to be debited for the consideration for shares allotted (number of shares allotted x subscription price). (Norwegian bank account no. 11 digits) In accordance with the terms and conditions set out in the Prospectus and this Subscription Form, I/we hereby irrevocably subscribe for the number of Offer Shares specified above and grant the Manager authorisation to debit (by direct or manual debiting as described above) the specified bank account for the payment of the Offer Shares allocated to me/us. Place and date Must be dated in the Subscription Period Binding signature. The subscriber must have legal capacity. When signed on behalf of a company or pursuant to an authorisation, documentation in the form of a company certificate or power of attorney should be attached INFORMATION ON THE SUBSCRIBER VPS account number Forename Surname/company In the case of changes in registered information, the account operator must be contacted. Your account operator is: Street address (for private: home address): Post code/district/country Personal ID number/organisation number Norwegian Bank Account for dividends Nationality Daytime telephone number

122 ADDITIONAL INFORMATION FOR THE SUBSCRIBER Regulatory Issues: In accordance with the Markets in Financial Instruments Directive ( MiFID ) of the European Union, Norwegian law imposes requirements in relation to business investments. In this respect the Manager must categorize all new clients in one of three categories: eligible counterparties, professional and non-professional clients. All subscribers in the Rights Issue who are not existing clients of the Manager will be categorized as non-professional clients. Subscribers can, by written request to the Manager, ask to be categorized as a professional client if the subscriber fulfils the applicable requirements of the Norwegian Securities Trading Act. For further information about the categorization, the subscriber may contact the Manager on telephone The subscriber represents that he/she/it is capable of evaluating the merits and risks of an investment decision to invest in the Company by subscribing for Offer Shares, and is able to bear the economic risk, and to withstand a complete loss, of an investment in the Offer Shares. Selling and Transfer Restrictions: The attention of persons who wish to subscribe for Offer Shares is drawn to section 17 Selling and Transfer Restrictions of the Prospectus. The making or acceptance of the Rights Issue to or by persons who have registered addresses outside Norway or who are resident in, or citizens of, countries outside Norway, may be affected by the laws of the relevant jurisdiction. Those persons should consult their professional advisers as to whether they require any governmental or other consents or need to observe any other formalities to enable them to subscribe for Offer Shares. It is the responsibility of any person outside Norway wishing to subscribe for Offer Shares under the Rights Issue to satisy himself/herself as to the full observance of the laws of any relevant jurisdiction in connection therewith, including obtaining any governmental or other consent which may be required, the compliance with other necessary formalities and the payment of any issue, transfer or other taxes due in such territorries. The Subscription Rights and Offer Shares have not been registered and will not be registered under the United States Securities Act of 1933, as amended (the U.S. Securities Act ) or under the securities law of any state or other jurisdiction of the United States and may not be offered, sold, taken up, exercised, resold, delivered or transferred, directly or indirectly, within the United States. There will be no public offer of the Subscription Rights and Offer Shares in the United States. The Subscription Rights and Offer Shares have not been and will not be registered under the applicable securities laws of Australia, Canada, Hong Kong, Japan or Switzerland and may not be offered, sold, resold or delivered, directly or indirectly, in or into Australia, Canada, Hong Kong, Japan or Switzerland except pursuant to an applicable exemption from applicable securities laws. This Subscription Form does not constitute an offer to sell or a solicitation of an offer to buy Offer Shares in any jurisdiction in which such offer or solicitation is unlawful. Subject to certain exceptions, the Prospectus will not be distributed in the United States, Australia, Canada, Hong Kong, Japan or Switzerland. Except as otherwise provided in the Prospectus, the Subscription Rights and the Offer Shares may not be transferred, sold or delivered in the United States, Australia, Canada, Hong Kong, Japan or Switzerland. Exercise of Subscription Rights and subscription of Offer Shares in contravention of the above restrictions and those set out in the Prospectus may be deemed to be invalid. Execution Only: The Manager will treat the Subscription Form as an execution-only instruction. The Manager is not required to determine whether an investment in the Offer Shares is appropriate or not for the subscriber. Hence, the subscriber will not benefit from the protection of the relevant conduct of business rules in accordance with the Norwegian Securities Trading Act. Information Exchange: The subscriber acknowledges that, under the Norwegian Securities Trading Act and the Norwegian Commercial Banks Act and foreign legislation applicable to the Manager there is a duty of secrecy between the different units of the Manager as well as between the Manager and the other entities in the Manager s group. This may entail that other employees of the Manager or the Manager s group may have information that may be relevant to the subscriber and to the assessment of the Offer Shares, but which the Manager will not have access to in its capacity as Manager for the Rights Issue. Information Barriers: The Manager is a securities firm that offers a broad range of investment services. In order to ensure that assignments undertaken in the Manager s corporate finance department are kept confidential, the Manager s other activities, including analysis and stock broking, are separated from the Manager s corporate finance department by information walls. The subscriber acknowledges that the Manager s analysis and stock broking activity may act in conflict with the subscriber s interests with regard to transactions of the Shares, including the Offer Shares, as a consequence of such information walls. Mandatory Anti-Money Laundering Procedures: The Rights Issue is subject to the Norwegian Money Laundering Act No. 11 of March 6, 2009 and the Norwegian Money Laundering Regulations No. 302 of March 13, 2009 (collectively the Anti-Money Laundering Legislation ). Subscribers who are not registered as existing customers with the Manager must verify their identity in accordance with the requirements of the Anti-Money Laundering Legislation, unless an exemption is available. Subscribers who have designated an existing Norwegian bank account and an existing VPS account on the Subscription Form are exempted, unless verification of identity is requested by the Manager. The verification of identity must be completed prior to the end of the Subscription Period. Subscribers that have not completed the required verification of identity may not be allocated Offer Shares. Further, in participating in the Rights Issue, each subscriber must have a VPS account. The VPS account number must be stated on the Subscription Form. VPS accounts can be established with authorised VPS registrars, which can be Norwegian banks, authorised securities brokers in Norway and Norwegian branches of credit institutions established within the EEA. Establishment of a VPS account requires verification of identity before the VPS registrar in accordance with the Anti-Money Laundering Legislation. Non-Norwegian investors may, however, use nominee VPS accounts registered in the name of a nominee. The nominee must be authorized by the Financial Supervisory Authority of Norway. Terms and Conditions for Payment by Direct Debiting - Securities Trading: Payment by direct debiting is a service the banks in Norway provide in cooperation. In the relationship between the payer and the payer s bank the following standard terms and conditions will apply: a) The service Payment by direct debiting securities trading is supplemented by the account agreement between the payer and the payer s bank, in particular Section C of the account agreement, General terms and conditions for deposit and payment instructions. b) Costs related to the use of Payment by direct debiting securities trading appear from the bank s prevailing price list, account information and/or information given by other appropriate manner. The bank will charge the indicated account for costs incurred. c) The authorization for direct debiting is signed by the payer and delivered to the beneficiary. The beneficiary will deliver the instructions to its bank who in turn will charge the payer s bank account. d) In case of withdrawal of the authorization for direct debiting the payer shall address this issue with the beneficiary. Pursuant to the Norwegian Financial Contracts Act, the payer s bank shall assist if the payer withdraws a payment instruction that has not been completed. Such withdrawal may be regarded as a breach of the agreement between the payer and the beneficiary. e) The payer cannot authorize payment of a higher amount than the funds available on the payer s account at the time of payment. The payer s bank will normally perform a verification of available funds prior to the account being charged. If the account has been charged with an amount higher than the funds available, the difference shall immediately be covered by the payer. f) The payer s account will be charged on the indicated date of payment. If the date of payment has not been indicated in the authorization for direct debiting, the account will be charged as soon as possible after the beneficiary has delivered the instructions to its bank. The charge will not, however, take place after the authorization has expired as indicated above. Payment will normally be credited the beneficiary s account between one and three working days after the indicated date of payment/delivery. g) If the payer s account is wrongfully charged after direct debiting, the payer s right to repayment of the charged amount will be governed by the account agreement and the Norwegian Financial Contracts Act. Overdue and missing payments: Overdue and late payments will be charged with interest at the applicable rate from time to time under the Norwegian Act on Interest on Overdue Payment of 17 December 1976 no. 100, currently 9.50% per annum. If a subscriber fails to comply with the terms of payment, the Offer Shares will, subject to the restrictions in the Norwegian Public Limited Companies Act and at the discretion of the Manager, not be delivered to the subscriber. The Manager, on behalf of the Company, reserves the right, at the risk and cost of the subscriber to, at any time, cancel the subscription and to re-allocate or otherwise dispose of allocated Offer Shares for which payment is overdue, or, if payment has not been received by the third day after the Payment Date, without further notice sell, assume ownership to or otherwise dispose of the allocated Offer Shares on such terms and in such manner as the Manager may decide in accordance with Norwegian law. The subscriber will remain liable for payment of the subscription amount, together with any interest, costs, charges and expenses accrued and the Manager, on behalf of the Company, may enforce payment for any such amount outstanding in accordance with Norwegian law. 2

123 Building a better working world Statsautoriserte revisorer Ernst & Young AS Drenning Eufemias gate 6, N Oslo Oslo Atrium, P.O. Box 20, N Oslo Foretaksregisteret: NO MVA Tlf: Fax: Medlemmer av den norske revisorforening APPENDIX F: INDEPENDENT ASSURANCE REPORT ON THE PRO FORMA FINANCIAL INFORMATION To the Board of Directors of Aqualis ASA Independent Practitioners' Assurance Report on the Compilation of Pro Forma Financial Information Included in a Prospectus We have completed our assurance engagement to report on the compilation of unaudited pro forma financial information of Aqualis ASA (the "Company"). The pro forma financial information consists of the unaudited pro forma condensed balance sheet as at 30 June 2013, the unaudited pro forma condensed income statement for the six months ended 30 June 2013, and related description and notes as set out in section 9.6 of the prospectus dated 11 October 2013 (the "Prospectus") issued by the Company. The applicable criteria on the basis of which the Company has compiled the unaudited pro forma financial information are specified in EU Regulation No 809/2004 and described in section 9.6 of the Prospectus (the "applicable criteria"). The unaudited pro forma financial information has been compiled for illustrative purposes only to provide information about how the acquisition of Aqualis Offshore Ltd and the Rights Offering set out in section 9.6 of the Prospectus might have affected the Company's consolidated financial position as at 30 June 2013 and the Company's consolidated financial performance for the six months ended 30 June 2013 as if the acquisition had taken place at 30 June 2013 and 1 January As part of this process, the Company has extracted financial information from the Company's and Aqualis Offshore Ltd's consolidated financial statements for the period ended 30 June No audit or review reports have been issued on the unaudited condensed consolidated financial information of the Company or Aqualis Offshore Ltd for the six months ended 30 June The Board of Directors' and Management's Responsibility for the Pro Forma Financial Information The Board of Directors and Management are responsible for compiling the pro forma financial information on the basis of the requirements of EU Regulation No 809/2004 as included in the Norwegian Securities Trading Act. Practitioner's Responsibilities Our responsibility is to express an opinion, as required by Annex II item 7 of EU Regulation No 809/2004 about whether the pro forma financial information has been compiled by the Company on the basis stated and that this basis is consistent with the accounting policies of the Company. We conducted our engagement in accordance with International Standard on Assurance Engagements (ISAE) 3420, Assurance Engagements to Report on the Compilation of Pro Forma Financial Information Included in a Prospectus, issued by the International Auditing and Assurance Standards Board. This standard requires that the practitioner comply with ethical requirements and plan and perform procedures to obtain reasonable assurance about whether the Company has compiled the pro forma financial information on the basis of the applicable criteria and whether this basis is consistent with the accounting policies of the Company. /J... rnfrrll'lcr f rrrf! of Er r,r 8., YOL.It) Clobill L_rrnr ll c1

124 Building a better working world Our work primarily consisted of comparing the unadjusted financial information with the source documents as described in section 9.6 of the Prospectus, considering the evidence supporting the adjustments and discussing the Pro Forma Financial Information with management of the Company. The aforementioned opinion does not require an audit of historical unadjusted financial information, the adjustments to conform the accounting policies of Aqualis Offshore Ltd to the accounting policies of the Company, or the assumptions summarized in section 9.6 of the prospectus. For purposes of this engagement, we are not responsible for updating or reissuing any reports or opinions on any historical financial information used in compiling the pro forma financial information, nor have we, in the course of this engagement, performed an audit or review of the financial information used in compiling the pro forma financial information. The purpose of pro forma financial information included in a prospectus is solely to illustrate how the significant event or transaction might have impacted the unadjusted financial information of the entity if the transaction had been undertaken at an earlier date. Because of its nature, the Pro Forma Financial Information addresses a hypothetical situation and, therefore, does not represent the Company's actual financial position or performance. Accordingly, we do not provide any assurance that the actual outcome of the acquisition of Aqualis Offshore Ltd and the Rights Offering would have been as presented. A reasonable assurance engagement to report on whether the pro forma financial information has been compiled on the basis stated involves performing procedures to assess whether the applicable criteria used by the Company in the compilation of the pro forma financial information provide a reasonable basis for presenting the significant effects directly attributable to the event or transaction, and to obtain sufficient appropriate evidence about whether: The related pro forma adjustments give appropriate effect to those criteria; The pro forma financial information reflects the proper application of those adjustments to the unadjusted financial information; and The pro forma financial information has been compiled on a basis consistent with the accounting policies of the Company. The procedures selected depend on the practitioner's judgment, having regard to the practitioner's understanding of the nature of the company, the event or transaction in respect of which the pro forma financial information has been compiled, and other relevant engagement circumstances. The engagement also involves evaluating the overall presentation of the pro forma financial information. We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Opinion In our opinion: a) The pro forma financial information has been properly compiled on the basis stated in section 9.6 of the Prospectus b) That basis is consistent with the accounting policies of the Company. A mr:rnbe1 t11 ftl of Emst & Young GlotJc l L1mited

125 Building a better working world This report is issued for the sole purpose of the Rights Offering in Norway and the admission of shares on Oslo B1<ns (Oslo Stock Exchange) and other regulated markets in the European Union or European Economic Area, as set out in the Prospectus approved by the Financial Supervisory Authority of Norway. Therefore, this report is not appropriate in other jurisdictions and should not be used or relied upon for any purpose other than the offering described above. We accept no duty or responsibility to and deny any liability to any party in respect of any use of, or reliance upon, this report in connection with any type of transaction, including the sale of securities other than the offer to the public of the shares on Oslo B0rs and other regulated markets in the European Union or European Economic Area, as set out in the Prospectus approved by the Financial Supervisory Authority of Norway. I A member firm of Ernst & Young Global Lim1ted

126 APPENDIX G: INDEPENDENT REPORT ON FAIR VALUE OF AQUALIS OFFSHORE RSM Audit Tax Advisory To the General Meeting of Clavis Pharma ASA RSM Hasner Kjelstrup & Wiggen AS Statsautoriserte revisorer Postboks 1312 Vika, N Oslo Filipstad Brygge 1. N Oslo T: F: Org.nr MVA Statement regarding increase in share capital At the Board of Directors' request we, as independent experts, issue this statement in compliance with The Public Limited Liability Companies Act section 10-2, refer section 2-6. The Board of Directors' responsibility for the statement The Board of Directors are responsible for the valuations that form basis for the consideration. The independent experts' responsibility Our responsibility is to prepare a statement relating to the increase in share capital with a consideration in other than cash by the investors against consideration in Clavis Pharma ASA shares, and express an opinion that the value of the assets the company shall take over as consideration for the increase in share capital is at least equivalent to the agreed consideration. The statement consists of two parts. The first part is a presentation of information in compliance with the requirements in The Public Limited Liability Companies Act section 10-2, refer section 2-6 first subsection No 1-4. The second part is our opinion regarding whether the assets the company shall take over have a value which is at least equivalent to the agreed consideration. Part 1: Information about the consideration Clavis Pharma ASA has signed a letter of intent to acquire 100 percent of the shares of Aqualis Offshore Ltd. The consideration is preliminary set at NOK 70 million, which is to be settled by the issuance of shares of Clavis Pharma ASA, valued at NOK 1.60 per share. Aqualis Offshore Ltd was founded 17 December 2012, and is registered in the UK. The company owns shares in the subsidiaries Aqualis Offshore Pte Ltd (Singapore), Aqualis Offshore Marine Services LLC (Dubai), Aqualis Offshore Inc (Texas), Aqualis Offshore UK Ltd (UK), Aqualis Offshore Servi9os Ltda (Brazil) and Aqualis Offshore AS (Norway). The companies provide consulting services to the offshore sector. Currently the companies employ around 40 people, and additional 30 people have signed contracts to join within year-end Aqualis Offshore Ltd is in its first year of operation and has not yet issued financial statements. Unaudited consolidated accounts for the first half of 2013 show operating income of$ 312,849, loss before tax of USD 934,622, and a negative equity of$ 853,601, minority interests excluded. The value of the shares of Aqualis Offshore Ltd is established through a combination of multiple analyses and present value calculations of its expected future cash flows. The valuation is based on a number of assumptions about expected future development of the business. As the company has no historical data to demonstrate, this means increased uncertainty compared to a more mature business. Important assumptions made relate amongst other to the increase in the number of RSM Hasner Kjelstrup & Wiggen er et frittstaende medlem av RSM International, en sammenslutning av uavhengige revisjons- og konsulentfirmaer. RSM International er navnet til et nettverk av uavhengige revisjons og konsulentfirmaer. hvor hvert firma praktiserer selvstendig. RSM International eksisterer ikke i noen jurisdiksjon sam en separatjuridisk enhet. Medlemmer av Den Norske Revisorforening

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