prospectus napatech a/s listing of 33,333,333 private ......solely for use in connection with (i)...

PROSPECTUS

NAPATECH A/S

(A Danish public limited company incorporated under the laws of Denmark)

Listing of 33,333,333 Private Placement Shares

Offering and listing of 16,666,667 Offer Shares in a Subsequent Offering to Eligible Shareholders

Listing of 1,145,000 Executive Offer Shares in an Executive Offering to the Company's Executive Management and the Board of Directors

This prospectus (the "Prospectus") has been prepared by Napatech A/S ("Napatech" or the "Company"), a public limited company incorporated under the laws of Denmark (together with its consolidated subsidiaries, the "Group"), solely for use in connection with (i) the listing on the Oslo Stock Exchange of 33,333,333 new shares of the Company issued through a private placement (the "Private Placement Shares") announced on 22 February 2019 (the “Private Placement”), (ii) a fully underwritten subsequent offering of 16,666,667 new shares of the Company (the "Offer Shares") (the "Subsequent Offering"), (iii) the listing of the Offer Shares on Oslo Stock Exchange and (iv) the listing on the Oslo Stock Exchange of 1,145,000 new shares of the Company issued through a separate offering to the Company's Executive Management and the Board of Directors (the "Executive Offer Shares") (the "Executive Offering"). The Company’s shares (the “Shares”) are listed on Oslo Stock Exchange under the ticker code “NAPA”.

The price at which the Offer Shares are being offered is NOK 1.50 per Offer Share (the "Subscription Price"). In the Subsequent Offering, the Company will, subject to applicable securities laws, allocate non-transferable subscription rights (the "Subscription Rights") to subscribers who:

were registered as holders of Shares in the Company’s register of shareholders with the Norwegian Central Securities Depository (the "VPS") as of expiry of 25 February 2019 (the "Record Date");

were not allocated Private Placement Shares or Executive Offer Shares;

are not resident in a jurisdiction where such offering would be unlawful or, for jurisdictions other than Norway, would require any prospectus filing, registration or similar action,

(each such shareholder an "Eligible Shareholder").

For each Share recorded as held in the Company as of expiry of the Record Date, each Eligible Shareholder will receive 0.73 Subscription Rights, rounded down to the nearest whole Subscription Right. One (1) Subscription Right will give the right to subscribe for, and be allocated, one (1) Offer Share, subject to the selling and transfer restrictions set out in Section 17 "Selling and Transfer Restrictions". Oversubscription by the Eligible Shareholders is allowed. Subscription without Subscription Rights is not permitted. The Subscription Rights may be used to subscribe for Offer Shares in the Subsequent Offering from 09:00 hours (CEST) on 30 April 2019 until 16:30 hours (CEST) on 10 May 2019 (the "Subscription Period").

Notifications of allocation of Offer Shares in the Subsequent Offering are expected to be issued on or about 13 May 2019. The due date for payment of allocated Offer Shares is 15 May 2019. Delivery of the Offer Shares to investors' VPS accounts is expected to take place on or about 20 May 2019. Trading in the Private Placement Shares and the Executive Offer Shares on Oslo Stock Exchange is expected to commence on or about 30 April 2019 under the trading symbol "NAPA". Trading in the Offer Shares on Oslo Stock Exchange is expected to commence on or about 20 May 2019 under the same trading symbol. The Offer Shares have not been and will not be registered under the U.S. Securities Act, and may not be offered or sold except (i) within the United States to QIBs in reliance on Rule 144A or another applicable exemption from, or in a transaction not subject to, the registration requirements of the U.S. Securities Act or (ii) to certain persons in offshore transactions in compliance with Regulation S under the U.S. Securities Act, and in accordance with any applicable securities laws of any state or territory of the United States or any other jurisdiction. Transfer of the Offer Shares will be restricted and each purchaser of the Offer Shares in the United States will be required to make certain acknowledgements, representations and agreements, as described under Section 16 "Selling and transfer restrictions".

Prospective investors should read this Prospectus in its entirety. Investing in the Shares involves a high degree of risk. See Section 2 "Risk factors".

Manager

ABG Sundal Collier

The date of this Prospectus is 29 April 2019

Napatech A/S – Prospectus

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IMPORTANT INFORMATION

Please refer to Section 18 "Definitions and Glossary of Terms" for definitions, which also apply to the preceding pages.

This Prospectus has been prepared by Napatech A/S solely for use in connection with (i) the listing of the Private Placement Shares, the Offer Shares and the Executive Offer Shares (the "New Shares") on the Oslo Stock Exchange ("the Listing") and (ii) the Subsequent Offering.

The Prospectus has been prepared to comply with the Norwegian Securities Trading Act of 29 June 2007 no. 75 (the "Norwegian Securities Trading Act") and related secondary legislation, including the Commission Regulation (EC) no. 809/2004 implementing Directive 2003/71/EC of the European Parliament and of the Council of 4 November 2003 regarding information contained in Prospectuses (the "Prospectus Directive") as well as the format, incorporation by reference and publication of such Prospectuses and dissemination of advertisements (hereinafter "EC Regulation 809/2004"). The Prospectus has been prepared pursuant to proportionate schedules for small-and medium sized enterprises and companies with reduced market capitalisation in accordance with Article 26b of the EC Regulation 809/2004.

This Prospectus has been prepared solely in the English language.

The Prospectus has been reviewed and was approved by the Financial Supervisory Authority of Norway (the "Norwegian FSA") on 29 April 2019 in accordance with sections 7-7 and 7-8, cf. section 7-3 of the Norwegian Securities Trading Act. The Norwegian FSA has not controlled or approved the accuracy or completeness of the information given in this Prospectus. The approval given by the Norwegian FSA only relates to the Company’s descriptions pursuant to a pre-defined check list of requirements. The Norwegian FSA has not made any form of control or approval relating to corporate matters described in or otherwise covered by this Prospectus.

The information contained herein is current as of the date hereof and subject to change, completion and amendment without notice. In accordance with section 7-15 of the Norwegian Securities Trading Act, significant new factors, material mistakes or inaccuracies relating to the information included in this Prospectus, which are capable of affecting the

assessment of the New Shares between the time when this Prospectus is approved and the date of the Listing will be included in a supplement to this Prospectus. Neither the publication nor distribution of this Prospectus shall under any circumstances create any implication that there has been no change in the Group’s affairs or that the information herein is correct as of any date subsequent to the date of this Prospectus.

All inquiries relating to this Prospectus should be directed to the Company or the Manager. No person is authorized to give information or to make any representation in connection with the Private Placement, the Subsequent Offering or the Executive Offering other than as contained in this Prospectus. If any such information is given or made, it must not be relied upon as having been authorized by the Company or the Manager or by any of the affiliates, advisors or selling agents of any of the foregoing.

No action has been or will be taken in any other jurisdiction other than Norway that would permit the possession or distribution of this Prospectus in any country or jurisdiction where this is unlawful or specific action for such purpose is required. The distribution of this Prospectus in certain jurisdictions may be restricted by law. The Company and the Manager require persons in possession of this Prospectus to inform themselves about and to observe any such restrictions. The restrictions and limitations listed and described herein are not exhaustive, and other restrictions and limitations in relation to this Prospectus that are not known or identified at the date of this Prospectus may apply in various jurisdictions.

This Prospectus serves as a listing prospectus as required by applicable laws and regulations only. This Prospectus does not constitute an offer to buy, subscribe or sell any of the securities described herein, and no securities are being offered or sold pursuant to it.

THE SHARES HAVE NOT BEEN, AND WILL NOT BE, REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "US SECURITIES ACT") OR WITH ANY SECURITIES REGULATORY AUHTORITY OF ANY STATE OR OTHER JURISDICTION IN THE UNITED STATES, AND MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES. THIS PROSPECTUS HAS NOT BEEN APPROVED NOR REVIEWED BY THE US SECURITIES AND EXCHANGE COMMISSION AND IS NOT FOR DISTRIBUTION IN THE UNITED STATES.

This Prospectus shall be governed and construed in accordance with Norwegian law. The courts of Norway, with Oslo as legal venue, shall have exclusive jurisdiction to settle any dispute that may arise out of or in connection with the Prospectus.


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TABLE OF CONTENTS

EXECUTIVE SUMMARY .................................................................................................................. 8

RISK FACTORS ............................................................................................................................. 15

Risk factors related to the Group and the industry in which it operates .......................................................... 15

Risk factors related to the Group's financing ................................................................................................... 19

Risk factors related to the securities ................................................................................................................ 19

STATEMENT OF RESPONSIBILITY ................................................................................................. 22

GENERAL INFORMATION ............................................................................................................ 23

Presentation of financial information .............................................................................................................. 23

Forward-looking statements ........................................................................................................................... 23

Third party information ................................................................................................................................... 24

THE PRIVATE PLACEMENT, THE SUBSEQUENT OFFERING AND THE EXECUTIVE OFFERING ......... 25

Background and use of net proceeds from the Private Placement, the Subsequent Offering and the Executive Offering .................................................................................................................................................................... 25

The Private Placement ..................................................................................................................................... 25

The Subsequent Offering ................................................................................................................................. 26

Net proceeds and expenses relating to the Private Placement, the Subsequent Offering and the Executive Offering .................................................................................................................................................................... 32

Interests of natural and legal persons involved ............................................................................................... 33

Managers and advisors .................................................................................................................................... 33

The Executive Offering .................................................................................................................................... 33

Dilution ........................................................................................................................................................... 34

Governing law and jurisdiction ........................................................................................................................ 35

PRESENTATION OF NAPATECH .................................................................................................... 36

Company overview .......................................................................................................................................... 36

Historical background and development ......................................................................................................... 36

Business description ........................................................................................................................................ 37

Napatech comparative technical advantages .................................................................................................. 40

Research and development ............................................................................................................................. 41


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Manufacturing ................................................................................................................................................. 42

Patents ............................................................................................................................................................ 42

Trend information and significant changes in the Group's activities ................................................................ 42

Material contracts ........................................................................................................................................... 43

MARKET OVERVIEW .................................................................................................................... 44

At the crossroads of two major market trends ................................................................................................ 44

Napatech geographic markets ......................................................................................................................... 45

Significant changes in the principal markets in which the Group operates ...................................................... 45

BOARD OF DIRECTORS, EXECUTIVE MANAGEMENT, AND EMPLOYEES ....................................... 47

Board of directors ............................................................................................................................................ 47

Executive Management ................................................................................................................................... 49

Conflicts of interests, family relationship, directorships etc. ........................................................................... 50

Details of any convictions for fraudulent offences, bankruptcy etc. ................................................................ 50

Remuneration and benefits ............................................................................................................................. 50

Bonus program ................................................................................................................................................ 51

Share option schemes ..................................................................................................................................... 51

Corporate Governance .................................................................................................................................... 51

Committees ..................................................................................................................................................... 51

Employees .................................................................................................................................................... 52

Pensions and other obligations .................................................................................................................... 52

Shareholdings ............................................................................................................................................... 52

FINANCIAL INFORMATION .......................................................................................................... 53

Introduction .................................................................................................................................................... 53

Historical financial information ....................................................................................................................... 53

Auditor ............................................................................................................................................................ 55

Financial risk management objectives and policies ......................................................................................... 56

Significant changes in the Group's financial or trading position ....................................................................... 56

CAPITAL RESOURCES ................................................................................................................ 57


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Overview of liquidity, capital resources, debt and certain other financial information ................................ 57

Summarised consolidated cash flow information ......................................................................................... 57

Working capital statement ........................................................................................................................... 58

Capitalisation and indebtedness ................................................................................................................... 58

Property, plant and equipment .................................................................................................................... 59

Investments.................................................................................................................................................. 59

CORPORATE INFORMATION AND DESCRIPTION OF SHARE CAPITAL ......................................... 61

Company corporate information .................................................................................................................. 61

Legal structure .............................................................................................................................................. 61

Admission to trading .................................................................................................................................... 61

Shareholders' agreement and lock-up .......................................................................................................... 62

The Shares and development of share capital .............................................................................................. 62

Share options ............................................................................................................................................... 62

Own Shares .................................................................................................................................................. 63

Authorizations to increase the share capital ................................................................................................. 63

Dividend policy ............................................................................................................................................. 66

Shareholders ............................................................................................................................................. 66

SHAREHOLDERS' MATTERS AND COMPANIES AND SECURITIES LAW ........................................ 67

The general meeting of shareholders ........................................................................................................... 67

Voting rights – amendments to the articles of association ........................................................................... 67

Pre-emptive rights ........................................................................................................................................ 67

Change of control ......................................................................................................................................... 68

Mandatory take-over bids ............................................................................................................................ 68

Squeeze-out ................................................................................................................................................. 68

Disclosure obligations .................................................................................................................................. 69

Rights of redemption and repurchase of shares ........................................................................................... 69

Distribution of assets on liquidation ............................................................................................................. 69

Dividends .................................................................................................................................................. 69

Articles of association................................................................................................................................ 69


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NORWEGIAN TAXATION ........................................................................................................... 71

General......................................................................................................................................................... 71

Taxation of dividends ................................................................................................................................... 71

Taxation of capital gains on realization of shares ......................................................................................... 72

Net Wealth Tax............................................................................................................................................. 72

Duties on transfer of shares ......................................................................................................................... 72

Inheritance tax ............................................................................................................................................. 73

DANISH TAXATION ................................................................................................................... 74

Introduction ................................................................................................................................................. 74

Taxation of dividends ................................................................................................................................... 74

Taxation upon realization of shares .............................................................................................................. 75

Net wealth tax .............................................................................................................................................. 76

Duties on transfer of Shares ......................................................................................................................... 76

Inheritance tax ............................................................................................................................................. 76

LEGAL MATTERS ....................................................................................................................... 76

Legal disputes ............................................................................................................................................... 76

Related party transactions ........................................................................................................................... 77

ADDITIONAL INFORMATION ..................................................................................................... 78

Incorporation by reference ........................................................................................................................... 78

Documents on display .................................................................................................................................. 78

SELLING AND TRANSFER RESTRICTIONS ................................................................................... 79

General......................................................................................................................................................... 79

United States ................................................................................................................................................ 80

EEA selling restrictions ................................................................................................................................. 81

Notice to Australian investors ...................................................................................................................... 81

Notice to Canadian investors ........................................................................................................................ 81

Notice to Hong Kong investors ..................................................................................................................... 82

Notice to Japanese investors ........................................................................................................................ 82


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Notice to Swiss investors .............................................................................................................................. 82

DEFINITIONS AND GLOSSARY OF TERMS .................................................................................. 83

APPENDICES

Appendix 1 – Napatech Patents and Pending Patent Applications Overview

Appendix 2 – Subscription Form for the Subsequent Offering


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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

A.1 Introduction and Warnings This summary should be read as introduction to the Prospectus. Any decision to invest in the securities 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 of the Member States, 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 intermediaries

Not applicable. No consent is granted by the Company for the use of the Prospectus for subsequent resale or final placement of the Shares.

Section B – Issuer

B.1 Legal and commercial name Napatech A/S

B.2 Domicile and legal form, legislation and country of incorporation

The Company’s registered name is Napatech A/S. The Company is organized as a public limited liability company in accordance with the Danish Companies Act, and is registered with the Danish Business Authority under company organization no. (CVRno.) 10 10 91 24.

B.3 Current operations, principal activities and markets

Napatech is a global provider of reconfigurable computing solutions with significant experience and expertise. Reconfigurable computing solutions address the growing disparity between the continuously increasing needs of modern software applications and the ability of available computing platforms to keep up with these demands.

Reconfigurable computing platforms are based on standard servers, but they include additional technology that is capable of processing large amounts of data quickly, which effectively accelerates the performance of software applications. In addition, this technology is software reconfigurable allowing the specific acceleration needs of a given application to be accommodated when and where it is required.

Napatech reconfigurable computing platforms make it possible to process more data faster with detailed insight into what is happening in real-time. With this information, it is possible to address the challenge of transporting, processing and securing data in even the fastest and largest networks and datacentres in the world.

Napatech reconfigurable computing platforms utilize Field Programmable Gate Arrays ("FPGAs"), a mature and widely used technology that allows implementation of almost any conceivable data processing task with high performance. FPGAs are configured using software allowing automated, remote and instantaneous configuration, and reconfiguration, of the data processing tasks that the FPGA needs to perform. This FPGA configuration software forms the heart of the reconfigurable computing solution and is the main focus of Napatech development activities.

Napatech relies on a broad ecosystem of technical and channel partners to develop, deliver and support reconfigurable computing solutions. From the FPGA chips that are used in Napatech's reconfigurable computing platform to the development of next-generation solutions together with Napatech's software application partners to the global reach and support provided by global channel partners, Napatech has


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the ecosystem of partners to seize the tremendous opportunity that reconfigurable computing promises.

The reconfigurable computing opportunity sits at the crossroads of two major market trends; the ubiquitous deployment of standard server platforms for every conceivable application and the growing intelligence and complexity of the software applications on which we all rely. Both trends are the source of tremendous growth in their own right, but the growing disparity between the performance and capabilities that software applications require and the ability of standard servers to meet those requirements is leading to an emerging and large opportunity in providing reconfigurable computing solutions that can bridge this performance gap.

B.4a Significant recent trends There is a general trend away from "hardware-centric" solutions in the market, where there is a close integration between the hardware and software components of the solution and where the solution is sold as a combined entity, towards "software-centric" solutions, where the interface between the software and hardware components is more open allowing the software and hardware to be sold separately. This trend has led to a change in end-user requirements and demand for Napatech’s customers’ offerings, which has led to corrections in inventory levels and delays in securing large projects.

It is the determination of Napatech that this is a temporary re-adjustment and a trend for which Napatech has prepared and is able to address quickly. For example, Napatech has taken steps to ensure that its hardware and software components can be sold separately to the extent that Napatech can provide Napatech software on third-party hardware, should that be necessary.

Napatech is continuing to align its business to a more software-centric market and is working closely with its major suppliers, partners and key customers to ensure that we continue to meet end-user demands and requirements.

The market trend towards software-centric solutions is expected to continue over the coming years. While this provides an overall significant growth opportunity for Napatech given its product strategy, the same trend could potentially negatively affect Napatech customer markets. This trend could displace current products, could lengthen sales cycles or defer business to later time frames, which could affect timing of revenue, predictability of revenue forecasting, and increases in competitive threats that affect closing sales in a timely manner. Napatech is working closely with its largest customers to help them navigate this transition as smoothly as possible.

B.5 Description of the Group The Group consists of the parent company, Napatech A/S, with wholly owned subsidiaries Napatech Inc (US).

B.6 Interests in the Company and voting rights

Shareholders owning 5% or more of the Shares have an interest in the Company’s share capital that is notifiable pursuant to Danish Capital Markets Act. The table below shows the ownership percentage held by such notifiable shareholders as registered in the VPS on 23 April 2019:

Shareholder Number of Shares Percent

VERDANE CAPITAL VIII K/S 18,680,222 28.13 % SUNDT AS 8,444,445 12.71 % LUDVIG LORENTZEN AS 4,444,445 6.69 %

B.7 Selected historical key financial information

The following consolidated financial information has been derived from Napatech's audited consolidated financial statements for the financial years 2017 and 2018.

Consolidated income statement

In DKK ’000

Year ended

31 December

2018

(audited)

2017

(audited)


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Revenue .................................................................................... 106,153 206,046

Cost of goods sold ...................................................................... (57,060) (66,611)

Gross profit.............................................................................. 49,093 139,435

Other operating income 599

Research and development costs .................................................. (18,460) (17,907)

Selling and distribution expenses .................................................. (66,735) (71,420)

Administrative expenses .............................................................. (39,469) (36,223)

Operating profit before depreciation, amortization and

impairment ..............................................................................

(74,972)

13,885

Depreciation amortization and impairment ..................................... (107,558) (37,755)

Operating result ...................................................................... (182,530) (23,870)

Finance income .......................................................................... - -

Finance costs ............................................................................. (9,576) (5,956)

Result before tax ..................................................................... (192,106) (29,826)

Income tax ............................................................................... (12,808) 5,395

Result for the period ................................................................ (179,298) (24,431)

Consolidated statement of financial position

As of

31 December

In DKK ’000 2018

(audited)

2017

(audited)

ASSETS

Development projects, completed .............................................. 29,773 68,416

Development projects, in progress ............................................. 8,194 46,342

Patents 4,972 5,412

Other intangible assets ............................................................. - 50

Intangible assets .................................................................. 42,939 120,220

Plan and equipment .................................................................. 1,932 5,166 Leasehold improvements........................................................... 605 1,079

Tangible assets ..................................................................... 2,537 6,245

Deferred tax asset .................................................................... - -

Leasehold deposits ................................................................... 2,407 2,283

Other non-currents assets .................................................... 2,407 2,283

Non-current assets................................................................ 47,883 128,748

Inventories .............................................................................. 17,485 36,124

Trade receivables ..................................................................... 25,305 51,938

Other receivables ..................................................................... 13,814 3,899

Income tax receivable .............................................................. 5,487 5,500

Cash and cash equivalents ........................................................ 17,159 39,967

Current assets ....................................................................... 79,250 137,428

Total assets ........................................................................... 127,133 266,176

EQUITY AND LIABILITES

Issued capital .......................................................................... 7,981 5,969

Share premium ........................................................................ 247,552 219,729

Foreign currency translation reserve ........................................... 215 (9)

Other capital reserves ............................................................... 4,971 6,361

Retained earnings .................................................................... (226,000) (48,883)

Equity .................................................................................... 34,719 183,167

Deferred tax liability ................................................................. - 7,425

Interest-bearing loans and borrowings ....................................... - -

Other non.current financial liabilities 13,391 -

Non-current liabilities ........................................................... 13,391 7,425

Interest-bearing loans and borrowings ........................................ 44,701 35,109

Trade payables ........................................................................ 5,959 26,130

Other payables ........................................................................ 11,099 13,855 Derivative financial instruments ................................................. 13,720 -

Provisions ............................................................................... - 490

Deferred revenue 69

Current liabilities .................................................................. 79,023 75,584


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As of

31 December

In DKK ’000 2018

(audited)

2017

(audited)

Total liabilities ...................................................................... 92,414 83,009

Total equity and liabilities ..................................................... 127,133 266,176

Consolidated statement of cash flows

As of

31 December

In DKK ’000 2018

(audited)

2017

(audited)

Cash flow from operating activities (44,276) 12,706

Net cash flows from operating activities ............................... (47,899) 15,081

Net cash flow from investing activities ................................. (33,643) (53,295)

Net cash flows from financing activities ................................ 58,841 31,814

Net change in cash and cash equivalents .............................. (22,701) (6,400)

Cash and cash equivalents at the end of the period .............. 17,159 39,967

B.8 Selected key pro forma

financial information

Not applicable

B.9 Profit forecast or estimate Not applicable

B.10 Audit report qualifications There are no qualifications in the auditor’s reports.

B.11 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.

Section C - Securities

C.1 Type and class of securities admitted to trading and identification number

The Private Placement Shares issued in the Private Placement are ordinary Shares in the Company. The Private Placement Shares were registered in the VPS under a separate securities number, ISIN DK0061137965, pending the publication of this Prospectus. Following the publication of this Prospectus, the Private Placement Shares will be registered under the same ISIN as the Company’s other Shares (i.e. ISIN DK0060520450) and become listed and tradable on the Oslo Stock Exchange.

The Offer Shares issued in the Subsequent Offering will be ordinary Shares in the Company. The Offer Shares will be registered in book-entry form with the VPS under the Company's ISIN number DK0060520450. The Offer Shares will be listed and tradable on Oslo Stock Exchange as soon as the share capital increase in relation to the Subsequent Offering is registered with the Danish Central Business Register and the Offer Shares have been issued in the VPS, expected on or about 20 May 2019.

The Executive Offer Shares issued in the Executive Offering are ordinary Shares in the Company. The Executive Offer Shares were registered in the VPS under a separate securities number, ISIN DK0061137965, pending the publication of this Prospectus. Following the publication of this Prospectus, the Executive Offer Shares will be registered under the same ISIN as the Company’s other Shares (i.e. ISIN DK0060520450) and become listed and tradable on the Oslo Stock Exchange.


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C.2 Currency of issue NOK

C.3 Number of shares in issue and par value

As of the date of this Prospectus, the Company's share capital is DKK 16,600,388.25 divided into 66,401,553 Shares, each with a nominal value of DKK 0.25.

C.4 Rights attaching to the securities

All Shares in the Company are equal in all respects and there are no different voting rights or classes of shares. Each Share carries one vote at the Company’s general meeting.

The New Shares are in all respects equal to the existing Shares of the Company from the date of registration with the Danish Business Authority and the VPS, including the right to any dividend payments.

C.5 Restrictions on transfer All of the Company's shares, including the New Shares, are freely transferable pursuant to the Company's Articles of Association.

Transfer of the Shares is subject to any applicable restrictions stipulated by law applicable to an investor.

C.6 Admission to trading The Company's Shares are listed on the Oslo Stock Exchange. No application has been made for listing of the Company's share on other markets than the Oslo Stock Exchange.

C.7 Dividend policy The Company has not paid or proposed dividend payments during the financial period covered by this Prospectus.

Section D – Risks

D.1 Key risks specific to the Company or its industry

The market for reconfigurable computing solutions is difficult to predict

The Group depends on growth in markets relating to reconfigurable computing and software application acceleration

The Group faces significant competition

Introduction of solutions and products based on new technologies could gain wide market adoption and displace the Group’s existing solutions and products

The Group’s performance will depend on successful introduction of new solutions and products and enhancements to existing solutions and products

The Group relies on the availability of licenses to third-party software and other intellectual property

The Group depends on protecting its proprietary technology and intellectual property rights

The Group might unintentionally violate third party intellectual property rights

Third parties might illegally copy the Group’s solutions and products or violate its patents and utility models

Defects in the Group’s solutions and products could harm their reputation and business

The Group’s quarterly and annual operating results might vary

significantly and be difficult to predict

The Group has long and unpredictable first-time sales cycles

The Group is dependent on its customers’ sales performances

Selling price of the Group’s solutions and products might be subject to significant competitive pricing

The Group is exposed to risks associated with changes in the general economy


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The Group is exposed to risks associated with international

operations

The Group might be required to grow in size, and might experience difficulties in managing this growth

The Group is dependent on attracting and retaining key personnel

The Group is unable to increase market awareness

Group expansion through acquisitions or investments

The Group relies on contract manufacturers to manufacture certain products

Governmental regulations affecting the export of the Group’s

solutions and products

International regulations regarding environment and materials effect on Group

Risks associated with exchange rate fluctuations

Risks related to tax issues as the Group operates in several jurisdictions

The Group may require additional equity in the future, which may not be available

There are risks associated with impairment of the Company’s development projects

The business of the Group faces liquidity risk that may have a material adverse impact on the Group

D.3 Key risks specific to the securities

The market price of the Shares may be highly volatile and investors in the Shares could suffer substantial losses

Future share capital measures may lead to a substantial dilution of the shareholdings of the Company’s shareholders

The Company will have broad discretion over the use of the net proceeds from the Private Placement, the Subsequent Offering and the Executive Offering and may not use the proceeds effectively

The Company may be unwilling or unable to pay dividends in the future

Pre-emptive rights may not be available to U.S. or other shareholders

Investors may not be able to exercise their voting rights for Shares registered in a nominee account

Investors may be unable to recover losses in civil proceedings in

jurisdictions other than Denmark

Danish law may limit shareholders’ ability to bring an action against the Company

Shareholders are subject to exchange rate risk as the Shares are priced in NOK and any future payments of dividends on the Shares will be denominated in NOK

Market interest rates may influence the price of the Shares


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Section E – Listing

E.1 Net proceeds and estimated expenses

The Company will bear the fees and expenses related to the Private Placement, the Subsequent Offering and the Executive Offering, which are estimated to amount to approximately NOK 4.5 million, and, thus, the total net proceeds from the Private Placement, the Subsequent Offering and the Executive Offering are estimated to amount to approximately NOK 72.2 million.

E.2a Reasons for the share issue

under the Listing and use of proceeds

Net proceeds from the Private Placement, the Subsequent Offering and

the Executive Offering will be used to finance further growth of the Company and for general corporate purposes.

E.3 Terms and Conditions for the offer

The Subsequent Offering was resolved by the Company's Board of Directors pursuant to the board authorisation granted by the Company's extraordinary general meeting on 15 march 2019. The Subsequent Offering consists of an offer by the Company to issue 16,666,667 Offer Shares, each with a par value of DKK 0.25, at a Subscription Price of NOK 1.50 per Offer Share. The Subsequent Offering is fully underwritten by the syndicate of applicants in the Private Placement.

E.4 Material and conflicting interests

The Manager and their 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, their employees and any affiliate may currently own Shares in the Company. The Manager do 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 has received a commission fee of a fixed percentage of the gross proceeds raised in the Private Placement and the Subsequent Offering, and, as such, had an interest in the Private Placement and the Subsequent Offering.

Other than what is set out above, the Company is not aware of any interest of natural or legal persons involved in issuance of the New Shares.

E.5 Selling shareholders and lock-up agreements

There will be no selling shareholders.

There are no lock-up restrictions on the New Shares.

E.6 Dilution resulting from the share issue under the Listing

The Private Placement, the Subsequent Offering and the Executive Offering will jointly result in an immediate dilution of approximately 62% for Eligible Shareholders who do not participate in the Subsequent Offering, the Executive Offering and the Private Placement.

E.7 Estimated expenses charged to investor

Not applicable. No expenses will be charged to shareholders by the Company.


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RISK FACTORS

Investing in the Company involves a high degree of risk. Any investor in the Company should consider carefully the following risk factors, as well as the other information contained in this Prospectus. Should any of the following risks occur, it could have a material adverse effect on the Company’s business, prospects, results of operations, cash flows and financial position, and the price of the Company’s securities may decline, causing investors to lose all or part of their invested capital. However, additional risks not presently known to the Company or which the Company currently deems immaterial may also have a material adverse effect on the Company.

It is not possible to quantify the significance to the Company of each individual risk factor as each of the risk factors mentioned below may materialize to a greater or lesser degree and have a material adverse effect on the Company’s business, results of operations, cash flows and financial position, and the price of the Company’s securities may decline, causing investors to lose all or part of their invested capital. The order in which the individual risks are presented below is not intended to provide an indication of the likelihood of their occurrence nor of the severity or significance of individual risks.

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 all or part of their investment.

Risk factors related to the Group and the industry in which it operates

2.1.1 The market for reconfigurable computing solutions is difficult to predict

Reconfigurable computing solutions are part of a new and rapidly evolving market for software application acceleration, which has significant potential. As an emerging market opportunity, it is difficult to predict the exact timing of customer needs for reconfigurable computing solutions.

If the market for reconfigurable computing solutions does not evolve as the Group anticipates this could have a material adverse effect on the Group’s business, prospects, financial position and results of operations.

2.1.2 The Group depends on growth in markets relating to reconfigurable computing and software application

acceleration

Demand for the Group’s solutions and products is linked to the size, growth and complexity of the reconfigurable computing solution market and the demand for software acceleration solutions.

The Group’s future financial performance will depend in large part on continued growth in the demand from customers investing in solutions for accelerating performance and the size of such investments. Group performance is also related to a continued growth in data volumes driven by cybersecurity, increased smartphone and cloud services usage, the successful deployment of next generation mobile infrastructures including SDN and NFV technologies and the continued need for more sophisticated and complex software applications related to these markets.

If these markets fail to grow, or grow more slowly than the Group currently anticipates this could have a material adverse effect on the Group’s business, prospects, financial position and results of operations.

2.1.3 The Group faces significant competition

The markets in which the Group operates are competitive, the technological development is rapid, and the Group might in the future also be exposed to increased competition from current market players or new entrants to the market.

The Group’s solutions and products might face competition based on many different factors, including market preference for technology, performance and functionality, breadth of product portfolio, product reliability and quality, product support, prices, effectiveness of marketing and sales efforts and brand awareness.

Competition in the markets where the Group operates might lead to reduced profitability or decline in opportunities. The failure of the Group to be competitive and respond to increased competition might have a material adverse effect on its business, prospects, financial position and operating results.

2.1.4 Introduction of solutions and products based on new technologies could gain wide market adoption and displace the Group’s existing solutions and products

Introduction of solutions and products, including new technologies, could cause the Group’s existing solutions and products to be less attractive to customers. The Group might not be able to successfully anticipate or adapt to changing technologies or customer requirements on a timely basis.

If the Group fails to keep up with technological changes or to convince the customers of the value of their, the Group’s business, operating results and financial condition could be materially and adversely affected.

2.1.5 The Group’s performance will depend on successful introduction of new solutions and products and enhancements to existing solutions and products

The Group’s continued success depends on the ability to identify new market needs and develop new solutions and products to address those needs.


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The introduction of new solutions and products or product enhancements might shorten the life cycle of existing solutions and products, or replace sales of some of the current solutions and products, thereby offsetting the benefit of even a successful product introduction, and might cause customers to defer purchasing of existing solutions and products in anticipation of the new solutions and products.

There is a risk that the Group will not be able to successfully commercialize the new solutions and products, and that the market adoption will take longer than the Group expects or that the market penetration will not be as big as the Group predicts. If any of these risks were to occur, it could have a material adverse effect on the Group’s business, prospects, financial position and results of operations.

2.1.6 The Group relies on the availability of licenses to third-party software and other intellectual property

The Group’s solutions and products include software or other intellectual property licensed from third parties, and the Group also uses software and other intellectual property licensed from third parties in the development of these solutions and products.

The inability to obtain or maintain certain licenses or other rights or the need to engage in litigation regarding these matters, could result in delays in the release of solutions and products and could otherwise disrupt the Group’s business, until equivalent technology can be identified, licensed or developed, and integrated into the solutions and products.

These events could have a material adverse effect on the Group’s business, operating results and financial condition.

2.1.7 The Group depends on protecting its proprietary technology and intellectual property rights

The success of the Group’s business depends on its ability to protect and enforce trade secrets, trademarks, copyrights, patents and other intellectual property rights.

The process of obtaining patent protection is expensive and time-consuming, and the Group might not be able to pursue all necessary or desirable patent applications. The Group might choose not to seek patent protection for certain innovations and might choose not to pursue patent protection in certain geographies.

Failure to protect the Group’s proprietary technology and property rights could lead to a competitive disadvantage and

result in a material adverse effect on the Group’s business, prospects, financial position and results of operations.

2.1.8 The Group might unintentionally violate third party intellectual property rights

Technologies evolve fast in the areas in which the Group operates, and it cannot be ruled out that the Group has incorporated or will in the future incorporate, without consent, elements in its solutions and products, which are protected by third-party intellectual property rights.

As the number of solutions and products and competitors in the reconfigurable computing solutions and related markets increases and overlaps occur, potential violations of intellectual property rights might increase. If the Group violates third party rights and become involved in infringement disputes, the outcome could result in the Group ceasing development of solutions and products, withdrawing them, paying a license fee to a third party or being liable to pay damages.

This could involve significant obligations and/or costs to the Group, which could have a material adverse effect on the Group’s business, prospects, financial position and results of operations.

2.1.9 Third parties might illegally copy the Group’s solutions and products or violate its patents and utility models

Illegal copies of the Group’s solutions and products or misuse of its brand and/or patents might cause loss of revenue and damage to the Group’s brand.

Unauthorized parties might attempt to misappropriate, reverse engineer or otherwise obtain and use them. The Group might be unable to determine the extent of any unauthorized use or infringement of their solutions and products, technologies or intellectual property rights.

These risks could have a material adverse effect on the Group’s business, prospects, financial position and results of operations.

2.1.10 Defects in the Group’s solutions and products could harm their reputation and business

The Group’s solutions and products are complex and might contain undetected defects or errors, especially when first introduced or when new versions are released. Defects in the Group’s solutions and products might lead to product returns and require implementation of design changes or software updates. These risks could have a material adverse effect on the Group’s business, prospects, financial position and results of operations.

2.1.11 The Group’s quarterly and annual operating results might vary significantly and be difficult to predict

Historically, the quarterly and annual operating results have varied from period to period. The Group expects these fluctuations to continue due to a variety of factors that are outside of the Group’s control such as: fluctuations in demand for Napatech solutions and products and the timing of orders from the Group’s customers; seasonal buying patterns of customers dependent on their fiscal year; delayed development of sales at new customers; industry related business softness; change in investment climate within the Group’s core markets; general international economic conditions.


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Any one of these factors or the cumulative effect of some of the factors mentioned might result in significant fluctuations in the Group’s quarterly and annual operating results, including fluctuations in the key metrics. The unpredictability could result in failure to meet the business objectives or the expectations of analysts or investors for any period.

2.1.12 The Group has long and unpredictable first time sales cycles

The typical sales cycles for the first design win including volume sale can be long and unpredictable, and the sales efforts require considerable time and resources to complete successfully.

The sale efforts typically involve evaluation by the customer of the use and benefits of the solutions and products followed by customer integration and qualification before volume purchase commences. The duration of the sales cycles typically ranges from three to twelve months but can be more than twelve months.

Due to the long and uncertain sales cycle, it is difficult to predict when the customer starts volume purchasing of the solutions and products and as a result the operating results might vary significantly.

2.1.13 The Group is dependent on its customers’ sales performances

As the majority of the Group’s products are fully integrated into the end-user solution marketed and sold by the Group’s customers, the product sales are fully dependent on the capabilities of Napatech customers in selling their solutions to their end-user customers in their target markets.

As product sales generally follow the customer’s growth in end-user sales, significant changes in end-user demand can have a material adverse effect on the Group’s operating results.

2.1.14 Selling price of the Group’s solutions and products might be subject to significant competitive pricing

The average selling prices of the Group’s solutions and products are related to customer volume purchase levels, competition and the maturity of the product; this development might negatively impact gross profits. In the future, it is possible that the average selling prices of the Group’s solutions and products will decrease in response to competitive pricing pressures or new product introductions.

In order to maintain profitability, the Group must develop and introduce new solutions and products and product

enhancements on a continuous basis and continually focus on product cost optimization. Failure to do so would cause the net revenue and gross profits to decline, which would harm its business and operating results.

2.1.15 The Group is exposed to risks associated with changes in the general economy

The Group’s operational performance could be negatively affected by changes in the economy in general or reduced information technology and network infrastructure spending especially within the markets and industries where the Group operates.

The purchase of the solutions and products might involve a significant commitment of capital and other resources. Therefore, weak global economic conditions or a reduction in information technology and network infrastructure spending could have a material adverse effect on the Group’s business, prospects, financial position and results of operations.

2.1.16 The Group is exposed to risks associated with international operations

In addition to Denmark, the Group currently has business operations and offices in USA. The Group’s operations in international markets are subject to risks inherent in international business operations, including, but not limited to, general economic conditions in each foreign country in which the Group will operate, overlapping differing tax structures, problems related to management of an organization spread over various countries, unexpected changes in regulatory requirements, compliance with a variety of foreign laws and regulations, and longer accounts receivable payment cycles in certain countries.

The materialization of such risks might have a material adverse effect on the Group’s business, prospects, financial position and operating results.

2.1.17 The Group might be required to grow in size, and might experience difficulties in managing this growth

As the Group’s development and commercialization plans and strategies for its new solutions and products continue to develop, it expects it will need additional managerial, operational, sales, marketing, financial and other resources. As the Group’s operations expand, it expects to enter into additional relationships with various strategic partners, suppliers and other third parties. The Group’s business, results of operations and financial position and the development and commercialization of its new solutions and products will depend, in part, on its ability to manage future growth effectively.

As a result, the Group must manage its development efforts effectively and hire, train and integrate additional personnel as required. To the extent that the Group is unable to accomplish these tasks, it could be prevented from successfully managing its business, which could have a materially adverse effect on its business, prospects, financial position and results of operation.


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2.1.18 The Group is dependent on attracting and retaining key personnel

The Group’s success depends, to a significant extent, on the continued services of the individual members of its management team, who have substantial experience in the industry and in the local jurisdictions in which it operates, as well as its ability to attract and retain skilled professionals with appropriate experience and expertise.

The Group’s ability to continue to identify and develop opportunities depends on the management’s knowledge of, and expertise in, the industry and such local jurisdictions and on their external business relationships, and the Group’s business is dependent on skilled technical and other personnel to develop, operate, sell and provide technical services and support for its business.

Failure to attract or retain management and key employees could result in an inability to properly manage the Group and to maintain the appropriate technological or business improvements. It can also lead to an inability to take advantage of new opportunities that might arise, which might in turn lead to a subsequent decline in competitiveness that could have a material adverse effect on the Group’s business, prospects, financial position and operating results.

2.1.19 The Group is unable to increase market awareness

The reconfigurable computing solution market is still emerging and the Group has not yet established broad market awareness of Napatech solutions and products and their associated benefits. Market awareness of the Group’s value proposition related to its solutions and products is essential for continued growth.

If marketing efforts are unsuccessful in creating market awareness of the Group and its solutions and products, then the Group’s business will be adversely affected, and the Group will not be able to achieve sustainable growth.

2.1.20 Group expansion through acquisitions or investments

The Group might decide to expand through acquisitions or investments in other companies or technologies. The effort during this process might affect day-to-day operational activities. An acquisition or investment might result in unforeseen operating difficulties and expenditures as well as difficulties associated with integrating the businesses, technologies, solutions and products, personnel or operations of the acquisition.

These challenges related to acquisitions or investments could adversely affect the business, operating results and financial condition of the Group.

2.1.21 The Group relies on contract manufacturers to manufacture certain products

If the Group fails to manage the relationship with its current US contract manufacturer or if the contract manufacturer experiences delays, disruptions, capacity constraints or quality problems in their operations, shipping of products to the Group’s customers could be impacted.

If the Group is required to change contract manufacturer it might incur increased costs to qualify a new contract manufacturer and initiate production.

Failure to manage the Group’s relationships with contract manufacturers successfully could negatively impact its business.

2.1.22 Governmental regulations affecting the export of the Group’s solutions and products

Some foreign governments may impose export license requirements and restrictions on the import or export of certain technologies. Some of the Group’s solutions and products may become subject to export control.

Governmental regulation of imports or exports related to certain technologies might change from time to time and the Group’s usage of new technologies might also be affected by regulations. Failure to obtain required export approval for the solutions and products could adversely affect revenue; result in penalties, costs and restrictions on export privileges.

2.1.23 International regulations regarding environment and materials effect on Group

The Group is subject to various international laws and regulations including electrical- and laser safety, electromagnetic compatibility, hazardous material content of the products, recycling of electronic equipment and content of conflict minerals.

As the Group conducts business internationally, there is a high focus on adhering to laws and regulations applicable to the manufacture of electrical equipment, including the Group’s products. The Group has policies and procedures in place to ensure that products and manufacturing of the products are aligned to international requirements for markets where the products are sold.

The Group adheres to several international environmental and business operations requirements. If there are changes to international regulation, their interpretation and the jurisdiction where they are applicable the Group might be required to reengineer the products, change manufacturing processes or establish other instruments for managing the changed regulation, which could have a material adverse effect on the business, financial condition and reputation of the Group.


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Risk factors related to the Group's financing

2.2.1 The Group may require additional equity in the future, which may not be available

The Group's future capital requirements and level of expenses depend on several factors, including, among other things, its growth strategy, investments requirements, timing and terms on which contracts can be negotiated, the amount of cash generated from operations, the level of demand for the Group's services and products and general industry conditions. There can be no assurance that the Group's business will generate sufficient cash flow from operations to service its debt and fund future capital requirements and expenses. In the event that the Group's existing resources are insufficient to fund the Group's business activities, the Group may need to raise additional funds through debt or additional equity financing. The Group cannot guarantee that it will be able to obtain additional funding at all or on terms acceptable to the Group. Failure to do so could have a material adverse effect on the Group's business, operations and financial conditions.

2.2.2 Risks associated with impairment of development projects

The Group has capitalized several of its projects costs related to development of products in its current product portfolio, and development projects (both completed and in progress) constitutes a significant portion of the total assets in the Group’s Financial Statements (as defined below). At the same time, the Group has recently experienced a substantial decrease in revenue from operations. Such decrease in revenue for some of the Company’s products may entail a longer lifecycle to fully cover the capitalized development costs. This could mean that products are less valuable at the end of the (longer) lifecycle, which, thus, entail a risk for the Group not being able to fully cover the initial investment in the product.

Even though the above scenario does not impact the Group’s available liquidity, any impairment loss recognized may have a material adverse effect on the Group’s overall financial position and equity.

2.2.3 The business of the Group faces liquidity risk that may have a material adverse impact on the Group

The Group’s business faces liquidity risk, meaning the Group could come into a situation where it does not have sufficient

liquidity to cover its financial obligations, which may have a material adverse impact on the Group’s business, results and operations, financial position and future prospects.

In particular, the ongoing shift in the market in which the Group operates from hardware-based solutions to software-based solutions, may affect the Group’s available liquid resources from outstanding receivables from customers. The trend could displace products in the Group’s current portfolio and/or entail an increase in competitive products affecting sales prices etc., which will decrease the Group’s revenue. See Section 6.8 "Trend information and significant changes in the Group's activities" for further information on the shift.

2.2.4 Risks associated with exchange rate fluctuations

The Group has operations that generate significant cash flows in primarily USD. The Group also comprises businesses with various functional currencies (DKK and USD). Although the Group might undertake limited hedging activities in an attempt to reduce certain currency fluctuation risks, these activities provide only limited protection against currency related losses.

2.2.5 Risks related to tax issues

The Company is incorporated and tax resident in both Denmark and USA (through Napatech A/S and Napatech Inc. respectively), and sells to customers in several jurisdictions. The overall tax liability will depend on where the source of revenues is and/or where profits are accumulated and subject to taxation, as the different jurisdictions have very different tax regimes and taxation rates.

The taxation rules to which the Group is subject are of a complicated nature, and differences in interpretation between the Group and the relevant tax authorities might lead to the Group being subject to unexpected claims for unpaid taxes or sanctions as a consequence of breach of applicable tax legislation. The tax liability might also depend on the tax residence of the shareholders (and in certain instances indirect shareholders) of the Company, which might vary from time to time as the Shares are subject to trading.

The Group’s interpretation and implementation of applicable legislation, tax agreements and regulations and/or interpretation and implementation of the administrative practice of the relevant authorities might not be correct, and there is a risk that such rules might be subject to change, possibly with retroactive effect. The Group’s tax situation, including its future effective tax rate and the usability of its net operating loss carry forwards, might change as a result of determinations by relevant tax authorities and could have a material adverse effect on the Group’s business, prospects, financial position and results of operations.

Risk factors related to the securities

2.3.1 The market price of the Shares may be highly volatile and investors in the Shares could suffer substantial losses

The market price of the Shares may be highly volatile and investors in the Shares could suffer substantial losses. An investment in the Shares involves a high degree of risk, and investors should be able to withstand substantial losses and/or wide fluctuations in the market price of the Shares. The market price of the Shares may decline as a result of a number of factors, including but not limited to, the risk factors mentioned in this Section as well as quarterly variations


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in operating results, adverse business developments, changes in financial estimates and investment recommendations or ratings by securities analysts, announcements by beyond the Group or its competitors of new product and service offerings, significant contracts, acquisitions or strategic relationships, publicity about the Group, its products and services or its competitors, lawsuits against the Group, unforeseen liabilities, changes in management, changes to the regulatory environment in which it operates or general market conditions.

In addition, the stock markets in general, and the market for developing tech companies in particular, have experienced high volatility that has often been unrelated to the operating performance of the issuer. No assurances can be given that stock market fluctuations, even if otherwise unrelated to the Group’s activities, will not have a material adverse effect on the market price of the Company’s Shares.

2.3.2 Future share capital measures may lead to a substantial dilution of the shareholdings of the Company’s shareholders

The Company may require additional capital in the future to finance its business activities and growth plans. Raising additional capital or the acquisition of other companies or shareholdings in companies by means of yet to be issued Shares of the Company as well as any other capital measures may lead to a considerable dilution of shareholdings in the Company.

2.3.3 The Company will have broad discretion over the use of the net proceeds from the Private Placement, the Subsequent Offering and the Executive Offering and may not use it effectively

The Company will have broad discretion over the use of net proceeds received from the Private Placement, the Subsequent Offering and the Executive Offering and such proceeds may not be used as currently planned and may not be used effectively. A failure to apply the net proceeds from the Private Placement, the Subsequent Offering and the Executive Offering effectively or as currently planned could have a material adverse effect on the Company’s business, prospects, financial position and results of operations.

2.3.4 Pre-emptive rights may not be available to U.S. or other shareholders

Under Danish law, existing shareholders will have pre-emptive rights to participate on the basis of their existing share ownership in the issuance of any new shares for cash consideration, unless those rights are waived by a resolution of the shareholder at a general meeting or the shares are issued on the basis of an authorization to the board of directors under which the board may waive the pre-emptive rights. Shareholders in the United States, however, may be unable to exercise any such rights to subscribe for new shares unless a registration statement under the U.S. Securities Act is in effect in respect of such rights and shares or an exemption from the registration requirements under the U.S. Securities Act is available. Shareholders in other jurisdictions outside Denmark may be similarly affected if the rights and the new shares being offered have not been registered with, or approved by, the relevant authorities in such jurisdiction. The Company is under no obligation to file a registration statement under the U.S. Securities Act or seek similar approvals under the laws of any other jurisdiction outside Denmark in respect of any such rights and shares. To the extent that the Company’s shareholders are not able to exercise their rights to subscribe for new shares, their proportional interests in the Company will be reduced and they may be financially diluted.

2.3.5 Transfer of Shares is subject to restrictions under the securities laws of the United States and other jurisdictions

The Shares have not been registered under the U.S. Securities Act or any U.S. state securities laws or any other jurisdiction outside of Denmark and are not expected to be registered in the future. As such, the Shares may not be offered or sold except pursuant to an exemption from the registration requirements of the US Securities Act and applicable securities laws.

2.3.6 Investors may not be able to exercise their voting rights for Shares registered in a nominee account

Beneficial owners of the Shares that are registered in a nominee account (e.g., through brokers, dealers or other third parties) may not be able to vote for 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 beneficial owners of the Shares will receive the notice for a general meeting in time to instruct their nominees to either effect a re-registration of their Shares or otherwise vote their Shares in the manner desired by such beneficial owners.

2.3.7 Investors may be unable to recover losses in civil proceedings in jurisdictions other than Denmark

The Company and each investor agree in this Prospectus that the courts of Norway, with Oslo as legal venue, shall have exclusive jurisdiction to settle any dispute which may arise out of or in connection with the Private Placement, the Subsequent Offering, the Executive Offering or this Prospectus. Consequently, it is not possible for investors to sue the Company in any other court in relation to the Private Placement, the Subsequent Offering, the Executive Offering and this Prospectus.

The Company is a public limited liability company organized under the laws of Denmark. The majority of the members of its Board of Directors and of the Company’s corporate management reside in Denmark and the USA. As a result, in relation to any claim not related to the Private Placement, the Subsequent Offering, the Executive Offering and this Prospectus it may not be possible for investors to effect service of process in other jurisdictions upon such persons or the Company, to enforce against such persons or the Company judgments obtained in non-Danish courts, or to enforce judgments on such persons or the Company in other jurisdictions.


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2.3.8 Danish law may limit shareholders’ ability to bring an action against the Company

The rights of holders of the Shares are governed by Danish law and by the Articles of Association. These rights may differ from the rights of shareholders in other jurisdictions. In addition, it may be difficult to prevail in a claim against the Company under, or to enforce liabilities predicated upon, securities laws in jurisdictions other than Denmark.

2.3.9 The Company may be unable or unwilling to pay any dividends in the future

The Company has not distributed any dividends as of the date of this Prospectus, and does not expect to do so in the near future.

Further, the Company may be unable or unwilling to pay dividends in future years, see Section 12.10 "Dividends" for conditions relating to dividend payments. The amount of dividend paid by the Company, if any, for a given financial period, will depend on, among other things, the Company's future operating results, cash flows, financial position, capital requirements, the sufficiency of its distributable reserves, credit terms, general economic conditions, legal restrictions and other factors that the Company may deem to be significant from time to time.

2.3.10 Shareholders are subject to exchange rate risk

The Shares are priced in NOK, and any future payments of dividends on the Shares will be denominated in DKK. Accordingly, investors outside Norway are subject to adverse movements in the NOK against their local currency, as the price received in connection with any sale of the Shares could be materially adversely affected, and investors outside Denmark are subject to adverse movements in the DKK against their local currency, as the foreign currency equivalent of any dividends paid on the Shares could be materially adversely affected.

2.3.11 Market interest rates may influence the price of the Shares

One of the factors that may influence the price of the Shares is its annual dividend yield as compared to yields on other financial instruments. Thus, an increase in market interest rates will result in higher yields on other financial instruments, which could adversely affect the price of the Shares.


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STATEMENT OF RESPONSIBILITY

This Prospectus has been prepared by Napatech A/S to provide information in connection with the Listing and the Subsequent Offering.

The Board of Directors of the Company 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.

Soeborg, 29 April 2019

The Board of Directors of Napatech A/S

Lars Boilesen Chairman

Bjørn Erik Reinseth Board member

Christian Jebsen Board member

Howard Bubb Board member

Henry Wasik Board member


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GENERAL INFORMATION

Presentation of financial information

4.1.1 Financial information in the Prospectus

The Group's audited consolidated financial statements as at and for the years ended 31 December 2018 and 2017 (together the "Audited Financial Statements") have been prepared in accordance with International Financial Reporting Standards as approved by the EU ("IFRS"). The IFRS principles have been applied consistently for 2018 and 2017. For further information on the Company's accounting principles, please refer note 2 to the Audited Financial Statements for 2018.

The Audited Financial Statements have been audited by Ernst & Young.

The Audited Financial Statements are incorporated by reference to the Prospectus, see Section 16.1 "Incorporation by reference".

4.1.2 Rounding

Certain figures included in this Prospectus have been subject to rounding adjustments (by rounding to the nearest whole number or decimal or fraction, as the case may be). Accordingly, figures shown for the same category presented in different tables may vary slightly. As a result of rounding adjustments, the figures presented may not add up to the total amount presented.

Forward-looking statements

This Prospectus includes "forward-looking" statements, including, without limitation, projections and expectations regarding the Group’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" and similar expressions, 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 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 forward-looking 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.

By their nature, forward-looking statements involve and are subject to known and unknown risks, uncertainties and assumptions as they relate to events and depend on circumstances that may or may not occur in the future. Because of these known and unknown risks, uncertainties and assumptions, outcomes may differ materially from those set out in any forward-looking statement. Important factors that could cause those differences include, but are not limited to:

implementation of its strategy and its ability to further expand its business and growth; technology changes and new products and services introduced into the Group’s market and industry; ability to develop new products and enhance existing products; the competitive nature of the business the Group operates in and the competitive pressure and changes to the

competitive environment in general; loss of important clients; earnings, cash flow, dividends and other expected financial results and conditions; fluctuations of exchange and interest rates; changes in general economic and industry conditions; political and governmental and social changes; changes in the legal and regulatory environment; environmental liabilities; changes in consumer trends; access to funding; and legal proceedings.

Additional factors that could cause the Group’s actual results, performance or achievements to differ materially include, but are not limited to, those discussed under Section 2 "Risk Factors". Prospective investors in the Shares are urged to read all sections of this Prospectus and, in particular, Section 2 "Risk Factors" for a more complete discussion of the factors that could affect the Group’s future performance and the industry in which the Group operates when considering an investment in the Company.


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Given the aforementioned uncertainties, prospective investors are cautioned not to place undue reliance on any of these forward-looking statements.

Third party information

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.


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THE PRIVATE PLACEMENT, THE SUBSEQUENT OFFERING AND THE EXECUTIVE OFFERING

This Section provides information on the completed Private Placement, the Subsequent Offering and the completed Executive Offering. Please note that the Offer Shares issued in the Private Placement, and the Executive Offer Shares issued in the Executive Offering, have already been subscribed, paid for and issued.

Background and use of net proceeds from the Private Placement, the Subsequent Offering and the Executive Offering

Net proceeds from the Private Placement, the Subsequent Offering and the Executive Offering will be used to finance further growth of the Company, and primarily to finance development activities in new higher growth product lines in Cybersecurity and Virtualization Acceleration to accelerate delivery of these new products to the market in 2019 and 2020, as well as for general corporate purposes. With new equity and the Company's baseline case, Napatech expects to be fully funded throughout 2019 and to become cash generating in 2020. Specifically Napatech wants to leverage its expertise in FPGA solutions to innovate new higher growth product lines in Cybersecurity and Virtualization Acceleration. In addition, Napatech will focus on new and additional engineering development to accelerate delivery of these new products to the market in 2019 and 2020. Further, the Company will enhance its go-to-market strategy, sales and marketing to maximize the revenue impact from new products while the market for Smart NICs is expanding. The proceeds from the Private Placement will also generally strengthen the Company's balance sheet.

The Private Placement

On 22 February 2019, the Company announced that it had carried out the Private Placement raising gross proceeds of NOK 50 million. The Private Placement consisted of 33,333,333 Private Placement Shares, at a Subscription Price of NOK 1.50 per Private Placement Share.

The Private Placement Shares were resolved issued by the Board of Directors on 15 March 2019 pursuant to an authorisation by an extraordinary general meeting in the Company held on 15 March 2019. Listing of the Private Placement Shares on the Oslo Stock Exchange is subject to the publication of this Prospectus.

5.2.1 Resolution relating to the issue of the Private Placement Shares

The Private Placement was resolved by the Company's Board of Directors pursuant to board authorization granted by the Company’s extraordinary general meeting on 15 March 2019, after which the following new provision was included in the Company's articles of association:

5. Capital Increase

(…)

5.3

Until 31 May 2019, the Board of Directors is authorized to increase the share capital one or more times without right of pre-emption for the existing shareholders and up to a total nominal amount of DKK 8,333,333.25.

The increase in share capital shall, as determined by the Board of Directors, be at market terms and by cash contribution. Contribution cannot be made in part.

In connection with an increase in share capital the following shall also apply: (i) the shares shall be registered in the name of the holder and shall be entered in the Company's register of shareholders, (ii) the shares are negotiable instruments, (iii) the articles of association’s provisions on shares, including the pre-emptive right in Clause 5.1 and with regard to redemption and transferability, shall apply for the new shares, and thereby no new class of shares is created, and (iv) the new shares will have rights to dividend and other rights from the date of registration of the capital increase.

The Board of Directors is authorized to determine additional terms in connection with the capital increase and perform the amendments to the articles of association necessary to carry out the capital increase.

Based on the above authorization, the Board of Directors made the following resolution on 15 March 2019:

A. The share capital is increased by between nom. DKK 1.00 and nom. DKK 8,333,333.25 by cash contribution

of NOK 1.50 per nom. DKK 0.25 share.

B. The subscription for the shares takes place by deviation from the shareholders' pre-emption right in favour

of the subscribers of shares following the accelerated book building process as listed in Appendix 1.

C. In the event that the capital increase is over-subscribed, the shares will be distributed on individual basis.

D. The shares must be subscribed for in writing at the latest five (5) calendar days after the meeting of the

board of directors and paid in cash in full to the company within five (5) calendar days thereof.

E. The new shares will belong to the current class of shares and have the same rights.

F. The shares will carry the same pre-emptive right as the current shares and no special limitation to the shares’

future pre-emption right will apply in later capital increases.

G. No shareholder will be obliged to have their share(s) redeemed.

H. The shares will be negotiable instruments, registered in the name of the holders and entered in the company’s

register of shareholders.


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I. The shares will have rights to dividend and other rights from the date of registration of the capital increase.

J. The estimated costs related to the capital increase amounted to DKK 2,200,000.

K. The company’s articles of association, section 3.1, will be amended whereby the nominal share capital

amount will be raised to reflect the capital increase as set out in the draft revised articles of association.

L. Prospectus will be prepared and distributed afterwards in connection with the targeted emission. Shares are

issued on a separate ISIN-number until an approved prospectus is available.

The board of directors authorized and directed the management and the company’s attorney to take all necessary actions with respect to the above decisions.

The price for the Private Placement Shares was determined by the Company's Board of Directors following a book-building process conducted by the Manager for the Private Placement. Completion of the Private Placement implies a deviation from the existing shareholders pre-emptive rights to subscribe for and be allocated new shares. The Board has considered the Private Placement in light of the equal treatment obligations under the Norwegian Securities Trading Act and Oslo Børs' Circular no. 2/2014, and is of the opinion that the contemplated transaction is in compliance with these requirements. The Board is of the opinion that the Private Placement allows the Company to raise capital more quickly and, at a lower discount compared to a rights issue. Furthermore, the Board is of the opinion that, in the current market, a private placement has a larger possibility of success compared to a rights issue. The Board of Directors has also considered the dilutive effect of the share issue (taking into consideration the size of the Subsequent Offering), the investor interest in the transaction, the strengthening of the shareholder base that will be achieved by the Private Placement, the liquidity in the shares, transaction costs, transaction efficiency and completion risks.

5.2.2 Participation of major existing shareholders in the Private Placement

The following major existing shareholder (being shareholders owning more than 5% of the total amount of issued shares) subscribed for, and was allocated, Private Placement Shares:

Verdane Capital VIII K/S, being a major shareholder in the Company, was allocated 11,777,778 Private Placement Shares.

5.2.3 Issuance, delivery and listing of the Private Placement Shares

The share capital increase pertaining to the Private Placement was registered with the Danish Business Authority on 20 March 2019. As a result of such registration, together with the registration of the share capital increase pertaining to the Executive Offering, the Company’s share capital was increased to DKK 16,600,388.25, divided into 66,401,553 Shares, each with a nominal value of DKK 0.25.

The Private Placement Shares were registered in the VPS under a separate securities number, ISIN DK0061137965, pending the publication of this Prospectus. Following the publication of this Prospectus, the Private Placement Shares will be registered under the same ISIN as the Company’s other Shares (i.e. ISIN DK0060520450) and become listed and tradable on the Oslo Stock Exchange. The Private Placement Shares were issued pursuant the Danish Companies Act.

5.2.4 Shareholder rights relating to the Private Placement Shares

The Private Placement Shares issued in the Private Placement are ordinary Shares in the Company, each having a nominal value of DKK 0.25, all freely transferable. The Private Placement Shares were issued electronically in registered form and the Company’s registrar in the VPS is DNB Bank ASA, Registrars Department, P.O. Box 166 Sentrum, 0021 Oslo.

The Private Placement Shares rank pari passu in all respects with the Company’s other Shares and carry full shareholder rights in the Company from the time of registration of the share capital increase pertaining to the Private Placement with the Danish Business Authority. The Private Placement Shares are eligible for any dividends that the Company may declare after such registration. See Section 11 "Corporate Information and Description of Share Capital" below for a more detailed description of the Shares and rights attaching to them.

5.2.5 The Company’s share capital following the Private Placement

As of the date of this Prospectus, following the Private Placement and the Executive Offering, the Company’s share capital is DKK 16,600,388.25 divided into 66,401,553 Shares, each with a nominal value of DKK 0.25.

5.2.6 Material disparity between the subscription price in the Private Placement and effective cash cost to members of the Board of Directors and management

There is no material disparity between the subscription price in the Private Placement and the effective cash cost to members of the Board of Directors and management.

The Subsequent Offering

The Subsequent Offering consists of an offer by the Company to issue 16,666,667 Offer Shares, each with a par value of DKK 0.25, at a Subscription Price of NOK 1.50 per Offer Share. The Subsequent Offering is fully underwritten by the syndicate of applicants in the Private Placement. Please see more information in Section 5.3.7 “Underwriting of the Subsequent Offering”. The Subsequent Offering, and the listing of the Offer Shares on the Oslo Stock Exchange, is


27

subject to the publication of this Prospectus.

All offers and sales in the United States will be made only to QIBs in reliance on Rule 144A or pursuant to another exemption from the registration requirements of the U.S. Securities Act. All offers and sales outside the United States will be made in compliance with Regulation S of the U.S. Securities Act. This Prospectus does not constitute an offer of, or an invitation to purchase, the Offer Shares in any jurisdiction in which such offer or sale would be unlawful. For further details, see the "Important Information" at the beginning of the Prospectus and Section 17 "Selling and Transfer Restrictions".

5.3.1 Resolution to Issue the Offer Shares

The Subsequent Offering was resolved by the Company's Board of Directors pursuant to board authorisation granted by the Company's extraordinary general meeting on 15 March 2019, after which the following new provision was included in the Company's articles of association:

5. Capital Increase

(…)

5.4

Until 30 June 2019, the Board of Directors is authorized to increase the share capital one or more times without right of pre-emption for the existing shareholders and up to a total nominal amount of DKK 4,166,666.75.

However so that shareholders who are allocated shares in the private placement conducted by the Board of Directors on 21 February 2019 and/or pursuant to the authorization under Clause 5.3 or 5.5 of the articles of association will not be eligible to participate in the capital increase pursuant to this Clause 5.4, and that funds that are under management by the same company, group of companies, fund manager(s) or similar may be treated as one shareholder when applying these limitations; except that to the extent that the capital increase is not validly subscribed for and allocated to the aforementioned shareholders as of 21 February 2019 the Sub-sequent Offering may be subscribed for by a syndicate of applicants in the private placement conducted pursuant

to Clause 5.3.


In connection with an increase in share capital the following shall also apply: (i) the shares shall be registered in the name of the holder and shall be entered in the Company's register of shareholders, (ii) the shares are nego-tiable instruments, (iii) the articles of association’s provisions on shares, including the pre-emptive right in Clause 5.1 and with regard to redemption and transferability, shall apply for the new shares, and thereby no new class of shares is created, and (iv) the new shares will have rights to dividend and other rights from the date of registration of the capital increase.


Based on the above authorization, the Board of Directors, on 15 March 2019, authorized and instructed the management to undertake the necessary preparations for the Subsequent Offering in accordance with the authorization from the general meeting in the company’s articles of association, section 5.4.

5.3.2 Subscription Price

The Subscription Price in the Subsequent Offering is NOK 1.50 per Offer Share. The Subscription Price is equal to the subscription price in the Private Placement and the Executive Offering.

5.3.3 Timetable

The timetable set out below provides certain indicative key dates for the Subsequent Offering (subject to shortening or extensions):

Last day of trading in the Shares including Subscription Rights 21 February 2019

First day of trading in the Shares excluding Subscription Rights 22 February 2019

Record Date 25 February 2019

Subscription Period commences 30 April 2019 at 09:00 hours (CEST)

Subscription Period ends 10 May 2019 at 16:30 hours (CEST)

Allocation of the Offer Shares Expected on or about 13 May 2019

Distribution of allocation letters Expected on or about 13 May 2019

Payment Date 15 May 2019

Delivery of the Offer Shares 20 May 2019

Listing and commencement of trading in the Offer Shares Expected on or about 20 May 2019


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5.3.4 Subscription Period

The Subscription Period will commence at 09:00 hours (CEST) on 30 April 2019 and end at 16:30 hours (CEST) on 10 May 2019. The Subscription Period may not be extended or shortened.

5.3.5 Eligibility to participate in the Subsequent Offering

In the Subsequent Offering, the Company will, subject to applicable securities laws, allocate the Subscription Rights to subscribers who:

were registered as holders of Shares in the Company’s register of shareholders with the VPS as of expiry of 25 February 2019 (the "Record Date");

were not allocated Private Placement Shares or Executive Offer Shares; and

who are not resident in a jurisdiction where such offering would be unlawful or, for jurisdictions other than Norway, would require any prospectus filing, registration or similar action,

(each such shareholder an "Eligible Shareholder", and collectively, “Eligible Shareholders”).

Provided that the delivery of traded Shares is made with ordinary T+2 settlement in the VPS, Shares that are acquired until and including 21 February 2019 will give the right to receive Subscription Rights, whereas Shares that are acquired from and including 22 February 2019 will not give the right to receive Subscription Rights.

For each Share recorded as held in the Company as of expiry of the Record Date, each Eligible Shareholder will receive 0.73 Subscription Rights, rounded down to the nearest whole Subscription Right.

One (1) Subscription Right will give the right to subscribe for, and be allocated, one (1) Offer Share, subject to the selling and transfer restrictions set out in Section 17 "Selling and Transfer Restrictions".

The Subscription Rights may be used to subscribe for Offer Shares in the Subsequent Offering before the expiry of the Subscription Period on 10 May 2019 at 16:30 hours (CEST). Holders of Subscription Rights should note that subscriptions for Offer Shares must be made in accordance with the procedures set out in this Prospectus.

Oversubscription (i.e., subscription for more Offer Shares than the number of Subscription Rights held by the subscriber

entitles the subscriber to be allocated) will be permitted.

Subscription without Subscription Rights will not be permitted. In the event that shareholders, who are not Eligible Shareholders, receive Subscription Rights in the Subsequent Offering, such shareholders will not be entitled to use such Subscription Rights to subscribe for Offer Shares in the Subsequent Offering.

The Subscription Rights will not be tradable, but will be visible as credited the individual Eligible Shareholder’s investor account with the VPS. The Eligible Shareholders who do not use their Subscription Rights will experience a significant dilution. The Subscription Rights would normally have an economic value if the Shares trade above the Subscription Price during the Subscription Period. Upon expiry of the Subscription Period, the Subscription Rights will expire and have no value.

5.3.6 Subscription procedure

Subscriptions for Offer Shares must be made by submitting a correctly completed Subscription Form to the Manager during the Subscription Period or, for Norwegian residents, made online as further described below. The Subscription Form is attached to this Prospectus as Appendix 2 and will be available on www.napatech.com and www.abgsc.com.

Correctly completed Subscription Forms must be received by the Manager no later than 16:30 hours (CEST) on 10 May 2019 at the following address:

ABG Sundal Collier ASA

Munkedamsveien 45D

P.O Box 1444 Vika

0115 Oslo

Norway

Phone: +47 22 01 61 73

Email:

[email protected]

Subscribers who are residents of Norway with a Norwegian personal identification number (Nw. personnummer) are encouraged to subscribe for Offer Shares through the VPS online subscription system (or by following the link on www.abgsc.com which will redirect the subscriber to the VPS online subscription system). The VPS online subscription system is only available for individual persons and is not available for legal entities; legal entities must thus submit a

http://www.napatech.com/

http://www.abgsc.com/

mailto:[email protected]

http://www.abgsc.com/


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Subscription Form in order to subscribe for Offer Shares.

Neither the Company nor the Manager may be held responsible for postal delays, unavailable 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 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, or in the case of applications through the VPS online subscription system, the online subscription

registration. By signing and submitting a Subscription Form, or by registration of a subscription with the VPS online

subscription system, the subscribers confirm and warrant that they have read this Prospectus and are eligible to subscribe for Offer Shares under the terms set forth herein.

There is no minimum subscription amount for which subscriptions in the Subsequent Offering 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) will be permitted. Subscription without Subscription Rights will not be permitted.

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.

All subscriptions in the Subsequent Offering will be treated in the same manner regardless of whether the subscription is made by delivery of a subscription form to the subscription offices or through the VPS online subscription system.

The Company is not aware of whether any members of the Company’s Management or Board of Directors intend to subscribe for Offer Shares in the Subsequent Offering, or whether any person intends to subscribe for more than 5% of the Offer Shares, however such persons may receive Subscription Rights if they are Eligible Shareholders.

5.3.7 Underwriting of the Subsequent Offering

The Subsequent Offering is fully underwritten by a syndicate of applicants in the Private Placement (the “Underwriters”), who have undertaken to subscribe and pay for Offer Shares not validly subscribed for and allocated to Eligible Shareholders in the Subsequent Offering. No underwriting commission will be paid to the Underwriters.

Allocation of the underwriting obligations will be conducted following expiry of the subscription period in accordance with principles set out in Section 5.3.8 “Allocation of Offer Shares” below.

The table below shows the subscription amount each Underwriter has undertaken to underwrite:

Investor Address Number of shares underwritten

Verdane Capital VIII K/S

c/o Harbour House Sundkrogsgade 21

DK-2100 Copenhagen Denmark 5,888,889

Sundt AS, whereof

Dronningen 1 0287 Oslo Norway 4,666,667

Jakob Iqbal Dronningen 1

0287 Oslo Norway

444,445

Ludvig Lorentzen AS, whereof Nils A Foldal

Haakon VIIs gate 1 0161 Oslo Norway 2,888,889

Haakon VIIs gate 1 0161 Oslo Norway

444,445

RIL AS

Dronningen 1 0287 Oslo Norway 222,222

MP Pensjon

Lakkegata 23 0187 Oslo Norway 1,111,111


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Brownske Bevegelser AS

Rønningveien 2 C 0494 Oslo Norway 888,889

Tigerstaden AS

Sørkedalsveien 10 0369 Oslo Norway 666,667

Arepo AS

Grefsenkollveien 16 A 0490 Oslo Norway 555,555

Total 16,666,667

5.3.8 Allocation of Offer Shares

Allocation of the Offer Shares will take place on or about 13 May 2019.

The following allocation criteria will be used for allotment of Offer Shares in the Subsequent Offering:

1) Subscription made on the basis of Subscription Rights. All subscribers with Subscription Rights will be allotted the number of Offer Shares subscribed for on the basis of Subscription Rights. One (1) Subscription Right will give the right to subscribe for, and be allocated, one (1) Offer Share, subject to the restrictions set out in Section 17 “Selling and Transfer Restrictions”.

2) Over-subscription made by subscribers with Subscription Rights. Offer Shares not allotted on the basis of Subscription Rights will be allotted on a pro-rata basis to subscribers with Subscription Rights that over-subscribed in the Offering.

3) Shares not alloacted in accordance to 1) and 2) will be allocated to the Underwriters pro-rata to their underwriting obligations.

The Board of Directors reserves the right to round off, cancel or reduce any subscription for Offer Shares. The Board of Directors will, however, not cancel a subscription which it finds to be correctly submitted by an Eligible Shareholder. Allocation of fewer Offer Shares than applied for, does not affect the subscribers obligation to subscribe and pay for the Offer Shares allocated.

The final result of the Subsequent Offering is expected to be published on or about 13 May 2019 in the form of a stock

exchange notification from the Company through Oslo Børs' information system and at the Company’s website (www.napatech.com). Notifications of allocated Offer Shares and the corresponding subscription amount to be paid by each subscriber are expected to be distributed in a letter on or about 13 May 2019. Subscribers having access to investor services through their VPS account manager will be able to check the number of Offer Shares allocated to them from 12:00 hours (CEST) on 13 May 2019. Subscribers who do not have access to investor services through their VPS account manager may contact the Manager from 12:00 hours (CEST) on 13 May 2019 to get information about the number of Offer Shares allocated to them.

5.3.9 Payment for the Offer Shares

The payment for Offer Shares allocated to a subscriber falls due on the Payment Date (15 May 2019). Payment must be made in accordance with the requirements set out in Sections below.

Subscribers who have a Norwegian bank account

Subscribers who have a Norwegian bank account must, and will by signing the Subscription Form, provide the Manager with a one-time irrevocable authorisation to debit a specified bank account with a Norwegian bank for the amount payable for the Offer Shares which are allocated to the subscriber.

The specified bank account is expected to be debited on or after the Payment Date. The Manager are only authorised to debit such account once, but 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.

The subscriber furthermore authorises the Manager to obtain confirmation from the subscriber’s bank that the subscriber has the right to dispose over the specified account and that there are sufficient funds in the account to cover the payment.

If there are insufficient funds in a subscriber’s bank account or if it for other reasons is impossible to debit such bank account when a debit attempt is made pursuant to the authorisation from the subscriber, the subscriber’s obligation to pay for the Offer Shares will be deemed overdue.

Payment by direct debiting is a service that banks in Norway provide in cooperation. In the relationship between the subscriber and the subscriber’s bank, the standard terms and conditions for "Payment by Direct Debiting – Securities Trading", which are set out on page 2 of the Subscription Form attached in Appendix 2 to this Prospectus, will apply,


31

provided, however, that subscribers who subscribe for an amount exceeding NOK 5 million by signing the Subscription Form provide the Manager with a one-time irrevocable authorisation to directly debit the specified bank account for the entire subscription amount.

Subscribers who do not have a Norwegian bank account

Subscribers who do not have a Norwegian bank account must ensure that payment with cleared funds for the Offer Shares allocated to them is made on or before the Payment Date.

Prior to any such payment being made, the subscriber must contact the Manager for further details and instructions.

Overdue payments

Overdue 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 8.75% per annum. If a subscriber fails to comply with the terms of payment, the Offer Shares will not be delivered to the subscriber.

5.3.10 Delivery of the Offer Shares

The Company expects that the Offer Shares will be issued on 20 May 2019 and that the Offer Shares will be delivered to the VPS accounts of the subscribers to whom they are allocated on or about the same day.

5.3.11 Listing and trading of the Offer Shares

The Offer Shares will be listed and tradable on Oslo Stock Exchange under the ticker code "NAPA" as soon as the sharee capital increase in relation to the Subsequent Offering is registered with the Danish Central Business Register and the Offer Shares have been issued in the VPS, expected on or about 20 May 2019.

Subscribers selling Offer Shares from 20 May 2019 and onwards must ensure that payment for such Offer Shares is made within the deadline set out above. Accordingly, a subscriber who wishes to sell its Offer Shares before actual delivery must ensure that payment is made in order for such Offer Shares to be delivered in time to the purchaser.

5.3.12 VPS account

To participate in the Subsequent Offering, each subscriber must have a VPS account. The VPS account number must be

stated when registering a subscription through the VPS online application system or on the Subscription Form for the Subsequent Offering. VPS accounts can be established with authorised VPS registrars, which can be Norwegian banks, authorised investment firms in Norway and Norwegian branches of credit institutions established within the EEA. However, non-Norwegian investors may use nominee VPS accounts registered in the name of a nominee. The nominee must be authorised by the Norwegian Ministry of Finance. Establishment of VPS accounts requires verification of identification by the relevant VPS registrar in accordance with Norwegian anti-money laundering legislation (see Section 5.3.13 "Mandatory anti-money laundering procedures").

5.3.13 Mandatory anti-money laundering procedures

The Subsequent Offering is subject to applicable anti-money laundering legislation, including the Norwegian Money Laundering Act of 6 March 2009 no. 11 and the Norwegian Money Laundering Regulations of 13 March 2009 no. 302 (collectively, the "Anti-Money Laundering Legislation").

Subscribers who are not registered as existing customers of the Manager must verify their identity to the Manager with whom the order is placed 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, or when registering a subscription through the VPS online application system, are exempted, unless verification of identity is requested by the Manager. Subscribers who have not completed the required verification of identity prior to the expiry of the Subscription Period may not be allocated Offer Shares.

5.3.14 Financial Intermediaries

All persons or entities holding Shares or Subscription Rights through financial intermediaries (i.e., brokers, custodians and nominees) should read this Section 5.3.14. All questions concerning the timeliness, validity and form of instructions to a financial intermediary in relation to the exercise, sale or purchase of Subscription Rights should be determined by the financial intermediary in accordance with its usual customer relations procedure or as it otherwise notifies each beneficial shareholder.

The Company is not liable for any action or failure to act by a financial intermediary through which Shares are held.

Subscription Rights

If an Eligible Shareholder holds Shares registered through a financial intermediary on the Record Date, the financial intermediary will customarily give the Eligible Shareholder details of the aggregate number of Subscription Rights to which it will be entitled. The relevant financial intermediary will customarily supply each Eligible Shareholder with this information in accordance with its usual customer relations procedures. Eligible Shareholders holding Shares through a financial intermediary should contact the financial intermediary if they have received no information with respect to the Subsequent Offering.

Shareholders who hold their Shares through a financial intermediary but are not Eligible Shareholders will not be entitled


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to exercise their Subscription Rights.

Subscription Period and period for trading in Subscription Rights

The time by which notification of exercise instructions for subscription of Offer Shares must validly be given to a financial intermediary may be earlier than the expiry of the Subscription Period. Such deadlines will depend on the financial intermediary. Eligible Shareholders who hold their Shares through a financial intermediary should contact their financial intermediary if they are in any doubt with respect to deadlines.

Subscription

Any Eligible Shareholder who holds its Subscription Rights through a financial intermediary and wishes to exercise its Subscription Rights, should instruct its financial intermediary in accordance with the instructions received from such financial intermediary. The financial intermediary will be responsible for collecting exercise instructions from the Eligible Shareholders and for informing the Manager of their exercise instructions.

Please refer to Section 17 "Selling and transfer restrictions" for a description of certain restrictions and prohibitions applicable to the exercise of Subscription Rights in certain jurisdictions outside Norway.

Method of payment

Any Eligible Shareholder who holds its Subscription Rights through a financial intermediary should pay the Subscription Price for the Offer Shares that are allocated to it in accordance with the instructions received from the financial intermediary. The financial intermediary must pay the Subscription Price in accordance with the instructions in the Prospectus. Payment by the financial intermediary for the Offer Shares must be made to the Manager no later than the Payment Date. Accordingly, financial intermediaries may require payment to be provided to them prior to the Payment Date.

5.3.15 The Offer Shares

The Offer Shares will be ordinary Shares of the Company, having a par value of DKK 0.25 each, and rank equal in all respects to all other Shares of the Company. The Offer Shares will be issued electronically in registered form in

accordance with the laws of Denmark, and will be eligible for any dividends which the Company may declare. All Shares, including the Offer Shares, will have voting rights and other rights and obligations which are standard under the laws of Denmark. The Offer Shares will be freely transferable.

The Offer Shares will be registered in book-entry form with the VPS under the Company's ISIN number DK0060520450. The Company´s VPS registrar is DNB Bank ASA, Registrars Department, P.O. Box 166 Sentrum, 0021 Oslo.

The Offer Shares will be issued pursuant the Danish Companies Act.

See Section 11 “Corporate information and description of share capital” for a further discussion of the rights attaching to the Shares.

For information on taxes on the income from the securities, please refer to Section 13 and 14 . The Company assumes

responsibility for the withholding of taxes at the source according to Norwegian Law.

5.3.16 Publication of information related to the Subsequent Offering

In addition to press releases at the Company’s website, the Company will use Oslo Børs’ electronic information system to publish information in respect of the Subsequent Offering.

Information on the result of the Subsequent Offering is expected to be published on or about 13 May 2019 in the form of a release through Oslo Børs’ electronic information system.

5.3.17 The Company’s share capital following the Subsequent Offering

Following the Subsequent Offering, and the completed Private Placement and Executive Offering, the Company’s share capital will be DKK 20,767,055 divided into 83,068,220 Shares, each with a nominal value of DKK 0.25.

5.3.18 Material disparity between the subscription price in the Subsequent Offering and effective cash cost to members of the Board of Directors and management

There is no material disparity between the subscription price in the Subsequent Offering and the effective cash cost to

members of the Board of Directors and management.

Net proceeds and expenses relating to the Private Placement, the Subsequent Offering and the Executive Offering

The Company will bear the fees and expenses related to the Private Placement, the Subsequent Offering and the Executive Offering, which are estimated to amount to approximately NOK 4.5 million, thus, giving net proceeds of NOK 72.2 million. No expenses or taxes will be charged by the Company or the Manager to the subscribers in the Private Placement the Subsequent Offering or the Executive Offering.


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Interests of natural and legal persons involved

The Manager and their 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, their employees and any affiliate may currently own Shares in the Company. The Manager do 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 has received a commission fee of a fixed percentage of the gross proceeds raised in the Private Placement and the Subsequent Offering, and, as such, had an interest in the Private Placement and the Subsequent Offering.

Other than what is set out above, the Company is not aware of any interest of natural or legal persons involved in issuance of the New Shares.

Managers and advisors

ABG Sundal Collier ASA acts as manager for the Company in connection with the Private Placement and the Subsequent Offering. Advokatfirmaet Schjødt AS acted as Norwegian legal counsel to the Company. Advokatfirmaet Lassen Ricard acted as Danish legal counsel to the Company.

The Executive Offering

On 22. February 2019, the Company announced that it had resolved to carry out the Executive Offering. In the Executive Offering, the Company has allocated 1,145,000 Executive Offer Shares in a separate offering to Company’s Executive Management and the Board of Directors at the Subscription Price of NOK 1.50 per Executive Offer Share.

The Executive Offer Shares were resolved issued by the Board of Directors on 15 March 2019 pursuant to an authorisation by an extraordinary general meeting in the Company held on 15 March 2019. Listing of the Executive Offer Shares on the Oslo Stock Exchange is subject to the publication of this Prospectus.

5.7.1 Resolution to issue shares in the Executive Offering:

The Executive Offering was resolved by the Company's Board of Directors pursuant board authorisation granted by the

Company's extraordinary general meeting on 15 March 2019, after which the following new provision was included in the Company's articles of association:

5. Capital Increase

(…)

5.5

Until 31 May 2019, the Board of Directors is authorized to increase the share capital one or more times without right of pre-emption for the existing shareholders and up to a total nominal amount of DKK 286,250.00 in favour of the following members of the management respectively the board of directors and for the following amounts:

Raymond John Smets, CEO, nom. DKK 70,000 Henrik Brill Jensen, COO, nom. DKK 12,500 Flemming Andersen, VP of Engineering, nom. DKK 18,750 Howard Gregory Bubb, Board member, nom. DKK 10,000 Bjørn Erik Reinseth, Vice chairman of the board, nom. DKK 62,500 Lars Rahbæk Boilesen, Chairman of the board, nom. DKK 62,500 Henry Edward Wasik Jr, Board member, nom. DKK 50,000




Based on the above authorisation, the Board of Directors made the following resolution on 15 March 2019:

A. The share capital is increased by between nom. DKK 1.00 and nom. DKK 286,250.00 by cash contribution of NOK 1.50 per nom. DKK 0.25 share.

B. The subscription for the shares takes place by deviation from the shareholders' pre-emption right in favour the persons stated in the articles of association, section 5.5.


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C. The shares must be subscribed for in writing at the latest five (5) calendar days after the meeting of the board of directors and paid in cash in full to the company within five (5) calendar days thereof.

D. The new shares will belong to the current class of shares and have the same rights. E. The shares will carry the same pre-emptive right as the current shares and no special limitation to the

shares’ future pre-emption right will apply in later capital increases. F. The new shares will be issued as shares in the amount of nom. DKK 0.25 each. G. No shareholder will be obliged to have their share(s) redeemed. H. The shares will be negotiable instruments, registered in the name of the holders and entered in the

company’s register of shareholders. I. The shares will have rights to dividend and other rights from the date of registration of the capital

increase. J. The estimated costs related to the capital increase amounted to DKK 70,000. K. The company’s articles of association, section 3.1, will be amended whereby the nominal share capital

amount will be raised to reflect the capital increase as set out in the draft revised articles of association. L. Prospectus will be prepared and distributed afterwards in connection with the targeted emission. Shares

are issued on a separate ISIN-number until an approved prospectus is available.


5.7.2 Allocation of Executive Offer Shares

The following members of the Company's Executive Management and the Board of Directors subscribed for, and were allocated, new shares in the Executive Offering:

Lars Rahbæk Boilesen, chairman of the Board of Directors in the Company, was allocated 250,000 new shares

Bjørn Erik Reinseth, Vice chairman of the board in the Company, was allocated 250,000 new shares

Henrik Brill Jensen, Chief Operating Officer in the Company, was allocated 50,000 new shares

Raymond John Smets, Chief Executive Officer in the Company, was allocated 280,000 new shares

Flemming Andersen, VP of Engineering in the Company, was allocated 75,000 new shares

Howard Gregory Bubb, board member in the Company, was allocated 40,000 new shares

Henry Edward Wasik Jr., board member in the Company, was allocated 200,000 new shares

5.7.3 Issuance, delivery and listing of the Executive Offer Shares

The share capital increase pertaining to the Executive Offering was registered with the Danish Business Authority on 20 March 2019. As a result of such registration, together with the registration of the share capital increase pertaining to the Private Placement, the Company’s share capital was increased to DKK 16,600,388.25, divided into 66,401,553 Shares, each with a nominal value of DKK 0.25.

The Executive Offer Shares were registered in the VPS under a separate securities number, ISIN DK0061137965, pending the publication of this Prospectus. Following the publication of this Prospectus, the Executive Offer Shares will be registered under the same ISIN as the Company’s other Shares (i.e. ISIN DK0060520450) and become listed and tradable on the Oslo Stock Exchange.

The Executive Offer Shares were issued pursuant the Danish Companies Act.

5.7.4 Share capital following the Executive Offering

As the date of this Prospectus, following the Executive Offering and the Private Placement, the Company’s share capital is DKK 16,600,388.25 divided into 66,401,553 Shares, each with a nominal value of DKK 0.25.

5.7.5 Shareholder rights relating to the Executive Offer Shares

The Executive Offer Shares issued in the Executive Offering are ordinary Shares in the Company, each having a nominal value of DKK 0.25, all freely transferable. The Executive Offer Shares were issued electronically in registered form and the Company’s registrar in the VPS is DNB Bank ASA, Registrars Department, P.O. Box 166 Sentrum, 0021 Oslo.

The Executive Offer Shares rank pari passu in all respects with the Company’s other Shares and carry full shareholder rights in the Company from the time of registration of the share capital increase pertaining to the Executive Offering with the Danish Business Authority. The Executive Offer Shares are eligible for any dividends that the Company may declare after such registration. See Section 11 "Corporate Information and Description of Share Capital" below for a more detailed description of the Shares and rights attaching to them.

Dilution

The Private Placement, the Subsequent Offering and the Executive Offering the will jointly result in an immediate dilution

of approximately 62% for Eligible Shareholders who do not participate in the Subsequent Offering, the Executive Offering

and the Private Placement.


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Governing law and jurisdiction

The New Shares are issued in accordance with the rules of the Danish Public Limited Companies Act.

This Prospectus is subject to Norwegian law. Any dispute arising in respect of this Prospectus is subject to the exclusive jurisdiction of the courts of Norway, with Oslo District Court as legal venue.


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PRESENTATION OF NAPATECH

Company overview

Napatech is a global provider of reconfigurable computing solutions with significant experience and expertise. Reconfigurable computing solutions address the growing disparity between the continuously increasing needs of modern software applications and the ability of available computing platforms to keep up with these demands.

With over 15 years’ experience in this market, Napatech has the expertise, technology, technical insight and relationships to address the growing need for reconfigurable computing solutions driven by the explosive growth in consumption of mobile, cloud and Internet of Things ("IoT") services supported by the wide-scale deployment of standard server computing platforms.

Consumers increasingly rely on smartphones and cloud services to provide access to business-critical and sensitive services at any time and any location. Consequently, fast connections and greater levels of protection against cybersecurity attacks are required. Data is also expected to be handled with care and privacy and this requires insight and oversight into how that data is handled. In short, services and associated data are expected to be available, reliable and protected at all times. Today, standard server platforms from vendors such as Dell, HP Enterprise, Cisco and Lenovo are running software applications like mobile apps, and cloud services in hyper-scale datacentres with hundreds of thousands of servers. The software applications for protecting and monitoring performance of mobile and cloud services are also running on standard servers. However, as the number, usage and complexity of these software applications increases, standard computing platforms struggle to meet performance and capacity demands.

Reconfigurable computing platforms are based on standard servers, but they include additional technology that is capable of processing large amounts of data quickly, which effectively accelerates the performance of software applications. In addition, this technology is software reconfigurable allowing the specific acceleration needs of a given application to be accommodated when and where it is required.

Napatech reconfigurable computing platforms make it possible to process more data faster with detailed insight into

what is happening in real-time. With this information, it is possible to address the challenge of transporting, processing and securing data in even the fastest and largest networks and datacentres in the world.

Napatech reconfigurable computing platforms utilize Field Programmable Gate Arrays ("FPGAs"), a mature and widely used technology that allows implementation of almost any conceivable data processing task with high performance. FPGAs are configured using software allowing automated, remote and instantaneous configuration, and reconfiguration, of the data processing tasks that the FPGA needs to perform. This FPGA configuration software forms the heart of the reconfigurable computing solution and is the main focus of Napatech development activities.

Napatech relies on a broad ecosystem of technical and channel partners to develop, deliver and support reconfigurable computing solutions. From the FPGA chips that are used in Napatech's reconfigurable computing platform to the development of next-generation solutions together with Napatech's software application partners to the global reach and support provided by global channel partners, Napatech has the ecosystem of partners to seize the tremendous opportunity that reconfigurable computing promises.

With its reconfigurable computing solutions, Napatech is enabling computer platforms to adapt at the speed of software innovation thus supporting the further growth and adoption of mobile, cloud and IoT applications.

Historical background and development

6.2.1 Growing with the reconfigurable computing solution opportunity

Napatech was founded in 2003 to address one of the first software applications to require a reconfigurable computing solution. Monitoring communication networks for performance and security was, and still is, a challenge, as it requires inspection of all data on the network. This requires solutions that are capable of inspecting large amounts of data at very high speeds within a very short time period.

The network performance and security software applications used to inspect communication network data rely on standard server platforms, but the technology in standard server platforms is not capable of supporting the speed, capacity and low latency demands of these monitoring applications. By adding FPGA technology to standard server platforms, together with software that manages the offload of data processing to the FPGA, it is possible to accelerate the performance and capacity of network performance and security applications.

Today, Napatech provides reconfigurable computing solutions for network performance and security monitoring to global customers such as Cisco, IBM, Dell EMC, HP Enterprise, Fujitsu, Nokia, Symantec, CA Technologies, NTT and SKT.

As smartphone and cloud service adoption has increased, more applications are now moving to the cloud, hosted in hype-scale datacentres with hundreds of thousands of standard servers. As smartphone and cloud services become more sophisticated and intelligent, data processing demands increase and Napatech is now seeing some of the same performance challenges that were experienced by Napatech customers in 2003 emerging for others and on a much broader scale.

This is providing Napatech with an enormous opportunity as there is growing acceptance that reconfigurable computing solutions are needed in order to address these challenges. Given the Group’s extensive experience and expertise in reconfigurable computing, Napatech is ideally positioned to exploit this opportunity.


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6.2.2 Napatech: a global company

With global headquarters in Copenhagen, Denmark and two offices in the United States in Portsmouth (NH) and Los Altos (CA), Napatech has always had a major focus on the North American market where the majority of the Group's target customers reside. The first U.S. office was opened in 2004. In addition, Napatech has built a significant business throughout the globe with major customers across Europe, Asia, the Middle East, South America and Australia.

The table below provides an overview of key events in Napatech’s development.

Year Event

2003............................ Napatech ApS incorporated in Copenhagen, Denmark

2004............................ Office opened in California, USA

2006............................ Napatech acquires certain assets from Xyratex

2007............................ Office opened in Massachusetts, USA

2009............................ Winner of the Red Herring 100 Europe

2010............................ Winner of Red Herring Award Global 100 award

2010............................ Winner of the national Ernst & Young "Entrepreneur of the Year 2010" in the category Innovation

2011............................ Napatech introduces World’s first 40 Gbps Ethernet adapter for network monitoring and analysis

2011............................ Winner of Interop Tokyo Best of Show Award - Grand Prix for outstanding products

2012............................ Napatech achieves 100 Gbps throughput with Dell PowerEdge servers

2013............................ Winner of three 2013 Golden Bridge Awards

2013............................ Napatech IPO on Oslo Børs

2014............................ Napatech named one of the Top 100 Businesses in Europe by European Business Awards

2014............................ Napatech demonstrates world’s first 100 Gbps CFP4-based analysis

2015............................ Napatech launches industry-first 200G throughput solution

2015............................ Global distribution agreement with Arrow Electronics

2016............................ Introduction of solution for smarter VoLTE quality assurance at Mobile World Congress

2016............................ Partnership agreement with Dell OEM

2016............................ Launch of compact 2x100g network accelerator

2017............................ Announcement of network recorder solution for Palo Alto firewalls

2018............................

2018............................

2018............................

Demonstration of accelerator-based cloud-RAN solution for 5G Network Operators

Divestiture of Pandion recorder product line

Napatech Link™ Capture Software on Intel® Programmable Acceleration Card (PAC) solution

released

Business description

6.3.1 The Napatech Reconfigurable Computing Platform™

The Napatech Reconfigurable Computing Platform™ consists of FPGA configuration software, which defines how the FPGA logical elements are combined to perform a specific set of tasks, FPGA-based "SmartNICs", which are the current preferred physical form-factor for introducing FPGA technology into standard servers and supporting software for integrating the reconfigurable computing platform with the target software application to be accelerated. Napatech also provides a range of services to support the customer in defining, implementing, deploying and maintaining reconfigurable computing platforms.

6.3.1.1 Napatech customers

Napatech customers are some of the largest vendors of IT and telecommunication software and solutions. This includes

companies such as Cisco, IBM, Dell EMC, HP Enterprise, Fujitsu, Nokia, Symantec, CA Technologies, NTT and SKT. Customers also include end-users, such as enterprises and government institutions, who choose to develop their own solutions based on the Napatech Reconfigurable Computing Platform™ and open-source software applications, such as Suricata, Snort, Bro and TRex.


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As in both cases, target software applications need to be developed, or at least adapted, to exploit the Napatech Reconfigurable Computing Platform™, a typical sales engagement can last several months followed by a development phase of several months, which will include support from Napatech in training and guiding customers in the development of their software application.

Around 40% of Napatech revenue comes from 3 large vendors of IT and telecommunication software and solutions. With large customers come revenue growth, enhanced credibility and increased exposure of products to potential new customers and markets. However, this also represents a customer concentration risk. To manage potential business risks associated with this, Napatech has over many years continuously improved and enhanced customer relationships by building trust, providing excellent service/delivery and staying competitive among peers, so that Napatech is viewed as a key supplier. In addition, Napatech has ensured a diversified customer base in different industries and geographies as well as a diversified product line covering multiple use cases and market segments.

6.3.1.2 Acceleration of data processing and software applications

The Napatech Reconfigurable Computing Platform™ is designed to process data faster while enabling software applications using the platform to execute more efficiently. Standard server platforms today typically rely on the main processing technology, the Central Processing Unit ("CPU"), to process all data for multiple contending software applications. This can lead to delays for individual software applications as the tasks they need to execute need to wait while the CPU is busy processing data for other software applications. This is particularly an issue for intensive software applications that need to examine all data in real-time, such as network management or cybersecurity applications.

By adding FPGA technology to standard server platforms, it is possible to divide the task of processing data between the CPU and the FPGA. The FPGA is ideal for processing large amounts of data for a specific software application quickly, particularly for executing algorithms, such as data encryption or data compression, while the CPU is ideal for processing data for many software applications at the same time. The net result is that each individual software application will experience fewer delays and more efficient processing, which leads to an acceleration of overall performance.

6.3.1.3 What is an FPGA and FPGA configuration software?

An FPGA differs from other data processing solutions, such as CPUs used in standard servers and personal computers or General Processing Units (GPUs) used in video acceleration, in that the functionality of the FPGA is not pre-defined and static. A CPU or GPU is defined to perform specific processing tasks, which cannot be changed. An FPGA, on the other hand, provides an array of logical calculation units and memory blocks that can be connected to provide a data processing solution. In this way, an FPGA can be programmed, or more specifically be configured, to perform any type of data processing task.

FPGA chips were first introduced to the market in the 1980s and are today used broadly for a wide range of applications including imaging, sensing, automation, aviation, healthcare, robotics and artificial intelligence. The two largest vendors are Xilinx and Intel. Napatech focuses on FPGA chips from these vendors, which are targeting applications in networking and cyber security.

The definition of how the logical units and memory blocks in an FPGA are connected to perform a specific data processing task is provided in a software file called an FPGA “image” file. The FPGA image file is applied to the FPGA chip, which then implements the connections specified. This entire process is performed automatically using software and can be performed remotely. It can even be performed “live” as data is flowing through the FPGA. In this way, the same FPGA can be reconfigured whenever required to perform completely different tasks just by applying different FPGA image files.

The development of an FPGA image file, or FPGA configuration software as it is referred to in this document, follows a process similar to the design and development of semiconductor chips and relies on tools from FPGA chip vendors, such as Xilinx and Intel. This is the main development activity of Napatech and FPGA configuration software provided by Napatech forms the heart of the Napatech Reconfigurable Computing Platform™.

It should be noted that FPGA configuration software can be applied to any FPGA with the required specifications, which allows the Napatech Reconfigurable Computing Platform™ to be implemented on any hardware platform that meets these specifications. This broadens the applicability of the Napatech Reconfigurable Computing Platform™ as it does not require that Napatech FPGA-based SmartNICs are part of the platform and delivered solution.

6.3.1.4 What is a SmartNIC?

Today, the form factor for introducing FPGA technology into standard server platforms is the Network Interface Card ("NIC") or more specifically "SmartNICs". Typically, the NIC, which is installed inside a standard server, is responsible for providing connectivity between the standard server and the communication network and has little intelligence. A "SmartNIC", on the other hand, is more intelligent and capable of processing data on the NIC itself, thus offloading this task from the server. A SmartNIC based on FPGA technology has the power to process a large amount of data at very high speeds and can therefore offload many more tasks and perform them much more efficiently. The FPGA-based SmartNIC has the added advantage of being software reconfigurable, which means that the way the data is processed on the SmartNIC can be changed, on the fly, to support new requirements.

By using FPGA-based SmartNICs, it is possible to upgrade existing standard server computing platforms to reconfigurable computing platforms simply by replacing the standard NIC in the server platform with the FPGA-based SmartNIC and the FPGA configuration software used to define and configure the solution to be implemented on the FPGA-based SmartNIC.


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6.3.1.5 Application driven, software focused, hardware independent solutions

The reconfigurable computing solutions provided by Napatech are driven by the needs of software applications, which means that the capabilities, performance and capacity of the solution are designed with the needs of specific software applications in mind.

The challenge that many networking and cybersecurity software applications face is that a large amount of data needs to be processed at high speeds in a very short period of time. For example, cybersecurity applications that need to examine data in real-time to determine whether malicious behaviour is occurring or not. This analysis cannot disrupt ongoing services and communications, but must also be thorough enough to detect and prevent damaging activity fast.

With a reconfigurable computing solution, it is possible to tailor the solution to the needs of the software application. In the cybersecurity example, the FPGA configuration software can configure the FPGA-based SmartNIC to offload some of the processing tasks so that known and trusted data need not be sent to the cybersecurity software application for analysis. Particularly intensive tasks, such as encrypting or decrypting data can also be offloaded and it has been shown that several orders of magnitude performance improvement can be achieved for tasks like this. In addition, these capabilities can be deployed only when needed. As the solution can be reconfigured, on the fly, using software, it is possible to start with a simpler solution and add capabilities as needed.

The value of the reconfigurable computing solution lies in the FPGA configuration software defining the configuration of the FPGA and the tasks that the FPGA needs to perform, such as encrypting data. The FPGA itself is available from major vendors like Xilinx and Intel. However, these vendors do not provide the FPGA configuration software that configures and defines how the data is processed on the FPGA. This the expertise and value that Napatech provides.

Napatech is, and will continue to be, a provider of FPGA-based SmartNICs. As the adoption of reconfigurable computing solutions grows, we expect FPGA-based SmartNICs to be available from a wider range of vendors, many of which will not provide the solution software to configure the FPGA. It is also possible that FPGA technology will be embedded in standard servers and not require SmartNICs. In both cases, it is important that Napatech FPGA configuration software

and other supporting software is hardware-independent and capable of supporting these alternative options.

Napatech provides a range of reconfigurable computing solutions addressing specific market needs, such as network performance and cybersecurity applications. Nevertheless, Napatech does provide services for custom development of reconfigurable computing solutions to address specific software application needs, such as a new type of routing software application or machine learning application. In many cases, these custom developments lead to new market opportunities as the needs identified by the lead customer are often shared by their competitors or similar companies.

6.3.2 The Napatech value chain

The typical Napatech value chain consists of the following:

FPGA chip vendors, such as Xilinx and Intel,that provide FPGA chips for SmartNIC hardware manufacturing and software for FPGA configuration software development.

Electronics manufacturing services (EMS) companies, such as Microboard Processing Inc., who manufacture and assemble Napatech SmartNIC hardware.

Standard server vendors, such as DellEMC, HP Enterprise and Cisco, who provide the server platform that is the basis for reconfigurable computing solutions. The Napatech FPGA-based SmartNIC hardware is physically installed in the server platform by Napatech customers as each customer has a preferred vendor of standard servers.

Software application vendors, who are the main customer of the Napatech Reconfigurable Computing Platform™, who install Napatech FPGA-based SmartNIC hardware in the standard server of their choice and integrate Napatech software during the development of their software application.

The software application vendors sell their solution, which is based on the Napatech Reconfigurable Computing Platform™, to enterprises, cloud service providers, telecommunication service providers and government institutions

Throughout this process, Napatech provides engineering support services to assist its customers with development of their software application and integration of both Napatech software and Napatech SmartNIC hardware in the standard server of their choice.

6.3.3 The importance of partners

Napatech is a reconfigurable computing solution provider and as such relies on an ecosystem of partners to provide complete solutions that address software application performance challenges in an efficient and effective manner. This includes close partnerships with the market’s largest vendors of FPGA products and standard server platforms as well as partnerships with channel partners that enable Napatech to deliver solutions to customers. These partnerships can provide great value in providing insight into current and future market needs as well as providing the capacity to develop and deliver solutions to customers on a global basis. They enable a company of the size of Napatech to have a much broader reach, insight and responsiveness than otherwise would be the case.

6.3.3.1 Standard server and FPGA partners

A reconfigurable computing platform is a standard server platform with the addition of a reconfigurable technology, such as FPGAs, the technology used in Napatech reconfigurable computing solutions, as well as FPGA configuration software also provided by Napatech.


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Standard servers are available from a number of global vendors including HP Enterprise, Dell EMC, Lenovo, Cisco and Fujitsu as well as major telecommunication solution providers, such as Ericsson and Nokia. Napatech has deep relationships and cooperation with these vendors and we ensure that any reconfigurable computing solution that Napatech develops is compatible with standard server products from these vendors. This allows customers to choose, and even re-use, the standard server platform that best suits their technical and commercial needs safe in the knowledge that any reconfigurable computing solution provided by Napatech will be compatible with their standard server of choice.

There are two major vendors of FPGA chips, namely Xilinx and Intel (formerly Altera). Their combined market share is over 90% giving them duopoly control of the market. Napatech has strategic relationships with both companies and this ensures that Napatech reconfigurable computing solutions can be made available on either Xilinx or Intel FPGA products.

Standard server and FPGA vendors are major global organizations with close ties to important end-user customers and, in that capacity, function as a source of business opportunities for Napatech. They provide valuable insight into end-user requirements and challenges as well as open doors to opportunities at strategic levels in the customer organisations.

6.3.3.2 Software application partners

Napatech has established deep relationships with some of the largest vendors of IT and telecommunication software and solutions. This includes companies such as Cisco, IBM, Dell EMC, HP Enterprise, Fujitsu, Nokia, Symantec, CA Technologies, NTT and SKT. These companies base their products and offerings on Napatech reconfigurable solutions, addressing the needs of their enterprise, telecommunication and government customers. This provides a significant amplification and reach effect that allows Napatech to address a much broader set of end-user needs than otherwise possible.

Napatech has established a strategic relationship with many of these customers, which provides Napatech with insight into the challenges and requirements of the customers’ end users and enables Napatech to collaborate with these customers on designing and delivering next-generation reconfigurable computing solutions that more effectively address the challenges identified. This helps Napatech to stay one step ahead of market needs as challenges can be identified

and a solution provided before these challenges become critical.

Another source of input is the growing open-source community. Many end-users and major commercial software application providers are involved in open-source communities as they realize that some of the challenges emerging are larger and more complex than most individual companies have the resources to address on their own. Collaboration accelerates the development of solutions, but also provides de-facto standardization that is important to end-users who need to ensure that there are multiple vendors to meet their needs.

Though contributions to open-source communities are open and available to all, it is common practice that commercial software vendors use open-source software as a starting point or foundation for their commercial offerings.

Napatech is also involved in several open-source initiatives addressing cybersecurity (e.g. Suricata, Snort, Bro) and the next generation of telecommunication networks based on Software Defined Networking (SDN) and Network Functions Virtualization (NFV) (e.g. ETSI, OVS, DPDK, A-CORD, ONF) as well as basing solutions on open-source software, such as Linux.

6.3.3.3 Channel partners

Napatech has several channel partners that fulfil various roles for Napatech in addressing customer needs. Some channel partners are used to extend the reach of Napatech in a specific geographic region, where there is a need for local insight into the market or a fulfilment solution for delivering products and solutions to customers in that specific region. Other channel partners are used to package and deliver a solution to customers that meets their specific needs, such as end-users who prefer their own solution based on open-source software rather than a commercial software solution.

Napatech has established deep strategic relationships with major global channel partners, such as Arrow and Dell EMC. These organizations not only have the reach and capacity to support Napatech globally, but also have the insight to open opportunities for Napatech at major enterprise, telecommunication provider and government organizations.

Napatech comparative technical advantages

Napatech has the ability to provide a complete reconfigurable computing solution that combines Napatech's expertise in FPGA configuration software, FPGA-based SmartNICs and acceleration of software applications on standard server platforms. This leverages 15+ years of experience in delivering reconfigurable computing solutions that Napatech believe it is difficult for competitors to match.

6.4.1 Napatech FPGA configuration software and SmartNIC expertise

There are a number of competing SmartNIC offerings in the market based on several technologies. Some of these technologies are programmable, such as Network Processing Units ("NPUs") and General Processing Units ("GPUs"). However, many of these SmartNIC offerings are based on proprietary technologies specific to a particular vendor and which require expertise in the software programming language and frameworks of that specific vendor.

FPGA-based SmartNICs, on the other hand, are based on two main FPGA chip vendors; Intel and Xilinx. While each provides their own tools and software frameworks, there is a broader expertise and knowledge of these frameworks than for other competing technologies.


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In general, FPGA technology is becoming the technology of choice for accelerating software application performance not just because of its ability to provide high performance and capacity, but also because of the inherent re-configurability of the technology, which allows the same FPGA-based SmartNIC to be used for any conceivable data processing application.

Napatech has 15 years of experience in providing high-performance FPGA-based solutions. This includes the expertise to design, develop and produce FPGA-based SmartNICs, but more importantly, the expertise to design, develop and deliver solutions in the form of FPGA configuration software. Napatech FPGA software design engineers and SmartNIC hardware engineers individually have several decades of experience with FPGA technology as well as insight into the needs of customers with respect to high-performance FPGA-based solutions.

6.4.2 Acceleration of software applications

Accelerating software applications on standard server platforms requires both knowledge of the application needs and the standard server platform itself. In particular, it requires intimate knowledge of how data is received, stored, transferred and processed in a standard server in order to avoid performance degradation.

Napatech has used this experience over the last 15 years to help customers to achieve performance improvement for their applications. This is accomplished through a combination of offloading demanding processing tasks to the FPGA-based SmartNIC and understanding how data needs to be transferred between the software application and the SmartNIC in the most efficient manner. This often requires software integration expertise and standard server architecture knowledge, which Napatech believes other SmartNIC vendors lack.

6.4.3 Product quality, delivery and support track record

Throughout its 15 years of business, Napatech has consistently been praised by customers for its excellent product quality and delivery efficiency as well as responsive support. While there are many providers of FPGA-based NICs, Napatech's understanding is that few have the experience of volume production that Napatech possesses, and the Company believes this makes Napatech a natural choice as strategic vendor of reconfigurable computing solutions.

Research and development

Napatech research and development activities are focused on three major activities:

Design, development and delivery of FPGA configuration software used to configure FPGA-based SmartNIC hardware and the reconfigurable computing solution to be delivered

Design and production management of FPGA-based SmartNIC hardware Design, development and delivery of supporting software used to manage the solution and interfaces to the

target software application that needs to be accelerated

Napatech divides its R&D process into five phases. The schedule, resource allocation and cost structure are examined and revised, if needed, at the end of each phase. This provides visibility and predictability, and ensures a dynamic process able to adapt to unforeseen technical challenges or new requirements. The five-step process is as follows:

1. Specification and planning: specify the product and establish the R&D plans

2. Feature development and feature integration: develop individual features in parallel teams

3. System integration: integrate individual features into a complete functional system/product

4. System verification: verify the system is working as specified and expected by customers

5. System qualification: generate the performance metrics (e.g. data throughput) critical for the product

The process is managed by cross-functional R&D teams, each of which is responsible for design, implementation, and testing of a specific set of features. This ensures full competence coverage for every feature. In the event a customer requires an alteration during the R&D process, it is critical that development is agile. Napatech’s R&D activities are all conducted in Denmark in order to ensure full alignment between the teams.

See Section 10.6 "Investments" for further information regarding research and development costs incurred in the period covered by the historical financial information.


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Manufacturing

Napatech relies on contract manufacturers for production of all FPGA-based SmartNIC hardware, where the Group’s current preferred manufacturer is Microboard Processing Inc (MPI). The contract manufacturer specializes in building complex products in small series meeting extremely high reliability requirements. The contract manufacturer utilizes a fully automated assembly line to bring down manual labour costs.

MPI is located in Connecticut, United States and was established in 1982. MPI has around 100 employees. Napatech has been a customer since 2010.

The Group does not define itself as being dependent on any particular contract manufacturer. In the event that Napatech was required to shift production to another supplier, Napatech estimates a lead time of between three and six months to get the facility up and running

Patents

The Company’s patent strategy is to pursue patents on technology and functionality that is relevant to Napatech in its current and future planned business activities. All patents filed are property of Napatech. Napatech utilizes an external patent agency for writing patent applications and managing the patent process. The term of the patents is 20 years from the filing date of the application.

Napatech acquired two patents from Xyratex Ltd in 2006. All other patents, and patent applications, have been developed by Napatech employees and are the property of Napatech.

Napatech believes a strong portfolio of intellectual property rights, patents and trademarks gives a competitive advantage by providing a high barrier of entry for competitors. Napatech expects continuous growth in its patent portfolio as new and existing patent applications are granted. Napatech is not dependent on any license income related to the existing patents.

Please see Appendix 1 for an overview of current patents and pending patent applications.

Trend information and significant changes in the Group's activities

In the 18 months before the publication of the Prospectus, Napatech has noted an impact on results driven by significant transformations in the market.

There is a general trend away from "hardware-centric" solutions, where there is a close integration between the hardware and software components of the solution and where the solution is sold as a combined entity, towards "software-centric" solutions, where the interface between the software and hardware components is more open allowing the software and hardware to be sold separately. This trend has led to a change in end-user requirements and demand for Napatech’s customers’ offerings, which has led to corrections in inventory levels and delays in securing large projects.

It is the determination of Napatech that this is a temporary re-adjustment and a trend for which Napatech has prepared and is able to address quickly. Napatech has ensured that Napatech software is not closely integrated with Napatech hardware components, which enables Napatech software to be sold separately and implemented on third-party hardware. Napatech is also working closely with the top 2 vendors of FPGA chips, Xilinx and Intel, to enable the delivery of Napatech software on third-party hardware.

The first example of this collaboration is the Napatech Link™ Capture Software on Intel® Programmable Acceleration Card (PAC) solution released in December 2018. This is the first example of a software-independent solution where Napatech FPGA configuration software is sold to the customer separately for installation on a server platform with a pre-integrated Intel® Programmable Acceleration Card (PAC) FPGA-based Network Interface Card.

Napatech has taken several steps both organizationally and strategically to better understand end-user requirements and market trends, especially in Napatech’s most important market, North America.

In 2017, Napatech expanded the board of directors adding U.S. based directors, Howard Bubb and Henry Wasik, who have significant experience and insight into markets, customers and partners important to Napatech. In addition, in 2017, Napatech expanded the management team with the addition of a U.S.-based Chief Marketing Officer with considerable experience within the industry that Napatech operates. In 2018, Napatech appointed a new U.S.-based Chief Executive Officer, Ray Smets who brings experience from several markets important to Napatech.

Napatech has established a strategy founded on 4 main pillars to ensure that Napatech addresses current business requirements, while also ensuring a focus on new market trends and opportunities associated with reconfigurable computing and the transition to software-centric solutions:

Dominate: Napatech intends to dominate the packet capture market and maintain the strategic relationships established with market leading key customers and partners.

Expand: Napatech is engaged with key customers on defining reconfigurable computing solutions that expand beyond packet capture use cases, such as inline cybersecurity solutions.

Establish: Napatech is establishing a beach-head in the virtualization solutions market based on current engagements with leading telecom carriers and vendors.

Explore: Napatech is exploring the potential for delivering compute offload solutions that leverage FPGA technology deployed by cloud vendors or server vendors.


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The market trend towards software-centric solutions is expected to continue over the coming years. While this provides an overall significant growth opportunity for Napatech given its strategy, the same trend could potentially negatively affect its customer’s markets. This trend could displace current products, could lengthen sales cycles or defer business to later time frames, which could affect timing of revenue, predictability of revenue forecasting, and increases in competitive threats that affect closing sales in a timely manner. Napatech is working closely with its largest customers to help them with this transition as smoothly as possible.

6.8.1 Divestiture of Pandion product line

In November 2018, Napatech announced the agreement to sell the Pandion Network Recorder product line to CounterFlow AI, a company based in USA, which delivers next-generation network forensic solutions for security operations centers (SOC). The decision to divest of the Pandion Network Recorder product line was based on a re-focusing of the Napatech activities on Napatech FPGA core competencies and key target markets and customers in line with the 4 main pillars of the Napatech strategy. It was also determined that Napatech Pandion customers’ developing needs would be better served by CounterFlow AI. As part of the agreement, Napatech will continue to provide FPGA-based SmartNICs to CounterFlow AI and thereby indirectly provide the core benefits of Napatech products and technology to Pandion customers.

Other than the impact of the transition from hardware-centric to software-centric solutions on operating results, there have been no other significant changes to the Group's operations and activities since the end of 2017.

Material contracts

No company within the Group has entered into any material contracts outside the ordinary course of business for the two years prior to the date of this Prospectus. Further, no company within the Group has entered into any other contract outside the ordinary course of business that contains any provisions under which the Group has an obligation or entitlement that it is material to the Group as of the date of this Prospectus.


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MARKET OVERVIEW

At the crossroads of two major market trends

The reconfigurable computing opportunity sits at the crossroads of two major market trends; the ubiquitous deployment of standard server platforms for every conceivable application and the growing intelligence and complexity of the software applications on which we all rely. Both trends are the source of tremendous growth in their own right, but the growing disparity between the performance and capabilities that software applications require and the ability of standard servers to meet those requirements is leading to an emerging and large opportunity in providing reconfigurable computing solutions that can bridge this performance gap.

7.1.1 Standard server growth and the migration to the cloud

According to IHS Markit, over 10 million servers are sold annually and are used for every conceivable software application. By 2022, the number of servers sold is expected to grow to 15 million or 50% more servers than today1. Today, almost half of all servers are sold to enterprises who still have their own datacentres and server facilities. However, in 2022, it is expected that half of all servers sold will be to cloud service providers. In other words, there is a continued trend of enterprises relying more on cloud services in the future.2

Cloud service providers have relied on the standard server as a scalable building block capable of supporting any conceivable software application. This has allowed cloud server providers to build hyper-scale datacentres housing hundreds of thousands of servers that are used to support a wide range of services, including Software-as-a-Service (SaaS), Platforms-as-a-Service (PaaS) and Infrastructure-as-a-Service (IaaS). If a service, or software application based on that service, needs more performance, the cloud service provider simply adds more servers.

7.1.2 Growing intelligence and complexity of software applications

The intelligence and complexity of software applications is growing. For example, cybersecurity is a major concern for all organizations, which is driving a tremendous amount of innovation in new types of security threat detection and prevention solutions and more sophisticated cybersecurity software applications. Machine learning and artificial

intelligence are more widely used today for cybersecurity and for many more applications and their usage is expected to grow over the coming years. Even on a more practical level, smartphones and tablet devices generate more data that needs to be processed than in the past.

With the move to a world of virtual and augmented reality, as well as the expected deployment of billions of IoT-devices, the amount of data to be stored and processed is expected to increase considerably. In addition, even more sophisticated software applications are expected to be developed to make sense of all this data using machine learning and artificial intelligence.

7.1.3 Cloud service provider innovation and inspiration opens opportunities

Managing and operating a hyper-scale datacentre with hundreds of thousands servers supporting software applications with growing intelligence and complexity has required the development of new innovative approaches to infrastructure design, management and operation. Today, hyper-scale datacentres are centrally controlled using software management systems where each server can be programmed and monitored remotely. Changes are automatically performed using software based on monitoring information or requests by the customer. This "software-defined" approach is one of the reasons that cloud services are so efficient and cost-effective.

Cloud service providers have led the way in exploiting the superior scalability and economics of standard servers as well as innovating new software-defined approaches for managing and operating datacentres at hyper-scale. The majority of hyper-scale cloud service providers have the capability and resources to develop these solutions internally, but have also shared many of their learnings, techniques and even designs through open-source communities. This is enabling other companies and industries to benefit from the innovations that cloud-service providers have developed.

This opens opportunities for companies like Napatech to develop solutions inspired by cloud service provider innovation that can enable other end-users who do not have the resources and capabilities themselves to develop software-defined approaches similar to cloud service providers. For example, software-defined approaches, technologies and solutions are being adopted by enterprises and telecommunication service providers in initiatives, such as Software Defined Networking ("SDN") and Network Functions Virtualization ("NFV").

7.1.4 Addressing the performance gap with FPGAs

According to the latest Cisco Virtual Networking Index report from November 2018, the amount of data globally is expected to increase threefold over the next five years3. In the same report, Cisco note that in 1992, global Internet traffic amounted to 100 Gigabytes (GB) of traffic per day. Ten years later, in 2002, global Internet traffic amounted to 100 GB per second, Today, Global Internet traffic is close to 50,000 GB per second and will triple to 150,700 GB per second in 2022 with no signs of abating.

1 IHS Markit, “Data Center Server Equipment Market Tracker Q3 2018”, December 12, 2018 2 IHS Markit, “Data Center Server Equipment Market Tracker Q3 2018”,December 12, 2018 3 Cisco, “Cisco Virtual Network Networking Index: “Forecast and Methodology, 2017-2022”, November , 2018


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As software applications have become more sophisticated and the amount of data to be processed in data centres has increased, the traditional model of "just adding more servers" has struggled to keep up with demands. The data processing power of standard servers is continuously improving, but not fast enough to meet demands. The expectation now is that the processing power of standard servers will no longer double every 18 months, as has been the norm in the past, but will double over the next 20 years, or 3% per year4. As data processing requirements continue to grow at double-digit rates, the only answer is to add more servers, but there is a limit to how many can be added as more servers can exceed the available electrical power, space and cooling capabilities of a given hyper-scale datacentre.

To mitigate these issues, cloud service providers have investigated alternative data processing technologies that could be added to standard servers. The idea is to offload some of the data processing tasks from the standard server to other technologies that are more suited to these particular tasks. Many different technologies have been investigated, and continue to be investigated, but a clear trend is developing around the use of reconfigurable computing technology and in particular the use of FPGAs.

The most widely publicized example of this is Microsoft Azure. Facing the challenges outlined above, Microsoft Azure chose to develop their own FPGA-based SmartNIC, for their own internal use as no commercial offering was available at that time that could meet their demands. The SmartNIC is designed to be installed in all of their standard servers and can be reconfigured remotely using software to offload data processing tasks that are normally a challenge for standard servers. As of the date of this Prospectus, Microsoft Azure uses this reconfigurable computing solution throughout their datacentres supporting their main cloud services, such as Microsoft365 as well as their search engine Bing.

Other cloud service providers have also adopted FPGA technology including Amazon Web Services, Alibaba, Tencent and Baidu as of the date of this Prospectus.

It is this interest in using FPGA technology and reconfigurable computing that prompted Intel to make one of its largest acquisitions to date in December 2015, namely the purchase of Altera, which is one of the two major FPGA chip vendors, for $16.7 billion.

The reconfigurable computing opportunity is not just confined to hyper-scale datacentres. Hyper-scale datacentres are often at the forefront of technology development and a beacon for other technology companies and service providers to follow. For example, telecommunication service providers were inspired by cloud service providers’ hyper-scale datacentre solutions and in particular, their use of standard servers, virtualization and automated, software-defined management and control. This led to the establishment of SDN and NFV, which are currently being implemented by the telecommunication industry and forms the backbone for planned 5th Generation (5G) mobile infrastructure deployments in the coming years.

In the same manner, the adoption of FPGA technology by cloud service providers is driving interest in other technology industries in investigating the power and versatility of reconfigurable computing solutions based on FPGA technology. This drives a significant opportunity for Napatech as more and more standard servers are enhanced to become reconfigurable computing platforms in support of ever more sophisticated and demanding software applications.

7.1.5 Competing solutions

There are a number of different competing solutions seeking to address the needs of customers for improved performance and FPGA-based solutions in general.

There are a number of SmartNIC solution providers in the market, many of which use alternative technologies to FPGAs. These include NPU- and GPU-based SmartNICs, which are based on proprietary technologies specific to a particular vendor, which require expertise in the software programming language and frameworks of that specific vendor. FPGA-based SmartNICs, on the other hand, are based on two main FPGA chip vendors; Intel and Xilinx. While each provides their own tools and software frameworks, there is a broader expertise and knowledge of these frameworks than for other competing technologies.

There are also a number of vendors of FPGA-based Network Interface Cards (NICs), which do not provide any FPGA configuration software, but enable customers to develop and test their own developed FPGA configuration software. In the future, these vendors can be potential partners for Napatech as Napatech software is hardware independent and can be supported on third-party hardware, such as FPGA-based NICs from other vendors, as long as they meet minimum specifications.

Napatech geographic markets

The market for reconfigurable computing solutions is global. Nevertheless, the majority of Napatech customers are in North America with 50% of Napatech sales in2018 attributed to this region. North America is expected to be the most important region for Napatech sales in the coming years.

Significant changes in the principal markets in which the Group operates

The principal markets for Napatech reconfigurable computing solutions are network performance and security monitoring, security threat prevention, software defined networking and network functions virtualization for enterprises, telecommunication providers and government organizations.

4 John Hennessy and David Patterson, Computer Architecture: A Quantitative Approach, 6/e. 2018


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The most significant change affecting markets in which Napatech is active is the transition from hardware-centric to software-centric solutions (described in section 6.8 "Trend information and significant changes in the Group's activities" above). This affects current customer product portfolios as these need to be adjusted to meet new end-user requirements and demands, but also provides significant new opportunities for Napatech as a software solution provider without the requirement that Napatech software solutions must be executed on Napatech hardware. The transition from hardware-centric to software-centric solutions has proven to be turbulent for the industry and has affected both Napatech customers and Napatech performance in 2018. In general, the transition to more software-centric solutions and software-defined approaches has not progressed as smoothly or as quickly as the industry expected. For example, NFV in the telecommunications industry was formally started in 2012 and the expectation was that by 2017, a broad range of telecommunications services would be based on NFV and SDN. However, it has proven to be more difficult than first anticipated for telecommunication service providers and their major vendors to provide reliable and effective SDN and NFV solutions. This is partly because of the inability of standard compute platforms to keep up with demand. Now, hardware acceleration using solutions like FPGA-based SmartNICs is becoming widely accepted as the path forward, as the telecommunication industry realizes that standard compute platforms alone cannot deliver the required performance. One of the negative impacts of the turbulent transition to software-centric solutions, and the associated emerging realization of the need for hardware acceleration, has been that purchases of traditional appliance-based solutions for network performance and security monitoring have been put on hold as end-users have waited for the promised software-centric solutions, particularly SDN and NFV solutions, to emerge. Since this is a core market for Napatech, it

has had a visible impact on Napatech performance in 2018. According to Gartner, the market for Network Performance Monitoring and Diagnostic solutions experienced a growth of only 1.8% compared to double-digit annual growth in the five years previous5. While this is the first time that Napatech has witnessed a slowdown in growth in this market, the Company has seen the first indications of a normalization of buying behaviour during the second half of 2018 and in particular Q4 as end-users can no longer wait for software-centric solutions to mature and need to upgrade their existing infrastructure to meet growing demands. Nevertheless, Napatech has been required to reassess its position in light of this change in buying behaviour and take the necessary steps to ensure that the Company can absorb the turbulence that can still be expected to be seen in the market in the near future.

5 Gartner, “Magic Quadrant for Network Performance Monitoring and Diagnostics”, February 7, 2019


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BOARD OF DIRECTORS, EXECUTIVE MANAGEMENT, AND EMPLOYEES

Board of directors

8.1.1 Overview

In accordance with Danish law, the Board of Directors is responsible for the overall and strategic management of the Company and for ensuring that the Company’s operations are organized and controlled in a satisfactory manner.

The Company’s Articles of Association provide that the Board of Directors shall consist of a minimum of four and a maximum of eight members.

As of the date of this Prospectus, the Company’s Board of Directors consists of the following:

Name Position Served since Term expires

Lars Boilesen ............................................... Chairman 2017 Annual General Meeting 2020

Christian Jebsen ........................................... Board member 2019 Annual General Meeting 2020

Howard Bubb ............................................... Board member 2016 Annual General Meeting 2020

Henry Wasik ................................................ Board member 2017 Annual General Meeting 2020

Bjørn Erik Reinseth ....................................... Board member 2006 Annual General Meeting 2020

8.1.2 Description of the Board members

Lars Boilesen, Chairman Lars Boilesen has extensive experience in the international software and technology industry. He currently serves as Chief Executive Officer for the Norwegian-listed software company Otello Corporation, where he has overseen the sale of the company’s browser, privacy and performance apps to a Chinese consortium. He has also been involved in a number of acquisitions, including that of AdColony in 2014.

Prior to becoming the CEO of Otello in 2010 (then Opera), Boilesen served as the company’s Executive Vice President of Sales & Distribution from 2000 to 2005, and was on the Board of Directors from 2007 to 2009. Boilesen spent several years at Tandberg as head of the Northern Europe and Asian-Pacific markets and as Vice President of Worldwide Sales and Sales Director. He also served as CEO for the Nordic and Baltic Region at Alcatel-Lucent and as Marketing Manager for Eastern Europe in LEGO Group. Boilesen holds a Bachelor’s Degree in Business Economics from Aarhus School of Business and a postgraduate diploma from Kolding Business School. He is a Danish citizen and resides in Norway.

Current directorships and executive management positions...................................................................

Napatech A/S, Board Chairman Cobuilder, Board Chairman Otello Corporation, CEO

Previous directorships and executive management positions...................................................................

Opera, Executive Vice President of Sales & Distribution Tandberg, Vice President of Worldwide Sales and Sales Director Alcatel-Lucent, CEO Nordic and Baltic Region LEGO Group, Marketing Manager Eastern Europe

Christian Jebsen, Board member Christian Jebsen is a partner at Verdane Capital. Prior to Verdane, Jebsen has had a number of executive management positions in listed and unlisted companies including CEO of Kebony AS, CEO of Vmetro ASA, CFO/COO of Opera Software ASA and CEO of Stavdal ASA. Jebsen’s professional background also includes seven years of investment banking experience with Nomura International in London and Enskilda Securities (SEB) in Stockholm and Oslo. Christian Jebsen is as Danish citizen. He holds a B.S. degree in economics and B.A. from Copenhagen Business School.


Napatech A/S, Board Member Verdane Capital, Partner Kitron ASA, Board Member Gintel AS, Board Member AKO Kunststiftelse, Board Member Stormbukta AS, Board Chairman


Kebony, CEO Vmetro ASA, CEO Opera Software ASA, CFO/COO Stavdal ASA, CEO Verdane Capital Advisor, Member of Investment Committee BAS AS, Board Member


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Howard Bubb, Board member Howard Bubb has served as a public company CEO, corporate executive, venture backed entrepreneur, professional mentor and management consultant. Bubb has been consulting since 2009, repositioning struggling businesses, defining new market categories, and launching new business units to achieve high growth and dominant market segment share. A strong leader of people, he blends strategy and execution skills with a keen ability to engage talent.

On a global scale, Howard Bubb transformed the communications business at Intel from a mix of acquisitions into an

integrated and cohesive $1.7B business unit. The division grew to become number one in its markets and went on to become one of the highest growth businesses at Intel for several years. Bubb earned a Bachelor of Science degree, from California Institute of Technology in 1976. He is a US citizen and resides in Connecticut, US.


Napatech A/S – Board member, CEO and Board Director of SARTA, a 501c(3).


CEO and Board Director of Netronome, Board Director of Calxeda, CEO and Chairman of Ambric, Corporate Officer of Intel, Board Director of PairGain, Board Director of TIA, a 501c(3), CEO and Board Director of Dialogic, VP & GM of Telenova, VP & GM of Memorex, VP & GM of United Technologies

Henry Wasik, Board member Henry Wasik brings significant depth of experience and insight to high technology businesses with a distinguished thirty-year pedigree at the highest levels of the global technology sector. His experience ranges from early stage start-ups to running multi-billion dollar global businesses. His industry background spans multiple markets including semiconductors (Mostek), Enterprise PBXs (Intecom), large scale global carrier network systems (Alcatel/DSC), web scale data centers (Force10 Networks) and technologically cutting edge cloud services and software (Joyent).

Henry Wasik’s current focus is on advisory (consulting) and board roles to early stage ventures focused on cloud based services and cloud infrastructure. Previously Henry was Board Chair at nearForm (Node.js, microservices); Board member at Norse (cybersecurity); Advisor to CEOs at Metavine, Kaloom, and AVNI (acquired by Veritas); CEO of Joyent (now Samsung), a cloud software and services firm; CEO of Force 10 Networks (now Dell), a technology leader in networking for web scale datacenters; CEO of Turin Networks, a provider of optical transport systems. Henry Wasik holds a Bachelor of Science degree in Electrical and Electronic Engineering from the University of Bridgeport, and an MBA from the Georgia Institute of Technology.


Napatech A/S – Board member


Previous directorships: nearForm, Norse, Joyent, Force 10 Networks, Turin Networks. Previous executive management positions: Joyent, Force10 Networks, Turin Networks, Alcatel, DSC Communications

Bjørn Erik Reinseth, Board member Bjørn Erik Reinseth is currently the CEO of the family office Foinco, an investment company. From 2005 to 2013 he served as Partner in Ferd Capital/Ferd Venture successfully doing venture and buy-out investments. Bjørn Erik has also founded and run his own management consultancy. He has experience from listed and public companies as CEO of Sense Communications International ASA (OSX), a mobile telecom operator, and as CMO/EVP Products & Strategy of NetCom ASA (OSX), the number two mobile operator in Norway. He also served as Managing Director of the Norwegian broadband communication company Bredbåndsfabrikken AS and has a broad experience in the telecom/ICT industry. He has also worked as a Research Fellow at the European Laboratory for Particle Physics (CERN) in Geneva.

He is a Norwegian citizen and resides in Norway. Bjørn Erik Reinseth holds a B.Sc. Hons in Engineering from the University of Surrey, UK, and Stanford Executive Program at Stanford University Graduate School of Business.

Current directorships and executive management

positions...................................................................

Napatech A/S – board member, Foinco AS – CEO, Altaria

AS – Chairman, Zentuvo Finland OY – Chairman, Norstat AS – Chairman, Allierogruppen AS – Chairman, Vuu AS – Board member.


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Zentuvo AS – Chariman and CEO, BNS Holding AS – board member, CFengine AS – board member, Streaming media – Board member, Seco Invest AS – board member, Telecomputing AS – board member, Safe-invest AS – board member, Smarterphone AS – board member, ShipCom AS – Chairman, Ship Equip International AS – Chairman, Colibria AS – Chairman and board member, Mohive – Board member, Film 24 AS – board member.

8.1.3 Independence from Executive Management and large shareholders

All board members are considered independent of the Group's Executive Management.

Lars Boilesen, Howard Bubb, Bjørn Erik Reinseth, Henry Wasik are independent of large shareholders in the Company as of the date of this Prospectus. Christian Jebsen is a partner of Verdane Capital, and represents the largest shareholder in the Company.

Refer to Section 8.3 "Conflicts of interests, family relationship, directorships etc." for further information regarding the Board members independence.

Executive Management

8.2.1 Overview

The table below sets forth the members of the Company’s Executive Management as of the date of this Prospectus.

Name Position Served since

Ray Smets .................................................. Chief Executive Officer 2018

Heine Thorsgaard Chief Financial Officer 2018

Henrik Brill Jensen ……………………………………… Chief Operating Officer 2005

8.2.2 Description of the Executive Management

Ray Smets, CEO Ray Smets was appointed CEO of Napatech in July 2018. Ray leads the overall strategy and execution of the Napatech business to capture the opportunities within the growing reconfigurable computing market. He brings over 30 years of combined experience from the security, cloud, networking, software and telecom industries.

Prior to joining Napatech, Ray held a variety of senior executive roles within technology companies driving strategy, development, sales, marketing, business execution and transformation. Ray’s career began at AT&T (formerly BellSouth Corporation) where he served for over 15 years heading up subsidiaries and business operations within IP networking, wireless and mobility, leading-edge software application development, and new technology testing and deployment. Subsequently, Ray was the VP/GM of Cisco’s market-leading wireless networking business unit, president of McAfee Security’s Network General/Sniffer Technology business, which is now a part of Netscout, and held senior global leadership roles in sales and/or marketing at A10 Networks, Packeteer, Metaswitch Networks, and Motorola. Ray holds a B.S. degree in computer engineering from the University of Florida, an M.B.A. degree from Nova-Southeastern University, and is an alumnus of the Stanford University Executive Program.


Napatech A/S, CEO


A10 Networks Inc., Executive Vice President – Worldwide Sales, Operations, Strategic Alliances Metaswitch Networks Inc., Senior Vice President – Field Operations, Sales, International Development Cisco Systems Inc., Vice President / General Manager – Wireless Networking Business Unit Packeteer Inc., Vice President – Worldwide Sales & Marketing Netopia Inc., Senior Vice President – Marketing, Products, Sales, Business Development McAfee Security/Network Associates Inc., President, – Network General Business Unit Bell South Corporation, Vice President, Network Transformation & Corporate Officer

Heine Thorsgaard, Chief Financial Officer Heine Thorsgaard is CFO at Napatech and works out of the Copenhagen office. Heine has more than 15 years of experience from senior finance manager positions, of which several in listed companies.


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Prior to joining Napatech, Heine had extensive experience from a number of different companies, both in the IT and engineering consultancy industries. Most recently, Heine worked for a consulting engineering company, where he held the position as CFO. Prior to this, Carsten held the position as CFO in an IT Consultant and Service company. Heine holds a Ph.D. in Management Accounting/Technologies of Management from Copenhagen Business School.


Napatech A/S, CFO


Orbicon A/S, CFO Alectia A/S, CFO NetDesign A/S, CFO Columbus IT Partner A/S, Group CFO Ementor Danmark A/S, CFO

Henrik Brill Jensen, Chief Operating Officer Henrik Brill Jensen is COO of Napatech. He joined Napatech as CEO in 2005. Henrik works at the Copenhagen office with a focus on executing the strategy of Napatech. Under his leadership, the company has grown to become the global leader in accelerating network management and security applications. Henrik has more than 25 years of experience in management within network communication and mobile product development and manufacturing.

Prior to joining Napatech, he worked as manager for DWD in Copenhagen (an Infineon Technologies Company) and also served as Director of Product Creation at Flextronics ODM in Denmark, where he was responsible for the development and manufacturing of mobile phones. In 2001 Henrik co-founded next-generation Ethernet start-up Firstmile Systems and worked as president & COO. Prior to this, he worked for Intel as director of engineering at the Converged Communications Division in Denmark, where he was responsible for the creation of the Intel® Express Router portfolio. Henrik started his network communications career in 1996 by joining Cray Communications as project manager. From

1986 to 1996, he performed research and development related to transducer and monitor equipment. Henrik Brill Jensen holds a B.Sc. in electrical and mechanical engineering from the Danish Technical University and a degree in specialized business studies from Copenhagen Business College.


Napatech A/S, COO


Napatech A/S, CEO DWD, Manager Flextronics ODM, Director of Product Creation Firstmile Systems, President and COO Intel, Director of Engineering

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 or its subsidiaries, of any of the Board members or members of the Executive Management and their private interests and or other duties. There are no family relations between any of the Company’s Board members or Executive Management.

There are no arrangements or understanding with major shareholders, customers, suppliers or others regarding membership of the Board of Directors or the executive management.

Details of any convictions for fraudulent offences, bankruptcy etc.

Board member Bjørn Erik Reinseth is chairman of the board of the Zentuvo AS, which resolved to file for bankruptcy in March 2018. The filing is still in process as of the date of this Prospectus.

Other than the above, 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; • Been 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

Danish law does not require that remuneration of the executive management or board members is disclosed on an individual basis. The Company has also chosen not to disclose any individual information cf. Section 8.8 "Corporate Governance".

The aggregate remuneration paid to members of the Company's Board of Directors in 2018 was approximately DKK 1.6 million compared to approximately DKK 1.3 million in 2017. The total compensation to the CEO in 2018 was DKK 3.1 million compared to DKK 2.3 million in 2017.


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No member of the Executive Management has the right to severance pay or other contracts with the Company or any of its subsidiaries providing for benefits upon termination of employment.

Bonus program

The Company’s bonus program, for the financial year 2019 is planned to be tied to yearly revenue performance. The Bonus program is planned to be approved in May 2019. The bonus program achievement is reviewed by the Remuneration Committee and approved by the Board of Directors. Bonus will be distributed following the approval of the full year accounts 2018.

Share option schemes

Employees and members of the management in both the parent company and the US-based subsidiary are eligible for share option schemes. They may be granted a certain number of share options in the parent company in return for the services they provide to the Group. Share options under these schemes are granted at fixed exercise prices. The right to share options can only be vested as long as the holder still is an employee of the Group.

For further information on the share options schemes in the Group, see Section 11.6 "Share options".

Corporate Governance

The Board of Directors has decided that the Company will generally report on compliance with the Danish corporate governance recommendations, and with the exceptions set out below. The Company will apply necessary adjustments when required by Norwegian governance.

The Company’s policy in relation to its stakeholders • The company welcomes diversity throughout the company functions. Being a small multinational company it is

inherently diverse in many aspects. The company has therefore not established a specific policy for diversity in the management level Openness and transparency

• The Board of Directors has not found it necessary to prepare an annual written specification of the skills it must have to best perform its tasks. The Company’s directors are selected with the purpose of creating a group best suited at performing its tasks in the interest of the Company’s stakeholders and in the light of the Company’s size and complexity.

• The Company does not publish the Board Committee, rules of procedure, information on committee members and annual activities. Given the size and complexity of the Company, the Board of Directors has not deemed it efficient to disclose this in detail. Given the size of the Company and its administrational structure, the Company does not have a whistleblower scheme as of the date of this Prospectus.

Composition and organization of the supreme governing body

• In light of international privacy traditions, the Board of Directors has not found it necessary to fix a retirement age for members of the Board of Directors in the Company’s Articles of Association or to include information in the Company’s annual report on such retirement age as well as the age of each member of the Board of Directors.

• Presently, the Company does not have a contingency procedure for take-over bids, but plans to develop one.

Remuneration of members of the governing bodies

• In light of international privacy traditions, the Company will not disclose the total remuneration granted to each member of the Board of Directors by the Company and other consolidated companies in its annual report or on its web page, except as required in the Danish Financial Statements Act.

• In line with Danish law, the Company remuneration policy will not be explained nor will the remuneration of the Board of Directors be approved by the shareholders at the Company’s general meeting.

Committees

8.9.1 Audit committee

The role of the audit committee, appointed by the Board, is to oversee the accounting processes of the Company and audits of the financial statements of the Company; assist the Board in oversight and monitoring of (1) the integrity of the Company’s financial statements, (2) the independent auditor’s qualifications, independence and performance, (3) the Company’s internal accounting and financial controls, and (4) the Company’s compliance with legal or regulatory requirements related to the financial standing and reporting of the Company; provide the Board with the results of its monitoring and recommendations derived there from; and provide to the Board such additional information and materials as it may deem necessary to make the Board aware of significant financial matters that require the attention of the Board.

The audit committee consists of three members of the Board of Directors: Bjørn Erik Reinseth (Committee Chairman), Lars Boilesen and Henry Wasik.


52

8.9.2 Remuneration committee

The role of the remuneration committee, appointed by the Board, shall be to discharge the Board’s responsibilities relating to compensation of the Company’s executives and administration of benefit plans. The Committee shall assist the Board in, as applicable, administering and overseeing (1) the Company’s compensation policies, plans and benefit programs, (2) the administration of the Company’s equity-based plans and (3) the compensation of the Company’s executive officers.

The remuneration committee consists of three members of the Board of the Directors: Lars Boilesen (Committee Chairman), Bjørn Erik Reinseth and Howard Bubb.

Employees

As of the date of this Prospectus, Napatech has a total of 84 employees, of which 66 are located in Denmark and 17 in the US and 1 in China.

The following table illustrates the number of employees as per the end of each calendar year for 2016 and 2017 and per the date of this Prospectus

YTD Year ended 31 December

2019 2018 2017

Total Group ..................................................................................................... 84 87 114

Pensions and other obligations

8.11.1 Pensions

Napatech A/S offers, through a pension company, has a pension scheme for all Danish employees, which includes a savings part and an insurance part. The savings part is a contribution arrangement, where both Napatech and the employee contribute, this means that Napatech has no liability on the pension scheme. The insurance part is taken out of the monthly paid-in amount. There are no provisions or accruals in the Napatech Group for pension, retirement or similar benefits.

Napatech Inc. offers, through a professional employer organization, a 401K plan for all US employees. Employee participation is voluntary and if chosen both Napatech and the employee contribute, this means that Napatech has no liability on the pension scheme as it supports a 401K plan, but does not contribute to the plan. In addition, Napatech Inc. provides health insurance through an insurance company for all US employees.

There are no provisions or accruals in the Napatech Group for pension, retirement or similar benefits.

8.11.2 Loans and guarantees

The Company has no outstanding loans or guarantees to any of its employees.

Shareholdings

8.12.1 Board of Directors

The table below sets out the number of Shares and warrants owned by the Board of Directors as of the date of this Prospectus:

Name Number of Shares

Number of

Options /

Warrants

Lars Boilesen, chairman ................................................................................ 320,000 0

Christian Jebsen ........................................................................................... 0 0 Howard Bubb ............................................................................................... 70,000 0

Henry Wasik ................................................................................................ 200,000 0

Bjørn Erik Reinseth ....................................................................................... 430,000 0

8.12.2 Executive Management

The following table sets forth the number of Shares and options held by the Company’s Executive Management as of the date of this Prospectus.

Name Number of Shares

Number of

Options /

Warrants

Ray Smets (commencement Jun. 24, 2018), Chief Executive Officer ................... 380,000 400,000

Heine Thorsgaard (commencement Dec. 1, 2018), Chief Financial Officer ............ 0 55,000

Henrik Brill Jensen (commencement Jan. 25, 2005), Chief Operational Officer ..... 398,320 304,552


53

FINANCIAL INFORMATION

Introduction

The information included in this Section presents financial information derived from the Group's Audited Financial Information as of and for the year ended 31 December 2018 and 2017.

The selected historical consolidated financial information for the Group set forth in this Section should be read in conjunction with the Audited Financial Information, which is incorporated by reference to this Prospectus, see Section 16.1 "Incorporation by reference". As regards the Group's Audited Financial Information for 2017, please refer to the information included in section 15.1.

Historical financial information

9.2.1 Consolidated income statement

The table below sets out the Group's out the Group's consolidated income statement for the financial years 2018 and 2017.

In DKK ’000

Year ended 31 December

2018

(audited)

2017

(audited)

Revenue ............................................................................................... 106,153 206,046

Cost of goods sold ................................................................................. (57,060) (66,611)

Gross profit......................................................................................... 49,093 139,435

Other operating income 599 -

Research and development costs ............................................................. (18,460) (17,907) Selling and distribution expenses ............................................................. (66,735) (71,420)

Administrative expenses ......................................................................... (39,469) (36,223)

Operating profit before depreciation, amortization and impairment ... (74,972) 13,885

Depreciation amortization and impairment ................................................ (107,558) (37,755)

Operating result ................................................................................. (182,530) (23,870)

Finance income ..................................................................................... - - Finance costs ........................................................................................ (9,576) (5,956)

Result before tax ................................................................................ (192,106) (29,826)

Income tax .......................................................................................... (12,808) 5,395

Result for the period ........................................................................... (179,298) (24,431)

9.2.2 Consolidated statement of financial position

The table below sets out the Group's statement of financial position as of the financial years ended 31 December 2018, and 2017.

As of

31 December

In DKK ’000 2018

(audited)

2017

(audited)

ASSETS

Development projects, completed .............................................. 29,773 68,416 Development projects, in progress ............................................. 8,194 46,342

Patents 4,972 5,412

Other intangible assets ............................................................. - 50

Intangible assets .................................................................. 42,939 120,220

Plan and equipment .................................................................. 1,932 5,166

Leasehold improvements........................................................... 605 1,079

Tangible assets ..................................................................... 2,537 6,245

Deferred tax asset .................................................................... - -

Leasehold deposits ................................................................... 2,407 2,283

Other non-currents assets .................................................... 2,407 2,283

Non-current assets................................................................ 47,883 128,748

Inventories .............................................................................. 17,485 36,124

Trade receivables ..................................................................... 25,305 51,938

Other receivables ..................................................................... 13,814 3,899


54

As of

31 December

In DKK ’000 2018

(audited)

2017

(audited)

Income tax receivable .............................................................. 5,487 5,500

Cash and cash equivalents ........................................................ 17,159 39,967

Current assets ....................................................................... 79,250 137,428

Total assets ........................................................................... 127,133 266,176

EQUITY AND LIABILITES

Issued capital .......................................................................... 7,981 5,969

Share premium ........................................................................ 247,552 219,729

Foreign currency translation reserve ........................................... 215 (9)

Other capital reserves ............................................................... 4,971 6,361

Retained earnings .................................................................... (226,000) (48,883)

Equity .................................................................................... 34,719 183,167

Deferred tax liability ................................................................. - 7,425

Interest-bearing loans and borrowings ....................................... - -

Other non.current financial liabilities 13,391 -

Non-current liabilities ........................................................... 13,391 7,425

Interest-bearing loans and borrowings ........................................ 44,701 35,109

Trade payables ........................................................................ 5,959 26,130

Other payables ........................................................................ 11,099 13,855

Derivative financial instruments ................................................. 13,720 -

Provisions ............................................................................... - 490

Deffered revenue 69

Current liabilities .................................................................. 79,023 75,584

Total liabilities ...................................................................... 92,414 83,009

Total equity and liabilities ..................................................... 127,133 266,176

9.2.3 Consolidated statement of cash flows

The table below sets out the Group's consolidated statement of cash flows for the financial years 2018 and 2017.

As of

31 December

In DKK ’000 2018

(audited)

2017

(audited)

Operating activities

Result before tax...................................................................... (192,106) (29,826)

Adjustments to reconcile profit before tax to net cash flows:

Finance income ........................................................................ -

Finance costs ........................................................................... 9,576 5,956

Depreciation, amortisation and impairment ................................. 107,558 37,755

Gain/loss on the sale of non-current assets ................................. (599) 428 Non-cash changes in inventories 21,323

Share-based payment expense .................................................. 1,101 978

Working capital adjustments:

Change in inventories ............................................................... (2,684) (17,449)

Change in trade and other receivables ........................................ 23,363 16,283

Change in trade and other payables and provisions ...................... (11,808) (1,419)

Cash flow from operating activities (44,276) 12,706

Cash flow hedges in financial items ............................................ (4,521) 2,506

Interest paid............................................................................ (4,485) (861)

Income tax received, net .......................................................... 5,383 730

Net cash flows from operating activities ............................... (47,899) 15,081

Investing activities

Proceeds from sale of tangible assets 126

Purchase of tangible assets ....................................................... (461) (4,864) Proceeds from sale of intangible assets 1,979

Investments in intangible assets ................................................ (35,411) (48,402)

Investments in leasehold deposits .............................................. 124 (29)

Net cash flow from investing activities ................................. (33,643) (53,295)

Financing activities

Capital increase ....................................................................... 31,550 1,705


55

As of

31 December

In DKK ’000 2018

(audited)

2017

(audited)

Transaction costs on capital increase (1,606)

Proceeds from borrowings ......................................................... 28,942 30,109

Repayment in borrowings .......................................................... -

Net cash flows from financing activities ................................ 58,841 31,814

Net change in cash and cash equivalents .............................. (22,701) (6,400)

Net foreign exchange difference ................................................. (107) (584)

Cash and cash equivalents at beginning of the period ................... 39,967

46,951

Cash and cash equivalents at the end of the period .............. 17,159 39,967

9.2.4 Consolidated statement of changes in equity

The table below sets out the Group's consolidated statement of changes in equity for the financial years 2018 and 2017.

In DKK ’000

Share

capital

Share

premium

Foreign

currency

translatio

n reserve

Share

based

payment

reserve

Cash flow

hedge

reserve

Retained

earnings

Total

equity

At 1 January 2017 .................. 5,916 216,429 510 7,611 (1,025) (25,032) 204,409

Result for the year ..................... - - - - - (24,431) (24,431)

Exchange differences on

translation of foreign operations .. - - (519) - - - (519)

Net gain cash flow hedges .......... - - - - 10,265 - 10,265

Net gain cash flow hedges

reclassified to revenue ............... - - - - (5,314) - (5,314)


reclassified to finance costs ......... - - - - (3,637) - (3,637) Income tax effect ...................... - - - - (289) - (289)

Total comprehensive income .. - - (519) - 1,025 (24,431) (23,925)

Issue of shares .......................... 53 1,652 - - - - 1,705

Reversal, exercised and lapsed

share options ............................ - 1,648 - (2,228) - 580 -

Share-based payments ............... - - - 978 - - 978

Total transactions with shareholders ........................... 53 3,300 - (1,250) - 580 2,683

At 31 December 2017 ............. 5,969 219,729 (9) 6,361 - (48,883) 183,167

Result for the year ..................... - - - - - (179,298) (179,298)

Exchange differences on

translation of foreign operations .. - - 224 - - - 224

Net gain cash flow hedges .......... - - - - (7,453) - (7,453)

Net gain cash flow hedges reclassified to revenue ............... - - - - - - -


reclassified to finance costs ......... - - - - 7,453 - 7,453

Income tax effect ...................... - - - - - - -

Total comprehensive income .. - - 224 - - (179,298) (179,298)

Issue of shares .......................... 2,012 29,493 - - - - 1,705

Transaction costs (1,980)

Reversal, exercised and lapsed share options ............................ - 310 - (2,491) - 2,181 -

Share-based payments ............... - - - 1,101 - - 978

Total transactions with

shareholders ........................... 2,012 27,823 - (1,390) - 2,181 2,683

At 31 December 2018 ............. 7,981 247,552 215 4,971 - (226,000) 34,719

Auditor

Ernst & Young P/S has been the Company’s statutory auditor since 2007 and has audited the Company’s consolidated Audited Financial Statements for the financial years 2016, 2017 and 2018. Ernst & Young’s address is Gyngemose Parkvej 50, 2860 Soeborg, Denmark. Ernst & Young is a member of FSR (Foreningen af Statsautoriseret Revisorer), The Danish institute of Public Accountants, membership number 1102292.


56

Ernst & Young has not audited any other information included in this Prospectus.

Financial risk management objectives and policies

The Group’s activities are exposed to a variety of risks: liquidity risk, market risk (including foreign exchange risk and interest rate risk) and credit risk. The primary responsibility for Napatech’s risk management and internal controls in relation to the financial reporting process rests with the Executive Management. Napatech’s internal control procedures are integrated in the accounting and reporting systems and include procedures with respect to review, authorization, approval and reconciliation. The Executive Management is in charge of ongoing efficient risk management, including the identification of material risks, the development of systems for risk management, and that significant risks are routinely reported to the Board of Directors.

The Group’s functional currency is USD. The Group’s revenue and cost of goods sold are mainly denominated in USD. The Group’s main currency risk is thus associated with fluctuations in DKK against USD. Costs incurred in DKK are hedged using forward exchange contracts. The Group’s policy is not to enter into such contracts that extend beyond the current fiscal year. All forward exchange contracts as of 31 December 2018 have been settled. For more information regarding the Group’s financial risk management, see Note 27 to the Company’s annual report for the financial year 2018, incorporated by reference hereto.

Significant changes in the Group's financial or trading position

Other than the Private Placement, the Subsequent Offering and the Executive Offering as further described in Section 5, there have not been any significant changes to the Group’s financial or trading position since 31 December 2018.


57

CAPITAL RESOURCES

Overview of liquidity, capital resources, debt and certain other financial information

10.1.1 Liquidity and capital resources

As of 31 of December 2018, the Group had available cash and unused credit facilities in the level of DKK 20.0 million, comprising of DKK 17.2 million in cash and cash equivalents and DKK 2.8 million in unused credit facilities, compared to approximately DKK 40.0 million in cash and DKK 16 million in unused credit facilities at year-end 2017. The decrease of cash and cash equivalents from 31 December 2017 to 31 December 2018 is mainly caused by a decline of the revenue in 2018 as further described in Section 10.2 "Summarised consolidated cash flow information" below. As of 31 December 2018, the Group's cash in banks was denominated in DKK 3.4 million and in USD amounting to USD 2.1 million.

Following the Private Placement, the Company received approximately NOK 50 million in gross cash. Through the Private Placement, the Group expects that its current operations and budgeted costs are fully funded throughout 2019.

At the date of this Prospectus, there are no material restrictions on the Group’s access or possibility to use its cash and cash equivalents.

Napatech’s primary commitments are only of operational character and include salary to employees and rent for the offices. The main parts of Napatech’s investments are capitalized internal product development, in the shape of man hours capitalized. All these costs are expected to be covered by the operational cash flow.

10.1.2 Borrowings

In September 2018 the Group received a non-interest-bearing loan of USD 3 million. The loan is to be repaid over a three-year period.

Total current liabilities per 31 December 2018 amounted to DKK 79.0 million and was mainly related to the Company's interest-bearing overdraft facility with Jyske Bank. The Company has issued a floating charge in favour of Jyske Bank in the amount of DKK 30 million, secured on the Company's receivables, inventories, IP and tangible assets with a carrying amount of DKK 69.8. The floating charge serves as security for the Company's loans and cash credit facility with Jyske

Bank.

The Group’s current borrowings and credit facility with Jyske Bank has been in place over several years in the Group’s ordinary course of business. Nonetheless, the facilities are renegotiated every year as part of the Group’s ordinary course and, hence, must be presented as current liabilities. As of the date of this Prospectus, the Group’s borrowings with Jyske Bank is due and subject to negotiations in March 2019.

The Group does not have any indirect or contingent liabilities, except for normal operating lease commitments, and the inventory at the contract manufacturers.

10.1.3 Leasing

As of 31 December 2018, the Group had operating lease commitments comprising of office facilities and cars. The commitments are in total DKK 6.4 million, where DKK 4.0 million is due within one year and DKK 2.4 million is due between one and five years.

10.1.4 Capitalization of development projects and impairment testing

The Group currently has capitalized several of its development projects, which is subject to impairment testing on an ongoing basis. The Group performs impairment testing of these investments by use of a discounted cash flow model over a period of time to validate that the net book value of the development project is in line with the expected cash generation. The model is subject to certain assumptions, including:

Timeframe, Discount rate, Estimated revenue Cost of goods sold, and Fixed costs excluding costs of Management.

10.1.5 Customer credit

Trade receivables amounted to DKK 25.3 million as of 31 December 2018. DKK 22.2 million were not past due. Of the DKK 3.1 million that due debtors DKK 2.6 million were less than 30 days past due. Napatech has a high focus on cash collection.

Summarised consolidated cash flow information

Net cash flow from operating activities in the financial year 2018 was negative DKK 47.8 million, compared to DKK 15.1 million in the financial year 2017. The change is caused by the decline in revenue from 2017 to 2018.


58

The net cash flow used in investing activities in the financial year 2018 amounted to DKK 33.6 million, compared to DKK 53.3 million in the financial year 2017. The change is caused by the decrease in the investment in intangible and tangible assets.

The net cash flow from financing activities in the financial year 2018 amounted to DKK 58.8 million, compared to DKK 31.8 million in the financial year 2017. The increase in the cash flow from financing activities is caused by a cash flows from capital increase in 2018.

Working capital statement

Napatech is of the opinion that the working capital available to the Group is sufficient for the Group’s present requirements and for the period covering at least 12 months from the date of this Prospectus.

Capitalisation and indebtedness

The table below should be read in conjunction with the information included elsewhere in this Prospectus, including Section 9 "Financial Information" and the Audited Financial Statements, incorporated hereto by reference see Section 16.1 "Incorporation by reference".

The table below set forth the Group's consolidated capitalization and indebtedness per 31 December 2018.

Capitalisation

In DKK million

As of

31

December

2018

As of

31 December

2018 adjusted for

March raise

(audited)

Indebtedness

Total current debt1

- Guaranteed - -

- Secured2 30.0 30.0

- Unguaranteed/unsecured 49.0 49.0

Total non-current debt

- Guaranteed - -

- Secured - -

- Unguaranteed/unsecured 13.4 13.4

Total indebtedness 92.4 92.4

Shareholders’ equity

a. Share capital 8.0 16.6

b. Additional paid-in capital 247.6 247.6 c. Other reserves -220.8 -189.9

d. Non-controlling interests - -

Total equity 34.7 74.3

Total capitalisation 127.1 166.7

Indebtedness

In DKK million

As of 31

December

2018

As of 31 December

2018 adjusted for

March raise

(audited)

(A) Cash 17.2 56.8

(B) Cash equivalents - -

(C) Interest bearing receivables - -

(D) Liquidity (A)+(B)+(C) 17.2 56.8

(E) Current financial receivables 62.1 62.1

(F) Current bank debt12 44.7 44.7

(G) Current portion of long-term debt 6.0 6.0

(H) Other current financial liabilities 28.3 28.3

(I) Current financial debt (F)+(G)+(H) 79.0 79.0

(J) Net current financial indebtedness (I)-(E)-(D) -0.3 -39.9

-

(K) Long-term interest-bearing debt - -

(L) Bonds issued - -

(M) Other non-current financial liabilities 13.4 13.4

(N) Non-current financial indebtedness (K)+(L)+(M) 13.4 13.4


59

Capitalisation

In DKK million

As of

31

December

2018

As of

31 December

2018 adjusted for

March raise

(O) Net financial indebtedness (J)+(N) 13.1 -26.5

1 Deferred tax and income tax is not included in the table. 2 In connection with the Company's loan and credit facility with Jyske Bank, the Company has issued a floating charge in favour of Jyske Bank in the

amount of DKK 30 million, secured on the Company's receivables, inventories, IP and tangible assets with a carrying amount of DKK 69.8.

Property, plant and equipment

The Company’s property, plant and equipment include R&D equipment and office improvements. The Group rents all its office premises in both Denmark and abroad. Napatech does not conduct own production. All manufacturing is outsourced to contract suppliers, as further described in Section 6.6 "Manufacturing".

The Group's activities do not pollute the environment and the Group is not aware of any environmental issues that may affect the issuer's utilisation of its tangible fixed assets.

Investments

10.6.1 Overview

The Group’s investment activities are related to research and development and fixed assets like machinery and equipment. The Group routinely incurs costs directly attributable to continuous product development and the design and testing of new or improved products to be held for sale. These costs are capitalized as intangible assets and depreciated over three years after the project is completed, which as a minimum is the useful life of Napatech’s products.

10.6.2 Historical investments

The table below provides an overview of the Group’s investment activities for the financial years 2018 and 2017.

Year ended 31

December

In DKK ’000 2018

(audited)

2017

(audited)

Development projects 35,080 47,890

Patents 331 512

Plant and equipment 461 4,342

Leasehold improvement 522

Total 35,872 53,788

Investments made in 2018

The Group invested approximately DKK 35.1 million in development projects in 2018. The Group invested DKK 7.7 in an ongoing project relating to development of a virtual switching software addressing NFV (Network Functions Virtualization) and virtualization market. The Group invested approximately DKK 6.0 million in an ongoing project relating to development of a software for enabling network security applications running on a third-party HW platform. Furthermore, the Group also invested approximately DKK 5.5 million in a project related to a software for full throughput packet capture with data selection and load balancing and approximately DKK 4.0 million relating to development of software for inline use case supporting 100G flow-matching. DKK 2.4 million were invested in an ongoing project to develop of a new SmartNIC hardware platform. Approximately DKK 6.7 million of the investments made in 2018 were relating to development on the Pandion products divested in Q4 2018.

Investments made in 2017

The Group invested approximately DKK 47.9 million in development projects in 2017. Of this, approximately DKK 7.3 million was invested in a project relating to development of a new 2x100/40G SmartNIC and software for full throughput packet capture and transmit functionality, which was completed the same year. Moreover, the Group also completed a project relating to development of software for full throughput packet capture with replay capabilities, which entailed an investment of approximately DKK 7.9 million. The Group also invested DKK 6.5 million in a project in progress relating to development of the next generation of the Group's network recording platform. In addition, the Group made a material investment of DKK 5.3 million in connection with a project relating to development of a software relating to the Group’s Pandion PCAP Recorder solution that enables parallel searches, which was completed in 2018. Lastly, the Group invested in DKK 5.6 million in the ongoing project relating to development of a new 2x10/25/40/50/100G SmartNIC and software for virtual switching addressing the NFV (Network Functions Virtualization) market.


60

With respect to tangible assets, the Group made investments of approximately DKK 1.5 million related to its test lab for its Pandion product line.

10.6.3 Investments in progress and future investments

As of the date of this Prospectus, the Company has investments in progress related to its ongoing development projects. These are geographically distributed to Denmark and will be financed by the Company’s cash flow from operations as well as equity raised in the Private Placement.

The Group’s material ongoing development projects as of the date of this Prospectus includes:

Project with aim to develop software enabling network security application running on a third-party HW platform.

Project with aim to develop virtual switching software addressing NFV (Network Functions Virtualization) and virtualization market.

Project with aim to develop software with flow matching capability for inline applications.

Other than costs related to these ongoing projects (including appurtenant patent costs), the Company has not made any firm future investment commitments.


61

CORPORATE INFORMATION AND DESCRIPTION OF SHARE CAPITAL

Company corporate information

The Company’s registered name is Napatech A/S. The Company is organized as a public limited liability company in accordance with the Danish Companies Act, and is registered with the Danish Business Authority under company organization no. (CVR-no.) 10 10 91 24.

The Company was incorporated on 1 January 2003.

The Company’s registered office is Tobaksvejen 23A, 1, 2860 Soeborg, Denmark. The Company’s phone number at this registered office is +45 45961500.

The Company's Shares are listed on the Oslo Stock Exchange and trade under the ticker "NAPA". The Shares are registered in book-entry form with VPS under ISIN DK 0060520450. The Company’s register of shareholders in the form of the register of VPS is kept by DNB Bank ASA, Registrars Department, 0021 Oslo, Norway.

Legal structure

The Group consists of the parent company, Napatech A/S, two wholly owned subsidiaries, and one branch office. The legal structure of the Group is presented in the figure below.

11.2.1 Napatech A/S

Napatech A/S (HQ) Tobaksvejen 23 A DK-2860 Soeborg Denmark

Napatech A/S is the parent company in the Group, and was incorporated in 2003. All development activities and interactions with the outsourced manufacturing are all driven out of Denmark. All IPR belongs to Napatech A/S and all products are supplied by Napatech A/S and either sold directly to customers or to subsidiaries.

11.2.2 Subsidiaries and branch offices

Napatech’s subsidiaries and branch office are responsible for sales and support. Napatech Inc. buys all products for resale from Napatech A/S and then distribute to their customers. Napatech Inc. performs its own invoicing and collection. The following table gives the subsidiary and branch office addresses.

Company Address

Napatech Inc.

1 New Hampshire Avenue, Suite 125, Portsmouth, NH 03801, USA

4300 El Camino Real, Suite 210, Los Altos, CA 94022, USA

Other than as set forth above, the the Group does not have holdings in which it holds a proportion of the capital likely to have a significant effect on the assessment of its own assets and liabilities, financial position or profits and losses.

Admission to trading


62

The Company's Shares were listed on the Oslo Stock Exchange on 6 December 2013 under ticker "NAPA".

Shareholders' agreement and lock-up

As of the date of this Prospectus, the Company is not aware of any shareholders' agreement or ongoing lock-up arrangements with respect to the Company's Shares.

The Shares and development of share capital

The Company's share capital as of the date of this Prospectus is DKK 16,600,388.25 divided into 66,401,553 Shares, each with a nominal value of DKK 0.25. The Company's Shares are freely transferable and are not subject to ownership restrictions pursuant to law, licensing conditions or the articles of association. The Shares are equal in all respects and there are no different voting rights or classes of share. Each Share carries one vote at the Company’s general meeting.

The table below summarizes the development in Napatech’s share capital for the period covered by the historical financial information in this Prospectus.

Date of resolution

Type of change

Change in

share capital

(DKK)

Nominal value

(DKK)

New number

of shares

New share

capital (DKK)

1 January 2016 - - 1 5,821,723 5,821,723

15 February 2016 Share capital increase 47,975 1 5,869,698 5,869,698

20 April 2016 1:4 Share split - 0.25 23,478,792 5,869,698

15 August 2016 Share capital increase 46,000 0.25 23,665,456 5,916,364

31 December 2016 /

1 January 2017 - - 0.25 23,665,456 5,916,364

13 February 2017 Share Capital Increase 36,399 0.25 23,813,720 5,953,430

14 August 2017 Share capital increase 15,738 0.25 23,877,672 5,969,418

31 December 2017 /

1 January 2018 - - 0.25 23,877,672 5,969,418

12 February 2018 Share capital increase 9,137 0.25 23,923,200 5.980.805

10 July 2018 Share capital increase 598,000 0.25 26,315,220 6,578,805

2 August 2018

15 March 2019

Share capital increase

Share capital increase

1,402,000

8,619,583.25

0.25

0.25

31,923,220

66,401,553

7,980,805

16,600,388.25

Share options

The employees and members of management in the Company and the US-based subsidiary are eligible for share options schemes. Employees are granted a certain number of share options in the Company in return for the services they provide to the Group.

Share options under the share options schemes are granted at fixed prices. The options only vest as long as the holder of the option is an employee of the Group.

As of the date of this Prospectus, the Company has a total of 2,003,820 share options outstanding giving right to 2,003,820 new Shares in the Company. The following table shows the exercise price and vesting dates for outstanding share options and warrants in the Company:

Number of share options

Exercise

price (DKK)

Vested on

date

Last exercise

date

318,4521 8.00 DKK 2015-07-01 2023-07-01

336,6682 12.18 NOK 2018-07-01 2019-07-01

92,0002 15.88 NOK 2020-03-01 2021-03-01 102,0003 22.00 NOK 2020-10-01 2021-10-01

150,0003 25.50 NOK 2021-05-16 2022-05-16

709,6004 5.00 NOK 2025-09-14 2026-09-14

55,000 3.20 NOK 2025-12-20 2026-12-20

1 Aggregate number of options and warrants issued by the Board of Directors prior to the listing of the Company on the Oslo Stock

Exchange in November 2013.

2 Issued by the Board of Directors pursuant to an authorization granted by the Company's annual general meeting on 29 April 2014.


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3 Issued by the Board of Directors pursuant to an authorizations granted by the Company's annual general meeting on 20 April

2016.

4 Issued by the Board of Directors pursuant to authorizations granted by the Company's annual general meeting on 20 April 2017

and 25 April 2018.

All authorizations to issue share options and warrants, including applicable terms and conditions, are included in the Company's Articles of Association, incorporated hereto, see Section 16.1 "Incorporation by reference".

Own Shares

As of the date of this Prospectus, the Company owns 10,800 Shares in the Company.

Authorizations to increase the share capital

As of the date of this Prospectus, the below mentioned authorisations to increase the Company's share capital are in place.

11.8.1 Resolutions regarding the Private Placement

The Private Placement was resolved by the Company's Board of Directors pursuant to board authorization granted by the Company’s extraordinary general meeting on 15 March 2019, after which the following new provision was included in the Company's articles of association:

5. Capital Increase

(…)

5.3

Until 31 May 2019, the Board of Directors is authorized to increase the share capital one or more times without right of pre-emption for the existing shareholders and up to a total nominal amount of DKK 8,333,333.25.




Based on the above authorization, the Board of Directors made the following resolution on 15 March 2019:

A. The share capital is increased by between nom. DKK 1.00 and nom. DKK 8,333,333.25 by cash contribution

of NOK 1.50 per nom. DKK 0.25 share.

B. The subscription for the shares takes place by deviation from the shareholders' pre-emption right in favour

of the subscribers of shares following the accelerated book building process as listed in Appendix 1.

C. In the event that the capital increase is over-subscribed, the shares will be distributed on individual basis.

D. The shares must be subscribed for in writing at the latest five (5) calendar days after the meeting of the

board of directors and paid in cash in full to the company within five (5) calendar days thereof.

E. The new shares will belong to the current class of shares and have the same rights.

F. The shares will carry the same pre-emptive right as the current shares and no special limitation to the shares’

future pre-emption right will apply in later capital increases.

G. No shareholder will be obliged to have their share(s) redeemed.

H. The shares will be negotiable instruments, registered in the name of the holders and entered in the company’s

register of shareholders.

I. The shares will have rights to dividend and other rights from the date of registration of the capital increase.

J. The estimated costs related to the capital increase amounted to DKK 2,200,000.

K. The company’s articles of association, section 3.1, will be amended whereby the nominal share capital

amount will be raised to reflect the capital increase as set out in the draft revised articles of association.

L. Prospectus will be prepared and distributed afterwards in connection with the targeted emission. Shares are


11.8.2 Resolutions regarding the Subsequent Offering

The Subsequent Offering was resolved by the Company's Board of Directors pursuant to board authorisation granted by the Company's extraordinary general meeting on 15 March 2019, after which the following new provision was included in the Company's articles of association:


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5. Capital Increase

(…)

5.4

Until 30 June 2019, the Board of Directors is authorized to increase the share capital one or more times without right of pre-emption for the existing shareholders and up to a total nominal amount of DKK 4,166,666.75.

However so that shareholders who are allocated shares in the private placement conducted by the Board of Directors on 21 February 2019 and/or pursuant to the authorization under Clause 5.3 or 5.5 of the articles of association will not be eligible to participate in the capital increase pursuant to this Clause 5.4, and that funds that are under management by the same company, group of companies, fund manager(s) or similar may be treated as one shareholder when applying these limitations; except that to the extent that the capital increase is not validly subscribed for and allocated to the aforementioned shareholders as of 21 February 2019 the Sub-sequent Offering may be subscribed for by a syndicate of applicants in the private placement conducted pursuant to Clause 5.3.


In connection with an increase in share capital the following shall also apply: (i) the shares shall be registered in the name of the holder and shall be entered in the Company's register of shareholders, (ii) the shares are nego-tiable instruments, (iii) the articles of association’s provisions on shares, including the pre-emptive right in Clause 5.1 and with regard to redemption and transferability, shall apply for the new shares, and thereby no new class of shares is created, and (iv) the new shares will have rights to dividend and other rights from the date of registration of the capital increase.


Based on the above authorization, the Board of Directors, on 15 March 2019, authorized and instructed the management to undertake the necessary preparations for a subsequent emission (“Subsequent Offering”) in accordance with the authorization from the general meeting in the company’s articles of association, section 5.4.

11.8.3 Resolutions regarding the Executive Offering

The Executive Offering was resolved by the Company's Board of Directors pursuant board authorisation granted by the Company's extraordinary general meeting on 15 March 2019, after which the following new provision was included in the Company's articles of association:

5. Capital Increase

(…)

5.5

Until 31 May 2019, the Board of Directors is authorized to increase the share capital one or more times without right of pre-emption for the existing shareholders and up to a total nominal amount of DKK 286,250.00 in favour of the following members of the management respectively the board of directors and for the following amounts:

Raymond John Smets, CEO, nom. DKK 70,000 Henrik Brill Jensen, COO, nom. DKK 12,500 Flemming Andersen, VP of Engineering, nom. DKK 18,750 Howard Gregory Bubb, Board member, nom. DKK 10,000 Bjørn Erik Reinseth, Vice chairman of the board, nom. DKK 62,500 Lars Rahbæk Boilesen, Chairman of the board, nom. DKK 62,500 Henry Edward Wasik Jr, Board member, nom. DKK 50,000




Based on the above authorisation, the Board of Directors made the following resolution on 15 March 2019:


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A. The share capital is increased by between nom. DKK 1.00 and nom. DKK 286,250.00 by cash contribution of NOK 1.50 per nom. DKK 0.25 share.

B. The subscription for the shares takes place by deviation from the shareholders' pre-emption right in favour the persons stated in the articles of association, section 5.5.

C. The shares must be subscribed for in writing at the latest five (5) calendar days after the meeting of the board of directors and paid in cash in full to the company within five (5) calendar days thereof.

D. The new shares will belong to the current class of shares and have the same rights. E. The shares will carry the same pre-emptive right as the current shares and no special limitation to the shares’

future pre-emption right will apply in later capital increases. F. The new shares will be issued as shares in the amount of nom. DKK 0.25 each. G. No shareholder will be obliged to have their share(s) redeemed. H. The shares will be negotiable instruments, registered in the name of the holders and entered in the company’s

register of shareholders. I. The shares will have rights to dividend and other rights from the date of registration of the capital increase. J. The estimated costs related to the capital increase amounted to DKK 70,000. K. The company’s articles of association, section 3.1, will be amended whereby the nominal share capital

amount will be raised to reflect the capital increase as set out in the draft revised articles of association. L. Prospectus will be prepared and distributed afterwards in connection with the targeted emission. Shares are



11.8.4 Authority to issue shares for targeted capital increases

On 25 April 2019, the Annual General Meeting granted the Board an authorization to increase the share capital with up

to DKK 2,076,055.00, after which the following new provision was included in the Company's articles of association:

5. Capital Increase

(…)

5.2

Until 25 April 2020, the Board of Directors is authorized to increase the share capital one or more times without right of pre-emption for the existing shareholders and up to a total nominal amount of DKK 2,076,055.00.

The increase in share capital shall, as determined by the Board of Directors, be at market value and by either cash contribution or contribution of other assets than cash. Contribution cannot be made in part.

In connection with an increase in share capital the following shall also apply: (i) the shares shall be registered in the name of the holder and shall be entered in the company's register of shareholders, (ii) the shares are negotiable instruments, (iii) the articles of association’s provisions on shares, including the pre-emptive right in Clause 5.1 and with regard to redemption and transfer-ability, shall apply for the new shares, and thereby no new class of shares is created, and (iv) the new shares will have rights to dividend and other rights from the date of registration of the capital increase.


This authorization will be without pre-emption right for the existing shareholders. This is pursuant to the minutes of the Annual General Meeting in order to allow the Board of Directors to make efficient use of the authorization. The fact that capital increase will be done at market value helps in the view of the Company to ensure that existing shareholders will not suffer economic loss in connection with the use of the authorization.

11.8.5 Authority to issue options and increase the share capital to fulfil obligations under such options

On 25 April 2019, the Annual General Meeting granted the Board an authorization to increase the share capital with up to DKK 519,176, after which the following new provision was included in the Company's articles of association:

“7. Share Options.

(…)

7.5 Authorization to issue share options

At an ordinary general meeting in the Company held on 25 April 2019 it was decided to authorize the Board of Directors, before 25 April 2023, to issue share options with the right to subscribe for up to nominally DKK 519,176.00 shares in the Company.

The options issued shall be subject to the following terms and conditions:


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The options shall be awarded to (a) new employees, (b) newly employed, (c) key employees, and/or (d) management, of the Company and of companies within the Napatech Group.

The share options - and the shares in the Company subscribed for on the basis of the share options - shall be issued/subscribed for without the Company's shareholders having any pre-emption rights.

The options shall confer a right to subscribe for new shares of up to nominally DKK 519,176.00 in the Company belonging to the same share class as the existing shares in the Company.

The strike price shall be determined by the board of directors, but cannot be less than par value.

Instead of issuing new shares the Board of Directors may elect to sell secondary shares to the option holders at the same price. Alternatively, the Board of Directors has the right to pay out a cash amount equivalent to the difference between the strike price and the trading price at the close of business at the OSE of the Napatech share on the date of exercise, multiplied by the number of shares to be issued.

Except in cases of payment of the difference of the strike price and the trading price, the exercise price (strike price) must be transferred in full and in cash.

If an option or any portion thereof (i) expires or otherwise terminates without all of the shares covered by such option having been issued or (ii) is settled in cash (i.e., the option holder receives cash rather than shares), the shares covered by the option reverts to the pool of nom. DKK 519,176.00 shares and again become available for issuance, meaning that such expiration, termination or settlement will not reduce (or otherwise offset) the number of shares that may be available for issuance under the authorization. If any shares issued pursuant to an option are forfeited back to or repurchased by the Company because of the failure to meet a contingency or condition required to vest such shares in the option holder, then the shares that are forfeited or repurchased will revert to and again become available for issuance under this authorization.

The shares subscribed for on the basis of the options shall be negotiable instruments. The shares shall be

registered in the name of the holder and shall be recorded in the Company’s register of shareholders.

No shareholder shall be obliged to let their shares be redeemed, in whole or in part, by the Company or anyone else.

For the fulfilment of the options, the Board of Directors has been authorized to increase the Company's share capital by up to nominally 519,176.00 shares in the Company and to make the consequential amendments of the articles of association.”

Given the purpose of employee incentivation, this authorization will be without pre-emption right for the existing shareholders.

Dividend policy

Napatech is investing its capital in the development and marketing of its products and also values the flexibility to be able to pursue strategic opportunities if they should arise. Therefore, the Company has up until now not distributed any dividends, and does not expect to do so in the near future.

Shareholders

As of 23 April 2019, the Company had approximately 648 shareholders. The Company’s 20 largest shareholders as registered in the VPS as of 23 April 2019 are shown in the table below.

# Shareholders Type of account Number of Shares Percent

1 VERDANE CAPITAL VIII K/S Ordinary 18,680,222 28.13 %

2 SUNDT AS Ordinary 8,444,445 12.71 %

3 LUDVIG LORENTZEN AS Ordinary 4,444,445 6.69 %

4 TIGERSTADEN AS Ordinary 2,538,006 3.82 %

5 SILVERCOIN INDUSTRIES AS Ordinary 2,295,335 3.46 % 6 MP PENSJON PK Ordinary 2,222,222 3.35 %

7 STOREBRAND VEKST VERDIPAPIRFOND Ordinary 1,840,804 2.77 %

8 BROWNSKE BEVEGELSER AS Ordinary 1,777,778 2.68 %

9 ARCTIC FUNDS PLC Ordinary 1,750,072 2.64 %

10 VERDIPAPIRFONDET DNB SMB Ordinary 1,694,070 2.55 %

11 DNB Markets Aksjehandel/-analyse Ordinary 1,120,000 1.69 %

12 Private investor Ordinary 979,544 1.48 %

13 Danske Bank A/S Nominee 944,889 1.42 %

14 The Bank of New York Mellon Nominee 939,721 1.42 % 15 Private investor Ordinary 888,888 1.34 %

16 AREPO AS Ordinary 777,777 1.17 %

17 MARSTAL AS Ordinary 720,000 1.08 %

18 Nordnet Bank AB Nominee 707,095 1.06 %

19 UBS Switzerland AG Nominee 592,336 0.89 %

20 HOLTA INVEST AS Ordinary

555,205 0.84 %

Top 20 shareholders 53,912,854 81.18 %

Others 12,488,699 18.83%


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Total 66,401,553 100%

There are no differences in voting rights between the shareholders.

As far as the Company is aware of, there are no other natural or legal person other than the shareholders shown in the table above, which indirectly or directly has a shareholding in the Company above 5% which must be notified under Danish law. Shareholders with ownership exceeding 5% must comply with disclosure obligations according to the Danish Capital Markets Act, see Section 12 "Shareholders' matters and companies and securities law" below.

To the extent known to the Company, there are no persons or entities who, directly or indirectly, jointly or severally, exercise or could exercise control over the Company. The Company is not aware of any arrangements the operation of which may at a subsequent date result in a change of control of the Company.

The Company’s Articles of Association do not contain any provisions that would have the effect of delaying, deferring or preventing a change of control of the Company.

No special measures to ensure abuse of control of the Company have been taken.

SHAREHOLDERS' MATTERS AND COMPANIES AND SECURITIES LAW

This Section includes certain aspects of Danish and Norwegian legislation relating to shareholding in a Danish public limited company, with its shares listed on the Oslo Stock Exchange, but is however not a full or complete description of the matters described herein. The following summary does not purport to be a comprehensive description of all the legal considerations that may be relevant to a decision to purchase, own or dispose of Shares. Investors are advised to consult their own legal advisors concerning the overall legal consequences of their ownership of Shares.

The Company is a Danish public limited company and is as such subject to, inter alia, Danish company and securities law, including the Danish Company Act and with regard to disclosure of inside information and ongoing disclosure

requirements, market abuse, mandatory take-overs, squeeze-out, etc. However, the Company is also subject, inter alia, to certain aspects of Norwegian law, including the Norwegian Securities Trading Act.

The general meeting of shareholders

The Company’s general meetings shall be held at the Company’s registered office, in Copenhagen or in Oslo. See article 8.1 of the Articles of Association.

General meetings shall be convened by the Board of Directors no later than three weeks and no earlier than five weeks before the date of the general meeting by publishing a notice on the Company’s website and, where requested, by e-mail to all shareholders registered in the register of shareholders. See articles 8.3 of the Articles of Association.

The annual general meeting shall be held every year in time for the audited and adopted annual report to reach the Danish Business Authority (Erhvervsstyrelsen) before expiry of the time limit provided by the Danish Financial Statements Act (årsregnskabsloven). See article 9.1 of the Articles of Association.

Extraordinary general meetings to consider specific issues shall be convened within two weeks of receipt of a written request to such effect from the Board of Directors, the auditor, or shareholders holding no less than 5% of the share capital. See articles 9.2, 9.3 and 9.4 of the Articles of Association.

Shareholders’ rights to attend and vote at general meetings shall be determined on the basis of the shares held by the shareholder on the date of registration. The date of registration shall be one week before the date of the general meeting. See article 11.2 of the Articles of Association.

Voting rights – amendments to the articles of association

Each Share of DKK 0.25 carries one vote.

All business transacted by the general meeting shall be decided by a simple majority of votes, unless otherwise provided by the Danish Companies Act (selskabsloven) or by the Articles of Association.

A resolution to amend the Articles of Association requires that the resolution be adopted by at least two-thirds of the votes cast as well as the share capital represented at the general meeting, unless the Danish Companies Act requires a larger majority.

The provisions in the Company’s Articles of Association relating to a change of the rights of the shareholders or a change to the capital are not more stringent than required by the Danish Companies Act.

Pre-emptive rights

Under Danish law, all shareholders of the Company will generally have pre-emptive rights if the general meeting of the Company resolves to increase the share capital by cash payment. However, the pre-emptive rights of the shareholders may be derogated from by a majority comprising at least two-thirds of the votes cast and of the share capital represented at the general meeting if the share capital increase is made at market price or if the share capital increase is made in favour of employees in the Company and/or its subsidiaries.


68

The exercise of pre-emptive rights may be restricted for shareholders resident in certain jurisdictions, including but not limited to the United States, Canada, Japan and Australia, unless the Company decides to comply with applicable local requirements.

Change of control

The Company’s Articles of Association do not contain provisions that would have the effect of delaying, deferring or preventing a change of control of the Company.

Mandatory take-over bids

The Company is partly subject to the mandatory take-over provisions set out in Part 8 of the Danish Capital Markets Act, and partly the mandatory take-over provisions set out in the Norwegian Securities Trading act chapter 6.

Matters of a legal nature related to the information to be provided to the employees of the Company and matters relating to company law, including matters concerning the thresholds at which mandatory bid obligations are triggered, possible exemptions from the obligation to present a bid and exceptions from the mandatory bid obligation, will be subject to Danish law and be monitored by the Danish Financial Supervisory Authority.

However, for matters of a legal nature related to the bidding process, including questions concerning the compensation offered in connection with the bid, and in particular the bid price, the bid procedure, information on the bidder’s decision to present a bid, the content of the offer document and publication of the bid, will be dealt with under Norwegian law.

There have been no public takeover bids by third parties in respect of the Shares during the last or current financial year.

12.5.1 Danish law

Section 45 of the Danish Capital Markets Act includes rules concerning public offers for the acquisition of shares in Danish companies admitted to trading on a regulated market (including the Oslo Stock Exchange) or an alternative marketplace.

If a shareholding is transferred, directly or indirectly, in a company admitted to trading on a regulated market or an alternative marketplace, the acquirer shall enable all shareholders of the company to dispose of their shares on identical

terms, if such transfer involves the acquirer obtaining a controlling influence. The rules also apply to multiple acquirers acting in concert.

An acquirer has a controlling influence when he directly or indirectly holds at least one third of the voting rights in a company, unless it is possible in special cases to clearly demonstrate that such holding does not constitute a controlling interest.

An acquirer who does not hold more than one third of the voting rights in a company, nevertheless has a controlling influence when the acquirer:

• has the right to control at least a third of the voting rights in the company in accordance with any agreement; or

• has the right to appoint or dismiss a majority of the members of the company’s central management body (e.g. board of directors).

In the determination of voting rights, voting rights which relate to shares held by the company itself or its subsidiaries must be included. The acquisition of own shares by a company triggers the mandatory take-over bid pursuant to section 45 if the repurchase is due to the influence of the company by which a person obtains control pursuant to the above. Exemptions from the mandatory bid requirement may be granted under certain circumstances by the Danish Financial Supervisory Authority.

12.5.2 Norwegian law

In the case a mandatory bid obligation is triggered, the offeror is required to prepare an offer document complying with Norwegian law, and such document requires approval by the takeover supervisory authority (the Oslo Stock Exchange, for companies listed on the Oslo Stock Exchange) before the bid is made public. In the mandatory bid, all shares of the company must be treated equally. The mandatory bid must be made in cash or contain a cash alternative at least equal in value to any non-cash offer.

Squeeze-out

The squeeze-out rules are subject to Danish corporate legislation.

Pursuant to Section 70 of the Danish Companies Act, shares in a company may be redeemed in whole or in part by a shareholder holding more than nine-tenths of the share capital and a corresponding proportion of the voting rights in the company. Furthermore, according to Section 73 of the Danish Companies Act, a minority shareholder may require the majority shareholder holding more than nine-tenths of the shares and the corresponding voting rights to redeem the minority shareholder’s shares.


69

Disclosure obligations

Pursuant to section 38ff. of the Danish Capital Markets Act, a shareholder in the Company is required to notify the Company and the Danish Financial Supervisory Authority immediately (but within four days after becoming aware or after the shareholder should have become aware of the transaction’s completion; the shareholder is deemed to have become aware at the latest two days after completion of the transaction) when the shareholder’s holding constitutes, exceeds, or falls below the limits 5, 10, 15, 20, 25, 50 or 90 per cent, and the limits one-third or two-thirds of the voting rights or share capital. The disclosure obligation also applies in respect of various synthetic, temporary, or joint holdings as set out in section 38(2) of the Danish Capital Markets Act, and the Danish Executive Order no. 1172 of 31 October 2017 on Major Shareholders.

Pursuant to sections 15-16 of the Danish Executive Order no. 1172 of 31 October 2017 on Major Shareholders, the notification must state the identity of the shareholder, the threshold reached or no longer reached by the major shareholder, including the number of shares in the major shareholder’s holding and their nominal value, information about share classes and about the basis of calculation of the holdings and the date on which the thresholds are reached or no longer reached. Any failure to comply with the disclosure requirements is punishable by a fine. After the receipt of a major shareholder notification, the Company will publish the contents thereof without undue delay.

Furthermore, the general notification requirements pursuant to Danish company law will apply.

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. A resolution to decrease the Company’s share capital must be passed by at least two-thirds of the votes cast as well as at least two-thirds of the share capital represented at the general meeting. Redemption of individual shares requires the consent of the holders of the shares to be redeemed.

If a Danish limited liability company purchases its own shares for consideration, such consideration may only consist of

the funds that may be distributed as extraordinary dividends under the Danish Companies Act. As a general rule, a purchase of a Company’s own shares for consideration requires authorization from the general meeting to the Company’s board of directors. Such authorization may only be given for a specified time, which may not exceed five years. However, where it is necessary in order to avoid significant and imminent detriment to the company, the board of directors may acquire the Company’s own shares on behalf of the company for consideration without authority from the general meeting.

Notwithstanding the above, Danish limited liability companies may, directly or indirectly, acquire their own shares (i) in connection with a reduction of the share capital; (ii) in connection with a transfer of assets by merger, division or other universal succession; (iii) in satisfaction of a statutory takeover obligation of the company; or (iv) in connection with the purchase of fully paid-up shares in a forced sale for the satisfaction of a claim held by the company.

Distribution of assets on liquidation

In the event of a dissolution or liquidation of the Company, the Company’s shareholders are entitled to participate in the distribution of net assets in proportion to their nominal shareholdings after payment of the Company’s creditors.

Dividends

Dividend payments, if any, are declared with respect to a financial year at the annual general meeting of shareholders in the following year at the same time as the statutory annual report that includes the audited financial statements for that financial year is approved.

In addition, the Company's general meeting may resolve to distribute interim dividends or to authorize the Company's Board of Directors to decide on the distribution of interim dividends. A resolution to distribute interim dividends within six months after the date of the balance sheet as set out in the latest annual report shall be accompanied by a balance sheet from either the Company's annual report or an interim balance sheet, which must be reviewed by the Company's auditors. If the decision to distribute an interim dividend is resolved more than six months after the date of the balance sheet as set out in the Company's latest adopted annual report, an interim balance sheet must be prepared and reviewed by the Company's auditors. The balance sheet or the interim balance sheet, as applicable, must in each case show that sufficient funds are available for distribution.

Dividend may not exceed the amount proposed or recommended by the Company's Board of Directors. Moreover, dividends and interim dividends may only be made out of distributable reserves and may not exceed what is considered sound and adequate with regard to the Company's financial condition and such other factors as the Company's Board of Directors may deem relevant.

Dividends not claimed by shareholders are forfeited in favour of the Company, normally after three years, under the general rules of Danish law or statute of limitations.

Danish law does not provide any dividend restrictions or special procedures for non-Danish resident holders of Shares.

Articles of association

The following is a summary of certain provisions of the Company’s Articles of Association:


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12.11.1 Objects of the Company

The Company’s objects are to carry out business in the fields of engineering and development and manufacturing of network components as well as business related thereto. See article 2.1 of the Articles of Association.

12.11.2 Capital and nominal value

As of the date of this Prospectus, the Company’s share capital is nominal DKK 16,600,388.25 divided into shares of DKK 0.25 or any multiple thereof. See article 3.1 of the Articles of Association.

12.11.3 Board of Directors and executive board

The Company is managed by a board of directors consisting of four to eight directors elected by the general meeting to hold office for one year at a time with the possibility of re-appointment. Additional board members may be elected in accordance with the special provisions of the Danish Companies Act on employee representation. For each member an alternate member may be elected. The general meeting appoints the chairman of the board of directors. No member of the executive board may be elected as chairman. See articles 16.1 and 16.2 and 16.4 of the Articles of Association.

The board of directors forms a quorum when more than half of all directors are represented. All business transacted by the board of directors shall be decided by a simple majority of votes. In the event of equality of votes, the chairman or, in the chairman’s absence, the vice-chairman, shall have a casting vote. See articles 17.2 and 17.5 of the Articles of Association.

The board of directors shall appoint one to three executive officers to be responsible for the day-to-day management of the Company’s business. See article 18.1 of the Articles of Association.


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NORWEGIAN TAXATION

General

Set out in this chapter 13 is a summary of certain Norwegian tax matters related to purchase, holding and disposal of shares. The statements herein are, unless otherwise stated, based on laws, rules and regulations in force in Norway as of the date of this Prospectus and are subject to any changes in law occurring after such date. Such changes could possibly be made on a retrospective basis. This summary does not address foreign tax laws.

The following summary is of a general nature and does not purport to be a comprehensive description of all Norwegian tax considerations that may be relevant for a decision to acquire, own or dispose of Shares. Shareholders who wish to clarify their own tax situation should consult with and rely upon their own tax advisors. Shareholders resident in jurisdictions other than Norway should consult with and rely upon local tax advisors with respect to the tax position in their country of residence.

Please note that for the purpose of the summary below, a reference to a Norwegian or non-Norwegian shareholder refers to the tax residency rather than the nationality of the shareholder.

Taxation of dividends

13.2.1 Norwegian Personal Shareholders

Dividends distributed to shareholders who are individuals resident in Norway for tax purposes ("Norwegian Personal Shareholders") are taxable in Norway for such shareholders at an effective tax rate of 31.68% to the extent the dividend exceeds a tax-free allowance. The dividend received, less the tax free allowance, shall be multiplied by 1.44, which are then included as ordinary income taxable at a flat rate of 22%, increasing the effective rate on dividend dividends received by Norwegian Personal Shareholders to 31.68%.

The tax free allowance is calculated on a share-by-share basis. The allowance for each share is equal to the cost price of the share multiplied by a risk free interest rate, based on the effective rate after tax of interest on treasury bills (Nw. statskasseveksler) with three months’ maturity and increased by 0.5%. The allowance is calculated for each calendar

year, and is allocated solely to Norwegian Personal Shareholders holding shares at the expiration of the relevant calendar year.

Norwegian Personal Shareholders who transfer shares will thus not be entitled to deduct any calculated allowance related to the year of transfer. Any part of the calculated allowance one year exceeding the dividend distributed on the shares, may be carried forward and set off against future dividends received on, or gains upon realization, of the same share.

13.2.2 Norwegian Corporate Shareholders

Dividends distributed to shareholders who are limited liability companies (and certain other similar entities) resident in Norway for tax purposes ("Norwegian Corporate Shareholders"), are generally effectively taxed at a rate of 0.66% (3% of dividend income from such shares is included in the calculation of ordinary income for Norwegian Corporate Shareholders and ordinary income is subject to tax at a flat rate of 22%).

13.2.3 Non-Norwegian Personal Shareholders

Dividends distributed to shareholders who are individuals not resident in Norway for tax purposes ("Non-Norwegian Personal Shareholders"), are as a general rule subject to withholding tax at a rate of 25%. The withholding tax rate of 25% is normally reduced through tax treaties between Norway and the country in which the shareholder is resident. The withholding obligation lies with the company distributing the dividends and the Company assumes this obligation.

Non-Norwegian Personal Shareholders resident within the EEA for tax purposes may apply individually to Norwegian tax authorities for a refund of an amount corresponding to the calculated tax-free allowance on each individual share (please see Section 13.2.1 "Norwegian Personal Shareholders" above). However, the deduction for the tax-free allowance does not apply in the event that the withholding tax rate, pursuant to an applicable tax treaty, leads to a lower taxation of dividends than the withholding tax rate of 25% less the tax-free allowance.

If a Non-Norwegian Personal Shareholder is carrying on business activities in Norway and the shares are effectively connected with such activities, the shareholders will be subject to the same taxation dividends as Norwegian Personal Shareholders, as described in Section 13.2.1 "Norwegian Personal Shareholders" above.

Non-Norwegian Personal Shareholders who have suffered a higher withholding tax than set out in an applicable tax treaty, may apply to the Norwegian tax authorities for a refund of excess withholding tax deducted.

13.2.4 Non-Norwegian Corporate Shareholders

Dividends distributed to shareholders who are limited liability companies (and certain other entities) not resident in Norway for tax purposes ("Non-Norwegian Corporate Shareholders"), are as a general rule subject to withholding tax at a rate of 25%. The withholding tax rate of 25% is normally reduced through tax treaties between Norway and the country in which the shareholder is resident.


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Dividends distributed to Non-Norwegian Corporate Shareholders resident within the EEA for tax purposes are exempt from Norwegian withholding tax; provided that the shareholder is the beneficial owner of the shares and that the shareholder is genuinely established and performs genuine economic business activities within the relevant EEA jurisdiction.

If a Non-Norwegian Corporate Shareholder is carrying on business activities in Norway and the shares are effectively connected with such activities, the shareholder will be subject to the same taxation of dividends as a Norwegian Corporate Shareholders, as described above in Section 13.2.2 "Norwegian Corporate Shareholders".

Non-Norwegian Corporate Shareholders who have suffered a higher withholding tax than set out in the applicable tax treaty, may apply to the Norwegian tax authorities for a refund of the excess withholding tax deducted.

Nominee registered shares will be subject to withholding tax at a rate of 25% unless the nominee has obtained approval from the Norwegian Tax Directorate for the dividend to be subject to a lower withholding tax rate. To obtain such approval, the nominee is required to file a summary to the tax authorities, including all beneficial owners that are subject to withholding tax at a reduced rate.

The withholding obligation in respect of dividend to Non-Norwegian Corporate Shareholders and on nominee registered shares lies with the company distributing the dividends and the Company assumes this obligation.

Taxation of capital gains on realization of shares

13.3.1 Norwegian Personal Shareholders

Sale, redemption or other disposal of shares are considered realization for Norwegian tax purposes. A capital gain or loss generated by a Norwegian Personal Shareholder through disposal of shares is included in, or deducted from, the basis for computation of ordinary income in the year of realization. Same as for taxation of dividends disbursed to Norwegian Personal Shareholders (described in Section 13.2.1 "Norwegian Personal Shareholders" above), the effective tax rate is currently 31.68% (capital gains, less the tax free allowance, and losses are multiplied by 1.44, and then included or deducted from the Norwegian Personal Shareholders ordinary income, which is taxable at a flat rate of 22%).

Gains are taxable and losses are deductible irrespective of the duration of the ownership of the shares disposed of.

The gain or loss is calculated as the difference between the consideration for the share and the cost price (including costs incurred in relation to the acquisition or realization of the share). From this capital gain, Norwegian Personal Shareholders are entitled to deduct a calculated allowance, provided that such allowance has not already been used to reduce taxable dividend income. Please refer to Section 13.2.1 "Norwegian Personal Shareholders" for a description of the calculation of the allowance. The allowance may only be deducted in order to reduce a taxable gain calculated upon the realization of the share, and may not be deducted to produce or increase a loss for tax purposes, i.e. any unused allowance exceeding the capital gain upon the realization of a share will be annulled.

13.3.2 Norwegian Corporate Shareholders

Norwegian Corporate Shareholders are exempt from tax on capital gains generated through the realization of shares qualifying for participation exemption. Losses upon the realization and costs incurred in connection with the purchase and realization of such shares are not deductible for tax purposes.

13.3.3 Non-Norwegian Personal Shareholders

Capital gains from sale or other disposals made by a Non-Norwegian Personal Shareholders are not subject to taxation in Norway, however, a tax liability in Norway may arise if the shares are held in connection with business activities carried out or managed from Norway.

13.3.4 Non-Norwegian Corporate Shareholders

Capital gains generated through realization of shares by Non-Norwegian Corporate Shareholders are not subject to taxation in Norway.

Net Wealth Tax

Norwegian Personal Shareholders are subject to net wealth tax. The marginal net wealth tax is currently 0.85% of the value assessed. When calculating the net wealth tax base, shares in listed companies are valued to 75% of the shares' quoted value as of 1 January in the year of the assessment, i.e. the year following the relevant income year.

Norwegian Corporate Shareholders are not subject to net wealth tax.

Shareholders not resident in Norway for tax purposes are, at the outset, not subject to Norwegian net wealth tax. Non-Norwegian Personal Shareholders may however be subject to net wealth tax if the shares are held in connection with a business, or connected to the conduct of trade, in Norway.

Duties on transfer of shares

No stamp duty or similar duties are currently imposed in Norway on the transfer or issuance of shares in the Company.


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Inheritance tax

A transfer of shares through inheritance or as a gift does not give rise to inheritance or gift tax in Norway.


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DANISH TAXATION

Introduction

The following summary of the consequences of Danish taxation is based on the rules and regulations applicable at the date of the Prospectus. The summary is based on applicable Danish laws, rules and regulations, as they exist as of the date of this Prospectus. Such laws, rules and regulations could be subject to change, possibly on a retroactive basis. The summary is only meant to provide general guidelines and does not deal with all aspects that could be important for potential investors. The tax treatment of each investor may depend on the individual investor’s specific situation. Potential investors are encouraged to consult their own tax advisors in order to assess specific taxation consequences associated with investment in the Company and how taxation issues might possibly apply locally and abroad, or what the implications involved are, inter alia, possible changes in applicable taxation.

Any reference to a “Danish shareholder” or a “foreign shareholder” in the summary below refers to the tax residency and not the nationality of such shareholder.

Taxation of dividends

14.2.1 Danish personal shareholders

Dividends paid to individual investors are taxed as share income. The applicable tax rate varies and depends on the size of share income. Income up until DKK 54,000 (this amount is adjusted annually as from 2020) is taxed at 27%, while a higher tax rate of 42% applies to income exceeding DKK 54,000 (2019). For married couples cohabiting at the end of the income year the maximum limit for applying the 27% tax rate is DKK 108,000 (this amount is adjusted annually as from 2020) irrespective of which spouse receives the share income.

Dividends are subject to withholding tax of 27% upon distribution. If the share income in a given year solely comprises dividend income and does not exceed DKK 54,000/108,000 (2019), the withholding tax constitutes a final tax. The Company is responsible for withholding tax on dividends on behalf of the shareholder.

14.2.2 Danish corporate shareholders

Corporate shareholders

Taxation of dividends and capital gains of shareholders that are subject to Danish corporate taxation depends on the size of shareholding. In this regard the distinction is made between:

Shares of subsidiaries (subsidiary shares); Shares of group enterprises (group shares); and Portfolio shares

“Subsidiary shares” are shares owned by a shareholder holding at least ten per cent of the nominal share capital of the issuing company, provided that the latter is located in the EU/EEA or in a country with which Denmark has concluded a double taxation treaty.

“Group shares” are defined as shares in companies with which the shareholder is subject to Danish tax consolidation or where the requirements for international tax consolidation under Danish law are fulfilled. It is of no importance in which country the companies are resident as long as the companies are affiliated.

If the shares do not constitute group shares, subsidiary shares or other shares, they constitute “portfolio shares”. In general, the shares constitute portfolio shares when the shareholder holds less than ten per cent of the nominal share capital in the issuing company.

Dividends received from subsidiary shares and group shares are tax exempt irrespective of the ownership period. Dividends received on portfolio shares are fully taxable at the general corporate income tax rate irrespective of the ownership period. The general income tax rate is 22%. These dividends are also subject to withholding tax, at the effective rate of 22%. The Company is responsible for withholding tax on dividends on behalf of the shareholder.

Shares owned through partnerships

Partnerships are as a general rule transparent for Danish tax purposes. However, if controlling shareholders in the partnership are located abroad such partnership may under certain circumstances be treated as a taxable entity instead of a transparent entity.

The taxation occurs at partner level, and each partner is taxed on its proportional share of the net income generated by the limited partnership regardless of whether such income is distributed to the partner or not. Such net income is taxed as if the partner had held the underlying assets personally.

When the net income is actually distributed to the shareholders in the limited partnership no additional taxation will occur.


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14.2.3 Foreign personal shareholders

Dividends distributed to non-resident individuals in respect of shares held in a Danish company are generally subject to Danish withholding tax at the rate of 27%. The Company is responsible for withholding tax on dividends on behalf of the shareholder.

Denmark has an extensive double taxation treaty network worldwide. Non-resident shareholders are normally eligible for a refund of a part of the Danish withholding tax paid where they are entitled to claim a reduction to the treaty rate. Shareholders resident in non-treaty states are not eligible for a lower withholding tax rate.

A separate regime for reduction of withholding tax to the relevant treaty rate is available to private individuals who are tax residents of the United States, Canada, Germany, the Netherlands, Belgium, Luxembourg, Norway, Sweden, Ireland, Switzerland, Greece, the United Kingdom and Finland. In order to qualify under this regime, a shareholder must deposit his/her shares with a Danish bank, and the shareholding must be registered and administered by VP Securities A/S. In addition, such shareholder must provide certification from the relevant foreign tax authority as to the shareholder’s tax residence and eligibility under the relevant treaty.

If the shareholder holds less than ten per cent of the nominal share capital in the issuing company and the shareholder is tax resident in a jurisdiction which has a double taxation treaty or a tax information exchange agreement with Denmark, such dividends are subject to Danish tax at a rate of 15%. However, Danish tax is withheld at a rate of 27% and the recipient must request a refund of Danish tax withheld in excess of the 15% or a lower rate set forth in the applicable double tax treaty. Where the recipient is tax resident in a country outside the EU, but in a country that has entered into an arrangement of exchange of information with Denmark it is an additional condition that the recipient together with associated parties does not own more than 10% of the shares in the company distributing the dividend.

14.2.4 Foreign corporate shareholders

Non-resident shareholders receiving dividend from subsidiary shares are not liable for Danish withholding tax irrespective of the ownership period, provided that the dividend taxation should have been reduced or relinquished under the

European Union Parent-Subsidiary Council Directive (90/435/EEC) or a double taxation treaty between Denmark and the residency state of the shareholder. Furthermore, Danish withholding tax does not apply to dividends paid to foreign shareholders of group shares if the above listed conditions are met and provided that the foreign company is domiciled in the EU/EEA. It is a requirement for applicability of a reduced rate or exemption from withholding tax under double taxation treaties that the non-resident shareholder is the beneficial owner of the dividend in question, while for the protection right under the directive to apply, the generally applicable anti-abuse principles shall not have been violated.

Dividends from portfolio shares are subject to a withholding tax of 27%, regardless of the ownership period. The Company is responsible for withholding tax on dividends on behalf of the shareholder.

If Denmark has entered into a double taxation treaty with the country in which the shareholder is resident, the shareholder may seek a refund from the Danish tax authorities of the part of the tax withheld in excess of the tax to which Denmark is entitled under the relevant double taxation treaty.

If the shareholder holds less than ten per cent of the Company’s nominal share capital and the shareholder is tax resident in a jurisdiction that has concluded a double taxation treaty or a tax information exchange agreement with Denmark, and the shareholder is eligible for a reduction under the treaty/agreement, then the applicable withholding tax rate is 15%. However, Danish tax is withheld at a rate of 27% and the recipient must request a refund of Danish tax withheld in excess of the 15% or a lower rate set forth in the applicable double tax treaty. If the shareholder is tax resident outside the European Union, it is an additional requirement for eligibility for the 15% rate that the shareholder together with any group related shareholders holds less than ten per cent of the Company’s nominal share capital.

Taxation upon realization of shares

14.3.1 Danish personal shareholders

Private individuals should include gain from the sale of shares in calculating taxable income, regardless of the ownership period and size of shareholding.

A gain realized on sale of shares is taxed as share income. The applicable tax rate varies and depends on the size of share income. Income up until DKK 54,000 (this amount is adjusted annually as from 2020) is taxed at 27%, while a higher tax rate of 42% applies to income exceeding DKK 54,000 (2019). For married couples cohabiting at the end of the income year the maximum limit for applying the 27% tax rate is DKK 108,000 (this amount is adjusted annually as from 2020) irrespective of which spouse receives the share income. The gain is calculated as the difference between the average acquisition cost of all shares in the issuing company and the received cash consideration.

Capital losses on listed shares can only be used to offset taxable gains and dividend income received from other listed shares. Losses on listed shares may only be set off against gains and dividends on other listed shares if the tax authorities have received certain information concerning the shares. This information can normally be provided to the tax authorities by the securities dealer.

Any excess loss on listed shares of a spouse that cannot be deducted in own capital gain or dividends from listed shares will be transferred for deduction in a spouse’s positive share income on listed shares. Any exceeding loss can be carried forward for subsequent income years and as a priority rule needs to be deducted in own positive share income on listed


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shares first, before it will be transferred to a spouse. The carried forward losses need to be utilized in the earliest possible income year.

14.3.2 Danish corporate shareholders

Corporate shareholders

Gains on disposal of subsidiary shares and group shares are tax exempt irrespective of ownership period. This entails that a loss is not deductible. Gains on disposal of listed portfolio shares are taxable at the general corporate income tax rate, while deduction is granted for losses. The general income tax rate is 22%.

Companies’ gains or losses on listed portfolio shares are taxed based on mark-to-market principle. A gain or a loss is calculated as the difference between the value of the listed portfolio shares at the beginning and the end of the income year, beginning with the difference between the acquisition cost and the value at the end of the same income year. Upon realization of the listed portfolio shares, i.e. redemption or disposal, the taxable income of that income year equals the difference between the value of the listed portfolio shares at the beginning of the income year and the value of the shares at realization. If the listed portfolio shares have been acquired and realized in the same income year, the taxable income equals the difference between the acquisition cost and the price at realization.

Transition from the status of subsidiary shares/group shares to portfolio shares, and vice versa, is for tax purposes treated as disposal and immediate acquisition at market value at the time of status change.

Shares owned through partnerships

Partnerships are as a general rule transparent for Danish tax purposes. However, if controlling shareholders in the partnership are located abroad such partnership may under certain circumstances be treated as a taxable entity instead of a transparent entity.

The taxation occurs at partner level, and each partner is taxed on its proportional share of the net income generated by the limited partnership regardless of whether such income is distributed to the partner or not. Such net income is taxed as if the partner had held the underlying assets personally. Companies being shareholder in the partnership are taxed

each year based on a mark-to-market principle even if the partnership has not sold any shares; see above under “Corporate shareholders”.

When the net income is actually distributed to the shareholders in the limited partnership no additional taxation will occur.

14.3.3 Foreign personal shareholders

Non-resident investors are in general not subject to capital gains taxation in Denmark upon disposal of shares. As an exception, gains and losses on the sale of shares that are attributable to a permanent establishment in Denmark are taxable.

14.3.4 Foreign corporate shareholders

Non-resident investors are in general not subject to capital gains taxation in Denmark upon disposal of shares. As an exception, gains and losses on the sale of listed portfolio shares are taxed under the same rules as for Danish resident investors, in cases where these shares are attributable to a permanent establishment in Denmark.

Net wealth tax

There is no Danish wealth tax with relevance to Danish or other shareholders.

Duties on transfer of Shares

There is no Danish share transfer tax or stamp duty upon transfer of shares.

Inheritance tax

When shares are transferred by way of inheritance, such transfer may give rise to inheritance tax in Denmark if the decedent, at the time of death, is a resident of Denmark for inheritance tax purposes, or if the shares are attributable to a permanent establishment in Denmark.

The basis for the computation of inheritance tax is the market value at the time the transfer takes place. The rate varies between 0% and 36.25%. For inheritance from for example parents to children, the maximum rate is 15%.

LEGAL MATTERS

Legal disputes

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 Group's financial position or profitably.


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As part of an accounting audit at listed companies, the Danish Business Authority has reviewed the Napatech A/S 2017 Annual Report and the interim report for the first half of 2018. During this process, in the autumn of 2018, the Danish Business Authority has found some deviations from required IFRS accounting principles and Napatech has been required to correct these moving forward. These include: Required write-downs on overdue debtors, improved continuous assessment of currency hedging contacts, expectations for the future should not exclusively be referred to in terms of revenue but should also contain sufficient information to allow a profit forecast to be derived. Napatech has implemented these requirements from the Danish Business Authority in the 2018 Annual Report and in the Q4’18 Interim Management Statement.

Related party transactions

Historical information regarding related party transactions in the Group is included in note 25 and 26 to the Audited Financial Statements for the financial years 2017 and 2018, respectively.

Since 31 December 2018, there have been no material transactions between the Company and any shareholder in the Company.

For further information regarding remuneration, salary and share based compensation to the Board of Directors and Executive Management, see Section 8.5 "Remuneration and benefits". Since 31 December 2018, there have been no other transactions between the Company and the Board of Directors or the Executive Management.


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ADDITIONAL INFORMATION

Incorporation by reference

Information in this Prospectus regarding the historical financial information of the Company is incorporated by reference and should be read in connection with the cross reference table provided below. References in the table to "Annex" and "Items" are references to the disclosure requirements as set forth in the Norwegian Securities Trading Act cf. the Norwegian Securities Trading Regulations by reference to such Annex (and Item therein) of Commission Regulation (EC) no. 809/2004.

Section in

the

Prospectus

Minimum Disclosure

Requirement of the

Prospectus (Annex XXV) Reference document and link

Page of

reference

document

9 Item

20.1

Audited historical

financial information

Financial Statements FY2018

https://www.napatech.com/wp-

content/uploads/2019/04/Napatech_Annual_Report_2018_vF.pdf

24-60

Financial Statements FY2017

https://marketing.napatech.com/acton/attachment/14951/f-05af/1/-/-/-/-/Napatech_Annual_Report_2017.pdf

24-60

9 Item

20.3

Audit reports Audit Report 2018

https://www.napatech.com/wp-

content/uploads/2019/04/Napatech_Annual_Report_2018_vF.pdf

79-82

Audit Report 2017

https://marketing.napatech.com/acton/attachment/14951/f-

05af/1/-/-/-/-/Napatech_Annual_Report_2017.pdf

79-82

12.11 Articles of

Association

Articles of Association

https://marketing.napatech.com/acton/attachment/14951/f-

51002af9-2681-4299-bec3-7f8eb7802d74/1/-/-/-/-/2019-03-

20_Articles_of_Association_with_Appendices.pdf

-

Documents on display

Copies of the following documents will be available for inspection at the Company’s business address at Tobaksvejen 23A, Denmark, during normal business hours from Monday to Friday each week (except public holidays) for a period of twelve months from the date of this Prospectus:

The Articles of Association of the Company;

All reports, letters, and other documents, historical financial information, valuations and statements prepared by any expert at the Company's request any part of which is included or referred to in the Prospectus.

The historical financial information of the Company for the financial years 2017 and 2018. This Prospectus.






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SELLING AND TRANSFER RESTRICTIONS

General

The grant of Subscription Rights and issue of Offer Shares upon exercise of Subscription Rights to persons resident in, or who are citizens of countries other than Norway, may be affected by the laws of the relevant jurisdiction. Investors 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 investor receives a copy of this Prospectus in any territory other than Norway, the investor may not treat this Prospectus as constituting an invitation or offer to it, nor should the investor in any event deal in the Offer Shares, unless, in the relevant jurisdiction, such an invitation or offer could lawfully be made to that investor, or the Offer Shares could lawfully be dealt in without contravention of any unfulfilled registration or other legal requirements. Accordingly, if an investor receives a copy of this Prospectus, the investor should not distribute or send the same, 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 investor forwards this Prospectus into any such territories (whether under a contractual or legal obligation or otherwise), the investor should direct the recipient’s attention to the contents of this section 17.1.

Except as otherwise noted in this Prospectus and subject to certain exceptions: (i) the Offer Shares being granted or offered, respectively, in the Subsequent Offering 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 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 Offer Shares. Ineligible Persons may not exercise Subscription Rights.

If an investor exercises Subscription Rights to obtain Offer Shares or trades or otherwise deals in the Offer Shares, that investor 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) the investor is not located in an Ineligible Jurisdiction; (ii) the investor is not an Ineligible Person; (iii) the investor is not acting, and has not acted, for the account or benefit of an Ineligible Person; (iv) the investor 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 investor and any such person will be located outside the United States;

(v) the investor understands that the 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

(vi) the investor 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 investor’s representations and warranties. Any provision of false information or subsequent breach of these representations and warranties may subject the investor to liability.

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 investor (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 investor 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 overview only. If the investor is in any doubt as to whether it is eligible to exercise Subscription Rights or subscribe for, or purchase or sell, Offer Shares, that investor 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.


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Subject to certain exceptions, financial intermediaries are not permitted to send this Prospectus or any other information about the Subsequent Offering 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 Subsequent Offering) 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

Offer Shares by such offeree, subscriber or purchaser under the laws applicable to such offeree, subscriber or recipient. Each investor should consult its own advisers before subscribing for Offer Shares or purchasing Offer Shares. Investors 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 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 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 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 Offer Shares are being offered and sold outside the United States in reliance on Regulation S under the US Securities Act. Any offering of the Offer Shares by the Company to be made in the United States will be made only to a limited number of “qualified institutional buyers” (as defined in Rule 144A under the U.S. Securities Act) pursuant to an exemption from registration under the U.S. Securities Act who have executed and returned an U.S. investor letter to the Company prior to exercising their Subscription Rights. Prospective recipients are hereby notified that sellers of the Offer Shares may be relying on an exemption from the provisions of Section 5 of the U.S. Securities Act provided by Rule 144A.

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 Subsequent Offering, any offer or sale of the Offer Shares within the United States by any dealer (whether or not participating in the Subsequent Offering) may violate the registration requirements of the US Securities Act.

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 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 Offer Shares are distributed, offered or sold in the United States, by accepting delivery of this Prospectus or by its subscription for Offer Shares, will be deemed to have represented and agreed, on its behalf and on behalf of any investor accounts for which it is subscribing for Offer Shares, as the case may be, that:

(i) it is a “qualified institutional buyer” as defined in Rule 144A under the U.S. Securities Act, and that it has executed and returned an Eligible Shareholder letter to the Company prior to exercising their Subscription Rights; and

(ii) the Offer Shares have not been offered to it by the Company by means of any form of “general solicitation” or “general advertising” (within the meaning of Regulation D under the U.S. Securities Act).


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Each person to whom 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 investor accounts for which it is subscribing for Offer Shares or Offer Shares, as the case may be, that:

(i) it is acquiring the Offer Shares from the Company or the Manager in an "offshore transaction" as defined in Regulation S under the US Securities Act; and

(ii) 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 Subsequent Offering contemplated by this Prospectus may not be made in that Relevant Member State, other than the Subsequent Offering 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) to legal entities which are qualified investors as defined in the Prospectus Directive; (ii) to fewer than 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

(iii) 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 Managers 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 investor 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 Directive 2003/71/EC (and amendments thereto to the extent implemented in the Relevant Member State), and includes any relevant implementing measure in each Relevant Member State.

The EEA selling restriction is in addition to any other selling restrictions set out in this Prospectus.

Notice to Australian investors

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 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 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 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.

Notice to Canadian investors

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 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.


82

Notice to Hong Kong investors

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 Subsequent Offering. 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 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 Offer Shares which are or are intended to be disposed of only to persons outside Hong Kong or only to such professional Investors.

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 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 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 investors

The Subsequent Offering 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 organized 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 investors

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 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 Offer Shares may be distributed in connection with any such public offering.


83

DEFINITIONS AND GLOSSARY OF TERMS

In the Prospectus, the following defined terms have the following meanings: Audited Financial Statements ........... The Group's audited consolidated financial statements as at and for the years

ended 31 December 2017 and 2018

Anti-Money Laundering Legislation Anti-money laundering legislation applicable to the Subsequent Offering, including the Norwegian Money Laundering Act of 6 March 2009 no. 11 and the Norwegian Money Laundering Regulations of 13 March 2009 no. 302

Company or Napatech ..................... Napatech A/S, a public limited company incorporated under the laws of Denmark

CPU Central Processing Unit

EC Regulation 809/2004 .................. Commission Regulation (EC) no. 809/2004 implementing the Prospectus Directive as well as the format, incorporation by reference and publication of such Prospectuses and dissemination of advertisements

Eligible Shareholder Subscribers to Subscription Rights who:

were registered as holders of Shares in the Company’s register of shareholders with the VPS as of the expiry of the Record Date;

were not allocated Private Placement Shares or Executive Offer Shares;

are not resident in a jurisdiction where such offering would be unlawful or, for jurisdictions other than Norway, would require any prospectus filing, registration or similar action,

Each such shareholder constitute an "Eligible Shareholder".

EMEA ............................................ Region including Europe, Middle-East and Africa

Executive Offer Shares .................... The 1,145,000 new shares issued through the Executive Offering.

Executive Offering .......................... The allocation of Executive Offer Shares in a separate offering to the Company’s Executive Management and the Board of Directors which the Company carried out, registered in the Danish Central Business Register on 20 March 2019

Financial Instruments and Exchange Law

The Financial Instruments and Exchange Law of Japan

FPGAs ........................................... Field Programmable Gate Arrays

Group ........................................... The Company together with its consolidated subsidiaries

IAS ............................................... International Accounting Standards

Ineligible Jurisdictions 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 Offer Shares.

Ineligible Persons An Ineligible Shareholder or other person in an Ineligible Jurisdiction or a citizen of an Ineligible Jurisdiction.

Ineligible Shareholders Shareholders who are 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 or (for jurisdictions other than Norway) would require any prospectus, filing,

registration or similar action.

IFRS ............................................. International Financial Reporting Standards as approved by the EU

IoT ............................................... Internet of Things

Listing ........................................... The listing of the New Shares on the Oslo Stock Exchange


84

Manager ........................................ ABG Sundal Collier ASA, except where the context requires otherwise

New Shares ................................... The Private Placement Shares, the Offer Shares and the Executive Offer Shares together.

NFV .............................................. Network Functions Virtualization

NIC ............................................... Network Interface Card

Non-Norwegian Corporate Shareholders..................................

Shareholders who are limited liability companies (and certain other entities) not resident in Norway for tax purposes

Non-Norwegian Personal Shareholders..................................

Shareholders who are individuals not resident in Norway for tax purposes

Norwegian Corporate Shareholders ... Shareholders who are limited liability companies (and certain other similar entities) resident in Norway for tax purposes

Norwegian FSA The Financial Supervisory Authority of Norway

Norwegian Personal Shareholders ..... Shareholders who are individuals resident in Norway for tax purposes

Norwegian Securities Trading Act ..... The Norwegian Securities Trading Act of 29 June 2007 no. 75

Oslo Stock Exchange ....................... Oslo Børs, a stock exchange operated by Oslo Børs ASA

Payment Date ................................ 15 May 2019, when the payment for Offer Shares allocated to a subscriber falls due

Private Placement ........................... The private placement that the Company carried out, registered in the Danish Central Business Register on 20 March 2019

Private Placement Shares ................ The 33,333,333 new shares issued through the Private Placement

Prospectus ..................................... This Prospectus dated 29 April 2019 prepared and published by the Company

Prospectus Directive ....................... Directive 2003/71/EC of the European Parliament and of the Council of 4 November 2003 regarding information contained in Prospectuses

Record Date 25 February 2019

Relevant Member State Each of the Member States of the EEA other than Norway, which has implemented the Prospectus Directive

SDN .............................................. Software Defined Network

Shares .......................................... All shares in the Company, including the New Shares, except where the context requires otherwise

Subscription Period ........................ The period from 09:00 hours (CEST) on 30 April 2019 until 16:30 hours (CEST) on 10 May 2019 in which Subscription Rights may be used to subscribe for Offer Shares in the Subsequent Offering

Subscription Price ........................... NOK 1.50 per Offer Share, except where the context requires otherwise

Subscription Rights ......................... The non-transferable subscription rights allocated through the Subsequent Offering

Offer Shares .................................. The 16,666,667 shares offered in the Subsequent Offering

Subsequent Offering ....................... The fully underwritten subsequent offering of 16,666,667 new shares of the Company

US Securities Act ............................ The United States Securities Act of 1933, as amended

Verdipapirsentralen or the VPS ......... The Norwegian Central Securities Depository


85

APPENDIX 1 Napatech Patents and Pending Patent Applications Overview

Case Ref. Title Official No. Application

Date

Registered

Date

Country Case Status

18047 AN APPARATUS FOR

ANALYZING A DATA

PACKET, A DATA PACKET

PROCESSING SYSTEM AND

A METHOD

ZL201080040856.

1

15-09-2010 18-03-2015 China Registered


ANALYZING A DATA


PROCESSING SYSTEM AND A METHOD

602010008505.8 15-09-2010 27-09-2013 Germany Registered


ANALYZING A DATA



A METHOD

2478677 15-09-2010 18-09-2013 Denmark Registered


ANALYZING A DATA



A METHOD

2478677 15-09-2010 08-10-2013 Finland Registered


ANALYZING A DATA PACKET, A DATA PACKET


A METHOD

2478677 15-09-2010 06-08-2013 France Registered


ANALYZING A DATA



A METHOD

2478677 15-09-2010 14-08-2013 United

Kingdom

Registered


ANALYZING A DATA

PACKET, A DATA PACKET PROCESSING SYSTEM AND

A METHOD

2478677 15-09-2010 24-09-2013 Ireland Registered


ANALYZING A DATA



A METHOD

2478677 15-09-2010 24-09-2013 Italy Registered


ANALYZING A DATA



A METHOD

5711237 15-09-2010 13-03-2015 Japan Registered

18047 AN APPARATUS FOR ANALYZING A DATA



A METHOD

10-1726359 15-09-2010 06-04-2017 Republic of Korea

Registered


ANALYZING A DATA



A METHOD

2478677 15-09-2010 08-10-2013 Sweden Registered


ANALYZING A DATA

PACKET, A DATA PACKET PROCESSING SYSTEM AND

A METHOD

8,929,378 15-09-2010 06-01-2015 USA Registered

18085 B2 ZL201080054597.

8



86


Date

Registered

Date

Country Case Status

18085 B2 5814253 06-12-2010 02-10-2015 Japan Registered

18086 DISTRIBUTED

PROCESSING OF DATA

FRAMES BY MULTIPLE ADAPTERS USING TIME

STAMPING AND A

CENTRAL CONTROL

ZL201080062899.

X


18086 DISTRIBUTED

PROCESSING OF DATA

FRAMES BY MULTIPLE

ADAPTERS USING TIME

STAMPING AND A

CENTRAL CONTROLLER

2507950 06-12-2010 21-02-2018 Germany Registered

18086 DISTRIBUTED

PROCESSING OF DATA

FRAMES BY MULTIPLE

ADAPTERS USING TIME STAMPING AND A

CENTRAL CONTROLLER


18086 DISTRIBUTED

PROCESSING OF DATA

FRAMES BY MULTIPLE

ADAPTERS USING TIME

STAMPING AND A

CENTRAL CONTROLLER


18086 DISTRIBUTED

PROCESSING OF DATA

FRAMES BY MULTIPLE

ADAPTERS USING TIME

STAMPING AND A CENTRAL CONTROLLER


18086 DISTRIBUTED

PROCESSING OF DATA

FRAMES BY MULTIPLE

ADAPTERS USING TIME

STAMPING AND A

CENTRAL CONTROLLER

2507950 06-12-2010 21-02-2018 United

Kingdom

Registered

18086 DISTRIBUTED

PROCESSING OF DATA

FRAMES BY MULTIPLE

ADAPTERS USING TIME

STAMPING AND A CENTRAL CONTROLLER


18086 DISTRIBUTED PROCESSING OF DATA

FRAMES BY MULTIPLE

ADAPTERS USING TIME

STAMPING AND A

CENTRAL CONTROLLER


18086 DISTRIBUTED

PROCESSING OF DATA

FRAMES BY MULTIPLE

ADAPTERS USING TIME

STAMPING AND A

CENTRAL CONTROL


18086 DISTRIBUTED

PROCESSING OF DATA FRAMES BY MULTIPLE

ADAPTERS USING TIME

STAMPING AND A

CENTRAL CONTROL

10-1738620 06-12-2010 16-05-2017 Republic of

Korea

Registered

18086 DISTRIBUTED

PROCESSING OF DATA

FRAMES BY MULTIPLE

ADAPTERS USING TIME

STAMPING AND A

CENTRAL CONTROLLER


18086 DISTRIBUTED

PROCESSING OF DATA FRAMES BY MULTIPLE

ADAPTERS USING TIME

STAMPING AND A

CENTRAL CONTROL

9,407,581 06-12-2010 02-08-2016 USA Registered


87


Date

Registered

Date

Country Case Status

18087 AN APPARATUS AND A

METHOD OF RECEIVING

AND STORING DATA

PACKETS CONTROLLED BY

A CENTRAL CONTROLLER

ZL201080063130.

X



METHOD OF RECEIVING

AND STORING DATA PACKETS CONTROLLED BY




METHOD OF RECEIVING

AND STORING DATA





METHOD OF RECEIVING

AND STORING DATA




18087 AN APPARATUS AND A METHOD OF RECEIVING

AND STORING DATA





METHOD OF RECEIVING

AND STORING DATA



2507951 06-12-2010 11-09-2013 United

Kingdom

Registered


METHOD OF RECEIVING

AND STORING DATA PACKETS CONTROLLED BY




METHOD OF RECEIVING

AND STORING DATA





METHOD OF RECEIVING

AND STORING DATA

PACKETS CONTROLLED BY A CENTRAL CONTROLLER



METHOD OF RECEIVING

AND STORING DATA



10-1720259 06-12-2010 21-03-2017 Republic of

Korea

Registered


METHOD OF RECEIVING

AND STORING DATA





METHOD OF RECEIVING AND STORING DATA



8,934,341 06-12-2010 13-01-2015 USA Registered

18101 AN ASSEMBLY AND A

METHOD OF RECEIVING

AND STORING DATA

WHILE SAVING

BANDWIDTH BY

CONTROLLING UPDATIN

ZL201080063131.

4



88


Date

Registered

Date

Country Case Status


METHOD OF RECEIVING

AND STORING DATA

WHILE SAVING

BANDWIDTH BY

CONTROLLING UPDATING

OF FILL LEVELS OF QUEUES

EP 2507952 06-12-2010 11-11-2013 Germany Registered

18101 AN ASSEMBLY AND A METHOD OF RECEIVING

AND STORING DATA

WHILE SAVING

BANDWIDTH BY


OF FILL LEVELS OF

QUEUES



METHOD OF RECEIVING

AND STORING DATA

WHILE SAVING BANDWIDTH BY

CONTROLLING UPDATIN



METHOD OF RECEIVING

AND STORING DATA

WHILE SAVING

BANDWIDTH BY


OF FILL LEVELS OF

QUEUES



METHOD OF RECEIVING

AND STORING DATA WHILE SAVING

BANDWIDTH BY


OF FILL LEVELS OF

QUEUES

2507952 06-12-2010 02-10-2013 United

Kingdom

Registered


METHOD OF RECEIVING

AND STORING DATA

WHILE SAVING

BANDWIDTH BY

CONTROLLING UPDATING OF FILL LEVELS OF

QUEUES



METHOD OF RECEIVING

AND STORING DATA

WHILE SAVING

BANDWIDTH BY

CONTROLLING UPDATIN



METHOD OF RECEIVING

AND STORING DATA

WHILE SAVING BANDWIDTH BY

CONTROLLING UPDATIN



METHOD OF RECEIVING

AND STORING DATA

WHILE SAVING

BANDWIDTH BY


10-1716832 06-12-2010 09-03-2017 Republic of

Korea

Registered


METHOD OF RECEIVING

AND STORING DATA

WHILE SAVING

BANDWIDTH BY CONTROLLING UPDATING

OF FILL LEVELS OF

QUEUES



METHOD OF RECEIVING

AND STORING DATA

WHILE SAVING

BANDWIDTH BY

CONTROLLING UPDATIN

8,874,809 06-12-2010 28-10-2014 USA Registered


89


Date

Registered

Date

Country Case Status

18249 Using the rail to bias

cooling surface

ZL201180020506.

3



cooling surface


18249 TERMISK STYRET

ANORDNING



cooling surface


18249 Using the rail to bias cooling surface



cooling surface

2561741 19-04-2011 23-04-2014 United

Kingdom

Registered


cooling surface



cooling surface



cooling surface



cooling surface

9,155,224 19-04-2011 06-10-2015 USA Registered

18529 An apparatus and a

method for receiving and

forwarding data

ZL201180064133.

X



method for receiving and forwarding data




forwarding data



90


Date

Registered

Date

Country Case Status



forwarding data




forwarding data




forwarding data

2661845 27-12-2011 12-09-2014 United

Kingdom

Registered



forwarding data


18529 An apparatus and a method for receiving and

forwarding data




forwarding data




forwarding data




forwarding data

9,246,850 27-12-2011 26-01-2016 USA Registered

18550 Using Sync packets to

control storage from

multiple blades

ZL201280006677.

5




multiple blades




multiple blades



control storage from multiple blades




multiple blades



91


Date

Registered

Date

Country Case Status



multiple blades

2668753 11-01-2012 04-10-2017 United

Kingdom

Registered



multiple blades




multiple blades




multiple blades


18550 Using Sync packets to control storage from

multiple blades


18697 Using venturi effect to cool

components below cooling

surface

ZL201180020528.

X




surface


18697 TERMISK STYRET

ANORDNING




surface




surface




surface

2561728 19-04-2011 23-04-2014 United

Kingdom

Registered


components below cooling surface




surface



92


Date

Registered

Date

Country Case Status



surface




surface




surface

9,155,223 19-04-2011 06-10-2015 USA Registered

18753 A DATA MERGE UNIT, A

METHOD OF PRODUCING

AN INTERLEAVED DATA

STREAM, A NETWORK

ANALYSER AND A METHOD OF ANALYSING A

NETWORK



METHOD OF PRODUCING

AN INTERLEAVED DATA

STREAM, A NETWORK

ANALYSER AND A METHOD

OF ANALYSING A

NETWORK



METHOD OF PRODUCING

AN INTERLEAVED DATA

STREAM, A NETWORK ANALYSER AND A METHOD

OF ANALYSING A

NETWORK

1654819 13-08-2004 02-07-2013 United

Kingdom

Registered

18811 Improved time stamping -

E1

ZL201280041919.

4



E1

2751941 30-08-2012 European

Patent

Office

Application

allowed


E1



E1

9,729,259 30-08-2012 08-08-2017 USA Registered

19009 Network monitor 7,411,946 12-08-2008 USA Registered

19607 delay before Work List 2874362 13-11-2013 European

Patent

Office

Response to

Exam Report

filed at IPO

19607 delay before Work List 10,033,665 11-11-2014 24-07-2018 USA Registered


93


Date

Registered

Date

Country Case Status

19663 Time stamp mechanism

with low pass filter











19663 Time stamp mechanism with low pass filter

3014797 27-06-2014 10-03-2017 United Kingdom

Registered












US-2016-

0142167-A1

27-06-2014 USA Examination

in progress

19852 Activity diodes 3100324 08-01-2015 European

Patent

Office

Response to

Exam Report

filed at IPO

19852 Activity diodes 9,800,336 08-01-2015 24-10-2017 USA Registered

19897 A SYSTEM AND A METHOD

FOR HANDLING DATA

3337099 12-12-2017 European

Patent Office

Examination

requested

19897 A SYSTEM AND A METHOD

FOR HANDLING DATA

US-2018-

0167322-A1

12-12-2017 USA Application

filed


94


Date

Registered

Date

Country Case Status

19954 Synchronized timing 3015971 27-10-2015 European

Patent

Office

Examination

report

received

19954 Synchronized timing 9,811,110 28-10-2015 07-11-2017 USA Registered

20689 prevention of disc

fragmentation

15/281,208 30-09-2016 USA Examination

in progress

20987 EXTENSION PCB WITH

COMMON COOLING

SYSTEM

3302009 30-09-2016 European

Patent

Office

Examination

requested

20987 EXTENSION PCB WITH COMMON COOLING

SYSTEM

WO 2018/060374 28-09-2017 Patent Cooperatio

n Treaty

Application filed

BeckGreener A METHOD OF

TRANSFERRING DATA

IMPLYING A NETWORK

ANALYSER CARD

EP 1 692 817 B1 09-12-2004 10-02-2012 Germany Registered


TRANSFERRING DATA

IMPLYING A NETWORK ANALYSER CARD

EP 1 692 817 B1 09-12-2004 10-02-2012 United

Kingdom

Registered


TRANSFERRING DATA

IMPLYING A NETWORK

ANALYSER CARD

EP 1 692 817 B1 09-12-2004 10-02-2012 France Registered

https://register.epo.org/application?number=EP04805984



APPENDIX 2: SUBSCRIPTION FORM FOR THE SUBSEQUENT OFFERING

NAPATECH A/S

SUBSEQUENT OFFERING APRIL-MAY 2019

In order for investors to be certain to participate in the Subsequent Offering, Subscription

Forms must be received no later than 10 May 2019 at 16:30 hours CEST. 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:

ABG Sundal Collier ASA

Munkedamsveien 45D

PO Box 1444 Vika

NO-0115 Oslo

Norway

Tel: + 47 22 01 61 73

E-mail: [email protected]

SUBSCRIBERS WHO ARE RESIDENTS OF NORWAY WITH A NORWEGIAN

PERSONAL IDENTIFICATION NUMBER CAN IN ADDITION SUBSCRIBE FOR

SHARES THROUGH THE VPS ONLINE SUBSCRIPTION SYSTEM (LINK

AVAILABLE AT WWW.ABGSC.COM)

General information: The terms and conditions for the Subsequent Offering in Napatech A/S (the “Company”) of 16,666,667 offer shares (the “Offer Shares”) pursuant to resolution by the

Company’s extraordinary general meeting on 15 March 2019 (the “EGM”) are set out in the prospectus dated 29 April 2019 (the “Prospectus”). Terms defined in the Prospectus shall have the

same meaning in this Subscription Form. The Company’s Articles of Association and annual accounts for the last two years, are available at the Company’s registered office and on the internet

addresses stated in the Prospectus. In case of any discrepancies between the Subscription Form and the Prospectus, the Prospectus shall prevail.

Subscription Period: The subscription period is from 09:00 CEST on 30 April 2019 to 16:30 CEST on 10 May 2019 (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 have 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. Subscription without subscription rights will not be

permitted.

Subscription price: The subscription price for one (1) Offer Share is NOK 1.50.

Right to subscribe: Non tradable subscripiotn rights (“Subscription Rights”) will be issued to subscribers who were registered as holders of Shares in the Company's register of shareholders

with the VPS as of expiry of 25 February 2019 (the “Record Date”) who were not allocated shares in the Private Placement or the Executive Offering, and who are not resident in a jurisdiction

where such offering would be unlawful or, for jurisdictions other than Norway, would require any prospectus filing, registration or similar action (“Eligible Shareholders”). For each Share

recorded as held in the Company as of expiry of the Record Date, each Eligible Shareholder will receive 0.73 Subscription Rights, rounded down to the nearest whole Subscription Right. Each

Subscription Right, subject to applicable securities laws, give the right to subscribe for and be allocated one (1) Offer Share. Over-subscription is allowed. Upon expiry of the Subscription

Period, the Subscription Rights will expire and have no value.

Allocation: The allocation criteria are set out in the Prospectus. The result of the Subsequent Offering is expected to be published on or about 13 May 2019 in the form of a stock exchange

notification from the Company through Oslo Børs' information system and at the Company’s website (www.napatech.com). Notifications of allocated Offer Shares and the corresponding

subscription amount to be paid by each subscriber are expected to be distributed in a letter on or about 13 May 2019. Subscribers having access to investor services through their VPS account

manager will be able to check the number of Offer Shares allocated to them from 12:00 hours (CEST) on 13 May 2019. Subscribers who do not have access to investor services through their

VPS account manager may contact the Manager from 12:00 hours (CEST) on 13 May 2019 to get information about the number of Offer Shares allocated to them.

Payment: The payment for the Offer Shares falls due on 15 May 2019 (the “Payment Date”). Subscribers who have a Norwegian bank account must, and will by signing the Subscription Form,

provide the Manager with a one-time irrevocable authorisation to debit a specified bank account with a Norwegian bank for the amount payable for the Offer Shares which are allocated to the

subscriber. The specified bank account is expected to be debited on or after the Payment Date. The Manager is only authorised to debit such account once, but 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. Subscribers who do not have a Norwegian bank account must ensure that payment

with cleared funds for the Offer Shares allocated to them is made on or before the Payment Date 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. over-

subscription):

(For broker: Consecutive no.)

1 SUBSCRIPTION RIGHT GIVES THE RIGHT TO BE ALLOCATED 1

OFFER SHARE

Σx Subscription price per Offer Share

NOK 1.50

Total Subscription amount to be paid

NOK

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 In the case of changes in registered

information, the account operator

must be contacted. Your account

operator is: Forename

Surname/company

Street address (for private: home address):

Post code/district/country

Personal ID number/Organisation number

Norwegian Bank Account for dividends

Nationality

mailto:[email protected]

Daytime telephone number

E-mail address

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 Subsequent Offering 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

+47 22 01 61 73 . 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 Subsequent Offering 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 Subsequent Offering 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 his capacity as Manager for the Subsequent Offering.

Information Barriers: The Manager is a securities firms 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 Subsequent Offering 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 Subsequent

Offering, 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 8.75% 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, reserve 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.


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NAPATECH A/S Tobaksvejen 23 A DK-2860 Soeborg

Denmark