INQ Group: The Conversion-Price 'Progress' Is Real but Thin — Too Early to Chase

INQ Group AB (Nasdaq Stockholm: INQ), the Swedish smartpen company formerly known as Anoto, added USD 0.8 million to its convertible loan on August 31 and, in the same announcement, raised the price at which that debt converts into shares from SEK 0.12 to SEK 0.16. Chief executive Jonathan Faiman described the increase as a sign of "the progress INQ is making". For a holder, or anyone tempted to treat a rising conversion price as proof the story is working, the question is worth slowing down on: progress toward what — a business that repays its borrowings, or a share price that rescues the lenders?

Start with what the conversion price actually is, because it is the whole news item. A convertible loan starts as debt that can be turned into stock at a preset price. The lower that price, the more shares the lender captures for the same dollars, and the more existing holders are diluted when conversion happens. So charging SEK 0.16 instead of SEK 0.12 is genuinely better for INQ's shareholders: measured on the fixed SEK/USD rate of 9.05 the loan documents use, the new USD 0.8 million is worth about SEK 7.2 million, which at SEK 0.12 would have printed roughly 60 million new shares but at SEK 0.16 prints about 45 million. Fifteen million shares saved, on a pre-consolidation capital of about 1.1 billion shares. Real, but small — roughly one and a half percentage points of dilution, around 4% to 5% of the current count either way.

The reason the price could rise matters more than the rise itself. Each new tranche of this facility has effectively been repriced at wherever the stock happened to be. The original October 2025 agreement carried a conversion price of SEK 0.06; the June 2026 tranche stepped up to SEK 0.12; the market price has moved with it, closing around SEK 0.15 in late August. That is the market repricing the loan, not the company earning its way to a better deal. Nothing in the half-year numbers supports a stronger balance sheet: the company ended June with just over SEK 1 million of cash, after drawing USD 0.9 million in March and USD 0.6 million in June. Three tranches in six months is not a company closing a funding gap; it is a company living quarter to quarter on its facility.

Which is why the identity of the lenders matters. The facility is subscribed by a known group — among the named lenders are Achilles Capital AB, Mark Stolkin and Machroes Holdings Limited — and Achilles' CEO, Gary Stolkin, sits on INQ's board. The board has been taking its own fees as set-off into the loan and then ratifying its own participation at the annual meeting. That does not make the financing fraudulent; it means the "progress" the market is being asked to read into a higher conversion price is, in a meaningful sense, priced by the people lending to themselves. The signal is softer than it looks.

Now the part the announcement does not say. INQ's economics are not close to self-funding. Revenue for the first half was MSEK 13.4 (a SEK 13.4 million, roughly USD 1.5 million — the business is that small), up from 10.5, and second-quarter growth was genuinely stronger at 64%, led by an 83% jump in the enterprise segment. But gross margin, a healthy 65% in the half, does not reach the cost base: the operating loss was MSEK 35.7, about 2.7 times the period's sales, wider than the year-ago loss. The full-year 2025 picture was worse — sales fell to MSEK 22 from 30 while the loss run continued. This is a story stock in the literal sense: the value sits in the partnerships, not in the numbers on the sheet today.

The real test is a clause buried in the terms. If INQ ever completes a qualified equity financing of at least USD 3 million at a subscription price of at least SEK 0.20, the loan converts automatically. What that means is that the day an outside equity buyer validates the story at a higher price is the same day the secured lender, plus the warrants it received worth 20% of the funds it put in, converts into shares and the true per-share economics become visible. With the facility now in the neighborhood of USD 6 million against a market capitalization of roughly SEK 160 million (about USD 18 million), the convertible is not pocket change; it is on the order of a third of the stock's entire market value sitting in front of existing holders, earning 8% until October 2027 and secured against the group's assets.

So how should an investor read the headline? The higher conversion price is an improvement, and it is fair to note the newest money is being priced at the market rather than at a large discount to it. But it is a market move, not a business move, and the business that must eventually carry the debt is still losing about 2.7 kronor for every krona it sells. The buy case rests entirely on whether the partnership pipeline becomes revenue that bends the margin curve: a first LAMY co-branded order of roughly 7,000 units with a Germany launch in the second half of 2026, an exclusive Filevine deal to put 2,000 custom pens and notebooks in front of an AI-driven legal workflow serving 100,000-plus professionals, and an ed-tech exam platform launched in May. Management says it expects these to deliver "increasing profitability into the end of this year" and more partnership news in the third and fourth quarters. That is the falsifiable claim; the next report, expected near the end of November, and any move toward a USD 3 million-plus equity raise at SEK 0.20 or better, are the proof points.

Until then, the honest position is too early. The conversion price bump is a genuine but thin improvement to the terms of survival; it tells you lenders were willing to take shares at a bit less than a discount, because the stock has roughly doubled off last autumn's lows along with the headlines, and a 100-for-1 reverse split was approved in July. It does not tell you the equity has stopped being ground down by debt it cannot service out of operations. A buyer at this price is buying the partnership story at a multiple the balance sheet cannot yet support, against a capital structure that converts on the first sign of outside validation. Watch the revenue proof and the shape of any future raise before deciding this is progress you can own.