1
IDEX ASA
Biometrics
2021
Annual
report
Statutory annual report in accordance with Norwegian requirement
s
for
IDEX Biometrics ASA for the
year
ended
December
31, 2021.This
annual report is published to the company’s shareholders and the general public as
well as the European
Regulatory Network which includes the Oslo Børs. The document is filed
with the Norwegian Register of company accounts. This report an
d
other public information abou
t IDEX Biometrics ASA are available at the
company’sweb site
www.idexbiometrics.com
.
All the to the the available
of
company’s
disclosures
market
and
general
public
are
at
Oslo
Børs’s
web
site
live.euronext.com/en or
www.newspoint.no
.IDEX
also
files
an
annual
report
on
Form
20
-F and
related
documents
and
exhibits with the
U.S.
Securities
and are
Exchange
Commission
(SEC).
All
SEC
filings
by
IDEX
Biometrics
ASA
avilable
at
www.sec.gov
.References in this document or other documents are included as an aid to where they can
be found and
such
other documents are
not incorporated
by
reference
into this document
unless
explicitly stated.
Financial
terms
used
in
this
report
are
in
accordance
with
International
Financial
reporting
Standards
(IFRS)
as adopted by the EU and with IFRS as issued by the International
Accounting Standards Board effective
December
31,
202
1.Date:
April
20, 2022
IDEX Biometrics ASA Annual Report 202
1 2
Table of
contents
Report
from
the
Board
of
Directors
......................................................................................................................
3
Consolidated
Financial
Statements
with
Notes
...................................................................................................
29
Parent
Company
Separate
Financial
Statements
with
Notes
..............................................................................
53
Responsibility
Statement
....................................................................................................................................
80
Report of Independent under on
Auditor
International
Standards
Auditing
.......................................................
81
Articles Association
of
........................................................................................................................................
86
Corporate
Governance
Review
...........................................................................................................................
87
Board
of
Directors
and
Executive
Officers
.........................................................................................................
93
IDEX Biometrics ASA Annual Report 202
1
Report from the Board of Directors
3
REPORT FROM BOARD DIRECTORS
THE
OF
We were incorporated as a public limited company under the laws of
Kingdom of Norway on July 24, 1996.
Our ordinary shares have been listed for trading on the Oslo Børs under the symbol “IDEX” since March 12,
2010, and our ADSs commenced trading on the Nasdaq Capital Market under the symbol “IDBA” on Our
principal execut
ive offices are located at Dronning Eufemias gate 16, NO
-
0191 Oslo, Norway, which is also our
registered office address, and our telephone number is +47 6783 9119. We currently have subsidiaries in the
United Kingdom, the United States and China.
BUSINESS
OVERVIEW
Description of the Company
IDEX
develop
s and markets
differentiated
fingerprint authentication
solutions
optimized for use in smart
cards
, based on patented and proprietary sensor technologies,
integrated circuit designs, and
highly
-
specialized firmware and
software
. We
primarily
target fingerprint authentication
applicat
ions
involving standardized smart
card
s without batteries,
although our
products also are applicable to battery
-
powered devices in different form factors
.
Our extensive intellectual property portfolio, leveraging 146
patents awarded and 66 patents pending,
across applicable
jurisdictions worldwide (as of December 31, 2021), is a critical
enabler of our strategy and competitive positioning.
From time to time, we may provide project
-
oriented engineering
or design services to customers.
We also license our
intellectual
property and software , although licensing currently
to third
-parties
does not contribute materially to our revenue.
Our current product portfolio consists of fingerprint
authentication modules, related software, and cardholder enrolment
solutio
ns. Our latest generation of fingerprint authentication device,
introduced in 2020, the TrustedBio family of modules, is a single
package solution consisting of our most advanced fingerprint imaging sensor and a proprietary application
specific integrated
circuit (“ASIC”), which is a multi
-purpose microprocessor executing image processing,
biometric processing, and power management functions. Our cardholder enrolment solutions currently are based
on an innovative, reusable sleeve, which provides secure, co
nvenient smart card enrolment.
Our current product portfolio is targeted at three applications, which we refer to as “market segments,”
within the smart card market: financial payments (i.e., credit, debit, and stored value transaction cards), cyber
auth
entication (i.e., devices for identification and authorization of users for access to high
-
value electronic
networks or sensitive physical facilities), and digital currency storage (i.e., devices for highly
-
secure authorized
access to cryptocurrency tradin
g platforms and the secure storage of digital currencies, both private and
government
-
sponsored). The financial payments market segment is the largest of the three we target, and it is
the most developed. The cyber authentication and digital currency sto
rage segments currently are far smaller,
and application
-
specific form factors, performance requirements, and standards are evolving.
Our customer
focus
primarily
is on
manufacturers of smart cards
. Other customers include
integrators of
authentication technologies and developers and vendors of security systems, across a broad market for
identification
-
based authorization solutions.
We also have individual corporate customers that design
authentication solutions for their own consumption.
Our products are not limited to use in smart cards, but also
are applicable to a range of applications across varying form factors.
Because a critical element of demand for our solutions originates with these manufacturers’ own customers
(e.g., the deman
d for financial payment cards with fingerprint authentication originates with a bank issuer
interested in offering such cards), we also direct our marketing and
demand creation
efforts toward theeducation
of
customers of smart card manufacturers, as well
as other influential participants in the smart card industry.
We utilize a direct sales force and have customers around the world. At the present time, we do not sell our
products through stocking distributors. Given the early
-
stage characteristics of the market segments we are
targeting
,
including the extended and unpredictable sales cycles frequently associated with marketing new and
innovative technology
-
based products, we expanded our marketing
and sales
in 2021staff
and
increased our
marketing
b
udget
for
202
2. A
standard
-format
, smart card
utilizing our
fingerprint authentication solution
, offered
by Rocker AB and manufactured by our
customer, IDEMIA France SAS
Report from the Board of Directors
IDEX Biometrics ASA Annual
1 Report 202
4
We do not own or operate capital
-
intensive manufacturing facilities, but operate as a fabless manufacturer,
utilizing third
-
parties for outsourced
manufactur
ing and product assembly
capabilities
.We currently rely on
Taiwan Semiconductor M
anufacturing Company, Limited (“TSMC”), the leading producer of semiconductor
wafers,
as the sole source of wafers for
our proprietary ASIC designs. We also rely on a limited number of
providers of outsourced semiconductor packaging, design, and test serv
ices
,
including Amkor Technology, Inc.,
and Silicon Precision Industries Limited (a unit of ASE Technology Holding Co., Ltd.), both of which are
leaders in outsourced semiconductor assembly and test services.
Fingerprint Authentication Steps
Every
indivi
dual
has unique, immutable fingerprints. A fingerprint consists of a series of ridges and
valleys
on the surface of
a
finger. The uniqueness of a fingerprint is established
by
each finger’s distinctive
pattern of
ridges
, valleys, and
minutiae points
ch are specific , whi
ridge characteristics occur
at either ring
the point at which
a fingerprint
ridge bifurcat
es
or
ends.
Biometric technologies are automated methods for
identifying
individuals based on a comparison of stored biological and
behavioral characteristics
with the current presentation of such characteristics.
Of all biometric
techniques, fingerprint
-
based identification is the oldestand most established
. Fingerprint identification has
been successfully used in numerous applicati
ons
for over a century
.
A fingerprint authentication solution, in summary, is an electronic system, combining hardware and
software, that captures an image of these unique fingerprint characteristics, transforms that image into a
mathematical representat
ion, and then compares that representation with a valid representation. If the results of
the comparison exceed a predefined verification threshold, the identity of the presenting individual is
authenticated.
The following summarizes the primary eleme
nts of fingerprint authentication, addressing our approach to each:
Scanning
S
canning is the process of recognizing and
captur
ing
the necessary characteristics of
an individual’s
fingerprint
using an electronic device
.
Ink and paper were originally used to capture fingerprint images. Optical
scanning was
an early
method for electronic capture of a fingerprint, and remains common in certain high
-
volume applications, primarily in law enforcement. Other scanning technologies for the detection of fingerprint
variances include those based on sensing variances in heat, pressure, and ultrasound.
Our
scanning technology
is
based on capacitive sens
s ing
, which utilize
an electrical field to detect
fingerprint characteristics
such as ridges, valleys variances in current
,
and minutiae bymeasuring
miniscule
associated with those varying characteristics. The surface of the sensor
, the
acts as one plate of a platen
,
capac
itor, and the finger acts as the other. Capacitive sensing, the most appropriate technology for resource
-
constrained applications, was the area in which the Company pioneered the signal processing innovations that
remain foundational to our strategy.
Mo
re recently, we have developed a differentiated approach to capacitive image capture, using a
polymer
substrate (i.e., a flex circuit) in which a capacitive sensing array (i.e., a fine
-
pitched wire mesh, with each wire
intersection representing an electrod
e) is embedded. Compared to conventional semiconductor
-
based capacitive
sensors, for which the sensing array is on the surface of a rigid integrated circuit, our flexible sensor is relatively
inexpensive to manufacture and allows for
a larger sensor surface area, more than twice the size of competitive
silicon sensors.
Our
ca
pacitive sensor produces a larger image, yielding more data, which enables superior
scanning, feature extraction, and matching performance.
Feature Extraction
The
miniscule
variations in current detected
in scanning
are a data set
represent
ing
the finge
rprint,
and the common practice is to create from this data set an 8
-
bit gray
-scale digital image for
further processing (i.e.,
f
eature extraction
).
Feature extraction
is a
-computationally
challenging process requiring speed and signal
-
processing precision
. A
lgorithms used in a resource
constrained environment such as a smart card must be -
highly efficient, reducing the burdens placed on processor
, memory, and power
resources.
We utilize proprietary algorithms to refine the image, allowing for precise
ident
ification of patterns
, which
are transformed into a
n accurate mathematical representation of the image, referred to as a “template.”
Matching
A m
atching algorithm
compare
s the
image to the encrypted template template created from the scanned
stored within the system at the time of the user’s enrolment. These algorithms also are computationally
-
challenging, again requiring speed and precision, as well as consistency of outcomes. Matching performance is
measured by the correlated rates of f
alse
ce (a
cceptan“
and false rejection (“FRR”), accuracy and FAR
”) reliability, and computational speed. Matching algorithms can be adjusted to meet the requirements of the
application, addressing the trade
-
offs between desired security levels and end
-
user convenience
(i.e., a low FAR,
suggesting high security, implies a high FRR, suggesting low end
-
user convenience). IDEX Biometrics ASA Annual Report 202
1
Report from the Board of Directors
5
Our matching algorithms, which are compact and highly
-
efficient, are well
-
suited providing fast results in
resource
-
constrained environments. They are differentiated by patented features such as insensitivity to image
rotation and the ability to process incomplete images (i.e., partial touches), enabling high accuracy and
reliability.
Our algorithms also are differentiated by the flexibility of how they may be used.
In a smart card
implementation,
because of security requirements,
matching algorithms are typically
executed in
the SE.
However,
our
TrustedBio
is designed to allow
matchi
ng algorithms to be executed
in a distributed
(i.e., shared)
mode, where
by
computationally intensive functions can be executed on our
module’s faster ASIC, reduc
ing
the
computational requirements of the SE. e designs based on
This allows customers the flexibility to optimiz
application requirements and
available
processing resources,
r
educing
overall system costs.
Summary of Smart Cards and Applications
A
smart card can be described as a compact microelectronic system, generally with the dimensi
ons of a
credit card or driver’s license, in which one or more embedded integrated circuits (“ICs”) enable secure storage,
processing, and communication of encrypted data.
Standards Bodies
The highest
-
level standards bodies defining smart card formats andfunctionalities are the International
Standards Organization (“ISO”) and the International Electrotechnical Commission (“IEC”), two independent
organizations that jointly develop the voluntary requirements for smart card compatibility. ISO/IEC 7816
addre
sses a broad range of requirements, including the physical dimensions of a smart card (the “ID
-
1” standard is 85.60 × 53.98
x 0.76
millimeters), electrical interfaces, the structure of data and their use (i.e., defining file
and command structures, including those for biometric verification), and communications and encryption
protocols. ISO/IEC 14443 addresses the requirements of contactless smart cards, including electrical interfaces
and protocols for radio frequency communications. ISO/IEC 18092 address
es NFC standards. ISO/IEC
standards are applicable to smart card use in the three market segments we are targeting, and our fingerprint
authentication solutions are designed to meet or exceed all applicable requirements.
Because we primarily target the fi
nancial payments market segment, our fingerprint authentication solutions
are designed in compliance with industry standards of EMV Company, LLC (“EMV”), a consortium established
by Europay, Mastercard, and VISA to develop and maintain communications, security, and encryption
specifications for the use of smart cards across financial payment networks.
B
ecause our solutions are used in smart cards utilizing the JavaCard card operating system and Java
-
based “applets,”
we comply with
the
standards of GlobalPlatform, an independent standards body, for secure channel communications and the use of
cryptographic data.
Smart Card Design
Th
e enabling in a smart card are typically a secure microcontroller (referred to as a secure element
ICs
(“SE”)), which
functions as the system
-
level processor, and one or more secondary microcontrollers ded
icated to
functions such as power management or biometric processing. SE processors
execute the card operating system
and one or more applets, which are compact programs that execute proprietary functions (e.g., an applet for a
payment network will coordinate communication of encrypted data using an encryption key only known by that
payment network). SEs generally have robust memory
blocks
for
encrypted
data storage
, wi
th multiple memory
types
, but separate memory ICs may be necessary, depending on the
smart card’s
application.
Also embedded in the layers of a smart card are an antenna, for wireless communication and power
harvesting, connecting circuitry
(referred to a
s an inlay), and, depending on the design of the smart card, various
passive electronic devices.
Multi
-
layer smart cards are generally made of thermoplastics (polyvinyl chloride
, or
PVC
,
is the most common material used), although metal and ceramic compou
nds
recently
have been
introduced
.
Contact
-
interface only
and
dual
-(i.e., contact and
contactless functionality)
smart cards do not have batteries and are powered, in the case of contact
-
only and dual
-
interface designs, through physical contact with a card
reader, or, for dual
-
interface
designs in contactless mode, though energy harvesting (i.e., resonant inductive
coupling)
enabled, most commonly, by
n
ear
field
communications (“NFC”) interface protocols.
A trend toward greater use of contactless communication continues across smart cards and reader
infrastructure (e.g., point
-
of
-
sale terminals) has been underway, accelerated by heightened end
-
user concerns
about hygiene caused by the COVID
-
19 pandemic. According to ABI Research, worldwide shipments of dual
-
interface cards for financial payments represented over 75% of the 3.0 billion smart cards shipped in 2021, and
we expect this percentage to expand. ABI Research also estimates the worldwide volume of contactless smart
card transactions grew by 49% f
rom 2020 to 2021. However, contactless smart card transactions generally are
limited by financial institutions and payment processing networks to small value transactions, given the absence
of a required signature or personal identification number (“PIN”)
as a second authentication factor.
Report from the Board of Directors
IDEX Biometrics ASA Annual
1 Report 202
6
Usage and Applications
The defining characteristic of a smart card is the security afforded by the SE and its use of data encryption to
secure storage and communications, making it an ideal solution for a very broad range of applications. Smart
cards are used worldwide in high volumes across the following applications (in descending order of estimated
total unit volumes for 2021): financial payments; government identification (including healthcare and social
-
se
curity applications); transportation and ticketing; and access control (for logical and physical applications).
The development of widely accepted standards for smart card performance uniformity and cross
-
vendor
compatibility has contributed to the sustained growth of smart cards in circulation, notably for financial payment
applications. ABI Research estimates approximately 10.3 billion smart cards, in the form of credit and debit
cards, ATM cards, and stored value cards, were in circulation as of Decembe
r 31, 2021, with 3.4 billion financial
payment cards shipped during the year.
We estimate this total to represent three
-
quarters of the total volume of smart cards shipped across all ID
-
1
format applications.
1
In contrast, we estimate less than 10% of smart cards shipped in 2021 were across all
access control applications.
2
Shipments for use in digital currency storage applications, an emerging market
segment, were not material in volume.
Our Strategy
Our strategy emphasizes demonstrable
solution
advantages that address evolving customer and end
-
user
requirements, leading to a sustainable competitive position and the avoidance of commoditizing pressures.
Since
the Company was founded, our
strategy and
competitive position
ing
have
been
based oncontinuous
advances in
technologies,
innovations in design
,
performance, enabled by our focus on research and and achievements in
development
.
We believe the combination of our broad and substantive intellectual property portfolio, our expertise across
a comprehensive range of challenging and complex domains, and our integrated, s
ystems engineering approach
represents a significant competitive advantage for IDEX.
Our intellectual property portfolio, as of December 31, 2021, consisted of 146 patents awarded and 66
patents pending, across applicable jurisdictions worldwide. Reflec
ting our core competencies, we have
substantial intellectual property across the following areas: design of biometric sensors, ASICs, and modules;
signals and data processing; and a broad range of solution features and functionalities.
Our core competenc
ies, characterized by deep domain expertise and a multi
-
disciplined, systems
engineering approach, are built on organizational strengths in the following domains: biometric imaging and
processing; sensor architectures; integrated circuit design; materials,
manufacturing, and packaging; algorithm,
firmware, and software development; encryption technologies; NFC and power management; and industrial
design.
Our
value proposition
is
based on the differentiated functionality and performance of our fingerprint
a
uthentication solutions and our distinctive systems engineering approach to offering integrated solutions
addressing multiple customer needs. These customer needs may vary among the market segments we target, but
generally are associated with the
enhancement
of
our customer’s
competitive advantages
, based on the
differentiated
functionality and performance
of our solutions,
and reduced total cost of ownership (“TCO”),
based on our distinctive systems engineering capabilities, enabling comprehensive, integrated solutions.
TCO represents the sum of the purchase price of our products, which we believe are competitive, and the
costs customers may encounter when implementing a fingerprint authentication solution in their own products
.
In contrast to vendors of individual elements of a solution, our core competencies enable us to contribute to
lowering the costs and challenges of system design for customers, while accelerating their time
-
to
-market.
We believe many customers in the market segments we targe
t could benefit from the TCO element of our
value proposition, as only a few global card manufacturers currently have the depth of resources and experience
to develop a fingerprint authentication solution on an expedited timeline. Design of a smart card i
ncorporating
1
We derived these estimates from market data regarding SE shipments categorized by smart card applications, published by Euros
mart
(February 2022). Subscriber identity modules, also known as SIM cards are included in this market data, as the enabling SEs
a
nd
technologies are similar, although the form factors are very different. SIM cards are much smaller devices used in mobile te
lephony
applications for subscriber
authenticat
ion. Similarly, the subscriber authentication devices used in pay
-
lications also are television app
categorized as smart cards. Our fingerprint authentication solutions are not applicable to such telephony or pay
-
television applications.
2
Physical access control applications commonly utilize keycards, also known as proximity cards, which are wireless devices ena
bling a
relatively low level of security for contactless identification. Applications include opening facility doors and gates, tim
e and attendance
systems, and automated toll collection. Keycards can be passive (i.e., powered by resonant inductive coupling) or active (i.e
., powered
by a battery). Keycard designs, functionalities, and communication protocols are proprietary to the ve
ndor, resulting in closed systems.
Our estimate of smart cards shipped for access control applications considers only those smart cards meeting the relevant ISO
/IEC
standards.
IDEX Biometrics ASA Annual Report 202
1
Report from the Board of Directors
7
fingerprint authentication can be challenging, as the interaction between the fingerprint sensor, the smart card
electronics, and the environment is complex, particularly given the limitations on power, processing capacity,
and form factor, an
d the stringent requirements for response time and accuracy. As such, we are committed to
offering a differentiated, integrated approach to our customers.
An important element of our strategy, linked to our delivery of comprehensive, integrated solutions, is our
development and use of strategic partnerships, which are intended to extend the scope of the integration of our
TrustedBio modules and related elements of our software across the smart card supply chain, thereby enhancing
our value proposition and, potentially, accelerating adoption of fingerprint authentication and demand for our
solutions.
Our Solutions
Our solutions consist of integrated fingerprint authentication modules, which our customers use in their end
-
products, and our enrollment device, with which a user can securely and easily store his or her fingerprint on a
smart card, thereby activating the
smart card’s fingerprint authentication capabilities. In 2021, we announced our
intention to market and license certain elements of our proprietary software, including our card operating system,
special purpose applets, and biometric algorithms, but we have not yet generated such revenue.
Recent product and solution announcements are indicative of our strategy and value proposition, as well as
the strategic shift we undertook late in the last decade toward market segments and applications for which th
e
differentiated characteristics of our solutions provide a demonstrable and sustainable competitive advantage.
In 2017, we announced a patented solution architecture, which we believe is competitively unique: a small,
and lightweight module containing two optimized components, a fingerprint imaging sensor made of a flexible
polymer substrate for image scanning and a small, yet powerful, ASIC for feature extraction, matching, and a
range of other advantageous functions. This architecture is ideal f
or use in smart cards and similar demanding
applications.
TrustedBio Product Family
In 2020, we announced the latest generation of this architecture, the
TrustedBio family of modules, and, in 2021, released an enhanced version,
the TrustedBio Max.
The capacitive sensor in a TrustedBio module is made using a polymer
substrate (i.e., a fle
x circuit) in which a capacitive sensing array (i.e., a
fine
-
pitched wire mesh, with each wire intersection representing an
electrode) is embedded. The platen is covered by a robust, protective
coating, allowing for years of usage.
O
ur flexible sensor isrelatively
inexpensive to manufacture and allows for an approximately 90 square
millimeter sensor
surface area
, more than twice the size of competitive silicon sensors. The capacitive sensor in a TrustedBio module produces a
larger image, yielding more data, which enables superior scanning, feature extraction, and matching
performance. Semiconductor
-
based sensors can have higher electrode density, but their smaller sensor areas
yield meaningfully less data for image processing, while increasing processin
g challenges to achieve equivalent
results. Additionally, the flexibility of the polymer substrate, into which the wire mesh array is embedded,
allows the TrustedBio module to easily meet industry specifications for torsion of plastic smart cards.
The ASIC used in a TrustedBio module is mounted on the reverse side of the polymer substrate in which our
sensor array is embedded. The ASIC is a proprietary microprocessor executing our third generation scanning
and template
-
creation (i.e., image processing and feature extraction)
algorithms, our patented anti
-
spoof
ing algorithm, NFC power harvesting
and voltage management, and data encryption. Depending on a
customer’s design or application requirements, our ASIC also can store
and execute our proprietary matching algorithms.
The ASIC in our latest T
rustedBio Max module provides
a
high
level of single in a
-
device functionality for
fingerprint authenticationsmart card
.
Fabricated on a 40 nanometer process node by TSMC, the
approximately 10 square millimeter
ASIC
utilizes
an A
RM Cortex
-
M3
32
-
bit processor, operati
ng
at up
to 200 MHz
,
enhanced memory anda
proprietary
parallel
-
processing logic core for accelerating our
template
-
creation
and anti
-
spoofing algorithms.
The capabilities of the TrustedBio Max module reflect our strategy
of creating competitive differen
tiation for our customers, while reducing
TCO. The TrustedBio Max enables smart cards with fingerprint
authentication that are secure, accurate, and power efficient, while
Our on
-
card, remote enrollment
solution, a battery
-
powered,
reusable device enabling creation of
a user fingerprint template, which is
stored on
–
and never leaves
–
the
smart card
A TrustedBio module, showing
the sensor surface (left) and, on
the reverse side (right), our
ASIC and connection circuits
Report from the Board of Directors
IDEX Biometrics ASA Annual
1 Report 202
8
providing a differentiated user experience characterized by
fast
transaction speed.
The groundbreaking
functionality of TrustedBio Max reduces computational burdens on
a smart
card’s SE, thereby allowing smart
card manufacturers
to utilize standard, low
-cost SEs
, rather than more costly SEs with expanded capabilities to
address biometri
c processing. The capabilities of the ASIC allow for a smart card with fingerprint authentication
to be designed without separate microcontrollers for biometric processing and power management functions,
reducing design complexity and costs. Our advanced algorithms and other proven software elements of our
solution
minimiz
e
software development
by our customers
,
as well as reducing associated risks and delays.
The
TrustedBio
Max solution is targeted at
smart card manufacturers seeking faster time
et with a -
to
-
mark
comprehensive
fingerprint authentication design that maximizes performance, while reducing development and
manufacturing costs.
Also in 2021, we announced a reference design based on integration of the SLC38 security controller, the
latest SE
released by Infineon Technologies AG, and the latest version of our TrustedBio module. Applicable to
implementation of fingerprint authentication in smart card applications across all three of our targeted market
segments, the high level of integration o
f this reference design enables differentiated authentication performance
(e.g., low latency, high accuracy, and high electrical efficiency), while reducing integration challenges for the
card manufacturer, thereby reducing costs and time
-
to
-market.
This
reference design, developed with the SE market share leader, represents an important achievement
toward our strategic goal of offering to smart card manufacturers the most comprehensive solutions for
fingerprint authentication, creating competitive advantages for their own smart card products, while lowering the
barriers to adoption of fingerprint authentication by lowering TCO, reducing complexities, and accelerating
time
-
to-
market.
Software Solutions
As stated, last year we announced our intention to m
arket and license certain elements of our proprietary
software, including our JavaCard operating system, special
-
purpose Java applets, biometric algorithms, and, as
their development is completed, our software
-
based enrolment solutions. We believe our expanding capabilities in software development have the potential to meaningfully add to our value proposition, broadening customer
engagements and increasing revenue.
For example, we are assisting issuers of smart cards as they develop dual
-
or multi
-
plications to use ap
broaden the appeal of their smart cards. Adding applications for execution within our JavaCard operating system
on a smart card with fingerprint authentication involves the creation of customized applets. We have assisted
issuers and smart
card manufacturers in the development of dual
-
use applications through the use of applets. For example, we supplied fingerprint authentication solutions to Chinese smart card manufacturers for banks piloting
dual
-
use smart cards. One pilot involved a bank’s issuance of a smart card with fingerprint authentication on
which user health and welfare data was stored, enabling streamlined, but highly secure, access to healthcare
services and government benefits. The other pilot involved a bank’s issuance of a s
mart card with fingerprint
authentication for financial payment and ticketing applications. On this co
-
branded smart card, users could
combine their bank transactions with the purchase and storage of high
-
speed rail tickets. To board a train, the
user passed the contactless card over a wireless reader on the platform. While these pilots have not yet led to
high
-
volume smart card issuance, we are encouraged by the potential of dual
-
and multi-
use applications, as they
represent compelling use cases for the high level of security provided by fingerprint authentication.
Our software roadmap includes the development of smart card applications that are being designed to
significantly enhance the competitive differentiation of our customers’ end
-
products and add
ress important
customer needs. In particular, we are focusing resources on the development, for which we have
protected the
associated
intellectual property rights,
of a smart card application to address the substantial level of fraud
associated with “car
d-
not
-present” transactions, which consistently represents approximately three
-
quarters of
the total value card
-
based fraud reported annually.
3
We anticipate this application could be attractive to smart
card issuers in the EU, as they seek to comply with expanding Stronger Customer Authentication requirements
for two
-
factor authentication under the Second Payment Services Directive, or PSD2
.
Enrolment Solutions
In 2017, we introduced a patented enrolment solution, addressing another significant barrier to adoption of
fingerprint authentication, particularly within the financial payments market segment: user enrolment
(i.e., the
process of imaging and storing a user’s fingerprint, in the form of a template, within the memory of the smart
card, thereby enabling its use). IDEX was the first to release such an innovative device, incorporating
proprietary hardware and software, which we developed in partnership with M
astercard Inc. We license the
design to our customers or their end
-
customers, for use with contactless-
only, contact
-
based, and dual interface
smart card designs. Under such a license, we provide a customized design meeting end
-
customer requirements
and
coordinate volume manufacturing for the end
-
customer by a third-
party.
3
According to
a December 2021 issue of
Nilson Report, global payment card
fraud
totaled
$28.6 billion in 2020, representing
approximately 6.8% of total purchase value.
IDEX Biometrics ASA Annual Report 202
1
Report from the Board of Directors
9
Using our battery
-
powered, reusable device, which is delivered to the user along with the smart card, enrollment can be completed in less than a minute, following the instructions on the device, guided by LED
indicators. A user can enroll
securely without visiting a physical site
such as a bank branch,
or automated teller
machine
.
Enrollment
is completed
entirely within
the biometric smart card and,
importantly
, without the need to
con
nect the enrollment
deviceor
the
smart card
itself
to a computer, smartphone
,
or any other deviceconnected
to a network
.
We also support tablet
-
based and similar enrolment solutions for use in circumstances involving centralized enrolment of a user popul
ation. These electronic data collection devices are manufactured and sold by third
-
parties and incorporate elements of our fingerprint authentication solutions. They most commonly are used in
bank branches (for payment card enrolment) and human resources
or security offices (for access control card
enrolment).
We believe low
-
cost, simple, convenient, and secure user enrolment processes are necessary to accelerate the adoption of fingerprint authentication in smart cards.
To further
lower the costs of enrolment and
improve
user experience, we are developing software
-
based enrolment solutions, for which we have protected the
associated intellectual property rights, to allow for enrolment over the user’s mobile phone or, specifically for
enrolment of fina
ncial payment card users, through a point
-
of
-sale terminal.
Three
-
Year Revenue Summary
For the full year 2021, the Company recorded consolidated revenue of $2.8 million, compared to $1.1
million for 2020, and $
0.4
million
for 2019. Product revenue, as a percentage of total revenue, represented 99%,
93
%, and 3
8% for 2021, 2020, and 2019, respectively. Revenue associated with our early
-
adopting customer in
the cyber authentication market segment represented
85
%,
81
%, and
72
% of our total revenue for 2021, 2020, and 2019, respectively. Our TrustedBio module was introduced in 2020 and began shipping in 2021.
T
here was
no l
icensing
revenue for 2021, 2020,
or
2019.
Backlog
We define backlog as non
-
cancellable orders scheduledto be delivered within 12 months and any deferred
revenue scheduled for recognition within 12 months. Customer order volume accelerated across 2021 from both
existing customers and, notably, new customers adopting the TrustedBio
–
SLC38 reference design we
developed with Infineon Technologies. Our backlog totaled $2.5 million, $1.7 million and approximately $120
thousand as of December 31, 2021, 2020, and 2019, respectively. These backlog figures exclude committed
deliveries pursuant to a multi
-
year sup
ply contract we have with our largest customer, as shipment volumes and
scheduled delivery dates are subject to change. As of December 31, 2021, the value of these committed
deliveries was approximately $1.2 million.
Marketing and Sales
Our customer
foc
us
primarily
is on
manufacturers of smart cards
. Other customers include
integrators of
authentication technologies and developers and vendors of security systems, across a broad market for
identification
-
based authorization solutions.
We also have individual corporate customers that design
authentication solutions for their own consumption.
Our products are not limited to use in smart cards, but also
are applicable to a range of applications across varying form factors.
Because a critical element of dem
and for our solutions originates with these manufacturers’ own customers
(e.g., the demand for financial payment cards with fingerprint authentication originates with a bank issuer
interested in offering such cards), we also direct our marketing and sales
efforts toward the customers of smart
card manufacturers, as well as other influential participants in the smart card industry.
Within the cyber authentication market segment, vendors of hardware
-
and software-
based security systems
and associated acce
ss control solutions represent the majority of our targeted customers, although, to date, the
majority of our revenue has been derived from the development and sale of a customized network authentication
solution to a single enterprise customer.
Within the
digital currency storage market segment, which is less structured than our other targeted market
segments, our customers have ranged from large smart card manufacturers addressing emerging digital currency
applications to small technology innovators developing devices for secure access to proprietary cryptocurrency
exchanges.
We utilize a direct sales force and have customers around the world. At the present time, we do not sell our
products through stocking distributors. Given the early
-
st
ages of the market segments we are targeting
,
including the extended and unpredictable sales cycles frequently associated with marketing new and innovative
technology
-
based products,
we expanded our sales and marketing staff
in 2021
plan to and
increase our
marketing
activities in
202
2. Our go
-
to
-market strategy emphasizes the creation and maintenance of relationships with and between
companies and organizations that are positioned to support the acceleration of the adoption of fingerprint
Report from the Board of Directors
IDEX Biometrics ASA Annual
1 Report 202
10
authen
tication in smart card applications. An important element of this strategy is establishing collaborative
agreements with well
-
positioned partners, leveraging their expertise and resources. Examples of these
partnerships include: IDEMIA France SAS and Zwi
pe AS, customers with which we have critical go
-
to
-market
engagements
4
; Mastercard Inc., which is a valuable contributor to demand creation and the advancement of
fingerprint authentication in financial payments; and Infineon Technologies AG and Tongxin M
icroelectronics
Co., Ltd., leaders in SE design and smart card electronics, with which we are developing integrated solutions.
With current and potential strategic partners, we have several initiatives underway intended to extend the
scope of the integration of our TrustedBio modules and related elements of our software across the smart card
supply chain, thereby enhancing our value proposition and, potentially, accelerating adoption of fingerprint
authentication and demand for our solutions. Recent exampl
es of these initiatives include the following, targeted
specifically as complements to the TrustedBio
-
SLC38
reference design
: •
with a supply chain partner, we have developed an optimized card inlay, consisting of a card antenna
and connective circuits, whic
h
should
reduce customer design and procurement costs
;
•
with another supply chain partner, w
e
have develop
ed
a proprietary card operating system for th
e
TrustedBio
-
SLC38reference design which can be installed on the SLC38 prior to shipment to a
smart
card manufacturer, further reducing costs and process steps
;
and
• w
e have collaborated with
a
vendor of equipment used for card manufacturing to optimize tooling and
process
management software, thereby increasing card production throughput, while lowering yield
losses.
Other strategic initiatives involve integration projects with numerous developers of SEs and electronic
components for financial payment smart card applications, as well as vendors supplying the cyber authentication
and digital currency storage market segments. We consider our initiatives to extend the scope of the integration
of our fingerprint authentication solutions across the smart card supply chain to be an important element of our
strategy, and we intend to expand such initiatives in the future.
Our marketing and sales personnel work closely with our product line management personnel to support
strategic sales activities. A broad range of mark
eting communications activities also help to expose and promote
the benefits of our fingerprint authentication solutions to potential customers. We have invested significant time
and resources to meet with card and device manufacturers to understand their
requirements and performance
issues.
Our Opportunity
Targeted Market Segments and Customers
We currently
target fingerprint authentication
applications involving smart
card
s without batteries (i.e., cards
conforming to
ISO/IEC standard
s
for ),
electronic identification cards
for which our solutions are especially well
-
suited. Customers for these and adjacent applications are within market segments, for which t
three emerging
he
solutions we offer and the applications served are summarized in the following table:
Market Segment
IDEX Solutions
Representative Applications
Financial
Payments
•
Smart cards
−
Dual
-
interface, NFC powered
−
Thermoplastic or metal
•
Customized COS and
Applets
•
Enrolment sleeve or tablet
-based solution
•
EMV
-compliant transaction applications
−
Credit, debit and stored value cards
•
Dual
- and multi
-
use applications
−
Co-
branded with partners
Cyber
Authentication
•
Smart cards and similar devices
−
ID-
1 form
factor or customer design
−
RFID/NFC or battery powered
•
Customized COS and Applets
•
Enrolment sleeve or tablet
-based solution
•
Secure user authorization for high value assets
−
Critical networks or applications
−
High security facilities
−
Easily
integrated with IAM platforms
−
FIDO Alliance compliance
4
We have entered into separate supply agreements with . IDEMIA France SAS, the second largest
IDEMIA France SAS
and
Zwipe AS
manufacturer of smart cards global
ly, utilizes our
TrustedBio fingerprint authentication solution
in its F.CODE platform, which it
markets to issuers in banking and financial services. Zwipe AS u
tilizes our TrustedBio fingerprint authentication solution in its Pay
ONE platform, which Zwip
e markets to smart card manufacturers and issuers as a comprehensive design.
IDEX Biometrics ASA Annual Report 202
1
Report from the Board of Directors
11
Market Segment
IDEX Solutions
Representative Applications
Digital
Currency
Storage
•
Enhanced smart cards and similar devices
−
ID-
1 form factor or customer design
−
RFID/NFC or battery powered
−
Optional displays and keypads
−
Optional Bluetooth
connectivity
•
Customized COS and Applets
•
Enrolment sleeve or tablet
-based solution
•
Secure devices for government digital currency
−
Example: e
-
CNY initiative of Chinese
central bank
• Card-
like “wallets” issued by state
-owned
banks
−
Dual
-
and multi
-
use applicat
ions
•
Secure storage of health and welfare
records
•
Highly secure cryptocurrency management
devices
−
Authorized user access to trading platforms
−
Secure storage of cryptocurrencies
Our
targeted
customers
in the financial payments market segment
manufacturersprimarily
are smart card .
This market segment is significantly larger and well
-
defined than the other two targeted market segments.
According to ABI Research, three global companies, IDEMIA France SAS (France),
Giesecke+Devrient
GmbH
(Germany), and Thales Group SAS (France), represent approximately 70% of total 2021 revenue associated with
shipments of smart cards for financial payments, and another seven smart card manufacturers share
approximately 15% of such revenue. According to Nilson Report, an industry newsletter, revenue from over 100
regionally
-
focused smart card manufacturers represented the balance of total 2021 revenue. As previously
disclosed, IDEMIA currently is our largest customer in t
he financial payment market segment.
Within the cyber authentication and digital currency storage market segments, our targeted customers
include vendors of access control and identity and access management (“IAM”) platforms, vendors and
integrators of authentication technologies, and developers of application
-
specific devices. As previously disclosed, we also have a long
-
standing relationship with a customer that designs network authentication
solutions for its own consumption. As indicated in the preceding table, our fingerprint authentication solutions
are not limited to use in smart cards without batteries and are suitable for a range of applications within the
access control and digital currency storage market segments, across varying form factors and
power
requirements.
Smart cards are used in a variety of other applications appropriate for fingerprint authentication, each of
which could develop in the future into a compelling market segment for us. A primary example of a potential
opportunity outsi
de of our targeted market segments is within health care, for which a non
-
transferable form of
identification, on which an individual’s personal details, health records, and insurance or similar social
-
security
data is encrypted and stored, addresses an important need for both providers and patients for immediate, secure
access to necessary information. We have investigated, and will continue to investigate, such opportunities for
new use cases, but our limited resources currently inhibit our ability to adequately support such activities.
The market segments we currently target are not subject to seasonal shifts in demand.
Demand Drivers
Demand for fingerprint authentication in our targeted market segments starts with the evolving needs of the
end
-
users. Across all smart card market segments, demand drivers for our solutions at the consumer level
uniformly include the following “ease of use” requirements: convenient enrolment; fast, convenient transactions;
and accuracy and security of transactions.
Since the onset of the COVID
-
19 pandemic, hygienic, touch-
free transactions have become a primary
demand driver for end
-
within the financial payments market segment. Given evidence of a users, particularly
substantial shift toward contactless transactions, the Smart Payment Association in December 2021 concluded
that “tap and go” transactions, whether using smart cards or mobile phone applications, had become the
preferred payment option for all age groups.
The shift toward contactless transactions is evidenced by ABI Research estimates of worldwide shipments
of dual
-
interface cards for financial payments, which represented over 75% of the 3.0 billion smart cards shipped in 2021. ABI Research also estimates the worldwide volume of contactless smart card transactions grew by 49%
from 2020 to 2021. However, contactless smart card transactions generally are limited by financial institutions
a
nd payment processing networks to small value transactions, given the absence of a second authentication
factor, such as a user
-
entered PIN.
Another contributor to end
-
user satisfaction, in our opinion, is a desire to reduce abstract uncertainties and per
ceptions of risk associated with fraud, identity theft, and other information security risks. Cybersecurity
events have become frequent and high profile, and public opinion surveys indicate that consumer are aware of
Report from the Board of Directors
IDEX Biometrics ASA Annual
1 Report 202
12
biometric authentication solutions and are willing to adopt such solutions to offset their concerns. According to
a 2020 Gallup survey, respondents reported that identify theft and loss of personal information were their
greatest concerns, by more than a two
-
one margin over other forms of to
-crime.
Mobile devices (e.g., cell phones) are considered particularly vulnerable to a wide variety of security threats,
primarily because they are connected to public networks. According to recently published research by a provider
of fraud prevention solutions, mobile devices account for greater than 60% of reported digital fraud, with mobile
digital wallets, cryptocurrency applications, and payment services applications experiencing significant increases
in fraudulent transactions.
Bridging consumer
preference for contactless transactions and ease of use requirements is a demand driver
shared with the issuers of smart cards: the elimination of the password or PIN as an authentication factor. Long
established as the “what you know” element of two
-
or
multi
-factor authentication (“MFA”), MFA has become a
core component of a security
-
conscious organization’s IAM
policy and procedures, increasing security and user confidence, while lowering risks and costs of access to, or usage of, a secured device, a s
ecured network or
online application, or a secured facility.
Despite their prevalent use,
passwords and PINs
are acknowledged as
now as a burden, cost, and source of risk for end
-
organizations relying on themusers
and
. P
asswords and PINsfrequently
are
forgotten and must be replaced or reinstated.
E
ntering passwords and PINs can inconveniently
slow the MFA process, impacting user experience, particularly when making a purchase with a credit or debit
card
, causing such delays to be a concern for end
-
user
s, merchants, issuers, and transaction processors. Also, t
he
vulnerabilities of MFA using passwords or PINs to phishing and other social engineering techniques are well
-
known and associated with costly and disruptive data breaches.
However, passwords and PINs do have demonstrable value. According to Nilson Report, credit card fraud
losses associated with MFA at the point
-
sale are the lowest of the transaction categories tracked. A of
-consequence of the shift to contactless transactions has been the imposition of transaction value limits on end
-
users, who are required to enter a PIN at the point
-
of
-
sale when a purchase exceeds a threshold value. In
response to end
-
user preferences, financial institutions and transaction processing networks have raised these
threshold values, but doing so increases risk of loss, increases the volume and costs of charge
-
backs to merchants, and taxes the fraud detection and prevention systems of issuers and transaction processing networks.
Fingerprint authentication repres
ents a compelling security solution for smart cards, particularly in the
financial payments market segment, as a fingerprint, unlike a password or PIN, cannot be lost, forgotten,
transferred, stolen, or easily compromised. Fingerprint authentication:
•
meet
-s end
user requirements for ease of use;
•
addresses end
-user concerns about biometric information collection and storage, as the fingerprint
template never leaves the smart card;
•
addresses end
-user concerns about transaction security risks;
•
provides a secur
e alternative to vulnerable mobile devices for payments and financial transactions;
•
enables contactless transactions, while eliminating passwords, PINs, and limits on transaction value;
and
•
maintains the higher security level of MFA, while efficiently co
mbining two authentication factors
(“what you have” and “what you are”).
Fingerprint authentication demand drivers for issuers and transaction processors include:
•
maintaining the superior fraud protection of MFA, while improving end
-
user experience;
•
given
the improved end
-
user experience, the possibility of higher frequency card usage (i.e., the “top of wallet” effect), thereby increasing transaction
-
based revenue;
•
increased differentiation for their smart card offerings and brands, potentially improving c
ustomer
ret
ention and customer acquisition rates;
•
addition of tangible value, potentially supporting new or higher fees for a premium card offering
;
and
•
minimal investment in infrastructure to support fingerprint authentication:
−
no modification of existing protocols for encrypted communications and transactions;
−
existing contactless point
-
of
-
sale terminals seamlessly process such transactions; and
−
limited modifications to back
-
end transaction processing.
For
smart card
issuers and transaction proce
ssors in the EU, fingerprint authentication satisfies the revised
Stronger Customer Authentication requirements for two
-
factor authentication under the Second Payment Services Directive, or PSD2.
IDEX Biometrics ASA Annual Report 202
1
Report from the Board of Directors
13
Many of these demand drivers are applicable to the Cyber Authentication and Digital Currency Storage
market segments we target. Ease of use considerations are important for end
-
users, and the efficiencies of fingerprint authentication as an alternative to passwords and PINs in MFA applications are compelling to en
d-
users and organizations relying on MFA. Given the different characteristics and development stages of these
market segments, however, our experience has been that demand drivers are frequently very specific to
individual customers.
Advantages of Our Fin
gerprint Authentication Solution
for Smart Card Manufacturers
We believe the historically high cost of manufacturing with fingerprint authentication has
smart cards
impeded their adoption
.
In response, we have focused on reducing the upfront cost of our products to smart card
manufacturers, while developing a value proposition emphasizing our differentiated approach to addressing
multiple customer needs. providing fingerprint authentication solutions
Our
approach tois to contribute to
a
comprehensive design and bill of materials that should significantly reduce development and manufacturing
costs
, while accelerating time to market.
Our TrustedBio module, integrating a low
-
cost polymer sensor and advanced biometric processing circuitry,
has been designed to be cost
-
high levels ofcompetitive with alternative solutions, while delivering
accuracy,
reliability
, and power
efficiency
.
The TrustedBio module has been designed to provide smart card manufacturers
numerous advantages, including the ability to design a smart card optimized for cost and performance objectives
by:
•
utilizing a general
-purpose SE,
thereby
reducing component costs and increasing design flexibility;•
eliminating need for separate microcontrollers for biometric processing or
power management, reducing
component costs, integration challenges, layout complexity, and manufacturing risks;
•
offering a large, yet flexible, sensor surface, enabling superior image capture, processing, and matching
performance, improving user experienc
e;
•
providing design flexibility (e.g., our matching algorithms can operate entirely on the SE, or be
partitioned to also operate on the ASIC within our TrustedBio module, maximizing resource efficiency
and system performance).
We have developed and are
marketing
a reference design integrating our TrustedBio module with the
SLC38 security controller from Infineon Technologies, thereby allowing our manufacturing customers to
further
minimize their own integration costs
and improve manufacturing yields (thr
ough reduced design complexity),
while accelerating
their time
market. -
to
-For this reference design:
• w
e
are able to
provide a proprietary card operating system, which can be installed on the SLC38 prior to
shipment to the customer
,
substantially
reducing
software development time and costs;•
with a leading inlay vendor, we have developed an optimized, cost
-
effective ca
rd inlay, consisting of a
card antenna and connective circuits, reducing customer design and procurement costs;
and
•
with a leading production equipment vendor, we have optimize
d
the vendor’s tooling and process
management software, thereby
facilitating for
a customer rapid creation of manufacturing capacity
delivering
increased
card production
volume and
lower yield losses.
We also have valuable relationships with standards bodies and leading global payment processors, which
provide the necessary certifications for a new financial payment card design before that design can be released
for production. We have had our fingerprint authentication solutions incorporated into smart card designs
approved by Mastercard, VISA, and China UnionPay. We also
were
the first
biometric vendor
to have passed a
development site security evaluation performed by
EMV.
Given our breadth of experience and core competencies, as well as the breadth of our collaborative
relationships with vendors across the smart card supply chain, we add value well beyond that associated with the
cost of our products.
We believe many customers in the market segments we target could benefit from the
comprehensive,
systems engineering element of our value proposition, as only a few global card manufacturers
currently have the depth of resources and experience to develop a fingerprint authentication solution on an
expedited timeline. Design of a smart card incorporating fingerprint authentication can be challenging, as the
interaction
among
the fingerprint sensor, the smart card electronics, and the environment is complex, particularly
given the limitations on power, processing capacity, and form factor, and the stringent requirements for response
time and accuracy.
Potential Size
and Growth Rates
of Targeted Market Segments
Within the financial payment market segment, we consider the annual volume of dual
-
interface smart cards
shipped to be a reasonable approximation of our addressable market opportunity. Significant demand drivers are
the increasing preference by end
-
users for contactless payments and the desire of both end
-
users and issuers and
Report from the Board of Directors
IDEX Biometrics ASA Annual
1 Report 202
14
transaction payment processors to replace passwords and PINs with fingerprint authentication, thereby
efficiently combining two authentication factors into one device. As such, we believe a reasonable and
appropriate measurement of our strategic progress in the financial payment market segment is the rate at which
our fingerprint authentication
solutions are incorporated into the annual volume of dual
-
interface smart cards
shipped.
5
ABI Research refers to this measurement as the “penetration rate.”
According to ABI Research (February 2022), worldwide shipments of dual
-
interface smart cards, en
abling
contactless transactions, totaled 2.3 billion units for 2021, representing a record 76% of total smart card
shipments. This annual shipment volume of dual
-
interface smart cards is expected to expand to 3.0 billion units by 2026, representing a five
-
year CAGR of 5.6%.ABI Research also estimates the worldwide volume of contactless smart card transactions grew by 49%
from 2020 to 2021, forecasting growth for the next five years at a compound annual rate exceeding 27%.
While we believe dual
-
interface card volumes represent an approximation of our addressable market for
payment cards, we do not believe the historical rate of adoption for contactless payments is indicative of a rate of
adoption for fingerprint authentication in smart cards.
According to
the
Smart Payment
Association, contactless
smart
cards
transaction volume took
approximately six
years to reach 15%
of total transaction volume at the point
-
of
-
sale
.According to Mastercard,
that total today has reached 50%
worldwide
. Contactless capabi
lities
like NFC were introduced in parallel with
the introduction of the SE
-
enabled smart card in 2004. Prior to that introduction, payment card transactions utilized cards with end
-
user account information stored on a strip of exposed magnetic tape (the
“mag stripe”).
Both contact
-
only and contactless transaction volumes were inhibited for the following decade by the slow pace at which merchants upgraded point
-
events contributed to rapid shift in smart card of
-sale infrastructure.
Several
transactions t
oward contactless
during the latter half of the last decade, including mandates by major transaction
processing networks requiring the installation by merchants of point
-
of
-
sale systems capable of accepting
contactless payments. The most recent driver of contactless transaction volume has been the onset of the
COVID
-
19 pandemic, which significantly changed consumer behavior. The Smart Payment Association in
December 2021 concluded that “tap and go” transactions, whether using smart cards or mobile phone
a
pplications, had become the preferred payment option for all age groups.
Fingerprint authentication adoption is not inhibited by the challenges faced by contactless transaction
methods when they were introduced. Today, contactless
-
capable point-
of
-
sale
infrastructure, as a percentage of
total infrastructure, varies from approximately
5
0% to
90% by region globally, with expectations for that figure
to continue higher, driven by consumer demand for touch
-
free smart card and mobile device transactions. Also,
the major transaction processing networks, aligned with EMV in support of fingerprint authentication, have
provided for streamlined integration of match
-
card fingerprint authentication at the pointon
--
of
-
sale.
6
Deployment of smart cards with fingerprint authentication has been limited to date, with numerous program
trials of various volumes since 2018. In 2021, one major bank in Europe launched a full
-
scale commercial
launch, using a competitor’s silicon image sensor. In aggregate, we estimate fewer than 300,000 smart cards
with fingerprint authentication have been deployed to date for fin
ancial payment applications. As of December
31, 2021, we are aware of 20 announced programs of various volumes. Of these, eight involve the use of our
fingerprint authentication solutions, either through our partnerships with IDEMIA France SAS and Zwipe
AS or
through our direct relationships with smart card manufacturers. Since we announced in July 2021, with Infineon
Technologies, a reference design based on an integration of our TrustedBio fingerprint authentication module
with their SLC38 secure contr
oller, we have secured five important design wins with smart card manufacturers,
each of which we believe could be in mass production in 2023. Based on these announcements and design wins,
we believe the financial payment market segment is moving from the earliest stage of technology adoption,
characterized by risk
-
tolerant innovators, to the early
-
adopter stage, characterized by visionaries who are willing
to accept a degree of risk for the opportunity to lead in their own markets.
For forecasting, we utilize a modified version of the framework published by ABI Research for assessing
the types of deployments expected to be associated with an issuer’s introduction of smart cards incorporating
fingerprint authentication to its customers:
5
Since 2016, ABI Research no longer tracks the very small volume of purely contactless cards manufactured each year, tracking
only
dual
-
interface and contact
-
only card productio
n. Because approximately 20% of worldwide point
-
of
-
sale terminals and related reader
infrastructure are contact
-
only, and because a dual
-interface capability allows for a transaction to occur when contactless functionality
is not available, end
-
users and
issuers prefer dual
-
interface cards.
6
Fingerprint authentication occurs within the processing capabilities of the smart card, with the matching algorithm determini
ng if the
presented fingerprint template matches the template stored in the memory of the
SE.
All user information, including the stored
template,
is encrypted within the smart card
and never leaves the smart card at any time.
A data element indicating
the transaction
originated with a smart card incorporating fingerprint authentication
is th
e only additional information communicated to the point
-
of
-
sale reader.
IDEX Biometrics ASA Annual Report 202
1
Report from the Board of Directors
15
•
Stage 1: an initial
trial, consisting of several hundred smart cards, generally distributed to a controlled
group within the issuer, intended as “proof of concept” and used to assess systems requirements. Our
experience has been that a Stage 1 trial is generally for less th
an 90 days.
•
Stage 2: an expanded pilot, consisting of several thousand smart cards, more broadly distributed to a
targeted cohort of users, and intended to identify deployment risks and evaluate usage patterns. We
anticipate many of the 20 announced progr
ams of which we are aware are Stage 2 deployments.
•
Stage 3: an initial commercial launch, consisting of multiple, phased deployments of tens of thousands
of smart cards over six to 12 months, supported by consumer education and high
-
touch marketing
initiat
ives. A Stage 3 deployment may be a distinct program, for example, targeting an exclusive
customer cohort with a premium service level, or it may be a preparatory deployment in anticipation of
a full commercial launch.
•
Stage 4: a full commercial launch, a
lso consisting of multiple, phased deployments, but of hundreds of
thousands of smart cards, over an extended period, with broad marketing support highlighting the
program as a mature element of the issuer’s product portfolio.
Based on our own research and estimates independently developed by biometric industry analysts and
securities analysts covering the Company and its competitors, we have developed, using this four
-
stage
framework, multiple scenarios for the “penetration rate” (i.e., the percentage
of annual shipments of dual
-
interface smart cards represented by smart cards incorporating fingerprint authentication) we might achieve over
the five
-
year forecast period. All of these scenarios are characterized by single
-
digit rates of penetration over
the
first three years, reflecting our assumptions regarding the number and sequencing of trials, pilots, and launches
for which our customers, the smart card manufacturers, are supplying smart cards incorporating our fingerprint
authentication solutions.
Our scenarios’ revenue levels markedly diverge, beginning in year four, based on our
assumptions regarding our ability over the preceding three years to “cross the chasm” of technology adoption.
Based on our recent accomplishments, we are confident we can
reduce costs, improve our solutions, and,
through development of innovative, complementary software, notably addressing scalable, low
-
cost enrolment
solutions, deliver a compelling fingerprint authentication solution to mainstream, high
-
volume customers.
If we
successfully reach the mainstream of the financial payment market segment, our potential long
-
term growth
could be substantial.
The cyber authentication market segment we are targeting shares certain characteristics with the financial
payment market segment, but we estimate it to be far smaller. As is the case with the financial payment market
segment, we believe the annual unit volume of smart cards shipped for access control applications is a
reasonable approximation of our addressable market opportunity. Based on ABI Research estimates and our
own assessment of available industry data, we estimate the annual unit volume to be between 200 million and
250
million units. We estimate the five
-year compound annual growth rate to be approximately 5%.
As is the case with the financial payment market segment, we also believe measurement of our strategic
progress in the cyber authentication market segment could be based on the rate at which our fingerprint
authentication solutions are incorporated into the annual volume of smart cards shipped. However, given the
characteristics of the broader access control market and the varying natu
re of our customer engagements to date,
our revenue forecasting based on such penetration assumptions is less certain. We have achieved success with a
high
-
profile customer with which we developed a customized network authentication solution for that
cus
tomer’s own consumption. In 2021, we secured a design win for a government identification card with cyber
authorization features, and we also have multiple design wins for cyber authorization solutions with smart card
manufacturers. As such, currently est
imating any penetration rate for the cyber authorization market segment is
difficult.
Within the digital currency storage market segment, which is very early in its development, accurately
estimating the size and growth rate of our opportunity is difficu
lt. We have experienced encouraging success in
developing customized solutions with a small number of early innovators. Based on this limited experience, and
our assessment of the opportunity, we believe the market segment has the potential to develop in
to a meaningful
contributor to our revenue.
Competition
We compete worldwide with many companies offering identification and authentication solutions, and some
of these companies have substantially greater financial, engineering, marketing and sales, cus
tomer support, and
other resources than we do. We compete directly with other companies providing biometric sensors and
solutions, including our principal competitors, Fingerprint Cards AB and NEXT Biometrics ASA. On January
25, 2022, Samsung Electronics, a global leader in semiconductors, introduced a device integrating a fingerprint
sensor, secure element, and a microprocessor. The device is targeted at the same market segments and
applications as our TrustedBio solution. While we have yet to encounter
Samsung in the market segments we
are targeting, nor can we predict when we will, we consider Samsung’s announcement to be a confirmation of
Report from the Board of Directors
IDEX Biometrics ASA Annual
1 Report 202
16
our own positive view of the business opportunity for fingerprint authentication in applications using smart
cards
.
The principal competitive factors upon which we compete include breadth of solution, engineering and
manufacturing support, solution performance (i.e., accuracy, ease of use, power consumption, reliability, and
transaction speed), and total cost of ownership. We maintain our ability to compete effectively primarily through
our engineering activities and the ongoing development of new and enhanced technologies, methods, and
processes.
We also may face competition from companies that may expand into our industry and introduce additional
competitive products. Existing and potential customers and partners are also potential competitors. These
customers may internally develop or acquire competitive technologies or comparable products, which may cause
them
to reduce or end their purchases of our products.
Research and Development
Our research and development activities are conducted primarily in the United Kingdom and the United
States. As of December
31, 2021, we had an engineering staff of 77 employees and eight individual contractors,
representing approximately 77% of our workforce.
Innovation through research and development is critical for us to remain competitive and to help our
customers maintain cost and performance leadership. Our technology road
map includes:
•
further reduction of system costs through optimized architecture and integration;
•
continuous solution performance improvements through enhancing sensor and ASIC designs;
•
further refinement and enhancement of our scanning, feature extraction, and matching algorithms;
•
development of compelling software complements to our solution strategy, including innovative
software
-
only enrolment solutions and card
-
present applications; andnot
-•
developing and integrating technologies (e.g., displays) for use in next
-
generation smart cards. Manufacturing and Supply Chain
Our fabless operational strategy is to maximize efficiency and cost competitiveness by designing our
products using industry standard design processes, incorporating verified high
-
volume components and
materials, and utilizing established manufacturing processes. In support of the anticipated demand for our
solutions, we have established a supply chain capable of satisfying forecast demand. We currently utilize
external partners for the fabrication, assembly, and testing of our products. We believe this strategy provides the
best combination of performance, cost, and feature attributes necessary for our products.
We develop the production test solutions for use by our assembly and test partners. In addition, to accelerate
the development of future mass production test solutions for our products, we have invested in sophisticated test
equipment at our facility in Rochester, New York. Production test routines are fully verified in
-
house, prior to installation on production lines at our partners’ facilities
, reducing cycle time, engineering support, and costs.
Our selected manufacturing partners for sensor production are Amkor Technology, Inc. and Silicon
Precision Industries Limited (a unit of ASE Technology Holding Co., Ltd.), both of which are leaders in
outsourced semiconductor assembly and test services. TSMC, one of the leading semiconductor manufacturers
in the world, is our partner for ASIC wafer production. The TSMC relationship gives us access to the newest
and most competitive silicon manufacturing processes and geometries, while providing the capacity and cost
structure to serve high volume opportunities.
We select our manufacturing partners based on a comprehensive supplier capability analysis, in order to
meet the high quality and reliability
standards required of our products. Our engineers and supply chain
personnel work closely with manufacturing and supply chain partners to increase yield, reduce manufacturing
costs, improve product quality, and ensure component sourcing strategies are in place to support our
manufacturing needs.
We believe our fabless manufacturing model enables us to focus our resources and expertise on the design,
development, sales, marketing and support of our products. We also believe this manufacturing model provid
es
us the flexibility required to quickly respond to new market opportunities and shifts in customer demand. It also
simplifies the scope of our operations and administrative processes and significantly reduces our working capital
requirements.
Intellect
ual Property
Our intellectual property rights cover individual inventions and complete biometric systems ranging from
measurement principles, algorithms, sensor design, and system solutions. Our extensive intellectual property
IDEX Biometrics ASA Annual Report 202
1
Report from the Board of Directors
17
portfolio, leveraging 146 patents awarded and 66 patents pending, across applicable jurisdictions worldwide (as
of December 31, 2021), is a critical enabler of our strategy and competitive positioning. We maintain a program
designed to identify technology appropriate for patent and
trade secret protection, and we file patent applications
in the United States and certain other countries for inventions we consider significant. We continuously seek to
protect aspects of our technology that provide significant competitive advantage.
Alt
hough our business is not materially dependent upon any one intellectual property right, our intellectual
property rights and the products made and sold under them, taken as a whole, are a significant element of our
business and our ability to compete. We rely on patents, trademark and copyright laws, trade secret protection
efforts, contractual terms, and confidentiality agreements to protect our intellectual property rights. In addition,
we require employees and consultants to execute appropriate non
-
di
sclosure and proprietary rights agreements. These agreements acknowledge our exclusive ownership of intellectual property developed for, and by, us,
requiring confidential treatment of all proprietary information.
In addition to patents, we also possess other forms of intellectual property rights, including trademarks,
know
-
how, trade secrets, design rights and copyrights. We control access to and use of our software, technology,
and other proprietary information. Our software is protected by the copyrigh
t, patent, and trade secret laws of
appropriate jurisdictions. Despite our efforts to protect our software, technology, and other proprietary
information, unauthorized parties may copy or otherwise obtain and use our software, technology, and other
propri
etary information. In addition, as we further expand our international operations and markets, effective
patent, copyright, trademark and trade secret protections may not be available, may be limited, or may not be
enforceable in certain foreign countries.
Companies in the markets in which we operate frequently are sued or receive informal claims of patent
infringement or infringement of other intellectual property rights. As we become more successful, we believe it
likely that competitors will attempt to
develop products similar to ours, which may infringe our intellectual
property rights. It also is possible competitors or other third parties will claim our products infringe their
intellectual property rights. Successful adjudication of claims of infring
ement by a third
-
party could result in:
injunctions that could prevent us from selling some of our products in certain markets; penalties, settlements, or
judgements that require payment of royalties or financial damages; and settlements or judgements requiring us to
develop non
-
infringing products at significant expense. We cannot provide assurance we will not be accused of
infringing any third
-
party intellectual property rights at any time in the future. The wordmark “IDEX,” the IDEX logo, and the brand
name TrustedBio are registered trademarks of, and
owned by, IDEX Biometrics ASA.
OPERATING AND FINANCIAL REVIEW AND PROSPECTS
Overview
Since the Company was founded, we have generated limited revenue and have incurred significant losses
.
Previous effor
ts to commercialize our portfolio of differentiated technologies for fingerprint authentication were
not successful, as targeted markets did not develop as anticipated or, once developed, quickly became
commoditized, undermining our differentiation and com
petitive positioning.
O
ur competitive positioning ha
s
been
, and is,
based on continuous advances in technologies, innovations in
design, and achievements in performance, enabled by our focus on research and development.
After the
commoditization (and su
bsequent competitive consolidation) of the mobile device market in the latter half of the
last decade,
IDEX undertook a strategic pivot toward applications for which
our
differentiated characteristics
provided demonstrable and sustainable competitive advan
tages
, reducing our exposure to commoditization. Our
focus today is on incorporating fingerprint authentication into
smart cards, which present
challenging form the
factors, demanding performance requirements, and extreme power limitations for which our solutions are ideally
suited.
IDEX has established customer relationships with innovators and early adopters sharing our vision for the
potential of fingerprint authentication in smart card applications, and, over the last two years, we have
experienced increasing strategic momentum, successfully attracting new customers and increasing our reported
revenue, as of December 31, 2021, for eight consecutive quarters.
With the July 2021 announcement of a reference design integrating our TrustedBio fingerprint
authentication module and the SLC38, the latest SE from Infineon Technologies, we began aggressively
marketing the reference design to smart card manufacturers. As of the date of this Annual Report, we
have five
design wins (i.e., contractual commitments) for this reference design with worldwide smart card manufacturers
and anticipate these designs could be in full production in 2023.
Customer order volume accelerated across 2021 from both existing customers and, notably, new customers
adopting the TrustedBio
–
SLC38 reference design. Our backlog, consisting of confirmed customer orders scheduled for delivery within the following 12 months (and amounts, if any, of deferred revenue scheduled for
Report from the Board of Directors
IDEX Biometrics ASA Annual
1 Report 202
18
recognit
ion during the period), totaled $2.5 million, $1.7 million and approximately $120 thousand as of
December 31, 2021, 2020, and 2019, respectively. These backlog figures exclude committed deliveries pursuant
to a multi
-
year supply contract we have with our
early
adopting customer in the cyber authentication market -
segment, as individual shipment volumes and scheduled delivery dates are subject to change. The terms of this
supply contract provide for automatic extensions of one year. As of December 31, 2021, the remaining value of
these committed deliveries under our supply contract was
approximately $1.2 million.
IDEX recorded revenue of $2.8 million for 2021, compared to $1.1 million for 2020, and $
0.4 million
for
2019. Product revenue, as a percentage of total revenue, represented 99.9%, 92.5%, and 37.5% for 2021, 2020,
and 2019, respectively. Revenue associated with our early
-
adopting customer in the cyber authentication market segment, inclusive of services revenue associated with product development, represented 85.4%, 89.7%, and
72.3% of our total revenue for 2021, 2020, and 2019, respectively. We began to ship production volumes of our
TrustedBio solution in 2021 and expect such volumes to represent an increasing percentage of total revenue in
the fu
ture.
We do not own or operate capital
-
intensive manufacturing facilities, but operate as a fabless manufacturer,
utilizing third
-
parties for outsourced manufacturing and product assembly capabilities.
We currently rely on
TSMC, the leading producer of semiconductor wafers, as the sole source of wafers for our proprietary ASIC
designs.
We also rely on a limited number of providers of outsourced semiconductor packaging, design, and test
services, including Amkor Technology, Inc., and Silicon Precision Industries Limited (a unit of ASE Technology
Holding Co., Ltd.), both of which are leaders in outsourced semiconductor assembly and test services
.
Despite
well
-
publicized disruptions throughout the semiconductor supply chain, in 2021 we did not experience
d
isruptions that were material to our operations or financial results. However, we have ordered
, and may
continue to
order
,
relatively high values of
raw materials and carry relatively large quantities of finished goods
so that customer delivery schedules can be met. While inventory levels likely will continue to expand as order
backlog increases and expectations of higher orders and shipments increase,
we
do not believe such quantities of
inventory represent, for the foreseeable future, a material risk to
our
financial position.
Due to recent inflationary pressures, primarily in the semiconductor supply chain, we expect our costs and
expenses to increase
,
which could negatively
influence
cash flow and profitability,
even if we are able to
significantly in
crease our revenue.
Given our fabless model, our manufacturing costs for the products we
currently sell are most influenced by the discounts our vendors offer for sustained, high
-
volume production orders. We may not achieve the necessary volume of production orders to obtain advantageous pricing for the
manufacture of our current products. Also, we may not be able to pass on increased costs to customers by
increasing the prices of our products.
Variable costs are associated primarily with production volumes. Our operating cost structure is largely
fixed, reflecting our business model and strategic focus on research and development. Because we believe the
Company’s leadership in fingerprint authentication technologies is an important competitive differ
entiator, we
intend to maintain research and development
activities
to maintain this leadership.
We utilize a direct sales force and have customers around the world. At the present time, we do not sell our
products through distributors. We expanded our plan to
marketing
in 2021and sales
staff
and
increase our
marketing and sales
activities in
202
2, as we seek to reduce the extended and unpredictable sales cycles we have
encountered. Fingerprint authentication applications in the market segments we targ
et are in the early stages of
development, and such extended and unpredictable sales cycles frequently are associated with marketing new
and innovative technology
-
based products. As a Norwegian public company, with Ordinary Shares listed on the Oslo Børs,
and an SEC registrant,
with ADSs listed on Nasdaq, we are required to comply with two sets of applicable laws, rules, and regulations.
From time to time, this may result in uncertainties regarding compliance, with the consequence being higher
costs assoc
iated with analysis of dual legal regimes, ongoing revisions to disclosure requirements, and adherence
to different governance practices. We devote a substantial amount of time to these compliance initiatives, which
has increased our legal and accounting costs. These compliance costs and commitments of management time
likely will continue to expand.
Our largest expenses are associated with personnel costs, including salaries, variable, performance
-
based
compensation, sales commissions, benefits, and charges for the recognition of share
-
based compensation costs. Our total
staff
, consisting of employees and individual contractors located in countries in which we do not have
operations, totaled 111, 102, and 116 as of December 31, 2021, 2020, and 2019, respec
tively.
As of December
31, 2021
,
19 were assigned to our Oslo office, 56 were assigned to our two offices in the United States, 27 were assigned to our office in the United Kingdom, and nine were assigned to our office in China. While we expect to
add
personnel to our marketing and sales staff during 2022, we also expect such expansion will be offset largely
by staffing reductions through attrition across other areas of the Company.
We anticipate our profitability could improve as revenue increases, as
our forecasts for operating expenses
are based on our assumed ability to increase revenue without proportional increases in our operating cost
structure. However, because of the uncertainties associated with accurately forecasting revenue levels, invento
ry
IDEX Biometrics ASA Annual Report 202
1
Report from the Board of Directors
19
planning, and achieving operational economies of scale, we cannot predict whether, or when, we might achieve
profitability.
Impact of COVID
-
19
In the first quarter of 2020, the World Health Organization declared COVID
-
19 a global pandemic. We
quickl
y adopted the guidelines, outlined by the relevant governments where our company operates, to ensure the
health of our employees and their families. We established an internal virus response team. Effective March
16,
2020, all travel and face
-
face meetito
-ngs were stopped, and we asked most staff members to work from home.
Staff members with specific roles required to be on
-
site at one of our facilities are being supported in line with
local government guidelines. As certain countries relaxed restrictions, many staff members have returned to
working on
-
site and have resumed travel. Our management and Board continue to monitor the situation closely
and will take further action as appropriate.
We have not experienced significant delays in our development projects, and we have not incurred
additional costs as a result of our response to the pandemic. Disruption of supply chains, particularly the
semiconductor supply chain, has been attributed to the pandemic. While we did not experience supply chain
disrupt
ions that were material to our operations or financial results during 2021, operational planning and
management of inventory levels were challenging, given uncertainties associated with vendor capacity
availability and allocations to us of such capacity.
Because we expect such uncertainties will continue through
2023, we may place orders for, and hold balances of, inventory at higher levels than would be expected if such
uncertainties did not exist.
We believe t
he pandemic has had an adverse influence on
the timing of
activities
of smart card
manufacturers and issuers
, including delaying product development and the initiation of trials and
pilots
involving smart cards incorporating our fingerprint authentication solutions.
The full impact of COVID
-
19 on
the Company’s business, results of operations, and financial condition may
depend on numerous evolving factors that are highly uncertain and cannot be accurately predicted.
As additional
information is obtained, the Company may be required to update its judgements, estimates, and assumptions.
Actual results could differ from prior judgements, estimates, and assumptions, and any such differences may be
material to the Company’s financial statements. The Company will continue to monitor the evolving situatio
n
and will assess the relevant implications for its consolidated financial statements.
Operating Results
The following table summarizes the results of our operations for the years ended December
31, 2021, 2020, and
2019.
Year Ended December
31,
2021
2020
2019
2021
-
2020Change
2020
-
2019Change
Revenue:
Product
........................................................
$ 2,837
$
1,013
$
159
180%
537
% Service
........................................................
3
82
265
(96%)
%)
Total revenue
....................................
2,840
1,095
424
159%
158
% Operating expenses:
Cost of materials, net of
inventory change
1,254
275
62
356%
344
%
Compensation and benefits
21,107
17,672
21,750
19%
%)
Research and development
2,680
1,895
4,385
41%
%)
Other operating expenses
7,347
5,936
4,641
24%
28
% Amortization and depreciation
....................
1,802
1,719
1,633
5%
Total operating expenses
..................
34,190
27,497
32,471
24%
%)
Loss from operations
.............................................
(31,350)
(26,402
)
(32,047
)
(19%)
18
% Finance income
.....................................................
11
26
135
(58%)
%)
Finance cost
...........................................................
(1,123)
(477
) (351
) (135%)
%)
Loss before tax
......................................................
(32,462)
(26,853
)
(32,263
)
(21%)
17
% Income tax expense (benefit)
................................
.
90
(99)
160
(190%)
38
% Net loss for the year
...............................................
$ (32,552)
$
(26,754
)
$
(32,423
)
(22%)
18
% Revenue
Revenue for the year ended December
31, 2021, was $2.8 million, consisting of $2.8 million of revenue
from product sales and a negligible amount of revenue from services. The increase in product sales of
$1.8
million from 2020 to 2021, representing an annual increase of 180%, is associated with higher sales to an
existing customer, with which we developed a customized cyber authentication solution. Revenue associated
with this customer represented approximately 85% of our total revenue for 2021. The balance of 2021 revenue
Report from the Board of Directors
IDEX Biometrics ASA Annual
1 Report 202
20
was associated with initial sales of our TrustedBio modules, which were introduced in 2020, with one customer
representing 9% of total revenue. In 2021, we continued to ship earlier generations of products to customers for
non
-
custom applications, although we expect such shipments will decline through 2022 as we fulfil customer
commitments and deplete existing inventories of these products. Service revenue for 2021 was negligible, as we
have deemphasized services as an element of customer engagement.
We expect shipments of our TrustedBio modules will expand through 2022, based on our backlog and our
current forecast for additional orders, production lead times, and shipments. Such shipments are expected to
contribute to important diver
sification of our customer base. We also expect to sustain shipments of our
customized cyber authentication solution, to the customer referenced above, at current levels through 2022.
Revenue for the year ended December
31, 2020, was $1.1
million, con
sisting of $1.0
million of revenue
from product sales, and approximately $82.0 thousand of revenue from services associated with the completion
of development of the customized cyber authentication solution for the customer referenced above. As such, this
single customer represented approximately 81% of our revenue for 2020. Our second largest customer
represented approximately 4% of total revenue for the year.
Revenue for the year ended December
31, 2019, was $0.4 million, consisting of $0.2
million of re
venue
from product sales, and $0.2 million of revenue from services associated with the development of the customized
cyber authentication solution for the customer referenced above. Revenue from this customer represented
approximately 72% of our revenue for 2019. Our second largest customer represented approximately 10% of
total revenue for the year.
We categorize our customer base utilizing the billing addresses of our customers. Certain customers may be
domiciled in one country, but utilize contract m
anufacturers located in other countries. While the terms of
customer agreements vary, and customers may or may not utilize contract manufacturers, when they do so,
customer agreements generally provide for orders to be placed with us by the contract manu
facturers utilized.
As such, we are potentially exposed to the risks associated with the countries in which the contract
manufacturers are domiciled (e.g., risks associated with customs delays and other logistical delays). During
2021, 2020, and 2019, in excess of 98% of product revenue each year was associated with shipments to
addresses in countries other than Norway. For each of these years, in excess of 94% of service revenue each
year was associated with the development of the customized cyber auth
entication solution for the customer
referenced above, which is domiciled in the United States.
Cost of materials,
net of inventory
change
Cost of materials, net of inventory change, which we consider to be an approximation of our cost of goods
sold
, rose roughly 356% from 2020 to 2021, to $1.3 million, reflecting the 180% increase for the year in product
revenue. For 2020, the figure was approximately $
275
thousand, a sequential increase of 344%, reflecting a 537% increase for the year in product revenue. For 2019, the figure was approximately $
62
thousand, a sequential decrease of (66%), reflecting sequentially lower product sales, associated with our transition to the
next generation of products, as well as the relatively higher percentage of revenue represented by engineering
services, for which
costs are recorded in either Compensation and benefits expenses or Research and
development expenses.
As stated above, certain
costs
typically associated with manufacturing overhead
, such as
personnel
costs and depreciation charges, are excluded from Cost of materials, net of inventory change, given the Company’s
presentation of operating expenses based on the nature of expenses rather than by functional categorization.
T
hese excluded
costs have not been material to date.
Pursuant to IAS 1 and our presentation of operating
expenses based on the nature of expenses, we do not present in our Consolidated Statements of Profit and Loss
figures representing “gross margin,” reflecting the subtraction of Cost of materials, net of inventory change,
from Revenue. Because the costs of delivering services are primarily related to project
-
specific allocations of
personnel costs, Cost of materials, net of inventory change, as presented, excludes such personnel costs.
As
such, we assess product
-
level profitability by c
alculating a gross margin based on subtraction of Cost of
materials, net of inventory change, from revenue derived from product sales. For 2021, such a product gross
margin figure was approximately $1.6 million, and the corresponding ratio of such figure to product revenue was
55.7%. For 2020, the product gross margin figure was approximately
$738
thousand, and the corresponding
ratio was 72.9
%
. For 2019, the product gross margin figure was approximately $97 thousand, and the corresponding ratio was 61.0%. Variances in these ratios reflect sequentially higher shipment volumes and shifts
in product mix and pricing.
7
7
nder IFRS
, the gross
margin
and ratio
figures discussed herein are alternative performance measures
(“APMs”), as they are neither
specified nor defined in IFRS
.
As we expect in the future to maintain the current level of product revenue, relative to total revenue, we
believe these figures are useful indicators of our performance. We also believe these
figures are consistent with IFRS, as no
adjustments to other IFRS
-
defined figures have been made, and their use in no way represents
pro forma
presentation of non
-
IFRS
figures in our Consolidated Financial Statements.
IDEX Biometrics ASA Annual Report 202
1
Report from the Board of Directors
21
Compensation and benefits
Compensation and benefits departments and activities, the following employee
expenses include, for all
-
related expenses: salaries, variable, performance
-
based compensation, sales commissions, benefits, and charges
for the recognition of share
-
based compensation costs. Compensation and benefits 31, 2021, were $21.1
expenses for the year ended December
million, as
compared to $17.7
million for the year ended December
31, 2020, an increase of $3.4
million, or 19%, reflecting
a higher number of employees, customary merit
-
based salary increases, and increased
levels of share
-
based
compensation costs. Notably, such expenses for 2020 reflected a temporary reduction of salaries for
approximately one quarter of the year, implemented in response to the COVID
-
19 pandemic, as well as a lower
average number of employees, due to headcount reductions and attrition.
Such
expenses for the year ended December
31, 2020, were $17.7
million, as compared to $21.8
million for
the year ended December
31, 2019, a decrease of $4.1 million, or (19%). The decrease was primarily du
e to cost
reductions undertaken in the fourth quarter of 2019, as well as the temporary reduction of salaries during 2020
descried above.
The year
-
end numbers of employees for 2021, 2020, and 2019 were 93, 90, and 102, respectively, reflecting
headcount reductions and attrition that occurred in 2020 and the expansion of our marketing and sales team
during 2021.
We expect staffing levels through 2022 will not change meaningfully, as we anticipate incremental hiring
for specific needs, if any, will be offse
t by attrition.
For more information regarding compensation and the composition of our staff, see
N
ote 4 to our Consolidated Financial Statements.
Research and
d
evelopment
Research and development expenses are presented in our Consolidated Statements of
Profit and Loss on a
net basis, reflecting the reduction of gross expenses through application of grants approved, if any. As
described, we regularly apply for and receive grants under government programs, in Norway and the United
Kingdom, supporting research and development activities.
For the year ended December
31, 2021, Research and development expenses were $2.7
million, reflecting
gross expenses of $3.4 million, offset by government grants of approximately $676 thousand. For the year
ended December
31, 2020, Research and development expenses were $1.9 million, reflecting gross expenses of
$4.2 million, offset by government grants of approximately $2.3 million. For the year ended December
31, 2019,
Research and development expenses were $4.4
million,
reflecting gross expenses of $5.0 million, offset by
government grants of approximately $568 thousand.
Research and development expenses include the cost of individual contractors assigned to engineering roles.
As of December 31, 2021, December 31, 2020, and December 31, 2019, compensation for eight, six, and eight
individual contractors, respectively, were included in Research and development expenses.
The sequential reductions in gross expenses reflect a reduced reliance on third
-
party service provide
rs for
outsourced engineering activities. Variances in the values of government grants approved reflects the timing of
our applications and when we are notified of approvals. During the first quarter of 2020, we filed claims in the
United Kingdom for research and development grants applicable to activities in 2017, 2018, and 2019. As a
result, we received $1.5
million of grant funds in 2020, which contributed to the significant increase in grant
value for that year.
For 2022, we have focused our research and development activities on a narrow range of priorities
associated with near
-
term product introduction objectives. We expect gross expenses associated with these
activities will be comparable to gross expenses incurred in 2021. Similarly, we expect government grant funding
for 2022 will be approximately the same as received in 2021.
Other
o
perating
e
xpenses
As described above, expenses in this category consist of costs associated with our marketing and sales
activities and costs associated with administrative activities.
Other operating expenses for the year ended December
31, 2021, were $7.4
million, as compared to
$5.9
millio
n for the year ended December
31, 2020, an increase of $1.4
million, or 24%. The increase was
primarily associated with higher professional services fees associated with the Company’s listing of ADSs on the
Nasdaq during the first quarter of 2021, as well as the expanded scope of regulatory compliance and investor
relations. Expanded liability coverage for our Directors and officers caused insurance costs to rise significantly.
Also, increased costs incurred with the renewal of certain enterprise softwar
e licenses contributed to the 2021
increase, as well as higher charges from cloud hosting providers.
Report from the Board of Directors
IDEX Biometrics ASA Annual
1 Report 202
22
The expansion of our marketing and sales staff during the second half of 2021 contributed to the increase in
Other operating expenses, as the costs of in
dividual contractors assigned to such roles are included in marketing
and sales expenses. The number of individual contractors in marketing and sales roles expanded to nine as of
December 31, 2021, up from five at the end of 2020 and six at the end of 2019. Due to the restrictions
associated with the COVID
-
19 pandemic, travel and related customer engagement costs remained significantly
below pre
-
pandemic levels, partially offsetting these increases.
Other operating expenses for the year ended December
31, 2020, were $5.9
million, as compared to
$4.6
million for the year ended December
31, 2019, an increase of $1.3
million, or 28%. This increase was
primarily due to higher outside professional service fees associated with the Company’s application for Na
sdaq
listing of ADSs, which began in the second half of the year. Due to the restrictions associated with the onset of
the COVID
-
19 pandemic, travel and related customer engagement costs were significantly below 2019 levels,
partially offsetting these inc
reases.
While we seek to identify opportunities to reduce our use of outside providers of professional services, we
rely on the expertise of such providers given our dual
-
listing of Ordinary Shares and ADSs and the resulting exposure to the complex legal
and regulatory requirements of Norway and the United States. If we increase our
revenue as we currently anticipate, these expenses should decline relatively, as a percentage of revenue, but we
do not expect an absolute decline in these expenses for the fo
reseeable future.
Finance income and
F
inance cost
As described above,
Finance income
generally
include
s
interest received on bank balances, the net gain
associated with aggregated foreign exchange translation adjustments for the period, and upward revisions, if any,
to provisions, reserves, or the recorded fair values of financial assets or liabilities.
Fi
nance cost
generally
include
s
interest expenses on lease liabilities, interest expenses on VAT obligations, the net loss associated with
aggregated foreign exchange translation adjustments for the period, and downward revisions, if any,
to
provisions, rese
rves, or the recorded fair values of financial assets or liabilities
.
For the year ended December 31, 2021, Finance income totaled approximately $11 thousand, consisting
primarily of interest income on our bank deposits. Finance cost for the year, totaled
($1.1 million), consisting
primarily of the net amount of losses associated with foreign exchange
translation.
In 2020 and 2019 the Finance income of $26
thousand
and
$135 thousand, respectively, were also primarily
interest income., while Finance cost
in those years, ($477 thousand) and ($351 thousand)
, respectively,
were
foreign exchange losses.
Income tax expense (benefit)
The provision for income tax presented in the Consolidated Statements of Profit and Loss represents, for the
reporting period, the sum of current taxes due and changes in deferred tax. Current taxes due represents the sum
of
income tax expense (benefit)
f
or each of our taxable entities: IDEX Biometrics ASA
(Norway);
IDEX
Biometrics UK Ltd.
(United Kingdom); IDEX Biometrics Holding Company Inc. and IDEX Biometrics America
Inc. (
United States
);
and
IDEX Electronics (Shanghai) Co., Ltd. (China).
I
ncome tax expense (benefit)
for each
entity is calculated using
the
the tax jurisdiction in which it operatesincome tax rates
of
, net of available tax
credits in each jurisdiction, if any.
For the years ended December 31, 2021, 2020, and 2019, the provision for income tax presented in the
Consolidated Statements of Profit and Loss was an expense of approximately $90 thousand, a benefit of
approximately ($99 thousand), and an expense of approximately $160 thousand. During the years ended
December
31, 2021, 2020 and 2019, the parent company did not record or pay income taxes in Norway.
Changes in deferred tax represent the periodic reconciliation of differences between financial reporting
values and tax reporting values. For further discussion of our deferred tax
calculations, see
N
ote 6 to our
Consolidated Financial Statements
Net
l
oss for the
ear y
Net loss for the years ended December
31, 2021, 2020, and 2019 was ($32.6 million), ($26.8
million), and
($32.4
million), respectively.
On a per share basis for these
three years, these losses were ($0.04), ($0.03), and
($0.05) per share,
respectively. For the Company, pursuant to IAS 33
Earnings per Share
, these loss per share figures are the same
on a basic and fully
-
diluted basis. Because the Company has recorded a loss, loss per share on a fully-
diluted
basis excludes any O
rdinary
S
hares issuable upon exercise of outstanding subscription rights, as doing so, given
the loss, would be anti
-
dilutive
(i.e., reduce loss per share)
. For the Company,
basic earni
ngs per share
is
the quotient of
the
profit or loss
for the period divided by
the
weighted average number of
O
rdinary
S
hares outstanding the period.
for
The weighted average number of
O
rdinary
Shares
outstanding during the period is the number of
Ordinary
S
hares outstanding
at the beginning of
the period, adjusted by the number of
O
rdinary
S
hares
issued or bought back during the period
,
multiplied by a
IDEX Biometrics ASA Annual Report 202
1
Report from the Board of Directors
23
time
-
weightingfactor
representing the
number of days the Ordinary Shares outstanding as a proportion
are
of the
total number of days in the period
.
Similarly, for the Company, fully
-
diluted
earnings per share
is
the quotient of
the
profit or loss
for the period
divided by
the weighted average number of
O
rdinary
S
hares outstanding the period
for
, but, if profit is recorded
for the period, the weighted average number of
O
rdinary
S
hares
also includes
the weighted
average number of O
rdinary
Shares that would be issued upon exercise of vested subscription rights at a share price equal to the
Ordinary Share price for the period. Such weight average of d
ilutive
O
rdinary
S
hares
shall be calculated on a
time
-
weighting basis, assuming subscription rights vested at the beginning of the period would be exercised at
the beginning of the period or,
if
vesting occurs after the beginning of the period,
assuming exercise of
subscription rights would occur on the subsequent vesting date
.
Liquidity and Capital Resources
Overview
Since our inception, we have incurred significant operating losses and negative cash flows. W
e anticipate we
will continue to incur operating losses and consume cash through 2022. However, we believe we have adequate
cash to meet our operational requirements through a period of at least 12 months after the date of this report.
Because we intend to
continue pursuing our strategy and expect rapid revenue growth, we anticipate
additional capital likely will be required to fund such revenue growth (e.g., funding of increased working capital
requirements).
However, if we do not meet our current perform
ance forecast, we likely will require additional
funding to defray future operating losses.
We expect
our revenue for 2022 will be higher than the level we recorded for 2021. We expect shipments of
our TrustedBio modules will expand through 2022, based on our backlog and our current forecast for additional
orders, production lead times, and shipments. We also expect to sustain shipments of our customized cyber
authentication solution, to the customer referenced above, at current levels through 2022.
If w
e achieve higher revenue, and we are able to maintain current product
-
level profitability, increased
revenue should allow us to absorb expected increases in operating expenses. However, maintaining product
-
level profitability will depend on our ability to
pass along expected increases in the costs to manufacture,
assemble, and test our products.
As compensation and related personnel expenses are our largest costs, we anticipate a modest rise in such
expenses in 2022, reflecting expected merit
-
based salary increases, given our expectation of little net change in
headcount across 2022. Our research and development spending is expected to continue at its current level
through 2022, reflecting ongoing technology and product development, some of which is funded by grants from
the governments of Norway and the United Kingdom. Other operating expenses li
kely will increase in
connection with expanded marketing and sales activities, given higher staffing levels and expanded initiatives, as
well as the likelihood of increased travel costs, given reduced restrictions on travel due to the partial abatement
of
the COVID
-19 pandemic. We also anticipate higher administrative costs, particularly due to the expanded
regulatory compliance requirements associated with the listing of our Ordinary Shares on the Oslo Børs and the
listing of our ADSs on Nasdaq.
On November 12, 2021, we completed a private placement of Ordinary Shares, with proceeds of $30.0
million. On February 15, 2021, we completed a private placement of Ordinary Shares, with proceeds of
$27.2
million.
As of December
31, 2021, we had cash and cash equivalents of $33.8
million, representing approximately
80% of total assets.
We have no debt to financial institutions or other lenders. Our ongoing material financing commitments are
limited to the lease agreements we entered into associated with our of
fice and lab facilities.
Cash Flows
Pursuant to IAS 7
Statement of Cash Flows
,
we present our Consolidated Statements of Cash Flow following the
indirect method. The following table summarizes the results of our cash flows for the periods presented:
Year Ended December
31,
2021
2020
2019
Net cash used in operating activities
.........................................
$
(27,533
)
$
(23,294
)
$
(27,168
)
Net cash used in investing activities
.........................................
(143)
(232
) (721
) Net cash provided by financing
activities
................................
.
54,148
17,438
32,989
Net change in cash and cash equivalents
..................................
$
26,472
$
(6,088
)
$
5,100
Report from the Board of Directors
IDEX Biometrics ASA Annual
1 Report 202
24
Net cash flow used in operating activities
During the year ended December 31, 2021, operating activities consumed cash of ($27.5
million), primarily
as a consequence of our net loss before tax of ($32.5
million), partially offset by non
-cash charges of
$4.6
million included in the net loss for the
year. We did not have a meaningful change in net working capital for
the year.
Operating activities during 2020 consumed cash of ($23.3 million), primarily as a result of our net loss
before tax of ($26.9 million) and a net working capital increase of ($
1.0 million), partially offset by non
-
cash
charges of $5.1 million included in net loss for the year.
Operating activities during 2019 consumed cash of ($27.2 million), primarily as a result of our net loss
before tax of ($32.3 million), partially offset by non
-
cash charges of $4.2 million included in net loss for the year and a net working capital decrease of $1.2 million.
Net cash flow used in investing activities
During the year ended December 31, 2021, investing activities consumed cash of approximately ($143
thousand), reflecting the use of approximately ($141 thousand) for capital expenditures for engineering
equipment.
Investing activities during 2020 consumed cash of approximately ($232 thousand), reflecting the use of
approximately ($152 thousand) for capital expenditures for engineering equipment and the use of approximately
($181 thousand) for the acquisition of certain patents.
Investing activities during 2019 consumed cash of approximately ($721 thousand), reflecting the use of
approximately ($850 thousand) for capital expenditures for production equipment utilized by a vendor of
contract manufacturing services, partially offset by the receipt of approximately $135 thousand of interest
income associated with higher cash balances for the period.
Net cash flow provided by financing activities
During the year ended December 31, 2021, share issuance generated cash of $54.1 million, which included
the proceeds from two private placements of Ordinary Shares, as well as proceeds from share issuances
a
ssociated with our Employee Share Purchase Program and the exercise of subscription rights, partially offset by
reductions of lease liabilities totaling approximately ($844 thousand).
Financing activities during 2020 generated cash of $17.4 million, representing proceeds of $18.0 million
from a private placement of Ordinary Shares and proceeds of approximately $731 thousand from share issuances
associated with our Employee Share Purchase Program and the exercise of subscription rights, partially offset by
r
eductions of lease liabilities totaling approximately ($793 thousand) and the last payment of ($500 thousand)
associated with a vendor
-
financed purchase of capital equipment.
Financing activities during 2019 generated cash of $33.0 million, representing th
e total proceeds from share
issuances of $34.2 million, partially offset by reductions of lease liabilities totaling approximately ($675
thousand) and a payment of ($500 thousand) associated with a vendor
-
financed purchase of capital equipment.Operating and Capital Expenditure Requirements
We have not achieved profitability on an annual basis since our inception. While we expect our revenue for
2022 will be higher than the level we recorded for 2021, we also expect to incur net losses and consume cash fo
r
the year. We expect our operating expenses will increase as we continue to spend on development of new
products and expanded product features and the development of new customers in our three targeted market
segments. Additionally, as we have Ordinary S
hares listed in Norway and ADSs listed in the United States, we
expect we will continue to incur the costs of regulatory compliance.
We do not anticipate an increase in capital expenditures above the level incurred during 2021 and 2020. We
also are not p
lanning to acquire intangible assets or have significant investment activities for the foreseeable
future.
Our future funding requirements will depend on many factors, including but not limited to:
•
the pace and amount of new production orders placed with us by existing customers and customers with
which we have recently secured design wins;
•
the scope, rate of progress, and costs of our expanded marketing and sales activities;
•
the scope, rate of progress, and costs of our product
development activities;
•
our ability to secure manufacturing capacity and address other ongoing supply chain uncertainties;
•
the cost of manufacturing our products and our ability to pass on cost increases to our customers;
•
the cost of developing our software and the timing thereof;
IDEX Biometrics ASA Annual Report 202
1
Report from the Board of Directors
25
•
the costs involved in filing and prosecuting patent applications and enforcing and defending potential
patent claims; and
•
the costs of retaining existing personnel and hiring additional skilled individuals to support ou
r
continued growth.
Parent Company Financial Statements
The Financial Review above of the consolidated profit and loss statements, as well as the consolidated
statements of financial position, largely apply to the parent company itself. The parent company
holds all
intellectual property rights. It is also the group’s party to all trade relations with manufacturing partners and
customers. All revenues and cost of goods sold accrue in the parent company. The subsidiaries provide
development services, market
facilitation services, supply
-
chain and administrative services to IDEXBiometrics
ASA and do not trade with external customers. The parent company recognizes these services as
development
expense and other operating expenses. The entities are funded through a combination of equity and
intercompany loans or advances, as required.
Nearly all of the group’s employees are employed in the subsidiaries. Hence, the parent has a small share of
the group’s payroll expenses. The parent company purchases develop
ment services from the subsidiaries,
whose
charges include the payroll cost of the development staff. Thus, the parent company reports higher R&D costs
than the consolidated group. The parent company purchases marketing and other services from the
subsidia
ries,
whose charges include the payroll cost of the staff performing the service. Thus, the parent
company
reports
higher
other operating expenses the consolidated
than
group.
The parent company’s long
-
term interest
-bearing loans to the subsidiaries were r
educed in 2020 and fully
repaid in 2021. The
short
-term receivables from group companies are mainly from IDEX UK. In 2020 IDEX UK
credited charges made in earlier years because IDEX UK carries its development cost in order to qualify for
SME research and
d
evelopment tax relief in the UK. Other aspects of the parent company’s
balance
sheet
are
covered
by
the
comments
for
the
consolidated
balance
sheet
for
the
group.
Allocation of the Net Loss for the Year
The net loss for 2021 of the parent company IDEX Biometrics ASA was $38,889,352.72 compared to a net
loss
of
$17,237,488.60
in
2020.
The
board
proposes be
that
the
loss
shall
added
to
the
accumulated
loss.
$46,000,000.
-
of the share premium has been allocated to partly cover accumulated losses. The
board does not
propose
any
dividend
payments for
2021.
Going Concern
The going concern assumption has been applied for the group as well as the parent company when
preparing financial has incurred accumulated net
the
statements.
IDEX
significant
operating
losses.
The
group’s
equity amounted to $37.7 million as of December 31, 2021. The company has no debt to financial institutions,
and raised $30.1 million new equity before expenses on November 9, 2021. The company has adequate
working
capital to meet i
ts operating commitments for at least twelve months from the date of this report. The board
confirms that
the
conditions going
for
the
concern
assumption
are
met.
HEALTH AND SAFETY
The board and management seek to create a working environment that is
pleasant, stimulating, safe and
to
the benefit of all employees. The working environment complies with the existing rules and regulations.
IDEX
offers flexible working hours for all employees. The board has not found reason to implement special
measures.
A
s of December 31, 2021, we had 93 employees and 18 contractors on our staff, working 98 full
-
time
equivalents, FTE. Of these, 72 individuals are engaged in development, 15 in marketing and sales, two in
production planning and supply chain, and nine in administration and finance. Of the total staff of 111 persons,
19 were assigned to our Oslo office, 56 were assigned to our two offices in the United States, 27 were assigned
to our office in the United Kingdom, and nine were assigned to our office in China.
None of our employees are represented by a labor union or covered by a collective bargaining agreement
,
and we have not experienced any work
stoppages.
No No
employee
has
suffered
work
-related
injury
resulting
in
sick
leave.
accidents or incidents
involving
the assets of IDEX have occurred. The sick leave in the group was
0.6
% in
2021
, compared to 0.4%
in 2020. Due
to the low number of employees, statistics for the parent company are not presented. The sick
leave
data
are
not
considered reason
for c
oncern.
Report from the Board of Directors
IDEX Biometrics ASA Annual
1 Report 202
26
IDEX practices equal opportunities in all aspects. All facilities at IDEX are equally well equipped for
females and males. Traditionally, fewer women than men have graduated in IDEX’s fields of work. The
management structure reflects the compositio
n of the technical staff. The board has not taken any special
measures
in
these respects.
ENVIRONMENTAL, SOCIAL AND GOVERNANCE MATTERS
We acknowledge and embrace the importance of Environmental, Social, and Governance (“ESG”)
considerations in the development and execution of the Company’s strategy, which must be sustainable and
contribute to the well
-
being of the communities in which we operate.
Our values are set forth in our Code of Conduct and Code of Ethics (“the Code,” available on our website).
The
Code states, “The purpose of the Company is to create value for the shareholders, while the business shall
also be to the benefit for the Company’s customers, staff, suppliers, other business relations and the society at
large.”
The Code also states, “IDEX makes every reasonable effort to secure a healthy, safe, and lawful work
environment, and that the Company complies with all applicable laws, rules, and regulations concerning
occupational health, safety, and environmental protection. The Company promotes equality and non
-
discrimination, non
-
harassment, fairness, and ethical behavior. The Company offers a pleasant, well
-
equipped,
and safe work environment, maintains fair and balanced employment practices and equal employment
opportunity policies, and co
mplies with all applicable labor laws. IDEX encourages and also expects similar
commitment from its suppliers, partners, and customers.”
As a fabless developer and supplier of high
-
technology products, we outsource all manufacturing activities. We select
manufacturing partners and other providers of products and services that follow responsible practices
in all ESG aspects. Our own operations do not have a significant impact on the natural environment, and the end
-
products in which our fingerprint authenti
cation solutions are used (e.g., PVC smart cards) can be efficiently
recycled. The Company is committed to minimizing use of energy, raw materials, water, and other resources,
and makes every reasonable effort to minimize the waste we generate. We have rec
ycling programs in place in
all our facilities.
As set forth in our Code and in our Articles of Association, we consider shareholders, staff, customers,
business partners, authorities, and society in general to be important stakeholders, with interests to be protected
and served. We consider how we interact with and treat our stakeholders to be the most efficient way we can
have a meaningful impact on their wellbeing. As such, IDEX is committed to fulfill its obligation to be as a
responsible member of society through the conduct of its business in an ethical, socially
-
responsible, and transparent manner.
As of December 31, 2021, women represented 15% of our staff, and two departments are led by women.
The composition of our Board of Directors meets Norwegian statutory requirements, with women as three of our
seven members.
ESG risks are not considered to be material to our financial statements. We have not identified any such
risks that could have the potential to materially harm our business in a non
-
financial manner.
As our business grows, our operations and the elements of our ESG profile likely will evolve. When our
ESG profile evolves to include measurable and material matters, we will supply investors and other stakeholders
with decision
-
usef
ul information regarding our ESG objectives and indicators of our progress toward those
objectives.
The current corporate governance review is included in the 2021 annual report and is also available at the
company’s website,
https://www.idexbiometrics.com/about
-
idex/
.
MANAGEMENT REMUNERATION, DIRECTORS’ AND OFFICERS’ INSURANCE
The annual general meetin
g in 2021 resolved a policy for executive remuneration. The full policy is
available at the company’s website,
https://www.idexbiometrics.com/about
-
idex/
. The actual remuneration in
2021
have been included in a note to the parent company financial statemen
ts. The executive remuneration
report will be presented to the 2022 annual general meeting in a separate document.
Since the company
’
on Oslo Børs, the company has had a conventional s shares were
admitted to
listing
Norway
-
based insurance policy covering
directors’ and officers’ liability world wide, except for liabilities
arising from U.S. Securities Act. Since 2021, ADSs representing the company’s shares are listed on the Nasdaq
Capital Market in the United States. The company and its directors and offic
ers are subject to incremental
IDEX Biometrics ASA Annual Report 202
1
Report from the Board of Directors
27
liability in the U.S. In order to attract and retain qualified individuals to the board and executive management,
the company maintains also a U.
S.-
based liability insurance with worldwide coverage to protect directors and of
ficers in the company from certain liabilities. The company has contractually obligated itself to indemnify, and
to advance expenses on behalf of, the directors and officers to the fullest extent permitted by applicable
Norwegian law so that they will serv
e the company free from undue concern. The U.S.
-
based insurance and the indemnification agreements were authorized by the extraordinary general
meeting of the company on December
15, 2020. Subject to various terms and sub
-
limits, the total insured amount is up to NOK 50 million in the
Norway
-
based policy and USD 5.0 million for liabilities exceeding USD 5.0 million or USD 10.0 million, as the
case may be, in the U.S.
-
based policy.
OUTLOOK
During 2021 IDEX made good progress transitioning from research and development to commercial
activities. Even with the extraordinary challenges created by COVID
-
19 on business and society, the team
was
able to
remain
focused
and
execute
on
the
2021
business plan.
IDEX Biometrics is partnering with leading vendors throughout the card supply chain. We consider these
industry partnerships an important element of our strategy and are pursuing opportunities to leverage the
strengths and resources of well
-
positioned companies that share our vision for fingerprint biometrics. Our value proposition is based on providing highly
-
integrated, high-
performance solutions enabling our
customers to design products that are as differentiated as our own. We have, today, highly
-d
ifferentiated
solutions to meet the demanding technical challenges of card
-
based applications and are aggressively pursuing still
-
evolving market segments. We are developing proprietary software that will further differentiate our
fingerprint solutions, w
hile widening the intellectual
property based “moat” around the Company. -
Despite the uncertain environment brought on by the challenges of a global pandemic and a constrained
semiconductor supply chain, IDEX Biometrics continues to make progress executing on a strategy positioning
the Company as the leading provider of biometric authentication solutions for payment
cards and adjacent
market applications
.
April 20,
2022
The
board
of
directors
of
IDEX
Biometrics
ASA
/s/ Opstad
Morten
Morten
Opstad
Chair
/s/
Lawrence
John
Ciaccia
Lawrence Ciaccia
John
Deputy chair
/s/
Deborah
Lee
Davis
Deborah Lee
Davis
Board member
/s/
Hanne
Høvding
Hanne Høvding
Board member
/s/
Annika Olsson
Annika Olsson
Board member
/s/
Thomas Quindlen
Thomas Quindlen
Board member
/s/ Stephen
Andrew
Skaggs
Stephen
Andrew
Skaggs
Board member
/s/
Vincent
Arthur
Graziani
Vincent
Arthur
Graziani
CEO
Report from the Board of Directors
IDEX Biometrics ASA Annual
1 Report 202
28
(Intentionally blank page)
IDEX Biometrics ASA Annual Report 202
1
Consolidated
Financial Statement
s
and
Notes
29
CONSOLIDATED FINANCIAL STATEMENTS
IDEX Biometrics ASA
Consolidated Statements of Profit and Loss
($000s, except per share amounts)
Year Ended December 31,
Note
2021
2020
2019
Revenue:
Product
$ 2,837
$ 1,013
$ 159
Service
Total revenue
Operating expenses:
Cost of materials, net of inventory change
Compensation and benefits
4
Research and development
5
Other operating expenses
18
Amortization and
depreciation
8, 9, 10
Total operating expenses
Loss from operations
(31,350 )
(26,402 )
(32,047 )
Finance
income
Finance cost
(1,123 )
(477 )
(351 )
Loss before tax
(32,462 )
(26,853 )
(32,263 )
Income tax expense (benefit)
6
(99 )
Net loss for the year
$ (32,552 )
$ (26,754 )
$ (32,423 )
Loss per share, basic and diluted
7
$ (0.04 )
$ (0.03 )
$ (0.05 )
Consolidated Statements of Comprehensive Income
Year December
Ended
31,
Note
2021
2020
2019
Net loss for the year
......................................................
$ (32,552 )
$
(26,754 )
$
(32,423 )
Other comprehensive income that may be reclassified
to profit (loss) in subsequent periods:
Foreign currency translation adjustment
.......................
Total comprehensive income (loss) for the period (net
of tax)
.......................................................................
$ (32,542 )
$
(26,084 )
$
(33,085 )
The accompanying notes are an integral part of these consolidated financial statements.
Consolidated Financial Statements and Notes
IDEX Biometrics ASA Annual Report 202
1 30
IDEX Biometrics ASA
Consolidated Statements of Financial Position ($000s)
Note
December
31,
2021
December
31,
2020
Assets
Non
-
current assets:
Goodwill
...................................................................................................
8
$ 968
$ 968
Intangible assets
........................................................................................
8
Property, plant, and equipment
..................................................................
9
Right
-
of
-
use assets
...................................................................................
10
Non
-
current receivables
............................................................................
Total non
-
current assets
..................................................................
Current assets:
Prepaid expenses
.......................................................................................
Inventory
...................................................................................................
13
Accounts
receivable, other
........................................................................
11
Accounts receivable, trade
........................................................................
11
Cash and cash equivalents
.........................................................................
14
Total current assets
.........................................................................
Total
assets
...........................................................................
$ 42,026
$ 17,006
The accompanying notes are an integral part of these consolidated financial statements.
IDEX Biometrics ASA Annual Report 202
1
Consolidated
Financial Statement
s
and
Notes
31
Note
December
31,
2021
December
31,
2020
Equity and liabilities
Paid
-
in capital:
Share capital
(NOK 0.15 1,010,388,454
31, 2021 and
2020, respectively
)
.....................................................................................
$ 20,410
$ 17,251
Share premium
................................................................................................
Other paid
-
in capital........................................................................................
Total paid
-
in capital..............................................................................
15
Foreign currency translation effects
...........................................................................
(12,312 )
(12,322 )
Accumulated loss
.......................................................................................................
(1,239 )
(14,687 )
Total equity
................................................................................
Non
-
current liabilities:
Non
-
current lease liabilities
............................................................................
10
Total non
-
current liabilities
..................................................................
Current liabilities:
Accounts payable
............................................................................................
12
Current lease liabilities
....................................................................................
10
Public duties payable
.......................................................................................
Other current liabilities
...................................................................................
12
Total current liabilities
..........................................................................
Total liabilities
......................................................................................
Total equity and liabilities
..........................................................
$ 42,026
$ 17,006
The accompanying notes are an integral part of these consolidated financial statements.
April
20,
2022
The
board
of
directors
of
IDEX
Biometrics
ASA
/s/ Opstad
Morten
Morten
Opstad
Chair
/s/
Lawrence
John
Ciaccia
Lawrence Ciaccia
John
Deputy chair
/s/
Deborah
Lee
Davis
Deborah Lee
Davis
Board member
/s/
Hanne
Høvding
Hanne Høvding
Board member
/s/
Annika Olsson
Annika Olsson
Board member
/s/
Thomas Quindlen
Thomas Quindlen
Board member
/s/ Stephen
Andrew
Skaggs
Stephen
Andrew
Skaggs
Board
member
/s/
Vincent
Arthur
Graziani
Vincent
Arthur
Graziani
CEO
Consolidated Financial Statements and Notes
IDEX Biometrics ASA Annual Report 202
1 32
IDEX Biometrics ASA
Consolidated Statements of Changes in Equity ($000s)
Share
Capital
Share
Premium
Other
Paid
-
in
Capital
Foreign
Currency
Translation
Effect
Accumulated
Loss
Total
Equity
Balance at December
31, 2018
....
$ 12,501
$ 166,419
$ 13,353
$
(12,330 )
$
(165,760 )
$ 14,183
Share issuance
.............................
Share
-
based compensation
..........
Net loss for the year
....................
(32,423 )
(32,423 )
Other comprehensive income
......
(
Balance at December
31, 2019
....
(12,992 )
(198,183 )
Share issuance
.............................
Share
-
based compensation
..........
Net loss for the year
....................
(26,754 )
(26,754 )
Allocation of share premium
.......
(210,250 )
Other comprehensive income
......
Balance at December
31, 2020
....
$ 17,251
$ 3,608
$ 18,664
$
(12,322 )
$
(14,687 )
$ 12,514
Share issuance
.............................
Share
-
based compensation
..........
Net loss for the year
....................
(32,552 )
(32,552 )
Allocation of share premium
.......
(46,000 )
Other comprehensive income
......
Balance at
December
31, 2021
....
$ 20,410
$ 9,452
$ 21,414
$ (12,312 )
$ (1,239 )
$ 37,725
Refer also to Note 15 to the consolidated financial statements.
The accompanying notes are an integral part of these consolidated financial statements.
IDEX Biometrics ASA Annual Report 202
1
Consolidated
Financial Statements
and
Notes
33
ID
EX Biometrics ASA
Consolidated Statements of Cash Flow ($000s)
Year Ended
December
31,
Note
2021
2020
2019
Operating activities
Profit (loss) before tax
............................................................
$ (32,462 )
$
(26,853 )
$
(32,263 )
Amortization and depreciation expense
..................................
8, 9, 10
Share
-
based compensation expense
........................................
16
Other non
-
cash operating expenses
.........................................
(Increase) decrease in inventories
...........................................
13
(375 )
(139 )
(Increase) decrease in accounts receivable
..............................
11
(314 )
(414 )
Increase (decrease) in accounts payable
..................................
12
(124 )
Change in other working capital items
....................................
(618 )
Interest expense
.......................................................................
(11 )
(27 )
Other
financial items
...............................................................
(238 )
Change in income taxes
..........................................................
(437 )
(226 )
Net cash flows from operating activities
................................
.
(27,533 )
(23,294 )
(27,168 )
Investing activities
Purchases of property, plant, and equipment
..........................
9
(850 )
Purchases of intangible assets
.................................................
8
(Payment) collection of non
-
current receivables
.....................
11
(6 )
Interest received
......................................................................
(141 )
(152 )
(13 ) 75
Net cash flows from investing activities
................................
.
(143 )
(232 )
(721 )
Financing Activities
Net proceeds from issuance of shares
.....................................
15
Payments on lease liabilities
...................................................
10
(844 )
(793 )
(675 )
Payment related to a financed asset purchase
.........................
9
(500 )
(500 )
Net cash flows from financing activities
................................
.
Net change in cash and cash equivalents
................................
(6,088 )
Effect of foreign exchange on cash balances
..........................
(11 )
(740 )
(609 )
Opening cash and cash equivalents balance
............................
Cash and cash equivalents at December
31
.............................
14
$ 33,759
$ 7,298
$ 14,126
The accompanying notes are an integral part of these consolidated financial statements.
Consolidated Financial Statements and Notes
IDEX Biometrics ASA Annual Report 202
1 34
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except per share amounts)
1. Corporate Information
-
owned s
ubsidiaries (collectively, “IDEX” or the “Company”) specialize in
the design, development, and sale of fingerprint authentication solutions. The Company’s fingerprint
authentication solutions are used primarily in contactless smart cards, including financi
al payment cards, access
control cards, and card
-
based devices for the storage of digital currencies.
-
0191 Oslo, NorwayOrdinary Shares, representing the only class of equity securities issued and outstanding, are listed on the Oslo
Børs, the stock exchange in Oslo, Norway, under the ticker symbol IDEX. The Company’s Am
erican Depositary
Shares (“ADSs”), each ADS representing 75 Ordinary Shares, are listed on Nasdaq, under the ticker symbol
IDBA.
IDEX is comprised of the Norwegian parent company and its subsidiaries in the United States (IDEX Biometrics
Holding
Company Inc. and IDEX Biometrics America Inc. (together, “IDEX America”)), the United Kingdom
(IDEX Biometrics UK Ltd. (“IDEX UK”)), and the People’s Republic of China (IDEX Electronics (Shanghai)
Co., Ltd. (“IDEX China”)). The parent company is the owner
of all intellectual property of IDEX and is the
contractual party to all customer and manufacturing partner agreements. All sales are recorded by the parent
company. The subsidiaries provide various services to the parent company, mainly associated with
en
gineering,
supply
-
chain administration, and customer service functions.
2. Basis of Presentation
The Company
prepare
s
its
Consolidated
F
inancial
Statements in accordance with International Financial
Reporting Standards (
“
) as issued by the InternatIFRS
”ional Accounting Standards Board (
“
IASB
”).
The
consolidated financial statements are presented in U.S.
D
ollars
(“USD”),
and all values are rounded to the
nearest thousand ($000), except when otherwise indicated.
As of January 1, 2020, the parent company c
hanged
its presentation currency from the Norwegian Krone (“NOK”) to USD, and, as of January 1, 2021, the parent
company changed its functional currency from NOK to USD. The change of functional currency to USD with
effect from January 1, 2021, reflected
the fact that over time revenue and operating expenses denominated in
USD had become the main currency of the parent company, justifying a change of functional currency to USD.
The Consolidated Financial Statements, prepared on a historical cost basis, include the accounts of the parent
company and its subsidiaries, with all intercompany transactions
,
, revenue, expenses, and unrealized balances
internal profit or losses
eliminated upon consolidation.
Consistent with IFRS requirements, a going concern assumption has been applied in the preparation of the
consolidated financial statements. The Company’s Board of Directors (the “Board”) confirms the conditions for
the going concern assumption have been met, as the Board has concluded the Company has adequate working
capital to meet its operating commitments for at least twelve months from the date of this report.
The consolidated financial statements for the year ended December were approved
31, 2021
,
presented herein,by the Board on April
20, 2022.
3. Significant Accounting Policies
The Company is not aware of, nor does it anticipate, any newly issued, but not yet effective, accounting
standards, amendments, or interpretations that would have a signifi
cant impact on the consolidated financial
statements or notes presented herein. However, any
newly issued, but not yet effective, accounting standards,
amendments, or interpretations may influence the accounting for future transactions or arrangements, as
well as
the future presentation of the Company’s Consolidated Financial Statements. The Company will implement
such new accounting standards, amendments, or interpretations, if any, as they become effective.
Accounting policies that are
significant to
he Company’st
results and financial position, in terms of materiality of
the items to which the policy is applied, are discussed
below
.
Accounting judgments, based on the use of estimates and assumptions
The application of certain accounting
standards
req
uires considerable judgment based upon estimates and
assumptions that
may
involve
high levels of
uncertainty at the time the
estimates
are made.
Judgments
and
estimates
are continually evaluated and are based on historical experience and other factors, inc
luding
expectations of future events that are believed to be reasonable under the circumstances.
Actual outcomes may
deviate from estimates. Changes in assumptions and deviations between estimates and final outcomes may have
a material
i
nfluence on the financial statements in the periods when assumptions are changed
or when
IDEX Biometrics ASA Annual Report 202
1
Consolidated
Financial Statement
s
and
Notes
35
uncertainty is resolved. The following represent the notable accounting items requiring management’s
judgement, based on the use of estimates and assumptions.
Goodwill
The carrying value of goodwill is recorded
initially
the fair value of the consideration paid for the assets at
acquired, less the capitalized value of the identifiable assets and initial impairment charges, if any. As goodwill
represents the future econom
ic value of assets acquired in a business combination above the separately recorded
values of those assets, subsequent impairment testing involves quantitatively comparing these separately
recorded values to the value of the business unit to which the goodwill is assigned. As of December 31, 2021,
such comparison indicated the carried value of goodwill was appropriate and
no
impairment was
recorded
.
Intangible assets
IDEX’s patents and other intellectual property rights created by the Company are capitalized and recorded in the
Consolidated Statements of Financial Position only when they satisfy the criteria for capitalization. No
development costs have been capitalized in 2021, 2020, or 2019.
Acquired intangible assets are capitalized
initially
, normally the purchase price. Intangible assets are at fair
value
amortized over their useful
economic
lives. An assessment of impairment losses on non
-
current assets is made
when there is an indication of a decrease in value. If an intangible asset’s carrying amo
unt is higher than the
asset’s recoverable amount, an impairment loss will be recognized in the consolidated statements of profit and
loss. The recoverable amount is the higher of the fair value (less costs to sell to an independent third party) or the
cal
culated value based on the discounted cash flow from continued use. A recoverable amount is determined
separately for each asset. Impairment losses recognized in the consolidated statements of profit and loss for
previous periods are reversed when such rev
ersal is supported by specific circumstances. Reversal is limited to
the lower of the updated recoverable amount and the carrying amount that would have been recognized had no
impairment losses been recognized for the asset in prior years. Impairment charg
es on goodwill are not subject to
reversal.
IFRS requires that certain
intangible assets
be tested for impairment annually or when circumstances indicate such assets may be impaired
. The
carrying value of other (i.e., tangible) only when
assets is
tested
circumstances
indicate such assets may be impaired
.
As of December 31, 2021, the Company determined that
there were no
indicators of impairment and no impairment
was recorded
.
Inventory
Inventories consist of raw materials, work in process, and finished goods. Materials and components consumed
in research and development activities are expensed at the time of purchase and excluded from inventory.
Inventory is recorded at the lower of cost and net realizable value, less impairment, if any. Impairment is
a
ssessed quarterly, based on management’s estimates of future consumption of inventories by category. The
determination of net realizable value is subject to considerable judgment, as reselling components or other
commodity raw materials at any value may not be easily achieved, and elements of work in progress and finished
goods, if impaired (i.e., considered excess or obsolete inventory), generally have no resale value and are held for
disposal.
Share
-
based compensation
IDEX estimates the fair value of ince
ntive subscription rights (“SRs”) at the grant date by using the Black
-
Scholes option pricing model. The valuation is based on share price and exercise price, share price volatility,
interest rates, and the estimated term of the SRs, based on historical assessments of exercise patterns, forfeiture,
and staff attrition. Share
-
based compensation is expensed, as earned, over the vesting period of the underlying
SRs. The accrued cost of the Company’s employment taxes associated with the earned value of the SRs
is
calculated and recorded concurrently with the related share
-
based payment expense.
IDEX estimates the fair value of the Employee Share Purchas Plan (“ESPP”) at the grant date, i.e. the first date
of the contribution period, by using the Black
-
ption pricing model. The valuation is based on share Scholes o
price and exercise price, share price volatility, interest rates, and the term of the contribution period. The share
-
based compensation is expensed across the contribution period. Employment taxes, if an
y, are expensed when
incurred.
Leasing agreements
Pursuant to
IFRS
16
Leases
(effective January 2019), if the Company is the lessee, management is required to
make judgments about whether an arrangement contains a lease, as defined in
IFRS
16, the term of
the lease, and
the appropriate discount rate to calculate the present value of lease payments. If the rate implicit in the lease
cannot be readily determined, management uses the incremental borrowing rate, which represents the rate that
the Company would
have to pay to borrow the funds necessary to obtain an asset of similar value to the right
-
of
-
use asset in a similar economic environment, with similar terms, security interests, and conditions. The values of
Consolidated Financial Statements and Notes
IDEX Biometrics ASA Annual Report 202
1 36
the lease liability and the associated right
-of-
use asset are capitalized on the Consolidated Statements of
Financial Position.
Lease extension options (or occupancy periods after termination options) are only included in the lease term if it
is reasonably certain the lease will be extended (or not terminated, as the case may be) and, as such, included
within lease liabilities. Th
e lease term is reassessed in the event such an option is exercised (or not exercised, as
the case may be) or the Company becomes obliged to exercise (or not exercise) such an option. The assessment
of reasonable certainty is only revised if a significant event or a significant change in circumstances occurs,
which affects this assessment and is within the lessee’s control (e.g., when significant investment in the facility
is made which has a useful life beyond the current lease term).
In the Consolidated
Statements of Profit and Loss, period lease payments are recorded as a periodic depreciation
expense and a periodic interest expense. The initial values of the lease liability and the associated right
-
of
-use
asset are amortized over the term of the lease l
iability. Given the inclusion of an interest charge on the liability
balance in such amortization, the Company records higher expenses early in the term of a lease and lower
expenses late in the term of a lease, in contrast to the amount of the actual lease payments, which generally are
fixed for the term of a lease.
In the Consolidated Statements of Cash Flows, the interest portion of the Company’s payments under its lease
liabilities is classified as a financing cost within cash flows from operating activities. The remaining portion of
such payments is classified as a reduction of lease liabilities within cash flows from financing activities.
Climate Change
As of December 31, 2021, the possible future financial impact to the Company resulting from
climate change is
uncertain. Given the nature of the Company’s operations and products, any such impact is currently believed to
not be material. The Company is monitoring current and expected climate change effects
,
as well as measures considered or impl
emented
by government and industr
y in order
to minimize any negative impact and to
take
advantage of
any favorable opportunities that may arise.
COVID
-
19
The COVID
-
19 pandemic, including the global emergence of new variants, continues to cause business and
economic uncertainties.
The full impact of COVID
-
19 on the Company’s business, results of operations, and
financial condition may depend on numerous evolving factors that are highly uncertain and cannot be accurately
predicted.
The Company will continue to monitor the evolving situation and will assess modifying its response
to the pandemic, as well as any relevant implications for its operations or financial reporting.
In the first quarter of 2020, the World Health Organization declared COVID
-
19 a globa
l pandemic. The
Company quickly adopted the guidelines, outlined by the relevant governments where the Company operates, to
ensure the health of staff members and their families. The Company established an internal virus response team,
and, effective March
16, 2020, all travel and face
-
to
-face meetings were stopped, and most staff members were
directed to work from home. Staff members with specific roles required to be on
-
site at one of our facilities are
being supported in line with local government guide
lines. As certain countries relaxed restrictions, many staff
members have returned to working on
-
site and have resumed travel. The Company’s management and Board continue to monitor the situation closely and will take further action as appropriate.
The C
ompany has not experienced significant delays in its development projects, and it has not incurred
additional costs as a result of its response to the pandemic. Disruption of supply chains, particularly the
semiconductor supply chain, has been attributed to the pandemic. While the Company did not experience supply
chain disruptions that were material to its operations or financial results during 2021, operational planning and
management of inventory levels were challenging, given uncertainties associated with vendor capacity
availability and allocations to the Company of such capacity. Because management expects such uncertainties
will continue through 2023, the Company may place orders for, and hold balances of, inventory at higher levels
than would be expected if such uncertainties did not exist.
Management believes the pandemic
has had an adverse influence on the timing of
activities
of smart card
manufacturers and issuers
, including delaying product development and the initiation of trials and
pilots
involving smart cards incorporating our fingerprint authentication solutions.
The Company considered the impact of COVID
-
19 on its judgements, estimates, and assumptions, and, as of the date of issuance of these financial statements, it is not aware of any specific event or circumstance that would
require the Company to update its judgements, estimates, and assumptions or revise the carrying value of its
assets or liabilities.
The full impact of COVID
-
19 on the Company’s business, results of operations, an
d
financial condition may depend on numerous evolving factors that are highly uncertain and cannot be accurately
predicted.
As additional information is obtained, the Company may be required to update its
judgements,
estimates
,
and assumptions. Actual results could differ from prior judgements,
estimates
and assumptions,
,
and
any such differences may be material to the Company’s financial statements. The Company will continue to
IDEX Biometrics ASA Annual Report 202
1
Consolidated
Financial Statement
s
and
Notes
37
monitor evolving
circumstances
identify and and will
assess
any
relevant impli
cations
its financial for
statements.
Financial risks
IDEX emphasizes capital preservation and liquidity in managing its cash, which is held in bank accounts, which
are denominated in USD, NOK, GBP, and CNY.
Short
-
term capital requirements include funding operating losses and supporting net working capita
l
requirements. Reflecting the Company’s operating model, investments in property, plant, and equipment are
modest, and have been funded with proceeds from issuance of the Company’s Ordinary Shares. IDEX has been
funded through the issuance of Ordinary Shares since it was established in 1996.
Interest Rate Risk
As of December 31, 2021, IDEX had cash of $33.8
million. The
Company’s exposure to interest rate sensitivity
is influenced primarily by changes in the underlying bank interest rates in the various
currencies. IDEX’s cash is
held in bank accounts, all of which are considered highly liquid. Accordingly, an immediate one percentage
point change in interest rates would not have a material effect on the fair market value the Company’s cash
accounts. As
the Company has no debt to financial lenders, it is not exposed interest rate risks associated with
variable rate debt. In calculating the recorded and carrying values of leases, interest rates are a variable in the
calculations of these values, but do n
ot represent a meaningful level of risk of material changes in these values.
Currency Risk
The Company’s transactions are commonly denominated in USD. However, the Company incurs a portion of its
expenses in other currencies, primarily NOK, British Pound
s (“GBP”), and Chinese Yuan (“CNY”), and is
exposed to changes in the rates of exchange between the USD and these currencies. While the Company seeks to
minimize this exposure by maintaining currency cash balances at targeted levels appropriate to meet for
eseeable
short to mid
-
term expenses in these other currencies, it does not use forward exchange contracts or other hedging
strategies to manage exchange rate exposure.
Credit and Liquidity Risk
IDEX extends customary credit terms to customers, reflecting
its assessment of their individual creditworthiness.
The Company does not believe it was exposed to significant credit risk associated with its Accounts receivable,
trade, balance as of December 31, 2021. (See Note 11
–
Accounts receivable.) If revenue continues to increase,
such balances from a broadening customer base will expand, potentially increasing the Company’s exposure to
credit risk.
The Company believes it faces minimal liquidity risk, as IDEX’s cash is on deposit with reputable, well
-
capitali
zed financial institutions. The Company has no debt to financial institutions and maintains adequate bank
balances to meet anticipated liabilities as they become due for at least twelve months from the date of these
Consolidated Financial Statements.
Othe
r accounting policies
Consolidation
The Company’s Consolidated Financial Statements are comprised of the financial statements of IDEX
Biometrics ASA and its wholly
-
owned subsidiaries, with all intercompany transactions, balances, revenue,
expenses, and unrealized internal profit or losses el
iminated upon consolidation.
Revenue recognition
Revenue is recognized when control of the promised goods or services is transferred to a customer, in an amount
reflecting
the consideration the Company expects to be entitled to in exchange for those good
s or services. Sales,
value add, and other taxes
incurred
concurrent with revenue producing activities are excluded from revenue.
Shipping and handling
charges
to customers are included in revenue, and costs associated with outbound freight
after control o
ver a product has transferred to a customer are accounted for as
revenue reductions
.
The Company’s primary source of revenue comes from the sale of
its
products,
which principally are
biometric
fingerprint modules, consisting of a sensor and an ASIC in a single package. Each module also contains
embedded software. The hardware and the embedded software are interdependent, in that each needs the other to
provide the intended fingerprint authentication function to the customer.
The pr
customers for the imary
C
ompany’s products
are
smart card manufacturers and similar solution integrators. The Company currently does
not utilize stocking distributors for the resale of its products.
The Company, from time to time, use licenses, in which royalties due
licenses its intellectual property under right to
to the Company are based upon a percentage of the licensee’s sales and/or unit volumes. For the year
s
ended
December 31, 2021, 2020, and 2019, the Company recognized no revenue from licensing its intellectual property.
Consolidated Financial Statements and Notes
IDEX Biometrics ASA Annual Report 202
1 38
Certain contracts with customers contain multiple performance obligations, which typically may include a
combination of
non
-
recurring
engineering (“NRE”)
services, prototype units, and production units. For these
contracts,
if
the individual performance o
bligations are distinct, they are
accounted for separately
. Generally, the
Company has determined the NRE
services
and prototype units represent one distinct performance obligation,
and the production units represent a separate distinct performance obligation. For such arrangements, revenue is
allocated to each performance obligation based on its relative standalone selling price, based on prices charged to
other
customers or
based o
n
expected cost plus a
customary
profit
margin. The Company
generally recognizes
revenue for NRE
services
and prototype units
at
the point in time
when a defined
milestone under the
arrangement is completed and control is transferred to the customer, which is generally the shipment or delivery
of the prototype
units
. Revenue for production units is recognized upon shipment or delivery, consistent with
product revenue
recognition
summarized above.
The Company also recognizes revenue from contracts with custo
mers associated with the delivery of certain
services, ranging from standalone NRE to advisory services. Generally, these contracts include a single
performance obligation (i.e., service element), and revenue is recognized upon the completion of the defin
ed
service element and final acceptance by the customer of the project deliverable, if any. However, r
evenue from
services may be recognized over time, if recognition of multiple service elements is based on completion of
substantive and results
-
based cont
ractual milestones, and acknowledgement by the customer of such completion.
The Company does not have material obligations or reserves for warranties, returns, or customer refunds.
Cost of materials, net of inventory change
Cost of materials, net of inv
entory change, primarily consists of the costs of raw materials, contract
manufacturing, and transportation associated with production and storage of products, net of inventory change.
Foreign currencies
The Company’s Consolidated Financial Statements are presented in USD. The functional currency of the parent
company is USD, while the functional currency for each foreign subsidiary is its local currency. Transactions
involving the translation to the respective functional currencies of values denominated
in foreign currencies are
classified as monetary or non
-
monetary, thereby defining the
measurement and recognition of
foreign currency translation
gains and losses
applicable to
a
transaction.
Monetary assets and liabilities
generally
have
values fixed by explicit or implicit contract. Examples include
bank deposits, debt,
accounts receivable
, and
accounts payable.
Monetary assets and liabilities
subject to foreign
currency adjustments measured on the
are
initial
transaction date using theexchange rate
s in effect at that date.
At each subsequent or derecognition,
reporting
date and through the date of settlement(i.e., payment)
such
monetary assets and liabilities are remeasured
using the
the
n-current exchange rate, and any foreign currenc
y
translation
gains or
losses
are recorded by the entity
within Financial income or Financial cost.
Non
-
monetary assets and liabilities generally are those assets and liabilities for which the recorded values are not
subject to contractual or other formal
definitions (i.e., those assets and liabilities that are not classified as
monetary assets or liabilities). Non
-
monetary assets and liabilities are not subject to foreign currency
adjustments at entity level.
Assets and liabilities in entities with anot
her functional currency than the USD, including goodwill and fair value
adjustments, if any, are translated into USD using the exchange rates
in effect at
of the the
reporting
date
Consolidated Statements of Financial Position. Amounts reported on the Con
solidated Statements of Profit and
Loss are translated to USD using
the average exchange rates in effect
for the reporting period.
Significant, large
transactions may be translated using the rate at the transaction date.
Foreign exchange differences arising on translation from functional currency to presentation currency
are
reported in
O
ther comprehensive income(“OCI”)
.
Translation gains or losses previously recognized in OCI are
reversed and recognized in the Consolidated Statements of Profit and Loss, if and when the entity is disposed.
Research and development expenses
Expenses in this category consist primarily of the costs of services and materials used in engineering activities
and certain outsourced development activities. presented by nature of expense
Costs are
,
thus
payroll costs
related to research and development employees are classified as Compensation and benefit expenses, not as
research and development expenses, on the Consolidated Statement of Profit and Loss. However, the
compensation p
aid to individual contractors serving in engineering roles is included in Research and
development expenses. As of December 31, 2021
,
2020,
and 2019, the number of individual
contractors
in
engineering roles was nine
,
six,
and
six
,
respectively.
Research costs are expensed as incurred. Development expenses that do not meet the criteria of capitalization are
expensed as incurred. Development expenses are capitalized when (i) the technical feasibility of completing
development has be
en demonstrated, (ii) the costs of development can be measured reliably, (iii) it is probable
IDEX will realize future economic benefits from the asset, and (iv) IDEX has committed to complete the
IDEX Biometrics ASA Annual Report 202
1
Consolidated
Financial Statement
s
and
Notes
39
development. Once the development is complete and the resul
ting asset is available for use, the capitalized
development cost (i.e., the asset value) is amortized over its expected useful life.
The Company applies for and has received government grants associated with certain research and development
projects. T
he
earned (i.e., recognized) value, if any, of government grants applicable to research and
development activities
are credited against costs. Generally, the applications or claims for such grants are
submitted after completion of the qualifying activities. When it is realistic that the application or claim will be
successful and the amount can be determined reliably, we credit the value of the grant against research and
development expenses for that reporting period. Due to the timing difference between the
completion of the
qualifying activities, the approval of our grant application or claim, and the receipt of the funds associated with
the grant, we may record, pending receipt of funds, the value of the grant as an Account receivable, other.
Finance income and finance cost
Finance income and finance cost consists of interest income, interest expense, and net foreign exchange losses
(gains) arising from settlement of obligations denominated in foreign currencies during the period and foreign
currency tr
anslation adjustments recognized at period
-
end.
Segment reporting
IDEX manages its operations as a single segment for the purposes of assessing performance and making
operating decisions. IDEX operates as one operating segment, fingerprint imaging and
authentication
technology. IDEX has determined that its chief operating decision maker is its Chief Executive Officer. The
Company’s chief operating decision maker reviews the Company’s financial information on an aggregated basis
for the purposes of alloc
ating resources and assessing financial performance.
IDEX categorizes customers by geographic region utilizing the addresses to which we invoice our products or
services. The Company’s product and service revenue by geographic region is as follows:
Year
Ended December
31,
(
$000s)
2021
2020
2019
Product Revenue:
Europe, Middle East, and Africa
$
2,807
$
952
$
47
Americas
Asia
-
Pacific
30
56
107
Total product revenue
2,837
1,013
159
Service Revenue:
Europe, Middle East, and Africa
3
Americas
77
265
Asia
-
Pacific
Total service revenue
82
265
Total Revenue
$
2,840
$
1,095
$
424
The Company’s revenue has historically come from a limited number of customers. During 2021, the top two
customers accounted for approximately 85% and 9% of the Company’s revenue, respectively, and in 2020, the
top two customers accounted for 81% and 4% of
revenue
, respectively. In 2019, the top two customers
accounted for 69%, and 10% of revenue, respectively.
4. Compensation and benefits
Compensation and benefits expenses consist of costs for direct employees of the Company. Compensation of
individual
c
ontractors is
reported as Research and development
expenses or
Other operating
expenses,
as
applicable
, based on the roles assigned to the individuals
.
Year Ended December
31,
($000s)
2021
2020
2019
Salary, payroll tax, benefits, other
............................................................
$ 18,197
$
14,917
$
19,219
Share
-
based compensation
........................................................................
2,910
2,755
2,531
Total
..........................................................................................................
$ 21,107
$
17,672
$
21,750
The table below sets forth the number of employees and individual contractors by their function.
C
ertain
individuals are
classified as
contractors because they live in countries in which the Company does not have a
formal business presence.
Consolidated Financial Statements and Notes
IDEX Biometrics ASA Annual Report 202
1 40
December 31, 2021
December 31, 2020
December 31, 2019
Employees
Contractors
Employees
Contractors
Employees
Contractors
Research and development
77
8
75
6
81
8
Marketing and sales
6
9
6
5
10
6
General and administrative
8
1
7
1
9
-
Supply chain and distribution
2
-
2
-
2
-
Total staff
93
18
90
12
102
14
The average number of employees for the years 2021, 2020, and 2019 were 95, 93, and 109 full
-
time
equivalents, respectively.
The Company provides health and other benefits to employees
consistent with common practice in the countries
in which it operates. No such benefits are provided to individual contractors.
The parent company contributes to a pension insurance plan for all its Norwegian employees. The plan satisfies
the Norwegian mandatory service pension rules. The pension plan is a fully insured, defined contribution plan.
Employees of IDEX America may participate in a health, dental, and vision insurance plan. IDEX America also
offers employer
-
funded plans for life insurance, short
-
term disability, and long
-term disability. IDEX America
does not offer or plan to offer any pension plans, except for a 401(k) defined
-
contribution plan. The Company currently does not match participant contributions to this plan.
IDEX China contributes to the mandatory social security plans in China, including contribution of 21% of
eligible salary to each employee’s personal retirement fund.
IDEX UK contributes up to 6% of an employee participant’s base salary to IDEX UK’s pension plan, subject to
the
employee contributing the same percentage through a salary reduction arrangement. The pension plan is a
fully insured, defined
-
contribution plan. Share
-
based compensation includes non
-
cash expenses associated with the recognition of the costs of share-
b
ased awards granted pursuant to the Company’s subscription rights plans and its employee share purchase plan
(“ESPP”). See Note 16.
Compensation of Key Management
For 2021, key management consisted of the Chief Executive Officer (“CEO”), Chief Financial O
fficer (“CFO”),
Chief Technology Officer (“CTO”), and Chief Commercial Officer (“CCO”). For 2020, key management
consisted of the CEO, CFO, and CTO, while, for 2019, key management consisted of the CEO, CFO, CTO, and
the Chief Innovation Officer (“CIO”).
The following amounts were recognized as compensation for key
management for the years shown. Related employment tax obligations paid by the Company are not included.
Year Ended December
31,
($000s)
2021
2020
2019
Compensation and
short
-
term benefits
$ 1,425
$
906
$ 1,367
Medical and similar benefits, contributions to pension schemes
73
66
52
Share
-
based compensation
...........................................................
443
449
840
Total compensation of key management
......................................
$
1,941
$
1,421
$
2,259
Key management, as defined, held the following subscription rights to Ordinary Shares under the subscription
rights incentive plans with the following expiration dates and exercise prices:
IDEX Biometrics ASA Annual Report 202
1
Consolidated
Financial Statement
s
and
Notes
41
Number outstanding as of December
31,
Grant
Date
Expiration Date
Exercise
Price
(NOK)
2021
2020
2019
August 10, 2016
May 11, 2021
7.79
775,000
November 9, 2016
May 11, 2021
6.59
1,400,000
February 24, 2017
May 11, 2021
6.59
750,000
August
9, 2017
May
12, 2022
7.76
515,000
February
21, 2018
May
12,
2022
4.67
4,500,000
May
9, 2018
May
9, 2023
4.28
2,250,000
August
14, 2019
May
9, 2024
1.65
327,800
2,327,800
3,774,000
February
26, 2020
May
9, 2024
1.11
5,000,000
5,000,000
June
17, 2020
May
15, 2025
1.71
1,125,000
1,125,000
April 20, 2021
May 15, 2025
2.71
2,750,000
June 3, 2021
May 12, 2026
2.38
2,000,000
August 11, 2021
May 12, 2026
2.40
1,668,100
Total
12,870,900
8,452,800
8,452,800
Compensation paid to the Board is presented in Note 17.
5. Research and development expenses
Research costs are expensed when incurred. Development costs are capitalized and held in the balance sheet only
if they satisfy the criteria for capitalization. The same applies to IDEX’s patents and other intellectual property
rights created by IDEX. IDEX
has not capitalized any development costs in 2021, 2020 or 2019. Development
costs related to creation of intellectual property have been expensed when incurred.
Research and development expenses include the cost of independent contractors assigned to en
gineering roles.
Government grants earned by the Company in support of research and development activities are credited
against research and development costs w
hen it is realistic that the application or claim will be successful and the
amount can be deter
mined reliably
.
Year Ended December
31,
($000s)
2021
2020
2019
Gross research and development expenses
$
3,356
$
4,196
$
4,953
Government grants credited
(676)
(2,301)
(568
) Net research and
development expenses
2,680
$
1,895
$
4,385
Government grants
Year Ended December
31,
($000s)
2021
2020
2019
Norway
$ 538
$
506
$
568
United Kingdom
138
1,795
Total
$ 676
$
2,301
$
568
The Norwegian SkatteFUNN is a government program supporting research and development activities in
Norway. Under the program, the Company, in its current loss position, is eligible for a cash grant in support of
approved projects, subject to meeting the requirements of the Research Council of Norway.
The Company’s IDEX UK subsidiary participates in a program by which the government of the United Kingdom
offers financial support for qualifying research and development activities of small and medium
-
sized
enterprises. Under the program, the Company, in its current loss position, is eligible for a cash grant in support of
approved projects, subject to approvals and meeting program requirements.
Consolidated Financial Statements and Notes
IDEX Biometrics ASA Annual Report 202
1 42
6. Income tax provision
The Company is subject to income taxes in the jurisdictions in which it operates. The Company’s provision for
income taxes (i.e., expense (benefit)) is based
on income tax rates in the tax jurisdictions in which it operates,
tax
credits
available in these jurisdictions, and reconciliation of
differences between financial reporting
values
and
tax reporting
values
. Grants awarded under government programs in Norway and the United Kingdom supporting research and
development activities are recorded as a credit against research and development expenses and are not included
in the calculation of the Company’s provision for income tax.
As of December 31, 2021, t
he C
ompany has a tax loss carryforward balance
in Norway
of approximately
$
251.1
million, representing a potential deferred tax asset, if recognized and calculated at the current corporate tax rate
of 22. The Company also has a tax loss carryforward balance in the United Kingdom of
0
%, of $55.2 million.approximately $1.9 million, representing a potential deferred tax asset, if recognized and calculated at the current
corporate tax rate of 19.0%, of approximately $361 thousand. The Company also has a tax loss
carryforward
balance in China of approximately $771 thousand, representing a potential deferred tax asset, if recognized and
calculated at the current corporate tax rate of 2.5%, of approximately $18 thousand. In the United States, the
Company has tax cre
dits, associated with research and development activities in the United States, totaling $1.8
million.
Because the Company has concluded there is not sufficiently convincing evidence the Company will generate
sufficient taxable profit, against which the
unused tax losses could be applied, the Company has not recognized
to date any deferred tax assets in its
s
tatement of financial position, consistent with IFRS standards.
A deferred
tax asset will be recognized when the Company determines it is more likel
y than not it will have sufficient future
taxable profit to apply the tax loss carryforward against future income taxes.
The major components of income tax provision for the years shown are:
Tax expense (benefit) for the year
Year Ended
December
31,
($000s)
2021
2020
2019
Taxes payable on the result of the year
$
90
$
44
$
160
Adjustment in respect to prior years
—
(112)
—
Change in recorded deferred tax
liability
—
(31
)
—
Income tax expense (benefit)
$
90
$
(99)
$
160
Elements of deferred tax
Year Ended December
31,
($000s)
2021
2020
2019
Employer’s tax on share
-
based compensation
$
(371)
$
(216)
$
(3)
Fixed Assets differences
1,154
675
62
Inventory differences
(5)
(213
) (1,154
)
Accruals differences
(1,152)
(1,144
) —
Research and development tax credits
(1,
563)
(1,787
) —
Losses carried forward
(253,300)
(225,951
)
(193,497)
Basis for calculation of deferred tax asset
(255,237)
(228,636
)
(194,592)
Calculated net deferred tax benefit, local tax rates 5
-
22%
(55,953)
(51,251)
(42,772)
Unrecognized deferred tax asset *
55, 953
51,251
42,803
Deferred tax liability in the balance sheet
$
—
$
—
$
(31)
Reconciliation of tax expense (benefit)
Year Ended December
31,
($000s)
2021
2020
2019
Loss before tax
$
(32,552)
$
(26,853
)
$
(32,263
)
Norway statutory tax, calculated at rate of 22%
(7,132)
(5,908
) (7,412
) Difference in subsidiary taxes, using local rates vs 22%
(179)
22
160
Estimated tax on permanent differences
(568)
389
640
Prior year adjustments
—
(112
) Change in unrecognized deferred tax asset **
7,969
5,510
6,772
Income tax expense (benefit)
$
90
$
(99)
$
160
*
As of December 31, 2021, there was not sufficiently convincing evidence the Company will generate
sufficient taxable profit, against which the unused tax losses could be applied. Consequently, no deferred tax
asset has been recognized. There are no restric
tions as to how long tax losses may be carried forward in
Norway or the United Kingdom. In China, tax loss carryforwards expire after five years and approximately
IDEX Biometrics ASA Annual Report 202
1
Consolidated
Financial Statement
s
and
Notes
43
$135 thousand will expire at the end of 2022. Tax credits associated with research and develo
pment
activities in the United States, totaling approximately $1.6 million as of December 31, 2021, can be applied
against taxable income for the following for 20 years.
**
The various deferred tax assets that have not been recognized are denominated in t
heir respective local
currencies. As such, the change in the year
-
end value in USD of these unrecognized deferred tax assets includes foreign currency translation adjustments arising from changes in the exchange rates between USD
and these local currencies from the prior year
-
end.
There are no deferred tax charges included in other comprehensive income in 2021, 2020, or 2019.
7. Loss per share calculation
The loss per share is the quotient of the net loss for the period divided by the weighted average n
umber of
Ordinary Shares outstanding for the year.
Year Ended December
31,
2021
2020
2019
Net loss for the year
(
$000s)
$
(32,552)
$
(26,
754
)
$ )
(32,
423
Number of ordinary shares issued at December
31
1,010,388,454
832,146,748
717,988,732
Weighted average basic number of shares
918,847,427
767,069,645
598,392,108
Assumed exercise of share equivalents
21,586,108
6,323,417
1,759,991
Weighted
average diluted number of shares
940,433,535
773,393,062
600,152,099
Loss per share for the year (basic and diluted*)
$ (0.04)
$
(
0.03)
$
(0.05)
*
The effects of potentially dilutive
Ordinary
Shares issuable upon exercise of outstanding subscription rights
are not included in the calculation due to the Company’s net losses for the periods presented, as their effect
would be anti
-
dilutive.
8. Goodwil
l and other intangible assets
Goodwill is the recorded difference between the consideration paid and the net value of identifiable assets
acquired and held, less impairment charges, if any. Goodwill balances as of December 31, 2021, and December
31, 2020
, reflected the following activity:
Year December
Ended
31,
($000s)
2021
2020
Cost at the beginning of the year
$
968
$
941
Impact of currency translation
27
Cost at the end of the year
$
968
$
968
There is only one cash generating unit in the Company and goodwill is allocated to this. IDEX performed the
annual impairment test on December 31, 2021. Based on the 2021 assessment, no impairment charge has been
made.
Acquired identifiable intangible a
ssets, consisting primarily of patents, are held at cost, less accumulated
amortization and impairment charges. Other intangible asset balances as of December 31, 2021, and December
31, 2020, reflected the following activity:
Consolidated Financial Statements and Notes
IDEX Biometrics ASA Annual Report 202
1 44
Year December
Ended
31,
($000s)
2021
2020
Amortization period (straight
-
line, in years)
10
-
1017
-
17
Cost at the beginning of the year
$
5,173
$
4,835
Additions
181
Impact of currency translation
157
Cost at
the end of the year
$
5,173
$
5,173
Accumulated Amortization at the beginning of the year
$
2,731
$
2,230
Amortization
477
396
Impact of currency translation
104
Accumulated Amortization at the end of the year
3,208
2,731
Carrying amount at the end of the year
$
1,965
$
2,442
Acquired patents are capitalized and amortized over the estimated useful life, which is the lifetime of the
respective patent(s).
9. Property, plant, and equipment
Property, plant, and equipment is held at cost, less accumulated depreciation and impairment charges. When
assets are sold or retired, such assets are no longer recorded in the Consolidated Statements of Financial Position.
Any gain or loss on the sale or retirement is recognized in the Consolidated Statements of Profit and Loss.
The capitalized amount of property, plant, and equipment is the purchase price, including freight, installation,
duties, taxes, and direct acquisition costs related to preparing t
he asset for use. Costs related to training and
commissioning are expensed as incurred. Subsequent costs, such as expenses for repair and maintenance, are
recognized as incurred in the Consolidated Statements of Profit and Loss. Subsequent enhancements cre
ating
future economic benefits are recognized in the Consolidated Statements of Financial Position as additions to
property, plant, and equipment.
These assets are depreciated using the straight
-
line method over each asset’s useful life. The depreciation period
and method are assessed each year to ensure that the method and period used is consistent with the status of the
non
-
current asset.
Property, plant, and equipment balances as of December 31, 2021, and December 31, 2020, reflected the
following acti
vity:
2021
($000s)
Plant and
machinery,
fixtures
and
fittings
Office
furniture
and
office
equipment
Instruments
and lab
equipment,
software
tools
Total
Depreciation period (straight line, in years)
3 - 5 3 - 5 3 - 5
Accumulated cost at December 31, 2020
$
855
$
710
$
2,217
$
3,782
Additions
—
74
67
14
1 Impact of currency translation
—
(2)
(3)
(5)
Accumulated cost at December 31, 2021
855
782
2,281
3,918
Accumulated depreciation at December 31, 2020
$
236
$
572
$
1,307
$
2,115
Depreciation
131
101
275
507
Impact of currency
translation
—
(2)
(3)
(5)
Accumulated depreciation at December 31, 2021
367
671
1,579
2,617
Carrying amount at December 31, 2021
$
488
$
111
$
712
$
1,301
IDEX Biometrics ASA Annual Report 202
1
Consolidated
Financial Statement
s
and
Notes
45
2020
($000
s)
Plant and
machinery,
fixtures
and
fittings
Office
furniture
and
office
equipment
Instruments
and lab
equipment,
software
tools
Total
Depreciation period (straight line, in years)
3-5 3-5 3-5
Accumulated cost at December 31, 2019
$
812
$
701
$
2,076
$
3,589
Additions
21
125
152
Impact of currency translation
22
3
16
41
Accumulated cost at December 31, 2020
855
710
2,217
3,782
Accumulated depreciation at December 31, 2019
$
104
$
453
$
1,019
$
1,576
Depreciation
119
115
275
509
Impact of currency translation
13
4
13
30
Accumulated
depreciation at December 31, 2020
236
572
1,307
2,115
Carrying amount at December 31, 2020
$
619
$
138
$
910
$
1,667
There were no assets under construction at the end of 2021 or 2020.
10. Leases
The Company’s leases are for office and laboratory space occupied by employees. Activity during 2021 and
2020 related to right
-
of
-use assets are shown below.
Year December
Ended
31,
($000s)
2021
2020
Depreciation periods (straight
-
line, in years)
3 - 5 3 - 5
Cost at the beginning of the year
$
2,543
$
2,081
Additions
158
417
Impact of currency translation
(10)
45
Cost at the end of the year
$
2,691
$
2,543
Accumulated depreciation at the beginning of the year
$
1,527
$
706
Depreciation
818
810
Impact of currency translation
(11)
11
Accumulated depreciation at the end of the year
2,334
1,527
Recorded value at the end of the year
$
357
$
1,016
Costs related to right
-
of
-use assets included in the Consolidated Statements of Profit and Loss include the
following:
Leases in the
Consolidated S
tatements of
P
rofit and
Loss
Year Ended December
31,
($000s)
2021
2020
2019
Depreciation
..............................................................................
$
818
$
810
$
698
Finance cost
..............................................................................
31
63
50
Consolidated Financial Statements and Notes
IDEX Biometrics ASA Annual Report 202
1 46
Lease liabilities included in the Consolidated Statements of Financial Position and related activity in the
Consolidated Statements of Profit and Loss and Consolidated Statements of Cash Flows include the following:
Leases in the
Consolidated S
tatements o
f
F
osition inancial
PYear December
Ended
31,
($000s)
2021
2020
Balance at January
1
$
1,058
$
1,398
Additions
158
317
Accretion of interest
31
136
Payments
(874)
(793
) Balance at December
31
373
1,058
Non
-
current
11
327
Current
362
731
Total lease liabilities
$
373
$
1,058
11. Accounts receivable
Accounts receivable
, trade,
includes amounts billed and currently due from customers. The amounts due are
stated at their estimated realizable value.
The Company’s payment terms vary by the type and location of its
customers and the products or services offered, although terms generally include a requirement of payment
within 30 to 60 days.
When necessary, t
he Company maintains allowances for doubtful accounts for estimated
losses resulting from the inability of its customers to make required payments, based on assessments of
custom
ers’ credit
-
risk profiles and payment histories. If the financial condition of the Company’s customers
were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances may be
required. The
C
ompany does not require co
llateral from its customers, although there have been circumstances
when the Company has required cash in advance (i.e., a partial down
-
payment) to facilitate orders in excess of a
customer’s established credit limit. To date, such amounts have not been ma
terial
.
The balances reported as Accounts receivable, other, consist primarily of amounts due to the Company
associated with Value Added Tax refund activity and amounts due to the Company from governments associated
with approved research and development g
rants.
Balances of accounts receivable at December 31, 2021, and December 31, 2020, are as follows:
Year ended December
31, 2021
Maturity
($000s)
Less
than 3 mths
3-6
months
6-
12
months
Total
Accounts receivable, trade
$
801
$ —
$ —
$
801
Accounts receivable, other
133
31
539
703
$
934
$
31
$
539
$
1,504
Year ended December
31, 2020
Maturity
($000s)
Less than
3 mths
3-6
months
6-
12
months
Total
Accounts receivable, trade
$
460
$
25
$
2
$
487
Accounts receivable, other
303
303
557
1,163
$
763
$
3
28
$
559
$
1,650
There were no provisions for bad debts at December 31, 2021, and December 31, 2020.
IDEX Biometrics ASA Annual Report 202
1
Consolidated
Financial Statement
s
and
Notes
47
12. Accounts payable and other
financial liabilities
The Company did not have any liabilities at December 31, 2021, or December 31, 2020, which represented debt
to financ
ial institutions. The Company’s monetary liabilities at December
31, 2021, and December 31, 2020, were as follows:
Year ended December
31, 2021
Maturity
($000s)
Less than 3 mths
3-6
months
6-
12
months
1-5
years
Total
Non
-
current lease liabilities
$
—
$ —
$
—
$
11
$
11
Accounts payable
685
—
—
—
685
Current
lease liabilities
132
107
123
—
362
Other liabilities
1,640
251
588
371
2,850
$
2,457
$
358
$
711
$
382
$
3,908
Year ended December
31, 2020
Maturity
($000s)
Less than 3 mths
3-6
months
6-
12 months
1-5
years
Total
Non
-
current lease
liabilities
$
—
$
—
$
—
$ 327
$ 327
Accounts payable
631
—
—
—
631
Current lease liabilities
214
187
330
—
731
Other current liabilities
1,619
121
527
—
2,267
$
2,464
$
308
$
857
$
327
$
3,956
Other current liabilities include accruals for earned compensation, earned vacation days not taken, potential
employer’s tax on share
-
based compensation, and accruals for goods and services received but not yet invoiced
by the supplier.
The estimated employer’s payroll tax liability related to share
-
based compensation amounted to $371 on
December 31, 2021, and $216 on December 31, 2020. It will be due only when the associated subscription
rights are exer
cised. The exercise will, in all likely circumstances, fund the payable employer’s payroll tax.
Interest expense including interest on lease liabilities in the Consolidated Statement of Profit and Loss in Finance
expense was $31 in 2021 and $63 in 2020.
IDEX had no other significant current or non
-
current monetary obligations at the end of 2021 or 2020. Also, the Company had no contingent liabilities at the end of 2021 or 2020.
13. Inventory
Inventories consist of raw materials, work in process, and finished goods. Materials and components purchased
for use in research and development activities are expensed at the time of purchase and excluded from inventory.
Inventory is recorded at the lower of cost and net realizable value, less impairment, if any.
Impairment is
assessed quarterly, based on management’s estimates of future consumption of inventories by category.
December
31,
2021
2020
($000s)
Cost
Reserves
Net
Cost
Reserves
Net
Raw materials
$
562
$ —
$
562
$
460
$
(114)
$
346
Work in progress
107
107
25
—
25
Finished goods
570
(5)
565
588
(100)
488
Total Inventory
$
1,239
$ (5)
$
1,234
$
1,073
$
(214)
$
859
In 2021, 2020, and 2019, materials with values of $138, $32, and $1,079, respectively, were consumed in new
product development and charged to development expense.
Consolidated Financial Statements and Notes
IDEX Biometrics ASA Annual Report 202
1 48
14. Cash and cash equivalents
USD
-
valued cash and cash equivalent balances by currency were as follows:
Year December
Ended
31,
($000s)
2021
2020
Denominated in USD
$
28,217
$
1,295
Denominated in NOK
3,707
5,298
Denominated in GBP
978
532
Denominated in CNY
857
173
Total
$
33,759
$
7,298
Of the amounts above, employees’ withheld payroll tax deposits amounted to $31 and $21 at the end of 2021 and
2020, respectively. Only the withheld payroll tax deposits were restricted. Deposits for facilities rent or utilities
have not been included in cash equivalents.
15. Share capital
There is one class of shares, and all such Ordinary Shares have equal rights. The par value of an Ordinary Share
is NOK 0.15 per share. IDEX does not hold any of its own Ordinary Shares.
Number of
Ordinary
Shares
Balance at December
31, 2019
717,988,732
Private placement of Ordinary Shares on May 11
65,341,413
Share issue (in lieu of Board compensation)
441,982
Share issue (in lieu of cash compensation)
4,318,523
Private placement of Ordinary Shares on November 9
42,528,181
Share issue (Employee Share Purchase Plan)
1,527,917
Balance at December
31, 2020
832,146,748
Private placement of Ordinary Shares on
Feb
ruary
15
83,214,674
Share issue (exercise of subscription rights)
1,767,606
Share issue (in lieu of Board compensation)
535,583
Private placement of Ordinary Shares on November 12
89,777,824
Share issue (Employee Share Purchase Plan)
2,946,019
Balance at December
31, 2021
1,010,388,454
Costs related to share issuance have been charged against equity and amounted to $2,827 in 2021, $689 in 2020,
and $899 in 2019.
16. Share
-
based compensation
Subscription rights plans
IDEX follows the practice of renewing its subscription rights plan at each Annual General Meeting, when the
preceding plan is closed for further grants and a new plan is established. On May 12, 2021, at the Annual
General Meeting, the shareholders resolve
d to adopt the 2021 Subscription Rights Incentive Plan (the “2021
Plan”).
The Board is responsible for administration of subscription rights plans and approves grants under the
plans
and the terms of each
grant
.
Under the 2021 Plan, the Board may grant up
to
91,672,048
subscription rights, provided the total number of
grants does not exceed 10 percent of the number of registered (i.e., issued and outstanding) Ordinary Shares.
Subscription rights may be granted to employees and individuals rendering services to the Company. The
exercise price shall be, at a minimum, the higher of the average closing price of an Ordinary Share, as reported
on the Oslo Børs, for the ten trading days preceding the date of the grant, or the closing price of an Ordinary
Share, as
reported on the Oslo Børs, on the trading day preceding the date of the grant. Unless resolved
otherwise by the Board, 25% of each grant of subscription rights vests per year. The annual vesting dates are the
latest of the following dates before the date
of grant of the subscription rights; (i) January 15, (ii) April
15, (iii)
July
15 or (iv) October 15. The subscription rights expire on the fifth anniversary of the Annual General Meeting
at which the shareholders resolved to establish the plan under which the subscription rights were granted.
Unvested subscription rights terminate on the holder’s last day of employment or, in the case of non
-
employees,
IDEX Biometrics ASA Annual Report 202
1
Consolidated
Financial Statement
s
and
Notes
49
the last day of the individual’s service to the Company. Vested subscription rights may be exercised up to 90
days after the holder’s last day of employment
or, in the case of non
-
employees, the last day of the individual’s service to the Company. There are no cash settlement alternatives for exercising subscription rights.
The fair value of the subscription rights granted is calculated, for recognition of share
-
based compensation expenses, using the Black
-
Scholes option pricing model, applying the following assumptions: Year Ended December
31,
2021
2020
2019
Exercise price (NOK)
.......................................................................
2.38
–
3.10
1.10
– 1.80
0.15
– 3.88
Weighted average exercise price per share
............................
2.53
1.62
1.38
Weighted average share price at date of grant
..................................
2.45
1.42
1.49
Expected term (years)
.......................................................................
4.62
4.77
4.93
Weighted average term (years)
..............................................
3.35
2.96
3.21
Share price volatility (percent)
.........................................................
85
-
112
78
– 113
63
– 80
Risk
-
free interest rate
.......................................................................
0.983
0.354
1.16
Expected dividend payment
.............................................................
0
Forfeiture
..........................................................................................
No attrition
No
attrition
No
attrition
Replacement of subscription rights
On June 17, 2020, the Board approved a subscription rights replacement program whereby
eligible employees
could exchange existing subscription rights, granted under Subscription Rights Incentive Plans from 2016 to
2018, that were of no value, with new subscription rights granted under the 2020 Subscription Rights Incentive
Plan. On October
2
, 2020, a combined total of 25,962,800 subscription rights under the Company’s 2020
Subscription Rights Incentive Plan were granted at an exercise price of NOK 1.71 per share. The subscription
rights vest by 1/3 on each of April 15, 2021, 2022, and 2023, a
nd expire on May
15, 2025.
Subscription rights outstanding at year end
Number of
Subscription
Rights
Weighted
Average
Exercise Price
(NOK)
Outstanding as of December
31, 2019
52,875,043
4.01
Granted
36,414,800
1.62
Exercised
(52,150)
1.65
Cancelled
(25,962,800)
5.40
Forfeited
(4,363,500)
4.28
Expired
(2,567,300)
7.32
Outstanding as of December
31, 2020
56,344,093
1.66
Granted
21,885,200
2.53
Exercised
(1,767,879)
1.33
Forfeited
(3,165,015)
1.97
Expired
(1,540,000)
5.22
Outstanding as of
December
31, 2021
56,344,093
1.84
Composition of outstanding and exercisable subscription rights at
December 31, 202
1
Outstanding Subscription Rights
Vested (Exercisable) Subscription Rights
Exercise Price (in NOK)
Number of
Subscription
Rights
Outstanding
Weighted
Average
Exercise
Price (NOK)
Weighted
Average
Remaining
Term (Years)
Weighted
Average
Remaining
Time to
Vest (Years)
Number of
Vested
Subscription
Rights
Weighted
Average
Exercise
Price
(NOK)
Weighted
Average
Remaining
Term
(Years)
0.00
-
0.50
4,330,366
0.15
2.36
0.04
2,165,186
0.15
2.36
0.50
-
1.00
720,800
0.71
2.36
1.29
310,400
0.71
2.36
1.00
-
1.50
5,542,500
1.11
2.36
1.04
1,385,625
1.11
2.36
1.50
-
2.00
38,760,433
1.70
3.14
0.96
14,045,131
1.69
3.14
2.00
-
3.00
20,588,700
2.51
4.24
2.04
4.24
3.00
-
5.00
1,238,600
3.29
3.05
1.32
175,775
3.94
3.05
5.00
-
10.00
575,000
5.53
1.23
575,000
5.53
1.23
Total
................................
.71,756,399
1.84
3.32
1.22
18,657,117
1.59
3.32
Consolidated Financial Statements and Notes
IDEX Biometrics ASA Annual Report 202
1 50
Composition of outstanding and exercisable subscription rights at
December 31, 202
0
Outstanding Subscription Rights
Vested
(Exercisable) Subscription Rights
Exercise Price (in NOK)
Number of
Subscription
Rights
Outstanding
Weighted
Average
Exercise
Price (NOK)
Weighted
Average
Remaining
Term (Years)
Weighted
Average
Remaining
Time to
Vest (Years)
Number of
Vested
Subscription
Rights
Weighted
Average
Exercise
Price (NOK)
Weighted
Average
Remaining
Term
(Years)
0.00
–
0.50
4,938,543
0.15
3.36
0.54
0.50
–
1.00
868,100
0.71
3.36
1.34
217,025
0.71
3.35
1.00
–
1.50
5,542,500
1.11
3.36
1.79
1.50
–
2.00
42,245,000
1.70
4.10
1.35
2,843,925
1.65
3.35
3.50
–
4.00
208,00
3.70
3.36
0.87
52,000
3.70
3.02
4.00
–
4.50
1,339,450
4.28
1.04
0.14
871,750
4.28
1.01
5.00
–
5.50
660,000
5.09
2.12
0.05
620,000
5.09
2.11
7.50
–
8.00
467,500
7.76
0.86
0.12
363,750
7.76
0.87
8.00
–
8.50
75,000
8.42
1.37
0.07
56,250
8.42
1.36
Total
................................
.56,344,093
3.82
1.66
1.24
5,024,700
3.03
2.59
Employee Share Purchase Plan
The ESPP was approved by shareholders at the 2021 Annual General Meeting. Under the ESPP, an IDEX
employee based in Norway, the United Kingdo
m, or
the United States may contribute up to 20% (subjectto
statutory limits) of his or her annual base salary, through payroll deductions, toward periodic purchases of newly
issued Ordinary Shares. Under the ESPP, an option for the purchase of an Ordinary Shar
e
is granted to
a
participating employees on the first day of a
semiannual
“offering period
”
to purchase
newly issued Ordinary
Shares
at the end of that offering period at a purchase price equal to 85% of the lesser of the fair market value
,
based on the closing price of an Ordinary Share reported by the Oslo Børs, on either the first day or the last day
of that offering period.
The offering periods occur from March through August, and from September through
February.
The ESPP is intended to qualify as an “employee stock purchase plan” under Section 423 of the
U.S.
Internal
Revenue Code, thereby affording certain tax advantages to employees who are taxpayers in the United States
.
There are no tax advantages for ESPP participants who are taxpayers in Norway or the United Kingdom.
For the three offering periods completed within 2021, an average of 53 employees participated in the ESPP and
purchased 2,946,019 Ordinary Shares at a weighted average price of NOK 2.00.
17. Related party transactions
The Company’s significant shareholders, Board members, and management, as well as their related parties, are
considered related parties of the Company.
Compensation of key management is disclosed in Note 4
– C
ompensation an
d
benefits.
Board compensation
Board compensation is paid in arrears after being approved by the shareholders, generally at the Annual General
Meeting. The following amounts were paid in 2021, 2020 and 2019:
Year Ended December
31, 2021
($000s)
Cash
Compensation
Shared
-
based
Compensation
Total
Morten Opstad, Board chair
............................................................
$
59
$
—
$
59
Lawrence J. Ciaccia, Board deputy chair
.......................................
28
33
61
Deborah Davis
...............................................................................
67
—
67
Hanne Hovding
...............................................................................
52
—
52
Annika Olsson
................................................................................
—
—
—
Thomas M. Quindlen
......................................................................
2
32
34
Stephen A. Skaggs
.........................................................................
4
58
62
$
212
$ 123
$
335
IDEX Biometrics ASA Annual Report 202
1
Consolidated
Financial Statement
s
and
Notes
51
Year Ended December
31, 2020
($000s)
Cash
Compensation
Shared
-
based
Compensation
Total
Morten Opstad, Board chair
............................................................
$
40
$
—
$
40
Lawrence J. Ciaccia, Board deputy chair
.......................................
38
—
38
Deborah Davis
...............................................................................
10
36
46
Hanne Hovding
...............................................................................
32
—
32
Stephen A. Skaggs
..........................................................................
4
34
38
$
1
24
$
70
$
194
Year Ended December
31, 2019
($000s)
Cash
Compensation
Shared
-
based
Compensation
Total
Morten Opstad, Board chair
............................................................
$
43
$
—
$
43
Lawrence J. Ciaccia, Board deputy chair
.......................................
34
—
34
Deborah Davis
...............................................................................
7
34
41
Hanne Hovding
...............................................................................
16
23
39
Andre James MacLeod
1
................................................................
.
7
34
41
Stephen A. Skaggs
.........................................................................
—
—
—
$
107
$
91
$
198
1
Mr.
MacLeod resigned from the Board on May
9, 2019.
Outstanding subscription rights awarded to members of the Board under the Company’s subscription rights plans
have the following expiration dates and exercise prices. For further information describing t
hese plans, see Note
16
–
Share
-based compensation.
Subscription rights outstanding as
of December
31,
Grant Date
Expiration
Date
Exercise Price
(NOK per share)
2021
2020
2019
August
15, 2018
May
9, 2023
5.10
—
—
600,000
June
17, 2020
May
15, 2025
1.71
600,000
600,000
—
The subscription rights granted on August 15, 2018
,
were replaced by the grant on June 17, 2020,
as part of an
exchange of subscription rights approved at the 2020 Annual General Meeting. This exchange was offered to all
eligible holders
.
Related party transactions
Morten Opstad, Board chair, is a
partner at Advokatfirmaet Ræder AS, the Company’s primary law firm, which
provided services to the Company resulting in charges of $338 in 2021, $477 in 2020, and $470 in 2019.
Lawrence J. Ciaccia, who was elected to the Board at the Annual General Meeting
on May
12, 2015, has served
on the Company’s Strategy Advisory Committee since January 2014. From time to time, Mr.
Ciaccia also
provides consulting services to IDEX. The fees paid to Mr. Ciaccia for his services totaled $65 in 2021, $65 in
2020, and $65
in 2019.
There were no overdue balances with any related parties at the end of 2021, 2020 or 2019.
18
.
Other Operating Expenses
Year ended December 31,
($000s)
2021
2020
2019
Sales and marketing activities $
1,287
$ 764
$ 850
Legal,
audit,
accounting
and
other 2,332 2, 1,
services
906
618
IT
expenses
2,047 1, 1,
621
367
Travel expenses
132
125
635
Other operating expenses
1,449
520
170
Total
other
operating
expenses
7,347
936
$ 4,
641
Consolidated Financial Statements and Notes
IDEX Biometrics ASA Annual Report 202
1 52
Auditor renumeration
The following table sets out the aggregate fees related to professional services rendered by the Company’s
external auditor, Ernst & Young AS (“EY”), for the calendar years 2021, 2020, and 2019:
Year ended December 31,
($000s)
2021
2020
2019
Audit services
$
352
$
235
$
468
Audit
-
related services
22
8
Tax services
7
8
Other services
24
12
5
Total
$
405
$
255
$
489
Audit services
represents the fees for the audit that must be performed by EY in order to issue an opinion on
the Company’s consolidated financial statements and to issue reports on the Company’s statutory financial
statements. The definition also includes fees for certain other audit services, which are services only the
designated independent auditor reasonably can provide, such as the auditing of non
-
recurring transactions, the
application of new accounting policies, and limited reviews of quarterly financial results.
Audit
-
related services
represents fees for other assurance and related services provided by EY, but not
limited to those that only reasonably can be provided by EY, which are reasonably related to the performance of
the audit.
Tax services
and
Other ser
vices
represent fees, approved by the Company’s Audit Committee, for services
not related to the audit provided by EY, pursuant to the provisions of the Sarbanes
-
Oxley Act.
19
. Subsequent Events
The
B
oard resolved on February 23, 202
2,
to issue 8,350,900 incentive subscription rights to
certain employees
and individual contractors the Company. The grant was made under the Subscription rights
of
C
ompany’s 2021plan. The exercise price of the subscription rights is NOK 2.08 per share, they vest by 25% per year, and expire
on May 15, 2026.
Following the grants, there
were
80,107,297 subscription rightsoutstanding.
The Board resolved on March 1, 2022, to issue 1,765,791
O
rdinary
S
hares at NOK 1.70 per share to employees
who participate in the company's Employee Share Purchase Plan (ESPP). On March 4, 2022, the Board resolved
to issue in total 394,409
O
price NOK 0.48 per share to employee rdinary
Shares at
a participants.
Following th
i
s
share issuance, the
re
were
1,012,548,654
Ordinary Shares issued and
outstanding.
As of the date of these financial statements, the company has not been affected by the outbreak of war between
Russia and the Ukraine and the sanctions imposed by the Unites States and EU. The Company’s business,
financial condition, results o
f operation and cash flows may be adversely impacted by the ongoing conflict or
future events.
IDEX Biometrics ASA Annual Report 202
1
Parent Company Separate Financial Statements
and
Notes
53
PARENT COMPANY SEPARATE FINANCIAL STATEMENTS
IDEX
Biometrics
ASA
Parent Company Separate Statements of Profit and Loss
(In
thousands,
except
per share
amounts)
Year
Ended
December
31,
Note
2021
2020
Revenue:
Product
$
2,837
$
1,013
Service
82
Total
revenue
2
2,840
1,095
Operating
expenses:
Cost of materials,
net
of change
inventory
1,254
275
Compensation and benefits
3
4,038
2,831
Research
and
development
4,
5, 6
25,301
6,440
Other
operating expenses
7, 21
9,383
8,139
Amortization
and
depreciation
9, 10,
11
600
519
Total
operating
expenses
40,575
18,203
Loss
from
operations
(37,735)
(17,108)
Finance
income
19
1,705
866
Finance
cost
19
(2,859)
(995)
Loss
before
tax
(38,889)
(17,237)
Income
tax expense
8
—
—
Net
loss
for
the
year
$
(38,889)
$
(17,237)
Loss per share, basic and diluted
15
$ (0.04)
$
(0.02)
Statements
of
Comprehensive
Income
Year
Ended
December
31,
2021
2020
Net loss for the year
$
(38,889)
$
(17,237)
Other
comprehensive income
that
may
be
reclassified
to
profit
(loss)
in
subsequent
periods:
(9)
—
Foreign currency translation adjustment
—
$
1,044
Total
comprehensive
income
(loss)
for
the period
(net of tax)
$
(38,898)
(16,194)
The
accompanying notes
are
an part
integral
of
these
financial
statements.
Parent Company Separate
Financial Statements
and
Notes
IDEX Biometrics ASA
1 Annual Report 202
54
IDEX
Biometrics
ASA
Parent Company
Separate
Statements of Financial Position
(In thousands, except share numbers and per share
amounts)
December
31,
Note
2021
2020
Assets
Non
-
current
assets:
Goodwill
9
$
968
$
968
Intangible
assets
9
1,965
2,442
Property,
plant equipment
and
10
463
558
Right
-
of-
use
assets
11
12
38
Shares
in
subsidiaries
1, 12
1,749
1,749
Long
-
loansterm
to
group
companies
6
, 18
—
1,050
Non
-
current
receivables
18
8
8
Total
non
-current assets
5,165
6,813
Current
assets:
Prepaid expenses
18
469
416
Inventory
20
1,234
859
Accounts receivable, other
18
726
806
Accounts receivable, trade
18
801
487
Receivables
from
group
companies
18
6,101
10,263
Cash
and
cash
equivalents
13
30,298
5,406
Total
current
assets
39,629
18,237
Total
assets
$
44,795
$
25,050
The
accompanying notes
are
an part
integral
of
these
financial
statements.
IDEX Biometrics ASA Annual Report 202
1
Parent Company Separate Financial Statements
and
Notes
55
December
31,
Note
2021
2020
Equity and
liabilities
Paid
-
in capital:
Share
capital
- NOK
0.15
par
value
per
share,
832,146,748
and
832,146,748shares
issued
and outstanding
at
December
31, 2021 and
2020, respectively.
$
20,410
$
17,251
Share
premium
9,452
3,608
Other paid
-
incapital
21,414
18,664
Total paid
-
incapital
15, 16
51,276
39,523
Foreign currency translation effects
—
(11,630)
Accumulated
loss
(11,845)
(7,317)
Total equity
39,431
20,576
Non
-
current liabilities:
Deferred
tax
liabilities
8
—
—
Non
-
current lease liabilities
11
—
14
Total
non
-current
liabilities
—
14
Current
liabilities:
Accounts
Payable
19
640
520
Payables companies
to
group
19
3,314
2,503
Income
tax
payable
8
—
—
Current
lease
liabilities
19
10
24
Public duties
payable
89
58
Other
current
liabilities
19
1,311
1,353
Total
current
liabilities
5,364
4,459
Total liabilities
5,364
4,474
Total
equity and
liabilities
$
44,795
$ 25,050
The
accompanying notes
are
an part
integral
of
these
financial
statements.
April
20,
2022
The
board
of
directors
of
IDEX
Biometrics
ASA
/s/ Opstad
Morten
Morten
Opstad
Chair
/s/
Lawrence
John
Ciaccia
Lawrence Ciaccia
John
Deputy chair
/s/
Deborah
Lee
Davis
Deborah Lee
Davis
Board member
/s/
Hanne
Høvding
Hanne Høvding
Board member
/s/
Annika Olsson
Annika Olsson
Board member
/s/
Thomas Quindlen
Thomas Quindlen
Board member
/s/ Stephen
Andrew
Skaggs
Stephen
Andrew
Skaggs
Board member
/s/
Vincent
Arthur
Graziani
Vincent
Arthur
Graziani
CEO
Parent Company Separate
Financial Statements
and
Notes
IDEX Biometrics ASA
1 Annual Report 202
56
IDEX
Biometrics
ASA
Parent Company
Separate
Statements of Change
s in
Equity
(In
thousands)
Share
Capital
Share
premium
Other Paid
-
in Capital
Foreign
Currency
Translation
Effects
Accu
-
mulated
Loss
Total
Equity
Balance at January 1, 2020
$ 15
,445
$ 197
,639
$ 15
,903
$ (12
,674)
$ (200
,
330)
$ 15
,984
Share issuance
1,
729
16
,
219
-
-
-
17
,
948
Share
-
based compensation
77
-
2,
761
-
-
2,
838
Loss for the year
-
-
-
-
(17
,
237)
(17
,
237)
Allocation of share premium to
over accumulated loss
-
(210
,
250)
-
-
210
,
250
-
Other comprehensive income
-
-
-
1,
044
-
1,
044
Balance at December 31, 2020
17
,
251
3,
608
18
,
664
(11
,
630)
(7
,
317)
20
,
576
Allocation at change of
functional currency
-
-
-
11
,
630
(11
,
630)
-
Share issuance
3,
107
51
,
205
-
-
-
54
,
312
Share
-
based compensation
52
639
2,
750
-
-
3,
441
Loss for the year
-
-
-
-
(38
,
889)
(38
,
889)
Allocation of share premium to
over accumulated loss
-
(46
,
000)
-
-
46
,
000
-
Other comprehensive income
-
-
-
-
(9)
(9)
Balance at December 31, 2021
$ 20
,410
$ 9
,452
$ 21
,414
$
- $ (11
,846)
$ 39
,431
The
accompanying notes
are
an part
integral
of
these
financial
statements.
IDEX Biometrics ASA Annual Report 202
1
Parent Company Separate Financial Statements
and
Notes
57
IDEX Biometrics ASA
Parent Company
Separate
Statements of Cash Flow
(In
thousands)
December
31,
Note
2021
2020
Operating
activities
Profit
(loss) before
tax
$ (38,889)
$ (17,237)
Amortization
and depreciation
expense
9, 11
10,
600
519
Share
-
based
compensation
expense
2,751
2,755
(Increase)
in
inventories
(375)
(139)
(Increase)
in
accounts
receivable
(314)
(414)
Increase accounts
in
payable
120
170
Change
in
other
working
capital
items
4,989
(11,353)
Other activities
operating
(1,190)
(214)
Interest paid
(1)
(2)
Other items
financial
1,154
129
Income
taxes
paid
8
-
-
Net
cash
flow
from
operating
activities
(31,156)
(25,787)
Investing
activities
Purchases
of
property, plant
and
equipment
9, 11
10,
(2)
-
Purchases
of
intangible
assets
-
(181)
Repayments on loans to
subsidiaries
1,050
1,926
Collections of
non
-current
receivables
18
-
57
Interest received
38
86
Net cash
flows from investing activities
1,086
1,888
Financing
activities
Net
proceeds
from
issue
of
shares
15, 16
54,992
18,731
Payments lease
on
liabilities
11
(29)
(25)
Payment related financed
to
a asset
purchase
-
(
500
) Net cash flow from financing activities
54,963
18,206
Net
change
in cash
and cash
equivalents
24,892
(5,693)
Effect
of
foreign
exchange
rate
changes
-
(766)
Opening
cash cash
and
equivalents
balance
5,406
11,865
Cash
and
cash equivalents
at
December
31
13
$
30,298
$
5,406
The
accompanying notes
are
an part
integral
of
these
financial
statements.
Parent Company Separate
Financial Statements
and
Notes
IDEX Biometrics ASA
1 Annual Report 202
58
NOTES
TO
PARENT
COMPANY
SEPARATE
FINANCIAL
STATEMENTS
(Amounts
in
thousands, per amounts)
except
share
1.
Organization and significant accounting policies
IDEX Biometrics ASA and subsidiaries (collectively “IDEX” or the “Company”) is a biometrics company
specializing in the design, development and sale of fingerprint identification and authentication solutions. The
Company’s fingerprint sensors and biometric solutions are used in touch
-
free smart cards, including payment
cards, and electronic devices. IDEX Biometrics ASA (the “parent company” or “IDEX
Biometrics ASA”) is a
public limited liability company incorporated in 1996 in Norway. The address of the head office is Dronning
Eufemias gate 16, NO
-
0191 Oslo, Norway. IDEX Biometrics ASA’s shares are listed at Oslo Børs, the stock
exchange in Oslo with
ticker code IDEX. IDEX Biometrics ASA ADSs are listed on the Nasdaq Capital
Market
in
New
York.
Each represents
ADS
75
IDEX
shares
and
the
ticker
code
is
IDBA.
IDEX Biometrics ASA has subsidiaries in the United States of America (U.S.), IDEX
Biometrics
Hol
ding
Company Inc.
and IDEX
Biometrics
America Inc (“IDEX America”), the United Kingdom (UK), IDEX
Biometrics UK Ltd. (“IDEX
UK”), and the People’s Republic of China (China), IDEX Electronics (Shanghai)
Co., Ltd. (“IDEX China”).
All subsidiaries are wholly
-owned. The parent company holds all intellectual property
of IDEX and is party to
all customer and manufacturing partner agreements. The subsidiaries provide various
services to the parent
company, mainly within the technical development, supply
-
nistration, and chain admi
customer interfacing and
marketing
functions.
The financial statements of IDEX Biometrics ASA have been prepared in accordance with International
Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board and IFRS as
adopted by the European Union. The financial statements have been prepared on a historical cost basis. The
going concern assumption has been applied when preparing the financial statements. The company has
adequate
working capital to meet its
operating commitments for at least twelve months from the date of this
report. The
board
confirms
that the
conditions
for
the
going
concern assumption
are met.
The functional and presentation currency of IDEX Biometrics ASA is the U.S. dollar (USD), consistent with the
presentation
currency
of
the
group financial
statements.
The
functional
currency
for
the
parent
company
was
NOK through
December
31
,
2020. The ch
ange of functional currency to USD with effect from January
1,
2021
,
reflected
the fact that over time revenue and operating expenses denominated in USD ha
d
become the main
currency of the parent company
, justifying
a change of functional currency to
USD.
These parent company financial statements should be read in connection with the Consolidated financial
statements of IDEX, published together with these financial statements.
The financial
statements for
the
year ended
December 31,2021
were
approved
by on 20,
the
board
April
2022.
Accounting policies
The Company is not aware of, nor does it anticipate, any newly issued, but not yet effective, accounting
standards, amendments, or interpretations that would have a
significant impact on the financial statements or
notes presented herein. However, any newly issued, but not yet effective, accounting standards, amendments, or
interpretations may influence the accounting for future transactions or arrangements, as well
as the future
presentation of the Company’s Financial Statements. The Company will implement such new accounting
standards, amendments, or interpretations, if any, as they become effective.
Accounting policies that are critical to the Company’s results and financial position, in terms of materiality of
the items to which the policy is applied, are discussed below.
Accounting judgments, based on the use of estimates and assumptions
The application of certain accounting standards requires considerable judgment based upon estimates and
assumptions that may involve high levels of uncertainty at the time the estimates are made. Judgments and
estimates are continually evaluated and are ba
sed on historical experience and other factors, including
expectations of future events that are believed to be reasonable under the circumstances. Actual outcomes may
deviate from estimates. Changes in assumptions and deviations between estimates and fin
al outcomes may have
a material influence on the financial statements in the periods when assumptions are changed or when
uncertainty is resolved. The following represent the notable accounting items requiring management’s
judgement, based on the use of estimates and assumptions.
IDEX Biometrics ASA Annual Report 202
1
Parent Company Separate Financial Statements
and
Notes
59
Goodwill
The carrying value of goodwill is recorded
initially
the fair value of the consideration paid for the assets at
acquired, less the capitalized value of the identifiable assets and initial impairment charges, if any. As goodwill
represents the future economic value of assets acquired in a business combination a
bove the separately recorded
values of those assets, subsequent impairment testing involves quantitatively comparing these separately
recorded values to the value of the business unit to which the goodwill is assigned. As of December 31, 2021,
such comparison indicated the carried value of goodwill was appropriate and
no
impairment was
recorded
.
Intangible assets
IDEX’s patents and other intellectual property rights created by the Company are capitalized and recorded in the
Statements of Financial Positi
on only when they satisfy the criteria for capitalization. No development costs
have been capitalized in 2021 or 2020.
Acquired intangible assets are capitalized
initially
, normally the purchase price. Intangible assets are at fair value
amortized over t
heir useful lives. An assessment of impairment losses on non
-
current assets is made when there
is an indication of a decrease in value. If an intangible asset’s carrying amount is higher than the asset’s
recoverable amount, an impairment loss will be recog
nized in the consolidated statements of profit and loss. The
recoverable amount is the higher of the fair value (less costs to sell to an independent third party) or the
calculated value based on the discounted cash flow from continued use. A recoverable amount is determined
separately for each asset. Impairment losses recognized in the consolidated statements of profit and loss for
previous periods are reversed when such reversal is supported by specific circumstances. Reversal is limited to
the lower of the updated recoverable amount and the carrying amount that would have been recognized had no
impairment losses been recognized for the asset in prior years. Impairment charges on goodwill are not subject to
reversal.
IFRS requires that certain intangible
assets be tested for impairment annually or when circumstances indicate
such assets may be impaired. The carrying value of other (i.e., tangible) assets is tested only when circumstances
indicate such assets may be impaired. As of December 31, 2021, the
Company determined
there were no
indicators
of impairment and no impairment was recorded
.
Inventory
Inventories consist of raw materials, work in process, and finished goods. Materials and components consumed
in research and development activities are ex
pensed at the time of purchase and excluded from inventory.
Inventory is recorded at the lower of cost and net realizable value, less impairment, if any. Impairment is
assessed quarterly, based on management’s estimates of future consumption of inventories by category. The
determination of net realizable value is subject to considerable judgment, as reselling components or other
commodity raw materials at any value may not be easily achieved, and elements of work in progress and finished
goods, if impaired
(i.e., considered excess or obsolete inventory), generally have no resale value and are held for
disposal.
Share
-
based compensation
IDEX estimates the fair value of incentive subscription rights (“SRs”) at the grant date by using the Black
-
Scholes option
pricing model. The valuation is based on share price and exercise price, share price volatility,
interest rates, and the estimated term of the SRs, based on historical assessments of exercise patterns, forfeiture,
and staff attrition. Share
-
based compensa
tion is expensed, as earned, over the vesting period of the underlying
SRs. The accrued cost of the Company’s employment taxes associated with the earned value of the SRs is
calculated and recorded concurrently with the related share
-
based payment expense.
IDEX estimates the fair value of the Employee Share Purchas Plan (“ESPP”) at the grant date, i.e. the first date
of the contribution period, by using the Black
-
Scholes option pricing model. The valuation is based on share price and exercise price, share
price volatility, interest rates, and the term of the contribution period. The share
-
based compensation is expensed across the contribution period. Employment taxes, if any, are expensed when
incurred.
Leasing agreements
Pursuant to
IFRS
ctive January 2019), if the Company is the lessee, management is required to 16 Leases (effe
make judgments about whether an arrangement contains a lease, as defined in
IFRS
16, the term of the lease, and
the appropriate discount rate to calculate the present value of lease payments. If the rate implicit in the lease
cannot be readily determined, management uses the incremental borrowing rate, which represents the rate that
the Company would have to pay to borrow the funds necessary to obtain an asset of similar value to the right
-
of
-
use asset in a similar economic environment, with similar terms, security interests, and conditions. The values of
the lease liability and the associated right
-
of
-use asset are capitalized on the Statements of Financial Position.
Parent Company Separate
Financial Statements
and
Notes
IDEX Biometrics ASA
1 Annual Report 202
60
Lease extens
ion options (or occupancy periods after termination options) are only included in the lease term if it
is reasonably certain the lease will be extended (or not terminated, as the case may be) and, as such, included
within lease liabilities. The lease term
is reassessed in the event such an option is exercised (or not exercised, as
the case may be) or the Company becomes obliged to exercise (or not exercise) such an option. The assessment
of reasonable certainty is only revised if a significant event or a significant change in circumstances occurs,
which affects this assessment and is within the lessee’s control (e.g., when significant investment in the facility
is made which has a useful life beyond the current lease term).
In the Statements of Profit and
Loss, period lease payments are recorded as a periodic depreciation expense and a
periodic interest expense. The initial values of the lease liability and the associated right
-
of
-use asset are
amortized over the term of the lease liability. Given the incl
usion of an interest charge on the liability balance in
such amortization, the Company records higher expenses early in the term of a lease and lower expenses late in
the term of a lease, in contrast to the amount of the actual lease payments, which generally are fixed for the term
of a lease.
In the Statements of Cash Flows, the interest portion of the Company’s payments under its lease liabilities is
classified as a financing cost within cash flows from operating activities. The remaining portion of such
payments is classified as a reduction of lease liabilities within cash flows from financing activities.
Climate Change
As of December 31, 2021, the possible future financial impact to the Company resulting from climate change is
uncertain. Given the nature of the Company’s operations and products, any such impact is currently believed to
not be material. The Company is monitoring current and expected climate change effects, as well as measures
considered or implemented by government and industry in order to minimize any negative impact and to take
advantage of any favorable opportunities that may arise.
COVID
-
19
The COVID
-
19 pandemic, including the global emergence of new variants, continues to cause business and
economic uncerta
inties. The full impact of COVID
-
19 on the Company’s business, results of operations, and
financial condition may depend on numerous evolving factors that are highly uncertain and cannot be accurately
predicted.
The Company will continue to monitor the evolving situation and will assess modifying its response
to the pandemic, as well as any relevant implications for its operations or financial reporting.
In the first quarter of 2020, the World Health Organization declared COVID
-
19 a global pandemic. The
Company quickly adopted the guidelines, outlined by the relevant governments where the Company operates, to
ensure the health of staff members and their families. The Company established an internal virus response team,
and, effective March
16, 2020, all t
ravel and face
-
to
-face meetings were stopped, and most staff members were
directed to work from home. Staff members with specific roles required to be on
-
site at one of our facilities are
being supported in line with local government guidelines. As certain countries relaxed restrictions, many staff
members have returned to working on
-
site and have resumed travel. The Company’s management and Board continue to monitor the situation closely and will take further action as appropriate.
The Company has not experienced significant delays in its development projects, and it has not incurred
additional costs as a result of its response to the pandemic. Disruption of supply chains, particularly the
semiconductor supply chain, has been attributed to the pandemic. While the Company did not experience supply
chain disruptions that were material to its operations or financial results during 2021, operational planning and
management of inventory levels were challenging, given uncertainties associated with vendor capa
city
availability and allocations to the Company of such capacity. Because management expects such uncertainties
will continue through 2023, the Company may place orders for, and hold balances of, inventory at higher levels
than would be expected if such
uncertainties did not exist.
Management believes the pandemic has had an adverse influence on the timing of activities of smart card
manufacturers and issuers, including delaying product development and the initiation of trials and pilots
involving smart cards incorporating our fingerprint authentication solutions.
The Company considered the impact of COVID
-
19 on its judgements, estimates, and assumptions, and, as of the date of issuance of these financial statements, it is not aware of any specific ev
ent or circumstance that would
require the Company to update its judgements, estimates, and assumptions or revise the carrying value of its
assets or liabilities. The full impact of COVID
-
19 on the Company’s business, results of operations, and
financial c
ondition may depend on numerous evolving factors that are highly uncertain and cannot be accurately
predicted. As additional information is obtained, the Company may be required to update its judgements,
estimates, and assumptions. Actual results could differ from prior judgements, estimates, and assumptions, and
any such differences may be material to the Company’s financial statements. The Company will continue to
IDEX Biometrics ASA Annual Report 202
1
Parent Company Separate Financial Statements
and
Notes
61
monitor evolving circumstances and will identify and assess any relevant implications for i
ts financial
statements.
Financial risks
IDEX emphasizes capital preservation and liquidity in managing its cash, which is held in
bank
accounts, which are denominated in USD
, NOK, and
GBP
.
Short
-
term capital requirements include funding operating losses and supporting net working capital
requirements. Reflecting the Company’s operating model, investments in property, plant, and equipment are
modest, and have been funded with proceeds from issuance of the Company’s ordinary shares. IDEX has been
funde
d through the issuance of ordinary shares since it was established in 1996.
Interest Rate Risk
As of December 31, 2021, IDEX had cash of $33.8
million. The Company’s exposure to interest rate sensitivity
is influenced primarily by changes in the underlying bank interest rates
in the various currencies
. IDEX’s cash is
held in
bank
accounts, all of which are considered highly liquid. Accordingly, an immediate one percentage
point change in interest rates would not have a material effect on the fair market value the Company’s cash
accounts. As the Company has no debt to
financial
lenders, it is not exposed interest rate risks associated with
variable rate debt. In calculating the recorded and carrying values of leases, interest rates are a variable in the
calculations of these values, but do not represent a meaningful level of risk of material changes in these values.
Currency Risk
The Company’s transactions are commonly denominated in USD. However, the Company incurs a portion of its
expenses in other currencies, primarily NOK, British Pounds (“GBP”), and Chinese Yuan (“CNY”), and is
exposed to changes in the rates of exchange between the USD and these currencies. While the Company seeks to
minimize this exposure by maintaining currency cash balances at
targeted levels appropriate to meet foreseeable
short to mid
-
term expenses in these other currencies, it does not use forward exchange contracts or other hedging
strategies to manage exchange rate exposure.
Credit and Liquidity Risk
IDEX extends customary credit terms to customers, reflecting its assessment of their individual creditworthiness.
The Company does not believe it was exposed to significant credit risk associated with its Accounts receivable,
trade, balance as of December
31, 2021. If revenue continues to increase, such balances from a broadening
customer base will expand, potentially increasing the Company’s exposure to credit risk.
The Company believes it faces minimal liquidity risk, as IDEX’s cash is on deposit with
reputable, well
-capitalized financial institutions. The Company has no debt to financial institutions and maintains adequate bank
balances to meet anticipated liabilities as they become due for at least twelve months from the date of th
ese
financial state
ments
.
Other
accounting policies
Revenue recognition
Revenue is recognized when control of the promised goods or services is transferred to a customer, in an amount
reflecting the consideration the Company expects to be entitled to in exchange for those goods or services. Sales,
value add, and other taxes incurred concurrent with revenue producing activities are excluded from revenue.
Shipping and handling
charges
to customers are included in revenue, and costs associated with outbound freight
after control over a product has transferred to a customer are accounted for as
revenue reductions
The Company’s primary source of revenue comes from the sale of its products, which principally are biometric
fingerprint modules, consisting of a sensor and an ASIC (i.e., application
-
specific integrated circuit) in a sing
le
package. Each module also contains embedded software. The hardware and the embedded software are
interdependent, in that each needs the other to provide the intended fingerprint authentication function to the
customer. The primary customers for the Company’s products are smart card manufacturers and similar solution
integrators. The Company currently does not utilize stocking distributors for the resale of its products.
The Company, from time to time, licenses its intellectual property under right to u
se licenses, in which royalties
due to the Company are based upon a percentage of the licensee’s sales and/or unit volumes. For the year
s
ended
December 31, 2021
and
2020,
the Company recognized no revenue from licensing its intellectual property.
Certain
contracts with customers contain multiple performance obligations, which typically may include a
combination of
non
-
recurring
engineering (“NRE”) services, prototype units, and production units. For these
contracts, if the individual performance obligatio
ns are distinct, they are accounted for separately. Generally, the
Company has determined the NRE services and prototype units represent one distinct performance obligation,
Parent Company Separate
Financial Statements
and
Notes
IDEX Biometrics ASA
1 Annual Report 202
62
and the production units represent a separate distinct performance obligation. For such arrangements, revenue is
allocated to each performance obligation based on its relative standalone selling price, based on prices charged to
other customers or based on expected cost plus a customary profit margin. The Company generally
recognizes
re
venue for NRE services and prototype units
at
milestone under the the point in time
when a defined
arrangement is completed and control is transferred to the customer, which is generally the shipment or delivery
of the prototype units. Revenue for production units is recognized upon shipment or delivery, consistent with
product revenue recognition summarized above.
The Company also recognizes revenue from contracts with customers associated with the delivery of certain
services, ranging from standalone NRE
to advisory services. Generally, these contracts include a single
performance obligation (i.e., service element), and revenue is recognized upon the completion of the defined
service element and final acceptance by the customer of the project deliverable
, if any. However, revenue from
services may be recognized over time, if recognition of multiple service elements is based on completion of
substantive and results
-
based contractual milestones, and acknowledgement by the customer of such completion.
The
Company does not have material obligations or reserves for warranties, returns, or customer refunds.
Cost of materials, net of inventory change
Cost of materials, net of inventory change, primarily consists of the costs of raw materials, contract
manufa
cturing, and transportation associated with production and
storage
of products
,
net of inventory
change
.
Foreign currencies
The functional currency of
IDEX Biometrics ASA
, and the USD is also the presentation currencyis USD
.
Transactions involving the translation to USD of values denominated in foreign currencies are classified as
monetary or non
-
monetary, thereby defining the measurement and recognition of foreign currency translation
gains and losses applicable to a transa
ction.
Monetary assets and liabilities generally have values fixed by explicit or implicit contract. E
Examples include
bank deposits, debt, accounts receivable, and accounts payable. Monetary assets and liabilities subject to foreign
currency adjustme
nts are measured on the initial transaction date using the exchange rates in effect at that date.
At each subsequent reporting date and through the date of settlement (i.e., payment) or derecognition, such
monetary assets and liabilities are remeasured usi
ng the then
-
current exchange rate, and any foreign currency
translation gains or losses are recorded by the entity within Financial income or Financial cost.
Non
-
monetary assets and liabilities generally are those assets and liabilities for which the recorded values are not
subject to contractual or other formal definitions (i.e., those assets and liabilities that are not classified as
monetary assets or liabilities). Non
-
monetary assets and liabilities are held at historical rate.
Shares in
subsidiaries
Shares in subsidiaries are held at
the
and net realizable valuel
ower of
cost
.
Any dividends are recognized as
financial income
, and impairments, if any, as financial costs.
There have not been any dividends or impairments
in the years ended D
ecember 31, 2021
or 2020.
Research and development expenses
Expenses in this category consist primarily of the costs of services and materials used in engineering activities
and development activities
outsourced to group companies or other providers
.
Costs are presented by nature of
expense, thus payroll costs related to research and development employees are classified as Compensation and
benefit expenses, not as research and development expenses, on the Statement of Profit and Loss. However, the
compensation paid to individual contractors serving in engineering roles is included in Research and
development expenses. As of December 31, 2021
and
2020
,
the number of individual contractors in engineering
roles was
six
,
three
, and three
, respectively.
Research costs are expensed as incurred. Development expenses that do not meet the criteria of capitalization are
expensed as incurred. Development expenses are capitalized when (i) the technical feasibilit
y of completing
development has been demonstrated, (ii) the costs of development can be measured reliably, (iii) it is probable
IDEX will realize future economic benefits from the asset, and (iv) IDEX has committed to complete the
development. Once the dev
elopment is complete and the resulting asset is available for use, the capitalized
development cost (i.e., the asset value) is amortized over its expected useful life.
The Company applies for and has received government grants associated with certain research and development
projects. The earned (i.e., recognized) value, if any, of government grants applicable to research and
development activities are credited against costs. Generally, the applications or claims for such grants are
submitted after completion of the qualifying activities. When it is realistic that the application or claim will be
IDEX Biometrics ASA Annual Report 202
1
Parent Company Separate Financial Statements
and
Notes
63
successful and the amount can be determined reliably, we credit the value of the grant against research and
development expenses for that reporting period. Due to the timing difference between the completion of the
qualifying activities, the approval of our grant application or claim, and the receipt of the funds associated with
the grant, we may record, pending receipt of funds, the value of the grant as an Account receivable, other.
Finance income and finance cost
Finance income and finance cost consists of interest income, interest expense, and net foreign exchange losses
(gains) arising from settlement of obligations denominated in foreign currencies during the period and foreign
currency translation adjustments recognized at period
-
end.
Segment reporting
IDEX manages its operations as a single segment for the purposes of assessing performance and making
operating decisions. IDEX operates as one operating segment, fingerprint imaging and authentication
technology. IDEX has determined that its chief operating decision maker is its Chief Executive Officer. The
Company’s chief operating decision maker reviews the Company’s financial information on an aggreg
ated basis
for the purposes of allocating resources and assessing financial performance.
2.
Revenue from contracts with customers
The balances of trade receivables at December 31, 2020 and 2021 were $801 and $487,
respectively, reflecting
the business grow
th in 2021. There were no contract asset or contract liability balances at December 31, 2020
or
2021.
IDEX categorizes customers by geographic region utilizing the addresses to which we
invoice
our products orservices
. The Company’s product and service revenue by geographic region is as follows:
Year Ended December
31,
($000s)
2021
2020
Product Revenue:
Europe, Middle East, and Africa
$
2,807
$
952
Americas
Asia
-
Pacific
30
56
Total product revenue
2,837
1,013
Service Revenue:
Europe, Middle East, and Africa
3
Americas
77
Asia
-
Pacific
Total service revenue
82
Total Revenue
$
2,840
$
1,095
The Company’s revenue has historically come from a limited number of customers. During 2021, the top two
customers accounted for approximately 85% and 9% of the Company’s revenue, respectively, and in 2020, the
top two customers accounted for 81% and 4% of
revenue, respectively.
3.
Compensation and benefits
Year Ended December
31,
($000s)
2021
2020
Salaries
$
871
$
286
Social security taxes
107
58
Pension
contribution
17
28
Other
personnel
expenses
133
89
Share‐based
compensation
2,751
2,175
Net employer’s
tax
on
share‐based
compensation
159
194
Total
$
4,038
$
2,831
Average no. of employees (full
-
time equivalents)In
the parent
company
2
1
In
the
group
95
93
At were
year
-end
2021,
there
1
female and 1 male
employee
in
IDEX
Biometrics
ASA
(2020:
1 male).
Salary
statistics
per
gender
have
not
been
prepared.
Parent Company Separate
Financial Statements
and
Notes
IDEX Biometrics ASA
1 Annual Report 202
64
IDEX Biometrics ASA provides a contribution
-
based pension insurance plan for all its employees. The plansat
isfies the Norwegian mandatory service pension rules (obligatorisk tjenestepensjon, OTP). The contribution
is
2% and 10% of the employee’s annual eligible salary. The pension plan is a fully insured, defined
contribution
plan.
In 2021, IDEX
operated two share
-
based compensation programs: Incentive subscription rights (SRs), and anemployee share purchase plan (ESPP). The parent company carries the full notional cost of the programs for the
group, and accrues the potential employer’s tax. The expense is non
-
the same amount is added to cash, and
equity. The
notional of grant. over
cost
SRs
is
based
on the
valuefair
of
SRs
at
The
cost
is expensed
the
vesting
period of each tranche of grant, which means the cost is front
-
loaded over the duration. The potential employer’s
tax liability is calculated on the intrinsic value of the pro
-
rata earned subscription rights at year end, and the net
change from the year before is expensed or
reversed. Upon exercise, the notional cost remains as recognized
,
while actual employer’s tax, if any, on
exercise is recognized by the relevant entity when incurred. The cost of
the ESPP is
t
he fair value at
enrolment
date
into
ESPP
is
expensed over the six
month
s
contribution period
(until
August 2021: three
-
months c
ontribution period)
. The fair value is determined using a Black
-
Scholes option
pricing model, based on share prices quoted on the Oslo Børs and published interest rates.
. Any related
employer’s tax is recognized by the yer’s tax is incurred, which date varies
relevant entity on the date the emplo
by jurisdiction and employee
disposition.
Remuneration to officers
2021
Remuneration to the group’s CEO and officers reporting to the CEO. All officers are employed in the
subsidiary
in their
respective
home
countries.
c
Salary
Incentive
variable
pay
Pension
contri
-
bution
Other
benefits
Share
-
based
remune
-
ration
(1)
Total
Vince Graziani, CEO
(2)
$
400
$
44
$
$
25
$
126
$
595
James A. Simms, CFO
(3)
211
-
-
20
180
411
Derek D'Antilio, CFO (3)
100
56
-
10
(25)
141
Anthony Eaton, CTO
2
54
22
15
2
60
354
Catharina Eklof, CCO (4)
2
59
76
-
-
108
4
42
Total
$
1,224
$
198
$
15
$
57
$
449
$
1,944
(1)
The amount is the amortised cost in the year under IFRS 2 Share
-
based payments, for incentive
subscription rights
. The amount for ESPP is the nominal discount in shares acquired in 2021
. Both
amounts represent an upfront calculation and does not
necessarily
represent
any the
gain from
plans.
Any gain on subscription rights,
is
reported separately
in
the
year of
exercise.
(2)
Mr.
Graziani
joi
ned
IDEX
as
Chief
Executive
officer
February
27,2020.
(3)
Mr. Simms joined IDEX as Chief Financial Officer as of April 20, 2021. Mr. D’Antilio was employed
as Chief Financial Officer until April 20, 2021. He remained under contract for no cash compensation
thr
o
ugh September 30, 2021.
(4)
Ms. Eklof is an individual contractor on assignment for IDEX as of June 1, 2021. The salary and
incentive amounts reported are the gross invoiced amounts. The 2021 incentive was a signon fee.
.
Salary, and whether cash are declared
bonus
other
benefits,
or
in
kind,
the
amounts
for
tax
purposes pension expensed
for
the
full
year
2021,
while
cost
and
share
-based
remuneration
are
amounts of subscription rights,
in
the
year.
Gains
on
exercise
incentive
if
any,
are
reported
separately.
Employers' not included.
tax
is
The
bonuses
paid
in
2021
relate
to
achievements
in
2020.
Mr. D’Antilio
exercised 1,000,000 subscription rights at NOK 1.65 per share on November 11, 2021
. No
other
officers
exercised
incentive
subscription 2021.
rights
in
IDEX Biometrics ASA Annual Report 202
1
Parent Company Separate Financial Statements
and
Notes
65
2020
($000s)
Salary
Incentive
variable
pay
Pension
contri
-
bution
Other
benefits
Share
-
based
remune
-
ration(1)
Total
Vince Graziani, CEO
(2)
$
312
$
$
$
$
12
$
455
Stan Swearingen, former CEO (3)
227
92
-
23
677
1,019
Derek D'Antilio, CFO (3)
279
18
-
25
84
405
Anthony Eaton, CTO
220
24
13
1
60
390
Total
$
1,224
$
34
$
$
72
$
1,013
$
2,270
(1)
The amount is the
amortised cost in the year under IFRS 2 Share
-
based payments, for incentive
subscription rights, plus the
reportable benefit from the ESPP. The subscription rights amount is an
upfront option value calculation and does not
represent
any
gain from
the
subscription
rights.
Gain
if
any,
is
reported
separately
in
the
year of
exercise.
(2)
Mr.
Graziani
joined
IDEX
as
Chief
Executive
officer
February
27,2020.
(3)
Mr. Swearingen was employed as Chief Executive Officer until February 27, 2020, whereafter he
continued
as Executive
Vice
President of Advanced
Technology and Strategy.
Salary, and whether cash are declared
bonus
other
benefits,
or
in
kind,
the
amounts
for
tax
purposes pension expensed
for
the
full
year
2020,
while
cost
and
share
-based
remuneration
are
amounts of subscription rights,
in
the
year.
Gains
on
exercise
incentive
if
any,
are
reported
separately.
Employers' not included.
tax
is
The
bonuses
paid
in
2020
relate
to
achievements
in
2019.
No
officers
exercised
incentive subscription
rights
in
2020.
Grants incentive
of
subscription
rights
to officers
Year ended December
31,
Grant
date
Exercise price
(NOK per share)
Number
of
subscription
rights
2021
Vincent Graziani, CEO
August 11, 2021
2.40
1,
210,
400
James A Simms, CFO
April 20, 2021
2.71
2,750,
000
August 11, 2021
2.40
247,400
Anthony Eaton, CTO
August 11, 2021
2.40
210,
300
Catharina Eklof, CCO
June 3, 2021
2.38 2
,000,000
2020
Vincent Graziani,
CEO
February
26,
2020
1.11
5,000,000
Stan Swearingen, former
CEO
(1)
June
17, 2020
1.71
6,815,000
Anthony
Eaton,
CTO
June
17, 2020
1.71
1,125,000
(1) Mr. Swearingen was employed as Chief Executive Officer until February 27, 2020,
whereafter he
continued as Executive Vice
President Advanced
of
Technology and
Strategy.
The
grants
on
June
17,
2020
was
made
against number
cancellation
of
an
equal
of
subscription
rights
granted
in
2016
-2018.
Guidelines for remuneration to
officers
IDEX’s
remuneration policy for the supervisory board and executives as well as guidelines for incentive
programmes
were
approved at the Annual General Meeting on 12 May 2021.
Except for appropriate travel advances, IDEX has not made any advance p
ayments or issued
loans to, or
guarantees
in
favour
of,
any
members
of
the management.
Share
-
based
remuneration
to
officers
The
officers
participate in the same share
-
based programs approved by the general meeting,
that are in
effect for all employees
. In 2021 IDEX operated a
subscription rights
-based incentive program (SR
program) and
an
employee share purchase plan (ESPP). 
Parent Company Separate
Financial Statements
and
Notes
IDEX Biometrics ASA
1 Annual Report 202
66
SR g
rants are scaled based on position, results and competitive considerations. The purpos
e of
SR grants
is to strengthen the company by providing to employees, management and individual contractors
additiona
l p
erformance incentive.
The ESPP allows the participant to convert up to 20% of the base salary into shares, by contributing an
amount from each paycheck during six months, and purchasing new issue shares at 15% discount on
lower of the share price at beginning and end of the contribution period.
Implementation and the
effect
of
policies
on
remuneration
to
officers
Salary, and attract
pension
any
paid
bonuses
will
employer’s
tax
which
will
be
expensed
simultaneously with the paid
or
earned
remuneration.
Actual incentive payments in the tables
the respective
years are reported in
above. The incentives may
have been
earned
partly in
or
full in
thecalendar year
before
the
payment wasmade.
Incentives
are
paid
only conducted.
after
evaluation
against
criteria
has
been
Until
the
evaluation
has
taken
place,
an
overall
accounting accrual covering all participants in the bonus plan has been made. The accrual is not
individual and
therefore
not of
included
in
the
table
remuneration
to
officers.
The share
-
based remuneration reported in the tables is the period’s notional cost of the respective officers’
subscription notional
rights.
The
equity
effect
of
this
cost
is
nil
because
the
contra
item
is
a equity
injection
of
equal
amount. addition, of
In
the
cost
employer’s
tax
on
the
earned
intrinsic
value
on
the
balance
sheet date, accrued. varies and may net reversal
is
The
value
with
the
share
price
entail
a of
cost.
For
the
reported officers years, accrual (reversal)
in
the
respective
the
cost
for
employer’s subscription rights
tax
on
in
2021
amounted $23
to
accrual
and
the
accumulated
accrual
amounted
to
$43
at
the
end
of
the
year
(2020:
$29 $32).
and
On
exercise,
the
actual
employer’s
tax
is
expensed,
and
the
accrual
adjusted
to
cover
the
remaining
outstanding subscription
rights.
The
actual
cost
of
the
employer’s by
tax
is
normally
funded
the
equity
paid
in
on
exercise.
Any
exercises
of
subscription by
rights
officers
in
the
respective
years
are
disclosed
above.
For
the
shareholders,
an
actual
or
possible
exercise
will
represent
a dilution.
At
the
end
of
2021,
the
number of outstanding subscription including 12,870,900
rights
to
present
officers
their
close
associates
was
,
corresponding 1. 8,452,800 outstanding
to
3
(2020:percent
of
the
share
capital
subscription
rights
corresponding
to
1.0
percent
of
the
share
capital
at
the
time).
The cost of the ESPP program is calculated on program level only and not individualised. The ESPP cost of any
participating officers is therefore not included in the table above.
Compensation of 6.
paid
to
the
board
directors
is
presented
in
Note
4.
Research and development expenses
Research costs are expensed
when incurred. Development costs
are capitalized
and
held
in
the
balance sheet
only if they satisfy the criteria for capitalisation. The same applies
to
IDEX Biometrics ASA’s patentsand
other by not development
intellectual
property
rights
created
IDEX.
IDEX
has
capitalised
any
costs
in
2021 2020. Development of property have
or
costs
related
to
creation
intellectual
been
expensed
when
incurred.
Government grants
related to
research
and
development
are
credited
against
costs.
Year Ended December
31,
($000s)
2021
2020
Gross
R&D
expenses
$
25,840
$
6,946
Government
grants credited
to
cost
(539)
(506)
Net R&D expenses
$
25,301
$
6,440
IDEX Biometrics ASA Annual Report 202
1
Parent Company Separate Financial Statements
and
Notes
67
5.
Government grants
Year Ended December
31,
($000s)
2021
2020
SkatteFunn (recognized as cost
reduction of
R&D expenses)
$
539
$
506
The Norwegian SkatteFunn support for research and development is delivered through the tax
administration.
The scheme is a direct, cash grant to pre
-
approved research and development projects,
subject to approved annual or completion reports to the Research Council of N
orway, as well as
audited confirmation of costs. The
recognized
amount
in
2021
represents
IDEX’s
claim
based
on
the
cost
of
the
approved
project
applications, limited by the maximum amount of support under the
program.
6.
Related Party
Transactions
The Company’s significant shareholders, board members and management, as well as related parties of
these are
considered related
parties.
Furthermore,
the
subsidiaries
are
close
relations
to
the
parent
company.
All
transactions with
related
parties have
been
carried
out
on
an arm’s length
principle.
Compensation management 3.
of
key
has
been
disclosed
in
Note
There
were
no overdue 2021
balances with
any
related
parties
at
the
end
of
or 2020.
See
also Note
17.
Board
The
following board compensation has been paid in 2021 and 2020. The board remuneration is paid in arrears,
after approval by the shareholders at the general meeting, covering the period up to that general meeting.
Year ended December 31,
2021
($000s)
Cash
Compensation
Share
-
based
Compensation
Total
Morten Opstad, chair
$
59
$
-
$
59
Lawrence John Ciaccia, deputy chair (1)
28
33
61
Deborah Davis (2)
67
-
67
Hanne Høvding (3)
52
-
52
Annika Olsson (4)
na
na
na
Thomas M. Quindlen, observer (5)
2
32
34
Stephen Andrew Skaggs (6)
4
58
62
Total
$
212
$
123
$
335
(1)
Mr. Ciaccia was member of the
Compensation Committee in the periods that the remuneration paid in 2021 and 2020
related to.
(2)
Ms. Davis was chair of the Compensation Committee in the periods that the remuneration paid in 2021
and 2020 related to. Ms. Davis was member of the Audit
Committee in the period that remuneration
paid in 2021 related to.
(3)
Ms. Høvding was member of the Audit Committee in the period that remuneration paid in 2021 related to.
(4)
Ms. Olsson was elected to the board on 12 May 2021. The board remuneration
for tenure
from 2021 annual general
meeting to 2022 annual general meeting will be paid in arrears, after approval by the 2022 annual general meeting
(5)
Mr. Quindlen was non
-
voting observer at the board as of October 2020, and was elected board member
at the annual
gen
eral meeting
on May 12, 2021.
(6)
Mr. Skaggs was chair of the Audit Committee in the period that remuneration paid in 2021 related to.
Year ended December 31, 2020
($000s)
Cash
Compensation
Shared
-
based
Compensation
Total
Morten
Opstad,
chair
$
40
$
-
$
40
Lawrence Ciaccia,
John
deputy
chair
(1) 38
-
38
Deborah Davis
(2)
10
36
46
Hanne
Høvding
32
-
32
Stephen
A.
Skaggs
4
34
38
Total
$
124
$
70
$
194
(1)
Mr.
Ciaccia
is
a member
of
the
Compensation
Committee
(2)
Ms.
Davis
is
chair of
the
Compensation
Committee
Following the annual general meeting of IDEX on May 12, 2021, board members Lawrence John Ciccia and
Steve
Skaggs and then board observer Tom Quindlen elected to receive part of the board remuneration in shares.
Mr. Ciaccia acquired
143,458 shares against payment of NOK 0.15 per share, in lieu of $28 of the board
remuneration. Mr. Ciaccia
took the remainder of the board remuneration in cash. Mr. Skaggs acquired 253,144
shares
against payment of NOK 0.15 per share, in lieu of $50 of the board remuneration. Mr. Skaggs took the
Parent Company Separate
Financial Statements
and
Notes
IDEX Biometrics ASA
1 Annual Report 202
68
remainder
of the
board
remuneration in
cash. Mr. Quindlen acquired 138,981 shares
against payment of NOK
0.15 per share, in lieu of $28 of the board remuneration. Mr. Quindlen took the
remainder
of the
board
remuneration in
cash.
The chair of the board is a partner at Advokatfirmaet Ræder AS. The law firm provided services to the Comp
any
amounting to $
338
in 2021 and $477 in 2020. The recognized amounts include accruals for services received
but not yet billed.
Mr. Ciaccia, who was first elected board member at the annual general meeting on May 12, 2015, has
served
on
IDEX’s
Strategy
Advisory
Council
(SAC)
since
January
2014
and
continues his tenure on the SAC. Mr. Ciaccia
also provides consulting services to IDEX. The combined fee for SAC service and consulting services amounted to
$
65
in 2021 and $65 in 2020.
Grants ince
of
ntive
subscription
rights
board
members
Year ended December
31,
Grant
date
Exercise price
(NOK per share)
Number
of
subscription
rights
2021
(no grants)
2020
Lawrence John Ciaccia
June 17, 2020
1.71
600,000
Any grants to a board member have been made in his/her capacity of service provider beyond board duty and
not as board compensation. The grant on June 17, 2020 was made against cancellation of an equal number of
subscription
rights
granted
on
August
15,
2018.
Nomination
Committee
The following fees has been paid to the nomination committee in 2021 and 2020 for the services up to the 2021
annual
general
meeting
and the 2020 annual
general
meeting,
respectively:
2021:
Chair Robert
Keith
$
2,7
, members
Håvard Nilsson and
Harald each.
Voigt $
1.6
2020:
Chair
Harald
Voigt
$2.8,
members
Robert
Keith
and
Rune Sundvall
$1.7
each.
LH Capital Ltd, controlled by Håvard Nilsson, in 2020 charged
GBP
50k
to
IDEX
for
IR
and
other
advisory
services delivered
in
2019.
Officers
Remuneration
to key
management
is
disclosed
in
note 3.
Subsidiaries
See
note
1,
13
and
18.
The
parent company
purchases
various
services
from
the
subsidiaries
at
arm’s
length
basis.
The subsidiaries are funded by adequate equity and interest
-
free advances
in order
not
encounter thin
capitalization issues.
I
nterest
-bearing loans at
arm’s
length rate
interest
have been issued in prior years but all
loans were fully repaid by December 31, 2021
.
($000s)
IDEX
Biometrics ASA’s cost of
services from subsidiaries
Interest income to
IDEX
Biometrics ASA
from subsidiaries
Intra
-
group transactions
2021
2020
202
1
2020
IDEX
Biometrics
Holding Company Inc.
-
-
-
-
IDEX
Biometrics
America Inc.
15 830
14 358
4
38
IDEX
Biometrics UK Ltd.
(1)
9 992
(7 489)
24
24
IDEX Electronics (Shanghai) Co., Ltd.
1 819
1 201
-
-
Total
27 640
8 069
28
62
(1)
The negative amount in 2020 was due to credit notes issued by IDEX Biometrics UK Ltd. to IDEX Biometrics
ASA for certain R&D projects
conducted
in 2017
-
2019 pursuant to an amended service agreement between the
parties.
The amount in 2021 includes $ 8,317 for the purchase of an IP package.
There
were
no overdue
payables between any
of
the
group companies
at
the
end
of
2021 2020.
or
IDEX Biometrics ASA Annual Report 202
1
Parent Company Separate Financial Statements
and
Notes
69
7.
Audit and audit fees
Ernst & Young AS (EY) is the auditor of the group as well as the parent company. The audit fees in
the
respective years as
are
follows:
Year ended December 31,
($000s)
2021
2020
Audit services
$
265
$
179
Audit
-
related services
22
Tax services
7
Other services
24
12
Total
$
318
$
199
8.
Income tax expense
Tax expense for the year
Year ended December 31,
($000s)
2021
2020
Payable taxes on the result of the year
$
—
$
—
Change in deferred tax asset/liability
—
—
Income tax expense
$
—
$
—
Computation of payable taxes for the year
Year ended December 31,
($000s)
2021
2020
Profit (loss)
before taxes
$
(38,891)
$
(17,237)
Permanent differences
(632)
2,246
Changes in temporary differences
(131)
(
799
) Basis for payable taxes
$
(39,654)
$
(15,790)
Calculated payable taxes on current year’s loss. 22 %
tax,
representing payable taxes on current
year’s loss in Norway
—
—
Payable taxes on current year’s result
$
—
$
—
Reconciliation of tax expense
Year ended December 31,
($000s)
2021
2020
Profit
(loss)
before taxes
$ (38,891)
$ (17,237)
Norway statutory tax rate of 22%
(8,556)
(3,792)
Tax on permanent differences
(13
9)
494
Change in deferred tax asset not recognized on December 31
8,695
3
,298
Actual tax expense
$
—
$
—
The change in deferred tax asset not recognized contains foreign currency exchange effects on the loss carry
forward in Norway, denominated in NOK.
There deferred
are
no
tax
charges
to
other
comprehensive 2021 or 2020
income
in
and no tax payable balances
.
Specification of deferred tax
Year ended December 31,
($000s)
2021
2020
Employer’s
tax
on share‐based
compensation
$
(371)
$
(216)
Fixed
Assets
434
358
Inventory
(5)
(213)
Other
3
-
Total
$
61
$
(71)
Losses
carried
forward (250,675)
(219,186)
Basis taxes
for
deferred(250,614)
(219,257)
Calculated net deferred tax income,
Norway
22%
(55,135)
(48,237)
Unrecognized deferred asset
tax
55,135
48,237
Deferred tax
liability in the
balance sheet
$
-
$
-
Parent Company Separate
Financial Statements
and
Notes
IDEX Biometrics ASA
1 Annual Report 202
70
The accumulated unrecognized deferred tax assets amounting to $
55,135
and $48,237 at December 31, 2021 and
2020, respectively, are related to tax losses carry forward in Norway. IDEX Biometrics ASA has not
generated
taxable profits in prior years. At December 31, 2021 there was not sufficiently convincing evidence
that
sufficient taxable
profit
will the
be
generated,
against
which
unused be
tax
losses could
applied.
Consequently, no deferred tax asset has been recognized. There are no restrictions as to how long tax losses
may
be carried
forward
in
Norway.
9.
In
tangible assets
Year ended December 31, 202
1
($000s)
Goodwill
Acquired
patents
Total
Cost
at
December
31, 2020
$
968
$
5,173
$
6,141
Additions
-
-
-
Disposals
at
cost
-
-
-
Cost
at
December
31, 2021
968
5,173
6,141
Accumulated
amortization
at
December
31,
2020
-
2,731
2,731
Amortization
-
477
477
Accumulated amortization items
of
disposed
-
-
-
Accumulated
amortization
at
December
31,
2021
-
3,208
3,208
Carrying
amount
at
December
31,
2021
$
968
$
1,965
$
2,933
Year ended December 31, 2020
($000s)
Goodwill
Acquired
patents
Total
Cost
at
December
31, 2019
$
941
$
4,975
$
5,916
Additions
-
181
181
Disposals
at
cost
-
-
-
Impact currency
of
translation
27
17
44
Cost
at
December
31, 2020
968
5,173
6,141
Accumulated
amortization at
December
31,
2019
-
2,370
2,370
Amortization
-
416
416
Accumulated amortization items
of
disposed
-
-
-
Impact currency
of
translation
-
(55)
(55)
Accumulated
amortization at
December
31,
2020
-
2,731
2,731
Carrying December
amount at
31,
2020
$
968
$
2,442
$
3,410
There is only one cash generating unit in the Company and goodwill is allocated to this. IDEX performed the
annual impairment test on December 31, 2021. The Company considers the relationship between its
market
capitalization (recoverable amount) and its carrying amount, among other factors, when reviewing for indicators
of impairment. The recoverable amount has been determined based on the fair value of the equity of IDEX.
Based on the 2021
assessment, no impairment charge has been made in 2021. There were n
o reasonable possible
changes
to any
key assumptions that
would cause
an
impairment
. No impairment charge was made in 2021 or
2020.
Acquired patents are capitalized and amortized over th
e estimated useful life, which is the lifetime of the
respective patent(s)
.
IDEX Biometrics ASA Annual Report 202
1
Parent Company Separate Financial Statements
and
Notes
71
10.
Property, plant and equipment
($000s)
Plant and
machinery,
fixtures and
fittings
Office
furniture
and
office
equipment
Instruments
and lab
equipment,
software tools
Total
Depreciation period, straight line, in years
3
–
103
–
103
-
10Cost
at
December
31, 2020
$
679
$ 2
$
119
$
800
Additions
-
2
-
-
Disposals
at
cost
-
-
-
-
Cost
at
December
31, 2021
679
4
119
802
Accum
.
amortization
at
December
31,
2020
121
2
119
242
Amortization
97
-
-
97
Accumulated amortization items
of
disposed
-
-
-
-
Accum
.
amortization
at
December
31,
2021
218
2
119
339
Carrying
amount
at
December
31,
2021
$
461
$
2
$ -
$
463
Cost
at
December
31, 20
19
$
722
$ 2
$ 5
11
$ 8
43
Additions
-
-
-
-
Disposals
at
cost
(43)
-
-
(43)
Currency
translation
-
-
-
-
Cost
at
December
31, 20
20
679
2
119
80
0
Accum.
amortization
at
December
31,
2019
85
2
1
08
195
Amortization
72
-
11
83
Accumulated amortization items
of
disposed
(43)
-
-
(43)
Currency translation
7
-
-
7
Accum. amortization
at
December
31,
202
0 121
2
119
242
Carrying
amount
at
December
31,
202
0 $
558
$
-
$ -
$
558
11.
Leases
IDEX Biometrics ASA leases an office in Oslo.
Right
-
of
-use assets
Year ended December 31,
($000s)
2021
2020
Depreciation
period, straight line, years
3
– 5
3
– 5
Cost
at
the beginning of the year
$
66
$
64
Additions
-
-
Disposals
at
cost
-
-
Currency translation
-
2
Cost
at
December
31
66
66
Accumulated depreciation
at
the beginning of the year
28
3
Depreciation
26
23
Accumulated depreciation items
of
disposed
-
-
Currency translation
-
2
Accumulated depreciation
at
December
31,
2021
54
28
Carrying
amount
at
December
31,
2021
$
12
$
38
Parent Company Separate
Financial Statements
and
Notes
IDEX Biometrics ASA
1 Annual Report 202
72
Leases included in the statements of profit and loss
Year ended December 31,
($000s)
2021
2020
Amortization and depreciation
26
23
Finance cost
1
2
Leases included in the statements of financial position
Year ended December 31,
($000s)
2021
2020
Balance
at
the beginning of the year
$ 38
$
61
Additions
-
-
Accreation of
interest
1
2
Payments
(29)
(26)
Balance
at
December
31
$
10
$
38
Non
-
current
-
14
Current
10
24
Balance at December 31
$
10
$
38
12.
Subsidiaries
The
subsidiaries
provide
various company, development, supply
services
to
the
parent
mainly
within
technical
-
chain administration and customer interface, and marketing and sales facilitation services to
IDEX Biometrics
ASA. The
accounting
year
in
all
subsidiaries
is
the
calendar
year,
same
as
in
the
parent
company
and
the
group.
O
wnership
Share
of
votes
Net profit
or
(loss)
Equity
Dec. 31,
2021
Dec. 31, 2021
2021
Dec. 31, 2021
IDEX
Biometrics
Holding
Co.
Inc.,
Delaware, USA
100 % 100 % - (5)
IDEX
Biometrics
America Inc., Delaware,
USA
100 %
100 %
745
4,121
IDEX
Biometrics UK
Ltd.,
England
100 % 100 %
5,634 (4,302)
IDEX
Electronics (Shanghai)
Co.,
Ltd, China
100 %
100 %
76
350
Dec. 31, 2020
Dec. 31, 2020
2020
Dec. 31, 2020
IDEX
Biometrics
Holding
Co.
Inc., Delaware, USA
100 % 100 % - (5)
IDEX
Biometrics
America Inc., Delaware, USA
100 %
100 %
507
3,377
IDEX Biometrics UK Ltd., England
100 %
100 %
(1,260) (9,943)
IDEX Electronics (Shanghai) Co., Ltd, China
100 %
100 %
54
267
IDEX (IDEX
Biometrics
Holding
Company
Inc.
Holding) holding company
is
a for
the
activities
in
the
USA.
The
operating by Holding.
company,
IDEX
Biometrics
America
Inc.
(IDEX
America),
is
held
IDEX
IDEX
Holding 2013 operations
and
IDEX
America
were
established
in
when
commenced.
IDEX
America’s
main
facilities in Wilmington,
are
Massachusetts
and
Rochester,
New
York.
IDEX
Biometrics
UK
Ltd. (IDEX
UK) was
incorporated
and
commenced operations in 2014.
The registered
office
is
in
Manchester,
England.
IDEX
UK
took
advantage
of
section
479a
of
the
UK
Companies
Act
2006
to
be audit 2020. 2021
exempt
from
of
its
financial
statements
for
the
calendar
year
IDEX
UK
was
profitable
as
of
but negative of
had
equity
at
the
end
2021. The parent company has provided funding as needed.
IDEX
Electronics
(Shanghai) China) 2015.
Co.,
Ltd.
(IDEX
was
established
and
commenced
activities
in
The
company located
is
in
Shanghai and has a branch in Beijing.
13.
Cash and cash equivalents
Of the cash and cash equivalents, employees’ withheld payroll tax deposits amounted to $31 and $21 at the end
of 2021
and 2020, respectively. Only the withheld payroll tax deposits were re
stricted. Deposits for facilities rent
or have not equivalents.
utilities
been
included
in
cash
IDEX Biometrics ASA Annual Report 202
1
Parent Company Separate Financial Statements
and
Notes
73
14.
Restricted assets
For the office lease, IDEX Biometrics ASA has placed an amount corresponding to about 3 months’ rent and
allocations of its
leasehold facilities in escrow account in the landlord’s name for the benefit of the landlord.
Such
escrow
accounts and
other
deposits amounted $8 at
to
$8 of
2021 andat
the
end
the
end
of
2020.
No
other
assets
have
been
pledged
as
security or
are
otherwi
se restricted.
15.
Share capital
There is one class of shares, and all shares have equal rights and are freely negotiable. The share capital is fully
paid in.
The
par
value of
the
shares is
NOK
0.15
per share.
IDEX
does
not
beneficially own
any
of
its
own
shares.
Number of shares
Balance at
December 31, 2019
717,988,732
2020:
Private
placement
of
shares
on
May
11
65,341,413
Share
issue
(in
lieu
of
board
compensation)
441,982
Share
issue
(in
lieu
of
cash
compensation)
4,318,523
Private
placement
of
shares
on
November
9
42,528,181
Share
issue
(Employee
Share Purchase Plan)
1,527,917
Balance at
December 31, 2020
832,146,748
2021:
Private placement of shares on February 15
83,214,674
Share
issue in lieu of board remuneration
535,583
Private placement of shares on November 9
89,777,824
Share issues at exercise of subscription rights
1,767,606
Share issues under Employee Share Purchase Plan
2,946,019
Balance at
December 31, 2021
1,010,388,454
As of December 31, 2021 there were 7,288 shareholder accounts on record, compared to 7,574 at December 31,
2020.
Costs related to share issuance have been charged against equity and amounted to $2,827 in 2021 and $748 in
2020.
Subscription
rights
are
presented
in
note
16.
Shareholders
As of
December
31,
2021
Number
of
shares
Percent
of
total
Société Générale
72,660,606
7.2
Sundt AS
68,507,977
6.8
Sundvall Holding AS
55,964,051
5.5
The
Northern Trust Comp, London Br
45,030,909
4.5
Goldman Sachs International
44,717,305
4.4
The Bank of New York Mellon
37,524,450
3.7
Caceis Bank
36,357,688
3.6
Robert Keith
32,139,394
3.2
Middelborg Invest AS
25,968,945
2.6
Alden AS
24,000,000
2.4
UBS AG London branch
16,482,055
1.6
Citibank, N.A.
14,905,768
1.5
Norda ASA
12,453,554
1.2
Tigerstaden AS
12,000,000
1.2
(continued)
Parent Company Separate
Financial Statements
and
Notes
IDEX Biometrics ASA
1 Annual Report 202
74
Shareholders
As of
December
31,
2021
Number
of
shares
Percent
of total
(continued)
Smart Riches Limited
11,968,240
1.2
Verdipapirfondet DNB SMB
11,297,904
1.1
Colargol Invest AS
10,650,318
1.1
RBC Investor Services Trust
10,521,348
1.0
F2 funds AS
8,500,000
0.8
Citibank, N.A.
8,474,554
0.8
Others
450,263,388
44.6
Total
1,010,388,454
100.0
For practical reasons, IDEX reports shareholders as registered in the VPS and does not combine accounts or
prepare a list of beneficial owners of holdings in nominee accounts. Robert Keith has disclosed to Oslo Børs
that, as of November 9, 2021, Mr. Keith, and together with his close associates, held 185,344,423 shares in the
company, representing 18.4% of the number of shares.
Shares
and
subscription
rights
held
or
controlled
by board members, officers and their
close
relations
Year December
Ended
31,
2021
2020
Shares
Incentive
Subscription
Rights
Shares
Incentive
Subscription
Rights
Morten Opstad, chair
7,398,916
7,398,916
Lawrence John Ciaccia, deputy chair (1)
415,021
600,000
271,563
600,000
Deborah Davis, board member
564,479
564,479
Hanne Høvding, board member
487,778
487,778
Annika Olsson, board member (2)
52,631
Na
na
Thomas M. Quindlen, board member (3)
413,981
275,000
Stephen Andrew Skaggs, board member
1,018,053
764,909
Vincent Graziani, CEO
1,173,279
6,210,400
810,239
5,000,000
James A. Simms, CFO (4)
1,494,736
2,997,400
na
na
Derek D'Antilio, former CFO (4)
na
na
681,926
2,000,000
Anthony,
Eaton, CTO
264,956
1,663,100
249,575
1,452,800
Catharina Eklof, CCO (5)
89,684
2,000,000
na
na
Total
13,373,514
13,470,900
11,504,385
9,052,800
(1)
The grant to Mr. Ciaccia was in his capacity of service provider beyond board duty and
not as board
remuneration. The grant on June 17, 2020 was made against cancellation of an equal number of
subscription rights granted on
August
15,
2018.
(2)
Ms. Olsson was elected to the board
at the annual general meeting
on 12 May 2021.
(3)
Mr. Quindlen was no
n-
voting observer at the board as of October 2020, and was elected board member at
the annual general meeting on May 12, 2021.
(4)
Mr.
Simms joined IDEX as
Chief
Financial Officer as of
April 20, 2021.
Derek D’Antilio was employed as
Chief Financial Officer un
til April 20, 2021. He remained under contract for no cash compensation thr
o
ugh
September 30, 2021
.
(5)
Ms. Eklof is an individual contractor on assignment for IDEX as of June 1, 2021. The salary and incentive
amounts reported are the gross invoiced amo
u
nts.
16.
Share
-
based remuneration
Incentive
subscription
rights
IDEX has the practice of renewing its incentive subscription rights program at each annual general meeting,
when the preceding program is closed for further grants and a new program opened. In 2021, the board granted
incentive subscription rights to employees and individual contractors under the 2020 program in the period
January 1
—
May 11, 2021 and made grants under the 2021 program in the period May 12 —
December 31,
2021.
IDEX Biometrics ASA Annual Report 202
1
Parent Company Separate Financial Statements
and
Notes
75
Under the
2021 subscription
rights
-based
incentive program
approved
at
the
annual general
meeting
on
May
12,
2021, the board may grant up to 91,672,048 incentive subscription rights, but limited in such a way that the
total
number of subscription rights outstanding under all programs may not exceed 10 percent of the number of
shares.
The subscription rights may be granted to employees and individual contractors performing similar work in
IDEX. The exercise price shall be, at minimum, the higher of the average closing price of the IDEX
shares
on
ten trading the date the the closing price the the
days
preceding
of
grant,
or
of
IDEX
shares
on
trading day
preceding the date of the grant. Unless resolved otherwise by the board, 25 percent of each grant of
subscription
rights latest
vest
per year.
vestingThe
annual
dates
are
the
of
the following
datedates
before
the
of grant of the
subscription rights; (i) January 15, (ii) April 15, (iii) July 15 or (iv) October 15. The subscription
rights lapse on
the fif
th anniversary after the annual general meeting that approved the program. Grants under programs for
prior years have similar pricing rules, vesting schedules and durations. Unvested subscription
rights terminate on
the holder’s last day of employment. Vested subscription rights may be exercised up to 90
days
after the
holder’s
last
day
of
employment.
The
holder may not request cash settlement. The company may elect to settle in cash.
Subscription rights activity
2021
2020
Number of
Subscription
Rights
Weighted
Average
Exercise Price
(NOK)
Number of
Subscription
Rights
Weighted
Average
Exercise Price
(NOK)
Outstanding as of January 1
56,344,093
1.66
52,875,043
4.01
Granted
21,
885,200
2.53
36,
414,800
1.62
Exercised
(1,767,879)
1.33
(52,150)
1.65
Forfeited
(3,165,015)
1.97
(4,363,500)
4.28
Cancelled
-
(25,962,800)
5.40
Expired
(1,540,000)
5.22
(2,567,300)
7.32
Outstanding as of
December 31
71,756,399
1.84
56,344,093
1.66
Subscription rights exercisable as of
December 31
18,657,117
1.59
5,024,700
3.03
Number of
Subscription
Rights
Weighted
Average Fair
Value (NOK)
Number of
Subscription
Rights
Weighted
Average Fair
Value (NOK)
Subscription rights granted in the year
21,885,200
1.51
36,414,800
0.79
The fair value of the subscription rights granted in the year has been calculated using the
Black
Scholes option-
pricing
model
applying following assumptions 2021 2020:
the
in
and
Black
-
Scholesoption pricing
parameters
Year ended December 31,
2021
2020
Exercise price
(NOK)
2.38
- 3.10
1.10
–
1.80
Weighted average per share
2.53
1.62
Weighted average actual share at date
price
of
grant
2.45
1.42
Expected
time to expiry
(years)4.62
4.77
Weighted average
time to exercise
3.35
2.96
Volatility
of
share
price
based share price
on
history
85%
- 112%
78%
-
113%
Weighted average interest rate
risk
-free
0.98%
0.35%
Expected
dividend
payment
0
0
Actual
population
of
subscription
rights
holders
No
attrition
No
attrition
Parent Company Separate
Financial Statements
and
Notes
IDEX Biometrics ASA
1 Annual Report 202
76
Outstanding
and
vested
incentive
subscription
rights
: December 31, 2021
Outstanding subscription
rights
Vested subscription rights
Exercise
Price
(in
NOK)
Number
of
Subscription
Rights
Outstanding
Weighted
Average
Exercise
Price
(in
NOK)
Weighted
Average
Remaining
Duration
Weighted
Average
Remaining
Time
to
Vest
(in
years)
Number
of
Vested
Subscription
Rights
Weighted
Average
Exercise
Price
(in
NOK)
Weighted
Average
Remaining
Duration
(in
years)
0.00
–
0.504,330,366
0.15
2.36
0,04
2,165,186
0.15
2.36
0.50
–
1.00720,800
0.71
2.36
1,29
310,400
0.71
2.36
1.00
–
1.505,542,500
1.11
2.36
1,04
1,385,625
1.11
2.36
1.50
–
2.0038,760,433
1.70
3.14
0,96
14,045,131
1.69
3.05
2.00
–
2.50
12,352,800
2.40
4.37
1,98
-
-
-
2.50
–
3.00
8,235,900
2.67
4.04
2,12
-
-
-
3.00
–
3.50
934,900
3.10
3.37
1,54
-
-
-
3.50
–
4.00208,000
3.70
2.36
0,79
104,000
3.70
2.36
4.00
–
4.5095,700
4.28
1.36
0,29
71,775
4.28
1.36
5.00
–
5.50500,000
5.10
1.36
-
500,000
5.10
1.36
8.00
–
8.50
75,000
8.42
0.37
-
75,000
8.42
0.37
Total
71,756,399
1.84
3.32
1,22
18,657,117
1.59
2.84
December 31, 202
0
Outstanding subscription rights
Vested subscription rights
Exercise
Price
(in
NOK)
Number
of
Subscription
Rights
Outstanding
Weighted
Average
Exercise
Price
(in
NOK)
Weighted
Average
Remaining
Duration
Weighted
Average
Remaining
Time
to
Vest
(in
years)
Number
of
Vested
Subscription
Rights
Weighted
Average
Exercise
Price
(in
NOK)
Weighted
Average
Remaining
Duration
(in
years)
0.00
–
0.504,938,543
0.15
3.36
0.54
-
-
-
0.50
–
1.00868,100
0.71
3.36
1.34
217,025
0.71
3.35
1.00
–
1.505,542,500
1.11
3.36
1.79
-
-
-
1.50
–
2.0042,245,000
1.70
4.10
1.35
2,843,925
1.65
3.35
3.50
–
4.00208,000
3.70
3.36
0.87
52,000
3.70
3.02
4.00
–
4.501,339,450
4.28
1.04
0.14
871,750
4.28
1.01
5.00
–
5.50660,000
5.09
2.12
0.05
620,000
5.09
2.11
7.50
–
8.00467,500
7.76
0.86
0.12
363,750
7.76
0.87
8.00
–
8.5075,000
8.42
1.37
0.07
56,250
8.42
1.36
Totalt
56,344,093
3.82
1.66
1.24
5,024,700
3.03
2.59
Employee
Share Purchase
Plan
(ESPP)
The 2021 ESPP was approved by the 2021 annual general meeting. Under the 2020 ESPP, IDEX employees may
contribute up to 20% of the annual base salary. The contribution periods are six months, September
-
February
and March
-
August (2020 ESPP: three months). On the last trading day of a contribution period, employees
purchase new issue shares at 85% of the lower of the closing share price at the first and last trading day of the
contribution period. The shares are not restricted (2020 ESPP: Restricted for three months.
In 2021, average 53 employees participated in three purchases under the 2020 ESPP. The participants acquired
2,946,019 shares at average price NOK 2.00 per share. The first contribution period under the 2021 program was
September 2021
-
bruary 28, 2022, IDEX issued 1,765,791 shares at NOK 1.70 per share.February 2022. On Fe
17.
Board authorizations to issue shares or acquire own shares
The board has been authorized by the respective annual general meetings to issue shares upon exercise of
incentive subscription rights granted under the various incentive subscription rights programmes, and to issue
shares under the Employee Share Purchase Plan. See note 16.
IDEX Biometrics ASA Annual Report 202
1
Parent Company Separate Financial Statements
and
Notes
77
Authorizations that were
in effect
on December 31, 2021
Date and purpose of
authorization
Authorized
number of
shares
Number of
shares issued by
Dec. 31, 2021
Annual general meeting
May 12, 2021:
Issue of shares in a rights issue
to raise additional capital
*
91,672,048
89,777,824
Private placement of shares to raise additional capital
*
91,672,048
-
*
The
combined authorisations
issue
under
these
two
may
not
exceed
91,672,048
shares.
At the annual general meeting on May 12, 2021, the board was authorized to acquire 91,672,048 of the
company's shares. The
authorization had not been used by the end of 2021.
18.
Non
-
current and current
eceivables
Non-
current receivables
December 31,
($000s)
2021
2020
Long
-
term loan
s
to group companies
$
-
$
1,050
Non
-
current receivables
8
8
Balance at December 31
$
8
$
1,058
The receivables are deposits for leasehold payments and are held at nominal value.
Maturity of current receivable
s
Year ended December
31,
202
1 ($000s)
Less than
3
months
3-
6 months
6-
12 months
Total
Accounts receivable, other
$
188
$
-
$
539
$
726
Accounts receivable, trade
801
-
-
801
Receivables
from
group
companies
6,101
-
-
6,101
Total
$
7,090
$
-
$
539
$
7,628
Maturity of current receivable
s
Year ended December
31,
2020
($000s)
Less than
3
months
3-
6 months
6-
12
months
Total
Accounts receivable, other
$
244
$
5
$
557
$
80
6 Accounts receivable, trade
487
-
-
487
Receivables
from
group
companies
10,2
63
-
-
10,263
Total
$
10,994
$
5
$
557
$
11,556
Trade receivables amounting to $134 were overdue by more than 30 days at the end of 2021 (2020: $
-
). No
expected loss had been accrued for at the end of 2021 or 2020. There were no other provisions for expected
credit losses in 2021 and 2020. No group or other receivables were overdue at the end of 2021 or 2020. A
significant share of the receivables from group companies is related to IDEX UK.
IDEX
UK
was profitable in
2021 at is
expected
to
be of eventually repaying
capable
the
receivable.
IDEX Biometric
s ASA had no contingent assets at the end of 2021 or 2020.
19.
Payables and Financial Liabilities
The Company did not have any liabilities at December 31, 2021 or 2020 which represented debt to financial
institutions. The table below shows maturity of undiscounted cash flows.
Parent Company Separate
Financial Statements
and
Notes
IDEX Biometrics ASA
1 Annual Report 202
78
Payables and Financial liabilities
Matrurity as of
December 31, 2021
($000s)
Less than
3 months
3-
6 months
6-
12
months
1-
5 years
More than
5 years
Total
Non
-
current lease liabilities
$
$
$
-
$
-
$
-
$
Accounts payable
640
-
-
-
-
40
Current lease liabilities
5
5
-
-
-
10
Short
-
term payab
.
to gr
oup comp.
3,314
-
-
-
-
3,314
Other current
liabilities
1,004
307
-
-
-
1,311
Total
$
4,963
$
312
$
-
$
-
$
-
$
5,275
Payables and
Financial liabilities
Maturity as of
December 31, 2020
($000s)
Less than
3 months
3-
6 months
6-
12
months
1-
5 years
More than
5 years
Total
Non
-
current lease liabilities
$
-
$
-
$
-
$
14
$
-
$
14
Accounts payable
520
-
-
-
-
520
Current lease liabilities
6
6
12
-
-
24
Short
-
term payab. to group comp.
2,503
-
-
-
-
2,503
Other current liabilities
1
,193
121
37
-
-
1,3
51
Total
$
4,222
$
127
$
49
$
14
$
-
$
4,413
Other current liabilities include accruals for earned compensation, vacation days not taken, ESPP
contributions
and accruals for goods and services received but not yet invoiced by the supplier.
Interest expense including interest on lease liabilities in statement of profit and loss in finance expense was $1 in
2021 and $2 in 2020. Remaining amount of finance expense is currency losses.
Accrued employer’s tax on share
-
based compensationThe estimated employer’s tax liability related to share
-
based compensation amounted to $371 on December 31,
2021 and $216 on December 31, 2020. It will be due only if and when the incentive subscription rights are
exercised. The exercise will, in all likely circumstances, fund the payable employer’s tax.
IDEX Biometrics ASA had no other significant current or non
-
current financial obligations at the end of 2021 or 2020. IDEX Biometrics ASA had no contingent liabilities at the end of 2021 or 2020.
20.
Inventory
December 31,
2021
2020
($000s)
Cost
Reserves
Net
Cost
Reserves
Net
Raw materials
$
562
$
-
$
562
$
460
$
(114)
$
346
Work in progress
107
-
107
25
-
25
Finished goods
570
(5)
565
588
(100)
488
Total
$
1,239
$
(5)
$
1,234
$
1,073
$
(214)
$
859
Inventory, consisting mainly of fingerprint sensors which have been manufactured by the company’s
manufacturing services providers, as well as components for such fingerprint sensors, is held at cost, which is
less than recoverable value. Inventory value has been reduced to reflect aging, obsolescence and estimated
shrinkage.
In 2021 and 2020, $34 and $32, respectively, of materials used in new product development was charged to
development expense.
IDEX Biometrics ASA Annual Report 202
1
Parent Company Separate Financial Statements
and
Notes
79
21.
Other operating expenses
Year ended December 31,
2021
2020
Sales and marketing activities
$
1,374
$
762
Legal, audit,
accounting and other services
1,880
2,417
Office and other expenses
, Insurance
1,359
422
IT expenses
692
509
Travel expenses
12
11
Intercompany charges other than R&D
4,066
4,018
Total
other
operating
expenses
9,383
8,139
Legal, audit and other services were exceptionally high in 2020 and into 2021 due to assistance in connection
with the company’
s l
isting on
the which
Nasdaq
commenced
on 1,
2021. Insurance cost increased March
substantially in 2021 due to the listing on Nasdaq.
22.
Subsequent Events
The
b
oard resolved on February 23, 2022, to issue 8,350,900 incentive subscription rights to employees and
individual contractors
the
group
. The grant was made under the
c
ompany’s 2021 Subscription rights plan. The
exercise price of the subscription rights is NOK 2.08 per share, they vest by 25% per year, and expire on May
15, 2026. Following the grants, there were 80,107,297 subscription rights outstanding.
The
b
oard resolved on March 1, 2022, to issue 1,
765,791
s
hares at NOK 1.70 per share to employees who
participate in the company's Employee Share Purchase Plan (ESPP). On March 4, 2022, the Board resolved to
issue in total 394,409
s
hares at a price NOK 0.48 per share to employees participants. Followi
ng this share
issuance, there were 1,012,548,654
s
hares issued and outstanding.As of the date of these financial statements, the company been affected by the outbreak of war between
has
not
Russia and the Ukraine and the sanctions imposed by the Unites States and EU. The Company’s business,
financial condition, results of operation and cash flows may be adversely impacted by the ongoing conflict or
future events.
Responsibility Statement
IDEX Biometrics ASA Annual Report 202
1 80
RESPONSIBILITY STATEMENT
The board and the managing director have today reviewed and approved this report from the board o
f
d
irectors as well as the annual financial statements for the IDEX group and the parent company IDEX
Biometrics
ASA as
at December 31,
202
1.The consolidated annual financial statements
and the annual financial statements for IDEX Biometrics
ASA have been prepared in accordance with IFRS as adopted by the EU and with IFRS as issued by the
International Accounting Standards Board and the additional requirements in the Norwegian accounting
act
effective December 31, 202
1
. The notes are an integral part of the respective financial statements. The report
from the board of directors have been prepared in accordance with the Norwegian accounting act and generall
y
a
ccepted
accounting practice in
Norway.
We confirm, to the best of our knowledge, that the information presented in the financial statements give
s a
true and fair view of the group’s and the parent company’s assets, liabilities, financial position and result for
the
period viewed in
their entirety, and that the report from the board of directors gives a true and fair view of
the
development, performance and financial position of the group and the parent company, and includes a
description the principal uncertainties which the
of
risks
and
group and
the
parent company
are
facing.
April
20
, 2022
The
board
of
directors
of
IDEX
Biometrics
ASA
/s/ Opstad
Morten
Morten
Opstad
Chair
/s/
Lawrence
John
Ciaccia
Lawrence Ciaccia
John
Deputy chair
/s/
Deborah
Lee
Davis
Deborah Lee
Davis
Board member
/s/
Hanne
Høvding
Hanne Høvding
Board member
/s/
Annika Olsson
Annika Olsson
Board member
/s/
Thomas Quindlen
Thomas Quindlen
Board member
/s/ Stephen
Andrew
Skaggs
Stephen
Andrew
Skaggs
Board member
/s/
Vincent
Arthur
Graziani
Vincent
Arthur
Graziani
CEO
Statsautoriserte revisorer
Ernst & Young AS
Dronning Eufemias gate 6a, 0191 Oslo
Postboks 1156 Sentrum, 0107 Oslo
Foretaksregisteret: NO 976 389 387 MVA
Tlf: +47 24 00 24 00
www.ey.no
Medlemmer av Den norske Revisorforening
A member firm of Ernst & Young Global Limited
INDEPENDENT AUDITOR'S REPORT
To the Annual Shareholders' Meeting of IDEX Biometrics ASA
Report on the audit of the financial statements
Opinion
We have audited the financial statements of IDEX Biometrics ASA (the Company), which comprise the
financial statements of the Company and the consolidated financial statements of the Company and its
subsidiaries (the Group). The financial statements of the Company and the Group comprise the statement
of financial position as at December 31, 2021 and the statements of profit and loss, comprehensive
income, cash flows and changes in equity for the year then ended, and notes to the financial statements,
including a summary of significant accounting policies.
In our opinion, the financial statements comply with applicable legal requirements and give a true and fair
view of the financial position of the Company and the Group as at December 31, 2021 and their financial
performance and cash flows for the year then ended in accordance with International Financial Reporting
Standards as adopted by the EU.
Our opinion is consistent with our additional report to the audit committee.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (ISAs). Our
responsibilities under those standards are further described in the
Auditor’s responsibilities for the audit of
the financial statements
section of our report. We are independent of the Company and the Group in
accordance with the requirements of the relevant laws and regulations in Norway and the International
Ethics Standards Board for Accountants’
International Code of Ethics for Professional Accountants
(including International Independence Standards)
(IESBA Code), and we have fulfilled our other ethical
responsibilities in accordance with these requirements. We believe that the audit evidence we have
obtained is sufficient and appropriate to provide a basis for our opinion.
To the best of our knowledge and belief, no prohibited non-audit services referred to in the Audit
Regulation (537/2014) Article 5.1 have been provided.
We have been the auditor of the Company for 22 years from the election by the general meeting of the
shareholders on November 13, 2000 for the accounting year 2000.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our
audit of the financial statements for 2021. These matters were addressed in the context of our audit of the
financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate
opinion on these matters. For each matter below, our description of how our audit addressed the matter is
provided in that context.
We have fulfilled the responsibilities described in the
Auditor’s responsibili
ties for the audit of the financial statements
section of our report, including in relation to these matters. Accordingly, our audit included the
2
Independent auditor's report - IDEX Biometrics ASA
2021
A member firm of Ernst & Young Global Limited
performance of procedures designed to respond to our assessment of the risks of material misstatement
of the financial statements. The results of our audit procedures, including the procedures performed to
address the matters below, provide the basis for our audit opinion on the financial statements.
Assessment of impairment of goodwill
Basis for the key audit matter
Carrying amount of goodwill was USD 968
thousand as of December 31, 2021, which is
unchanged from December 31, 2020. The
recoverable amount has been determined based
on a value in use calculation. Estimating the value
in use requires management judgment, including
estimates of future revenues, gross margin,
operating costs and capital expenditures.
Management’s assessment of the valuation of
goodwill was a key audit matter because the
assessment requires significant judgement and
implies significant estimation uncertainties.
Our audit response
We evaluated management’s assessment of
impairment indicators of the goodwill. We tested
management’s assumptions used in the value in
use calculations and assessed the historical
accuracy of ma
nagement’s estimates. This
included comparing projected revenues, gross
margin, operating costs and capital expenditures
to the budget approved by the board of directors
.
We also evaluated the level of consistency
applied in the valuation methodology from
previous years. Our audit procedures also
included testing of the mathematical accuracy of
the valuation model and an assessment of the
appropriateness of the disclosures.
We refer to note 2 and 8 of the consolidated
financial statements and note 9 of the parent
company separate financial statements regarding
goodwill.
Other information
Other information consists of the information included in the annual report other than the financial
statements and our auditor’s report thereon. Management (the board of directors an
d Chief Executive
Officer) is responsible for the other information. Our opinion on the financial statements does not cover
the other information, and we do not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information,
and, in doing so, consider whether the board of directors’ report, the statement on corporate governance
and the statement on corporate social responsibility contain the information required by applicable legal
requirements and whether the other information is materially inconsistent with the financial statements or
our knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the
work we have performed, we conclude that there is a material misstatement of this other information or
that the information required by applicable legal requirements is not included, we are required to report
that fact.
We have nothing to report in this regard, and in our opinion,
the board of directors’ report, the statement
on corporate governance and the statement on corporate social responsibility are consistent with the
financial statements and contain the information required by applicable legal requirements.
3
Independent auditor's report - IDEX Biometrics ASA
2021
A member firm of Ernst & Young Global Limited
Responsibilities of management for the financial statements
Management is responsible for the preparation and fair presentation of the financial statements in
accordance with International Financial Reporting Standards as adopted by the EU, and for such internal
control as management determines is necessary to enable the preparation of financial statements that
are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, management is responsible for assessing
the Company’s and the
Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern
and using the going concern basis of accounting unless management either intends to liquidate the
Company or the Group, or to cease operations, or has no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are
free from material
misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an
audit conducted in accordance with ISAs will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic decisions of users taken on the
basis of these financial statements.
As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional
scepticism throughout the audit. We also:
• Identify and assess the risks of material misstatement of the financial statements, whether due to
fraud or error, design and perform audit procedures responsive to those risks, and obtain audit
evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not
detecting a material misstatement resulting from fraud is higher than for one resulting from error,
as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override
of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company’s and the Group’s internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by management.
•
Conclude on the appropriateness of management’s use of the going concern basis of accounting
and, based on the audit evidence obtained, whether a material uncertainty exists related to
events or conditions that may cast significant doubt on the Company’s and the Group’s ability to
continue as a going concern. If we conclude that a material uncertainty exists, we are required to
draw attention in our auditor’s report to the re
lated disclosures in the financial statements or, if
such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit
evidence obtained up to the date of our auditor’s report. However, future events or conditions
may cause the Company and the Group to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the financial statements, including the
disclosures, and whether the financial statements represent the underlying transactions and
events in a manner that achieves fair presentation.
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Group to express an opinion on the consolidated financial
statements. We are responsible for the direction, supervision and performance of the group audit.
We remain solely responsible for our audit opinion.
4
Independent auditor's report - IDEX Biometrics ASA
2021
A member firm of Ernst & Young Global Limited
We communicate with the board of directors regarding, among other matters, the planned scope and
timing of the audit and significant audit findings, including any significant deficiencies in internal control
that we identify during our audit.
We also provide the audit committee with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other matters
that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with the board of directors, we determine those matters that were of
most significance in the audit of the financial statements of the current period and are therefore the key
audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public
disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should
not be communicated in our report because the adverse consequences of doing so would reasonably be
expected to outweigh the public interest benefits of such communication.
Report on other legal and regulatory requirement
Report on compliance with regulation on European Single Electronic Format (ESEF)
Opinion
As part of our audit of the financial statements of IDEX Biometrics ASA we have performed an assurance
engagement to obtain reasonable assurance whether the financial statements included in the annual
report, with the file name 5967007LIEEXZXHECW11-
2021
-12
-31
-en.zip, has been prepared, in all material respects, in compliance with the requirements of the Commission Delegated Regulation (EU)
2019/815 on the European Single Electronic Format (ESEF Regulation) and regulation given with legal
basis in Section 5-5 of the Norwegian Securities Trading Act, which includes requirements related to the
preparation of the annual report in XHTML format and iXBRL tagging of the consolidated financial
statements.
In our opinion, the financial statements included in the annual report have been prepared, in all material
respects, in compliance with the ESEF Regulation.
Management’s responsibilities
Mana
gement is responsible for the preparation of an annual report and iXBRL tagging of the consolidated
financial statements that complies with the ESEF Regulation. This responsibility comprises an adequate
process and such internal control as management determines is necessary to enable the preparation of
an annual report and iXBRL tagging of the consolidated financial statements that is compliant with the
ESEF Regulation.
Auditor’s responsibilities
Our responsibility is to express an opinion on whether, in all material respects, the financial statements
included in the annual report have been prepared in accordance with the ESEF Regulation based on the
evidence we have obtained. We conducted our engagement in accordance with the International
Standard for Assurance Engagements (ISAE) 3000
–
“Assurance engagements other than audits or
reviews of historical financial information”. The standard requires us to plan and perform procedures to
obtain reasonable assurance that the financial statements included in the annual report have been
prepared in accordance with the ESEF Regulation.
5
Independent auditor's report - IDEX Biometrics ASA
2021
A member firm of Ernst & Young Global Limited
As part of our work, we performed procedures to obtain an understanding of the company’s processes for
preparing its annual report in XHTML format. We evaluated the completeness and accuracy of the iXBRL
tagging and assessed management’s use of judgement. Our work comprised reconciliation of the iXBRL
tagged data with the audited financial statements in human-readable format. We believe that the
evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Oslo, April 29, 2022
ERNST & YOUNG AS
Leiv Aschehoug
State Authorised Public Accountant (Norway)
Articles of Association
IDEX Biometrics ASA Annual Report 202
1 86
ARTICLES
OF
ASSOCIATION
OF
IDEX
BIOMETRICS
ASA
Last March
amended
on
4 2022
– Office
translation from Norwegian
§ 1
The
name
of
the
company
is
IDEX
Biometrics
ASA
and
it
is
a public
limited
company.
§ 2
The objective of the Company is to deliver identification systems and other activitie
s r
elated to this.§ 3
The
business
offices
are
in
the
Oslo
municipality,
Norway.
§ 4
The
company's be of
shares
shall
registered
in
the
Norwegian
Registry
Securities.
§ 5
The share capital is NOK 1
,51
882
,298
.10
divided into
1,012,548,654
shares each with a n
ominal value of
NOK
0.15
per
share
and
issued
in
name.
§ 6
The board of the Company consists of from three to seven members in accordance with th
e a
nnual
general
meeting’s instruction.
§ 7
The annual general meeting shall convene in or near Oslo at the board’s decision, and shall
consider:
•
Determination
of
the
annual
financial
statements
•
Appropriation
of profit
(net)
or of
covering
losses
•
Election
of
chair
of
the board board
and
members
•
Election
of
chair
and
members
of
the
nomination committee
•
Election
of
auditor
•
Determination of
remuneration to the board of directors, members of the nomination c
ommittee
and the auditor
•
Other
matters
which
are
governed by
law
•
Other
matters
which
are
mentioned
in
the
notice the
of
annual
general
meeting.
§ 8
a. The company shall have a
nomination committee. The nomination committee shall have
three
members, including a chairman. Members of the nomination committee shall be electe
d b
y
the annual
general
meeting
for a term of two years.
b.
The
nomination committee shall:
•
Propose
candidates
for
election
to
the
board
of
directors
•
Propose
the
remuneration
to
be
paid to
the
board
members
•
Propose
candidates
for
election
to
the
nomination
committee
•
Propose
the
remuneration
to
be
paid to
the
nomination
committee
members
c. The guidelines for the nomination committee shall be resolved by the annual genera
l m
eeting.
§ 9
Documents which timely have been made available on the Internet site of the company an
d w
hich deal
with matters that are to be considered at the general meeting need not be sent
t
o t
he
company’s
shareholders.
§
10
As a general rule, the company's general meetings shall be conducted in Norwegian. The
general meeting
may however resolve by a simple majority vote that English shall be used.
Shareholders
may
present
their
points of or
view
in
the
Norwegian
English
language.
§ 11 A shareholder who wishes to attend the general meeting, in person or by proxy, shall notify his/her
attendance to the company no later than 2 days prior to the general meeting. If the shareholder does not
not
ify the company of his/her attendance in a timely manner, the company may deny him/her access to
the general meeting.
IDEX Biometrics ASA
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Report 202
1
Corporate Governance Review
87
CORPORATE GOVERNANCE
Last updated by the
board of directors on April 20, 2022
1.
IMPLEMENTING AND REPORTING
This statement outlines the position of IDEX Biometrics ASA (
IDEX or
the Company) in relation to the
recommendations contained in the Norwegian Code of Practice for Corporate
Governance dated October
14,
2021
(the Code). The Code is publicly available at www.nues.no. In the following, the Board of Directors (the
Board) will address each recommendation of the Code and identify any areas where the Company does not
fully comply with the recommendations and explain the underlying reasons for the deviations and any
compensating measures where applicable.
2.
IDEX’S BUSINESS
In the articles of association, the Company’s business is defined as “The objective of the Company is to
deliver
identification systems and other activities related to this.”
The Company’s business goals and key strategies are stated in a business plan adopted by the Board. The
plan is reviewed and revised annually by the Board. The business goals and key strategies
are presented in the
annual report.
IDEX seeks to create value
for the shareholders in a sustainable manner, while taking into account
financial, social and environmental considerations. The Company makes every effort to comply with the
wording and intent of the laws, rules and regulations in the countries and markets where it operates. IDEX is
not aware of being or having been in breach of any such statutory laws, rules or regulations. The Company
pays due respect to the norms of the various stakeholders in the business. In addition to the shareholders, the
Company considers its employees, the Company’s business partners, the society in general and the authorities
as stakeholders. IDEX is committed to maintain a high standard of corporate governance, be a good corporate
citizen and demonstrate integrity and high ethical standards in all its business dealings.
The Board considers that the Board and the management have adequate monitoring and control systems
in place to ensure insight in and control over the activities. The Board has resolved
a code of conduct and
ethical guidelines which apply to all employees, consultants and contractors as well as the elected board
members. The
code of conduct
also incorporate
s
the Company’s guidelines on corporate social responsibility.
The
code of conduct
is
available on the Company’s website,
www.idexbiometrics.com
.
3.
CAPITAL STRUCTURE, EQUITY AND DIVIDENDS
IDEX has until now been a development company and consequently funded on equity. The capital
structure will
change in the commercial growth stage. IDEX's working capital and fixed assets will
most likely
need to be funded by a combination of supplier credit and borrowing from financial lenders. The Board will
target an optimal capital structure that leverages th
e equity while maintaining a moderate risk.
At
several occasions
, the Company has been in need of raising equity to fund its activities. Share issues,
hereunder private placements, have been resolved by the shareholders at general meetings or by the Board
pursuant to authorizations from the general meeting. The Board has annually proposed to the general meeting
reasonable authorizations for share issues. Such board authorizations have explicitly stated the type and
purposes of transactions in which the auth
orizations may be applied.
Proposed authorizations to issue shares have been considered and voted separately by each type and
purpose. The Board authorizations to issue shares have been valid until the next annual general meeting, as
recommended by the Code. The proposals have been approved by the shareholders.
Further, the Company has for many years had
in place a moderate incentive scheme in the form of a
subscription rights program, as resolved by the general meeting. The subscription rights program is l
imited to a
number of subscription rights representing 10% of the Company’s share capital. The Company implemented in
2020
an employee share purchase plan (ESPP), whereby employees may convert a portion of cash
remuneration to shares in the company. The ESPP serves to encourage employee ownership and represents a
cash saving for the company.
The
shareholders has
authoriz
ed
the Board to acquire up to 10% of the Company’s own shares.
T
he
authorization ends
at the next annual general meeting of shareholders. No such share purchases have been
made as yet.
IDEX has not as yet declared or paid any dividends on its shares. The Company does not anticipate
paying any cash dividends on its shares within the current planning horizon. IDEX intends to retain future
ear
nings, to finance operations and the growth of its business. Any future decision to pay dividends would be
Corporate Governanc
e Review
IDEX Biometrics ASA Annual Report 202
1 88
based on an amended dividend policy that may be instituted in due course, which policy would reflect the
Company’s financial condition, results of op
eration and capital requirements.
4.
EQUAL TREATMENT OF SHAREHOLDERS AND TRANSACTIONS WITH CLOSE
ASSOCIATES
The Company places great emphasis on ensuring equal treatment of its shareholders. There are no trading
restrictions or limitations relating only to no
n‐residents of Norway under the articles of association.
In the authorizations to issue new shares where the shareholders resolve to waive the pre
-
emptive rights
of existing shareholders, the rationale for doing so shall be included as part of the decision
material presented
to the general meeting. If and when such transactions are conducted, the justification will also be included in
the announcements to the market.
All related‐party transactions, whether completed, in effect or future, have been and will
be carried out on
an arm’s length basis. Any related
-
party transactions shall be subject to
review by the audit committee or other
independent third‐party valuation unless the transaction by law requires shareholder approval. The Company
takes legal and financial advice on these matters when relevant.
There are no clauses in the articles of association about trading in the Company’s own shares. Any such
trade must be authorized by the general meeting of shareholders.
5.
FREELY NEGOTIABLE SHARES
The Company has one class of shares. Each share carries one vote. There are no restrictions on voting
rights of the shares. All shares are freely assignable. The articles of association do not contain any restrictions
on the shares.
6.
GENERAL MEETINGS
The general meeting
of shareholders provides a forum for shareholders to discuss any matters with the
Board. To the maximum degree possible, all members of the Board and the chair of the nomination committee
shall attend
the general meeting. The Company’s CEO and the auditor
shall also
attend
the general meeting.
The shareholders elect a person to chair the general meeting. The Board will arrange for an independent
candidate if so requested by shareholders. Notice of a meeting of the shareholders shall be sent in a timely
mann
er, and the Company shall issue the notice and documents for a general meeting, including the proxy
form, no later than 21 days before the date of the general meeting. Foreign residents will receive the notice and
any documents in English. The documents shall be precise and comprehensive to provide shareholders a basis
for voting on the various matters. The articles of association state that documents which deal with matters that
are to be handled at the general meeting need not be sent to the shareholders if the documents
timely
have been made available on the Company's web site.
The Board endeavours to provide comprehensive information in relation to each agenda item in order to
facilitate constructive discussions and informed resolutions at the meeting.
The notice will also provide information on the procedures shareholders must observe in order to
participate in and vote at the general meeting.
The Board may choose whether to hold a general meeting as a
physical meeting or as an electronic meeting, pursu
ant to the Norwegian public limited companies act (the
PLCA).
Shareholders who are unable to attend in person will be provided the option to vote by proxy in favor
or against each of the Board’s proposals.
If a general meeting is held as a physical meeting
, shareholders have a
right to attend by electronic means, unless the Board finds that there is sufficient cause for it to refuse to allow
this.
The notice shall contain a proxy form as well as information of the procedure for proxy representation.
Advance
voting has
not been introduced in the articles of association
.
At the meeting, votes shall be cast
separately on each subject and for each office/candidate in the elections. Consequently, the proxy form shall to
the extent possible, facilitate
separate voting instructions on each subject and on each office/candidate in the
elections. The notice, as well as the Company’s website, will set out that the shareholders have the right to
propose resolutions in respect of matters to be dealt with at the
general meeting.
7.
NOMINATION COMMITTEE
The nomination committee is implemented in the Company’s articles of association, and the mandate for
the nomination committee has been resolved by the annual general meeting. The mandate is compliant with the
current
version of the Code. The annual general meeting elects the chair and two committee members. No
current board member or IDEX executive is a member of the nomination committee.
One
nomination
committee
member
was a board member of the Company before 2007
.
IDEX Biometrics ASA
Annual
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Corporate Governance Review
89
S
ubject to resolution by the 2022 annual general meeting, the Company’s guidelines for the nomination
committee shall state that no executive personnel or board members in the Company should be a member of
the nomination committee.
The mandate states that t
he nomination committee shall comply with the relevant sections in the Code.
The nomination committee shall prepare and present proposals to the annual general meeting in respect of the
following matters:
•
Propose candidates for election to the Board.
•
Propo
se the remuneration to be paid to the Board members.
•
Propose candidates for election to the nomination committee.
•
Propose the remuneration to be paid to the nomination committee members.
The nomination committee shall give a brief account of how it has car
ried out its work and shall
substantiate its recommendations.
Information about the nomination committee, including deadlines and contact details, is available on the
Company's web site.
8.
BOARD OF DIRECTORS; COMPOSITION AND INDEPENDENCE
The majority of the members of the Board shall be independent of the Company’s executive management,
material business contacts and the company’s larger shareholders. This is intended to ensure that sufficient
independent advice and judgment is brought to bear. All board mem
bers are required to make decisions
objectively in the best interest of the Company. The majority of the current Board meets the independence
criteria of the Code. The Board meets the statutory gender requirements. The board members’ attendance
statistics
is included in the presentation of the board members in the annual report.
The articles of association state that there shall be from three to seven board members. The service period
is not stated in the articles, hence the Board members stand for election
every two years pursuant to the
provisions of the PLCA. It follows from the articles of association that the chair of the Board shall be elected
separately.
The Board considers that it is beneficial for the Company and its shareholders at large that the B
oard
members hold shares in the Company and encourages such share ownership.
The Board pays attention to ensure that ownership shall not in any way affect or interfere with proper
performance of the fiduciary duties which the Board members and the management owe the Company and all
shareholders. As and when appropriate, the Board takes independent advice in respect of its procedures,
corporate governance and other compliance matters.
9.
THE WORK OF THE BOARD OF DIRECTORS
The division of responsibility and duties between the Board and the managing director is based on
(CEO)
applicable laws and well‐established practices, which have been stated in board instructions in accordance with
the PLCA. The Board instructions also set out the number of scheduled Board meetings per year and the
procedures in connection with the Board’s work and meetings.
The Board instructions state that the Board has the ultimate responsibility for the organization and
planning of the Company, as well as a control and supervisory function, hereunder a duty to keep itself
informed. The Board shall appoint the managing director and determine his or her remuneration and also
possibly give notice or dismiss the managing director. The Board shall ensure that the organization of the
accounting an
d funds management includes adequate control procedures. The Board shall monitor and
follow‐up the status and development of the Company’s operational, financial and other results.
The Board set
s
out an annual plan for its work, focusing on business goals
and key strategies as described
.
Section 2 above. The Board instructions also list inter alia the following tasks:
•
Issue interim and annual financial statements and other statutory reports;
•
Issue notice of the annual general meeting;
•
Resolve the
annual plan and budget, including capital expenditure budget;
•
Resolve investment in and disposals of subsidiaries and associated companies, and in real estate;
•
Resolve and issue guarantees and other commitments and the pledging of assets;
Corporate Governanc
e Review
IDEX Biometrics ASA Annual Report 202
1 90
•
Resolve customer
-related or revenue
-generating agreements as well as other agreements and
activities which are significant and would be expected to have a significant impact on the
Company’s results and financial position; and
•
Determine whether legal proceedings should be
commenced or settled.
The Board instructions state that in situations when the chair cannot or should not lead the work of the
Board, the deputy chair shall chair the Board. If the deputy chair is also prevented from chairing the meeting,
the longest
-
ng board member present shall chair the meeting until an interim chair has been elected by and servi
among the board members present.
The Board conducts a self
-
evaluation of its performance and expertise annually.
Any and all related party transactions are hand
led pursuant to the Company’s related party transaction
policy, to ensure that the Company is made aware of any possible conflicts of interest and to ensure that any
such transactions are handled in a sufficiently thorough manner.
The full five
-
person board served as audit committee until 2021, when
IDEX
established
a separate audit
committee
. The audit committee currently
consists of four independent
Board members
. The audit committee
is advisory to the Board. The Board has set up an audit committee charte
r that is compliant with the rules that
follows from the Norwegian PLCA and the U.S. Securities Exchange Act of 1934 and the listing rules of the
Nasdaq Stock Market.
Since
2019, the Board
has
elected two of its members to serve as a compensation committee
.
The
compensation committee is advisory to the Board, and also serves as an advisory forum to the managing
director.
The Board has set up a compensation committee charter.
Members of the Board and the management are obliged to notify the Board if they ha
ve any material
direct or indirect interest in any transaction contemplated or entered into by the Company or any other matter
that will be considered by the Board.
10.
RISK MANAGEMENT AND INTERNAL CONTROL
The Board has adopted rules and guidelines regarding,
amongst other matters, risk management and
internal control. The rules and guidelines duly take into account the extent and nature of the Company’s
activities as well as the Company’s corporate values and
code of conduct, including corporate social
respon
sibility. The Board conducts an annual review of the Company’s most important areas of exposure to
risk and its internal control arrangements, including the reporting procedures.
Effecti
v
e February 24, 2021,
IDEX
consisting of three established
a separate audit committee
independent
Board members
. Before that date, the full board was also the audit committee. The audit
committee is advisory to the Board. The Board has set up an audit committee charter that is compliant with t
he
rules in the Norwegian PLCA and the U.S. Securities Exchange Act of 1934 and the listing rules of the Nasdaq
Stock Market.
IDEX issues interim financial reports each quarter and an annual financial report. The accounting policies
applied when preparing the reports satisfy regulatory requirements. The Board reviews monthly financial
reports for the group, comparing actual results to budget or plan. The size of the Company’s operation and staff
numbers necessarily leads to dependence on key individuals. Ho
wever, the same factors also provide for
transparency and inherent risk reduction. The subsidiaries are operationally integrated in the parent company,
and the group works as one, unified company with staff on several sites. Legal and financial interaction
between the group companies is conducted on arm’s length terms.
IDEX’s activities and financials are controlled by the parent company. The audit committee meets
separately with the external auditor
at least once per year
to review risk factors and measure
s, and any incidents
and issues. The audit committee reviews all interim and annual financial reports before resolution by the
Board. The Board has resolved a financial manual, which sets out policies and procedures for financial
management and reporting in the group. This manual provides instructions for financial planning, treasury,
accounting and reporting. It is reviewed annually by the audit committee, and updated as and when appropriate.
The Board acknowledges that, having operations spread over four sites on three continents outside Norway,
business control is a practical challenge. In addition to the financial framework and systems, IDEX has
implemented comprehensive IT systems and quality management systems and standardised operating
procedures which ensures adequate business controls.
IDEX does not operate a separate internal audit function. The CFO department conducts internal reviews
of the group companies. Each review is conducted by a staff member not involved in transaction processing in
the en
tity in question, and the findings are reported to the audit committee.
IDEX Biometrics ASA
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As regards share trading by IDEX's Board members, employees and individual contractors, as well as
their close relations and controlled entities, the Board has adopted an insider manual with ancillary documents.
The insider manual is intended to ensure that, among other things, trading in the Company’s shares by insiders
are conducted in accordance with applicable laws and regulations.
11.
REMUNERATION OF THE BOARD OF DIRECTORS
A reasonable cash remuneration to the Board members for their services from the annual general meeting
in 20
20
until the annual general meeting in 2021
was proposed to and resolved at the annual general meeting
20
21
. To lessen the cash outflow and stimulate shareholding among the Board members, the annual general
meeting granted an option for the Board members to receive the remuneration partly or fully in the form of
shares.
Three
board members took up this option in 20
20
. Amount details are disclosed in the financial
statements.
The nomination committee shall propose board remuneration for the period between the annual general
meetings of 20
21
and 20
. No share22
-
based incentives have been granted as board remuneration. Any Board member performing work fo
r the Company beyond the board duty shall ensure that such assignments do not in
any way affect or interfere with proper performance of the fiduciary duties as a board member. Moreover, the
Board, without the participation of the interested member, shall a
pprove the terms and conditions of any such
arrangements. Adequate information about the remuneration shall be disclosed in the annual financial
statements.
Advokatfirmaet Ræder AS, in which IDEX’s chair, Morten Opstad, is a partner, renders legal services
to
the Company. Generally, such services are largely undertaken by lawyers at Ræder other than Mr
.
Opstad. In the cases where legal services provided by Ræder are carried out by Mr
.
Opstad, such services, which are outside Mr
.
Opstad’s duties as chair, are invoiced by Ræder. The legal fees to Ræder are disclosed in the
financial statements.
Larry Ciaccia, who was last re
-
elected board member at the annual general meeting on 9 May 2019, has
served on IDEX’s Strategy Advisory Council (SAC) since January 2014 and continues his tenure on the SAC,
for which he is remunerated separately. Mr
.
Ciaccia also provides consulting services to IDEX for a fixed
annual fee, and he has been granted incentive subscription rights in his capacity as adviser to IDEX. The fees
a
nd share
-based remuneration to Mr
.
Ciaccia are disclosed in the financial statements.12.
SALARY AND OTHER REMUNERATION FOR EXECUTIVE PERSONNEL
Salary and other remuneration to the executive personnel in the Company is determined pursuant to the
Company’s executive remuneration policy, as approved by the 2021 annual general meeting. The executive
remuneration policy is publicly available on the Co
mpany’s web site.
The executive remuneration policy seeks to align the interests of the Company’s executives and its
shareholders, and to continuously improve sustainable performance. Furthermore, the policy is designed to
align the interests of the Company and its executives to ensure its contribution to the Company’s commercial
strategy, long
-
term interests and financial viability.
On an annual basis the Company’s compensation committee shall review the terms of the executive
remuneration policy, to de
termine if any revisions are necessary. Where revisions are required, the
compensation committee shall make proposals to the Board which, if significant and subject to Board approval,
are proposed by the Board to the annual general meeting for approval. In
the absence of any significant
revisions, the executive remuneration policy shall be presented and explained by the Board to the annual
general meeting every four years at minimum. At each annual general meeting, the Board shall present a
remuneration rep
ort for the previous financial year.
In the event of significant changes to the executive remuneration policy, these must be described and
explained in the policy document. The policy shall describe and explain how the shareholders’ views on the
guideline
s, the general meeting’s vote and the salary reports since the previous vote on the policy have been
taken into account.
13.
INFORMATION AND COMMUNICATIONS
The Board places great emphasis on the relationship and communication with the shareholders. The
primary
channels for communication are the interim reports and presentations, the annual report and the
associated financial statements. IDEX also issues other notices to shareholders when appropriate. The general
meeting of shareholders and the presentations pro
vide
opportunities
for shareholders to discuss any matters
with the Board.
The Company publishes its annual financial calendar for the following year. All reports and other notices
Corporate Governanc
e Review
IDEX Biometrics ASA Annual Report 202
1 92
are issued and distributed according to the rules and practices at Oslo Bø
rs. The notices to the market are
published on the Oslo Børs newssite,
www.newsweb
.no
.
The regulatory public filings in the USA, are published on the Securities and Exchange Commission’s EDGAR site,
https://www
.sec.gov/edgar/searchedgar/companysearch.html
.
The reports and other pertinent information are
also available on the Company’s website,
www.idexbiometrics
.com.
The Board has adopted the following policies:
•
Policy for reporting of financial and other information and investor relations;
•
Policy for contact with shareholders outside general meetings; and
•
Policy for information management in unusual situations attracting or likely to attract media or
other external interest.
The financial reporting of IDEX is fully compliant with applicable laws and regulat
ions. IDEX prepares
and presents its annual financial reports in accordance with IFRS. The content of the interim reports is
compliant with IFRS.
The current information practices are adequate under current rules. IDEX complies with the Oslo Børs
code of p
ractice for IR information.
14.
TAKE
-
OVERSThere are no takeover defence mechanisms in place. The Board will endeavor that shareholder value is
maximised and that all shareholders are treated equally. The Board acknowledges its duty to not obstruct
take‐over b
ids and to not discourage or hinder competing bids. Any agreement with a bidder that acts to limit
the Company’s ability to arrange other bids should only be entered into whe
n
evident that such an it is self
-agreement is in the common best interest of the
Company and its shareholders.
The Board will avoid compensation to a bidder whose bid does not complete, and limit any such
compensation to the costs the bidder has incurred in making the bid. The Board shall otherwise ensure full
compliance with
section 14 of the Code.
15.
AUDITOR
IDEX’s auditor is fully independent of the Company. IDEX represents a minimal share of the auditor’s
business. IDEX does not obtain business or tax planning advice from its auditor. The auditor may provide
certain technical
and clerical services in connection with the preparation of the annual tax return and other
secondary reports, for which IDEX assumes full responsibility. IDEX’s auditor is Ernst & Young AS (EY). EY
has been the auditor of the Company since
200
0.
The
audit
committee and the
Board reviews the auditor’s annual plan, and the auditor presents to the
committee and the B
oard the findings and recommendations after the audits.
The auditor communicates in
writing with the committee and the Board on all matters brought to light by the audit of which the committee
and/or the Board should be apprised in order to be able to discharge its responsibility and functions.
The
auditor attends the
audit committee and
board meetings when annual financial statements are considered and
resolved, and the
committee as well as the
board regularly meets separately with the auditor to review risk factors and measures, and any incidents and issues. Accounting policies and any c
hanges are subject to the
statutory audit.
Annually, the auditor shall submit an additional report to the Company’s audit committee in which the
auditor declares its independence and explains the results of the statutory audit carried out by providing a ra
nge
of information about the audit. The specific information to be provided is regulated by EU’s Audit Regulation,
which is applicable in Norway in accordance with Section 12
-
1 of the Auditor’s Act.
The Board shall make arrangements for the auditor to attend all general meetings in the Company.
All
audit and other assignments to the auditor shall be approved by the audit committee before the
assignment begins. The Board shall otherwise ensure full compliance with section 15 of the Code.
IDEX Biometrics ASA
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Board of Directors and Executive Officers
93
BOARD AND EXECUTIVE
OF
DIRECTORS
OFFICERS
The following table sets forth
information concerning our executive officers and board
directors as of December 31, 2021:
Name
Age
Position(s)
Directors:
Morten Opstad
...............................................
68
Chair
Lawrence J
.
Ciaccia
2
.....................................
Deputy Chair
Deborah Lee Davis
1,2
....................................
Director
Hanne
Høvding
1
............................................
Director
Annika Olsson
...............................................
45
Director
Thomas M.
Q
uindlen
.....................................
58
Director
Stephen A. Skaggs
1
.......................................
58
Director
Executive Officers:
Vincent Graziani
............................................
Chief
Executive
Officer
James A. Simms
............................................
62
Chief Financial
Officer
Anthony Eaton
...............................................
Chief Technology Officer
Catharina Eklof
..............................................
52
Chief Commercial Officer
1.
Member of Audit Committee.
2.
Member of Compensation Committee.
Board
of
Directors
Our
B
oard held e
ight
meetings during the period from our
A
nnual
G
eneral
Meeting on May
12
, 202
1,
until
and including April
20
, 202
2
. All meetings have been conducted as virtual meetings via live webcast.
Morten Opstad
has served as
Board C
hair since March 1997. Mr.
Opstad is
a partner in Advokatfirmaet
Ræder AS in Oslo, Norway. He has rendered legal assistance with respect
to establishing and organizing several
technology and innovation companies. He currently serves as chair of the board of
Ensurge Micropower ASA
(Oslo Børs:
ENSU)
.
Mr.
Opstad holds a legal degree (Cand.Jur.) from the University of Oslo
and
was admitted
to the Norwegian Bar Association in 1986. Mr.
Opstad was born in 1953
,
and resides in is a Norwegian citizen
, Oslo. Mr.
Opstad attended all
Board meetings in t
he period.
Lawrence J
. C
iaccia
has served as a
Di
rector since May 2015 and was appointed as Deputy Chair in May of
2019.
He has broad expertise from the semiconductor industry
, most notably
playing
a pivotal role in transforming AuthenTec from a start
-
up
into the world’s leading fingerprint sensor supplier
. He
serv
ed
as
AuthenTec’s
CEO from September 2010 until the company’s acquisition by Apple in October 2012. He
remained with Apple through February 2013 to assist in the acquisition integration and transition. Mr.
Ciaccia
holds a B
.S
.i
n Electrical Engineering from Clarkson University and an M.B.A. from the Florida Institute of
Technology. Mr. Ciaccia was born in 1958, is a
United States
citizen
,
and resides in Florida. Mr.
Ciaccia
att
ended
seven B
oard meetings in the period.
Deborah Lee Davis
has served as a
Director since May 2015. She is independent of the
C
ompany’s
executive management, material business contacts
,
and larger shareholders. Ms. serves on the boards of
Davis
directors
of
International Personal Finance Plc, The Institute of Directors
,
Diaceutics plc, and Lloyds Banking
Group Insurance Board. She also serves as Southern African Conservation Trust in South Africa.
a trustee of
the
During her career
, she held senior execu
tive leadership roles at PayPal, eBay, Verizon
,
and Symantec. a Sloan Masters in Science (Management) with Distinction from London Business School and a Bachelor of Applied
Science (Electronics) Honours degree from the University of Melbourne.
She also
hol
ds a Diploma in Company
Direction with distinction from The Institute of Directors.
Ms.
Davis was born in 1963
,
is a dual citizen of
Australia and the
U
nited
K
ingdom,
and
divides her residencies between Australia and the
nited U
K
ingdom
.
Ms.
Davis attended
all
Board meetings in the period.
Hanne Høvding
has served as a
D
irector since December 2007. She is independent of the
C
ompany’s
executive management, material business contacts
,
and larger shareholders.
During
her professional career
,
Ms.
Høvding held
several management positions within personnel administration, finance, credit card
administration
,
and debt collection. She holds in Economics and Business Administration from the
a
B.S.
Norwegian School of Economics and Business Administration. Ms. ing was born in 1954
Høvd
,
is a Norwegian
citizen
,
and resides in Oslo. Ms. Høvding attended all
B
oard meetings in the period. Annika Olsson
was elected as a Director
in May 2021. She is independent of the
C
ompany’s executive
management, material
business contacts
,
and larger shareholders. Ms. Olsson is
the
CEO
of
Express Bank A/S,
Board of Directors and Executive Officers
IDEX Biometrics ASA Annual Report 202
1 94
a unit of the BNP Paribas Group. During her 20
-
year career in consumer financial services
,
Ms. Olsson has held
various executive positions.
B
efore joining Express Bank A/S in 2010
, s
he
served as
Commercial Director
for
Resurs Bank, a leader in retail finance in the Nordic region. Ms. Olsson
also serves on the
board
of directors
of
Finans & Leasing
(
the Association of Danish Finance Houses)
. She holds a B.S.
in finance and marketing from
IHM
B
usiness
School. Ms. Olsson was born in 1976, is a Swedish citizen
,
and resides in Copenhagen, Denmark. After her election as a Director,
Ms. Olsson attended all
B
oard meetings in the period.
Thomas M. Quindlen
was elected as a Directo
r in
May 2021.
From October 2020 until
his election
, he
attended
Board meetings
as a non
voting observer-
.
H
e is independent of the
C
ompany’s executive management, material business contacts
,
and larger shareholders. Quindlen has worked in
Mr.
f
inancial
services for
three
decades
and is now the CEO
o
f Retail Card, a division of Synchrony, a Fortune 200 company. Earlier in his
career
, Mr. several leadership roles
Quindlen
served in
for
GE Capital, the financial services subsidiary of the
General Electric Company. Mr.
Quindlen holds a
B.S.
in accounting f
rom Villanova University. Mr.Quindlen
was born in 1962, is a United States citizen
,
and resides in Connecticut.
After his election as
a Director,
Mr.
Quindlen attended all
B
oard meetings in the period.
Stephen A. Skaggs
has served as a
Director since May 2019. He is independent of the
C
ompany’s executive management, material business contacts
,
arger shareholders. Mrand
l.
Skaggs has more than 25 years of
experience in the semiconductor industry
and
most recently served as Senior Vice President and CFO of Atmel,
a leading supplier of microcontrollers, prior to its acquisition by Microchip Technology
i
n 2016.
Mr. Skaggs
serv
ed
as CEO
and, earlier, as CFO of Lattice Semiconductor, a supplier of programmable logic devices and
related software. Earl
ier
in his career, he worked for Bain
& Company, a global management consulting firm.
He currently serves as a non
-
executive director and audit committee chair of Coherent, a leading supplier
of lasertechnologies
. Mr.
Skaggs holds a B.S. in Chemical Engineering from the University of California, Berkeley
,
an
d
an
M.B.A. from the Harvard Business School. Mr. Skaggs was born in 1962, is
a United States citizen
, and
resides in Nevada. Mr.
Skaggs attended all
B
oard meetings in the period.
Family Relationships and Selection Arrangements
There are no family relationships between any of the
D
irectors. There are no family relationships betwe
en
any
D
irector and any
member of
senior management of our Company. There is no arrangement or understanding with major shareholders, customers, suppliers
,
or others, pursuant to which Directors
were elected or members of
management was selected.
Board Di
versity Matrix
Under
the
Board Diversity Rule
of Nasdaq
,
we are required to publicly disclose statistics
describing the
diversity of our Board. Our philosophy regarding candidates for the Board is to identify, nominate, and elect the
most
qualified individuals available to us, regardless of race, creed, sexual orientation, nationality, ethnicity,
language, or religion.
Board Diversity Matrix
Total Number of Directors
7
Female
Male
Part I: Gender Identity
Directors:
3
4
Part II:
Demographic Background
Norway Citizen
1
1
Swedish Citizen
1
United Kingdom Citizen
1
1
United States Citizen
3
Ethnicity: White
2
4
Ethnicity: Underrepresented
Individual in Home Country
Jurisdiction
2
1
1.
This Director holds dual citizenship in Australia and the United Kingdom.
2.
Pursuant to Nasdaq instructions, underrepresentation is b
ased
definitions of
“national, racial,
ethnic, indigenous, cultural, religious, or linguistic identity” in the
country of the
Company’s
principal executive offices (i.e., Norway).
IDEX Biometrics ASA
Annual
Report 202
1
Board of Directors and Executive Officers
95
Executive officers
Vincent Graziani
has served as our Chief Executive Officer since February 2020. He joined IDEX
(“CEO”)
from Infineon Technologies
AG, for which
he was most recently Vice President of Strategy Development and
Implementation
,
with responsib
ility
for leading new business development and strategic partnerships.
Mr. Graziani
has also led technology companies from the pre
-
revenue stage to significant revenues and scale
while serving as CEO of Sand 9, Vbrick Systems, and Sandburst.
Earlier in his career, he held positions of
increasing responsibility in engineering as well as
m
arketing and sales at Intel, Broadcom, and Siemens
Semiconductor. Mr. Graziani holds a B
.S
.
in Electrical Engineering from
t
he University of New Hampshire and
a M
.S.
in Electrical Engineering from Northeastern University. the Com
Mr.
Graziani is located at
pany’s offices
in Wilmington, Massachusetts.
James A.
Simms
has served as our Chief Financial Officer (
“
CFO
”) since April 2021. Prior to joining us, and
since 2008, he served as CFO, Treasurer
,
and Corporate Secretary of Vicor Corporation (NASDAQ: VICR), for
which he also served as a member of the
b
oard of
d
irectors. At Vicor, he played a key role in repositioning the
company strategically and organizationally. Before 2008, Mr. Simms worked as an investment banker for over
two decades, most recently with
Needham & Company, Inc. Mr. Simms holds a
B.A.
from the University of Virginia
and
an
M.B.A. from the
Wharton School of the University of Pennsylvania. He is
located at
the
Company’s offices in Wilmington, Massachusetts.
Anthony Eaton
has served as our Ch
ief Technology Officer since March 2019. Mr.
Eaton served as our Vice
President of Systems Engineering from February 2017 to February 2019, and our Senior Director of Engineering
from August 2016 to January 2017. Prior to joining us
, he served as Director
of System Engineering at Atmel,
where he was responsible for building and running the System Engineering function for the MaxTouch Business
Unit.
Earlier,
Mr
. Eaton held senior engineering roles at NVIDIA, Mirics Semiconductor and Sony
Semiconductor. Mr.
E
aton holds Bachelor’
in Engineering from Cambridge University. s and Master’s degree
s He
is located at
the Company’s offices in Farnborough, U
nited
K
ingdom.
Catharina Eklof
has served as our Chief Commercial Officer (
“CCO
”)
since
June 2021. Prior to joining
us,
Ms. Eklof held the position as Chief Commercial Officer at Defentry, a cyber safety
solutions provider, for
which
she led
marketing and
sales
, leading the company’s international expansion. Ms. Eklof has
over
20 years
of
experiences as a
global executive
leading
business transformation across financial services, retail, travel
,
and
information security.
Notably, she had roles of increasing responsibility over 12 yea
rs with Mastercard. She was
instrumental in establishing Mastercard’s global strategic merchant program, bringing digital payment solutions
and new, data
-
driven business models to
the
organization. Ms. Eklof serves on the board of directors of Avanza
Bank
Holding AB (Nasdaq Stockholm: AZA). Ms. Eklof holds an M
.B.A.
in International Business and a M.S.
in Economics from the University of Uppsala, Sweden. Ms. Eklof is assigned to our office in Oslo, Norway, but
resides
in Belgium.
