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IDEX Biometrics ASA
2022 Annual report
Statutory annual report in accordance with Norwegian requirements
for IDEX Biometrics ASA for the year ended December 31, 2022.
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 and other public information about
IDEX Biometrics ASA are available at the company’s web site www.idexbiometrics.com.
All of the company’s disclosures to the market and the general public are available at Oslo
Børs’s web sites 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 Exchange Commission (SEC). All SEC filings by IDEX Biometrics ASA are
avilable at www.sec.gov.
References included in this document or other documents are intended as an aid to where
information can be found and the documents referenced 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 issued by the International Accounting Standards Board (IASB) and IFRS
as endorsed by the European Union, effective December 31, 2022.
Date: April 26, 2023
IDEX Biometrics ASA Annual Report 2022
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Table of contents
Report from the Board of Directors
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3
Consolidated Financial Statements with Notes
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29
Parent Company Separate Financial Statements with Notes
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54
Responsibility Statement
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81
Report of Independent Auditor under International Standards on Auditing
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82
Articles of Association
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87
Corporate Governance Review
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88
Board of Directors and Executive Officers
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94
IDEX Biometrics ASA Annual Report 2022
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REPORT FROM THE BOARD OF DIRECTORS
We were incorporated as a public limited company under the laws of Norway on July 24, 1996. Our
Ordinary Shares have been listed for trading in Norway on the Oslo Børs under the symbol “IDEX” since March
12, 2010, and our ADSs have been listed for trading on Nasdaq under the symbol “IDBA” since March 1, 2021.
Our principal executive 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 develops 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 applications involving standardized
smart cards without batteries, although our products also are
applicable to battery-powered devices in different form factors.
Our extensive intellectual property portfolio, leveraging 175
patents awarded and 62 patents pending (as of December 31, 2022),
across applicable jurisdictions worldwide, 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 to third parties, although licensing currently
does not contribute to our revenue.
Our current product portfolio consists of fingerprint
authentication modules, related software, and cardholder enrolment
solutions. Our latest generation of fingerprint authentication device,
A standard-format smart card, utilizing our
fingerprint authentication solution, offered by
First Abu Dhabi Bank and manufactured by
our customer, IDEMIA France SAS
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, convenient 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), digital
access (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 trading 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 digital access and digital currency storage 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 demand 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 the education
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
IDEX Biometrics ASA Annual Report 2022
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innovative technology-based products, we expanded our marketing and sales staff in 2021 and increased our
marketing spending in 2022.
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
Taiwan Semiconductor Manufacturing 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 services, including Amkor Technology, Inc.,
and Silicon Precision Industries, Limited, both of which are leaders in outsourced semiconductor assembly and
test services.
Fingerprint Authentication Steps
Every individual 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, which are specific ridge characteristics occurring at either the point at which
a fingerprint ridge bifurcates 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 oldest and most established. Fingerprint identification has been
successfully used in numerous applications 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 representation, 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 elements of fingerprint authentication, addressing our approach to
each:
Scanning
Scanning is the process of recognizing and capturing 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 sensing, which utilizes an electrical field to detect
fingerprint characteristics such as ridges, valleys, and minutiae by measuring miniscule variances in current
associated with those varying characteristics. The surface of the sensor, the platen, acts as one plate of a
capacitor, 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.
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 electrode) 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 capacitive 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 representing the fingerprint, and the
common practice is to create from this data set an 8-bit gray-scale digital image for further processing (i.e.,
feature extraction). Feature extraction is a computationally-challenging process requiring speed and signal-
processing precision. Algorithms 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 identification of patterns, which
are transformed into an accurate mathematical representation of the image, referred to as a “template.”
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Matching
A matching algorithm compares the template created from the scanned image to the encrypted template
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 false acceptance (“FAR”) and false rejection (“FRR”), accuracy and
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).
Our matching algorithms, which are compact and highly efficient, are well-suited for 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 a secure
microcontroller (referred to as a secure element (“SE”). However, our TrustedBio is designed to allow matching
algorithms to be executed in a distributed (i.e., shared) mode, whereby computationally intensive functions can
be executed on our module’s faster ASIC, reducing the computational requirements of the SE. This allows
customers the flexibility to optimize designs based on application requirements and available processing
resources, reducing overall system costs.
Summary of Smart Cards and Applications
A smart card can be described as a compact microelectronic system, generally with the dimensions 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.
Because we primarily target the financial 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. Because 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
The enabling ICs in a smart card are typically a secure microcontroller, the SE, which functions as the
system-level processor, and one or more secondary microcontrollers dedicated 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, with 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 as 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 compounds recently have been introduced.
Contact-only and dual-interface (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 near 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 80% of the 3.1 billion smart cards shipped in 2022, and
we expect this percentage to expand. ABI Research also estimates the worldwide volume of contactless smart
card transactions grew by 36% from 2021 to 2022. However, contactless smart card transactions generally are
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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.
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 2022): financial payments; government identification (including healthcare and social-
security 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 11 billion smart cards, in the form of credit and debit cards,
ATM cards, and stored value cards, were in circulation as of December 31, 2022, with 3.1 billion financial
payment cards shipped during the year.
According to ABI Research, 71% of the total volume of smart cards shipped (excluding SIM cards) were
for payments, while less than 5% of smart cards shipped in 2022 were access control applications. Physical
access control applications commonly utilize keycards, also known as proximity cards, which are wireless
devices enabling a relatively low level of security for contactless identification. 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 positioning have been based on continuous advances in
technologies, innovations in design, and achievements in performance, enabled by our focus on research and
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, systems engineering
approach represents a significant competitive advantage for IDEX.
Our intellectual property portfolio, as of December 31, 2022, consisted of 175 patents awarded and 62
patents pending, across applicable jurisdictions worldwide. Reflecting 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 competencies, 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
authentication 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 target 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 incorporating
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,
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and form factor, and 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 complete solutions for the manufacture of fully functioning biometric smart cards
including fingerprint sensors, card inlay, antennae, EMV module with an SE released by Infineon Technologies
AG, and proprietary software, including our card operating system, special purpose applets, and biometric
algorithms.
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 the
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 for 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
covered by a robust,
protective coating, allowing for years of usage. Our flexible sensor is
relatively 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
A TrustedBio module, showing
the sensor surface (left) and, on
the reverse side (right), our
ASIC and connection circuits
processing 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 includes a proprietary microprocessor executing our third generation
scanning and template-creation (i.e., image processing and feature extraction) algorithms, our patented anti-
spoofing 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 TrustedBio Max module provides a high level of single-device functionality for
fingerprint authentication in a smart card. Fabricated on a 40-nanometer process node by TSMC, the
approximately 10 square millimeter ASIC utilizes an ARM Cortex-M3 32-bit processor, operating at up to 200
MHz, enhanced memory, and a 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 differentiation
for our customers, while reducing TCO. The TrustedBio Max enables smart cards with fingerprint authentication
that are secure, accurate, and power efficient, while providing a differentiated user experience characterized by
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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 biometric 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 minimize 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-to-market with a 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 of 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.
Complete Biometric Smart Card Solutions
In 2021, we began the development of complete solution for the
manufacture of fully functional biometric smart cards. The hardware is
based on the IDEX-Infineon reference platform described above. The
complete solution adds elements of proprietary software, including our
JavaCard operating system, special-purpose Java applets, biometric
algorithms, and 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.
IDEX Pay complete solution for card manufacturers
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 Mastercard Inc. We
have continued to work together with leaders in the industry to further
improve the enrolment process.
In addition to the enrolment sleeve,
we expect to soon be able to offer several options including enrolment
via mobile phone, assisted enrolment (in-branch enrolment), and
ultimately, enrolment at Point of Sale (PoS).
Using one of our proprietary solutions, a user can complete the
enrolment process in less than a minute, following simple instructions.
Enrollment is completed entirely within the biometric smart card and,
importantly, the encrypted fingerprint template is immediately stored
only on the card, never in the cloud or on any connected device such
as a smart phone or PC.
Our enrolment solutions enable the creation of
a user fingerprint template, which is encrypted
and stored
only on the smart card, never in the cloud.
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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 financial payment card users, through a point-of-sale terminal.
Three-Year Revenue Summary
For the full year 2022, the Company recorded consolidated revenue of $4.1 million, compared to $2.8
million for 2021, and $1.1 million for 2020. Product revenue, as a percentage of total revenue, represented 95.0
%, 99.9 % and 92.5 % for 2022, 2021, and 2020, respectively. Revenue from sensors for smart cards represented
52% of our total revenue for 2022. Revenue associated with our customer in the digital authentication market
segment represented 48%, 85%, and 81% of our total revenue for 2022, 2021, and 2020, respectively. There was
no licensing revenue for 2022, 2021, or 2020.
Order Backlog
We define order backlog as non-cancellable orders scheduled to be delivered within 12 months and any
deferred revenue scheduled for recognition within 12 months. Customer order volume accelerated across 2022
from both existing customers and, notably, new customers adopting the TrustedBio – SLC38 reference design we
developed with Infineon Technologies. Our backlog totaled $3.3 million, $2.5 million and $1.7 million as of
December 31, 2022, 2021, and 2020, respectively.
Marketing and Sales
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 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 digital access market segment, vendors of hardware- and software-based security systems and
associated access 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-stages 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 and increased our marketing
spending in 2022.
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
authentication 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 E-Kart Elekronik Kart Sistemleri A.S., customers with which we
have critical go-to-market engagements; 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
Microelectronics Co., Ltd., leaders in SE design and smart card electronics, with which we are developing
integrated solutions.
Other strategic initiatives involve integration projects with numerous developers of SEs and electronic
components for financial payment smart card applications, as well as technology partners addressing the digital
accessand digital currency storage market segments. We consider our initiatives to extend the scope of the
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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 marketing 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 cards without batteries (i.e., cards
conforming to ISO/IEC standards for electronic identification cards), for which our solutions are especially well-
suited.
Customers for these and adjacent applications are within three emerging market segments, for which the
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
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 applications
•
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 primarily are smart card manufacturers.
We believe this market segment has the potential to be significantly larger and more 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 50%
of total 2022 revenue associated with shipments of smart cards for financial payments, and the top six represent
close to 70% of such revenue. Other regionally-focused smart card manufacturers represented the balance. As
previously disclosed, IDEMIA currently is our largest customer in the financial payment market segment.
Within the digital access 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
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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 outside 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.
With the onset of the COVID-19 pandemic, hygienic, touch-free transactions became an important demand
driver for end-users, particularly within the financial payments market segment. Given evidence of a 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. This trend continued in 2022.
The shift toward contactless transactions is evidenced by ABI Research estimates of worldwide shipments
of dual-interface cards for financial payments, which represented over 80% of the 3.1 billion smart cards shipped
in 2022. ABI Research also estimates the worldwide volume of contactless smart card transactions grew by 36%
from 2021 to 2022. However, contactless smart card transactions generally are limited by financial institutions
and 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
perceptions 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 consumers are aware of
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-to-one margin over other forms of 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 secured 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-users and organizations relying on them. Passwords and PINs
frequently are forgotten and must be replaced or reinstated. Entering 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-users, merchants, issuers, and transaction processors. Also, the
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.
A 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
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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.
Contactless biometric cards enable offer a convenient tap and go experience for users with higher security than
PIN transactions.
Therefore, enabling a contactless payment experience with no threshold on transaction value.
Fingerprint authentication represents 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:
•
meets end-user requirements for convenience and 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 secure 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 combining 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 customer
retention 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 processors in the EU, fingerprint authentication satisfies the revised
Stronger Customer Authentication requirements for two-factor authentication under the Second Payment
Services Directive, or PSD2.
Many of these demand drivers are applicable to the Digital Access 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 end-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 Fingerprint Authentication Solution for Smart Card Manufacturers
We believe the historically high cost of manufacturing smart cards with fingerprint authentication has
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. Our approach to providing fingerprint authentication solutions is 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-competitive with alternative solutions, while delivering high levels of
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;
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•
eliminating the 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 experience;
•
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 certified payment card solution 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 (through reduced design
complexity), while accelerating their time-to-market.
For this certified payment card solution:
•
with a leading smart card module supplier, we developed a custom EMV module with an SLC38;
•
the SLC38 can include our proprietary card operating system, substantially reducing software
development time and costs;
•
with a leading inlay vendor, we have developed an optimized, cost-effective card inlay, consisting
of a card antenna and connective circuits, reducing customer design and procurement costs; and
•
with a leading production equipment vendor, we have optimized 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.
Card manufacturers can choose this complete solution which is pre-certified by Visa and Mastercard
thereby eliminating the time and expense of the certification process. Alternatively, manufacturers can utilize
subcomponents of the solution as they see fit to maximize their own contribution to the value chain.
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. 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.
Significant demand drivers are the increasing preference by end-users for contactless payments and the desire of
both end-users and issuers and 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. ABI Research refers to this measurement as the “penetration rate.”
According to ABI Research (February 2023), worldwide shipments of dual-interface smart cards, enabling
contactless transactions, totaled 2.4 billion units for 2022, representing a record 79% of total smart card
shipments. This annual shipment volume of dual-interface smart cards is expected to expand to 3.1 billion units
by 2027, representing a five-year CAGR of 5.2%.
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ABI Research also estimates the worldwide volume of contactless smart card transactions grew by 36%
from 2021 to 2022, forecasting growth for the next five years at a compound annual rate exceeding 21%.
While we believe dual-interface card volumes represent an approximation of our addressable market for
payment cards, we expect that the adoption rate for biometric payment cards will be faster than the historical rate
of adoption for contactless payments.
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%. Contactless capabilities (e.g., 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-of-sale infrastructure. Several events contributed to rapid shift in smart card
transactions toward contactless volumes 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 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 applications, 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 50% to 90% by region globally, with expectations for that figure
to continue higher, driven by consumer demand for contactless smart card and mobile device transactions. Also,
the major transaction processing networks, aligned with EMV in support of fingerprint authentication, have
facilitated streamlined integration of match-on-card fingerprint authentication at the point-of-sale. Fingerprint
authentication occurs within the processing capabilities of the smart card, with the matching algorithm
determining if the presented fingerprint template matches the template stored in the memory of the Secure
Element. 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 the only additional information communicated to the point-of-sale reader.
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. As of December 31, 2022, we are aware of 9
banks who have launched biometric payment card programs involving the use of our fingerprint authentication
solutions through our partnerships with IDEMIA France SAS and Zwipe AS. 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 controller, we have secured 11 important design wins with smart
card manufacturers, each of which we believe could be in mass production by the end of 2023. Based on these
announcements and design wins, we believe the financial payment market segment is in 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.
With an expanding list of customer design wins and announced bank launches we are now better able to
create bottom-up product forecasts to manage our supply chain.
For overall market 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:
•
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 than 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 programs 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 initiatives. A Stage 3 deployment may be a distinct program, for example, targeting an
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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, also 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 digital access 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 in Biometrics Payment
Cards Development, Project and Market Opportunities (April 2022), the annual unit volume is expected to be
between 41 million and 254 million units by 2026.
As is the case with the financial payment market segment, we also believe measurement of our strategic
progress in the digital acess 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 nature 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 customer’s own
consumption. In 2021, we secured a design win for a government identification card with digital authorization
features, and we also have multiple design wins for digital access solutions with smart card manufacturers.
Currently, estimating any penetration rate for the digital access market segment is difficult and unreliable.
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 difficult. 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 into 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, customer
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 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.
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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, 2022, we had an engineering staff of 64 employees and six individual contractors,
representing approximately 70% of our staff. As of December 31, 2021, the numbers were 77 employees and
eight contractors, and 77% of the staff. While we maintain a high level of development activities, we have made
a moderate shift of resources to our commercialization activities.
Innovation through research and development is critical for us to remain competitive and to help our
customers maintain cost and performance leadership. Our technology roadmap 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 to complement our solution strategy, including innovative
software-only enrolment solutions and card-not-present applications; and
•
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, 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. The TSMC
facility producing our semiconductor wafers is located in China, which exposes us to risk associated with
international trade policy, tariffs, and related policy matters, all of which are outside of our influence or control.
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 provides
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.
Intellectual 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
portfolio, leveraging 175 patents awarded and 62 patents pending, across applicable jurisdictions worldwide (as
of December 31, 2022), is a critical enabler of our strategy and competitive positioning. We maintain a program
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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.
Although 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-disclosure 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 copyright, 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
proprietary 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
is 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 on their
intellectual property rights. Successful adjudication of claims of infringement 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
Our competitive positioning has 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 subsequent 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
could provide demonstrable and sustainable competitive advantages, reducing our exposure to commoditization.
Our focus today is on incorporating fingerprint authentication into smart cards, which present the challenging
form 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 three years, we have
experienced increasing strategic momentum, successfully attracting new customers and increasing our revenue
for ten consecutive quarters up to June 30, 2022. In the second half of 2022, shipments were limited by supply
chain delays and component shortage. Revenue in 2022 increased 44% from 2021.
Since we released a reference design integrating our TrustedBio fingerprint authentication module and the
SLC38, the latest SE from Infineon Technologies, we have marketed this reference design to smart card
manufacturers. By the end of 2022, we had 12 design wins (i.e., contractual commitments) for this reference
design with smart card manufacturers worldwide and anticipate these designs could be in full production by the
end of 2023.
Customer order volume accelerated across 2022 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
IDEX Biometrics ASA Annual Report 2022
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recognition during the period), totaled $3.3 million, $2.5 million and $1.7 million as of December 31, 2022,
2021, and 2020, respectively.
IDEX recorded revenue of $4.1 million for 2022, compared to $2.8 million for 2021, and $1.1 million for
2020. Product revenue, as a percentage of total revenue, represented 95.0 %, 99.9 % and 92.5 % for 2022, 2021,
and 2020, respectively. Revenue associated with our early-adopting customer in the digital access market
segment, inclusive of services revenue associated with product development, represented 48.2%, 85.4%, and
89.7% of our total revenue for 2022, 2021, and 2020, respectively. We began to ship production volumes of our
TrustedBio solution in 2021 and experienced significant growth in 2022, and expect such volumes to represent
an increasing percentage of total revenue in the future.
We do not own or operate capital-intensive manufacturing facilities, but operate as a
fabless
manufacturer,
outsourcing manufacturing and product assembly activities. We currently rely on TSMC, the leading producer of
semiconductor wafers, as the sole source of wafers for our proprietary ASICs. We also rely on a limited number
of providers of semiconductor packaging, design, and test services, including Amkor Technology, Inc., and
Silicon Precision Industries Limited, both of which are leaders in outsourced semiconductor assembly and test
services. Like many other companies in the electronics markets we experienced some disruptions in the supply
chain which restricted our revenue in the second half of 2022. We have ordered, and may continue to order,
relatively high values of raw materials and carry relatively large quantities of finished goods with the aim 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 the quantities of inventory
represent, for the foreseeable future, a material risk to our financial position.
Due to inflationary pressures, primarily in the semiconductor supply chain, we expect our costs and
expenses likely will increase, which could negatively influence cash flow and profitability, even if we are able to
significantly increase 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 cost of materials, net of inventory change. 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 differentiator, 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 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 staff in 2021 and increased our
marketing spending in 2022.
As a Norwegian public company, with Ordinary Shares listed on the Oslo Børs, and an SEC registrant,
with ADSs listed on Nasdaq Capital Markets, we are required to comply with two sets of applicable laws, rules,
and regulations. From time to time, this may result in a complex compliance framework, with the consequence
being higher costs associated 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 compliance, 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 99, 111, and 102 as of December 31, 2022, 2021, and 2020, respectively. As of December 31,
2022, 16 were assigned to our head office in Oslo, 42 were assigned to our two offices in the United States, 36
were assigned to our office in the United Kingdom, and five were assigned to our offices in China. We expect to
maintain a stable staff level during 2023, but there may be shifts from engineering to marketing and sales.
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, inventory
IDEX Biometrics ASA Annual Report 2022
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
The future progression of the COVID-19 pandemic and its effects on the Company’s business and
operations are unknown and not predictable.
There have not been any significant delays in our development
projects or material operating cost increases due to COVID-19.
However, the pandemic did cause certain, short-
term delays of projects in 2021, and 2022.
Disruption of supply chains, and significant price increases, particularly the semiconductor supply chain,
have been attributed to the pandemic. We did experience some supply chain disruptions during 2022, and
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 may
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 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 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 the relevant implications for its
consolidated financial statements. Should governments in the countries in which IDEX Biometrics, its suppliers
or customers operate reimpose restrictions on interpersonal contact, workplace access, and travel, IDEX
Biometrics may experience reduced productivity, customers and potential customers may delay orders, or there
may be disruptions in the supply chain.
Operating Results
The following table summarizes the results of our operations for the years ended December 31, 2022,
2021, and 2020.
Year Ended December 31,
($000s)
2022
2021
2020
2022-2021
Change
2021-2020
Change
Revenue:
Product
$
3,889
$
2,837
$
1,013
37
%
180
%
Service
203
3
82
6654
%
(96
)%
Total revenue
4,091
2,840
1,095
44
%
159
%
Operating expenses:
Cost of materials, net of inventory change
3,244
1,254
275
159
%
356
%
Compensation and benefits
19,213
21,107
17,672
(9
)%
19
%
Research and development
3,250
2,680
1,895
21
%
41
%
Other operating expenses
8,402
7,347
5,936
14
%
24
%
Amortization and depreciation
1,352
1,802
1,719
(25
)%
5
%
Total operating expenses
35,460
34,190
27,497
4
%
24
%
Loss from operations
(31,369
)
(31,350
)
(26,402
)
0
%
19
%
Finance income
97
11
26
781
%
(58
)%
Finance cost
(1,425
)
(1,123
)
(477
)
27
%
135
%
Loss before tax
(32,698
)
(32,462
)
(26,853
)
1
%
21
%
Income tax expense (benefit)
(36
)
90
(99
)
(140
)%
(191
)%
Net loss for the year
$
(32,662
)
$
(32,552
)
$
(26,754
)
0
%
22
%
Revenue
Revenue for the year ended December 31, 2022, was $4.1 million, consisting of $3.9 million of revenue
from product sales and $0.2 million from services. The increase in product sales of $1.1 million from 2021 to
2022, representing an annual increase of 37%, is associated with significant growth in sales to customers in the
card market, while sales to the customized digital access solution were lower than in the previous year. Service
revenue is a minor element of customer engagement. Our two largest customers represented 48% and 25%,
respectively,
of total revenue for the year.
IDEX Biometrics ASA Annual Report 2022
Report from the Board of Directors
20
We expect shipments of our TrustedBio modules will expand through 2023, based on our backlog and our
current forecast for additional orders, production lead times, and shipments. Such shipments are expected to
contribute to important diversification of our customer base. We expect that shipments of our customized digital
access solution may decline in 2023.
Revenue for the year ended December 31, 2021, was $2.8 million consisting of $2.8 million of revenue
from product sales, and negligible amount of revenue from services, associated with the completion of
development of a customized digital access solution to an existing customer. As such, this single customer
represented approximately 85% of our revenue for 2021. Our second largest customer represented approximately
9% of total revenue for the year.
Revenue for the year ended December 31, 2020, was $1.1 million, consisting of $1.0 million of revenue
from product sales, and $0.1 million of revenue from services associated with the development of the customized
digital access solution for the customer referenced above. Revenue from this customer represented approximately
81% of our revenue for 2020. Our second largest customer represented approximately 4% of total revenue for the
year.
We categorize origin of revenue based on the billing addresses of our deliveries. Certain customers may
request delivery to other countries than the customer's domicile. Customers' contract manufacturers may place
orders with us under the terms of the customer's contract. We are potentially exposed to the risks associated with
the countries to which delivery is requested and in countries where the contract manufacturers are domiciled
(e.g., risks associated with customs delays and other logistical delays).
Cost of materials, net of inventory change
Cost of materials, net of inventory change, rose 159% from 2021 to 2022, to $3.2 million, reflecting the
37% increase for the year in product revenue and also the product mix. For 2021, the figure was $1.3 million, a
sequential increase of 356%, reflecting a 180% increase for the year in product revenue. For 2020, services
represented 7% of total revenue, in 2021, almost nil, and in 2022, 5% of revenue. Because we present our
Consolidated Financial Statements reflecting the nature of expenses, the costs of personnel delivering
engineering services associated with services revenue are not included in Cost of materials, net of inventory
change.
Certain costs typically associated with manufacturing and manufacturing overhead, such as personnel costs
and depreciation charges, are excluded from Cost of materials, net of inventory change, given the presentation of
operating expenses based on the nature of expenses rather than by function. These 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 a line representing “gross margin,”
reflecting the subtraction of Cost of materials, net of inventory change, from Revenue. We assess product-level
profitability by calculating a
proxy
gross margin based on subtraction of Cost of materials, net of inventory
change, from revenue derived from product sales. Under IFRS, the gross margin and ratio figures are alternative
performance measures (“APMs”), as they are not defined in IFRS. 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. For 2022, such a product gross margin to product revenue was 17% .
For 2021, and 2020, the product gross margins were 56% and 73% respectively. The declining gross margin
ratios reflect sequentially higher shipment volumes and shifts in product mix. In 2022, the margin was
additionally adversely impacted by several factors: higher component prices have not yet been passed on to
customers, manufacturing costs have not yet achieved high-volume level, and a write-off of inventory of a
discontinued product.
Compensation and benefits
Compensation and benefits expenses include, for all departments and activities, the following employee-
related expenses: salaries, variable, performance-based compensation, sales commissions, benefits, and charges
for the recognition of share-based compensation costs.
Compensation and benefits expenses for the year ended December 31, 2022, were $19.2 million, as
compared to $21.1 million for the year ended December 31, 2021, a decrease of $1.9 million or minus 9%,
reflecting a reduction in number of employees, and a lower level of share-based compensation costs.
IDEX Biometrics ASA Annual Report 2022
Report from the Board of Directors
21
Such expenses for the year ended December 31, 2021, were $21.1 million, as compared to $17.7 million
for the year ended December 31, 2020, an increase of $3.4 million, or 19%. The increase was due to a higher
number of employees, customary merit-based salary increases, and increased levels of share-based compensation
costs. Additionally, salary expenses for 2020 reflected a temporary reduction of salaries for approximately one
quarter of the year, implemented in response to the COVID-19 pandemic.
The year-end numbers of employees for 2022, 2021, and 2020 were 82, 93, and 90, respectively, reflecting
staff reductions and attrition in engineering during the three years and the expansion of our marketing and sales
team during 2021 and 2022. We expect staffing levels through 2023 will not change notably, as we anticipate
any incremental hiring for specific needs will be offset by attrition.
For more information regarding compensation and the composition of our staff, see Footnote 4 to our
Consolidated Financial Statements, which are presented in Part III of this Annual Report.
Research and development
Research and development expenses are presented 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, 2022, research and development expenses were $3.2 million, reflecting
gross expenses of $4.0 million, offset by government grants of $0.7 million. 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 $0.7 million. 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 $2.3 million.
Research and development expenses include the cost of individual contractors assigned to engineering
roles. As of December 31, 2022, December 31, 2021, and December 31, 2020, compensation for six, eight, and
six individual contractors, respectively, were included in Research and development expenses.
The variations in gross research and development costs between the years reflect primarily the use of third-
party service providers for outsourced engineering activities, particularly related to ASIC development and
initiation of fabrication. Variances in the values of government grants approved reflect 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 significantly higher level of
grant value for that year.
For 2023, we have focused our research and development activities on a narrower range of priorities
associated with near-term product introduction objectives. Going forward we expect gross expenses associated
with these activities will be comparable to gross expenses incurred in 2022. Similarly, we expect government
grant funding for 2023 will be approximately the same as received in 2022.
Other operating expenses
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, 2022, were $8.4 million, as compared to $7.3
million for the year ended December 31, 2021, an increase of $1.1 million or 14%. Other operating expenses for
the year ended December 31, 2021, were $7.3 million, as compared to $5.9 million for the year ended December
31, 2020, an increase of $1.4 million, or 24%.
The expansion of our marketing and sales staff in 2021 and higher activity level in 2022 has contributed to
the increase in Other operating expenses. The costs of individual 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, 2022, up from five at the end of
2020. Due to the restrictions associated with the
COVID-19 pandemic, travel and related customer engagement costs in 2021 remained significantly below pre-
pandemic level, partially offsetting other increases.
Other operating expenses increased significantly from 2020 to 2021 and into 2022 also because of higher
professional services fees associated with the Company’s listing of ADSs on the Nasdaq during the first quarter
IDEX Biometrics ASA Annual Report 2022
Report from the Board of Directors
22
of 2021, as well as the related expanded scope of regulatory compliance and investor relations. Expanded
liability insurance coverage for our Directors and Executive Officers caused insurance costs to rise significantly
from 2020 to the following years.
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 as a percentage of revenue, but we do not
expect an absolute decline in these expenses for the foreseeable future.
Finance income and Finance cost
As described above, Finance income generally includes 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. Finance cost generally
includes 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, reserves, or the recorded fair values of financial assets or liabilities.
For the year ended December 31, 2022, Finance income totaled $97 thousand, consisting primarily of
interest income on our bank deposits. Finance cost for the year, totaled $1.4 million consisting primarily of the
net amount of losses associated with foreign exchange translation adjustments.
In 2021 and 2020, Finance income of $11 thousand and $26 thousand, respectively, consisted primarily of
interest income, while Finance cost in those years, $1.1 million and $0.5 million, respectively, were net foreign
exchange translation 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) for each of our taxable entities. Income tax expense (benefit) for each entity
is calculated using the income tax rates of the tax jurisdiction in which it operates.
Changes in deferred tax represent the periodic reconciliation of differences between financial reporting
values and tax reporting values. The Company does not capitalize any deferred tax asset. Hence, any potential
gain from increase in deferred tax asset is not recognized.
For further details of tax calculations, see Footnote 6
to our Consolidated Financial Statements, which are presented in Part III of this Annual Report.
For the years ended December 31, 2022, 2021, and 2020, the provision for income tax presented in the
Consolidated Statements of Profit and Loss was a benefit of $36 thousand, an expense of $90 thousand and a
benefit of $99 thousand. During the years ended December 31, 2022, 2021 and 2020, the parent company did not
record or pay income taxes in Norway.
Net loss for the year
Net loss for the years ended December 31, 2022, 2021, and 2020 was $32.7 million, $32.6 million, and
$26.8 million, respectively.
On a per share basis for these three years, these losses were $0.03, $0.04, and $0.03 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 Ordinary Shares 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 earnings per share is the quotient of the profit or loss for the period divided by the
weighted average number of Ordinary Shares outstanding for the period. The weighted average number of
Ordinary Shares outstanding during the period is the number of Ordinary Shares outstanding at the beginning of
the period, adjusted by the number of Ordinary Shares issued or bought back during the period, multiplied by a
time-weighting factor representing the number of days the Ordinary Shares are outstanding as a proportion of the
total number of days in the period.
IDEX Biometrics ASA Annual Report 2022
Report from the Board of Directors
23
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 Ordinary Shares outstanding for the period, but, if profit is
recorded for the period, the weighted average number of Ordinary Shares also includes the weighted average
number of Ordinary 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 dilutive Ordinary Shares 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 establishment, we have incurred significant operating losses and negative cash flows. We
anticipate we will continue to incur operating losses and consume cash through 2023. There is significant doubt
about our ability to continue as a going concern. We will require additional funding to defray anticipated future
operating losses. Because we intend to continue pursuing our strategy and to rapidly grow our revenue, we
anticipate additional capital will be required (i.e., for the funding of increased working capital requirements).
We expect our revenue for 2023 will be higher than the level in 2022. We expect shipments of our
TrustedBio modules will expand through 2023, based on our backlog and our current forecast for additional
orders, production lead times, and shipments. Maintaining and improving product-level profitability in 2023
compared to 2022 will depend on our ability to pass along expected increases in the costs to manufacture,
assemble, and test our products.
Compensation and related personnel expenses are our largest costs and we anticipate a decrease in such
expenses in 2023 compared to 2022, reflecting the reduction in number of employees in the second half of 2022
and given our expectation of a stable number of employees in 2023. Our research and development spending is
expected to continue at its current level through 2023, 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 likely will increase modestly in connection with expanded marketing and sales activities, as well as the
likelihood of increased travel costs, given reduced restrictions on travel.
On November 16, 2022, we completed a private placement of 150 million Ordinary Shares, with gross
proceeds of $15.6 million.
As of December 31, 2022, we had cash and cash equivalents of $16.1 million, representing approximately
56% 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 office 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,
($000s)
2022
2021
2020
Net cash used in operating activities
$
(31,914
)
$
(27,533
)
$
(23,294
)
Net cash used in investing activities
(160
)
(143
)
(232
)
Net cash provided by financing activities
14,520
54,148
17,438
Net change in cash and cash equivalents
$
(17,555
)
$
26,472
$
(6,088
)
Net cash flow used in operating activities
During the year ended December 31, 2022, operating activities consumed cash of $31.9 million, primarily
as a consequence of our net loss before tax of $32.7 million, and a net working capital increase of $2.3 million,
partially offset by non-cash charges of $4.1 million included in the net loss for the year.
IDEX Biometrics ASA Annual Report 2022
Report from the Board of Directors
24
Operating activities during 2021 consumed cash of $27.5 million, primarily as a result of our net loss
before tax of $32.5 million and a net working capital decrease of $0.1 million partially offset by non-cash
charges of $4.6 million included in net loss 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 $0.5 million, partially offset by non-cash
charges of $4.5 million included in net loss for the year.
Net cash flow used in investing activities
During the year ended December 31, 2022, investing activities consumed cash of $160 thousand reflecting
the use of $267 thousand for capital expenditures for engineering equipment, partially offset by the receipt of $97
thousand of interest income associated with higher interest rates for the period.
Investing activities during 2021 consumed cash of $143 thousand, reflecting the use of $141 thousand for
capital expenditures for engineering equipment.
Investing activities during 2020 consumed cash of $232 thousand, reflecting the use of $152 thousand for
capital expenditures for engineering equipment and the use of $181 thousand for the acquisition of certain
patents.
Net cash flow provided by financing activities
During the year ended December 31, 2022, share issuance generated net cash of $14.4 million, which
included the proceeds from a private placement of Ordinary Shares, as well as proceeds from share issuances
associated with our Employee Share Purchase Plan and the exercise of incentive subscription rights, partially
offset by reductions of lease liabilities totaling $400 thousand.
Financing activities during 2021 generated cash of $54.1 million, which included the net proceeds from
two private placements of Ordinary Shares, as well as proceeds from share issuances associated with our
Employee Share Purchase Plan and the exercise of incentive subscription rights, partially offset by reductions of
lease liabilities totaling $844 thousand.
Financing activities during 2020 generated cash of $17.4 million, representing net proceeds of $18.0
million from a private placement of Ordinary Shares and proceeds of $731 thousand from share issuances
associated with our Employee Share Purchase plan and the exercise of incentive subscription rights, partially
offset by reductions of lease liabilities totaling $793 thousand and the final payment of $500 thousand associated
with the purchase of intangible assets.
Operating and Capital Expenditure Requirements
We have not achieved profitability on an annual basis since our inception. While we expect our revenue for
2023 will be higher than the revenue in 2022, we also expect to incur net losses and consume cash for the year.
We expect our operating expenses will remain stable as we continue to spend on the development of new
products and expanded product features and the development of new customers in our three targeted markets.
Additionally, as we have Ordinary Shares 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 2022 and 2021.
We also are not planning 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 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 2022
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 our
continued growth.
Among other factors, our history of losses, limited revenue and negative cash flows from operations raise
significant doubt about our ability to continue as a going concern. As a result, our independent registered public
accounting firm has included an explanatory paragraph in their opinion for the year ended December 31, 2022 as
to the significant doubt about our ability to continue as a going concern. Our consolidated financial statements
contemplate that we will continue to operate as a going concern. We have been able to raise funds through
private placements of shares in the past. During 2022, we raised $15.1 million through private placements. We
regularly review all strategic options to fund ongoing operations, research and development projects and working
capital needs, including a capital raise. While we have been successful in the past in raising funds through private
placements of shares, there is no assurance that we will be successful in the future.
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 IDEX Biometrics
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.
Only two of the group’s 82 employees are employed in the parent company. Hence, the parent has a small
share of the group’s payroll expenses. The parent company purchases development services from the
subsidiaries, whose charges include the payroll cost of the development staff. Thus, the parent company reports
higher development costs than the consolidated group. The parent company purchases marketing and other
services from the subsidiaries, whose charges include the payroll cost of the staff performing the service. In
addition, most of the commercial team, who work and live in various countries where IDEX does not have a
subsidiary, are individual contractors to the parent company, and the cost is included in Other operating
expenses. Thus, the parent company reports higher Other operating expenses than the consolidated group.
The parent company’s long-term interest-bearing loans to the subsidiaries were fully repaid in 2021. The
short-term receivables from group companies are mainly from IDEX UK. IDEX UK carries its development cost
in order to qualify for SME research and development 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 2022 of the parent company IDEX Biometrics ASA was $31,023,240.87 compared to a net
loss of $38,889,352.72 in 2021. The board proposes that the loss shall be added to Accumulated loss.
$18,000,000.- of the Share premium has been transferred to Capital reduction reserve to partly absorb
Accumulated loss. The board does not propose any dividend payments for 2022.
Going Concern
The going concern assumption has been applied in the preparation of the consolidated financial statements.
The going concern assumes the realization of assets and liquidation of liabilities in the normal course of business.
IDEX has incurred significant operating losses, and has accumulated losses, net of capital reduction reserve of
$33,901 as of December 31, 2022, and reported cash outflow amounting to $17,555, after obtaining new equity
in a net amount of $14,334. The company has no debt to financial institutions. Net equity amounted to $22,841
and the balance sheet solvency amounted to $13,370 at December 31, 2022. The Company aims to increase
revenue generation through sales of its products, however, it does not currently have the cash resources to fully
meet its operating commitments for the next twelve months. These factors, among others, cast significant doubt
on the Company’s ability to continue as a going concern.
As an ongoing activity, we monitor liquidity and the board is prepared to take appropriate measures if and
when required. We have been successful in the past with implementing cost reductions and raising capital
through private placements of equity. However, there is no assurance that cash generated by future operations
will be adequate to meet our needs or that we will be successful in the future in raising additional capital in the
IDEX Biometrics ASA Annual Report 2022
Report from the Board of Directors
26
form of equity or debt. The Company plans to undertake a private placement of shares or procure other
substantial funding by the end of the third quarter of 2023 to provide additional funding to support research and
development and fund working capital.
On balance, the board has concluded that the conditions for the going concern assumption are met.
HEALTH AND SAFETY
Talented, highly-motivated contributors are important to executing the Company’s strategy. In order to
maintain our leadership position in fingerprint authentication in a highly competitive employment market,
attracting and retaining the best employees and individual contractors worldwide is a priority. Accordingly, we
offer compelling compensation and benefits, and seek to foster a culture of innovation in which personnel are
empowered to do (and are rewarded for) their best work. 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.
As of December 31, 2022, the Company had 104 individuals on staff, consisting of 85 employees and 19
individual contractors (individual contractors typically reside in countries in which we do not have business
operations). Of this total, 17 were assigned to our Oslo office, 46 were assigned to our two offices in the United
States, 36 were assigned to our office in the United Kingdom, and five were assigned to our office in China.
Some of our staff serve on a part-time basis. We assess staffing needs based on a full-time equivalent
(“FTE”) basis. As of December 31, 2022, we had 82 FTE employees and 17 FTE individual contractors. Of this
total of 99 FTEs:
•
70 were engaged in engineering functions (hardware design, systems design, and software
development);
•
15 were engaged in marketing and sales functions;
•
seven were engaged in administrative and financial functions; and
•
seven were engaged in production planning and supply chain management.
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 in 2022.
No employee has suffered work-related injury resulting in sick leave. No accidents or incidents involving
the assets of IDEX have occurred. The sick leave in the group was 1.2% in 2021, compared to 0.6% in 2021. Due
to the low number of employees, statistics for the parent company are not presented. The sick leave data are not
considered reason for concern.
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 composition of the technical staff. The board has not taken any special
measures in these respects.
Our compensation program is designed to attract and reward talented individuals who possess the skills
necessary to support our business objectives, assist in the achievement of our strategic goals, and create long-
term value for our holders of our equity securities. We provide employees with compensation packages including
a competitive base salary and benefits, which may vary from country to country, such as life and health
insurance, supplemental insurance, paid time off, paid parental leave, and an Employee Share Purchase Plan in
which eligible employee may participate. Generally (and subject to local laws), new employees and individual
contractors are awarded subscription rights for the purchase of the Company’s Ordinary Shares. Staff members
also generally are eligible to participate in an annual performance-based variable compensation plan, as well as
be eligible for periodic awards of subscription rights based on the performance of the Company and that of the
staff member. We believe a compensation program with the appropriate balance of short- and long-term
incentives aligns the interests of holders of our equity securities and our personnel.
IDEX Biometrics ASA Annual Report 2022
Report from the Board of Directors
27
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 complies 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 authentication 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 recycling programs in
place in all our facilities.
As set forth in our Code, 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 a responsible member of society through the
conduct of its business in an ethical, socially-responsible, and transparent manner.
As of December 31, 2022, women represented 19% of our staff, and four departments are led by women.
The composition of our Board meets Norwegian statutory requirements, with three women among 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-useful information regarding our ESG objectives and indicators of our progress toward those
objectives.
The current corporate governance review is included in the 2022 annual report to Norway and is also
available at the company’s website, https://www.idexbiometrics.com/about-idex/.
The Company will publish its annual due diligence review of the Company’s impact on human rights and
working conditions, pursuant to the Norwegian transparency act, by June 30, 2023. The review will be available
at the Company’s web site, https://www.idexbiometrics.com/.
MANAGEMENT REMUNERATION, DIRECTORS’ AND OFFICERS’ INSURANCE
The annual general meeting 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
2022 has been disclosed in a note to the parent company financial statements. The executive remuneration report
will be presented to the 2023 annual general meeting in a separate document.
Since the company’s shares were admitted to listing on Oslo Børs, the company has had a conventional
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
IDEX Biometrics ASA Annual Report 2022
Report from the Board of Directors
28
Market in the United States. The company and its directors and officers are subject to incremental 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 officers 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 serve 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 2022 IDEX made good progress transitioning from research and development to commercial
activities. Even with the continuing challenges created by COVID-19 on business and society, the team stayed
focused and executed on the 2022 business plan. We grew our revenue by 44%, launched the turnkey solution for
card manufacturers, achieved 11 design wins, and expanded our technological base.
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 highly-differentiated solutions to
meet the demanding technical challenges of card-based applications and are aggressively pursuing still-evolving
market segments. We have developed proprietary software that differentiates our fingerprint solutions. We
continue to invest in development of hardware and software and expand the Company's know-how and
intellectual property base in order to maintain the Company's technological leadership.
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 26, 2023
The board of directors of IDEX Biometrics ASA
/s/ Morten Opstad
Morten Opstad
Chair
/s/ Lawrence John Ciaccia
Lawrence John Ciaccia
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
IDEX Biometrics ASA Annual Report 2022
Consolidated Financial Statements 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
2022
2021
2020
Revenue:
Product
$
$
$
Service
Total revenue
Operating expenses:
Cost of materials, net of inventory change
Compensation and benefits
4
Research and development
5, 6
Other operating expenses
18
Amortization and depreciation
8, 9, 10
Total operating expenses
Loss from operations
(31,369
)
(31,350
)
(26,402
)
Finance income
Finance cost
(1,425
)
(1,123
)
(477
)
Loss before tax
(32,698
)
(32,462
)
(26,853
)
Income tax expense (benefit)
6
(36
)
(99
)
Net loss for the year
$
(32,662
)
$
(32,552
)
$
(26,754
)
Loss per share, basic and diluted
7
$
(0.03
)
$
(0.04
)
$
(0.03
)
Consolidated Statements of Comprehensive Income ($000s)
Year Ended December 31,
Note
2022
2021
2020
Net loss for the year
$
(32,662
)
$
(32,552
)
$
(26,754
)
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)
$
(31,981
)
$
(32,542
)
$
(26,084
)
The accompanying notes are an integral part of these consolidated financial statements.
IDEX Biometrics ASA Annual Report 2022
Consolidated Financial Statements and Notes
30
IDEX Biometrics ASA
Consolidated Statements of Financial Position ($000s)
Note
December 31,
2022
December 31,
2021
Assets
Non-current assets:
Goodwill
8
$
$
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
$
$
Equity and liabilities
Share capital (NOK 0.15 1,166,326,584
shares issued and outstanding at December 31, 2022 and 2021,
respectively)
15
$
$
Share premium
Share-based payment reserve
Foreign currency translation effects
(11,632
)
(12,312
)
Capital reduction reserves
Accumulated loss
(303,401
)
(270,739
)
Total equity
Non-current liabilities:
Non-current lease liabilities
10, 12
Total non-current liabilities
Current liabilities:
Accounts payable
12
Current lease liabilities
10, 12
Public duties payable
Other current liabilities
12
Total current liabilities
Total liabilities
Total equity and liabilities
$
$
The accompanying notes are an integral part of these consolidated financial statements.
April 26, 2023
The board of directors of IDEX Biometrics ASA
/s/ Morten Opstad
Morten Opstad
Chair
/s/ Lawrence John Ciaccia
Lawrence John Ciaccia
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
IDEX Biometrics ASA Annual Report 2022
Consolidated Financial Statements and Notes
31
IDEX Biometrics ASA
Consolidated Statements of Changes in Equity ($000s)
Share
capital
Share
premium
Share
based
payment
Foreign
currency
translation
effects
Capital
reduction
reserve *
Accumulated
loss *
Total
equity
Balance at December 31,
2019
$
$
$
$
(12,992
)
$
$
(211,433
)
$
Share issuance
Share-based
compensation
Net loss for the year
(26,754
)
(26,754
)
Transfer of share
premium
(210,250
)
Other comprehensive
income
Balance at December 31,
2020
$
$
$
$
(12,322
)
$
$
(238,187
)
$
Share issuance
Share-based
compensation
Net loss for the year
(32,552
)
(32,552
)
Transfer of share
premium
(46,000
)
Other comprehensive
income
Balance at December 31,
2021
$
$
$
$
(12,312
)
$
$
(270,739
)
$
Share issuance
Share-based
compensation
Net loss for the year
(32,662
)
(32,662
)
Transfer of share
premium
(18,000
)
Other comprehensive
income
Balance at December 31,
2022
$
$
$
$
(11,632
)
$
$
(303,401
)
$
*Refer also to Note 2: Basis of Preparation and to Note 15: Share Capital to the consolidated financial
statements.
The accompanying notes are an integral part of these consolidated financial statements.
IDEX Biometrics ASA Annual Report 2022
Consolidated Financial Statements and Notes
32
IDEX Biometrics ASA
Consolidated Statements of Cash Flow ($000s)
Year Ended December 31,
Note
2022
2021
2020
Operating activities
Profit (loss) before tax
$
(32,698
)
$
(32,462
)
$
(26,853
)
Amortization and depreciation expense
8, 9, 10
Share-based compensation expense
16
(Increase) decrease in inventories
13
(3,215
)
(375
)
(139
)
(Increase) decrease in accounts receivable
11
(548
)
(314
)
(414
)
Increase (decrease) in accounts payable
12
Change in other working capital items
(39
)
Interest paid
(33
)
(11
)
(27
)
Taxes paid (received)
(372
)
(437
)
Net cash flows from operating activities
(31,370
)
(27,533
)
(23,294
)
Investing activities
Purchases of property, plant, and equipment
9
(267
)
(141
)
(152
)
Purchases of intangible assets
8
(181
)
(Payment) collection of non-current receivables
11
(13
)
Interest received
Net cash flows from investing activities
(160
)
(143
)
(232
)
Financing Activities
Net proceeds from issuance of shares
15
Payment of principal portion of lease liabilities
10
(400
)
(844
)
(793
)
Payment related to a financed asset purchase
9
(500
)
Net cash flows from financing activities
Net change in cash and cash equivalents
(17,555
)
(6,088
)
Effect of foreign exchange on cash balances
(80
)
(11
)
(740
)
Opening cash and cash equivalents balance
Cash and cash equivalents at December 31
14
$
$
$
The accompanying notes are an integral part of these consolidated financial statements.
IDEX Biometrics ASA Annual Report 2022
Consolidated Financial Statements and Notes
33
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except per share amounts)
the design, development, and sale of fingerprint authentication solutions. The Company’s fingerprint
authentication solutions are used primarily in contactless smart cards, including financial payment cards, access
control cards, and card-based devices for the storage of digital currencies.
Ordinary 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 American 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 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 generated by the parent company. The subsidiaries provide
various services to the parent company, mainly associated with engineering, supply-chain administration, and
Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”) and IFRS as
and all values are rounded to the nearest thousand ($000), except when otherwise indicated. As of January 1,
2020, the parent company changed 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 from NOK to USD, was determined by to be appropriate, given that the parent company’s
operational transactions had come to be primarily dominated in 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, balances, revenue, expenses, and unrealized
internal profit or losses eliminated upon consolidation.
Capital Reduction Reserve to reflect the legal decision of the absorption of historical accounting losses into
Share Premium. Previously, the Company presented transfer of Share premium to absorb losses as a component
of Accumulated Loss. The Company changed its presentation to reflect the amount of transfer losses to Share
Premium separately from accumulated losses on the Consolidated Statements of Financial Position and
The Company has evaluated whether there are conditions and events, considered in the aggregate, that raise
significant doubt about the Company’s ability to continue as a going concern within one year after the date the
consolidated financial statements are issued. From its inception through December 31, 2022, IDEX has incurred
significant operating losses and has reported negative cash flows from operations. As of December 31, 2022, the
Company has accumulated losses of $303,401. The Company has no debt to financial institutions. Net equity
amounted to $22,841 and the consolidated statement of financial position solvency amounted to $13,370 at the
end of 2022. The Company does not expect that its existing cash would enable it to fund its operating expenses
and capital expenditures requirements for the next twelve months. The future viability of the Company beyond
that point is largely dependent on its ability to generate cash from operating activities and to raise additional
capital to finance its operations.
The Company plans to undertake a private placement of shares or procure other substantial funding by the end of
the third quarter of 2023 to provide additional funding to support research and development and fund working
capital. While the Company has been successful in the past in raising funds through private placements of shares,
there is no assurance that we will be successful in the future. The Company’s failure to raise capital as and when
needed could have a negative impact on its financial condition and its ability to pursue its business strategies.
Based on its recurring losses from operations incurred since inception, expectation of continuing losses for the
foreseeable future and need to raise additional capital to finance its future operations, the Company has
concluded that there is significant doubt about its ability to continue as a going concern.
The accompanying consolidated financial statements do not include any adjustments that might result from the
outcome of this uncertainty. Accordingly, the consolidated financial statements have been prepared on a basis
that assumes the Company will continue as a going concern and which contemplates the realization of assets and
Significant Accounting Policies
Accounting policies that are significant to the Company’s results and financial position, in terms of materiality of
the items to which the policy is applied, are discussed below.
The statements of profit and loss are presented by the nature of expense. The cash flow statements are presented
by the indirect method.
There have not been any changes to the Company's accounting policies applied in the financial statements for
2022 compared to those applied in the annual financial statements for 2021.
The application of certain accounting standards requires estimates based on considerable judgment and
assumptions that may involve high levels of uncertainty at the time the estimates are made. Estimates are
continually evaluated. Assumptions are based on historical experience and other factors, including expectations
of future events and parameters that are believed to be reasonable under the circumstances. Actual outcomes may
deviate from estimates.
on the financial statements in the periods when estimates or assumptions are changed or when uncertainty is
resolved. The following represent the most significant accounting items based on estimates, based on
Goodwill represents the future economic value of assets acquired in a business combination above the separately
recorded values of the assets. Subsequent impairment testing involves quantitatively comparing the recorded
value to the estimated value of the business unit to which the goodwill is assigned. The estimate is based on
judgments of when and whether there will be an economic benefit from the business unit, and assumptions about
the amounts. As of December 31, 2022, such comparison indicated the carried value of goodwill was
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 2022, 2021, or 2020.
Acquired intangible assets are capitalized initially at fair value, normally the purchase price. Intangible assets are
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. An intangible asset’s carrying amount is compared to the
asset's recoverable amount. 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 estimated cash flow from continued use.
The estimate is based on judgments of when and whether there will be an economic benefit from the asset, and
assumptions about the amounts. As of December 31, 2022, the Company determined that there were no
Inventories consist of raw materials, work in process, and finished goods. Inventory is recorded at the lower of
cost and net realizable value. Impairment is assessed quarterly, based on management’s judgment of when and
whether the inventory may be sold, and assumptions about the sales price and selling costs. The estimate is
uncertain, because timing of sales are subject to many risks. Selling prices are uncertain in the market for IDEX's
products. 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),
IDEX estimates the fair value of incentive subscription rights (“SRs”) at the grant date by using the Black-
Scholes option pricing model, and record share-based remuneration cost over the vesting period of the SRs. The
valuation is based on share price and exercise price, share price volatility, interest rates, and the expected term of
the SRs, based on historical data. The parameters may in the future deviate from the historical observations. The
accrued cost of the Company’s employment taxes associated with the earned intrinsic value of the SRs will vary
with share price, which is a highly unpredictable parameter.
IDEX estimates the fair value of the Employee Share Purchase Plan (“ESPP”) at the grant date, i.e. the first date
of the contribution period, by using the Black-Scholes option pricing model. The share-based compensation is
expensed over the contribution period. The valuation is based on share price and exercise price, share price
volatility, interest rates, and the term of the contribution period. The parameters may in the future deviate from
As of December 31, 2022, the possible future financial impact to the Company resulting from climate change is
uncertain. Given the nature of the Company’s operations and products, the Company believe any such impact not
to 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 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.
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 or 2022, 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
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 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
funded through the issuance of Ordinary Shares since it was established in 1996.
The current cash position and financial forecasts indicate that in 2023, the Company will need significant
funding in the form of equity injection, debt or other. The board is considering various funding options and
believes that the Company will obtain further financing for its planned operation, growth and working capital
requirements. Refer to the comments regarding going concern in Note 2.
As of December 31, 2022, IDEX had cash of $16.1 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 trading transactions are commonly denominated in U.S. Dollars (“USD”), which is the
Company’s consolidation and presentation currency. The functional currency of the parent company, IDEX
Biometrics ASA, is USD, while the functional currencies of the subsidiaries are the currency in their respective
domiciles. The Company incurs a portion of its expenses in other currencies than the USD, primarily British
Pounds (“GBP”), Norwegian Krone (“NOK”), Euro ("EUR"), and Chinese Yuan (“CNY”). The Company's cost
level is exposed to changes in the rates of exchange between the USD and these currencies. IDEX seeks to
minimize this exposure by maintaining currency cash balances at targeted levels appropriate to meet foreseeable
short-term expenses in these other currencies. The Company does not use forward exchange contracts or other
hedging strategies to manage exchange rate exposure. Excess cash balances are generally held in USD-
denominated accounts.
Each subsidiary's assets and liabilities are naturally hedged by being held and denominated in the functional
currency of the subsidiary.
In addition to USD, the parent company holds bank deposits in NOK and GBP; receivables in NOK, GBP and
EUR; and payables in NOK, GBP and EUR. A 10% change in the relative value of USD to NOK would not have
had a material effect on the carrying value of the Company’s net financial assets and liabilities in foreign
currencies at December 31, 2022 and December 31, 2021. The same applies to the value of USD to CNY or
EUR. A 10% increase in the value of the GBP relative to the USD would have had a corresponding effect on the
carrying value of our net financial assets and liabilities in foreign currencies at December 31, 2022 of
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, 2022. (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.
As of December 31, 2022, the parent company had extended advances to IDEX UK denominated in GBP, in the
equivalent to $7,597. It is expected that IDEX UK will eventually repay these advances.
The Company believes it faces minimal risk on its cash position, as IDEX’s cash is on deposit with reputable,
regulated banks. The Company has no debt to financial institutions.
The balance sheet solvency amounted to $13,370 at December 31, 2022. The Company aims to increase revenue
generation through sales of its products; however, it does not currently have the cash resources to fully meet its
operating commitments for the twelve months following the date of the financial statements. This cast significant
Other accounting policies
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,
Equity is comprised of the following:
•
Share Capital: comprised of the nominal amount of the parent’s ordinary shares. This capital is not
distributable in the form of dividends under the Norwegian Public Limited Liability Companies Act
(the “PLLC Act”) (refer to Note 15: Share Capital and Share Premium).
•
Share Premium: comprised of: (1) the amount received attributable to Share Capital, in excess of the
nominal amount of shares issued by the parent company, reduced by; (2) issuance costs directly
attributable to the capital increase and; (3) transfers into the Capital Reduction Reserve, (refer to
Note 15: Share Capital and Share Premium).
•
Share Based Payment Reserve: comprised of Share-based payment reserve.
•
Foreign Currency Translation Effects: comprised of Currency Translation Difference.
•
Capital Reduction Reserve: comprised of the absorption of accumulated losses of the Company by
the Share Premium, as resolved by the Company’s Board of Directors (refer to Note 15: Share
Capital and Share Premium).
•
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 incurred 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 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 primary customers for the
Company’s products are smart card manufacturers and similar solution integrators. The Company currently does
not utilize distributors for the resale of its products.
The Company, from time to time, licenses its intellectual property under right to use licenses, in which royalties
due to the Company are based upon a percentage of the licensee’s sales and/or unit volumes. For the years ended
December 31, 2022, 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 obligations 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 on 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 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. The
Company does not have material obligations or reserves for warranties, returns, or customer refunds.There were
Cost of materials, net of inventory change, primarily consists of the costs of raw materials, contract
manufacturing, and transportation associated with production and storage of products for sale to customers, net
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 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 using 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 not subject to foreign currency adjustments
at entity level.
Assets and liabilities in entities with another functional currency than the USD, including goodwill and fair value
adjustments, if any, are translated into USD using the exchange rates in effect at the reporting date of the
Consolidated Statements of Financial Position. Amounts reported on the Consolidated 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 Other comprehensive income (“OCI”). Translation gains or losses previously recognized in OCI are
Expenses in this category consist primarily of the costs of services and materials used in engineering activities
and certain outsourced development activities. 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 paid to individual contractors serving in engineering
roles is included in Research and development expenses.
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 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 development 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.
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
successful and the amount can be determined reliably, the Company 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
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
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 allocating 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)
2022
2021
2020
Product Revenue:
Europe, Middle East, and Africa
$
3,574
$
2,807
$
952
Americas
252
0
5
Asia-Pacific
63
30
56
Total product revenue
3,889
2,837
1,013
Service Revenue:
Europe, Middle East, and Africa
10
3
2
Americas
193
0
77
Asia-Pacific
—
0
3
Total service revenue
203
3
82
Total Revenue
$
4,091
$
2,840
$
1,095
The Company’s revenue has in the past come from a limited number of customers. During 2022, the top two
customers accounted for approximately 48% and 24% of the Company’s revenue, respectively, and in 2021, the
top two customers accounted for 85% and 9% of revenue, respectively. In 2020, the top two customers accounted
Accounting standards issued but not effective
The Company will adopt applicable new and amended accounting standards, including interpretations, when they
become effective. We do not expect any significant impact on the Company's result or financial position from the
new and amended standards issued but not yet effective.
Amendments to IAS 1–Classification of liabilities as current or non-current
— The amendments clarify the
requirements for classifying liabilities as current or non-current. The amendments are effective for reporting
periods beginning on or after January 1, 2023, and must be applied retrospectively. The amendments will not
have a material impact on any of the Company's liabilities as of December 31, 2022, 2021 or 2020.
Amendments to IAS 8–Definition of accounting estimates
— The amendments clarify the distinction between
changes in accounting estimates and changes in accounting policies and the correction of errors. The
amendments also clarify how entities use measurement techniques and inputs to develop accounting estimates.
The amendments are effective for reporting periods beginning on or after January 1, 2023, and apply to changes
in accounting policies and changes in accounting estimates that occur on or after the start of such period. The
amendments are not expected to have a material impact on the company's financial statements.
Amendments to IAS 1 and IFRS Practice statement 2–Disclosure of accounting policies
— The amendments
replace the requirement to disclose the ‘significant’ accounting policies with a requirement to disclose the
‘material’ accounting policies. The amendments to IAS 1 are applicable for annual periods beginning on or after
1 January 2023. The Company will revise the accounting policy information disclosures for 2023 to become
consistent with the amended IAS 1.
Amendments to IAS 12–Deferred tax related to asssets and liabilities arising from a single transaction
— The
amendments should be applied to transactions that occur on or after the beginning of the earliest comparative
period presented. The amendments are not expected to have a material impact on the company's financial
Compensation and benefits
Compensation and benefits expenses consist of costs for direct employees of the Company. Compensation of
individual contractors 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)
2022
2021
2020
Salary, payroll tax, benefits, other
$
17,389
$
18,197
$
14,917
Share-based compensation
1,824
2,910
2,755
Total
$
19,213
$
21,107
$
17,672
The table below sets forth the number of employees and individual contractors by their function, measured in
full-time equivalents. Most of the contractors live and work in countries in which the Company does not have a
formal business presence.
December 31, 2022
December 31, 2021
December 31, 2020
Employees
Contractors
Employees
Contractors
Employees
Contractors
Research and development
64
6
77
8
75
6
Marketing and sales
6
9
6
9
6
5
General and administrative
5
2
8
1
7
1
Supply chain and distribution
7
-
2
—
2
—
Total staff
82
17
93
18
90
12
The average number of employees for the years 2022, 2021, and 2020 were 90, 95 and 93 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-
based awards granted pursuant to the Company’s subscription rights plans and its employee share purchase plan
Compensation of Key Management
For 2022 and 2021 key management consisted of the Chief Executive Officer (“CEO”), Chief Financial Officer
(“CFO”), Chief Technology Officer (“CTO”), and Chief Commercial Officer (“CCO”). For 2020, key
management consisted of the CEO, CFO, and CTO.
Year Ended December 31,
2022
2021
2020
(in thousands)
Compensation and short-term benefits
$
1,362
$
1,425
$
906
Medical and similar benefits, contributions to pension schemes
62
73
66
Share-based compensation
271
443
449
Total compensation of key management
$
1,695
$
1,941
$
1,421
Compensation and other short-term benefits, whether cash or in kind, are the amounts declared for tax purposes
for the respective years. Pension cost and share-based remuneration are expensed amounts in the respecitve
years. Gains on exercise of incentive subscription rights, if any, are not included. Employers' tax is not included.
The variable incentive pay paid in one year relate to achievements in the previous year. No officers exercised
incentive subscription rights in 2022 or 2020. One former officer exercised options in 2021, after employment
was terminated.
Key management held the following subscription rights to Ordinary Shares under the subscription rights
incentive plans with the following expiration dates and exercise prices:
Number outstanding as of December 31,
Grant Date
Expiration Date
Exercise Price
(NOK)
2022
2021
2020
August 14, 2019
May 9, 2024
1.65
327,800
327,800
2,327,800
February 26, 2020
May 9, 2024
1.11
5,000,000
5,000,000
5,000,000
June 17, 2020
May 15, 2025
1.71
1,125,000
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
2,000,000
August 11, 2021
May 12, 2026
2.40
1,420,700
1,668,100
March 23, 2022
May 12, 2026
2.08
836,900
August 10, 2022
May 12, 2027
1.18
1,631,000
Total
12,341,400
12,870,900
8,452,800
Compensation paid to the Board is presented in Note 17.
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 2022, 2021 or 2020. 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 engineering roles.
Government grants earned by the Company in support of research and development activities are credited against
research and development costs when it is realistic that the application or claim will be successful and the
amount can be determined reliably.
Year Ended December 31,
($000s)
2022
2021
2020
Gross research and development expenses
$
3,959
$
3,356
$
4,196
Government grants credited
(709
)
(676
)
(2,301
)
Net research and development expenses
$
3,250
$
2,680
$
1,895
Government grants
Year Ended December 31,
($000s)
2022
2021
2020
Norway
$
312
$
538
$
506
United Kingdom
397
138
1,795
Total
$
709
$
676
$
2,301
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, SME R&D tax relief. Under the program, the Company, in its current loss position, is eligible for a
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.
As of December 31, 2022, the Company has a tax loss carryforward balance in Norway of $252.8 million,
representing a potential deferred tax asset, if recognized and calculated at the current corporate tax rate of 22.0%,
of $55.6 million. The Company also has a tax loss carryforward balance in the United Kingdom of $3.4 million,
representing a potential deferred tax asset, if recognized and calculated at the current corporate tax rate of 19.0%,
of $0.6 million. The Company does not have a tax loss carryforward balance or a deferred tax liability in China.
In the United States, the Company has tax credits, associated with research and development activities in the
United States, totaling $1.4 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 statement of financial position, consistent with IFRS standards. A deferred
tax asset will be recognized when the Company determines it is more likely 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)
2022
2021
2020
Taxes payable on the result of the year
$
33
$
90
$
44
Adjustment in respect to prior years
(69
)
—
(113
)
Change in recorded deferred tax liability
—
—
(31
)
Income tax expense (benefit)
$
(36
)
$
90
$
(100
)
Year Ended December 31,
($000s)
2022
2021
2020
Employer’s tax on share-based compensation
$
(24
)
$
(371
)
$
(216
)
Fixed Assets differences
987
1,154
675
Inventory differences
(131
)
(5
)
(213
)
Accruals differences
(993
)
(1,152
)
(1,144
)
Research and development tax credits
(1,404
)
(1,563
)
(1,787
)
Losses carried forward
(256,201
)
(253,300
)
(225,951
)
Basis for calculation of deferred tax asset
(257,766
)
(255,237
)
(228,636
)
Calculated net deferred tax expense (benefit), local tax rates 5-
22%
(56,592
)
(55,953
)
(51,251
)
Unrecognized deferred tax asset *
56,592
55,953
51,251
Deferred tax liability (asset) in the balance sheet
$
—
$
—
$
—
Reconciliation of tax expense (benefit)
Year Ended December 31,
($000s)
2022
2021
2020
Loss before tax
$
(32,698
)
$
(32,552
)
$
(26,853
)
Norway statutory tax, calculated at rate of 22%
(7,194
)
(7,132
)
(5,908
)
Difference in subsidiary taxes, using local rates vs 22%
68
(179
)
22
Estimated tax on permanent differences
(267
)
(568
)
389
Adjustment in respect of prior years
(69
)
—
(112
)
Use of and change in tax loss carried forward
7,426
7,969
5,510
Income tax expense (benefit)
$
(36
)
$
90
$
(99
)
* As of December 31, 2022, 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 restrictions as to how long tax losses may be carried forward in Norway or the United
Kingdom. In China, the tax loss carryforwards that had not been utilized by the end of 2022, expired as of Dec 31,
2022. Tax credits associated with research and development activities in the United States, totaling $1.4 million as of
December 31, 2022, 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 their 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.
The loss per share is the quotient of the net loss for the period divided by the weighted average number of
Ordinary Shares outstanding for the year.
Year Ended December 31,
2022
2021
2020
Net loss for the year ($000s)
$
(32,662
)
$
(32,552
)
$
(26,754
)
Number of ordinary shares issued at December 31
1,166,326,584
1,010,388,454
832,146,748
Weighted average basic number of ordinary shares
1,026,932,569
918,847,427
767,069,645
Dilution effect (treasury stock method)
5,058,154
21,586,108
6,323,417
Weighted average diluted number of shares
1,031,990,723
940,433,535
773,393,062
Loss per share for the year (basic and diluted*)
$
(0.03
)
$
(0.04
)
$
(0.03
)
* 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-
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, 2022, and December
31, 2021, reflected the following activity:
Year Ended December 31,
($000s)
2022
2021
Cost at the beginning of the year
$
968
$
968
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, 2022. Based on the 2022 assessment, no impairment charge has been
made. The Company used a discounted cash flow model which utilized Level 3 measures that represent
unobservable inputs. Key assumptions used to determine the estimated fair value include: (a) internal cash flows
forecasts for 4 years following the assessment date, including expected revenue growth, costs to produce,
operating profit margins and estimated capital needs; (b) an estimated terminal value using a terminal year long-
term future growth rate of 3.0% determined based on the long-term expected prospects of the Company; and (c)
a discount rate (post-tax) of 12 % which reflects the weighted-average cost of capital adjusted for the relevant
risk associated with the Company's operations. No reasonably possible changes in any key assumptions would
cause the carrying amount to exceed the recoverable amount.
Acquired identifiable intangible assets, consisting primarily of patents, are held at cost, less accumulated
amortization and impairment charges. Other intangible asset balances as of December 31, 2022, and December
31, 2021, reflected the following activity:
Year Ended December 31,
($000s)
2022
2021
Amortization period (straight-line, in years)
10 - 17
10 - 17
Cost at the beginning of the year
$
5,173
$
5,173
Additions
—
—
Impact of currency translation
—
—
Cost at the end of the year
$
5,173
$
5,173
Accumulated Amortization at the beginning of the year
$
3,208
$
2,731
Amortization
477
477
Impact of currency translation
—
—
Accumulated Amortization at the end of the year
3,685
3,208
Carrying amount at the end of the year
$
1,488
$
1,965
Acquired patents are capitalized and amortized over the estimated useful life, which is the lifetime of the
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 the 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 creating
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, 2022, and December 31, 2021, reflected the
following activity:
2022
($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, 2021
$
855
$
782
$
2,281
$
3,918
Additions
125
38
104
267
Impact of currency translation
(11
)
(18
)
(37
)
(66
)
Accumulated cost at December 31, 2022
969
803
2,348
4,120
Accumulated depreciation at December 31, 2021
$
367
$
671
$
1,579
$
2,617
Depreciation
125
73
246
443
Impact of currency translation
(6
)
(10
)
(33
)
(48
)
Accumulated depreciation at December 31, 2022
486
734
1,793
3,012
Carrying amount at December 31, 2022
$
483
$
69
$
556
$
1,107
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
141
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
The Company’s leases are for office and laboratory space occupied by employees. There are no exposure to
future variable lease payments that are not reflected in the measurement of lease liabilities. Activity during 2022
and 2021 related to right-of-use assets are shown below.
Year Ended December 31,
($000s)
2022
2021
Depreciation periods (straight-line, in years)
3-5
3-5
Cost at the beginning of the year
$
2,691
$
2,543
Additions
1,654
158
Disposal of right to use assets
(1,569
)
—
Impact of currency translation
(133
)
(10
)
Cost at the end of the year
$
2,643
$
2,691
Accumulated depreciation at the beginning of the year
$
2,334
$
1,527
Depreciation
431
818
Accumulated depreciation of disposed right of use assets
(1,566
)
—
Impact of currency translation
(101
)
(11
)
Accumulated depreciation at the end of the year
1,098
2,334
Recorded value at the end of the year
$
1,545
$
357
Costs related to right-of-use assets included in the Consolidated Statements of Profit and Loss include the
following:
Leases in the Consolidated Statements of Profit and Loss
Year Ended December 31,
($000s)
2022
2021
2020
Depreciation
$
431
$
818
$
810
Finance cost
33
31
63
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 Statements of Financial Position
($000s)
2022
2021
Balance at January 1
$
373
$
1,058
Additions
1,575
158
Accretion of interest
33
31
Payments
(437
)
(874
)
Balance at December 31
1,544
373
Non-current
1,142
11
Current
402
362
Total lease liabilities
$
1,544
$
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, the Company maintains allowances for doubtful accounts for estimated
losses resulting from the inability of its customers to make required payments, based on assessments of
customers’ 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 Company does not require collateral 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
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 grants.
Balances of accounts receivable at December 31, 2022, and December 31, 2021, are as follows:
Year ended December 31, 2022
Maturity
($000s)
Less than 3
months
3-6 months
6-12 Months
Total
Accounts receivable, trade
$
1,349
$
—
$
—
$
1,349
Accounts receivable, other
198
33
698
929
Total
$
1,547
$
33
$
698
$
2,278
Year ended December 31, 2021
Maturity
($000s)
Less than 3
months
3-6 months
6-12 Months
Total
Accounts receivable, trade
$
801
$
0
$
0
$
801
Accounts receivable, other
133
31
539
703
Total
$
934
$
31
$
539
$
1,504
The Company did not have any liabilities at December 31, 2022, or December 31, 2021, which represented debt
to financial institutions. The Company’s monetary liabilities at December 31, 2022, and December 31, 2021,
were as follows:
Year ended December 31, 2022
Maturity
($000s)
Less
than
3 months
3-6 months
6-12
months
1-5 years
Total
Non-current lease liabilities
$
—
$
—
$
—
$
1,142
$
1,142
Accounts payable
1,540
—
—
—
1,540
Current lease liabilities
125
105
172
—
402
Other liabilities
838
1,400
459
—
2,697
Total
$
2,503
$
1,505
$
631
$
1,142
$
5,781
Year ended December 31, 2021
Maturity
($000s)
Less
than
3 months
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
Total
$
2,457
$
358
$
711
$
382
$
3,908
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 $24 on
December 31, 2022, and $371 on December 31, 2021. It will be due only when the associated subscription rights
are exercised. 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 $33 in 2022 and $31 in 2021.
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,
2022
2021
($000s)
Cost
Reserves
Net
Cost
Reserves
Net
Raw materials
$
2,280
$
—
$
2,280
$
562
$
—
$
562
Work in progress
1,486
—
1,486
107
—
107
Finished goods
812
(130
)
681
570
(5
)
565
Total Inventory
$
4,577
$
(130
)
$
4,447
$
1,239
$
(5
)
$
1,234
In 2022, 2021, and 2020, materials with values of $154, $124, and $32 respectively, were consumed in new
USD-valued cash and cash equivalent balances by currency were as follows:
Year Ended December 31,
($000s)
2022
2021
Denominated in USD
$
14,917
$
28,217
Denominated in NOK
990
3,707
Denominated in GBP
128
978
Denominated in CNY
90
857
Total
$
16,124
$
33,759
Of the amounts above, employees’ withheld payroll tax deposits amounted to $26 and $31 at the end of 2022 and
2021, respectively. Only the withheld payroll tax deposits were restricted. Deposits for facilities rent or utilities
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.
During the years ended December 31, 2022 and December 31, 2021, the Board of Directors approved the transfer
of $18.0 million and $46.0 million, respectively, of Share Premium to absorb uncovered losses as allowed under
Norwegian law. As a result, Share Premium has been reduced by a cumulative amount of $287.5 million as of
the year ended December 31, 2022 and $269.5 million as of the year ended December 31, 2021 against Capital
Reduction Reserve. The transfer has no impact on the total equity, comprehensive income (loss), assets
(including cash) nor liabilities.
Number of
Ordinary Shares
Balance at December 31, 2020
832,146,748
Private placement of Ordinary Shares on February 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
Share issues (Employee Share Purchase Plan)
4,947,546
Share issue (exercise of subscription rights)
990,584
Private placement of Ordinary Shares on November 16
150,000,000
Balance at December 31, 2022
1,166,326,584
Costs related to share issuance have been charged against equity and amounted to $
737
in 2022, $
2,827
in 2021,
and $
689
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, 2022, at the Annual
General Meeting, the shareholders resolved to adopt the 2022 Subscription Rights Incentive Plan (the “2022
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 2022 Plan, the Board may grant up to 101,254,865 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, 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,
2022
2021
2020
Exercise price (NOK)
1.03 – 2.08
2.38 – 3.10
1.10 – 1.80
Weighted average exercise price per share
1.54
2.53
1.62
Weighted average share price at date of grant
1.42
2.45
1.42
Expected term (years)
4.45
4.62
4.77
Weighted average term (years)
3.27
3.35
2.96
Share price volatility (percent)
72 – 100
85 – 112
78 – 113
Risk-free interest rate
2.653 %
0.983 %
0.354 %
Expected dividend payment
-
-
-
Forfeiture
None
None
None
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, and expire on May 15, 2025.
Subscription rights outstanding at year end
Subscription rights activity
2022
2021
Number of
Subscription
Rights
Weighted
Average
Exercise
Price
(NOK)
Number of
Subscription
Rights
Weighted
Average
Exercise
Price
(NOK)
Outstanding as of January 1
71,756,399
1.84
56,344,093
1.66
Granted
19,342,900
1.54
21,885,200
2.53
Exercised
(930,184
)
0.29
(1,767,879
)
1.33
Forfeited
(8,987,484
)
2.25
(3,165,015
)
1.97
Expired
(75,000
)
8.42
(1,540,000
)
5.22
Outstanding as of December 31
81,106,631
1.74
71,756,399
1.84
Subscription rights exercisable as of December 31
36,416,302
1.65
18,657,117
1.59
Number of
Subscription
Rights
Weighted
Average
Fair Value
(NOK) per
Subscr.
Right
Number of
Subscription
Rights
Weighted
Average
Fair Value
(NOK) per
Subscr.
Right
Subscription rights granted in the year
19,342,900
0.82
21,885,200
1.51
Composition of outstanding and exercisable subscription rights at December 31, 2022
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 - 0.49
3,486,882
0.15
1.36
0.00
3,486,882
0.15
1.35
0.50 - 0.99
720,800
0.71
1.36
0.22
515,600
0.71
0.97
1.00 - 1.49
16,507,000
1.14
3.34
1.48
2,759,850
1.11
0.68
1.50 - 1.99
36,300,174
1.70
2.15
0.16
24,589,220
1.70
1.42
2.00 - 2.49
17,218,050
2.28
3.37
1.27
2,732,625
2.40
0.87
2.50 - 2.99
5,412,900
2.65
3.37
1.34
1,353,225
2.65
0.84
3.00 - 4.99
960,825
3.34
1.96
0.48
479,200
3.52
0.79
5.00 - 9.99
500,000
5.10
0.36
0.00
500,000
5.10
0.35
Total
81,106,631
1.74
2.68
0.74
36,416,602
1.65
1.27
Composition of outstanding and exercisable subscription rights at December 31, 2021
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
0.00
575,000
5.53
1.23
Total
71,756,399
1.84
3.32
1.22
18,657,117
1.59
3.32
Employee Share Purchase Plan
The Employee Share Purchase Plan (“ESPP”) is revolved each year at the Annual General Meeting. The current
ESPP was approved by shareholders at the 2022 Annual General Meeting. Under the ESPP, an IDEX employee
based in Norway, the United Kingdom, or the United States may contribute up to 20% (subject to 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 Share is granted to a participating
employees on the first day of a 6-months' “offering period” to purchase new 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
shares are not restricted.
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.
The share-based remuneration cost of the ESPP is calculated at the start of each contribution period, and
amortized over that period. The cost is based on the contribution amount and amounts to the discount of 15% at
the beginning of the period, plus the option value of an 85% call and 15% put option granted at the beginning of
the period. The option value is based on a Black-Scholes option pricing model applying prevailing interest rates
and share price volatility at the beginning of the period.
ESPP cost calculation parameters
September 1, 2022
March 1, 2022
September 1, 2021
Expected contribution amount (NOK 1,000)
2,025
2,307
3,009
Share price on start date (NOK per share)
0.83
1.96
2.65
Share price volatility
68
%
66
%
64
%
Risk-free interest rate
2.82
%
0.95
%
0.25
%
Expected dividend payment
—
—
—
Expected number of shares
2,854,899
1,385,049
1,335,810
Share-based compensation cost per expected share
0.32
0.75
1.01
In the two offering periods completed within 2022, an average of 43 employees (2021: 53) participated in the
ESPP and purchased a total of 4,947,546 Ordinary Shares at a weighted average price of NOK 1.08 (2021:
2,946,019 shares at average NOK 2.00 per share).
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 – Compensation and 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 2022, 2021 and 2020:
Year Ended December 31, 2022
($000s)
Cash
Compensation
Shared-based
Compensation
Total
Morten Opstad, Board chair
$
53
$
—
$
53
Lawrence J. Ciaccia, Board deputy chair
53
—
53
Deborah Davis
68
—
68
Hanne Hovding
55
—
55
Annika Olsson
44
—
44
Thomas M. Quindlen
55
—
55
Stephen A. Skaggs
62
—
62
$
390
$
—
$
390
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
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
$
124
$
70
$
194
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 these plans, see Note
16 – Share-based compensation.
Subscription rights outstanding as
of December 31,
Grant Date
Expiration
Date
Exercise
Price
(NOK per
share)
2022
2021
2020
June 17, 2020
May 15,
2025
1.71
600,000
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.
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 $234 in 2022, $338 in 2021, and $477 in 2020.
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 Council ("SAC") since January 2014. The SAC was discontinued effective
June 30, 2022. From time to time, Mr. Ciaccia also provides consulting services to IDEX. The fees paid to Mr.
Ciaccia for his services totaled $58 in 2022, $65 in 2021, and $65 in 2020.
In connection with our November 2022 private placement, we entered into a share lending agreement with three
shareholders in order to facilitate settlement of the new shares in the private placement. As a fixed fee for the
share lending, each lender received a fee equaling 5% per annum of the sum of the subscription price per new
share in the private placement multiplied by the number of borrowed shares lent by the respective lender. In total,
we paid approximately $14 thousand under the share lending agreement with approximately $6 thousand paid to
Sundt AS and approximately $4 thousand each paid to Sundvall Holding AS and Mr. Robert Keith.
Year Ended December 31,
($000s)
2022
2021
2020
Sales and marketing activities
$
2,840
$
1,387
$
764
Legal, audit, accounting and other services
2,073
2,332
2,906
IT expenses
1,894
2,047
1,621
Travel expenses
230
132
125
Other operating expenses
1,364
1,449
520
Total other operating expenses
$
8,402
$
7,347
$
5,936
The following table sets out the aggregate fees related to professional services rendered by the Company’s
independent auditor, Ernst & Young AS (“EY”), for the calendar years 2022, 2021, and 2020:
Year Ended December 31,
($000s)
2022
2021
2020
Audit services
$
447
$
352
$
235
Audit-related services
43
22
8
Tax services
7
7
0
Other services
4
24
12
$
501
$
405
$
255
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
represent fees, approved by our Audit Committee, for tax services not related to the audit provided
by EY, pursuant to the provisions of the Sarbanes-Oxley Act.
Other services
represent other fees, approved by our Audit Committee, for services not related to the audit
The Board resolved on February 21, 2023, to grant 1,423,800 incentive subscription rights to five new employees
and individual contractors. The grant was made under the Company’s 2022 Subscription Rights Incentive Plan.
The exercise price of the subscription rights is NOK 0.72 per share. The grants vest by 25% per year and expire
on May 15, 2027. Following the grants, there were 82,065,247 subscription rights outstanding.
The Board resolved on February 28, 2023, to issue 2,648,336 Ordinary Shares at NOK 0.71 per share to
employees participating in the Company’s ESPP.
There have been no events between December 31, 2022, and the date of these financial statements that have had
any material impact on the Company’s results for 2022, or the value of the Company’s assets and liabilities as of
IDEX Biometrics ASA Annual Report 2022
Parent Company Separate Financial Statements and Notes
54
IDEX Biometrics ASA
Parent Company Separate Statements of Profit and Loss
(In thousands, except per share amounts)
Year Ended December 31,
Note
2022
2021
Revenue:
Product
$
3,889
$
2,837
Service
203
3
Total revenue
2
4,091
2,840
Operating expenses:
Cost of materials, net of inventory change
3,244
1,254
Compensation and benefits
3
2,906
4,038
Research and development
4, 5, 6
16,079
25,301
Other operating expenses
7, 21
10,943
9,383
Amortization and depreciation
9, 10, 11
599
600
Total operating expenses
33,771
40,575
Loss from operations
(29,679
)
(37,735
)
Finance income
19
544
1,705
Finance cost
19
(1,888
)
(2,859
)
Loss before tax
(31,023
)
(38,889
)
Income tax expense
8
—
—
Net loss for the year
$
(31,023
)
$
(38,889
)
Loss per share, basic and diluted
15
$
(0.03
)
$
(0.04
)
Statements of Comprehensive Income
Year Ended December 31,
2022
2021
Net loss for the year
$
(31,023
)
$
(38,889
)
Other comprehensive income that may be
reclassified to profit (loss) in subsequent periods:
—
(9
)
Total comprehensive income (loss) for the period (net of tax)
$
(31,023
)
(38,898
)
The accompanying notes are an integral part of these financial statements.
IDEX Biometrics ASA
Parent Company
Separate
Statements of Financial Position
(In thousands, except share numbers and per share amounts)
December 31,
Note
2022
2021
Assets
Non-current assets:
Goodwill
9
$
968
$
968
Intangible assets
9
1,488
1,965
Property, plant and equipment
10
367
463
Right-of-use assets
11
62
12
Shares in subsidiaries
1, 12
1,749
1,749
Non-current receivables
18
7
8
Total non-current assets
4,641
5,165
Current assets:
Prepaid expenses
18
562
469
Inventory
20
4,447
1,234
Accounts receivable, other
18
465
726
Accounts receivable, trade
18
1,349
801
Receivables from group companies
18
7,597
6,101
Cash and cash equivalents
13
14,242
30,298
Total current assets
28,663
39,629
Total assets
$
33,304
$
44,795
The accompanying notes are an integral part of these financial statements.
December 31,
Note
2022
2021
Equity and liabilities
Share capital (NOK 0.15 par value per share, 1,166,326,584 and
1,010,388,454
shares issued and outstanding at December 31, 2022 and 2021,
respectively)
$
22,762
$
20,410
Share premium
4,036
9,452
Share-based payment
23,575
21,414
Capital reduction reserves
287,500
269,500
Accumulated loss
(312,369
)
(281,345
)
Total equity
25,505
39,431
Non-current liabilities:
Non-current lease liabilities
11
13
—
Total non-current liabilities
13
—
Current liabilities:
Accounts Payable
19
1,400
640
Payables to group companies
19
5,057
3,314
Current lease liabilities
19
46
10
Public duties payable
98
89
Other current liabilities
19
1,185
1,311
Total current liabilities
7,786
5,364
Total liabilities
7,799
5,364
Total equity and liabilities
$
33,304
$
44,795
The accompanying notes are an integral part of these financial statements.
April 26, 2023
The board of directors of IDEX Biometrics ASA
/s/ Morten Opstad
Morten Opstad
Chair
/s/ Lawrence John Ciaccia
Lawrence John Ciaccia
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
IDEX Biometrics ASA
Parent Company Separate Statements of Changes in Equity
(In thousands)
Share
capital
Share
premium
Share-
based
payment
Foreign
currency
translation
effects
Capital
reduction
reserve *
Accumulated
loss *
Total
equity
Balance at January 1, 2021
$
17,251
$
3,608
$
18,664
$
(11,630
)
$
223,500
$
(230,817
)
$
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
)
Transfer of share premium
—
(46,000
)
—
—
46,000
—
—
Other comprehensive income
—
—
—
—
—
(9
)
(9
)
Balance at December 31, 2021
20,410
9,452
21,414
—
269,500
(281,346
)
39,431
Share issuance
2,273
12,103
—
—
—
—
14,376
Share-based compensation
79
481
2,161
—
—
—
2,721
Loss for the year
—
—
—
—
—
(31,023
)
(31,023
)
Transfer of share premium
—
(18,000
)
—
—
18,000
—
—
Other comprehensive income
—
—
—
—
—
—
—
Balance at December 31, 2022
$
22,762
$
4,036
$
23,576
$
—
$
287,500
$
(312,369
)
$
25,505
*Refer also to Note 1: Organization, basis of presentation, and significant accounting policies and Note 15: Share
capital and share premium.
The accompanying notes are an integral part of these financial statements.
IDEX Biometrics ASA
Parent Company Separate Statements of Cash Flow
(In thousands)
December 31,
Note
2022
2021
Operating activities
Profit (loss) before tax
$
(31,023
)
$
(38,889
)
Amortization and depreciation expense
9, 10, 11
599
600
Share-based compensation expense
2,721
2,751
(Increase) in inventories
(3,213
)
(375
)
(Increase) in accounts receivable
(2,045
)
(314
)
Increase in accounts payable
2,503
120
Change in other working capital items
(1
)
4,989
Other operating activities
(1,435
)
(1,190
)
Interest paid
(2
)
(1
)
Other financial items
1,346
1,154
Net cash flow from operating activities
(30,549
)
(31,156
)
Investing activities
Purchases of property, plant and equipment
9, 10, 11
(2
)
(2
)
Repayments on loans to subsidiaries
1
1,050
Interest received
92
38
Net cash flows from investing activities
91
1,086
Financing activities
Net proceeds from issue of shares
15, 16
14,376
54,992
Payment of principal portion of lease liabilities
11
25
(29
)
Net cash flow from financing activities
14,401
54,963
Net change in cash and cash equivalents
(16,056
)
24,892
Opening cash and cash equivalents balance
30,298
5,406
Cash and cash equivalents at December 31
13
$
14,242
$
30,298
IDEX Biometrics ASA Annual Report 2022
Parent Company Separate Financial Statements and Notes
59
NOTES TO PARENT COMPANY SEPARATE FINANCIAL
STATEMENTS
(Amounts in thousands, except per share amounts)
1. Organization, basis of presentation, and significant accounting policies
IDEX Biometrics ASA and its wholly-owned subsidiaries (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 financial payment cards, access
control cards, and card-based devices for the storage of digital currencies.
IDEX Biometrics ASA, the parent company, 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. The Company’s
Ordinary 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 American 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 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 generated by the parent company. The subsidiaries provide
various services to the parent company, mainly associated with engineering, supply-chain administration, and
customer service functions.
IDEX Biometrics ASA prepares its Financial Statementson a historical cost basis, and in accordance with
International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board
(“IASB”) and IFRS as endorsed by the European Union. The financial statements are presented in U.S. Dollars
(“USD”), and all values are rounded to the nearest thousand ($000), except when otherwise indicated. As of
January 1, 2020, the parent company changed 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 from NOK to USD, was determined by to be appropriate, given that the parent
company’s operational transactions had come to be primarily dominated in USD.
During the year ended December 31, 2022, the Company revised its classification related to the presentation of
Capital Reduction Reserve to reflect the legal decision of the absorption of historical accounting losses into
Share Premium. Previously, the Company presented transfer of Share premium to absorb losses as a component
of Accumulated Loss. The Company changed its presentation to reflect the amount of transfer losses to Share
Premium separately from accumulated losses on the Consolidated Statements of Financial Position and
Consolidated Statements of Changes in Equity. The Company has applied this change to all periods.
The Company has evaluated whether there are conditions and events, considered in the aggregate, that raise
significant doubt about the Company’s ability to continue as a going concern within one year after the date the
consolidated financial statements are issued. From its inception through December 31, 2022, IDEX has incurred
significant operating losses and has reported negative cash flows from operations. As of December 31, 2022, the
Company has accumulated losses of $303,401. The Company has no debt to financial institutions. Net equity
amounted to $22,841 and the consolidated statement of financial position solvency amounted to $13,370 at the
end of 2022. The Company does not expect that its existing cash would enable it to fund its operating expenses
and capital expenditures requirements for the next twelve months. The future viability of the Company beyond
that point is largely dependent on its ability to generate cash from operating activities and to raise additional
capital to finance its operations.
The Company plans to undertake a private placement of shares or procure other substantial funding by the end of
the third quarter of 2023 to provide additional funding to support research and development and fund working
capital. While the Company has been successful in the past in raising funds through private placements of shares,
there is no assurance that we will be successful in the future. The Company’s failure to raise capital as and when
needed could have a negative impact on its financial condition and its ability to pursue its business strategies.
Based on its recurring losses from operations incurred since inception, expectation of continuing losses for the
foreseeable future and need to raise additional capital to finance its future operations, the Company has
concluded that there is significant doubt about its ability to continue as a going concern.
IDEX Biometrics ASA Annual Report 2022
Parent Company Separate Financial Statements and Notes
60
The accompanying consolidated financial statements do not include any adjustments that might result from the
outcome of this uncertainty. Accordingly, the consolidated financial statements have been prepared on a basis
that assumes the Company will continue as a going concern and which contemplates the realization of assets and
satisfaction of liabilities and commitment in the ordinary course of business.
IDEX Biometrics ASA is the parent company in the IDEX group . The Consolidated Financial Statements of
IDEX Biometrics ASA including its subsidiaries are published separately.
The parent company separate financial statements for the year ended December 31, 2022 were approved by the
board on April 26, 2023.
Significant accounting policies
Accounting policies that are significant to the Company’s results and financial position are discussed below.
The statements of profit and loss are presented by the nature of expense. The cash flow statements are presented
by the indirect method.
There have not been any changes to the Company's accounting policies applied in the financial statements for
2022 compared to those applied in the annual financial statements for 2021.
Accounting estimates, based on the use of judgment and assumptions
The application of certain accounting standards requires estimates based on considerable judgment and
assumptions that may involve high levels of uncertainty at the time the estimates are made. Estimates are
continually evaluated,. Assumptions are based on historical experience and other factors, including expectations
of future events and parameters that are believed to be reasonable under the circumstances. Actual outcomes may
deviate from estimates.
Changes in estimates and deviations between estimated result and actual outcome may have a material influence
on the financial statements in the periods when estimates or assumptions are changed or when uncertainty is
resolved. The following represent the most significant accounting items based on estimates, based on
management's judgment and assumptions.
Goodwill
Goodwill represents the future economic value of assets acquired in a business combination above the separately
recorded values of the assets. Subsequent impairment testing involves quantitatively comparing the recorded
value to the estimated value of the business unit to which the goodwill is assigned. The estimate is based on
judgments of when and whether there will be an economic benefit from the business unit, and assumptions about
the amounts. As of December 31, 2022, 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 2022, 2021, or 2020.
Acquired intangible assets are capitalized initially at fair value, normally the purchase price. Intangible assets are
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. An intangible asset’s carrying amount is compared to the
asset's recoverable amount. 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 estimated cash flow from continued use.
The estimate is based on judgments of when and whether there will be an economic benefit from the asset, and
assumptions about the amounts. As of December 31, 2022, 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. Inventory is recorded at the lower of
cost and net realizable value. Impairment is assessed quarterly, based on management’s judgment of when and
whether the inventory may be sold, and assumptions about the sales price and selling costs. The estimate is
uncertain, because timing of sales are subject to many risks. Selling prices are uncertain in the market for IDEX's
products. 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.
IDEX Biometrics ASA Annual Report 2022
Parent Company Separate Financial Statements and Notes
61
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, and record share-based remuneration cost over the vesting period of the SRs. The
valuation is based on share price and exercise price, share price volatility, interest rates, and the expected term of
the SRs, based on historical data. The parameters may in the future deviate from the historical observations. The
accrued cost of the Company’s employment taxes associated with the earned intrinsic value of the SRs will vary
with share price, which is a highly unpredictable parameter.
IDEX estimates the fair value of the Employee Share Purchase Plan (“ESPP”) at the grant date, i.e. the first date
of the contribution period, by using the Black-Scholes option pricing model. The share-based compensation is
expensed over the contribution period. The valuation is based on share price and exercise price, share price
volatility, interest rates, and the term of the contribution period. The parameters may in the future deviate from
the historical observations.
Climate Change
As of December 31, 2022, the possible future financial impact to the Company resulting from climate change is
uncertain. Given the nature of the Company’s operations and products, the Company believe any such impact not
to 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 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.
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 or 2022, 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.
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 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
funded through the issuance of Ordinary Shares since it was established in 1996.
The current cash position and financial forecasts indicate that in 2023, the company will need significant funding
in the form of equity injection, debt or other. The board is considering various funding options and believes that
the Company will obtain further financing for its planned operation, growth and working capital requirements.
Interest Rate Risk
As of December 31, 2022, IDEX had cash of $16.1 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.
IDEX Biometrics ASA Annual Report 2022
Parent Company Separate Financial Statements and Notes
62
Currency Risk
The Company’s trading transactions are commonly denominated in U.S. Dollars (“USD”), which is the
Company’s consolidation and presentation currency. The functional currency of the parent company, IDEX
Biometrics ASA, is USD, while the functional currencies of the subsidiaries are the currency in their respective
domiciles. The Company incurs a portion of its expenses in other currencies than the USD, primarily British
Pounds (“GBP”), Norwegian Krone (“NOK”), Euro ("EUR"), and Chinese Yuan (“CNY”). The Company's cost
level is exposed to changes in the rates of exchange between the USD and these currencies. IDEX seeks to
minimize this exposure by maintaining currency cash balances at targeted levels appropriate to meet foreseeable
short-term expenses in these other currencies. The Company does not use forward exchange contracts or other
hedging strategies to manage exchange rate exposure. Excess cash balances are generally held in USD-
denominated accounts.
In addition to USD, the parent company holds bank deposits in NOK and GBP; receivables in NOK, GBP and
EUR; and payables in NOK, GBP and EUR. A 10% change in the relative value of USD to NOK would not have
had a material effect on the carrying value of the Company’s net financial assets and liabilities in foreign
currencies at December 31, 2022 and December 31, 2021. The same applies to the value of USD to CNY or
EUR. A 10% increase in the value of the GBP relative to the USD would have had a corresponding effect on the
carrying value of our net financial assets and liabilities in foreign currencies at December 31, 2022 of
approximately $750 thousand.
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, 2022. (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.
As of December 31, 2022, the parent company had extended advances to IDEX UK denominated in GBP, in the
equivalent to $7,597. It is expected that IDEX UK will eventually repay these advances.
The Company believes it faces minimal risk on its cash position, as IDEX’s cash is on deposit with reputable,
regulated banks. The Company has no debt to financial institutions.
The balance sheet solvency, excluding intercompany items, amounted to $13,328 at December 31, 2022. The
Company aims to increase revenue generation through sales of its products, however, it does not currently have
the cash resources to fully meet its operating commitments for the next twelve months. This cast significant
doubt on the Company’s ability to continue as a going concern.
Other accounting policies
Equity
Equity is comprised of the following:
•
Share capital: comprised of the nominal amount of the parent’s ordinary shares. This capital is not
distributable in the form of dividends under the Norwegian Public Limited Liability Companies Act
(the “PLCA”) (refer to Note 15: Share capital).
•
Share premium: comprised of: (1) the amount received attributable to Share capital, in excess of the
nominal amount of shares issued by the parent company, reduced by; (2) issuance costs directly
attributable to the capital increase and; (3) transfers into the Capital Reduction Reserve, (refer to
Note 15: Share Capital and Share Premium).
•
Share based payment: comprised of cost of share-based payment.
•
Foreign currency translation effects: comprised of currency translation difference on equity at
historical rate vs. equity at conversion date rate at implementation of USD as functional currency.
•
Capital reduction reserve: comprised of the absorption of accumulated losses of the Company by the
Share premium, as resolved by the Company’s Board of Directors (refer to Note 15: Share capital).
•
Accumulated loss: is comprised of cumulative historical losses of the Company.
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.
IDEX Biometrics ASA Annual Report 2022
Parent Company Separate Financial Statements and Notes
63
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 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 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 use licenses, in which royalties
due to the Company are based upon a percentage of the licensee’s sales and/or unit volumes. For the years ended
December 31, 2022 and 2021, 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 obligations 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 on 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 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. There
were no contract asset or contract liability balances at December 31, 2020, 2021 or 2022.
Cost of materials, net of inventory change
Cost of materials, net of inventory change, primarily consists of the costs of raw materials, contract
manufacturing, and transportation associated with production and storage of products for sale to customers, net
of inventory change.
Foreign currencies
The functional currency of IDEX Biometrics ASA is USD, and the USD is also the presentation currency.
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 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 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 using 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 lower of cost and net realizable value. Any dividends are recognized as
financial income, and impairments, if any, as finance costs. There have not been any dividends or impairments in
the years ended December 31, 2022 or 2021.
IDEX Biometrics ASA Annual Report 2022
Parent Company Separate Financial Statements and Notes
64
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.
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 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 development 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
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, the Company 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 aggregated basis
for the purposes of allocating resources and assessing financial performance.
Accounting standards issued but not effective
The Company will adopt applicable new and amended accounting standards, including interpretations, when they
become effective. We do not expect any significant impact on the Company's result or financial position from the
new and amended standards issued but not yet effective.
Amendments to IAS 1–Classification of liabilities as current or non-current
— The amendments clarify the
requirements for classifying liabilities as current or non-current. The amendments are effective for reporting
periods beginning on or after January 1, 2023, and must be applied retrospectively. The amendments will not
have a material impact on any of the Company's liabilities as of December 31, 2022, 2021 or 2020.
Amendments to IAS 8–Definition of accounting estimates
— The amendments clarify the distinction between
changes in accounting estimates and changes in accounting policies and the correction of errors. The
amendments also clarify how entities use measurement techniques and inputs to develop accounting estimates.
The amendments are effective for reporting periods beginning on or after January 1, 2023, and apply to changes
in accounting policies and changes in accounting estimates that occur on or after the start of such period. The
amendments are not expected to have a material impact on the company's financial statements.
Amendments to IAS 1 and IFRS Practice statement 2–Disclosure of accounting policies
— The amendments
replace the requirement to disclose the ‘significant’ accounting policies with a requirement to disclose the
‘material’ accounting policies. The amendments to IAS 1 are applicable for annual periods beginning on or after
1 January 2023. The Company will revise the accounting policy information disclosures for 2023 to become
consistent with the amended IAS 1.
Amendments to IAS 12–Deferred tax related to asssets and liabilities arising from a single transaction
— The
amendments should be applied to transactions that occur on or after the beginning of the earliest comparative
IDEX Biometrics ASA Annual Report 2022
Parent Company Separate Financial Statements and Notes
65
period presented. The amendments are not expected to have a material impact on the company's financial
statements.
2. Revenue from contracts with customers
The balances of trade receivables at December 31, 2022 and 2021 were $1,349 and $801, respectively, reflecting
the business growth in 2022. There were no contract asset or contract liability balances at December 31, 2022 or
2021 .
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)
2022
2021
Product Revenue:
Europe, Middle East, and Africa
$
3,574
$
2,807
Americas
252
—
Asia-Pacific
63
30
Total product revenue
3,889
2,837
Service Revenue:
Europe, Middle East, and Africa
10
3
Americas
193
—
Asia-Pacific
—
—
Total service revenue
203
3
Total Revenue
$
4,091
$
2,840
The Company’s revenue has historically come from a limited number of customers. During 2022, the top two
customers accounted for approximately 48% and 24% of the Company’s revenue, respectively, and in 2021, the
top two customers accounted for 85% and 9% of revenue, respectively.
3. Compensation and benefits
Year Ended December 31,
($000s)
2022
2021
Salaries
$
814
$
871
Social security taxes
97
107
Pension contribution
22
17
Other personnel expenses
149
133
Share
‐
based compensation
2,161
2,751
Net employer’s tax on share
‐
based compensation
(337
)
159
Total
$
2,906
$
4,038
Average no. of employees (full-time equivalents)
In the parent company
2
2
In the group
88
95
At year-end 2022, there were 1 female and 1 male employee in IDEX Biometrics ASA (2021: 1 female and 1
male). Salary statistics per gender have not been prepared.
IDEX Biometrics ASA provides a contribution-based pension insurance plan for all its employees. The plan
satisfies 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 2022, IDEX operated two share-based compensation programs: Incentive subscription rights (SRs), and an
employee 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-cash, and the same amount is added to
equity. The notional cost of SRs is based on the fair value of SRs at grant. The cost is expensed over 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 the fair value at enrolment date into ESPP, and is expensed over the six months contribution period.
The fair value is determined using a Black-Scholes option pricing model, based on share prices quoted on the
IDEX Biometrics ASA Annual Report 2022
Parent Company Separate Financial Statements and Notes
66
Oslo Børs, and published interest rates. Any related employer’s tax is recognized by the relevant entity on the
date the employer’s tax is incurred, which date varies by jurisdiction and employee disposition.
Remuneration to officers
2022
Remuneration to the group’s CEO and officers reporting to the CEO. All officers are employed in the subsidiary
in the country where they work, or a contractor to the parent company.
($000s)
Salary
Incentive
variable
pay
Pension
contri-
bution
Other
benefits
Share-
based
remune-
ration (1)
Total
Vince Graziani, CEO
$
400
$
—
$
—
$
26
$
139
$
565
Eileen Wynne, interim CFO (2)
37
—
—
—
—
37
James A. Simms, former CFO (2)
290
—
—
21
(56
)
255
Anthony Eaton, CTO
237
—
14
—
74
325
Catharina Eklof, CCO (3)
398
—
—
—
114
512
Total
$
1,362
$
—
$
14
$
47
$
271
$
1,694
(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 option value at date of enrollment earned in 2022. Both amounts
represent an upfront calculation and do not necessarily represent any gain from the plans. Any gain on
subscription rights is reported separately in the year of exercise.
(2)
Ms. Wynne joined IDEX as interim Chief Financial Officer as of August 15, 2022. Mr. Simms left his
position with IDEX as of the same date.
(3)
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.
Salary, bonus and other benefits, whether cash or in kind, are the amounts declared for tax purposes for
the full year 2022, while pension cost and share-based remuneration are expensed amounts in the year.
Gains on exercise of incentive subscription rights, if any, are reported separately. Employers' tax is not
included. The bonuses paid in 2022, if any, relate to achievements in 2021.
No officers exercised incentive subscription rights in 2022.
2021
($000s)
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, former CFO (3)
100
56
—
10
(25
)
141
Anthony Eaton, CTO
254
22
15
2
60
354
Catharina Eklof, CCO (4)
259
76
—
—
108
442
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 on shares acquired in 2021. Both amounts represent an
upfront calculation and does not necessarily represent any gain from the plans. Any gain on subscription
rights, is reported separately in the year of exercise.
(2)
Mr. Graziani joined 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 through
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, bonus and other benefits, whether cash or in kind, are the amounts declared for tax purposes for
the full year 2021, while pension cost and share-based remuneration are expensed amounts in the year.
Gains on exercise of incentive subscription rights, if any, are reported separately. Employers' tax is not
included. 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 rights in 2021.
IDEX Biometrics ASA Annual Report 2022
Parent Company Separate Financial Statements and Notes
67
Grants of incentive subscription rights to officers
Year ended December 31,
Grant date
Exercise price
(NOK per share)
Number of
subscription
rights
2022
Vincent Graziani, CEO
August 10, 2022
1.18
1, 210,400
Eileen Wynne, interim CFO
—
James A. Simms, former CFO
—
Anthony Eaton, CTO
February 23, 2022
2.08
836,900
August 10, 2022
1.18
210,300
Catharina Eklof, CCO
August 10, 2022
1.18
210,300
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
Derek D'Antilio, former CFO
—
Anthony Eaton, CTO
August 11, 2021
2.40
210,300
Catharina Eklof, CCO
June 3, 2021
2.38
2,000,000
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 May 12, 2021.
Except for appropriate travel advances, IDEX has not made any advance payments 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 2022 IDEX operated a subscription rights-based incentive program (SR
program) and an employee share purchase plan (ESPP).
SR grants are scaled based on position, results and competitive considerations. The purpose of SR grants
is to strengthen the company by providing to employees, management and individual contractors
additional performance 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 effect of the policies on remuneration to officers
Salary, pension and any paid bonuses will attract employer’s tax which will be expensed simultaneously
with the paid or earned remuneration.
Actual incentive payments in the respective years are reported in the tables above. The incentives may
have been earned partly or in full in the calendar year before the payment was made. Incentives are paid
only after evaluation against criteria has been conducted. 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 included in the table of remuneration to officers.
The share-based remuneration reported in the tables is the period’s notional cost of the respective officers’
subscription rights. The equity effect of this cost is nil because the contra item is a notional equity injection of
equal amount. In addition, the cost of employer’s tax on the earned intrinsic value on the balance sheet date, is
accrued. The value varies with the share price and may entail a net reversal of cost. 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 tax is normally funded by the equity paid in on exercise. Any exercises of
subscription rights by officers in the respective years are disclosed above.
For the shareholders, an actual or possible exercise will represent a dilution. At the end of 2022, the number of
outstanding subscription rights to present officers including their close associates was 12,341,400,
corresponding to 1.1 percent of the share capital (2021: 12,870,900 outstanding subscription rights to then-
present officers, corresponding to 1.3 percent of the share capital at the time).
Compensation paid to the board of directors is presented in Note 6.
IDEX Biometrics ASA Annual Report 2022
Parent Company Separate Financial Statements and Notes
68
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 capitalization. The same applies to IDEX Biometrics ASA’s patents and other
intellectual property rights created by IDEX. IDEX has not capitalised any development costs in 2022 or 2021.
Development costs related to creation of intellectual property have been expensed when incurred. Government
grants related to research and development are credited against costs.
Year Ended December 31,
($000s)
2022
2021
Gross R&D expenses
$
16,380
$
25,840
Government grants credited to cost
(301
)
(539
)
Net R&D expenses
$
16,079
$
25,301
5. Government grants
Year Ended December 31,
($000s)
2022
2021
SkatteFunn (recognized as cost reduction of R&D expenses)
$
301
$
539
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 Norway, as well as
audited confirmation of costs. The recognized amount in 2022 represents IDEX’s claim based on the
cost of the approved project applications.
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 of key management is disclosed in Note 3.
There were no overdue balances with any related parties at the end of 2022 or 2021. See also Note 17.
Shareholders
In connection with our November 2022 private placement, we entered into a share lending agreement with three
shareholders in order to facilitate settlement of the new shares in the private placement. As a fixed fee for the
share lending, each lender received a fee equaling 5% per annum of the sum of the subscription price per new
share in the private placement multiplied by the number of borrowed shares lent by the respective lender. In
total, we paid approximately $14 thousand under the share lending agreement with approximately $6 thousand
paid to Sundt AS and approximately $4 thousand each paid to Sundvall Holding AS and Mr. Robert Keith.
Board of Directors
The following board compensation has been paid in 2022 and 2021. 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, 2022
($000s)
Cash
Compensation
Share-based
Compensation
Total
Morten Opstad, chair
$
53
$
—
$
53
Lawrence John Ciaccia, deputy chair (1)
53
—
53
Deborah Davis (2)
68
—
68
Hanne Høvding (3)
55
—
55
Annika Olsson
44
—
44
Thomas M. Quindlen (4)
55
—
55
Stephen Andrew Skaggs (5)
62
—
62
Total
$
390
$
—
$
390
(1)
Mr. Ciaccia was member of the Compensation Committee in the periods that the remuneration paid in 2022 related to.
(2)
Ms. Davis was chair of the Compensation Committee and member of the Audit Committee in the period
that the remuneration paid in 2022 relates to.
(3)
Ms. Høvding was member of the Audit Committee in the period that remuneration paid in 2022 related to.
IDEX Biometrics ASA Annual Report 2022
Parent Company Separate Financial Statements and Notes
69
(4)
Mr. Quindlen member of the Audit Committee in the period that remuneration paid in 2022 related to.
(5)
Mr. Skaggs was chair of the Audit Committee in the period that remuneration paid in 2022 related to.
Year ended December 31, 2021
($000s)
Cash
Compensation
Shared-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 period that the remuneration paid in 2021 related to.
(2)
Ms. Davis was chair of the Compensation Committee and member of the Audit Committee in the period
that the remuneration paid in 2021 relates 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 was 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
general meeting on May 12, 2021.
(6)
Mr. Skaggs was chair of the Audit Committee in the period that remuneration paid in 2021 related to.
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
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 Company
amounting to $234 in 2022 and $338 in 2021. 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 through June 2022, when the SAC was
discontinued. Mr. Ciaccia also provides consulting services to IDEX. The combined fee for SAC service and
consulting services amounted to $58 in 2022 and $65 in 2021.
There were no grants of incentive subscription rights to any board member in 2022 or 2021.
Nomination Committee
The following fees has been paid to the nomination committee in 2022 and 2021 for the services up to the 2022
annual general meeting and the 2021 annual general meeting, respectively. 2022: Chair Robert Keith $
2.6
,
members Håvard Nilsson and Harald Voigt $
1.6
each. 2021: Chair Robert Keith $
2.7
, members Håvard Nilsson
and Harald Voigt $
1.6
each.
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. Interest-bearing loans at arm’s length interest rate have been issued in prior years but all
loans were fully repaid by December 31, 2022.
IDEX Biometrics ASA Annual Report 2022
Parent Company Separate Financial Statements and Notes
70
($000s)
IDEX Biometrics ASA’s
cost of services from
subsidiaries
Interest income to IDEX
Biometrics ASA from
subsidiaries
Intra-group transactions
2022
2021
2022
2021
IDEX Biometrics Holding Company Inc.
$
—
$
—
$
—
$
—
IDEX Biometrics America Inc.
15,256
15,830
—
4
IDEX Biometrics UK Ltd. (1)
2,133
9,992
—
24
IDEX Electronics (Shanghai) Co., Ltd.
1,153
1,819
—
—
Total
$
18,542
$
27,641
$
—
$
28
(1)
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 2022 or 2021.
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 are as follows:
Year ended December 31,
($000s)
2022
2021
Audit services
$
381
$
265
Audit-related services
43
22
Tax services
7
7
Other services
4
24
Total
$
435
$
318
8. Income tax expense
Tax expense for the year
Year ended December 31,
($000s)
2022
2021
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)
2022
2021
Profit (loss) before taxes
$
(31,023
)
$
(38,891
)
Permanent differences
1,656
(632
)
Changes in temporary differences
(170
)
(131
)
Basis for payable taxes
$
(29,537
)
$
(39,654
)
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 (benefit)
Year ended December 31,
($000s)
2022
2021
Profit (loss) before taxes
$
(31,023
)
$
(38,891
)
Norway statutory tax rate of 22%
(6,825
)
(8,556
)
Tax on permanent differences
364
(139
)
Change in deferred tax asset not recognized on December 31
6,461
8,695
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.
IDEX Biometrics ASA Annual Report 2022
Parent Company Separate Financial Statements and Notes
71
There are no deferred tax charges to other comprehensive income in 2022 or 2021 and no tax payable balances.
Elements of deferred tax
Year ended December 31,
($000s)
2022
2021
Employer’s tax on share
‐
based compensation
$
(24
)
$
(371
)
Fixed Assets differences
375
434
Inventory differences
(131
)
(5
)
Other differences
(20
)
3
Losses carried forward
(252,798
)
(250,675
)
Basis for calculation of deferred taxes
(252,598
)
(250,614
)
Calculated net deferred tax expense (benefit) 22%
(55,572
)
(55,135
)
Unrecognized deferred tax asset
55,572
55,135
Deferred tax liability (asset) in the balance sheet
$
—
$
—
The accumulated unrecognized deferred tax assets amounting to $55,572 and $55,135 at December 31, 2022 and
2021, respectively, are related to tax losses carry forward in Norway. IDEX Biometrics ASA has not generated
taxable profits in prior years. At December 31, 2022 there was not sufficiently convincing evidence that
sufficient taxable profit will be generated, against which the unused tax losses could be 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. Intangible assets
Year ended December 31, 2022
($000s)
Goodwill
Acquired
patents
Total
Cost at December 31, 2021
$
968
$
5,173
$
6,141
Additions
—
—
—
Disposals at cost
—
—
—
Cost at December 31, 2022
968
5,173
6,141
Accumulated amortization at December 31, 2021
—
3,208
3,208
Amortization
—
477
477
Accumulated amortization of disposed items
—
—
—
Accumulated amortization at December 31, 2022
—
3,685
3,685
Carrying amount at December 31, 2022
$
968
$
1,488
$
2,456
Year ended December 31, 2021
($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 of disposed items
—
—
—
Accumulated amortization at December 31, 2021
—
3,208
3,208
Carrying amount at December 31, 2021
$
968
$
1,965
$
2,933
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, 2022. Based on the 2022 assessment, no impairment charge has been
made. The Company used a discounted cash flow model which utilized Level 3 measures that represent
unobservable inputs. Key assumptions used to determine the estimated fair value include: (a) internal cash flows
forecasts for 4 years following the assessment date, including expected revenue growth, costs to produce,
operating profit margins and estimated capital needs; (b) an estimated terminal value using a terminal year long-
term future growth rate of 3.0% determined based on the long-term expected prospects of the Company; and (c)
a discount rate (post-tax) of 12 % which reflects the weighted-average cost of capital adjusted for the relevant
risk associated with the Company's operations. No reasonably possible changes in any key assumptions would
cause the carrying amount to exceed the recoverable amount.
Acquired patents are capitalized and amortized over the estimated useful life, which is the lifetime of the
respective patent(s)
.
IDEX Biometrics ASA Annual Report 2022
Parent Company Separate Financial Statements and Notes
72
10. Property, plant and equipment
($000s)
Plant and
machinery,
fixtures and
fittings
Office
furniture
and office
equipment
Total
Depreciation period, straight line, in years
3 – 10
3 – 10
Cost at December 31, 2021
$
679
$
4
$
683
Additions
—
2
2
Disposals at cost
—
—
—
Cost at December 31, 2022
679
6
685
Accumulated amortization at December 31, 2021
218
2
220
Amortization
97
1
98
Accumulated amortization of disposed items
—
—
—
Accumulated amortization at December 31, 2022
315
3
318
Carrying amount at December 31, 2022
$
364
$
3
$
367
($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
Cost at December 31, 2020
$
679
$
2
$
119
$
800
Additions
—
—
—
—
Disposals at cost
—
2
—
—
Cost at December 31, 2021
—
—
—
—
Accumulated amortization at December 31, 2020
679
4
119
802
Amortization
121
2
119
242
Accumulated amortization of disposed items
97
—
—
97
Accumulated amortization at
December 31, 2021
—
—
—
—
Carrying amount at
December 31, 2021
218
2
119
339
11. Leases
IDEX Biometrics ASA leases an office in Oslo.
Right-of-use assets
Year ended December 31,
($000s)
2022
2021
Depreciation period, straight line, years
3 – 5
3 – 5
Cost at the beginning of the year
$
66
$
66
Additions
77
—
Disposals at cost
(66
)
—
Currency translation
—
—
Cost at December 31
76
66
Accumulated depreciation at the beginning of the year
54
28
Depreciation
25
26
Accumulated depreciation of disposed items
(65
)
—
Currency translation
—
—
Accumulated depreciation at December 31
14
54
Carrying amount at December 31
$
62
$
12
Leases included in the statements of profit and loss
Year ended December 31,
($000s)
2022
2021
Amortization and depreciation
25
26
Finance cost
2
1
IDEX Biometrics ASA Annual Report 2022
Parent Company Separate Financial Statements and Notes
73
Leases included in the statements of financial position
Year ended December 31,
($000s)
2022
2021
Balance at the beginning of the year
$
10
$
38
Additions
75
—
Accretion of interest
2
1
Payments
(25
)
(29
)
Balance at December 31
$
62
$
10
Non-current
13
—
Current
49
10
Balance at December 31
$
62
$
10
There are no exposure to future variable lease payments that are not reflected in the measurement of lease
liabilities.
12. Subsidiaries
The subsidiaries provide various services to the parent company, mainly within technical development, supply-
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.
Ownership
Share of votes
Net profit
or (loss)
Equity
Dec. 31, 2022
Dec. 31, 2022
2022
Dec. 31, 2022
IDEX Biometrics Holding Co. Inc., Delaware,
USA
100
%
100
%
—
(5
)
IDEX Biometrics America Inc., Delaware, USA
100
%
100
%
1,015
5,136
IDEX Biometrics UK Ltd., England
100
%
100
%
(2,668
)
(6,505
)
IDEX Electronics (Shanghai) Co., Ltd, China
100
%
100
%
16
385
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
IDEX Biometrics Holding Company Inc. (IDEX Holding) is a holding company for the activities in the USA.
The operating company, IDEX Biometrics America Inc. (IDEX America), is held by IDEX Holding. IDEX
Holding and IDEX America were established in 2013 when operations commenced. IDEX America’s main
facilities are in Wilmington, 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 and the main facility is in Farnborough, England. IDEX UK was profitable in
2021 but had negative equity at the end of 2021, and made a loss in 2022. The parent company has provided
funding as needed. It is expected that IDEX UK will eventually become profitable and achieve positive equity
from sale of IP development packages.
IDEX Electronics (Shanghai) Co., Ltd. (IDEX China) was established and commenced activities in 2015. The
company is registered in Shanghai and has one branch in Beijing and one branch in Shenzhen.
13. Cash and cash equivalents
Of the cash and cash equivalents, employees’ withheld payroll tax deposits amounted to $26 and $31 at the end
of 2022 and 2021, respectively. Only the withheld payroll tax deposits were restricted. Deposits for facilities rent
or utilities are reported as Non-current receivables and have not been included in cash equivalents.
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 an escrow account in the landlord’s name for the benefit of the landlord.
Such escrow accounts and other deposits amounted to $7 at the end of 2022 and $8 at the end of 2021.
No other assets have been pledged as security or are otherwise restricted.
IDEX Biometrics ASA Annual Report 2022
Parent Company Separate Financial Statements and Notes
74
15. Share capital and share premium
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
Ordinary Shares
Balance at December 31, 2020
832,146,748
Private placement of Ordinary Shares on Feb 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
Share issues (Employee Share Purchase Plan)
4,947,546
Share issue (exercise of subscription rights)
990,584
Private placement of Ordinary Shares on November 16
150,000,000
Balance at December 31, 2022
1,166,326,584
As of December 31, 2022 there were 7,430 shareholder accounts on record, compared to 7,288 at December 31,
2021.
Costs related to share issuance have been charged against equity and amounted to $737 in 2022 and $2,827 in
2021.
Subscription rights are presented in note 16.
Shareholders
As of December 31, 2022
Number of
shares
Percent
of total
Sundt AS
85,974,977
7.4
Société Générale
54,652,807
4.7
Sundvall Holding AS
47,667,645
4.1
Pictet & Cie (Europe) S.A.
46,604,017
4.0
HSBC Bank PLC
45,030,909
3.9
Goldman Sachs International
44,717,305
3.8
Robert Keith
42,109,394
3.6
Alden AS
41,868,000
3.6
The Bank of New York Mellon
38,905,050
3.3
BNP Paribas Arbitrage SNC
17,480,491
1.5
Fender Eiendom AS
15,744,350
1.3
Tigerstaden AS
15,000,000
1.3
RBC Investor Services Trust
14,993,779
1.3
Citibank, N.A.
14,905,768
1.3
Guttis AS
13,400,000
1.1
F2 funds AS
13,000,000
1.1
Smart Riches Limited
11,968,240
1.0
Colargol Invest AS
11,350,000
1.0
F1 funds AS
11,000,000
0.9
Hortulan AS
10,830,718
0.9
Others
569,123,134
48.8
Total
1,166,326,584
100
IDEX Biometrics ASA Annual Report 2022
Parent Company Separate Financial Statements and Notes
75
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 18, 2022, Mr. Keith, together with his close associates, held 135,145,579 shares in the company,
representing 12.1% of the number of shares at that time.
During the year ended December 31, 2022, the Board of Directors approved the transfer of $18.0 million of share
premium to absorb accumulated losses. As a result, Share Premium has been reduced by a cumulative amount of
$287.5 million as of the year ended December 31, 2022 against Capital Reduction Reserve. The transfer has no
impact on the total equity, comprehensive income (loss), assets (including cash) nor liabilities.
Shares and subscription rights held or controlled
by board members,
officers and their close relations
Year Ended December 31,
2022
2021
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
415,021
600,000
Deborah Davis, board member
564,479
—
564,479
—
Hanne Høvding, board member
487,778
—
487,778
—
Annika Olsson, board member
52,631
—
52,631
—
Thomas M. Quindlen, board member
413,981
—
413,981
—
Stephen Andrew Skaggs, board member
1,018,053
—
1,018,053
—
Vincent Graziani, CEO
1,584,290
7,420,800
1,173,279
6,210,400
Eileen Wynne, interim CFO (2)
—
—
na
na
James A. Simms, former CFO (2)
na
na
1,494,736
2,997,400
Anthony, Eaton, CTO
284,639
2,710,300
264,956
1,663,100
Catharina Eklof, CCO
89,684
2,210,300
89,684
2,000,000
Total
12,309,472
12,941,400
13,373,514
13,470,900
(1)
The grant to Mr. Ciaccia, originally on August 15, 2018, 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
the 2018 grant.
(2)
Ms. Wynne joined IDEX as interim Chief Financial Officer as of August 15, 2022. Mr. Simms left his
position with IDEX as of the same date.
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 2022, the board granted
incentive subscription rights to employees and individual contractors under the 2021 program in the period
January 1–May 11, 2022 and made grants under the 2022 program in the period May 12–December 31, 2022.
Under the 2022 subscription rights-based incentive program approved at the annual general meeting on May 12,
2022, the board may grant up to 101,254,865 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 days preceding the date of the grant, or the closing price of the IDEX shares on the trading day
preceding the date of the grant. The board may in cases of particular circumstances issue up to a total of
10,125,486 subscription rights at a lower price but not less than NOK 0.15 per share. Unless resolved otherwise
by the board, 25 percent of each grant of subscription rights vest 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 lapse on the fifth 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.
IDEX Biometrics ASA Annual Report 2022
Parent Company Separate Financial Statements and Notes
76
Subscription rights activity
2022
2021
Number of
Subscription
Rights
Weighted
Average
Exercise
Price
(NOK)
Number of
Subscription
Rights
Weighted
Average
Exercise
Price
(NOK)
Outstanding as of January 1
71,756,399
1.84
56,344,093
1.66
Granted
19,342,900
1.54
21,885,200
2.53
Exercised
(930,184
)
0.29
(1,767,879
)
1.33
Forfeited
(8,987,484
)
2.25
(3,165,015
)
1.97
Expired
(75,000
)
8.42
(1,540,000
)
5.22
Outstanding as of December 31
81,106,631
1.74
71,756,399
1.84
Subscription rights exercisable as of December 31
36,416,302
1.65
18,657,117
1.59
Number of
Subscription
Rights
Weighted
Average
Fair Value
(NOK) per
Subscr.
Right
Number of
Subscription
Rights
Weighted
Average
Fair Value
(NOK) per
Subscr.
Right
Subscription rights granted in the year
19,342,900
0.82
21,885,200
1.51
The fair value of the subscription rights granted in the year has been calculated using the Black-Scholes option
pricing model applying the following assumptions in 2022 and 2021:
Black-Scholes option pricing parameters
Year ended December 31,
2022
2021
Exercise price (NOK)
1.03 – 2.08
2.38 – 3.10
Weighted average exercise price per share
1.54
2.53
Weighted average share price at date of grant
1.42
2.45
Expected term (years)
4.45
4.62
Weighted average term (years)
3.27
3.35
Share price volatility (percent)
72 – 100
85 – 112
Risk-free interest rate
2.65%
0.98%
Expected dividend payment
-
-
Forfeiture
None
None
Outstanding and vested incentive subscription rights:
December 31, 2022
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 - 0.49
3,486,882
0.15
1.36
—
3,486,882
0.15
1.35
0.50 - 0.99
720,800
0.71
1.36
0.22
515,600
0.71
0.97
1.00 - 1.49
16,507,000
1.14
3.34
1.48
2,759,850
1.11
0.68
1.50 - 1.99
36,300,174
1.70
2.15
0.16
24,589,220
1.70
1.42
2.00 - 2.49
17,218,050
2.28
3.37
1.27
2,732,625
2.40
0.87
2.50 - 2.99
5,412,900
2.65
3.37
1.34
1,353,225
2.65
0.84
3.00 - 4.99
960,825
3.34
1.96
0.48
479,200
3.52
0.79
5.00 - 9.99
500,000
5.10
0.36
—
500,000
5.10
0.35
Total
81,106,631
1.74
2.68
0.74
36,416,602
1.65
1.27
IDEX Biometrics ASA Annual Report 2022
Parent Company Separate Financial Statements and Notes
77
December 31, 2021
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 - 0.49
4,330,366
0.15
2.36
0.04
2,165,186
0.15
2.36
0.50 - 0.99
720,800
0.71
2.36
1.29
310,400
0.71
2.36
1.00 - 1.49
5,542,500
1.11
2.36
1.04
1,385,625
1.11
2.36
1.50 - 1.99
38,760,433
1.70
3.14
0.96
14,045,131
1.69
3.14
2.00 - 2.99
20,588,700
2.51
4.24
2.04
—
-
4.24
3.00 - 4.99
1,238,600
3.29
3.05
1.32
175,775
3.94
3.05
5.00 - 9.99
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
Employee Share Purchase Plan (ESPP)
The Employee Share Purchase Plan (“ESPP”) is revolved each year at the Annual General Meeting. The current
ESPP was approved by shareholders at the 2022 Annual General Meeting. Under the ESPP, an IDEX employee
based in Norway, the United Kingdom, or the United States may contribute up to 20% (subject to 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 Share is granted to a participating
employees on the first day of a 6-months' “offering period” to purchase new 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
shares are not restricted.
The share-based remuneration cost of the ESPP is calculated at the start of each contribution period, and
amortized over that period. The cost is based on the contribution amount and amounts to the discount of 15% at
the beginning of the period, plus the option value of an 85% call and 15% put option granted at the beginning of
the period. The option value is based on a Black-Scholes option pricing model applying prevailing interest rates
and share price volatility at the beginning of the period.
ESPP cost calculation parameters
September 1, 2022
March 1, 2022
September 1, 2021
Expected contribution amount (NOK 1,000)
2,025
2,307
3,009
Share price on start date (NOK per share)
0.83
1.96
2.65
Share price volatility
68
%
66
%
64
%
Risk-free interest rate
2.82
%
0.95
%
0.25
%
Expected dividend payment
—
—
—
Expected number of shares
2,854,899
1,385,049
1,335,810
Share-based compensation cost per expected share
0.32
0.75
1.01
In the two offering periods completed within 2022, an average of 43 employees (2021: 53) participated in the
ESPP and purchased a total of 4,947,546 Ordinary Shares at a weighted average price of NOK 1.08 (2021:
2,946,019 shares at average NOK 2.00 per share).
17. Board authorizations to issue shares or acquire own shares
The board has been authorized by the respective annual or extraordinary general meetings to issue shares upon
exercise of incentive subscription rights granted under the various incentive subscription rights programs, and to
issue shares under the Employee Share Purchase Plan. See note 16.
Authorizations that were in effect on December 31, 2022
Date and purpose of authorization
Authorized
number of
shares
Number of
shares issued
by Dec. 31, 2022
Extraordinary general meeting December 9, 2022:
Issue of shares in a rights issue to raise additional capital *
116,632,658
—
Private placement of shares to raise additional capital *
116,632,658
—
* The combined issue under these two authorisations may not exceed 116,632,658 shares.
IDEX Biometrics ASA Annual Report 2022
Parent Company Separate Financial Statements and Notes
78
At the annual general meeting on May 12, 2022, the board was authorized to acquire up to 101,254,865 of the
company's shares. The authorization had not been used by the end of 2022.
18. Non-current and current receivables
Non-current receivables
December 31,
($000s)
2022
2021
Long-term loans to group companies
$
—
$
—
Non-current receivables
7
8
Balance at December 31
$
7
$
8
The receivables are deposits for leasehold payments and are held at nominal value.
Maturity of current receivables
Year ended December 31, 2022
($000s)
Less than
3 months
3-6 months
6-12
months
Total
Accounts receivable, other
$
164
$
—
$
301
$
465
Accounts receivable, trade
1,349
—
—
1,349
Receivables from group companies
7,597
—
—
7,597
Total
$
9,110
$
—
$
301
$
9,412
Maturity of current receivables
Year ended December 31, 2021
($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
Trade receivables amounting to $328 were overdue by more than 30 days at the end of 2022 (2021: $ –). No
expected loss had been accrued for at the end of 2022 or 2021. There were no other provisions for expected
credit losses in 2022 and 2021. No group or other receivables were overdue at the end of 2022 or 2021. A
significant share of the receivables from group companies is related to IDEX UK. IDEX UK operated at a loss in
2022 but was profitable in 2021 and is expected to eventually repay the receivable.
IDEX Biometrics ASA had no contingent assets at the end of 2022 or 2021.
19. Payables and Financial Liabilities
The Company did not have any liabilities at December 31, 2022 or 2021 which represented debt to financial
institutions. The table below shows maturity of undiscounted cash flows.
Payables and Financial liabilities
Maturity as of December 31, 2022
($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
1,400
—
—
—
—
1,400
Current lease liabilities
12
12
23
—
—
46
Short-term payables to group companies
5,057
—
—
—
—
5,057
Other current liabilities
861
324
—
—
—
1,185
Total
$
7,330
$
335
$
23
$
—
$
—
$
7,688
IDEX Biometrics ASA Annual Report 2022
Parent Company Separate Financial Statements and Notes
79
Payables and Financial liabilities
Maturity 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 payables to group companies
3,314
—
—
—
—
3,314
Other current liabilities
1,004
307
—
—
—
1,311
Total
$
4,963
$
312
$
—
$
—
$
—
$
5,275
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 $2 in
2022 and $1 in 2021. Remaining amount of finance expense is currency losses.
Accrued employer’s tax on share-based compensation
The estimated employer’s tax liability related to share-based compensation amounted to $24 on December 31,
2022 and $371 on December 31, 2021. The employer's tax 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 2022 or
2021. IDEX Biometrics ASA had no contingent liabilities at the end of 2022 or 2021.
20. Inventory
December 31,
2022
2021
($000s)
Cost
Reserves
Net
Cost
Reserves
Net
Raw materials
$
2,280
$
—
$
2,280
$
562
$
—
$
562
Work in progress
1,486
—
1,486
107
—
107
Finished goods
812
(130
)
681
570
(5
)
565
Total
$
4,577
$
(130
)
$
4,447
$
1,239
$
(5
)
$
1,234
Inventory, consisting mainly of fingerprint sensors which have been manufactured by the company’s
manufacturing services providers for sale to customers, 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 2022 and 2021, $154 and $124 of materials, respectively, were used in product development and was charged
to development expense.
21. Other operating expenses
Year ended December 31,
2022
2021
Sales and marketing activities
$
2,833
$
1,374
Legal, audit, accounting and other services
1,507
1,880
Office and other expenses, Insurance
1,215
1,359
IT expenses
559
692
Travel expenses
39
12
Intercompany charges other than R&D
4,790
4,066
Total other operating expenses
$
10,943
$
9,383
The increase in Sales and marketing activities reflects the increase in the activity level in this function from 2021
to 2022. Legal, audit, accounting and other services were higher in 2021 than in 2022 because of the Nasdaq
listing project that was completed in 2021. The increase in Intercompany charges other than R&D was mainly
due to administrative functions taken on by subsidiaries on assignment for the parent company.
IDEX Biometrics ASA Annual Report 2022
Parent Company Separate Financial Statements and Notes
80
22. Subsequent Events
The Board resolved on February 21, 2023, to grant 1,423,800 incentive subscription rights to five new employees
and individual contractors. The grant was made under the Company’s 2022 Subscription Rights Incentive Plan.
The exercise price of the subscription rights is NOK 0.72 per share. The grants vest by 25% per year and expire
on May 15, 2027. Following the grants, there were 82,065,247 subscription rights outstanding.
The Board resolved on February 28, 2023, to issue 2,648,336 Ordinary Shares at NOK 0.71 per share to
employees participating in the Company’s ESPP.
There have been no events between December 31, 2022, and the date of these financial statements that have had
any material impact on the Company’s results for 2022, or the value of the Company’s assets and liabilities as of
December 31, 2022.
IDEX Biometrics ASA Annual Report 2022
Responsibility Statement
81
RESPONSIBILITY STATEMENT
The board and the managing director have today reviewed and approved this report from the board of directors as
well as the annual financial statements for the IDEX group and the parent company IDEX Biometrics ASA as at
December 31, 2022.
The consolidated annual financial statements and the annual financial statements for IDEX Biometrics ASA have
been prepared in in accordance with International Financial Reporting Standards (IFRS) as issued by the
International Accounting Standards Board (IASB) and IFRS as endorsed by the European Union and the
additional requirements in the Norwegian accounting act effective December 31, 2022. 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 generally accepted accounting practice in Norway.
We confirm, to the best of our knowledge, that the information presented in the financial statements gives 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 of the principal risks and uncertainties which the group and the parent company are facing.
April 26, 2023
The board of directors of IDEX Biometrics ASA
/s/ Morten Opstad
Morten Opstad
Chair
/s/ Lawrence John Ciaccia
Lawrence John Ciaccia
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
IDEX Biometrics ASA Annual Report 2022
Report of Independent Auditor
82
REPORT OF INDEPENDENT AUDITOR
IDEX Biometrics ASA Annual Report 2022
Report of Independent Auditor
83
IDEX Biometrics ASA Annual Report 2022
Report of Independent Auditor
84
IDEX Biometrics ASA Annual Report 2022
Report of Independent Auditor
85
IDEX Biometrics ASA Annual Report 2022
Report of Independent Auditor
86
IDEX Biometrics ASA Annual Report 2022
Articles of Association
87
ARTICLES OF ASSOCIATION OF IDEX BIOMETRICS ASA
Last amended on 28 February 2023 – 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 activities related to this.
§ 3
The business offices are in the Oslo municipality, Norway.
§ 4
The company's shares shall be registered in the Norwegian Registry of Securities.
§ 5
The share capital is NOK 175,346,238.- divided into 1,168,974,920 shares each with a nominal 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 the annual
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 (net) profit or covering of losses
•
Election of chair of the board and board 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 committee
and the auditor
•
Other matters which are governed by law
•
Other matters which are mentioned in the notice of the 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 elected by 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 general meeting.
§ 9
Documents which timely have been made available on the Internet site of the company and which deal
with matters that are to be considered at the general meeting need not be sent to the 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 view in the Norwegian or 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
notify the company of his/her attendance in a timely manner, the company may deny him/her access to
the general meeting.
IDEX Biometrics ASA Annual Report 2022
Corporate Governance Review
88
CORPORATE GOVERNANCE
Last updated by the board of directors on April 20, 2022 with editorial updates April 19, 2023
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 was not updated in 2022. 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 incorporates the Company’s guidelines on corporate social responsibility. The at all times
current 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 funded on equity. The capital structure may change
during 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 the 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 authorizations 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 for its employees and
individual contractors in the form of a subscription rights program, as resolved by the general meeting. The
subscription rights program is limited 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 have authorized the Board to acquire up to 10% of the Company’s own shares. The
authorization ends at the next annual general meeting of shareholders. No such share purchases have been
made as yet.
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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 earnings, to
finance operations and the growth of its business. Any future decision to pay dividends would be based on an
amended dividend policy that may be instituted in due course, which policy would reflect the Company’s
financial condition, results of operation 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 non
‐
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. The Company has a policy for transactions
with related parties, available at the Company's website, www.idexbiometrics.com.
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 manner, 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, www.idexbiometrics.com..
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, pursuant 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 to refuse 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
IDEX Biometrics ASA Annual Report 2022
Corporate Governance Review
90
current version of the Code. The annual general meeting elects the chair and two committee members. No
current board member or IDEX executive may be a member of the nomination committee. One nomination
committee member was a board member of the Company before 2007.
The mandate states that the 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.
•
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.
The nomination committee shall give a brief account of how it has carried 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, www.idexbiometrics.com.
8.
BOARD OF DIRECTORS; COMPOSITION AND INDEPENDENCE
Currently there are seven board members including the chair. 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 PLCA. It follows from the articles of association that the
chair of the Board shall be elected separately.
All board members are required to make decisions objectively in the best interest of the Company. 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. 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 Board considers that it is beneficial for the Company and its shareholders at large that the Board 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 (CEO) is based on
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 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 approve the CEO's hiring, termination and remuneration of his or her direct
reports. The Board shall ensure that the organization of the accounting and management of funds 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 sets 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;
IDEX Biometrics ASA Annual Report 2022
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•
Resolve and issue guarantees and other commitments and the pledging of assets;
•
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 Board, the
longest-serving board member present shall chair the meeting until an interim chair has been elected by and
among the board members present.
The Board conducts a self-evaluation of its performance and expertise annually.
Any and all related party transactions are handled 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, then 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 charter 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 Capital 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 charter for the compensation committee.
Members of the Board and the management are obliged to notify the Board if they have 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 responsibility. 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.
Effective February 24, 2021, IDEX established a separate audit committee consisting of three, later four,
independent Board members. Before that date, the full, then five-person, 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 the rules in the Norwegian PLCA and the U.S. Securities Exchange Act of 1934 and the listing
rules of the Nasdaq Capital 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. However, 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 measures, 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. The manual is reviewed annually by the audit committee, and updated as and when appropriate. The
Board acknowledges that, having operations outside Norway that are spread over four sites on three continents,
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 are intended to ensure adequate business controls.
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Corporate Governance Review
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IDEX does not operate a separate internal audit function or department. 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 entity in question, and the findings are reported to the audit committee.
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
2021 until the annual general meeting in 2022 was proposed to and resolved at the annual general meeting
2022. 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. No board members took up this option in 2022.
The nomination committee shall propose board remuneration for the period between the annual general
meetings of 2022 and 2023. No share-based incentives have been granted as board remuneration. Any Board
member performing work for 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 approve 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 12 May 2021, has
served on IDEX’s Strategy Advisory Council (SAC) since January 2014 and continued his tenure on the SAC
through June 2022, when the SAC was discontinued. A fixed annual fee was paid to Mr. Ciaccia for his tenure
on the SAC. 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 and 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 Company’s web site, www.idexbiometrics.com.
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 determine 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 an
executive remuneration report 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 guidelines,
the general meeting’s vote and the salary reports since the previous vote on the policy have been taken into
account.
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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 provide opportunities for shareholders to discuss any matters with the
Board.
In December, the Company publishes its annual financial calendar for the following year. All reports and other
notices are issued and distributed according to the rules and practices at Oslo Børs. 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 regulations. 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 at all
times current code of practice for IR information.
14.
TAKE-OVERS
There 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 bids 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 when it is self-evident that such an
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 2000. Latest partner rotation was in 2022. Audit firm rotation
procedure will need to take place latest in 2026, effective 2027.
The audit committee and the Board reviews the auditor’s annual plan, and the auditor presents to the committee
and the Board 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 changes 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 range 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.
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Board of Directors and Executive Officers
94
BOARD OF DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth information concerning our executive officers and board directors as of December
31, 2022:
Name
Age
Position(s)
Executive Officers:
Vincent Graziani
62
Chief Executive Officer
Eileen Wynne
56
Chief Financial Officer (interim)
Anthony Eaton
50
Chief Technology Officer
Catharina Eklof
53
Chief Commercial Officer
Directors:
Morten Opstad
69
Chair
Lawrence J. Ciaccia
2
64
Deputy Chair
Deborah Lee Davis
1,2
59
Director
Hanne Høvding
1
68
Director
Annika Olsson
46
Director
Thomas M. Quindlen
1
60
Director
Stephen A. Skaggs
1
60
Director
1.
Member of
Audit Committee.
2.
Member of Compen
sation Committee.
Board of Directors
Our Board held seven meetings during the period from our Annual General Meeting on May 12, 2022,
until and including April 19, 2023. The meetings have been conducted as in-person and virtual meetings via live
webcast.
Morten Opstad
has served as Board Chair 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, is a Norwegian citizen, and resides in
Oslo. Mr. Opstad attended 7 Board meetings in the period.
Lawrence J. Ciaccia
has served as a Director 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, Inc. from a start-up into the world’s leading fingerprint sensor supplier. He served as
AuthenTec, Inc's CEO from September 2010 until the company’s acquisition by Apple Inc. in October 2012. He
remained with Apple Inc. through February 2013 to assist in the acquisition integration and transition. Mr.
Ciaccia holds a B.S.in 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
attended 6 Board meetings in the period.
Deborah Lee Davis
has served as a Director since May 2015. She is independent of the Company’s
executive management, material business contacts, and larger shareholders. Ms. Davis serves on the boards of
directors of International Personal Finance Plc, The Institute of Directors, Diaceutics plc, and Lloyds Banking
Group Insurance Board. She also serves as a trustee of the Southern African Conservation Trust in South Africa.
During her career, she held senior executive leadership roles at PayPal, eBay, Verizon, and Symantec. Ms. Davis
holds 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 holds 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 United Kingdom. Ms. Davis attended 7 Board meetings in the period.
Hanne Høvding
has served as a Director since December 2007. She is independent of the Company’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 a B.S. in Economics and Business Administration from the Norwegian School of
Economics and Business Administration. Ms. Høvding was born in 1954, is a Norwegian citizen, and resides in
Oslo. Ms. Høvding attended 7 Board meetings in the period.
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Board of Directors and Executive Officers
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Annika Olsson
was elected as a Director in May 2021. She is independent of the Company’s executive
management, material business contacts, and larger shareholders. Ms. Olsson is the CEO of Ekspres Bank A/S, a
unit of the BNP Paribas Group. During her 20-year career in consumer financial services, Ms. Olsson has held
various executive positions. Before joining Ekspres Bank A/S in 2010, she 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 Business School. Ms. Olsson was born in 1976, is a Swedish citizen, and resides in Copenhagen, Denmark.
Ms. Olsson attended 6 Board meetings in the period.
Thomas M. Quindlen
was elected as a Director in May 2021. From October 2020 until his election, he
attended Board meetings as a non-voting observer. He is independent of the Company’s executive management,
material business contacts, and larger shareholders. Mr. Quindlen has worked in financial services for three
decades and was the CEO of Retail Card, a division of Synchrony, a Fortune 200 company, from January 2014
until his recent retirement in January 2023. Earlier in his career, Mr. Quindlen served in several leadership roles
for GE Capital, the financial services subsidiary of the General Electric Company. Mr. Quindlen holds a B.S. in
accounting from Villanova University. Mr. Quindlen was born in 1962, is a United States citizen, and resides in
Connecticut. Mr. Quindlen attended 5 Board meetings in the period.
Stephen A. Skaggs
has served as a Director since May 2019. He is independent of the Company’s
executive management, material business contacts, and larger shareholders. Mr. Skaggs has more than 25 years
of experience in the semiconductor industry and most recently served as Senior Vice President and CFO of
Atmel Corporation, a leading supplier of microcontrollers, prior to its acquisition by Microchip Technology, Inc.
in 2016. Mr. Skaggs served as CEO and, earlier, as CFO of Lattice Semiconductor Corporation, a supplier of
programmable logic devices and related software. Earlier in his career, he worked for Bain & Company, a global
management consulting firm. He currently serves as a non-executive director of Coherent Corporation, a global
leader in engineered materials, optoelectronics and lasers. Mr. Skaggs holds a B.S. in Chemical Engineering
from the University of California, Berkeley, and 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 7 Board meetings in the
period.
Family Relationships and Selection Arrangements
There are no family relationships between any of the Directors. There are no family relationships between
any Director 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 Diversity 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.
The following table sets forth a profile of the composition of our seven-member Board as of December 31,
2022:
Board Diversity Matrix
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 based definitions of “national, racial, ethnic,
indigenous, cultural, religious, or linguistic identity” in the country of the Company’s principal executive
offices (i.e., Norway).
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Executive officers
Vincent Graziani
has served as our Chief Executive Officer (“CEO”) since February 2020. He joined
IDEX from Infineon Technologies AG, for which he was most recently Vice President of Strategy Development
and Implementation, with responsibility 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 marketing and sales at Intel, Broadcom, and Siemens Semiconductor. Mr.
Graziani holds a B.S. in Electrical Engineering from the University of New Hampshire and a M.S. in Electrical
Engineering from Northeastern University. Mr. Graziani is located at the Company’s offices in Wilmington,
Massachusetts.
Eileen M. Wynne
has served as our Interim Chief Financial Officer (“CFO”) since August 2022. Prior to
August 2022, Ms. Wynne provided interim and part-time accounting and finance services to businesses,
including IDEX. From December 2020 until August 2022, Ms. Wynne provided consulting services to IDEX.
Prior to joining us, and from May 2013 to June 2019, Ms. Wynne served as Vice President and Chief Accounting
Officer of Analog Devices, Inc.
(NASDAQ: ADI) where she was responsible for ADI's accounting processes
and controls globally. From March 2017 to September 2017, Ms. Wynne served as interim Chief Financial
Officer of Analog Devices, Inc. Before 2013, Ms. Wynne held various corporate accounting roles within Analog
Devices, Inc. and was an audit manager for Grant Thornton, LLP.
Ms. Wynne also serves on the board of
directors of Monolithic Power Systems, Inc. Ms. Wynne holds a B.A. from Saint Anselm College and an M.S.A.
in Accounting from Bentley University. She is located at the Company’s offices in Wilmington, Massachusetts.
Anthony Eaton
has served as our Chief Technology Officer ("CTO") 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 Corporation, Mirics Semiconductor,
Inc. and Sony Semiconductor Solutions Group. Mr. Eaton holds Bachelor’s and Master’s degrees in Engineering
from Cambridge University. He is located at the Company’s offices in Farnborough, United Kingdom.
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 experience as a global executive leading business transformation across financial services, retail, travel, and
information security. Notably, she had roles of increasing responsibility over 12 years 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 and works in Belgium.
IDEX Biometrics ASA Annual Report 2022
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Idex Biometrics ASA
Dronning Eufemias gate 16, NO-0191 Oslo, Norway
+47 6783 9119; [email protected] www.idexbiometrics.com
Corp. ID: NO 976 846 923 MVA/VAT