NEXT Biometrics Group ASA

2024

Annual Report

NEXT BIOMETRICS GROUP ASA

NEXTBIOMETRICS.COM

3 Letter from the CEO

5 NEXT Biometrics at a glance

6 Report from the Board of Directors

13 Corporate Governance Report

24 Corporate Social Responsibility Report

27 Financial Statements Group

32 Notes to financial statement - Group

59 Financial Statements Parent Company

64 Notes to financial statement - Parent

73 Responsibility statement

74 Auditor's report

80 Alternative performance measures

Contents

ANNUAL REPORT 20242

Letter from the CEO

DEAR SHAREHOLDER,

2024 has been an exciting and transformational year.

In our 2023 Annual Report I promised that 2024

would bring growth to our organization, increase

the speed of NEXT’s innovation and continue the

enhancement of our innovative product portfolio.

Despite the challenges we have faced, I am proud

that NEXT has managed to stay on this path.

Integrations in Action – NEXT’s Impact in Society

The fight against the ever-increasing number and

sophistication of security threats aimed at nations,

governments and corporations continues. Millions

of people in Africa and Asia, for example, still cannot

access the basic services and benefits they are

entitled to. Meanwhile, governments are struggling

to efficiently administer to citizens’ needs and

support with services – often due to poverty and

non-existent, or poorly functioning, national ID

systems. For example, India clearly grapples with the

dual challenge of securing a sufficient security level

for its ID program and providing a system that is low

cost. Still, it is evident that providing a high security

level for its ID program is the overarching priority

exemplified by the recent L1 freeze resulting in

heightened security standards and fewer equipment

providers that can satisfy these requirements.

Hence, our purpose of providing secure

authentication through easily integrated

biometrics is more important than ever.

I am immensely proud that our work is also

concretely improving lives, securing societies,

and paving the way for the next generation

of biometric security.

Expanding and Enhancing the Portfolio

In 2024, we continued our focus on research

and development, continuing to lead on

biometric innovation.

We set out to further develop NEXT’s product

portfolio, aligning it with the evolving needs of our

customers and market dynamics. FAP20 has long

been a flagship product for us, highly regarded for

its slim form-factor and compatibility with the leading

digital identity platforms. Recognizing its potential,

this year we focused on enhancing its capabilities.

We have consistently issued updates about FAP20’s

progress during this year. To provide a wider view of

our work, I have highlighted a few achievements on

a more strategic level below.

- In 2024, we signed a Memorandum of

Understanding (MoU) with NEXT’s long-term

partner ACPL to jointly develop a new product

which targets the growing government ID market

and different national ID programs in Asia,

South America, and Africa. The MoU includes

a commitment by ACPL to place purchase orders

amounting to at least 35 MNOK over a period

of 18 months. We aim to have progressed to

launch phase and first delivery of this new

product in late 2025.

- Another important development during 2024 was

securing NEXT’s first design-win in the touchpad

sector. The customer’s end-user product is a

medical keyboard aimed at industrial use, with

NEXT supplying the customer with fingerprint

modules and touchpads for the keyboard.

We aim to deliver this medical keyboard in 2025.

We are also continuing to develop our offering

in the PC and Laptop segments, initially through

adding one of our Partner’s touchpad products

alongside our own. Our vision for the future is

to develop and sell a new fingerprint touchpad

product of our own.

2024: Transformation Achieved

Product milestones, organizational growth, and strong financial performance

– NEXT Biometrics (NEXT) had a transformational 2024. We delivered on our

commitments to customers and on the continued enhancement of our product

portfolio. The results? A remarkable 108% revenue growth, solidified partnerships,

and a strengthened market position, opening up access to the most attractive,

high-tier tenders and business areas.

ANNUAL REPORT 20243

- A new member of the FAP family also emerged

in 2024 as we demonstrated the first engineering

samples of our new FAP30 fingerprint sensor.

We are delighted to see that the market’s

reception has exceeded all expectations.

The FAP30 product is a complementary offering

to the FAP20 solution, functioning as a more

sophisticated, high-tier product targeting the

most demanding environments and use cases.

Typical use cases for FAP30 include government

and national ID programs, access control and

corporate applications. The solution’s strong

Liveness features – the sensor’s ability to

detect real fingers and stop fake fingers from

authenticating – have driven strong interest from

the market. Following product demonstrations, we

have inked a multi-year MoU for the FAP30, valued

at approximately 18 MNOK per year. This MoU is

of strategic importance for NEXT. Not only does

it ensure the market introduction of the FAP30

sensor, but the device will also target attractive

sectors, such as the law enforcement and banking

industries in Europe and South Africa, as well

as the growing MOSIP (Modular Open Source

Identity Platform) market in Asia and Africa.

Navigating Challenging Markets

India and China were our largest geographical

markets in 2024. Our growth in India was

characterized by an increase in the number of

outstanding tenders, especially in the banking and

finance sectors. This momentum was driven by the

generational security upgrade of Aadhaar, triggering

vendors to upgrade devices and verify

the compliance of integrations. NEXT is already

Aadhaar compliant, with the latest L1 certification,

and our strategic focus in India is to further

strengthen our market position to increase

our market share long-term.

Our work in India in 2024 continued in line with our

plans until late Q4, when the UIDAI (Unique Identity

Authority of India) placed a temporary ban on the

enrollment of all new L1 devices. The UIDAI’s ban

followed a security incident at a competitor and did

not concern NEXT’s technology. However, the pause

had a knock-on effect for all vendors with Aadhaar

compliance as it was effective until all vendors have

undergone further testing. This delayed NEXT’s

deliveries and resulted in heavily reduced

revenues in the fourth quarter.

Despite these temporary challenges, we continued

executing on our strategy across India and Asia.

In 2024 we grew our organization, focusing on

our key business areas such as customer support

and presales, where we doubled our headcount.

In China, one short-term goal for 2024 was for

NEXT’s FAP20 sensor to become China-ID certified.

Like India’s Aadhaar system, without this certification

we cannot penetrate the most attractive business

segments. At the start of 2024, NEXT received

its China ID certification and it also expanded its

footprint to the medical insurance, healthcare and

access control markets. The final months of 2024

were slow in China, mostly driven by temporary

delays with a software project integration and overall

slowness in the business climate. In addition to the

market segments mentioned above, NEXT is also

targeting customers in the point of sale and fintech

segments in China. The process of improving NEXT’s

position in the value-chain and transforming from

vendor sensor to a solutions provider continued

through the year.

As I look back upon the year, I am immensely

proud of what we have achieved together at NEXT.

Despite challenging economic conditions, we have

managed to drive impressive growth. And this is

only the beginning – we will continue to lead, deliver

solutions, and pave the way for biometrics in 2025.

Thank you.

Ulf Ritsvall

2024

ANNUAL REPORT 20244

LETTER FROM THE CEO

NEXT Biometrics at a glance

NEXT provides advanced fingerprint sensor technology that delivers uncompromised

security and accuracy for the best possible user experience in the banking & finance,

government ID, access control and laptop & notebook market areas. NEXT Biometrics

Group ASA is headquartered in Oslo, with sales, support, and development operations

in Seattle, Taipei, Tokyo, New Delhi and Shanghai.

Technology & Product Development

NEXT Biometrics is a pioneer in the field of Active

Thermal® technology. NEXT’s unique Active Thermal®

technology offers high-security authentication using

ultra-thin sensors with high image quality and low

energy consumption.

Compared to competing technologies, Active Thermal

sensors offer many advantages: Secure, future-proof,

Cost-effective performance & integration, Excels in

demanding environments.

NEXT’s sensor solutions have steadily gained momentum

in the industry. This is due to their large, thin FAP-

standardized sensing area combined with high image

quality, high security level and low energy consumption.

The products are used in various applications such as

point of sales terminals (POS), readers, Notebooks and

Access solutions.

Its Active Thermal® technologies are certified by entities

including Aadhaar, ChinaID, FBI-PIV, MOSIP and NIBSS,

and has been implemented in countries including

Bangladesh, China, Ghana, India, Malaysia, Pakistan,

U.S. and Vietnam.

In 2024, we continued our focus on research and

development as part of our technology leadership. We set

out to further develop NEXT’s product portfolio, aligning

it with the evolving needs of our customers. Our FAP20

has long been a flagship product, highly regarded for its

slim form-factor and compatibility with the leading digital

identity platforms. Recognizing its potential, during the

year we focused on enhancing its capabilities.

In addition, the Group has a technology roadmap that

includes the development of a FAP30 sensor product

targeted at high-end governmental ID applications that is

planned to be launched in 2025. Moreover, the roadmap

also contains a new product that targets the smartphone

market. The planned smartphone product includes

fingerprint authentication on the full display screen

of a phone.

Sales & Marketing

The Group has a dedicated global sales force that has

established relationships with stakeholders in different

ecosystems active in focused market segments.

The company has a diversified customer base, which

includes Biometric technology companies, POS

manufacturers, biometric HW manufacturers and

Government ID providers.

NEXT’s ongoing business development efforts are

expected to bring additional volumes from new use

cases and targeted niche applications.

Manufacturing

NEXT has established outsourced production with

strong partners in Asia with proven ability to produce

large volumes of high quality and robust sensors for mass

market deployment, which is highly recognized and

appreciated by existing and potential new customers.

The Group can increase production capacity rapidly

when needed.

ANNUAL REPORT 20245

Report from the Board of Directors

A global leader in fingerprint sensor technology

NEXT Biometrics Group ASA (“Parent Company”)

is a public limited liability company incorporated

and domiciled in Norway, with headquarters in

Stortorvet 7, 0155 Oslo, Norway. The Parent company

and its subsidiaries (“NEXT” or “the Group”) provides

advanced fingerprint sensor technology that

delivers uncompromised security and accuracy for

the best possible user experience in the areas of

Government ID, Access control, Laptop&Notebook

and Banking&Finance.

NEXT’s fingerprint sensors are unique, using

thermal conductivity to read the fingerprint image,

as opposed to capacitive, ultra sonic or optical

sensing. This patented sensing principle allows

designs uniquely compatible with low temperature

polysilicon production processes (“LTPS”) used in

high-end displays. This enables significantly lower

production costs for the Group’s fingerprint sensors

compared to competing sensor technologies. The

Group has developed and markets a portfolio of

fingerprint sensors, sensor modules and readers,

which may be incorporated into a wide range of

products and solutions.

The Group has four wholly owned subsidiaries:

NEXT Biometrics AS (Norway) and its subsidiaries

NEXT Biometrics Inc. (Seattle, USA), NEXT

Biometrics Taiwan Ltd. (Taipei, Taiwan) and NEXT

Biometrics Solutions India Pvt. Ltd. (Bengaluru,

India). In addition, the group has control over and

a 50% shareholding in NEXT Biometrics China Ltd.

(Shanghai, China). In 2024 the Group sold 50% of

the shares in NEXT Biometrics China Ltd. (NEXT

China) at zero cost to the external party. A certain

part of shares in NEXT China is transferred back

to NEXT Biometrics AS at zero cost as a part of the

agreement with the external party. Hence, there is no

minority interest in relation to NEXT China. See

note 16 for further details. All five subsidiaries in the

Group are consolidated into Group accounts.

NEXT Biometrics Group ASA’s shares are listed on

the Oslo Stock Exchange.

Highlights 2024

Key 2024 developments in NEXT:

- Revenues for 2024 of NOK 71.6 million compared to NOK 34.4 million

in 2023

- Gross profit of 55% for 2024 compared to 21% in 2023

- Adjusted gross profit

of 55% for 2024 compared to 33% in 2023

- Adjusted EBITDA

of NOK -35.1 million in 2024 compared to

NOK -43.7 million in 2023

- 18 new design-wins in 2024 and accumulated 64 design-wins as per

December 2024, which will contribute to future revenues

- Break-through in China with launch of new China ID product and

FAP30 engineering samples demonstrated to partners and customers

1 Please see section Alternative Performance measures on page 80 for further details

ANNUAL REPORT 20246

Business overview

Biometric fingerprint sensing technology continues

to gain traction across the world. Biometric

technology is used in Laptop and Governmental

projects and businesses have deployed the

technology in medical services, devices for financial

inclusions such as pension payments, point of sale

devices (POS), office and facility access, voting

registration and time and attendance solutions.

The Group has developed products, established its

manufacturing platform and sales and marketing

to establish a business with significant footprint

and customers in key markets such as Banking &

Finance, Government ID, Access control, Laptops,

and POS solutions. The Group has a unique

proven technology that outperforms competitive

solutions in key markets from form factor (size and

thickness), biometric performance, quality, standard

compliance and unit cost. As per end of 2024,

NEXT has biometrics distributors with presence

in the Americas, Asia, Europe and Africa. NEXT is

represented in major large and growing biometric

markets with high-security needs and extensive

use of biometrics.

In India, the Aadhaar program has registered more

than one billion people fingerprints. This provides

access to different governmental services and

benefit systems. NEXT’s local partners will certify

their products, which include NEXT’s FAP20 sensors.

Hence, the Indian authorities' generational upgrade

of India’s national Aadhaar program and our local

partners are expected to trigger strong demand for

NEXT sensors in 2025 and later years.

In China, security remains a strong market driver

and being the world’s most biometrics enabled

country, the interest in our FAP20 sensor, including

our liveness feature, has been strong. Early 2024,

we announced that one of our other partners got

awarded the China ID certification for the FAP20

sensor and NEXT has already received multiple

orders in China, which were shipped during the year.

In the Americas, NEXT has two distributors covering

US, Mexico and Brazil. The focus in these markets

is to replace current installed base of bulky and

expensive optical fingerprint products.

In the Laptop market the Group is working to

increase the run rate revenues from existing

clients. The Group is also working on new business

opportunities with additional laptop manufacturers,

focusing both on developing new opportunities with

standard sensors and the FAP20 higher security

implementations.

The Group is working on a new FAP30 product,

which will offer outstanding image quality and

built-in anti-spoofing, which provides unmatched

capability to detect a live finger. The larger-sized

FAP30 is naturally also an important feature that

ensures a more complete picture of the fingerprint.

The FAP30 sensor can easily be fitted into and

integrated into various system requirements

and surroundings. The Group has presented

product samples to interested customers and the

customer feedback has been very positive and the

addressable market is sizeable. The FAP30 product

is expected to be launched in 2025.

Sustainability and transparency

NEXT meets the authorities' requirements for

sustainability reporting and further information

can be found in Corporate Social Responsibility

Report (see page 24). Reporting required by the

Norwegian Transparency Act for the 2023 financial

year was published in the 2023 financial reporting

section on the company’s website in June 2024

(www.nextbiometrics.com/investors/financial_reports_

presentations/). Transparency act reporting for 2024

will be published at the latest on 30 June 2025 at

the same web site location.

ANNUAL REPORT 20247

REPORT FROM THE BOARD OF DIRECTORS

Financial summary – The Group

Comprehensive income

Revenues were NOK 71.6 million in 2024 compared

to NOK 34.4 million in 2023.

Gross profit was NOK 39.2 million (55%) in 2024

compared to a gross profit of NOK 7.4 million

(21%) in 2023.

Adjusted Gross profit was NOK 39.5 million (55%)

in 2024 compared to an adjusted gross profit of

NOK 11.4 million (33%) in 2023.

Payroll expenses were NOK 32.8 million in 2024,

compared to NOK 42.4 million in 2023. Average

number of employees were 23 in 2024 compared to

24 employees in 2023. The Group had 24 employees

at the end of 2024, compared to 23 employees at the

end of 2023. Share-based remuneration, including

related accrued social security tax, included in payroll

expenses was, NOK 1.1 million in 2024, compared

to NOK 10.3 million in 2023. The decrease in share

based renumeration cost in 2024 is due to the lower

number of options awarded in 2024 and negative

social security remuneration cost resulting from the

decrease in the company’s stock price and lowered

social security cost for future periods from 19.1% to

14.1%. Research and development (R&D) expenses

included in payroll expenses were NOK 6.5 million in

2024 compared to NOK 6.4 million in 2023.

Other operating expenses were NOK 47.0 million in

2024, compared to NOK 23.2 million in 2023. R&D

expenses included in other operating expenses were

NOK 4.2 million in 2024, compared to NOK 2.6 million

in 2023. Moreover, allowance for expected credit loss

was NOK 7.3 million in 2024, compared to NOK 0.5

million in 2023. See note 13 for more details.

Total R&D expenses, included in both payroll and

other operating expenses, were NOK 10.7 million in

2024, compared to NOK 9.0 million in 2023.

The Group’s expenses in 2024 were mainly related

to developing the FAP30 product and fingerprint

sensor improvements.

Depreciation, amortization and impairment were NOK

5.4 million in 2024, compared to NOK 8.2 million in

2023. The decrease in 2024 is due to the impairment

losses booked in 2023 and assets reaching the end of

their depreciable life.

Net financial items amounted to a net gain of NOK

1.0 million in 2024, compared to a net gain of NOK

0.9 million in 2023. The gains in 2024 were related to

currency gains and interest income.

Income tax cost was NOK 0.2 million in 2024,

compared to NOK 0.2 million in 2023.

EBITDA for the Group was negative NOK 40.7 million in

2024, compared to negative NOK 58.2 million in 2023.

Adjusted EBITDA for the Group was negative NOK

35.1 million in 2024, compared to negative NOK 43.7

million in 2023.

Loss after taxes for the Group was NOK 45.2 million

in 2024, compared to NOK 65.7 million in 2023.

In the outlook section of NEXT’s 2023 annual report

it was stated that the company expected increased

number of design-wins, increased revenues, and

improved profitability. During 2024 NEXT increased

its number of design-wins in line with expectations.

Revenues in 2024 increased by 108%. Still, the

revenue growth was lower than the stated growth

target in the 2023 annual report due to project

and governmental approval delays relating to key

customer projects in India and China.

ANNUAL REPORT 20248

REPORT FROM THE BOARD OF DIRECTORS

Changes in accounting policies

The accounting policies applied in preparation of the

financial statements for 2024 are consistent with those

applied in the preparation of Annual Report for 2023.

Financial position and cash

Total assets as of 31 December 2024 amounted to

NOK 152.4 million, compared to NOK 118.9 million as of

31 December 2023.

Total equity was NOK 118.9 million at the end of 2024

compared to NOK 94.4 million at the end of 2023.

The Group had non-current liabilities of NOK 2.2

million and current liabilities of NOK 31.3 million at

the end of 2024, compared to non-current liabilities

of NOK 0.2 million and current liabilities of NOK 24.4

million at the end of 2023.

Cash amounted to NOK 62.9 million at the end

of 2024 compared to NOK 67.8 million at the end

of 2023.

The Group had gross account receivables of NOK

67.4 million at the end of 2024 compared to NOK 15.3

million at the end of 2023. Account receivables net of

credit loss allowance provisions was NOK 56.8 million

as of 31 December 2024 (NOK 12.3 million in 2023).

Cash flow

Net cash flow from operating activities was negative

with NOK 61.7 million in 2024 compared to negative

NOK 56.6 million in 2023. The loss after taxes for the

Group was improved by NOK 20.5 million from 2023

to 2024. Still, the lowered loss in 2024 compared to

2023 was offset by net cash flow from working capital

changes of negative NOK 24.9 million in 2024. Hence,

the decline in cash flow in 2024 relative to 2023 is

mainly due to increased working capital partially

offset by lowered loss after taxes in 2024.

Net cash flow from investing activities was negative

NOK 0.6 million in 2023 compared to negative NOK

0.0 million in 2023.

Net cash flow from financing activities was positive

NOK 58.1 million in 2024 as a result of the share issue

that was performed in October 2024. Net cash flow

from financing activities was positive NOK 54.9

million in 2023.

ANNUAL REPORT 20249

REPORT FROM THE BOARD OF DIRECTORS

Financial summary – The Parent Company

Comprehensive income

Total revenues for the parent company were NOK 9.5

million in 2024 compared to NOK 8.9 million in 2023.

The revenues were mainly resulting from management

fees and royalties charged to the subsidiary NEXT

Biometrics AS.

Payroll expenses including share-based remuneration

for the parent company were NOK 11.8 million in 2024,

compared to NOK 21.1 million in 2023. The decrease

is mainly resulting from lower number of options

awarded in 2024 reducing share-based remuneration

and a reduction in the NEXT share price and lowered

social security cost for future periods from 19.1%

to 14.1%, which triggered negative share-based

remuneration social security costs in 2024. There were

4 employees in the parent company at year-end 2024,

compared to 4 employees at the end of 2023.

Other operating expenses for the parent company

was NOK 7.7 million in 2024 compared to NOK 6.7

million in 2023.

Depreciation and amortization for the parent company

was NOK 1.4 million in 2024 compared to NOK 1.3

million in 2023.

Net financial income was NOK 1.8 million in 2024

compared to a net financial income of NOK 1.9

million in 2023.

The parent company had a loss before taxes in

2024 and 2023. Hence, no payable taxes incurred.

No deferred tax assets have been recognized

during 2024 and 2023.

Loss after taxes for 2024 was NOK 9.6 million

compared to NOK 18.2 million in 2023.

Financial position and cash

Total assets as of 31 December 2024 amounted to

NOK 369.5 million, compared to NOK 318.5 million

as of 31 December 2023.

The parent company had NOK 7.6 million in current

liabilities at the end of 2024, compared to NOK 10.6

million at the end of 2023.

Cash amounted to NOK 47.9 million at the end of 2024

compared to NOK 40.1 million at the end of 2023.

Cash flow

Net cash flow from operating activities was negative

NOK 7.7 million in 2024, compared to negative NOK

10.7 million in 2023. Net cash flow from investments

was negative NOK 44.0 million in 2024 compared

to negative NOK 43.2 million in 2023. Net cash flow

from financing was positive NOK 59.5 million in 2024

compared to positive NOK 56.5 million in 2023.

Equity and allocation of profit (loss) after taxes

Equity for the parent company was NOK 361.7 million

at the end of 2024 compared to NOK 307.9 million at

the end of 2023.

The Board of Directors proposes that the loss after

taxes of the parent company of NOK 18.2 million to

be booked to the share premium account.

ANNUAL REPORT 202410

REPORT FROM THE BOARD OF DIRECTORS

Next shares and share capital

NEXT ASA’s shares are listed at Oslo Stock

Exchange’s main list with ticker NEXT. The 2024 year-

end closing price was NOK 6.88, down from NOK 7.1

at the end of 2023. During 2024, the shares traded

in the range of NOK 6.4 to NOK 9.0.

The issued share capital of the parent company

at the end of 2024 amounted to NOK 115.2 million

consisting of 115,154,535 ordinary shares, each share

having a par value of NOK 1. At the end of 2024,

there were a total of 3,391 registered shareholder

accounts, compared to 4,079 at the end of 2023.

NEXT raised gross proceeds of NOK 40.15 million in

a private placement that was completed in October

2024. NEXT also issued new shares in relation to

exercise of employee share options in 2024, which

resulted in total gross proceeds of NOK 22.29 million.

Please see note 18 in group consolidated financial

statement for further details.

The Group has entered into, and plan to continue

to enter into, stock option agreements to attract

talented, experienced and highly valued employees.

As per 31 December 2024, NEXT has 10,020,579

share options outstanding. Please see note 18

in group consolidated financial statement for

further details.

Financial risk, capital management

NEXT is exposed to certain financial risks related

to exchange rates and interest levels. These are,

however, insignificant compared to the business risk.

NEXT’s business risk may be summarized in:

a - NEXT currently has higher costs than revenues

and has negative cash flow from operations.

b - NEXT’s business plan assumes additional

revenue from existing and new products under

development.

c - Revenue from NEXT’s products depends, among

other things, on market factors which are not

controlled by NEXT.

d - Competing companies’ products have entered

the commercial stage, and the competitive

situation for NEXT’s products is constantly

changing.

e - NEXT’s intended markets are undergoing rapid

technological changes.

NEXT manages its liquidity passively, which means

that funds are placed in floating-interest bank

accounts. The majority of cash is held in Norwegian

kroner at parent company level and is distributed

when appropriate to the affiliates. This is both to

have control of the overall liquidity situation and to

manage expense levels in the affiliates.

NEXT has financial liabilities related to office leases

in multiple locations as per 31 December 2024.

NEXT’s sales and production cost are in US dollars.

Other operating expenses are mainly in Norwegian

kroner (NOK) and US dollars (USD), depending on

the location. Equity transactions are in NOK. In the

parent company, the majority of the cost and all

equity transactions are in NOK. NEXT does not use

financial instruments to hedge this risk.

The Group is exposed to credit risk. NEXT sells its

sensors to leading international distributors and

original equipment manufacturers of electronic

components, primarily based in Asia, Europe and

North America. The Group’s accounts receivables

increased during 2024 as a result of increased

revenues and slow collection of account receivables.

Moreover, the group increased its allowance for

expected credit loss in 2024. Please see note 13 and

20 for further details. The majority of the Group’s

receivables are currently not credit insured. Late

2024, the Group entered into a credit insurance

policy with a major insurance company whereby

account receivables credit losses for qualified

credits will be covered within certain limits.

Liability insurance

The Group has directors and officer’s liability

insurance with a NOK 50 million total coverage, and

it covers legal costs, emergency costs and multiple

other types of contingency costs.

Employees

At the end of 2024, the Group had 24 employees

(2023: 23), of which 6 are women (2023: 5).

Additionally, the Group has individual technical/

scientific specialists working at its premises on a

contract basis. The average female proportion of

group employees was 25% in 2024 (2023: 20.7%).

The parent company had 4 employees by the

end of 2024. There were 3 male employees and 1

female employee at year-end. The average female

proportion of parent company employees was 25%

in 2024 (2023: 21%). There are currently 4 members

of the board, of which 2 are women.

The parent company had no long-term leave of

absence due to illness or any work-related incidents

or accidents resulting in material damage or

personal injury during 2024. The average sickness

absence rate in the parent company was 1.1% in 2024

compared to 0% in 2023.

ANNUAL REPORT 202411

REPORT FROM THE BOARD OF DIRECTORS

Corporate governance

NEXT’s guidelines for corporate governance are in

accordance with the Norwegian Accounting Act

§3-3b and seek to comply with the Norwegian code

of Practice for Corporate Governance, dated 14

October 2021. Please see separate annual report

section “Corporate Governance Report” for more

information.

Social responsibility, environment and

climate impact

NEXT’s guidelines for social responsibilities are

in accordance with the Norwegian Accounting

Act §3-3c. Please see separate annual report

section “Corporate Social Responsibility Report”

for more information on social responsibilities,

environment, climate impact and working

environment. The Group does not own or

operate manufacturing facilities. Manufacturing

is done through third parties. Climate impact and

potential risk is low in the short to medium term.

Please see note 21 for further details on climate risks.

Going concern

In accordance with § 3-3a of the Norwegian

Accounting Act, the Board of Directors confirms that

the financial statements have been prepared under

the assumption of going concern.

Subsequent events

Between 31 December 2024 and the resolution of

these financial statements, there has not been any

event which have had any noticeable impact on

the Group’s or the parent company's result for 2024

or the value of the Group or the parent company’s

assets and liabilities as of 31 December 2024.

Outlook

The Board of Directors wishes to highlight that

any forward-looking statements and assessments

are subject to substantial uncertainty, and actual

developments may differ materially from current

expectations.

Based on signed orders and current market visibility,

NEXT is targeting a revenue of NOK 180–200 million

for 2025. We expect continued growth for our flagship

sensor FAP20 in India and China. Moreover, with

NEXT’s new FAP30 sensor launching in the second

half of 2025 we expect this to provide significant

additional revenue growth. As a result, NEXT expects

the majority of its 2025 revenue in the second half of

the year.

We expect the overall business environment and

momentum in our key markets, such as China, to be

slow in the first half of the year. We expect business

conditions to pick-up pace, however, and be strong

in the second half of the year. Another positive

development is the reopening of the India Aadhaar

market, with continued enrollment of L1 devices

expected to contribute a significant part of NEXT’s

revenues in 2025.

Within R&D, NEXT recently presented a new project

which uses NEXT Active Thermal technology to

enable fingerprint authentication on a full display

screen. This is an innovation that many market

segments like smartphone and access markets have

attempted to achieve for a long time without success.

This project will benefit both our existing product

portfolio, in addition to enabling us to target a vast new

market. The first phase will focus on production of a

prototype, and we will then engage end customers

to sign partner agreements. Following NEXT’s R&D

announcement of the project, external parties have

approached us to discuss opportunities for co-

operation. Multiple non-disclosure agreements have

been signed, one of which is with a major global

technology company.

Moving into 2025, NEXT is strategically positioned with

a compelling product lineup, established partnerships,

and a solid financial foundation. This paves the way for

continued revenue growth and strong cash flow.

Odd-Harald Hauge

Chair

/Sign/ /Sign/

/Sign/

Petter Fjellstad

Board member

Ulf Ritsvall

CEO

Emine Lundkvist

Board member

Siri Gomnæs Børsum

Board member

The board of directors of NEXT

Biometrics Group ASA

Oslo, 10 April 2025

ANNUAL REPORT 202412

REPORT FROM THE BOARD OF DIRECTORS

Corporate Governance Report

INTRODUCTION

For NEXT Biometrics Group ASA ("NEXT" or the

"Company"), good corporate governance is about

doing the right things, and doing the things right.

The manner in which the Company is managed is

vital to the development of the Company’s value

over time. The Company's corporate governance

framework has been designed to provide a

foundation for value creation, business risk

reduction, and to ensure good control mechanisms.

NEXT believes in open and honest communication

with the shareholders, and interaction between

shareholders, the board of directors and the

Company’s management. NEXT aims to show

respect and responsibility for shareholders as well

as with all stakeholder groups, such as co-operating

partners, customers, suppliers, employees and

authorities. NEXT is subject to corporate governance

reporting requirements according to section 3-3b of

the Norwegian Accounting Act and the continuing

obligations of stock exchange listed companies

at Oslo Stock Exchange. Further, NEXT’s board of

directors endorses "The Norwegian Code of Practice

for Corporate Governance" (the "Code"), most

recently revised in October 2021 and issued by the

Norwegian Corporate Governance Policy Board.

The Code is available at http://www.nues.no/.

NEXT’S IMPLEMENTATION AND REPORTING ON CORPORATE GOVERNANCE

NEXT aspires to comply with the recommendations

of the Code. Taking into account the size and

maturity of the Company, there may be deviations

from the Code. If the Code is deviated from, the

deviation is described and explained in the relevant

section of this report. The Company’s policies,

instructions and internal processes are continuously

developed. A review of the Company’s corporate

governance policy is performed annually to ensure

continued compliance with the Code.

BUSINESS

NEXT’s business is clearly described in the

Company’s articles of association: “The objective of

the company is to conduct research, development

and commercialization of security products,

participation and investment in companies

conducting similar activities as well as other activities

that will naturally fall under this”. The Company’s

articles of association are available at the Company’s

homepage, www.nextbiometrics.com.

Basic corporate values

The Company has formulated three basic corporate

values to form a guideline for the Company’s

business operations: (i) innovative business models,

(ii) close client relationship and (iii) global reach.

”The ethical and corporate social responsibility

guideline” has been set out in accordance with

these values.

Ethics and corporate social responsibility

The Company has implemented ethical and

corporate social responsibility guidelines, in

accordance with its basic corporate values.

Moreover, the Company promotes and ensures

sustainable business operations and supply chain.

Additional information is included in the sections

related to specific Environmental, Social, and

Governance matters in this report.

ANNUAL REPORT 202413

EQUITY AND DIVIDENDS

Capital structure

The board of directors and the management of the

Company seek, at all times, to have a sound relation

between the Company’s capital structure and the

Company’s objectives, strategies and risk profile.

The board shall immediately take adequate steps

should it be apparent at any time that the Company’s

equity or liquidity is less than adequate.

Dividend policy

It is a long-term objective of the Company to generate

returns to shareholders in the form of dividends and

capital appreciation, at a level which is at least equal

to other investment possibilities with comparable risk.

Since NEXT is in a growth-phase, no dividend has

been paid so far. Further, no dividend has been

proposed for the coming year. When the Company

reaches a steady state position, NEXT intends to

establish a clear and predictable dividend policy,

which will form the basis for any proposals on dividend

payments to be resolved by the general meeting.

Authorizations to the board of directors

The annual general meeting, held on 16 May 2024,

gave the board authorization to increase the

Company’s share capital by up to NOK 20,889,000

to enable the Company to conduct share issues

in an effective manner. The board of directors was

also granted authorization to deviate from the

shareholders’ preferential rights when using the

authorization.

Moreover, the board of directors was given an

authorization to increase the Company’s share capital

for the option program by up to NOK 11,980,658, out

of which NOK 1,660,000 can be used to issue shares

to board members under options granted to board

members in 2019, 2020 and 2022. The authorization

covers capital increases by way of contributions

in kind but does not cover capital increases in

connection with mergers, and the board may decide

that the shareholders’ pre-emption right to the new

shares can be deviated from. The authorization is

limited in time until the 2025 general meeting or 30

June 2025, whichever comes first.

As of 31 December 2024, there are no further

authorizations granted to the board of directors,

neither to increase the share capital by issuing new

shares, nor to the Company to purchase its own

shares. Any future authorizations given will be limited

in time until the next general meeting, in accordance

with the Code.

2024

ANNUAL REPORT 202414

CORPORATE GOVERNANCE REPORT

EQUAL TREATMENT OF SHAREHOLDERS AND TRANSACTIONS WITH

CLOSE ASSOCIATES

Class of shares

The Company has one class of shares and there are

no voting restrictions. Each share represents one

vote and equal rights at the Company’s general

meeting. The par value per share is NOK 1.00.

Pre-emption rights of existing shareholders

NEXT’s existing shareholders have pre-emption

rights to subscribe for shares in the event of a share

capital increase, unless otherwise indicated by

special circumstances. Any decision to deviate from

the pre-emption rights of existing shareholders

shall be justified. The justification for such decisions

shall be publicly disclosed in a stock exchange

announcement issued in connection with the

increase in share capital.

Transactions with close associates

The Company’s significant shareholders, a

shareholder’s parent company, board members,

executive personnel and close associates of any

such parties are considered to be related parties.

All transactions with related parties will be carried

out in accordance with the arm’s length principle.

All transactions with related parties that are not

immaterial will be publicly disclosed by NEXT. In

the event that such a transaction occurs, the board

will arrange for a valuation to be obtained from an

independent third party. This will not apply if the

transaction requires the approval of the general

meeting pursuant to the requirements of the

Norwegian Public Limited Companies Act.

If NEXT should carry out any transaction in its own

shares, this will be carried out either through the

stock exchange or at prevailing stock exchange

prices to ensure equal treatment of all shareholders.

Other than this, the board is not aware of any

transactions in 2024 between the Company and

the shareholders, a shareholder’s parent company,

directors, executive personnel or parties closely

related to such individuals that qualify as material

transactions.

SHARES AND NEGOTIABILITY

The shares in the Company are freely transferable,

and the Company’s articles of association contain

no restrictions on transferability, ownership,

trading or voting.

ANNUAL REPORT 202415

CORPORATE GOVERNANCE REPORT

GENERAL MEETINGS

The general meeting is the Company’s supreme

governing body, and all shareholders are guaranteed

participation and the opportunity to exercise

their rights.

The Company’s board takes steps to ensure that the

shareholders can participate in the general meetings

of the Company. The board of directors

will ensure that:

- the resolutions and any supporting

information distributed are sufficiently

detailed, comprehensive and specific to allow

shareholders to form a view on all matters to be

considered at the general meeting;

- members of the board of directors, the chair of

the nomination committee and the auditor (if the

items to be considered are of such a nature that

the auditor’s attendance must be regarded as

essential) are present at the general meeting;

- the general meeting is able to elect an

independent chairperson for the general

meeting; and

- that shareholders are able to vote on each

independent matter, including on each

individual candidate nominated for election.

Shareholders are encouraged to give notice of their

intention to attend the AGM, with a deadline as

close to the date of the General Meeting as possible,

typically one day in advance.

Shareholders who are unable to attend the general

meeting in person will be given the opportunity to,

and encouraged to, vote by proxy or through written

voting in a period prior to the general meeting. The

Company will in this respect provide information

on the procedure for representation at the general

meeting and prepare a proxy form/written voting

form that makes voting on each individual matter

possible. The Company will nominate a person to

act as a proxy for the shareholders.

NOMINATION COMMITTEE

Article 6 of the Company’s articles of association

sets out the requirements for the nomination

committee.

Composition

The nomination committee shall consist of two to

three members, where all members, including the

chair, are elected by the general meeting, which

also have approved guidelines for the duties

and remuneration of the nomination committee.

The nomination committee members shall be

independent of the board of directors and executive

management. The members are elected for a period

of up to two years.

The current nomination committee was elected at

the annual general meeting on 16 May 2024 for the

period until the annual general meeting in 2025.

All of the members of the nomination committee

have been selected to consider the interests of

shareholders in general and are independent from

both the Company’s executive management and the

Company’s board of directors. As of 31 December

2024, the nomination committee consisted of Jon

Frode Vaksvik (chair), Haakon M. Sæter and Hans

Herman Horn.

NEXT is not aware of the existence of any

agreements or business partnerships between

the Company and any third parties in which

members of the nomination committee have

direct or indirect interests.

Instructions and work

Instructions to the nomination committee were

last revised by the general meeting held on 16 May

2014. The nomination committee is responsible for

seeking out and nominating qualified candidates

for the board of directors and the nomination

committee, and for proposing the remuneration to

be paid to the board of directors and the nomination

committee, including an explanation of how it came

to its recommendations. The nomination committee

gathers input from shareholders, the board of

directors and the Company’s executive personnel as

part of its work on proposing candidates for election

to the board.

The Company provides information on the

membership of the committee.

ANNUAL REPORT 202416

CORPORATE GOVERNANCE REPORT

THE BOARD OF DIRECTORS: COMPOSITION AND INDEPENDENCE

Composition of the board of directors

The articles of association state that the Company’s

board of directors should comprise three to nine

board members elected by the general meeting.

The chair of the board is elected by the general

meeting and among the Company’s board.

NEXT emphasizes that the board shall have

requisite competency to independently evaluate

the cases presented by the executive management

team as well as the Company’s operation. It is also

considered important that the board can function

well as a body of colleagues.

As of 31 December 2024, the board of directors

comprises the following four members:

- Odd Harald Hauge

- Petter Fjellstad

- Emine Lundkvist

- Siri Gomnæs Børsum

All of the abovementioned board members are

elected for the period until the annual general

meeting in 2025.

A presentation of the board can be found on the

Company’s website.

The board’s independence

NEXT believes that it is in the best interests of the

Company and its shareholders to have independent

directors and applies the Code’s list of criteria

for evaluating whether a director is considered

independent.

Two out of the four board members are women, and

none of the members of the Company’s executive

management or main business connections are

members of the board of directors. The members

of the board of directors are independent of the

Company’s main shareholders. The composition

of the board ensures that it can attend to the

common interests of all shareholders and meet

the Company’s need for expertise, capacity and

diversity, and that it can operate independently of

any special interests.

Each independent director who experiences a

change in circumstances that could affect such

director’s independence is obligated to deliver a

notice of such change to the chair of the board.

Members of the board are encouraged to own

shares in the Company.

Election of the board of directors

The general meeting appoints the members of the

board of directors based on the proposal from the

Company’s nomination committee. The chair of the

board is elected by the general meeting.

It is the Company’s view that directors who have

developed a valuable insight into the Company

and its operations over time make important

contributions to the board. On this background,

the Company does not wish to establish time limits

in relation to the term of office for board members.

However, directors are elected each year.

To ensure that the board continues to generate new

ideas and operate effectively, the board evaluates

and assesses its performance on an annual basis.

A member of the board is entitled to retire prior to

the end of his or her term of appointment if special

circumstances arise. If possible, the board and the

nomination committee shall be given reasonable

prior notice thereof.

ANNUAL REPORT 202417

CORPORATE GOVERNANCE REPORT

THE WORK OF THE BOARD OF DIRECTORS

The board’s responsibilities

Norwegian law lays down the tasks and

responsibilities of the board of directors.

These include the overall management and

supervision of the Company. This means that the

board bears the ultimate responsibility for managing

the Company and for monitoring its administration

and business activities. The board is responsible

for establishing internal control systems and for

ensuring that the Company operates in compliance

with the adopted value platform and Code of Ethics.

The directors of the board shall discharge their

duties in a loyal manner.

The fundamental responsibility of the directors is

to oversee day-to-day management and evaluate

strategy, to exercise their business judgment to

act in what they reasonably believe to be the best

interests of the Company and its shareholders.

The board is also to oversee such matters as are

required by statutory law, the Company’s articles of

association, policies, instructions and procedures

as well as resolutions of the general meeting. It is

the duty of the board to oversee the management’s

performance to ensure that the Company operates

in an effective, efficient and ethical manner in order

to produce value for the Company’s shareholders.

The board also evaluates the Company’s overall

strategy and monitors the Company’s performance

against its operating plan.

The board is responsible for supervising strategic,

financial and execution risks and exposures

associated with the Company’s business strategy,

product innovation and sales road map, policy

matters, significant litigation and regulatory

exposures, and other current matters that may

present material risk to the Company’s financial

performance, operations, infrastructure, plans,

prospects or reputation, acquisitions and

divestitures. Further, the board shall ensure that the

ongoing activities of the Company are subject to

adequate control.

Annual plan

The board of directors sets an annual plan for

its work, with particular emphasis on financial

objectives, strategy and implementation. This

plan covers the follow-up of the Company’s

operations, internal control, strategy development

and other issues.

Instructions for the board of directors

The board of directors has implemented instructions

for its own work. The board’s instructions are subject

to review every second year and are revised as

needed. The current instruction was revised 5

November 2024.

The instructions cover the following items:

appointment of the board of directors; board

member independence; tenure and retirement;

by-election; the duties of the board; committees;

takeovers; allocation of the work within the

board; the working procedures of the board;

meeting – including meeting plan; quorum;

disqualification; majority requirements; categories

of decision; minutes; safety procedures and duty

of confidentiality; information concerning the work

of the board; evaluation of the work of the board

and board committees; directors’ liability insurance;

liability for damages; new board members or CEO

awareness of instructions; waiver and amendment;

approval of transactions with related parties and

communications with shareholders.

Instruction for the CEO

There is a clear segregation of duties between the

board of directors and the executive management.

The board has prepared a set of instructions for

the CEO. The current instruction was revised 5

November 2024.

The CEO shall follow the guidelines and instructions

issued by the board of directors. The CEO is

responsible for the day-to-day management of the

Company, pursuant to section 6-14 in the Norwegian

Public Limited Companies Act. The CEO ensures

that the board receives relevant information in an

accurate, sufficient, and timely manner in order to

allow the board to carry out its duties. The CEO

represents the Company externally in matters that

form part of the day-to-day management. The

day-to-day management does not cover matters

of extraordinary nature or of major importance.

However, the CEO is authorized to decide on

matters of extraordinary nature or major important

cases, where the decisions of the board of directors

cannot be awaited without serious detriment to the

Company. The board of directors must be notified of

the decision as soon as possible.

ANNUAL REPORT 202418

CORPORATE GOVERNANCE REPORT

Financial reporting

The board is responsible for ensuring the integrity

of financial information. The board evaluates

the integrity of the Company’s accounting and

financial reporting systems, including the audit

of the Company’s annual financial statements by

the independent auditors, and that appropriate

disclosure controls and procedures and systems of

internal control are in place.

Quarterly and annual financial reports are reviewed

and approved at board meetings and form the basis

for external financial reporting.

In connection with the presentation of the year-

end financial statements, the CEO and the CFO

declare that the accounts have been prepared in

accordance with generally accepted accounting

principles, and that to the best of their knowledge all

information is accurate and no material information

has been omitted.

Board meetings

The board shall deliberate matters and make

decisions in meetings, unless the chair of the board

finds that the matter may be presented in writing or

be dealt with in another satisfactory manner.

The directors are free to consult the Company’s

executives as needed. Any board member or the

CEO can require specific matters to be deliberated

on by the board. The CEO shall, in consultation

with the chair of the board, prepare matters to be

deliberated by the board. Any matter shall always

be prepared and presented in such a manner as to

provide the board with a satisfactory basis for making

its decision.

The CEO has a right and a duty to attend the board’s

deliberation of matters, unless otherwise determined

by the board with respect to each individual

matter. The CEO is not entitled to cast votes. Other

participants are called in as needed.

Conflicts of interest and disqualification

The board of directors ensures that members of

the board of directors and executive personnel make

the Company aware of any material interest that they

may have in items to be considered by

the board of directors.

A member of the board or the executive

management may not participate in the discussion

or decision of issues of such special and prominent

interest to the person in question, or to any closely

related party of said person, that the board member

or member of the executive management must be

regarded as having a distinct personal or financial

interest in the matter. This is in compliance with

section 6-27 of the Norwegian Public Limited

Companies Act.

Chair of the board of directors

The chair of the board of directors ensures that

the board of directors operates well and carries

out its duties. In addition, the chair of the board of

directors also has certain specific duties in respect

of the general meeting. Matters to be considered

by the board are prepared by the chief executive in

collaboration with the chair, who chairs the meetings

of the board.

Board Committees

The board has appointed a separate audit

committee. The committee shall prepare, draw up

and present items for consideration by the board

as a whole.

ANNUAL REPORT 202419

CORPORATE GOVERNANCE REPORT

Audit Committee

The Company’s audit committee is governed by

the Norwegian Public Limited Companies Act and

a separate instruction adopted by the board.

A majority of the members shall have qualifications

in accounting or auditing. The principal tasks of the

audit committee are:

- prepare the board of directors’ supervision of

the Company’s financial reporting process;

- monitor the systems for internal control and risk

management;

- have continuous contact with the Company’s

auditor regarding the audit of the annual

accounts;

- review and monitor the independence of the

Company’s auditor, including in particular the

extent to which services other than auditing

provided by the auditor or the audit firm

represent a threat to the independence

of the auditor;

- monitor the Company’s compliance with

applicable legal and regulatory requirements;

- handle and investigate concerns raised by the

Company’s employees related to the internal

revision or audit; and

- evaluate the audit committee’s activities.

The audit committee consists of Petter Fjellstad

(Chair) and Emine Lundkvist.

Remuneration Committee

The remuneration committee draws up guidelines

and proposals for senior executive remuneration.

The Company’s remuneration policy, including

remuneration to the CEO and the senior executives,

are dealt with at one of the board meetings and

accounted for in the Board’s annual report.

The remuneration committee consists of Odd Harald

Hauge (Chair) and Siri Gomnæs Børsum.

The board of director’s evaluation of its own work

The board shall annually evaluate its activities,

performance and competence, and has adopted

a self-assessment questionnaire for the purpose

thereof. The assessment results shall be submitted

to the nomination committee.

ANNUAL REPORT 202420

CORPORATE GOVERNANCE REPORT

RISK MANAGEMENT AND INTERNAL CONTROL

It is ultimately the responsibility of the board of

directors to ensure that NEXT has sound internal

controls and risk management systems appropriate

to the Company’s size and business. The board,

and the management, have increased focus on risk

management and internal controls. The board of

directors forms its opinion on the Company’s internal

controls and risk management systems based on the

information presented to it by the management.

The executive management closely monitors the

main risk factors, to ensure the Company has proper

guidelines, processes and internal controls in place.

The board of directors conducts annual reviews of

the Company’s most important areas of exposure to

risk and such areas’ internal control arrangements.

NEXT has experienced finance and accounting

personnel, who continuously strive to improve

routines and internal control systems. Initiatives are

ongoing to ensure risks are efficiently managed,

and that key controls are in place to achieve financial

goals, operational goals, and compliance with

regulations. The Company’s internal controls and

systems also cover the Company’s corporate values,

ethical guidelines and principles of corporate social

responsibility.

The size of the Group’s operations and limited

staff size necessarily lead to dependence on

key individuals and a limitation on the possible

implementation of internal control risk reduction

measures.

The Norwegian entities of NEXT have an internal

risk management, finance and accounting function.

The board presents an in-depth review of NEXT’s

financial status in the “Report from the board of

directors” as part of this annual report.

REMUNERATION OF THE BOARD OF DIRECTORS

The remuneration of the board reflects the board’s

responsibility, expertise, time commitment and the

complexity of the Company’s activities.

The general meeting approves the remuneration

paid to the board of directors each year.

The nomination committee prepares the

proposed remuneration to the general meeting.

The remuneration of the board of directors is not

linked to the Company’s performance. The current

board members were granted share options in 2019,

2020 and 2022, which were approved at the annual

general meetings held in 2019, 2020 and 2022.

Moreover, the board members’ options awarded

in 2020 were extended to June 2026 at the 2023

annual general meeting. The Company deviates from

the Code by granting options to board members.

For more details on the remuneration to the board,

please refer to note 19 in the annual financial

statements. Except for the one deviation above,

the Company does not deviate from the Code in

relation to remuneration of the board of directors.

REMUNERATION OF EXECUTIVE MANAGEMENT

The board establishes guidelines for the

remuneration of the executive management

team setting out the main principles applied in

determining the salary and other remuneration of

the executive management team. The general

meeting approved the remuneration guidelines

in May 2024. The guidelines are available on the

Company's website.

The main principle in the Company’s policy for

remuneration is that the leading employees should

be offered competitive terms to attract and retain

the competence that the Company needs.

The general meeting has approved the Company’s

share option programs.

For details regarding remuneration to the executive

management, see note 19 in the annual financial

statements, and for details regarding share option

arrangements, see note 18 in the annual financial

statements.

The Company deviates from the Code by not having

a cap on the performance-related remuneration

ANNUAL REPORT 202421

CORPORATE GOVERNANCE REPORT

INFORMATION AND COMMUNICATIONS

NEXT believes in open and honest communication

with the shareholders, and interaction between

shareholders, the board of directors and the

Company’s management. The board of directors

and the executive management team assign

considerable importance to giving the shareholders

and other stakeholders relevant and current

information about the Company and its

activity areas.

Regular information is published through annual

reports, quarterly reports, press releases, notices to

the stock exchange and investor presentations in

accordance with what is deemed appropriate from

time to time. Information on value drivers and risk

factors is provided through the interim reporting,

which will enable investors to evaluate NEXT’s

performance and risk.

The CEO is responsible for investor relations and

is the main contact person of the Company for the

capital market. All communication is done solely in

the English language.

All reports and notices are issued and distributed

according to the rules and regulations of the Oslo

Stock Exchange. Information relevant to investors

is published at Oslo Stock Exchange and made

available on the Company’s website. Shareholder

information, including a financial calendar and

information about webcasts, is available on www.

nextbiometrics.com/investors

TAKEOVERS

The Company has established guidelines for the

board on how it will act in the event of a take-

over bid. The board will handle take-over bids in

accordance with Norwegian law, including the

Norwegian Securities Trading Act and the Code.

The Company has not been subject to any take-over

bids in 2024.

There are no defense mechanisms against take-

over bids in the Company’s articles of association

nor any underlying steering document. In corporate

take-over or restructuring situations, the board shall

exercise due and proper care so that all shareholder

values and interests are preserved. During the

course of a take-over process, the board and

management shall ensure that the shareholders are

treated equally, and that the Company’s business

activities are not disrupted unnecessarily. The

board has a particular responsibility to ensure

that shareholders are given sufficient information

and time to form a view on the offer. The board of

directors otherwise concurs with what is stated in

the Code regarding this issue.

AUDITOR

The Company’s auditor is elected by the general

meeting and is fully independent from the Company.

From 2024, RSM Norge AS is the Company’s auditor.

NEXT represents a small share of the auditor’s

business. NEXT does not obtain significant business

or tax planning advice from its auditor. For further

information, see note 19 to the group financial

statements.

The board of directors is responsible for ensuring

that the board and the audit committee are provided

with sufficient insight into the work of the auditor. In

this regard, the board of directors ensures that the

auditor submits the main features of the plan for

the audit of the Company to the audit committee

annually. The board of directors invites the auditor

to participate in board meeting(s) that deal with the

annual accounts. At these meetings, the auditor (i)

reports on any material changes in the Company’s

accounting principles and key aspects of the audit,

(ii) comments on any material estimated accounting

figures, and (iii) reports all material matters on which

there has been disagreement between the auditor

and the executive management of the Company.

The audit committee shall at least once a year

perform a review of the Company’s internal control

procedures with the auditor, including weaknesses

identified and proposals for improvement. The board

and the audit committee shall review periodically the

use of the auditor for services other than the audit. At

least once a year, the audit committee and the board

will meet the auditor without the presence of the

CEO or other members of executive management.

At the annual general meeting, the board shall

present a review of the auditor’s compensation as

paid for audit work required by law and remuneration

associated with other assignments.

In connection with the auditor's presentation to the

board of the annual work plan, the board considers if

the auditor to a satisfactory degree also carries out a

control function.

ANNUAL REPORT 202422

CORPORATE GOVERNANCE REPORT

§ 1  THE COMPANY NAME

The name of the company is NEXT Biometrics Group

ASA. The company is organised as a public limited

liability company.

§ 2  BUSINESS OFFICE

The company's registered office is in Oslo

municipality.

§ 3  BUSINESS ACTIVITIES

The objective of the company is research and

development, and commercialisation of safety

products, trade and investment in such companies

and what is connected with such business.

§ 4  SHARE CAPITAL

The company's share capital is NOK 115,154,535

divided into 115,154,535, each with a nominal value of

NOK 1. The company's shares shall be registered in

the Norwegian Central Securities Depository.

§ 5  BOARD OF DIRECTORS

The Company's board of directors shall consists of 3

– 9 members as appointed by the general meeting.

§ 6  NOMINATION COMMITTEE

The company shall have a nomination committee.

The nomination committee shall consist of two or

three members appointed by the general meeting.

The members of the nomination committee,

including the director, shall be elected by the

general meeting. The nomination committee shall be

elected for a period of two years, if not other period is

decided upon by the general meeting.

The nomination committee makes recommendations

to the general meeting regarding election of

board members and members to the nomination

committee, and regarding remuneration to the

board members and members of the nomination

committee. The general meeting shall resolve the

remuneration to the members of the nomination

committee. The general meeting may lay down

guidelines for the nomination committee.

§ 7  SIGNATORY RIGHTS

Two board members jointly have the right to sign on

behalf of the company. The board of directors may

give power of procuration.

§ 8  GENERAL MEETING

Documents regarding matters to be discussed at

the general meeting of the company, also applying

documents that, pursuant to law, shall be included

in, or attached to the notice of the general meeting

of shareholders, can be made available at the

company's website. The requirement regarding

physical distribution shall then not apply.

A shareholder may in any case request to be

sent documents that shall be discussed at the

general meeting.

The shareholder may vote in writing, including by way

of electronic communication in advance in a period

prior to the general meeting. The board of directors

may establish guidelines for such advanced voting. It

shall be stated in the notice for the general meeting

the guidelines laid down. At the ordinary general

meeting the following matters shall be addressed

and decided upon:

1. Approval of the annual accounts and annual

report, including the distribution of dividends.

2. Other matters that pursuant to law or the

articles of association must be dealt with at

the general meeting.

ARTICLES OF ASSOCIATION FOR NEXT BIOMETRICS GROUP ASA

Per 31 December 2024

ANNUAL REPORT 202423

CORPORATE GOVERNANCE REPORT

Corporate Social

Responsibility Report

This review of NEXT Biometrics Group ASA ("NEXT"

or the "Group")’s corporate social responsibility

principles and practice is prepared in compliance

with Section 3-3c of the Norwegian Accounting Act.

NEXT’s business consists of research &

development, commercialization and manufacturing

of fingerprint technology and products for a variety

of uses. NEXT works closely with world class

manufacturing subcontractors and distribution

partners. NEXT is committed to be a good corporate

citizen and demonstrate integrity and high ethical

standards in all its business dealings.

NEXT’s board and management are committed

to maintaining high ethical standards and have

implemented guidelines with regards to values

and ethics. The purpose of these standards and

guidelines is to create a sound corporate culture

and to preserve the integrity of NEXT by helping

employees to promote standards of good business

practice. NEXT’s Ethical and Social Responsibility

Guidelines were last approved by the board on 5

November 2024 and applies to all employees of

the Group. They also apply to anyone who holds a

position of trust in the Group (including membership

of boards) and hired consultants acting on behalf

of the Group. They aim to provide guidance to our

people for a common platform.

NEXT has also established a Supplier Code of

Conduct that requires NEXT Biometrics Group

suppliers to conduct business in a responsible

manner, based on the duty to respect human

rights, labor rights, protect health, safety and the

environment, prevent corruption and in general,

apply sound business practices. NEXT’s Supplier

Code of Conduct was last updated and approved

by the Board on 5 November 2024.

The Group strives for a business culture

characterized by openness. Openness is a

prerequisite for motivation, trust, confidence and

safety at work. Everyone shall feel confident to raise

any concern, small or large, with their manager or

another colleague.

The Ethical and Corporate Social Responsibility

Guidelines support NEXT’s vision, core values

and principles. The guidelines are instrumental

for NEXT’s approach to human rights, fair working

environment and equal rights, health and safety,

environment, business ethics and anti-corruption.

The Group regularly reviews the guidelines and take

steps to update and educate the organization.

ANNUAL REPORT 202424

Human rights

In addition to following national rules and

regulations, NEXT conducts its business in line with

fundamental international rules. Including those

described in international human rights conventions

such as the UN Convention on Human Rights and

the labour rights conventions of the International

Labour Organization (ILO).

The Group respects the right to freedom of

association and opposes any form of child labour,

forced labour or discrimination. NEXT practices

equal opportunities and rights and encourage all

business relations to follow the same principles.

Any violations of basic human rights are

unacceptable to the Group.

It is our goal to have no form of human rights abuse

or labor issue at any stage related to production of

our products.

Fair working environment

NEXT has a personnel policy designed to prevent

discrimination on the grounds of race, color, gender,

sexual orientation, age, disability, language, religion,

legitimate political or other opinions, national or

social origin, property, birth or other status.

The Group employs many different nationalities from

a diversity of cultures and has built an international

mindset for years. Employees are encouraged to

treat each other and business contacts with respect

and act according to local laws and regulations, as

well as to pay attention to local values and norms for

social conduct.

The Group does not tolerate degrading treatments

towards any employee. The Group’s employees are

encouraged to report any incident of discrimination

to their nearest leader or through the applicable

whistle-blow channels through our HR department.

NEXT’s board and management seek to create a

working environment that is pleasant, stimulating,

safe and beneficial to all employees. The working

environment complies with the existing rules and

regulations. The board has not found reason to

implement special measures. No employee in the

group has suffered work-related injury resulting

in sick leave. No accidents nor incidents involving

the assets of the Group have occurred. The parent

company had no long-term leave of absence due

to illness or any work-related incidents or accidents

resulting in material damage or personal injury

during 2024. The average sickness absence rate in

the parent company was 1.1% in 2024 compared to

0% in 2023.

Equal rights

All facilities are equally well equipped for females

and males. Traditionally, fewer women than men

have graduated in NEXT’s fields of work, and the

candidates available for recruiting have often

predominantly been males. The management

structure reflects the composition of the technical

staff. Of the 24 employees in the NEXT group at the

end of 2024, 6 are women. At year-end 2024, the

parent company has 4 board members, of which

2 are women. The parent company complies with

Norwegian legal requirement with respect to gender

representation in the board of directors.

Raising awareness of employees on human rights

and labor principles and relevant issues are

regularly done by internal training and as part of the

introduction program for new employees.

Health and Safety

Health and safety are an indispensable component

in all the Group’s activities. All hazards and risks

to health and safety must be avoided. Generally,

NEXT’s business involves low safety risk in the day-

to-day activities, without use of heavy machinery or

equipment that can cause damage or injuries. As a

fabless biometrics company, production has been

outsourced to specialized manufacturers. NEXT is

concerned for safety of employees in third party

factories and it is an integral part of the evaluation

criteria which the Group applies ahead of being

classified as a “NEXT certified vendor/partner”.

None of the processes in use by the suppliers are

known to be of particular hazard to the staff.

Environment and climate impact

NEXT does not own or operate manufacturing

facilities. Manufacturing is done through third parties

that comply with the ISO 14001 environmental

standard, among others. Consequently, there is little

pollution associated with the Group’s operations.

NEXT seeks to limit resource consumption, prevent

unnecessary environmental pollution including

optimizing transportation of goods, and manage

waste in an environmentally friendly and resource

efficient manner.

NEXT climate impact and potential risk is low in the

short to medium term. The Group is not impacted

by physical climate risk such as potential flooding

or general increase in the sea level. Moreover, NEXT

does not face any potential liabilities due to damage

caused by climate change. Still, NEXT is likely to

be impacted by the regulatory and technological

changes that are to be implemented (in the future)

to reach a carbon neutral society, which may lead to

long term increased electronic component purchase

and manufacturing costs.

CORPORATE SOCIAL RESPONSIBILITY REPORT

ANNUAL REPORT 2024

Business ethics & anti-corruption

The Group’s operations depend on the trust of

contractual parties, the authorities, shareholders,

employees and society in general. In order to gain

trust, the Group is dependent upon professionalism,

expertise and high ethical standards in all aspects of

the Group’s work. This applies to the way the Group

operates and to the conduct of each individual. All

employees are therefore expected to behave with

care, integrity and professionalism and abstain from

actions that may weaken trust in the Group.

The NEXT Biometrics’ Ethical and Corporate Social

Responsibility Guidelines contain guidelines for

ethical behaviour in business relations. These

clearly states that NEXT strongly oppose all forms of

corruption or bribery. NEXT encourages reporting

of suspected misconduct; a «whistle-blower»

communication channel. NEXT adheres to national

and foreign antitrust laws.

No one may receive benefits for themselves or for

others from the Group’s business contacts if such

benefits are based on the employment relationship.

Correspondingly, no one shall give such benefits

to the Group’s business contacts. The guidelines

explicitly govern conflict of interests, gifts and

money laundering. Business courtesies of modest

value, conforming to normal social customs and not

intended for influence, are not considered bribes. All

gifts with an estimated value of more than NOK 1,000

must be reported to the Group’s CFO, who will keep

a log over such gifts and assess whether the relevant

gift can be retained or provided, based on a case-

by-case evaluation.

NEXT has to date not been accused of, or involved

in, any cases pertaining to any form of corruption or

bribery. NEXT encourages each employee to report

on possible censurable incidents. NEXT’s employees

have an obligation to report on criminal activity and

on incidents which could endanger life or health.

The board of directors and management are not

aware of any breach of our code of conduct.

Raising awareness of the guideline has been

the Group’s main action with regard to this area.

The Group is not aware of any breach of the

implemented guideline. The Group does not have

any other guidelines or actions regarding Corporate

Social Responsibility due to the limited size and

resources of the parent company. The Group will

continue to have focus on these guidelines and

incorporate them into our company culture. The

Group will do this by updating and educating the

organization.

2024

CORPORATE SOCIAL RESPONSIBILITY REPORT

ANNUAL REPORT 2024

Financial

Statements

Group

ANNUAL REPORT 202427

The consolidated financial statements should be read in conjunction with the accompanying notes.

The Group has changed selected 2023 comparatives in order for the financial statements to be more in line with accounting

practice. See note 24 for details.

Group

Consolidated statement of comprehensive income 1 January - 31 December

(amounts in NOK 1,000) Notes 2024 2023

Revenues 3,24 71,574 34,383

Cost of materials 12,24 -32,416 -27,004

Gross profit 39,158 7,379

Payroll expenses 4,18 -32,791 -42,370

Other operating expenses 5,6 -47,041 -23,218

Depreciation and amortization 10,11 -5,394 -7,068

Impairment losses 10,11 - -1,139

Total operating expenses -85,227 -73,795

Operating profit (loss) -46,068 -66,416

Financial income 7 1,482 1,054

Financial expenses 7 -119 -62

Net currency gains (losses) 7 -332 -74

Net financial items 1,030 918

Profit (loss) before taxes –45,038 -65,498

Income tax expenses 8 -197 -234

Profit (loss) after taxes -45,235 -65,732

Earnings per share (in NOK)

Basic and diluted 9 -0.42 -0.69

Other comprehensive income (loss) that may be reclassified:

Translation differences on net investments in foreign operations 6,369 1,170

Other comprehensive income (loss) 6,369 1,170

Total comprehensive income (loss) -38,866 -64,562

Profit (loss) after taxes attributable to:

Owners of the parent company -45,235 -65,732

Total comprehensive income (loss) attributable to:

Owners of the parent company -38,866 -64,562

ANNUAL REPORT 202428

FINANCIAL STATEMENTS GROUP

Odd-Harald Hauge

Chair

/Sign/ /Sign/

/Sign/

Petter Fjellstad

Board member

Ulf Ritsvall

CEO

Emine Lundkvist

Board member

Siri Gomnæs Børsum

Board member

The consolidated financial statements should be read in conjunction with the accompanying notes.

Group

Consolidated statement of financial position As of 31 December

(amounts in NOK 1,000) Notes 2024 2023

Intangible assets 10 825 1,530

Property, plant and equipment 11 7,094 6,738

Total non-current assets 7,919 8,268

Inventories 12 17,672 23,126

Accounts receivables 13 56,754 12,303

Other current assets 14 7,138 7,451

Cash 15 62,907 67,753

Total current assets 144,471 110,632

Total assets 152,390 118,900

Share capital 18 115,155 104,025

Share premium 70,268 30,858

Other reserves 35,208 31,965

Accumulated losses -101,775 -72,498

Total equity 118,857 94,351

Non-current lease liabilities 17 2,244 194

Total non-current liabilities 2,244 194

Accounts payables 10,910 5,984

Income tax payables 8 92 33

Current lease liabilities 17 1,843 1,745

Other current liabilities 16 18,444 16,594

Total current liabilities 31,289 24,355

Total equity and liabilities 152,390 118,900

The board of directors of

NEXT Biometrics Group ASA

Oslo, 10 April 2025

ANNUAL REPORT 202429

FINANCIAL STATEMENTS GROUP

The consolidated financial statements should be read in conjunction with the accompanying notes.

Group

Consolidated statement of cash flow 1 January - 31 December

(amounts in NOK 1,000) Notes 2024 2023

Profit (loss) before taxes –45,038 -65,498

Share based remuneration 4,5 3,243 5,896

Share based payments social security expense 4 -1,637 4,611

Income taxes paid 8 - -26

Depreciation and amortization 10,11 5,394 7,068

Impairment losses 10,11 - 1,139

Change in inventories 12 5,817 3,852

Change in accounts receivables 13 -44,452 -6,042

Change in accounts payables 4,926 -1,792

Change in other working capital items and other 8,807 -6,590

Interests received 7 1,400 1,054

Interests paid 7 -141 -303

Net cash flow from operating activities -61,681 -56,630

Purchase of property, plant and equipment and intangible assets 10,11 -597 -13

Net cash flow from investing activities -597 -13

Net proceeds from issue of shares 18 60,129 57,016

Payment of lease liabilities 17 -2,017 -2,078

Net cash flow from financing activities 58,111 54,938

Net change in cash flow -4,167 -1,705

Cash balance as of 1 January 67,753 69,302

Effects of exchange rate changes on cash -679 155

Cash balance as of 31 December 62,907 67,753

Comprising of:

Cash 15 62,907 67,753

ANNUAL REPORT 202430

FINANCIAL STATEMENTS GROUP

The consolidated financial statements should be read in conjunction with the accompanying notes

Incremental costs directly attributable to the issue of

ordinary shares are recognized as a deduction from

equity. Income tax relating to transaction costs of an equity

transaction is accounted for in accordance with IAS 12.

Group

Consolidated statement of changes in equity 1 January - 31 December

Attributable to owners of the parent company

(amounts in NOK 1,000) Notes Share capital

premium

Other

reserves

Accumulated

losses

Total

equity

As of 1 January 2024 104,025 30,858 31,965 -72,498 94,351

Profit (loss) after taxes -45,235 -45,235

Other comprehensive income (loss) 6,369 6,369

Total comprehensive income (loss) - - - -38,866 -38,866

Share issues 19 11,130 51,313 62,442

Share issue costs 19 -2,314 -2,314

Share based remuneration 19 3,243 3,243

Transfer of loss to share premium -9,589 9,589 -

As of 31 December 2024 115,155 70,268 35,208 -101,775 118,857

As of 1 January 2023 91,981 4,049 26,069 -26,099 96,000

Profit (loss) after taxes -65,732 -65,732

Other comprehensive income (loss) 1,170 1,170

Total comprehensive income (loss) - - - -64,562 -64,562

Share issues 19 12,044 48,106 60,150

Share issue costs 19 -3,134 -3,134

Share based remuneration 19 5,896 5,896

Transfer of loss to share premium -18,163 18,163 -

As of 31 December 2023 104,025 30,858 31,965 -72,498 94,351

ANNUAL REPORT 202431

FINANCIAL STATEMENTS GROUP

Notes to financial

statement - Group

NEXT Biometrics Group ASA (“Parent company”)

is a public limited liability company, incorporated

and domiciled in Norway, with headquarter in

Stortorvet 7, 0155 Oslo, Norway. The Parent

company and its subsidiaries (“NEXT” or “the

Group”) provides advanced fingerprint sensor

technology that delivers uncompromised security

and accuracy for the best possible user experience

in thesmart card, government ID, access control

and notebook markets.

The Group has five operating subsidiaries. The

following four are owned 100%: NEXT Biometrics AS

(Norway) and its subsidiaries NEXT Biometrics Inc.

(Seattle, USA), NEXT Biometrics Taiwan Ltd. (Taipei,

Taiwan) and NEXT Biometrics Solutions India Pvt.

Ltd. (Bengaluru, India). NEXT Biometrics China Ltd.

(Shanghai, China) is a company that is controlled

by the Group and that NEXT Biometrics AS owns

50% of the share capital as per 31/12/2024 following

a transaction where the Group sold 50% of the

shares in NEXT Biometrics China Ltd. (NEXT China)

in 2024 for zero cost. The Group has an obligation

to repurchase 50% as a part of an agreement with

an external party. Hence, the Group controls the

subsidiary and will acquire the remaining shares in

the entity at zero cost. Consequently, the subsidiary

is fully consolidated, and no minority interest

is recorded in the balance sheet of the Group.

Please see note 16 for further details regarding this

arrangement. All of the five Group subsidiaries are

consolidated into the Group financial accounts.

NEXT ASA’s shares are listed on the Oslo Stock

Exchange.

The purpose of the company as stated in the articles

of association is to conduct research, development

and commercialization of security products, as well

as other activities that will naturally fall under this

The financial statements have been approved for

issuance by the Board of Directors on 10 April 2025

and is subject to approval by the Annual General

Meeting on 9 May 2025.

Changes in accounting policies

The accounting policies applied in preparation of the

financial statements for the year ended 31 December

2024 are consistent with those applied in the

preparation of the prior year financial statements.

New and amended standards and interpretations

adopted by the Group as of 1 January 2024.

The new amendments to IAS 1 concerning new

disclosure requirements relating to liabilities with

covenants and convertible debt is not applicable

for the group.

There are no new amendments applicable for the

annual reporting period commencing 1 January 2024

that have been adopted by Next Biometrics Group.

New and amended standards and interpretations

not yet adopted.

IFRS 18 Presentation and Disclosure in Financial

Statements is effective for periods beginning on

or after 1 January 2027.

IFRS 18 will replace IAS 1 Presentation of Financial

Statements, and introduce new requirements to

help achieve comparability across companies.

Although IFRS 18 will not affect the recognition or

measurement of items in the financial statements,

changes are expected to be made to the Group’s

presentation of the Consolidated statement of

comprehensive income.

Management is currently assessing the detailed

implications of applying the new standard to the

Group’s consolidated financial statements.

NOTE 1

GENERAL INFORMATION

ANNUAL REPORT 202432 ANNUAL REPORT 2024

Basis of preparation

These financial statements have been prepared

in accordance with IFRS® Accounting Standards

as adopted by the EU per 31 December 2024.

Going concern

The Board of Directors confirms that the financial

statements have been prepared under the

assumption of going concern.

Currency

These financial statements are presented in

Norwegian kroner, which is also the Parent

company’s functional currency. Except for

Next Biometrics AS, which is based in Norway

and that uses USD as its functional currency,

each entity within the Group utilizes the local

currency of its domicile and operational base

as its functional currency.

Property, plant and equipment

Property, plant and equipment are held at cost

less accumulated depreciation and impairment

losses. When assets are sold or disposed, the gross

carrying amount and accumulated depreciations are

reversed. Any gain or loss on the sale or disposal is

recognized in the profit and loss.

Inventory

Raw materials, work in progress and finished

products are valued at the lower of cost and net

realizable value after deduction for obsolescence.

Costs are determined using the FIFO and average

cost method.

Cash flow

The cash flow statement has been drawn up in

accordance with the indirect method and reports

cash flows during the period classified by operating,

investing and financing activities.

Significant estimates and judgements

Preparation of financial statements in accordance

with IFRS requires that the management

makes judgements and prepares estimates

and assumptions which have an impact on the

recognized amounts for assets, liabilities, revenue

and costs. Estimates and related assumptions have

been based on the management’s best knowledge

of past and recent events, experience and other

factors which are considered reasonable under the

circumstances. Actual results may deviate from such

assumptions. Estimates and underlying assumptions

are subject to continuous evaluation.

Critical accounting estimates for the Group are:

Share-based remuneration:

The cost of options granted to employees and

employee option social security costs are classified

as employee costs while cost of options granted

to consultants/contractors are classified as other

operating costs. Please see note 18 for further details.

Research and development expenses/

Intangible assets:

Research costs are expensed as incurred. An

intangible asset arising from the development

expenditure on an individual project is recognized

only when the Group can demonstrate the technical

feasibility of completing the intangible asset so that it

will be available for use or sale, the Group’s intention

and capability of completing the development

and realize the assets, and the net future financial

benefits of use or sale.

Expected credit loss on account receivables:

The Group recognizes loss allowances for expected

credit loss on account receivables, which are

measured at amortized cost. The Group applies

a provision matrix to calculate expected credit loss

(ECL). The provision matrix is based on historical

losses and forward-looking information and is

updated at each reporting date. In addition,

the trade receivables are grouped in customer

segments that have a similar credit risk profile.

During 2024 the amount of significant overdue

receivables has increased. The Group has a limited

operating history with several of its major customers,

which makes it more challenging to establish

expected credit loss estimates for these receivables.

This fact, together with the significant amount of

trade receivables overdue at year-end 2024,

makes estimated ECL a critical estimate.

NOTE 2

SUMMARY OF MATERIAL ACCOUNTING POLICIES

ANNUAL REPORT 202433

NOTES TO FINANCIAL STATEMENT  GROUP

NOTE 3

Revenues and segment reporting Accounting principle

The Group manufactures and sell fingerprint

sensor technology hardware and software, both to

distributors and end-customers. The sales contract

and terms of delivery depends on the customer, but

most products are shipped ex-works. In accordance

with IFRS 15, revenue is recognized when control of

the product is transferred to the customer. Typically

when the customer picks up the products as per

contract, the Group has delivered and transferred

the products, there is no unfulfilled obligation that

could affect the customer’s acceptence of the

products. The goods are predominately sold based

on fixed prices. No significant element of financing is

deemed present as the sales are normally made with

a credit term of 30-90 days upon delivery, which is

consistent with market practice.

(amounts in NOK 1,000) 2024 2023

Fingerprint sensor technology 71,252 33,717

Other revenues 322 666

Total operating revenues 71,574 34,383

The Group targets four customer groups and

application areas for the technology:

(i) Office & Notebooks

(ii) Payment & Fintech

(iii) Access control

(iv) Public Security

The same generic fingerprint sensor technology

and products is used for all customers. Most of the

Group’s key IP, including our NEXT Active Thermal™

is shared and used in all products. The employees in

the Group work across all products and customers.

The R&D personnel are focused on technology,

rather than specific customer groups such as Office

& Notebooks or Public Security. Based on this, the

Group consider that we only operate within one

business segment, and therefore also report

only within one business segment, “Fingerprint

sensor technology”.

The Group’s property, plant and equipment (PPE)

mainly consist of a specialized coating machine that

is located in Taipei, Taiwan. The remaining part of the

Group’s PPE consists of R&D test equipment located

in Seattle, USA and Taipei, Taiwan.

The Group’s revenues, both in 2024 and in 2023,

were mainly related to customers geographically

located in Asia (Japan, Singapore, China, Taiwan

and India). The Group has 4 major customers, which

represent 25% (0%), 20% (17%), 12% (63%) and 11%

(0%) of revenues in 2024 (2023 in brackets).

All of the group’s revenue is point in time type

of revenue.

Other revenue of NOK 0.3 million mainly relates to

sale of electronic components and other fees.

ANNUAL REPORT 202434

NOTES TO FINANCIAL STATEMENT  GROUP

NOTE 4

Payroll expenses

(amounts in NOK 1,000) 2024 2023

Salaries, fees -26,169 -26,507

Share based remuneration (salary part) -2,776 -5,729

Share based remuneration (employer's tax) 1,637 -4,611

Social security taxes -3,600 -3,515

Pension contribution -652 -804

Other personnel expenses -1,231 -1,204

Total payroll expenses -32,791 -42,370

Average numbers of employees 23 24

The cost for share based remuneration (employer's

tax) was negative NOK 1.6 million in 2024 compared

to a cost of NOK 4.6 million in 2023. The negative

cost in 2024 is due to reduction in the liability for

share option social security tax mainly triggered by

a reduction in the Group's stock price price and

lowered social security cost for future periods from

19.1% to 14.1%. Please refer to note 18 for further

information on the Group's option program.

The Group employed an average number of

employees of 23. In addition, the company has 15

contractors who are working for the company on a

part time or full time basis.

The parent company, NEXT Biometrics Group ASA,

provides a contribution-based pension insurance

scheme for all employees. The scheme satisfies the

mandatory service pension (‘OTP’) in Norway.

NEXT Biometrics Inc has a 401-K plan for its

employees, which allows employees to save for

retirement with pre-tax funds. The company currently

does not contribute to this plan but pays for its

administration. NEXT Biometrics Taiwan Ltd offers an

employee pension plan with an annual contribution

of 6% of the salary, but capped at TWD 9,000 per

month per employee (NOK 3,100 per month).

NEXT Biometrics China Ltd and NEXT Biometrics

Solutions Pvt Ltd have no local pension plans.

Termination benefits

Termination benefits are payable when the

employment is terminated by the Group before

the normal retirement date or when an employee

accepts voluntary redundancy in exchange for these

benefits. The Group recognizes termination benefits

when the Group can no longer withdraw the offer.

ANNUAL REPORT 202435

NOTES TO FINANCIAL STATEMENT  GROUP

NOTE 5

Other operating expenses

(amounts in NOK 1,000) 2024 2023

Product and marketing costs -6,795 -5,225

Sales and marketing incentive fees -3,631 -

Business services costs -18,084 -9,841

R&D costs -4,173 -2,600

R&D and government grants1 1,848 1,754

Fees to contractors, auditors, lawyers and others -5,382 -4,331

Allowance for expected credit loss -7,315 -462

Other expenses3 -3,057 -2,345

Share based remuneration (operating part) -452 -167

Total other operating expenses -47,041 -23,218

The Group’s business service costs increased

from NOK 9.8 million in 2023 to NOK 18.1 million

in 2024 largely due to transfer of personnel from

hired employees to contractors, increased number

of contractors in the areas of sales, product and

marketing as well as due to higher sales incentive

bonuses and travel activity.

1 R&D grants and other government grants are

related to Skattefunn grants in 2023/2024.

2 Fees to contractors, auditors, lawyers refers to

amounts paid the company’s contractors and

service providers who are working for the company

on a part time or full time basis.

3 Other expenses include software expenses,

IT cost, insurance fees, non deductable VAT

and stock exchange related fees.

 Share based remuneration (operating part)

refers to share options granted to contractors

(see note 18 for further information).

ANNUAL REPORT 202436

NOTES TO FINANCIAL STATEMENT  GROUP

NOTE 6 Research and development cost

Cost related to research and development is only

recognized on projects we are confident will amount

to either a new product or a substantially improved

existing product. In general, research costs are

expensed when incurred. Research expenditures is

only capitalized when research and development

cost can be measured reliably and confidently.

Internal and external research and development

performed in 2024 do not meet the Group’s

capitalization criteria.

The reported research and development (R&D) costs

includes external project costs for work and material

purchased from various companies and institutions.

The payroll cost of R&D staff is included in payroll,

and any capitalization reported as a credit on a

separate line. The major parts of the R&D costs are

related to development and substantial improvement

of the sensor technology as well as production trials

and pilot production of new sensor modules.

Expensed R&D costs for the Group amounted to

NOK 10.7 million in 2024 (2023: NOK 9.0 million),

of which NOK 6.5 million (2023: NOK 6.4 million) is

presented in payroll expenses and NOK 4.2 million

(2023: NOK 2.6 million) in other operating expenses.

Government grants

Government grants are recognized when there is

reasonable assurance that the grant will be received,

and all attaching conditions will be complied with.

When the grant relates to an expense item,

it is recognized as a reduction in expense.

When the grant can be viewed as payment

for a deliverable or performance of service,

it is recognized as other revenue.

The subsidiary NEXT Biometrics AS’ estimated

R&D public grant in connection with SkatteFUNN

(Norwegian Government tax deduction for research

and development in the innovative business

sector) for 2024 is NOK 1.8 million (2023: NOK 1.5

million). The total amount is presented as part of

“Other current assets” in the balance sheet and

has correspondingly led to a reduction in other

operating expenses. The grant is subject to final

approval by the tax authorities.

NOTE 7

Financial items

(amounts in NOK 1,000) 2024 2023

Interest income 1,400 1,054

Interest income on sub-leases (see note 17) 81 -

Total financial income 1,482 1,054

Interest expenses -2 -157

Interest expenses leases (see note 18) -139 -146

Other financial expenses 22 241

Total financial expenses -119 -62

Realized currency gains (losses) -273 -62

Change in unrealized currency gains (losses) -59 -12

Net currency gains (losses) -332 -74

Net financial items 1,030 918

ANNUAL REPORT 202437

NOTES TO FINANCIAL STATEMENT  GROUP

(amounts in NOK 1,000) 2024 2023

Profit (loss) before taxes -45,038 -65,498

Expected income tax expenses at Norwegian nominal tax rate (22%) -9,908 -14,410

Difference between local tax rates and Norwegian nominal tax rate -336 -72

Effect of change in local tax rates - -

Tax effect of permanent differences -189 -29

Change in deferred tax assets not recognized 10,513 14,417

Prior year underaccrual/(overaccrual) of income tax -5 -5,132

Other 123 5,460

Actual income tax expenses 197 234

Effective tax rate 0% 0%

NOTE 8 Income taxes

The tax expense consists of the tax payable and

changes in deferred tax. Deferred tax has been

calculated based on the temporary differences

between the recorded and tax values, as well as

on any tax loss carry-forward at the balance sheet

closing date. Any temporary differences increasing

or reducing tax that will or may reverse in the same

period, have been netted.

A deferred tax asset will be recognized when it is

probable that the Group will have sufficient profit for

tax purposes to utilize the tax asset. At each balance

sheet date, the Group reviews its unrecognized

deferred tax assets and the value it has recognized.

The Group recognizes an unrecognized deferred tax

asset to the extent that is has become probable that

the Group can utilize the deferred tax asset. Similarly,

the Group will reduce its deferred tax asset to the

extent that it can no longer utilize it.

Deferred tax and deferred tax assets are measured

on the basis of the expected future tax rates.

Deferred tax assets related to losses carried forward

is recognized when it is probable that the loss carried

forward may be utilized. Evaluation of probability

is based on historical earnings, expected future

margins and the size of the order backlog. Future

events may lead to these estimates being changed.

Such changes will be recognized when reliable new

estimates can be made.

The subsidiary NEXT Biometrics AS has applied

for R&D public grant funds in connection with

SkatteFUNN (Norwegian Government tax deduction

for research and development in the innovative

business sector) in 2023 and 2024. The amount for

2024 is NOK 1.8 million. Please see note 6 and 14 for

further details.

(amounts in NOK 1,000) 2024 2023

Current taxes (enties located in Norway) - -

Current taxes (International subsidiaries*) 197 196

Change in deferred taxes (International subsidiaries*) - 38

Total income tax expenses 197 234

* Subsidiaries in Taiwan, USA, India and China

Income tax expense reconciliation:

ANNUAL REPORT 202438

NOTES TO FINANCIAL STATEMENT  GROUP

(amounts in NOK 1,000) 2024 2023

Property, plant and equipment -1,801 -2,971

Inventories -16,938 -17,200

Accounts receivables and other assets -10,133 -2,932

Lease liabilities -875 -430

Other temporary differences -1,865 -7,193

Tax losses carried forward -1,368,912 -1,320,961

Total temporay differences and tax losses carried forward -1,400,524 -1,351,686

Deferred tax assets (amounts in NOK 1,000) 2024 2023

Property, plant and equipment 396 654

Inventories 3,726 3,784

Accounts receivables and other assets 2,229 645

Lease liabilities 192 95

Other temporary differences 410 1,614

Tax losses carried forward 301,161 290,611

Deferred tax assets not recognized -308,115 -297,403

Deferred tax assets(-)/liability(+) in the balance sheet - -

(amounts in NOK 1,000) 2024 2023

Deferred tax assets - -

Deferred tax liabilities - -

Net deferred taxes as of 31 December - -

As of 31 December 2024, NOK 1 369 million (2023: NOK 1 321 million) of tax losses carried forward are related to the

Norwegian companies with no limitiations in expiry date.

Due to a history of losses, deferred tax assets are not recognized.

Note 8 Continued

Deferred tax related to the following temporary differences:

The following table illustrates the deferred tax balance recognized in the statement of financial position:

ANNUAL REPORT 202439

NOTES TO FINANCIAL STATEMENT  GROUP

NOTE 9 Earnings per share

The calculations of earnings per share attributable to

the equity holders of the parent company are based

on the following data:

(amounts in NOK 1,000) 2024 2023

Profit (loss) after taxes (NOK 1,000) -45,235 -65,732

Number of shares outstanding as of 1 January 104,024,929 91,980,763

New shares issued during the year (see note 19) 5,500,000 12,000,000

Excercised incentive options during the year (see note 19) 5,629,606 44,166

Number of shares outstanding as of 31 December 115,154,535 104,024,929

Weighted average number of shares for the year * 107,219,921 95,151,133

Effect of dilution option programmes - -

Weighted average number of shares adjusted for effect of dilution 107,219,921 95,151,133

Earnings per share, basic and diluted (NOK) -0.42 -0.69

Earningspershare

Earnings per share are calculated by dividing the

profit or loss for the period by the weighted average

number of ordinary shares outstanding over the

course of the period. Earnings per share fully

diluted are calculated based on the result or the

year divided by the average number of shares fully

diluted. The effect of dilution is not counted in when

the result is a decrease loss per share.

ANNUAL REPORT 202440

NOTES TO FINANCIAL STATEMENT  GROUP

NOTE 10 Intangible assets

Intangible assets mainly consist of the patent

and know-how (IP) described as the NEXT Active

Thermal™ Sensing principle, internally generated

ASIC designs and source code license.

(amounts in NOK 1,000) 2024 2023

Accumulated cost as of 1 January 30,494 29,779

Additions 54 -

Disposals at cost - -

Translation differences 2,707 715

Accumulated cost as of 31 December 33,255 30,494

Accumulated amortization and impairment losses as of 1 January -28,963 -27,200

Amortization -762 -1,100

Accumulated amortization and impairment losses of disposed items - -

Translation differences -2,705 -662

Accumulated amortization and impairment losses as of 31 December -32,430 -28,963

Carrying amount as of 31 December 825 1,530

Amortization period in years (straight line) 3-12 3-12

As of 31 December 2024, in carrying amount, there

is no internally generated assets, the net book value

of intangible assets of NOK 0.8 million (2023: NOK 1.5

million) are separately acquired assets. There are

no impairments related to intangible assets in

2024 and 2023.

The patent and know-how (IP) is amortized over 12

years (equal to the patent life from initial recognition).

ANNUAL REPORT 202441

NOTES TO FINANCIAL STATEMENT  GROUP

NOTE 11 Property, plant and equipment

As of 31 December 2024, carrying amount of

equipment consists of machinery of NOK 3.1 million

(2023: NOK 4.8 million) and office equipment of

NOK 0 million (2023: NOK 0.1 million). Rental

agreement assets represent office leases and

amounted to NOK 4.0 million as per 31 December

2024 (2023: NOK 1.8 million).

The accumulated cost of equipment primarily relates

to the coating machine purchased in 2017 that is

located in Taiwan, amounting to NOK 21.2 million.

This includes the addition of additional investments

NOK 0.6 million in 2024. The remainder of the

accumulated equipment cost mainly represents

a cutting machine, that has a gross book value of

NOK 7.3 million and zero net book value. Please note

that these assets have been subject to currency

adjustments. There are no impairments related to

equipment in 2024 while the Group booked an

impairment of NOK 1.1 million in 2023.

Additions in 2024 for rental agreement assets

were mainly related to new office leases in Norway

and USA. See also note 17 for further information

regarding leases.

2024 2023

(amounts in NOK 1,000) Equipment

Rental

agreement

assets Total Equipment

Rental

agreement

assets Total

Accumulated cost as of 1 January 35,765 5,317 41,082 36,097 5,421 41,518

Additions 597 4,276 4,873 13 1,066 1,079

Disposals at cost -5 -4,755 -4,760 -1,448 -1,270 -2,718

Translation differences 2,260 553 2,813 1,103 100 1,203

Accumulated cost as of 31 December 38,616 5,392 44,008 35,765 5,317 41,082

Accumulated depreciation and impairment

losses as of 1 January -30,871 -3,473 -34,344 -26,629 -2,542 -29,171

Depreciation -2,524 -2,108 -4,632 -3,896 -2,076 -5,972

Impairment losses - - - -1,139 - -1,139

Derecognition of RoU asset due to office lease

amendment - -224 -224 - - -

Accumulated depreciation and impairment

losses of disposed items -5 4,755 4,750 1,448 1,186 2,634

Translation differences -2,128 -336 -2,464 -655 -41 -696

Accumulated depreciation and impairment

losses as of 31 December

-35,528 -1,386 -36,914 -30,871 -3,473 -34,344

Carrying amount as of 31 December 3,088 4,006 7,094 4,894 1,844 6,738

Depreciation period in years (straight line) 3-10 2-4 3-10 2-4

ANNUAL REPORT 202442

NOTES TO FINANCIAL STATEMENT  GROUP

NOTE 12

Inventories

NOTE 13

Accounts receivables

(amounts in NOK 1,000) 2024 2023

Raw material, consumables and supplies 9,382 17,143

Work in progress 2,790 2,367

Finished products 5,500 3,615

Total inventories 17,672 23,126

(amounts in NOK 1,000) 2024 2023

Accounts receivables-gross 67,424 15,269

Accounts receivables-loss allowance -10,669 -2,966

Total accounts receivables as of 31 December 56,754 12,303

(amounts in NOK 1,000) 2024 2023

Not due 10,673 11,531

30-90 days overdue 23,729 -

90-120 days overdue - -

120-180 days overdue 15,520 690

180+ days overdue 6,832 81

Total accounts receivables as of 31 December 56,754 12,303

Cost of materials is defined as cost of materials and

production service expenses.

Cost of materials includes net write-downs of

inventories. In 2024, write-downs on inventories was

NOK 0.36 million while the write-down of inventories

was NOK 4.04 million in 2023.

The total credit loss allowance provision was NOK 10.7

million as per year end 2024 (2023: NOK 3 million),

representing 15.8% (2023: 19.4%) of the total gross

value of accounts reveivables. Of the provision of NOK

10.7 million, NOK 3.3 million is related to a disputed

claim relating to a product shipment from 2020.

During 2024 the amount of significant overdue

receivables has increased. For the account

receivables outstanding as per 31 December 2024,

the Group is expecting collect approximately 50% of

the net account receivables in the first half of the year

and the remaining portion in the second half of 2025.

The Group has few, but large customers. The provision

is based on individual assessment of each customer

after thorough evaluations and discussions with each

respective customer.

ANNUAL REPORT 202443

NOTES TO FINANCIAL STATEMENT  GROUP

Note 13 Continued

ACCOUNTS RECEIVABLES AND OTHER FINANCIAL ASSETS

Initial recognition and measurement

Account receivables are initially recognized when

they are originated. An account receivable without a

significant financing component is initially measured

at the transaction price.

Accounts receivable loss allowance

The Group recognizes loss allowances on account

receivables measured at amortized cost. None of the

account receivables contain a significant financing

component and the time value of money will not

need to be considered as it is insignificant.

The Group has few, but large customers. The Group

considers reasonable and supportable information

that is relevant and available when estimating

loss allowance. This includes both quantitative

and qualitative information and analysis of each

customer and their domicile. The provision is based

on individual assessment of each customer after

thorough evaluations and discussions with each

respective customer, as well as past experience. The

Group has a limited operating history with several of

its major customers, which makes it more challenging

to establish expected credit loss estimates for these

receivables. This fact, together with the significant

amount of trade receivables overdue at year-end

2024, makes estimated ECL a critical estimate.

Account receivables write-off

The gross carrying amount of a account receivables

is written off when the Group has no reasonable

expectations of recovering it in its entirety or

a portion thereof.

NOTE 14

Other current assets

(amounts in NOK 1,000) 2024 2023

Prepayments 3,073 2,564

Government grants (see note 6) 1,776 1,527

Deposits 376 320

Income taxes and other taxes receivables 758 359

Other receivables 1,155 2,680

Total other current assets as of 31 December 7,138 7,451

NOTE 15 Cash

Cash include cash in hand, deposits held at call

with banks and bank deposits related to employee

withholding tax (restricted funds).

(amounts in NOK 1,000) 2024 2023

Cash-unrestricted 62,615 67,332

Cash-employee withholding tax deposits 293 422

Total cash 62,907 67,75 3

ANNUAL REPORT 202444

NOTES TO FINANCIAL STATEMENT  GROUP

NOTE 16

Other current liabilities

(amounts in NOK 1,000) 2024 2023

Accrued salary, vacation pay and board remuneration 3,405 1,863

Public duties payable 1,244 1,504

Share options social security tax 1,880 6,225

Other current liabilities 11,915 7,001

Total other current liabilities 18,444 16,594

Total other current liabilities was NOK 18.4 million as

per 31 December 2024 compared to NOK 16.6 million

as per 31 December 2023. The liability for share

option social security tax was reduced in 2024 due

to payment of options social security tax during the

year (as a result of options exercised in 2024) and a

reduction of the company’s stock price during 2024.

Other current liabilities was NOK 11.9 million as per

31 December 2024, of which NOK 5.3 million mainly

relates to uninvoiced goods and services that

has been received by the group while NOK 3.6

million relates to accrued sales and marketing

incentive fees.

The Group has entered into a contract with an

external party targeting to reach certain sales

targets in China. Upon reaching certain milestones,

performance fees are due to the external partner.

The sales and marketing fees liability estimate

is based on an assessment of progress of the

achivement of milestones as per 31 December 2024

and when such milestones are expected to be

fulfilled. The accrued liability for marketing incentive

fees is NOK 3.6 million as per 31 December 2024.

The Group may elect to settle the liability in cash

or in NEXT Biometrics Group ASA shares at its own

discretion. In 2024 the Group sold 50% of shares the

subsidiary in China (NEXT China) at zero cost to the

external party. A certain part of shares in NEXT China

is transferred back to NEXT Biometrics AS at zero

cost when each individual milestone is fulfilled and

settled as a part of the arrangement with the external

party. Hence, the Group will control 100% of shares in

NEXT China when all milestones have been fulfilled.

Alternatively, all remaining shares in the subsidiary

will be transferred to the Group once the agreement

has expired and some or none of the milestones

have been fulfilled. The agreement with the external

party also covers governance and operations during

the joint ownership period whereby the Group will

control the operations of NEXT China even when the

Group has a 50% shareholding.

In 2020, NEXT provided biometric products to a

former client. The client failed to meet the agreed-

upon payments, leading NEXT to decide to pursue

these payments through the courts, citing a breach

of contract. The arbitration court proceedings are

ongoing. The book value of the NEXT receivable

relating to this claim is zero as per 31 December

2024. In 2024, the former client countersued

NEXT for breach of contract and is seeking damages

from NEXT. NEXT’s management, in consultation with

its legal advisors, considers this countersuit to be

without merit and with an extremely low likelihood

of succeeding. As such, in accordance with IAS 37,

no provision has been recognized for this

potential liability in the financial statements as

of 31 December 2024.

For financial liabilities at amortised cost, the

carrying amount is assessed to be a reasonable

approximation of fair value. All items above are at

amortised cost or nominal value.

Provisions

Provisions are recognized when, and only when, the

Group has a valid liability (legal or constructive) as a

result of events that have taken place and it is more

probable than not that a financial settlement will take

place as a result of the event(s), and the size of the

amount can be measured reliably. Provisions are

reviewed on each balance sheet date and their level

reflects the best estimate of the liability. When the

effect of time is insignificant, the provisions will be

equal to the size of the expense necessary to be free

of the liability. When the effect of time is significant,

the provisions will amount to the present value of

future payments to cover the liability. Any increase

in the provisions due to time is recorded as other

financial expenses.

Contingent liabilities and assets

Contingent liabilities are possible obligations

resulting from past events which existence depends

on future events; obligations that are not recognized

because it is not probable that they will lead to an

outflow of resources; and obligations that cannot be

measured with sufficient reliability.

Contingent liabilities are not recognized in the

annual financial statements but will be disclosed

in the notes if applicable. A contingent asset is

not recognized in the annual financial statements

but is disclosed in the notes if there is a degree of

probability that a benefit will accrue to the Group.

ANNUAL REPORT 202445

NOTES TO FINANCIAL STATEMENT  GROUP

(amounts in NOK 1,000) 2024 2023

Property-office leases (included in "Property, plant and equipment") 4,006 1,844

Total right-of-use assets 4,006 1,844

Non-current lease liabilities 2,244 194

Current lease liabilities 1,843 1,745

Total lease liabilities 4,087 1,940

NOTE 17 Leases

The table below shows the amounts related to leases recognized in the statement of financial position:

As per 31 December 2024, the Group has office lease

agreements in Norway, China, USA and Taiwan. The

individual lease terms for the Group’s office leases

are generally 2-3 years including extension periods

at inception of the lease period. The group’s office

leases in Norway and USA were renewed in 2024.

The subsidiary in China entered into a new one-year

office lease in 2024. In accordance with IFRS 16

regulations, the lease in China is not recognized as a

right-of-use asset. Instead, it is directly recorded as

an operating expense.

See note 11 for more information regarding right-of-use assets.

(amounts in NOK 1,000) 2024 2023

Depreciation property right-of-use assets (included in "Depreciation and amortization") -2,108 -2,076

Interest income (included in "Financial income") 81 -

Interest expenses (included in "Financial expenses") -139 -146

Net expenses related to leases -2,166 -2,222

(amounts in NOK 1,000) 2024 2023

Opening balance 1,940 2,966

Changes from financing cash flows -2,017 -2,078

Changes in lease liabilities due to new/amended lease agreements or CPI adjustments 4,002 986

Other changes 22 -46

Translation differences 140 113

Closing balance as of 31 December 4,087 1,940

(amounts in NOK 1,000) 2024 2023

Within one year 1,843 1,745

More than 1 year but within 5 years 2,447 194

After 5 years - -

Total contractual cash flows related to leases 4,290 1,940

The table below shows the amounts related to leases recognized in the statement of comprehensive income:

The table below shows a reconciliation of the opening and closing balance for lease liabilities arising

from financing activities:

The table below shows the maturity profile for the lease liabilities based on contractual undisocunted payments:

The total cash outflow for leases in 2024 was NOK 2.0 million (2023: NOK 2.1 million).

ANNUAL REPORT 202446

NOTES TO FINANCIAL STATEMENT  GROUP

Leasingagreements

Currently, the Group’s only leases are office leases.

The intial fixed lease period for the office leases

are generally 1-4 years at inception of the individual

leases. Currently, no office lease extension options

have been recognized. The Group recognizes the

office lease liability and a corresponding office

right-of-use asset at the commencement date of the

lease. Lease liabilities are measured at the present

value of the remaining lease payments not paid at

the commencement date. The lease payments are

discounted using the lessee’s interest rate implicit

in the lease, or incremental borrowing rate when

the interest rate implicit in the lease cannot be

readily determined. Lease payments consists of

the following elements: fixed payments, variable

lease payment that are based on an index or a rate,

amounts expected to be payable by the lessee

under residual value guarantees, the exercise price

of a purchase option if the lessee is reasonably

certain to exercise that option, and payments of

penalties for terminating the lease if the lease term

reflects the lessee exercising that option.

A corresponding asset representing the right to

use the underlying asset during the lease term

(right-of-use asset) is recognized, adjusted for

prepayments done before commencement date,

and initial direct costs and restoration costs if any.

The right-of-use-asset is depreciated over the lease

term and the depreciation expense is recognized as

an operating expense. Interest expense on the lease

liability is recognized as a financial expense.

Lease contracts entered with a duration of less than

12 months and leases with a low value will not be

recognized in the statement of financial position but

recognized as an operating expense over the lease

period. Lease liabilities will be remeasured upon

the occurrence of certain events (e.g., a change in

the lease term, a change in future lease payments

resulting from a change in an index or rate used to

determine those payments), which generally will be

recognized as an adjustment to the right-of-use asset.

Note 17 Continued

ANNUAL REPORT 202447

NOTES TO FINANCIAL STATEMENT  GROUP

NOTE 18 Share capital, shareholder’s information and share-based options

There is one class of shares. All shares have equal

rights and are freely negotiable. The share capital

is fully paid in. The par value of the shares is NOK

1 per share.

There were 115,154,535 shares in the company on

31 December 2024, compared to 104,024,929 shares

on 31 December 2023. At the end of 2024 there were

3,391 shareholder accounts compared to 4,079 at

the end of 2023.

Number of shares outstanding 2024 2023

Opening balance 104,024,929 91,980,763

Share issue(s) 5,500,000 12,000,000

Exercised incentive share options 5,629,606 44,166

Closing balance 115,154,535 104,024,929

In October 2024, NEXT successfully completed

a private placement issuing 5,500,000 new

shares at a subscription price of NOK 7.3 per

share, corresponding to gross proceeds of NOK

40.2 million. Direct expenses and underwriting

commission in relation to the private placement was

NOK 2.1 million and net proceeds were NOK 38.1

million. Moreover, in February, May and August 2024,

909,606 share options were exercised at an average

subscription price of NOK 3.7 per share with total

gross proceeds of NOK 3.4 million and net proceeds

of NOK 3.3 million. Further, in September 2024,

4,720,000 share options were exercised at

an average subscription price of NOK 3.99 per

share with total gross proceeds of NOK 18.9

million and gross proceeds of NOK 18.8 million.

Total net proceeds for the year 2024 amounted

to NOK 60.1 million.

In September 2023, NEXT successfully completed

a private placement issuing 12,000,000 new

shares at a subscription price of NOK 5.0 per

share, corresponding to gross proceeds of NOK

60.0 million. Direct expenses and underwriting

commission in relation to the private placement

was NOK 3.1 million and net proceeds were NOK

56.9 million. Moreover, in May and September 2023,

44,166 share options were exercised at an average

subscription price of NOK 3.4 per share

with total gross proceeds of NOK 0.15 million.

Total net proceeds for the year 2023 amounted

to NOK 57.0 million.

There are no authorizations to the board to purchase

own shares.

Capital resources

NEXT manages its liquidity passively, which means

that funds are placed in floating-interest bank

accounts. The majority of cash is held in Norwegian

kroner at parent company level and is distributed

when appropriate to the affiliates. This is both to

have control of the overall liquidity situation and to

manage expense levels in the affiliates.

NEXT has no interest bearing debt by the end

of 2024.

NEXT targets to have an equity ratio above 80%,

measured as total equity divided by total assets.

ANNUAL REPORT 202448

NOTES TO FINANCIAL STATEMENT  GROUP

Equity ratio 2024 2023

Total equity 118,857 94,351

Total assets 152,390 118,900

Equity share 78% 79%

Capital resources 2024 2023

Current liabilities 31,289 24,355

Non-current liabilities 2,244 194

Less cash -62,907 -67,753

Net debt (net cash) -29,374 -43,204

Total equity 118,857 94,351

Total capital resources 89,482 51,147

Gearing ratio (%) –33% -84%

Note 18 Continued

Top 20 shareholders at 31 December 2024 Number of shares Percent of shares

Skandinaviska Enskilda Banken AB 7,413,614 6.4 %

Torstein Tvenge 6,500,000 6.2 %

SILVERCOIN INDUSTRIES AS 6,384,062 5.6 %

HAAS AS 5,953,000 5.5 %

NORUS AS 5,918,286 3.8 %

VERDIPAPIRFONDET DELPHI NORGE 5,499,912 3.7 %

EDGEWATER AS 5,385,645 3.2 %

SONGA CAPITAL AS 5,150,486 3.1 %

The Bank of New York Mellon SA/NV 3,857,313 3.0 %

UBS Switzerland AG 3,649,081 2.8 %

CAMACA AS 3,479,871 2.4 %

NORUS HOLDING DATTER AS 3,074,349 2.3 %

AS AUDLEY 2,627,027 1.8 %

VALSET INVEST AS 2,555,113 1.7 %

LUCELLUM AS 2,520,000 1.6 %

MARSTAL AS 1,786,158 1.6 %

CAMIKO AS 1,617,200 1.5 %

ECOMNEX HOLDING AS 1,494,461 1.5 %

SIX-SEVEN AS 1,438,644 1.4 %

AVEO INVEST AS 1,430,000 1.2 %

Total top 20 77,734,222 60.3 %

Others 37,420,313 39.7%

Total number of shares 115,154,535 100.0%

The largest shareholders at year end and shares owned by executive and Directors of the Board:

ANNUAL REPORT 202449

NOTES TO FINANCIAL STATEMENT  GROUP

Shares owned by Executives and Directors

of the Board

Number of

Percent of

shares Held through

Ulf Ritsvall, CEO 17,000 0.01%

Eirik Underthun, CFO 119,000 0.10%

Marcus Lauren, CPO 20,000 0.02%

Digvijay Singh Kanwar, SVP Head of Sales IUEA - 0.00%

Joshua Chui, SVP Head of Sales South-East

Asia - 0.00%

Peter Heuman, former CEO 1,000,000 0.87%

Odd-Harald Hauge, Chair 548,907 0.48% Odd-Harald Hauge

Petter Fjellstad 1,032,779 0.90% Fjellstad Holding AS

Siri Gomnæs Børsum - 0.00%

Emine Lundkvist 79,738 0.07%

Jon Frode Vaksvik 35,000 0.03% Jon Frode Vaksvik & Skavak Invest AS

Haakon Sæter

8,370,794 7.27% Silvercoin Industries AS, Fredrikstad

Spillerinvest AS, Six-Seven AS &

Haakon Sæter

Hans Herman Horn 11,387,683 9.89% NORUS AS, Norus Holding Datter AS,

Edgewater AS & Hans Herman Horn

Total 22,610,901 19.64%

Note 18 Continued

 In addition to the shares held directly through

Silvercoin Industries AS and Six-Seven AS,

Silvercoin Industries AS held futures In addition

to the shares held directly through Silvercoin

Industries AS and Six-Seven AS, Silvercoin

Industries AS held futures contracts on 2,000,000

NEXT shares as per 31 December 2024.

Senior Executives

Board of Directors

Nomination Committee

ANNUAL REPORT 202450

NOTES TO FINANCIAL STATEMENT  GROUP

Note 18 Continued

As of 31 December 2024, the Company has one share option program:

Long-term share options program

NEXT has allotted long-term share options to

employees. The options in the 2019, 2020, 2021 and

2022 program are fully vested as per 31. December

2024. The options allocated to employees in the

2023 program vest 1/3 in quarter three 2024, 1/3 in

quarter three 2025 and 1/3 in quarter one 2026. The

options allocated to employees in the 2024 program

vest 1/3 in quarter three 2025, 1/3 in quarter three

2026 and 1/3 in quarter one 2027. The options in

the 2020 and 2021 program were extended during

2023 and these options expire in 2026. The options

in the 2022 program expire in 2025. The options in

the 2023 program expire 5 years after the options

have been granted (2028) while the options in the

2024 program expire in 2029. All options allocated to

board members are fully vested.

There are currently an accumulated 10,020,579 (8.7%

of total number of shares in the Company) share

options outstanding. Out of these, 6,479,028 share

options have vested.

Each option gives the holder the right to acquire one

share from the Company at a strike price defined in

the individual share option agreement.

The option agreements include a clause on

accelerated vesting in case of a majority of shares

in the Company are (i) sold to an acquirer, (ii) the

Company is merged with another company, (iii) a

demerger occurs, and (iv) if the company’s shares

are delisted.

At the Annual General Meeting (AGM) 16 May 2024

the Board of Directors was granted authorization

to issue up to 11,980,658 shares in the company in

relation to options granted to employees and board

members.

2024 2023

Options-movement

Number of

options

Weighted average

exercise price

Number of

options

Weighted average

exercise price

Outstanding options-Beginning period 14,048,519 4.86 11,932,228 4.86

Granted 2,225,000 7.86 2,500,000 5.99

Exercised -5,629,606 3.96 -44,166 3.39

Forfeited or expired -623,334 9.74 -339,543 15.45

Outstanding options-End period 10,020,579 5.65 14,048,519 4.86

Vested options-End period 6,479,028 4.83 10,710,182 4.66

2024 2023

Number of

options

Weighted average

fair value

Number of

options

Weighted average

fair value

Granted options - During period 2,225,000 2.00 2,500,000 1.93

ANNUAL REPORT 202451

NOTES TO FINANCIAL STATEMENT  GROUP

Note 18 Continued

The fair value for the share-based options granted in

the year has been calculated by use of the Black-

Scholes and the following assumptions have been

applied in 2024 and 2023:

Exercise price:

2024: Weighted average NOK 7.86 per share

2023: Weighted average NOK 5.99 per share

Vesting period:

2024 employee options: 1/3 have 1 years, 1/3 have 2

years and 1/3 have 2.5 years

2023 employee options: 1/3 have 1 years, 1/3 have 2

years and 1/3 have 2.5 years

Volatility:

2023: 41%-42% depending on time to maturity of

individual options.

2023: 41%-68% depending on time to maturity of

individual options.

Risk free interest rate:

2024: 3.58%-4.10% depending on time to maturity of

individual options.

2023: 3.68%-4.21% depending on time to maturity of

individual options.

Attrition:

2024: Estimated 8% employee attrition for individual

non-vested share-based options.

2023: Estimated 8% employee attrition for individual

non-vested share-based options.

No expected dividend payment

2024

Net expense

in the period

(NOK 1,000)

Of which adjustment prior

periods expense because of

change in estimated number of

options that will vest

(NOK 1,000)

Remaining expense

future periods

(NOK 1,000)

Number of options

expected to vest

(number of options)

2019 grants - - - 103,418

2020 grants - - - 1,598,500

2021 grants - - - 1,803,664

2022 grants 714 - - 2,314,997

2023 grants 1,399 - 1,215 1,975,000

2024 grants 1,130 - 3,317 2,225,000

Total 3,243 - 4,532 10,020,579

2024

Range of

exercise price

Weighted average remaining

contractual life (years)

Number of options

expected to vest

(number of options)

Total number of

options outstanding

(number of options)

2019 grants 6,52-9,85 0.38 103,418 103,418

2020 grants 2,49-3,21 1.47 1,598,500 1,598,500

2021 grants 5,97-7,45 1.47 1,803,664 1,803,664

2022 grants 4,48-4,89 0.42 2,314,997 2,314,997

2023 grants 5,94-6,46 3.46 1,883,083 1,975,000

2024 grants 7,86-7,86 4.46 1,971,335 2,225,000

Total - - 9,674,997 10,020,579

ANNUAL REPORT 202452

NOTES TO FINANCIAL STATEMENT  GROUP

NOTE 19 Remuneration key personnel and audit fees

2024 (amounts in NOK 1,000)

Board

remuneration Salary Bonus Other benefits Pension cost

Fair value

granted options *

Total

remuneration

Ulf Ritsvall, CEO - 2,960 1,509 65 - 1,939 6,472

Eirik Underthun, CFO - 2,010 - 5 181 291 2,487

Marcus Lauren, CPO - 2,253 - - - 111 2,364

Digvijay Singh Kanwar, SVP Head

of Sales IUEA - 991 904 - - 206 2,100

Joshua Chui, SVP Head of Sales

South-East Asia - 1,880 1,347 - - 136 3,363

Peter Heuman, former CEO

- 87 - - 5 -148 -56

Odd Harald Hauge, Chair 200 - - - - - 200

Petter Fjeldstad 500 - - - - - 500

Emine Lundkvist 200 - - - - - 200

Siri Gomnæs Børsum 200 - - - - - 200

Jon Frode Vaksvik, Chair 30 - - - - - 30

Haakon Sæter 20 - - - - - 20

Hans-Herman Horn 20 - - - - - 20

Total remuneration 1,170 10,181 3,760 70 186 2,535 17,900

ACTUAL REMUNERATION  SENIOR EXECUTIVES

* Fair value of granted options is equal to expensed share option remuneration for the year, which is based on

fair value at grant date and vesting period (see note 2 for further information).

Board remuneration reported above is based on paid-out amounts.

 Peter Heuman was NEXT Biometrics Group CEO until 30 September 2023. From 1 October 2023 to 16 May

2024 Peter Heuman was advisor to the CEO and board of directors.

Board of Directors

Nomination Committee

Senior Executives

ANNUAL REPORT 202453

NOTES TO FINANCIAL STATEMENT  GROUP

2023 (amounts in NOK 1,000)

Board

remuneration Salary Bonus Other benefits Pension cost

Fair value

granted options *

Total

remuneration

Ulf Ritsvall, CEO

- 2,130 100 19 - 1,650 3,900

Eirik Underthun, CFO - 1,878 100 4 172 862 3,016

Marcus Lauren, CPO

- 418 - - - 11 429

Digvijay Singh Kanwar, SVP Head

of Sales IUEA

- 684 82 - - 127 893

Joshua Chui, SVP Head of Sales

South-East Asia

- 313 - - - 11 325

Peter Heuman, former CEO

- 3,186 - 3 131 1,783 5,103

Petter Fjeldstad, Chair 500 - - - - - 500

Odd Harald Haug 200 - - - - - 200

Emine Lundkvist 200 - - - - - 200

Siri Gomnæs Børsum 200 - - - - 73 273

Jon Frode Vaksvik, Chair 30 - - - - - 30

Haakon Sæter 20 - - - - - 20

Hans-Herman Horn 20 - - - - - 20

Total remuneration 1,170 8,610 282 27 303 4,518 14,909

ACTUAL REMUNERATIONSENIOR EXECUTIVES

Note 19 Continued

 Ulf Ritsvall was promoted to NEXT Biometrics Group CEO effective from 1 October 2023. Ulf Ritsvall

previously was NEXT SVP Sales and Marketing.

 Marcus Lauren was hired as Chief Product Officer effective from 1 November 2023.

 Digvijay Singh Kanwar was promoted to SVP Head of Sales IUEA effective from 1 November 2023.

 Joshua Chui was hired as VP Head of Sales South-East Asia effective from 1 November 2023.

 Peter Heuman was NEXT Biometrics Group CEO until 30 September 2023. From 1 October 2023

Peter Heuman was advisor to the CEO and board of directors.

CEO remuneration

Ulf Ritsvall (CEO) has a salary of NOK 2.6 million per year.

In addition, he is part of the Company’s option plan and

the bonus program, which provides annual bonuses

based upon the achievement of performance objectives

established by the company. Further, the CEO is entitled

to a pension benefit of 15% of annual base salary. Ulf

Ritsvall was awarded and paid a bonus in 2023, while no

bonus was paid out during 2024. During 2023 and 2024,

the company also paid pension benefits as salary, which is

reported under salary in the tables above.

Peter Heuman was NEXT Biometrics Group CEO until 30

September 2023. From 1 October 2023 to 16 May 2024

Peter Heuman was engaged as an advisor to the CEO

and board of directors. When engaged as CEO during

2023, Peter Heuman had a base salary of NOK 3.0 million

per year and 15% of annual salary in pension benefits.

In addition, he participated in the Company’s option

plan and the bonus program, which provides annual

bonuses based upon the achievement of performance

objectives established by the company. Peter Heuman

was awarded a bonus in 2023 and the company also paid

pension benefits as salary for the amount in excess of the

company’s standard pension contribution for 2023, which

is reported under salary in the tables above.

Board of Directors

Nomination Committee

Senior Executives

ANNUAL REPORT 202454

NOTES TO FINANCIAL STATEMENT  GROUP

Note 19 Continued

Severance

Ulf Ritsvall (CEO) has a severance agreement

whereby he will receive 100% pay for 6 months for

termination by the Company without cause.

Loans and guarantees for senior executives

The Company has not made any advance payments

or issued loans to, or guarantees in favor of, any

senior executives or members of the board as per 31

December 2024.

Share based remuneration

Share-based payments are equity-settled share

options granted to employees, contractors and

members of the board of directors. The options

are charged against the income statements at

their fair value over the vesting period, with a

corresponding increase in equity. The fair value

of share-based options is determined using the

Black-Scholes option-pricing model. The social

security contribution payable in connection with

the exercise of the share options is accrued on a

straight-line basis as current liabilities, based on the

intrinsic value of the share options at the end of each

accounting period with consequent charges to the

payroll expenses. Share-based remuneration and

option social security costs related to employees

and members of the board are charged as payroll

expenses, while costs related to contractors are

charged as other operating expenses.

Salary, pension and any bonuses will attract

employer’s tax, which will be expensed

simultaneously with the remuneration. The notional

cost of options as share-based remuneration is

expensed, but the equity effect is nil because the

contra item is a notional equity injection of equal

amount. In addition, employer’s tax is accrued on

the intrinsic value of the option on the balance sheet

date.

For the shareholders, a possible exercise of share

options will represent a dilution. At the end of

2024, the number of outstanding options to senior

executives amounted to 8,085,000 corresponding

to 7.0% of the share capital. At the end of 2023, the

number of outstanding options to senior executives

amounted to 11,205,000 corresponding to 10.8% of

the share capital.

For further details regarding share-based

remuneration, see note 18.

2024

Accumulated

quantity

options OB

Granted

options

Expired/

adjusted

options

Exercised

options

Average

exercise

price-A

Accumulated

quantity

options CB

Average

exercise

price-B

Ulf Ritsvall, CEO 2,725,000 1,400,000 - - - 4,125,000 6.30

Eirik Underthun, CFO 1,750,000 50,000 - -350,000 2.49 1,450,000 5.54

Marcus Lauren, CPO 75,000 150,000 - - - 225,000 7.39

Digvijay Singh Kanwar, SVP Head

of Sales IUEA 200,000 150,000 - - - 350,000 6.35

Joshua Chui, SVP Head of Sales

South-East Asia 75,000 200,000 - - - 275,000 7.48

Peter Heuman, former CEO 5,020,000 - -300,000 -4,720,000 3.99 - -

Odd Harald Hauge, Chair 200,000 - - - - 200,000 2.49

Petter Fjeldstad 1,030,000 - - - - 1,030,000 2.66

Emine Lundkvist 230,000 - - - - 230,000 3.27

Siri Gomnæs Børsum 200,000 - - - - 200,000 4.89

Total 11,505,000 1,950,000 -300,000 -5,070,000 8,085,000

OPTIONS  SHARE BASED REMUNERATION

Board of Directors

Senior Executives

ANNUAL REPORT 202455

NOTES TO FINANCIAL STATEMENT  GROUP

Note 19 Continued

2023

Accumulated

quantity

options OB

Granted

options

Expired/

adjusted

options

Exercised

options

Average

exercise

price-A

Accumulated

quantity

options CB

Average

exercise

price-B

Ulf Ritsvall, CEO 1,900,000 825,000 - - - 2,725,000 5.53

Eirik Underthun, CFO 1,500,000 250,000 - - - 1,750,000 4.86

Marcus Lauren, CPO - 75,000 - - - 75,000 6.46

Digvijay Singh Kanwar, SVP Head

of Sales IUEA 100,000 100,000 - - - 200,000 5.21

Joshua Chui, SVP Head of Sales

South-East Asia - 75,000 - - - 75,000 6.46

Peter Heuman, former CEO 4,720,000 300,000 - - - 5,020,000 4.11

Petter Fjeldstad, Chair 1,030,000 - - - - 1,030,000 2.66

Odd Harald Hauge 200,000 - - - - 200,000 2.49

Emine Lundkvist 230,000 - - - - 230,000 3.27

Siri Gomnæs Børsum 200,000 - - - - 200,000 4.89

Total 9,880,000 1,625,000 - - 11,505,000

A Average exercise price for options exercised during the financial year (amounts in NOK)

B Average exercise price for quantity of options by the end of the financial year (amounts in NOK)

(amounts in NOK 1,000) 2024 2023

Audit fee 780 532

Attestation 238 145

Tax services - -

Non-audit services 6 74

Total audit fees 1,024 751

Audit fees

Board of Directors

Senior Executives

ANNUAL REPORT 202456

NOTES TO FINANCIAL STATEMENT  GROUP

NOTE 20 Financial risk management

The Group is subject to various financial risks,

which are systematically monitored and managed

to mitigate potential adverse impacts. Our risk

management ensures that these risks are identified,

assessed, and controlled effectively, thereby

safeguarding the Group’s financial stability and

performance.

Credit risk

Credit risk refers to the risk that a counterparty will

default on its contractual obligations resulting in

financial loss to the Group. The Group assesses each

customer on an individual basis to estimate lifetime

expected credit losses. The credit loss estimates are

set by management based on internal and external

information. This includes qualitative information and

analysis, based on the Group’s historical experience

and including forward-looking information. These

estimates are subject to risks and uncertainties that

could cause actual results to differ from current

expectations. For example, economic and market

conditions in the geographic areas and industries

that the Group is operating can change. Moreover,

the Group is facing risks related to new customers

in existing and new markets, market acceptance

of new products and services and changes in

governmental regulations that impact the ability of

the Group's end customers to sell their products,

which may affect the Group's ability to collect its

account receivables. Further, the Group has a limited

operating history with several of its major customers

in the new markets, which makes the Group exposed

to additional credit risk. See note 13 - Accounts

receivables for more information regarding

account receivables.

Liquidity risk

The Group strives to maintain sufficient cash to

continue it’s operations and meet obligations.

The Group manages liquidity risk by maintaining

adequate cash reserves by continuosly monitoring

actual and forecasted cash flow by matching the

maturity profiles of financial assets and liabilities.

The Groups obligations mainly consists of supplier

liabilities and other current liabilities. See note 16 -

Liabilities for more information. The Group has no

long term liabilities or overdraft facilities with financial

institutions as of 31 December 2024.

Foreign currency risk

The primary functional currency of the Groups main

operating subsidiary NEXT Biometrics AS is USD.

The Group’s revenues outside China are incurred

in USD. The Group recognized 64% of its revenues

in USD and 36% in Chinese Yuan (CNY) in 2024

(100% and 0% respectively in 2023). The CNY/USD

rate has been quite stable in recent years. Still, the

Group is exposed to fluctuations of the CNY, which

will impact the value of account receivables that

are issued in CNY. The Group’s cost of materials

purchases are incurred in USD. Moreover, the

Group incurs employee and operating expenses

that is denominated in USD, Norwegian Kroner

(NOK), Taiwan Dollar (TWD) and CNY. The NOK/USD

exchange rate has shown some volatility in

recent years while the TWD and CNY are relatively

closely correlated to the USD. The Group has

not implemented a hedging policy to manage

currency risks as it believes the costs are larger

than the benefits.

ANNUAL REPORT 202457

NOTES TO FINANCIAL STATEMENT  GROUP

NOTE 21 Climate risk

The Group does not own or operate manufacturing

facilities. Manufacturing is done through third parties.

Climate impact and potential risk is low in the short

to medium term. The Group is not directly impacted

by physical climate risk such as potential flooding

or general increase in the sea level. Moreover, the

Group does not face any potential liabilities due

to damage caused by climate change. Still, the

Group is likely to be impacted by the regulatory and

technological changes that are to be implemented

(in the future) to reach a carbon neutral society,

which may lead to long term increased electronic

component purchase and manufacturing costs.

Note 22 Related parties

The Group’s significant shareholders, board

members and management are considered related

parties. Transactions between related parties are

always aimed at being carried at arm’s length

principle.

Board members have received remuneration

according to the general meetings decisions.

In addition, board members have been granted

options. Salary and board remuneration to related

parties have been disclosed in note 19.

Note 23 Events occurring after the balance sheet date

Between 31 December 2024 and the resolution of

these financial statements, there has not been any

event which have had any noticeable impact on

the Group’s or the parent company’s result for 2024

or the value of the Group or the parent company’s

assets and liabilities as of 31 December 2024.

We refer to note 13. In the period from 1 January 2025

up to 1 April 2025 the Group has received NOK 4.7

million in payments on account receivables that were

outstanding as per 31 December 2024.

Note 24 Changes in reporting items in consolidated

statement of comprehensive income

There are minor changes to the consolidated

statement of comprehensive income compared

to previous years. Operating revenues and other

revenues have been combined into one financial

statement reporting line item named “Revenues”.

Similarly, Cost of goods sold and Inventory write

downs have been combined into one financial

statement reporting line item named “Cost of

materials”. These changes were implemented in

order made to be more in line with our peers and

general accounting practice.

(amounts in NOK 1,000) 2023

Operating revenue 33,717

Other revenue 666

Revenues 34,383

(amounts in NOK 1,000) 2023

Cost of goods sold -22,962

Inventory write downs -4,042

Cost of materials -27,004

ANNUAL REPORT 202458

NOTES TO FINANCIAL STATEMENT  GROUP

Financial

Statements

Parent

Company

ANNUAL REPORT 202459

Parent company

Statement of comprehensive income 1 January - 31 December

(amounts in NOK 1,000) Notes 2024 2023

Revenues 2 9,451 8,921

Total revenues 9,451 8,921

Payroll expenses 3 -11,361 -11,953

Share based remuneration 3 -432 -9,111

Other operating expenses 4 -7,715 -6,686

Depreciation and amortization 7,8 -1,366 -1,265

Total operating expenses -20,874 -29,014

Operating profit (loss) -11,423 -20,093

Financial income 5 1,471 1,385

Financial expenses 5 -55 -191

Net currency gains (losses) 5 418 737

Net financial items 1,834 1,930

Profit (loss) before taxes -9,589 -18,163

Income tax expenses 6 - -

Profit (loss) after taxes -9,589 -18,163

Other comprehensive income (loss) - -

Total comprehensive income (loss) -9,589 -18,163

ANNUAL REPORT 202460

FINANCIAL STATEMENTS PARENT COMPANY

Odd-Harald Hauge

Chair

/Sign/ /Sign/

/Sign/

Petter Fjellstad

Board member

Ulf Ritsvall

CEO

Emine Lundkvist

Board member

Siri Gomnæs Børsum

Board member

Parent Company

Statement of financial position As of 31 December

(amounts in NOK 1,000) Notes 2024 2023

Intangible assets 7 750 1,500

Property, plant and equipment 8,15 954 447

Shares in subsidiaries 9 312,790 266,616

Loans to group companies 10 5,534 6,137

Total non-current assets 320,028 274,700

Other current assets 11 1,542 3,699

Cash 12 47,924 40,091

Total current assets 49,466 43,790

Total assets 369,494 318,490

Share capital 13 115,155 104,025

Share premium 174,906 135,496

Other reserves 31,580 28,336

Retained earnings 40,060 40,060

Total equity 361,701 307,918

Non-current lease liability 15 227 -

Total non-current liabilities 227 -

Accounts payables 910 697

Current lease liabilities 15 648 430

Other current liabilities 14 6,008 9,446

Total current liabilities 7,566 10,572

Total equity and liabilities 369,494 318,490

The board of directors of

NEXT Biometrics Group ASA

Oslo, 10 April 2025

ANNUAL REPORT 202461

FINANCIAL STATEMENTS PARENT COMPANY

Parent Company

Statement of changes in equity 1 January - 31 December

Attributable to owners of the parent company

(amounts in NOK 1,000) Notes

capital

premium

Other

reserves

Retained

earnings

Total

equity

As of 1 January 2024 104,025 135,496 28,336 40,060 307,918

Profit (loss) after taxes -9,589 -9,589

Other comprehensive income (loss) - -

Total comprehensive income (loss) - - -9,589 -9,589

Share issues 13 11,130 51,313 62,442

Share issue costs 13 -2,314 -2,314

Share-based remuneration 13 3,243 3,243

Transfer of loss to share premium -9,589 9,589

As of 31 December 2024 115,155 174,906 31,580 40,060 361,701

As of 1 January 2023 91,981 108,687 22,440 40,060 263,169

Profit (loss) after taxes -18,163 -18,163

Other comprehensive income (loss) - -

Total comprehensive income (loss) - - -18,163 -18,163

Share issues 13 12,044 48,106 60,150

Share issue costs 13 -3,134 -3,134

Share-based remuneration 13 5,896 5,896

Transfer of loss to share premium -18,163 18,163

As of 31 December 2023 104,025 135,496 28,336 40,060 307,918

ANNUAL REPORT 202462

FINANCIAL STATEMENTS PARENT COMPANY

Parent Company

Statement of cash flow 1 January - 31 December

(amounts in NOK 1,000) Notes 2024 2023

Profit (loss) before taxes -9,589 -18,163

Share based remuneration 13 2,069 4,500

Accrued share option social security cost -4,345 4,611

Depreciation and amortization 7,8 1,366 1,265

Change in accounts payables 214 168

Change in other working capital items and other 1,791 -3,784

Interests received 890 733

Interests paid -54 -35

Net cash flow from operating activities -7,658 -10,705

Net financing of subsidiary 9,10 -45,000 -46,000

Repayments of intercompany loan 1,013 2,800

Net cash flow from investing activities -43,987 -43,200

Proceeds from issue of shares 60,129 57,016

Payment of lease liabilities 15 -650 -506

Net cash flow from financing activities 59,479 56,510

Net change in cash flow 7,834 2,605

Cash balance as of 1 January 40,091 37,486

Effects of exchange rate changes on cash 82 -10

Cash balance as of 31 December 47,9 24 40,091

Comprising of:

Cash 12 47,9 24 40,091

ANNUAL REPORT 202463

FINANCIAL STATEMENTS PARENT COMPANY

Notes to financial

statement - Parent

NOTE 1 General information and summary of significant accounting policies

NEXT Biometrics Group ASA is a holding company

and contains the actvities that are performed in

Norway including Group Management. These

financial statements have been prepared in

accordance with IFRS® Accounting Standards as

adopted by the EU per 31 December 2024.

NEXT Biometrics Group ASA’s accounting principles

are consistent with the accounting principles for the

Group, as described in note 2 of the consolidated

financial statements. Where the notes for the parent

company are substantially different from the notes

for the Group, these are shown below. Otherwise,

refer to the notes to the consolidated financial

statements.

Shares in subsidiaries are accounted for using the

cost method. The investments in subsidiaries are

valued at cost unless impairment is required due

to lower fair value. Assessments of impairment on

shares in subsidiaries are done by the end of each

reporting period. When the parent has an obligation

to settle share-based remuneration to employees

in subsidiaries in its own equity instruments, this

is accounted for as an increase in equity and a

corresponding increase in shares in subsidiaries.

NOTE 2 Revenues

Operating revenues are management fee and royalty

charged to the subsidiary NEXT Biometrics AS.

Revenues from NEXT Biometrics AS totals to NOK 9.5

million in 2024 (2023: NOK 8.9 million).

NOTE 3 Payroll expenses

(amounts in NOK 1,000) 2024 2023

Salaries, fees -9,147 -9,513

Share based remuneration (salary part) -2,069 -4,500

Share based remuneration (employer's tax) 1,637 -4,611

Social security taxes -1,625 -1,780

Pension contribution -349 -481

Other personnel expenses -240 -178

Total payroll expenses -11,793 -21,064

Average numbers of employees 4 5

The parent company, NEXT Biometrics Group ASA,

provides a contribution-based pension insurance

scheme for all employees. The scheme satisfies the

mandatory service pension (‘OTP’) in Norway.

By the end of 2024, there were 4 employees in the

parent company.

ANNUAL REPORT 20246464

NOTE 4 Other operating expenses

(amounts in NOK 1,000) 2024 2023

Fees to consultants, lawyers and others -4,361 -3,779

Travel expenses -733 -598

Other expenses -2,621 -2,309

Total other operating expenses -7,715 -6,686

Other expenses include insurance, marketing

expenses, Oslo stock exchange fees, stock register

fee and other costs.

NOTE 5 Financial items

(amounts in NOK 1,000) 2024 2023

Interest income from group companies (see note 10) 499 410

Interest income on sub-leases (see note 15) 81 -

Interest income 890 974

Total financial income 1,471 1,385

Interest expenses -2 -156

Interest expenses right-to-use assets (see note 15) -54 -35

Total financial expenses -55 -191

Realized currency gains (losses) -171 320

Change in unrealized currency gains (losses) 590 416

Net currency gains (losses) 418 737

Net financial items 1,834 1,930

(amounts in NOK 1,000) 2024 2023

Audit fee -441 -286

Attestation -202 -145

Non-audit services -53 -38

Total audit fees -696 -468

Fees to consultants, lawyers and others includes remuneration to auditor, see specification in table below:

ANNUAL REPORT 202465

NOTES TO FINANCIAL STATEMENT  PARENT

NOTE 6 Income taxes

(amounts in NOK 1,000) 2024 2023

Current taxes - -

Change in deferred taxes - -

Total income tax expenses - -

Profit (loss) before taxes -9,589 -18,163

Expected income tax expenses at Norwegian nominal tax rate (22%) -2,110 -3,996

Tax effect of permanent differences -47 309

Change in deferred tax assets not recognized 2,157 3,686

Actual income tax expenses - -

Effective tax rate 0% 0%

(amounts in NOK 1,000) 2024 2023

Property, plant and equipment 954 447

Long term loans - -

Lease receivables - -

Lease liabilities - -

Other temporary differences -2,218 -6,623

Tax losses carried forward -243,672 -228,957

Total temporary differences and tax losses carried forward -244,936 -235,133

Deferred tax assets -53,886 -51,729

Deferred tax assets not recognized 53,886 51,729

Deferred tax assets in the balance sheet - -

Tax losses carried forward has no

limitiations in expiry date.

Due to a history of losses, deferred tax

assets are not recognized.

Income tax expense reconciliation:

Deferred tax related to the following temporary differences:

ANNUAL REPORT 202466

NOTES TO FINANCIAL STATEMENT  PARENT

(amounts in NOK 1,000) 2024 2023

Deferred tax assets - -

Deferred tax liabilities - -

Net deferred taxes as of 31 December - -

Note 6 Continued

NOTE 7 Intangible assets

Intangible assets consist mainly of acquisition of right

to use the patent and know-how (IP) described as

the NEXT Active Thermal™ Sensing principle.

(amounts in NOK 1,000) 2024 2023

Accumulated cost as of 1 January 7,458 7,458

Additions - -

Disposals at cost - -

Accumulated cost as of 31 December 7,458 7,458

Accumulated amortization and impairment losses as of 1 January -5,959 -5,209

Amortization -750 -750

Accumulated amortization and impairment losses of disposed items - -

Accumulated amortization and impairment losses as of 31 December -6,708 -5,959

Carrying amount as of 31 December 750 1,500

Amortization period in years (straight line) 12 12

The individual intangible asset is not considered

as separate cash generating units. Rather, that

assets are evaluated for impairment in combination

with other assets. Therefore, impairment tests have

been performed as part of an overall impairment

assessment. Consequently, it was concluded that

there was no need for impairment of intangible assets.

(amounts in NOK 1,000) 2024 2023

Profit (loss) before taxes -9,589 -18,163

Permanent differences -214 1,406

Change in temporary differences -4,911 4,310

Basis for current taxes -14,715 -12,446

The following table illustrates the deferred tax balance recognized in the statement of financial position:

The following table illustrates the basis for calculation of current tax:

ANNUAL REPORT 202467

NOTES TO FINANCIAL STATEMENT  PARENT

(amounts in NOK 1,000) Office

Owned directly by

Parent company

Ownership / voting

interest in % 2024

Ownership / voting

interest in % 2023

NEXT Biometrics AS Oslo, Norway x 100% 100%

NEXT Biometrics Inc. Seattle, USA 100% 100%

NEXT Biometrics China Ltd. Shanghai, China 50% 100%

NEXT Biometrics Taiwan Ltd. Taipei, Taiwan 100% 100%

NEXT Biometrics Solutions Pvt. Ltd. Bengaluru, India 100% 100%

NOTE 8 Property, plant and equipment

NOTE 9 Shares in subsidiaries and group companies

The table below shows the subsidiaries in the Group. All subsidiaries are consolidated in the Group’s financial statements:

Right-of-use assets (RoU-assets) represent office

leases. In 2024, the company extended the Oslo

office lease by 2 years and changed its office

location with the same office lease company, which

represent the additions in 2024 for right-of-use

assets (RoU-assets). Additions in 2023 were related

to KPI adjustments of the existing lease contract

in Oslo. See also note 15 for further information

regarding leases.

The change in carrying amount from 31 December

2023 to 31 December 2024, is related to capital

increases of NOK 45.0 million and investment in

subsidiaries related to sharebased renumeration cost

(employees and contractors in subsidiaries) of NOK

1.2 million.

2024 2023

(amounts in NOK 1,000) RoU-assets Total RoU-assets Total

Accumulated cost as of 1 January 1,048 1,048 1,021 1,021

Additions 1,346 1,346 27 27

Disposals at cost -1,047 -1,047 - -

Accumulated cost as of 31 December 1,347 1,347 1,048 1,048

Accumulated depreciation and impairment losses as of 1 January -600 -600 -85 -85

Depreciation -616 -616 -515 -515

Impairment losses - - - -

Derecognition of RoU asset due to office lease amendment -224 -224 - -

Accumulated depreciation and impairment losses of disposed items 1,047 1,047 - -

Accumulated depreciation and impairment losses as of 31 December -392 -392 -600 -600

Carrying amount as of 31 December 954 954 447 447

Depreciation period in years (straight line) 2-4 2-4

(amounts in NOK 1,000) 2024 2023

NEXT Biometrics AS 312,790 266,616

Total shares in subsidiaries 312,790 266,616

The table below shows the carrying amount of shares in subsidaries for the Parent company as of 31 December:

ANNUAL REPORT 202468

NOTES TO FINANCIAL STATEMENT  PARENT

NOTE 10 Loans to group companies

NOTE 11 Other current assets

NOTE 12 Cash

(amounts in NOK 1,000) 2024 2023

Loan to NEXT Biometrics Taiwan Ltd. 5,534 6,137

Total loans group companies as of 31 December 5,534 6,137

(amounts in NOK 1,000) 2024 2023

Receivables NEXT Biometrics AS 877 2,772

Prepayments 351 496

Deposits 115 86

Other receivables 199 345

Total other current assets 1,542 3,699

(amounts in NOK 1,000) 2024 2023

Cash-unrestricted 47,631 39,669

Cash-employees withheld payroll tax deposits 293 422

Total cash 47,924 40,091

The loan to NEXT Biometrics Taiwan Ltd. was

charged with NIBOR 6 months + 1.0%. From 1st

November 2024, the loan was charged NIBOR 6

months + 3.2%. Interest for 2024 amounted to NOK

0.4 million (2023: NOK 0.4 million).

The parent company had a short-term loan to NEXT

Biometrics AS during 2024. Interest was charged

with the rate of 7.2% per annum. Interest for 2024

amounted to NOK 0.1 million. The loan was repaid in

December 2024.

ANNUAL REPORT 202469

NOTES TO FINANCIAL STATEMENT  PARENT

NOTE 13 Equity and share based remuneration

There is one class of shares. All shares have equal

rights and are freely negotiable. The share capital

is fully paid in. The par value of the shares is NOK 1

per share.

Number of shares outstanding 2024 2023

Opening balance 104,024,929 91,980,763

Share issue(s) 5,500,000 12,000,000

Exercised incentive share options 5,629,606 44,166

Closing balance 115,154,535 104,024,929

As of 31 December 2024, the Company has one

share option program. There are currently an

accumulated 10,020,579 (8.7% of total number of

shares in the Company) share options outstanding.

NEXT Biometrics Group ASA booked a share based

remuneration operating cost of NOK 2.1 million as

payroll expense and NOK 1.2 million was booked as

investment in subsidiaries.

As an alignment of principles, NEXT Biometrics

ASA, in 2023 made a material adjustment to earlier

periods share-based remuneration effect in the

equity statement, with a corresponding increase to

investments in subsidiaries, as compared to the 2022

financial statements. The total equity effect of share

based remuneration for the 2023 financial period

was NOK 5.9 million, of which NOK 4.5 million was

booked as payroll expense and NOK 1.4 million was

booked as investment in subsidiaries.

For further information regarding share capital,

shareholder’s information and share-based

options, please refer to note 18 in group

consolidated financial statement.

Net amount in the period (NOK 1,000)

2024 2023

Share based remuneration cost,

NEXT Biometrics Group ASA

2,069 4,500 See note 3, payroll expenses

Share based remuneration cost,

employees in NEXT Biometrics

Group ASA subsidiaries

716 1,229 Booked as addition to investment in

subsidiaries (Note 9, shares in subsidiaries)

Share based remuneration cost,

consultants/contractors in NEXT

Biometrics Group ASA subsidiaries

458 167 Booked as addition to investment in

subsidiaries (Note 9, shares in subsidiaries)

Total 3,243 5,896

ANNUAL REPORT 202470

NOTES TO FINANCIAL STATEMENT  PARENT

(amounts in NOK 1,000) 2024 2023

Opening balance 430 863

Changes from financing cash flows -650 -506

Changes in lease liabilities due to new/amended lease agreements or CPI adjustments 1,041 27

Other changes 53 47

Closing balance as of 31 December 875 430

NOTE 14 Other liabilities

NOTE 15 Leases

(amounts in NOK 1,000) 2024 2023

Accrued salary, vacation pay and board remuneration 2,885 1,304

Public duties payable 1,022 1,437

Share options social security tax 1,880 6,225

Other current liabilities 220 479

Total other current liabilities 6,008 9,446

For financial liabilities at amortised cost, the

carrying amount is assessed to be a reasonable

approximation of fair value. All items above are at

amortised cost or nominal value.

(amounts in NOK 1,000) 2024 2023

Depreciation property right-of-use assets (included in "Depreciation and amortization") -616 -515

Interest income (included in "Financial income") 81 -

Interest expenses (included in "Financial expenses") -54 -35

Net expenses related to leases -588 -549

See note 8 for more information regarding right-of-use assets.

The total cash outflow for leases in 2024 was NOK 0.6 million (2023: NOK 0.5 million).

(amounts in NOK 1,000) 2024 2023

Property-office leases (included in "Property, plant and equipment") 954 447

Total right-of-use assets 954 447

Non-current lease liabilities (included in "Other non-current liabilities") 227 -

Current lease liabilities (included in "Other current liabilities") 648 430

Total lease liabilities 875 430

The table below shows the amounts related to leases recognized in the statement of financial position:

The table below shows the amounts related to leases recognized in the statement of comprehensive income:

The table below shows a reconciliation of the opening and closing balance for lease liabilities arising from

financing activities:

ANNUAL REPORT 202471

NOTES TO FINANCIAL STATEMENT  PARENT

(amounts in NOK 1,000) 2024 2023

Within one year 690 352

More than 1 year but within 5 years 230 -

Total contractual cash flows related to leases 920 352

Note 15 Continued

NOTE 16 Related party transactions

The parent company’s significant shareholders,

board members and management, are considered

related parties. For overview of transactions with

these parties, please refer to note 22 in group

consolidated financial statement.

Companies within the Group are also considered

related parties. See note 2 for overview of sales to

group companies and note 10 for overview of loans

to group companies.

NOTE 17 Events occurring after the balance sheet date

Between 31 December 2024 and the resolution of

these financial statements, there has not been any

event which have had any noticeable impact on

the Group’s or the parent company’s result for 2024

or the value of the Group or the parent company’s

assets and liabilities as of 31 December 2024.

The table below shows the maturity profile for the lease liabilities based on contractual undiscounted payments:

ANNUAL REPORT 202472

NOTES TO FINANCIAL STATEMENT  PARENT

Responsibility

statement

We confirm that, to the best of our knowledge, the

financial statements for the period from 1 January

to 31 December 2024 have been prepared in

accordance with IFRS as adopted by the EU, with

such additional information as required by the

Norwegian Accounting Act, and give a true and fair

view of the Group’s and Parent company’s assets,

liabilities, financial position and result of operations,

and that the Board of Directors’ report 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 that they face.

Oslo, 10 April 2025

Odd-Harald Hauge

Chair

/Sign/ /Sign/

/Sign/

Petter Fjellstad

Board member

Siri Gomnæs Børsum

Board member

Emine Lundkvist

Board member

Ulf Ritsvall

CEO

ANNUAL REPORT 202473

RSM Norge AS (organisasjonsnummer 982316588), RSM Advokatfirma AS (organisasjonsnummer 914095573),

RSM Norge Kompetanse AS (organisasjonsnummer 925107492). RSM Norge AS er medlem av RSM-nettverket og

driver under navnet RSM. RSM er forretningsnavnet som brukes av medlemmene i RSM-nettverket. RSM

Advokatfirma AS og RSM Norge Kompetanse AS er selskaper tilknyttet RSM Norge AS. Hvert medlem i RSM-

nettverket er et selvstendig revisjons- og rådgivningsfirma med uavhengig virksomhet. RSM-

nettverket er ikke selv en

To the General Meeting of Next Biometrics Group ASA

Report on the Audit of the Financial Statements

Opinion

We have audited the financial statements of Next Biometrics Group ASA, which comprise:

the financial statements of the parent company Next Biometrics Group ASA (the Company), which

comprise the balance sheet as at 31 December 2024, the income statement, statement of

comprehensive income, statement of changes in equity and statement of cash flows for the year then

ended, and notes to the financial statements, including material accounting policy information, and

the consolidated financial statements of Next Biometrics Group ASA and its subsidiaries (the Group),

which comprise the balance sheet as at 31 December 2024, the income statement, statement of

comprehensive income, statement of changes in equity and statement of cash flows for the year then

ended, and notes to the financial statements, including material accounting policy information.

In our opinion

the financial statements comply with applicable statutory requirements,

the financial statements give a true and fair view of the financial position of the Company as at 31

December 2024, and its financial performance and its cash flows for the year then ended in accordance

with IFRS Accounting Standards as adopted by the EU, and

the consolidated financial statements give a true and fair view of the financial position of the Group as at

31 December 2024, and its financial performance and its cash flows for the year then ended in

accordance with IFRS Accounting Standards as adopted by the EU.

Our opinion is consistent with our additional report to the Audit Committee.

Basis for Opinion

We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities

under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial

Statements section of our report. We are independent of the Company and the Group as required by relevant

laws and regulations in Norway and the International Ethics Standards Board for Accountants’ International

Code of Ethics for Professional Accountants (including International Independence Standards) (IESBA Code),

and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that

the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

To the best of our knowledge and belief, no prohibited non-audit services referred to in the Audit Regulation

(537/2014) Article 5.1 have been provided.

Independent Auditor’s Report

Penneo Dokumentnøkkel: 0UWH5-5WW0K-CPDY9-RUFGF-YHIP9-OEA87

Auditor's report

ANNUAL REPORT 202474

Next Biometrics Group ASA

Auditor’s Report 2024

We have been the auditor for the Company for 1 year from the election by the general meeting of the

shareholders on 16 May 2024 for the accounting year 2024.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of

the financial statements of the current period. These matters were addressed in the context of our audit of the

financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion

on these matters.

Key Audit Matters How our audit addressed the Key Audit Matters

Accounts receivables

Per the reporting date 2024 Next Biometrics Group

ASA has in its consolidated financial statements

recognized net accounts receivables of NOK

56 754 000, including a loss allowance provision of

NOK 10 669 000.

During 2024 the levels of overdue account

receivables have increased, and per the 2024

reporting date, accounts receivables of 120 days

overdue or more amounted to NOK 22 352 000.

The estimation of expected credit losses, and thus

the valuation of accounts receivables, involve

significant judgment. Management must consider

factors such as the aging of accounts receivables,

historic payments patterns, forward looking

information on macroeconomic factors affecting the

ability of the customers to settle the receivables, and

other relevant information that can impact the

customers creditworthiness. Management utilizes this

information to determine the loss allowance that

should be recognized per the reporting date.

Accounts receivables are considered a key audit

matter due to the estimation uncertainty for expected

credit losses.

We obtained information regarding the

management’s processes for evaluation of overdue

accounts receivables. Due to the Groups limited

operating history with several of its major customers

it is challenging to establish expected credit loss

estimates for the accounts receivables. The

assessment of provisions for loss allowances is

therefore based on an individual assessment of each

material customer per the reporting date.

Our audit approach for addressing the key audit

matter for accounts receivables involved several

audit procedures.

Our audit procedures included, among others, the

following:

- We have obtained confirmations from customers

equivalent to 85% of outstanding receivables as

of 31. December 2024.

- We have reviewed payments received after the

reporting date and considered if adjustment

based on credit notes issued after the reporting

date is necessary.

- We have conducted meetings with management

to review outstanding receivables and reviewed

management’s written assessment for each

individual accounts receivable, and information

on the expected payment date.

- We have reviewed the disclosures for accounts

receivables in the financial statement and have

considered these disclosures to be sufficient to

provide information about the estimation

uncertainty that exits related to the valuation of

accounts receivables as of 31. December 2024.

Penneo Dokumentnøkkel: 0UWH5-5WW0K-CPDY9-RUFGF-YHIP9-OEA87

ANNUAL REPORT 202475

AUDITOR'S REPORT

Next Biometrics Group ASA

Auditor’s Report 2024

Other Information

The Board of Directors and the Managing Director (management) are responsible for the information in the

Board of Directors’ report and the other information accompanying the financial statements. The other

information comprises information in the annual report, but does not include the financial statements and our

auditor’s report thereon. Our opinion on the financial statements does not cover the information in the Board of

Directors’ report nor the other information accompanying the financial statements.

In connection with our audit of the financial statements, our responsibility is to read the Board of Directors’

report and the other information accompanying the financial statements. The purpose is to consider if there is

material inconsistency between the Board of Directors’ report and the other information accompanying the

financial statements and the financial statements or our knowledge obtained in the audit, or whether the Board

of Directors’ report and the other information accompanying the financial statements otherwise appear to be

materially misstated. We are required to report if there is a material misstatement in the Board of Directors’

report or the other information accompanying the financial statements. We have nothing to report in this regard.

Based on our knowledge obtained in the audit, it is our opinion that the Board of Directors’ report

is consistent with the financial statements and

contains the information required by applicable statutory requirements.

Our opinion on the Board of Director’s report applies correspondingly to the statements on Corporate

Governance and Corporate Social Responsibility.

Responsibilities of Management for the Financial Statements

Management is responsible for the preparation of financial statements that give a true and fair view in

accordance with IFRS Accounting Standards as adopted by the EU, and for such internal control as

management determines is necessary to enable the preparation of financial statements that are free from

material misstatement, whether due to fraud or error.

In preparing the financial statements, management is responsible for assessing the Company’s and the Group’s

ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the

going concern basis of accounting unless management either intends to liquidate the Group or to cease

operations, or has no realistic alternative but to do so.

Auditor’s Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free

from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our

opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in

accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from

fraud or error and are considered material if, individually or in aggregate, they could reasonably be expected to

influence the economic decisions of users taken on the basis of these financial statements.

As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional

scepticism throughout the audit. We also:

identify and assess the risks of material misstatement of the financial statements, whether due to fraud

or error. We design and perform audit procedures responsive to those risks, and obtain audit evidence

that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material

misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve

collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

Penneo Dokumentnøkkel: 0UWH5-5WW0K-CPDY9-RUFGF-YHIP9-OEA87

ANNUAL REPORT 202476

AUDITOR'S REPORT

Next Biometrics Group ASA

Auditor’s Report 2024

obtain an understanding of internal control relevant to the audit in order to design audit procedures that

are appropriate in the circumstances, but not for the purpose of expressing an opinion on the

effectiveness of the Company's and the Group's internal control.

evaluate the appropriateness of accounting policies used and the reasonableness of accounting

estimates and related disclosures made by management.

conclude on the appropriateness of management’s use of the going concern basis of accounting and,

based on the audit evidence obtained, whether a material uncertainty exists related to events or

conditions that may cast significant doubt on the Company's and the Group's ability to continue as a

going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our

auditor’s report to the related disclosures in the financial statements or, if such disclosures are

inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the

date of our auditor’s report. However, future events or conditions may cause the Company and the

Group to cease to continue as a going concern.

evaluate the overall presentation, structure and content of the financial statements, including the

disclosures, and whether the financial statements represent the underlying transactions and events in a

manner that achieves a true and fair view.

obtain sufficient appropriate audit evidence regarding the financial information of the entities or business

activities within the Group to express an opinion on the consolidated financial statements. We are

responsible for the direction, supervision and performance of the group audit. We remain solely

responsible for our audit opinion.

We communicate with the Board of Directors regarding, among other matters, the planned scope and timing of

the audit and significant audit findings, including any significant deficiencies in internal control that we identify

during our audit.

We also provide the Audit Committee with a statement that we have complied with relevant ethical requirements

regarding independence, and to communicate with them all relationships and other matters that may reasonably

be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with the Board of Directors, we determine those matters that were of most

significance in the audit of the financial statements of the current period and are therefore the key audit matters.

We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the

matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in

our report because the adverse consequences of doing so would reasonably be expected to outweigh the public

interest benefits of such communication.

Report on Other Legal and Regulatory Requirements

Report on Compliance with Requirement on European Single Electronic Format (ESEF)

Opinion

As part of the audit of the financial statements of Next Biometrics Group ASA, we have performed an assurance

engagement to obtain reasonable assurance about whether the financial statements included in the annual

report, with the file name NB_Group_ASA_Annual_report_2024-12-31.zip, have been prepared, in all material

respects, in compliance with with the requirements of the Commission Delegated Regulation (EU) 2019/815 on

the European Single Electronic Format (ESEF Regulation) and regulation pursuant to Section 5-5 of the

Norwegian Securities Trading Act, which includes requirements related to the preparation of the annual report in

XHTML format and iXBRL tagging of the consolidated financial statements.

Penneo Dokumentnøkkel: 0UWH5-5WW0K-CPDY9-RUFGF-YHIP9-OEA87

ANNUAL REPORT 202477

AUDITOR'S REPORT

Next Biometrics Group ASA

Auditor’s Report 2024

In our opinion, the financial statements, included in the annual report, have been prepared, in all material

respects, in compliance with the ESEF regulation.

Management is responsible for the preparation of the annual report in compliance with the ESEF regulation.

This responsibility comprises an adequate process and such internal control as management determines is

necessary.

Our responsibility, based on audit evidence obtained, is to express an opinion on whether, in all material

respects, the financial statements included in the annual report have been prepared in compliance with ESEF.

We conduct our work in compliance with the International Standard for Assurance Engagements (ISAE) 3000 –

“Assurance engagements other than audits or reviews of historical financial information”. The standard requires

us to plan and perform procedures to obtain reasonable assurance about whether the financial statements

included in the annual report have been prepared in compliance with the ESEF Regulation.

Management’s Responsibilities

Auditor’s Responsibilities

As part of our work, we have performed procedures to obtain an understanding of the Company’s processes for

preparing the financial statements in compliance with the ESEF Regulation. We examine whether the financial

statements are presented in XHTML-format. We evaluate the completeness and accuracy of the iXBRL tagging

of the consolidated financial statements and assess management’s use of judgement. Our procedures include

reconciliation of the iXBRL tagged data with the audited financial statements in human-readable format. We

believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Oslo, 10 April 2025

RSM Norge

Cecilie Tronstad

State Authorised Public Accountant

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ANNUAL REPORT 202478

AUDITOR'S REPORT

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ANNUAL REPORT 202479

AUDITOR'S REPORT

Alternative

performance measures

NEXT’s financial information has been prepared in

accordance with International Financial Reporting

Standards (IFRS). In addition, it is management’s

intent to provide alternative performance measures

that are regularly reviewed by management to

enhance the understanding of NEXT’s

performance, but not instead of, the financial

statements prepared in accordance with IFRS.

The alternative performance measures presented

may be determined or calculated differently by other

companies.

Definitions

Most of these key figures are alternative performance

measures according to ESMA’s definition. How

these key figures are used is described below,

as is how they are calculated. The alternative

performance measures are used to provide a

more comprehensive description of how the

operational activities are developing, such as

adjusted gross profit , Adjusted EBITDA and

Adjusted operating expenses.

Gross profit / gross profit (%)

Gross profit is defined as revenues less cost

of materials.

Gross profit (%) is expressed as a percentage

of revenues.

ANNUAL REPORT 202480

(amounts in NOK 1,000) 2024 2023

Revenues 71,574 34,383

Cost of materials -32,416 -27,004

Gross profit 39,158 7,379

(amounts in NOK 1,000) 2024 2023

Revenues 71,574 34,383

Cost of materials excluding inventory writedowns -32,053 -22,962

Adjusted gross profit 39,521 11,421

(amounts in NOK 1,000) 2024 2023

Cost of materials -32,416 -27,004

Deducted inventory writedowns 363 4,042

Cost of materials excluding inventory writedowns -32,053 -22,962

Gross profit (%) 39,158 7,379

Divided by revenues 71,574 34,383

Gross profit (%) 55% 21%

Adjusted gross margin 39,521 11,421

Divided by revenues 71,574 34,383

Adjusted gross profit (%) 55% 33%

Adjusted gross profit / Adjusted gross profit (%)

Adjusted gross profit is defined as revenues less cost

of materials excluding inventory write-downs.

Adjusted gross profit (%) is expressed as a

percentage of revenues.

Cost of materials excluding inventory write-downs

Cost of materials excluding inventory write-downs is

cost of materials and production service expenses

less inventory write-downs.

Inventory write-downs

Inventory write-downs are costs related to excess

inventory in relation to raw materials, semi-

finished goods, products and product lines that

are discontinued and/or in the process of being

discontinued.

ANNUAL REPORT 202481

ALTERNATIVE PERFORMANCE MEASURES

EBITDA / Adjusted EBITDA

EBITDA is earnings before interest, taxes,

depreciation, amortization and impairment losses.

Adjusted EBITDA ex options is equal to EBITDA

excluding “share-based remuneration” (salary part,

employer’s part and operating part), inventory write-

downs and sales and marketing incentive fee.

Adjusted operating expenses (Adjusted OPEX)

is defined as salaries and personnel cost and

other operating expenses excluding share based

remuneration as well as sales and marketing

incentive fee.

Operating expenses (OPEX)

Operating expenses (OPEX) consist of salaries and

personnel cost and other operating expenses.

Sales and marketing incentive fees

Sales and marketing incentive fees represent

accrued liabilities related to performance fees in

connection with progress on sales targets in China.

When reaching certain milestones, performance

fees are due to an external partner. The sales

and marketing fees liability estimate is based on

an assessment of progress of the achivement of

milestones as per each balance sheet date and

when such milestones are expected to be fulfilled.

(amounts in NOK 1,000) 2024 2023

Operating profit (loss) -46,068 -66,416

Added back depreciation and amortization 5,394 7,068

Added back impairment losses - 1,139

EBITDA -40,674 -58,209

(amounts in NOK 1,000) 2024 2023

Operating expenses (OPEX) 79,832 65,588

Deducted share-based remuneration (salary part) -2,776 -5,729

Deducted share-based remuneration (employer's tax) 1,637 -4,611

Deducted share-based remuneration (operating part) -452 -167

Deducted sales and marketing incentive fee -3,631 -

Adjusted operating expenses (Adjusted OPEX) 74,611 55,081

Added back share-based remuneration (salary part) 2,776 5,729

Added back share-based remuneration (employer's tax) -1,637 4,611

Added back share-based remuneration (operating part) 452 167

Added back inventory write-downs 363 4,042

Added back sales and marketing incentive fee 3,631 -

Adjusted EBITDA -35,090 -43,659

ANNUAL REPORT 202482

ALTERNATIVE PERFORMANCE MEASURES

NEXT BIOMETRICS GROUP ASA

NEXTBIOMETRICS.COM