| ☐ | REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934 |
| ☒ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
2021
| ☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
| ☐ | SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Title of each class | Trading Symbol(s) |
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American Depositary Shares, each representing 75 | IDBA | The Nasdaq Capital | ||
Ordinary | * | The Nasdaq Capital |
* |
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2021
| Large accelerated filer | ☐ | Accelerated filer | ☐ | Non-accelerated filer | ☒ | |||||
| Emerging growth company | ☒ | |||||||||
| † | The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012. |
| U.S. GAAP ☐ | International Financial Reporting Standards as issued | Other ☐ | ||||||
| by the International Accounting Standards Board ☒ |
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“ASA, inclusive of its wholly-owned subsidiaries in the United States, IDEX Biometrics Holding Company Inc. and IDEX Biometrics America Inc. (“IDEX America”), the United Kingdom, IDEX Biometrics UK Ltd. (“IDEX UK”), and the People’s Republic of China, IDEX Electronics (Shanghai) Co., Ltd. (“IDEX China”).
future investments in our business, our anticipated capital expenditures and our estimates regarding our capital requirements;
our ability to effectively manage our growth, including any additional international expansion;
our ability to compete effectively with existing competitors and new market entrants;
the growth rates of the markets in which we compete;
Item 1. | Identity of Director, Senior Management and Advisers. |
Item 2. | Offer Statistics and Expected Timetable. |
Item 3. | Key Information. |
We have elected to voluntarily comply with Item 3.A., as effective February 10, 2021 and are omitting this disclosure in reliance thereon.
[Reserved]
Our largest potential market, the biometric payment card market, is an undeveloped and emerging market and it is difficult to predict how large this market could be;
Our biometric technology has not yet gained, and may never gain, widespread market acceptance;
If the estimates and assumptions we have used to calculate the sizequoted prices of our target markets are inaccurate, our future growth rate may be limited.
We
We will require additional funding to finance our operations, and
We
The markets in which
If we fail to innovatecompetitive advantages in response to changing customer needsunexpected developments in the market segments we target;
Even though
We have only generated limited revenue and have incurred significant operating losseslosses. We cannot offer any assurances regarding whether or when we will generate sufficient operational cash flow to offset our costs and negative cash flows sinceaccelerate the expansion our inception.business, or whether or when we will generate sufficient revenue to achieve or maintain profitability.
We will require additional funding to finance our operations. profitability.
We cannot be certain when or if, our operationswe will generate sufficient operational cash flow to fully fundoffset our ongoing operations orcosts and accelerate the growthexpansion of our business. Webusiness, nor whether or when we will generate sufficient revenue to achieve or
Our largest potential market is the biometric payment card market. The market for biometric payment cards is an undeveloped and emerging market andin early stages of development. As such, it is difficult to predict the varying pace at which these applications will develop into defined market segments, how large the market segments could be, and to what extent we will successfully penetrate any such market segment, if at all.
We primarily market and sell biometric products and software solutions to the paymentacceptance by card and access control markets. The market for biometric payment cards is an undeveloped and emerging market and it is difficult to predict how large this market could be. Our technology representsissuers, card manufacturers, or card users.
individuals and appearance of biometric readers on popular consumer products, including the smart phones,risks have increased interest in biometrics generally, it remains an undeveloped and emerging market. Biometric based solutions compete with more traditional security methods including keys, cards, personal identification numbers and security personnel. In addition, our biometric technology has not yet gained, and may never gain, widespread market acceptance. Acceptancegeneral awareness of biometrics and our technology as an alternative to such traditional methods depends upon a number of factors including:
national or international events, such as the ongoing COVID-19 pandemic, which may affect the need for improved electronic security systems and data protection procedures, and fingerprint authentication has achieved widespread acceptance among manufacturers and users of smart phones, widespread acceptance of fingerprint authentication in smart cards, if it occurs, likely will depend on a wide range of variables and outcomes, including:
the performance and reliability of biometric solutions;
marketing efforts and publicity regarding these solutions;
costs involved in adopting and integratingthe potential exposure of personal biometric solutions;
competition from non-biometric technologies that provide more affordable, but less robust, authentication.
will fail to meet the customer’s technical, performance, or cost requirements, or that our product will be replaced by a competitor’s product or an alternative authentication solution based on different technologies. Although we may complete a customer’s product development process successfully, the customer subsequently may delay or terminate its product development efforts due to factors and considerations outside of our influence or control.
harmed.
We areconsidered estimates, characterized by uncertainty and subject to lengthy development periods and product acceptance cycles, which can result in development and engineering costs without any future revenue.
We provide fingerprint sensors and related software solutions that are incorporated by card manufacturers into the products they sell. They make the determination during their product development programs whether to incorporate our solutions or pursue other alternatives. This process requires us to make significant investments of time and resources in the design of fingerprint sensors and related software solutions for our products well before our customers introduce their products incorporating our solutions into the market, and before we can be sure that we will generate any significant sales to our customers or even recover our investment. During a customer’s entire product development process, we face the risk that our solutions will fail to meet our customer’s technical, performance, or cost requirements, or that our products will be replaced by competitive products or alternative technological solutions. Even if we complete our design process in a manner satisfactory to our customer, the customer may delay or terminate its product development efforts. The occurrence of any of these events could cause sales to not materialize, be deferred, or be cancelled, which could adversely affect our operating results.
position.sales comes from one or more largerevenue is associated with a limited number of customers, and the loss of whichsuch a customer, or a meaningful decline in revenue associated with such a customer, could harm our business, operating performance, and financial condition, and operating results.
financial position.
Our ability to growaffected and our business, operating performance, and financial position could be harmed.
financial position.
customer relationships.
Potentialoperational performance, and financial position.
ability to pursue opportunities in targeted market segments.
authentication solutions could be reduced.
our success in designing and introducing new fingerprint sensors and related software solutions, including those implementing new technologies;
the quality of ourprovide responsive, high-quality customer service and support;
the rate at which customers incorporate
respond to competitors’ product orand pricing moves, new product and technology introductions by our competitors;development, marketing initiatives, strategic partnering, and
currency fluctuations, which may cause a competitor’s products to be priced significantly lower than our products.
Moreover, additional
products.
In March 2020, the World Health Organization declared the outbreak of COVID-19 a pandemic. Our business and operations could be adversely affected by national and global epidemics, including the ongoing COVID-19 pandemic, impacting the markets and communities in which we operate.
and disrupt our operations. We haveonset of the pandemic, we implemented a flexible work-from-home policy for employees and are evaluating hybrid working models for our operations on a go-forward basis.restricted travel. We will continue to monitor federal, state, and localapplicable regulations and the recommendations of public health professionals as we determine which actions are in the best interests of us and our employeesemployees.
In addition, whilescheduling uncertainty, we have not experienced, to date, interruptions in our development activities or delays in meeting customer commitments that had a material influence on our results. The
position.
Unfavorablerange of exogenous risks. A sustained period of unfavorable conditions in the global economy or in the vertical marketsmarket segments we serve could limit our ability to grow our business and negatively affect our operating results.
General worldwide economic conditions have experienced significant instability due to the global economic uncertainty and financial market conditions caused by the COVID-19 pandemic. These conditions make it extremely difficult for customers and us to accurately forecast and plan future business activities and could cause customers to reduce or delay their spending. At this time, the potential impact on customer spend from the COVID-19 pandemic is difficult to predict and, therefore, it is not possible to fully determine the impact on our future results. Historically, economic downturns have resulted in overall reductions in spending. If macroeconomic conditions deteriorate or are characterized by uncertainty or volatility, customers may curtail or freeze spending in general and for biometric products such as ours specifically, whichtarget could have an adverse impact on our business, operational performance, financial condition, and operating results.
We target generating revenue from customers in the payment cards and access control verticals. While these verticals were not affected as severely by weak economic conditions caused by COVID-19 as the retail, hospitality, and entertainment industries, we cannot assure these verticals will not suffer more severe losses in the future as they are in turn impacted by consumer demand and the performance of the retail, hospitality and entertainment industries. Furthermore, we cannot predict the timing, strength, or duration of any economic slowdown or recovery. In addition, even if the overall economy is robust, we cannot assure the market for services such as ours will experience growth or that we will experience growth. Additionally, the increased use of digital payments and virtual credit cards by consumers could pose an obstacle to the growth of our business.
position. War, terrorism, other acts of violence, or natural or manmade disasters, could have an immediate and sustained impact on business and investor confidence, leading to reduced economic activities, potentially harming our business, operational performance, and financial position.
Our business may be adversely affected by instability, disruption or destructionposition.
Such events may cause customers to suspend or delay their decisions on using our products and services, make it difficult or impossible to access somethe capital markets likely would decline, independent of our inventory, and give rise to sudden significant changesperformance or disclosed outlook, potentially resulting in regional and global economic conditions and cycles that could interfere with purchases of goods or services. These events also pose significant risks tolower quoted market prices for our personnel and to physical facilities, which could materially adversely affect our financial results.
We rely on the performance of highly skilled personnel, including senior management and our engineering, professional services, sales and technology professionals; if we are unable to retain or motivate key personnel or hire, retain and motivate qualified personnel, our business would be harmed.
We believe our success has depended, and continues to depend, on the efforts and talents of our senior management team and our highly skilled team members, including our sales personnel, engineering and support personnel. From time to time, there may be changes in our senior management team resulting from the termination or departure of our executive officers and key employees. Our senior management and key employees are employed on an at-will basis, which means that they could terminate their employment with us at any time. Many of our executive officers and key employees receive equity compensation as a portion of their overall compensation package. A substantial decrease in the market price of our ordinary shares would effectively reduce the compensation ofsecurities. As such, persons and could increase the risk that they depart from our company. The loss of any of our senior management or key employees could adversely affect our ability to build onaccess additional capital through the efforts they have undertaken and to execute our business plan, and we may notcapital markets could be able to find adequate replacements. We cannot ensure that we will be able to retain the services of any members of our senior managementdiminished or other key employees.
significantly delayed.
Because many rapidly growing markets for our products are international, our business is susceptible to risks associated with international operations.
Biometric products including ours
| 1 | We currently do not have personnel or customers in Russia, Ukraine, or the neighboring countries. |
sales,
different, complex and changing laws governing intellectual property rights, which in certain countries sometimes afford reduced protection of intellectual property rights;
any
changes to economic, social,
challenges
the burdensany of complyingour three targeted markets, with a variety of various country laws in which we operate;
difficulties in staffing and managing international operations; and
rapid changes in government, economic and political policies and conditions, political or civil unrest or instability, terrorism or pandemics (including but not limited to the COVID-19 pandemic) and other similar outbreaks or events.
We cannot guarantee that any potential future expansion efforts that we may undertake will be successful. If we invest substantial time and resources to expand our international operations and are unable to do so successfully and in a timely manner,potentially adverse influence on our business, operational performance, and operating results will suffer.
financial position.
We priceinfluenced by potentially large gains or losses experienced in the translation of amounts denominated in foreign currencies.
financial position.
difficulties in integrating operations, technologies, services and personnel;
the diversion of financial and management resources from existing operations;
the risk of entering new markets;
the potential loss of existing customers following an acquisition;
the potential loss of key employees and the associated risk of competitive efforts from such departed personnel; and
the inability to generate sufficient revenue to offset acquisition or investment costs.
As a result, ifIf we fail to properly evaluate and successfully execute any acquisitions or investments,strategic transaction, our business, operational performance, and prospectsfinancial position may be seriously harmed.
Regulations
position.
come into effect.
noncompliance.
Because our productsposition could be usedmaterially adversely affected.
Personalbusiness operations; reputational harm; loss of revenue or profits; loss of customers or sales; and other adverse business consequences.
of these laws, rules and regulations and their application to our products and professional services in Norway, the United States and other foreign jurisdictions is ongoing and cannot be fully determined at this time.
In the United States, these include rules and regulations promulgated under the authority of the Federal Trade Commission, the Electronic Communications Privacy Act, Computer Fraud and Abuse Act, the Health Insurance Portability and Accountability Act of 1996, the Gramm Leach Bliley Act, the California Consumer Privacy Act, or the CCPA, and other state laws relating to privacy and data security. The CCPA, which became effective on January 1, 2020, drastically changes the ability for individuals to control the use of their personal data. It contains detailed requirements regarding collecting and processing personal information, imposes certain limitations on how such information may be used, and provides rights to consumers that have never before been available in the past, all of which may be imposed on us by our customers and/or end users. This could increase our costs of doing business. Some observers have noted that the CCPA could mark the beginning of a trend toward more stringent privacy legislation in the United States, which could increase our potential liability and adversely affect our business.
Virtually every jurisdiction in which we operate has established its own data security and privacy legal framework with which we or our customers must comply, including but not limited to the EU. The EU’s data protection landscape is currently unstable, resulting in possible significant operational costs for internal compliance and risk to our business. The EU has adopted the GDPR, which went into effect in May 2018 and contains numerous requirements and changes from previously existing EU law, including more robust obligations on data processors and heavier documentation requirements for data protection compliance programs by companies. Among other requirements, the GDPR regulates transfers of personal data, subject toincluding biometric information, and notification procedures in the GDPR to third countries that have not been found to provide adequate protection toevent of a breach of data security or other unintentional disclosure of such personal data, includinginformation. For example, the European Union’s General Data Protection Regulation (“EU GDPR”), the United States. TheKingdom’s GDPR also introduced numerous privacy-related changes(“UK GDPR”), and China’s Personal Information Protection Law (“PIPL”) impose strict requirements for companies operating inprocessing personal data. For example, under the EU including greater control forGDPR, government regulators may impose temporary or definitive bans on data subjects (including, for example, the “right to be forgotten”), increased data portability for EU consumers, data breach notification requirements and increased fines. In particular, under the GDPR,processing, as well as fines of up to 20 million euros or up to 4% of the annual global revenue, of the noncompliant company, whichever is greater, couldgreater. Further, individuals may initiate litigation related to processing of their personal data. We also target customers in Asia and have an office in China, and, as such, may be imposed for violationssubject to new and emerging data privacy regimes in Asia, including China’s PIPL, Japan’s Act on the Protection of certain of the GDPR’s requirements. Such penalties are in addition to any civil litigation claims byPersonal Information, and Singapore’s Personal Data Protection Act.
In additionlegal frameworks specifically applicable to the GDPR,collection and storage of biometric information.
uncertainties.
Furthermore, the costs of compliance with, and other burdens imposed by, the laws, regulations, and policies that are applicable to the businesses of our customers may limit the use and adoption of, and reduce the overall demand for, our products. Privacy concerns, whether validdestroy or not valid, may inhibit market adoptionuse personal data. Any of our products and software solutions particularly in certain industries and foreign countries.
We face risks associated with security breaches, cyber-attacks and hacking.
We face risks associated with security breaches, cyber-attacks and hacking of our computer systems or those of our third-party representatives, vendors, and service providers. Although we have implemented security procedures and controls to address these threats, our systems may still be vulnerable to data theft, computer viruses, programming errors, attacks by third parties, or similar disruptive problems. If our systems, or systems owned by third parties affiliated with our company, were breached or attacked, the proprietary and confidential information of our company, our employees and our customers could be disclosed and we may be required to incur substantial costs and liabilities, including the following: liability for stolen assets or information; fines imposed on us by governmental authorities for failure to comply with privacy laws or for disclosure of any personally identifiable information as a part of such attack; costs of repairing damage to our systems; lost revenue and income resulting from any system downtime caused by such breach or attack; loss of competitive advantage if our proprietary information is obtained by competitors as a result of such breach or attack; increased costs of cyber security protection; costs of incentives we may be required to offer to our customers or business partners to retain their business; damage to our reputation; and expenses to rectify the consequences of the security breach or cyber-attack. In addition, any compromise of security from a security breach or cyber-attack could deter customers or business partners from entering into transactions that involve providing confidential information to us. As a result, any compromise to the security of our systemsevents could have a material adverse effect on our reputation, business, reputation,or financial condition, and operating results.
Any failure to protect our proprietary technology and intellectual property rights could substantially harmposition, including but not limited to: loss of customers; interruptions in our business and operating results.
We protect our proprietary technology and confidential information through the use of patents, trade secrets, trademarks, confidentiality agreements and other contractual provisions. Theoperations; inability to process of seeking patent protection is lengthy and expensive. Further, there can be no assurance that even if a patent is issued, that it will not be challenged, invalidatedpersonal data or circumvented, or that the rights granted under the patents will provide us with meaningful protection or any commercial advantage.
Our intellectual property rights cover individual inventions and complete biometric systems ranging from measurement principles, algorithms, sensor design and system solutions. We have filed applications to protect our intellectual property rights in a wide range of countries including the United States, the United Kingdom, Norway and several other countries. As of December 31, 2020, we have been granted 127 patents and have 97 pending patent applications. The wordmark ‘IDEX’ and the IDEX logo are registered trademarks of IDEX Biometrics ASA and are owned by IDEX.
There can be no assurance that we will obtain registrations of principal or other trademarks in key markets. Failure to obtain registrations could compromise our ability to fully protect our trademarks and brands, and could increase the risk of challenge from third parties to our use of our trademarks and brands. Effective intellectual property protection may be unavailable or limited in some foreign countries in which we operate. For example, the validity, enforceability and scope of protection of intellectual property in China, where we operate are still evolving and historically, have not protected and may not protect in the future, intellectual property rights to the same extent as laws developed in certain other countries.
We rely upon written agreements with our customers, suppliers, manufacturers, and other recipients of our technologies and products. However, such confidentiality and non-disclosure agreements may not be adequate to protect our proprietary technologies or may be breached by other parties. Additionally, our customers, suppliers, manufacturers, and other recipients of our technologies and products may seek to use our technologies and products without appropriate limitations. Unauthorized parties may attempt to copy or otherwise use aspects of our technologies and products that we regard as proprietary. Other companies, including our competitors, may independently develop technologies that are similar or superior to our technologies, duplicate our technologies, or design around our patents. If our intellectual property protection is insufficient to protect our intellectual property rights, we could face increased competition in the markets for our technologies and products.
We may pursue, and from time to time defend litigation to enforce our intellectual property rights, to protect our trade secrets, and to determine the validity and scope of the proprietary rights of others. These litigations, whether successful or unsuccessful, could result in substantial costs and diversion of resources, which could have a material adverse effect on our business, financial condition, and operating results.
Any claims that our technologies infringe the intellectual property rights of third parties could result in significant costs and have a material adverse effect on our business.
We cannot be certain that our technologies and products do not and will not infringe issued patents or other third party proprietary rights. Any claims, with or without merit, could result in significant litigation costs and diversion of resources, including the attention of management, and could require us to enter into royalty or licensing agreements, any of which could have a material adverse effect on our business. There can be no assurance that such licenses could be obtained on commercially reasonable terms, if at all, or that the terms of any offered licenses would be acceptable to us. We may also have to pay substantial damages to third parties, or indemnify customers or licensees for damages they suffer if the products they purchase from us or the technology they license from us violates any third party intellectual property rights. An adverse determination in a judicial or administrative proceeding, or a failure to obtain necessary licenses to use such third-party technology could prevent us from manufacturing, using, or selling certain of our products, and there is no guarantee that we will be ablejurisdictions; limited ability to develop or acquire alternate non-infringing technology.
In addition, we may license certain technology used incommercialize our products; expenditure of time and for our products from third parties. These third-party licenses may be granted with restrictions, and there can be no assurances that such third-party technology will be availableresources to us on commercially acceptable terms.
If we are unable to license technology for our products from third parties on commercially acceptable terms,defend any claim or if any third party initiates litigation against us for alleged infringement of their proprietary rights, we may not be able to sell certaininquiry; adverse publicity; or revision or restructuring of our products and we could incur significant costs in defending against litigation or attempting to develop or acquire alternate non-infringing products, which would have an adverse effect on our operating results.
Our patents may not provide us with competitive advantages.
We hold numerous patents in the United States and in other countries, which cover multiple aspects of our technology. There can be no assurance that we will continue to develop proprietary products or technologies that are patentable, that any issued patent will provide us with any competitive advantages or will not be challenged
by third parties, or that patents of others will not hinder our competitive advantage. Although certain of our technologies are patented, there are other organizations that offer products with comparable functionality that employ different technological solutions and compete with us for market share.
andin which we could be obligated to pay additional taxestaxes.
As a multinational organization,Norway and subsidiaries domiciled in the United Kingdom, the United States, and China, we maycan be subject to taxation on sales, profits, and assets, as well as payments of social security obligations, in several jurisdictions around the world with increasinglyworldwide jurisdictions. Tax laws are complex, tax lawsdifficult to interpret accurately, and subject to change. Accordingly, the amount of taxes we pay in these jurisdictions could increase substantially as a result of changes in the applicable tax principles,laws and regulations, including increased tax rates new tax laws or revised interpretations of existing tax laws and precedents, which could have a material adverse effect on our liquiditybusiness, operating performance, and operating results.financial position. Moreover, we generally conduct our international operations through wholly-owned subsidiaries and report our taxable income in various jurisdictions worldwide based upon our business operations in those jurisdictions. Our intercompany relationships are and will continue to be subject to complex transfer pricing regulations administered by taxing authorities in various jurisdictions.
Additionally, tax authorities in the jurisdictions in which we operated could review our prior and future tax returns and impose additional tax, interest, and penalties.
The relevant taxing authoritiesdeferred tax assets against taxable income in these jurisdictions could review ourany country in which he have tax returns and impose additional tax, interest and penalties, and the authorities could claim that various withholding requirements apply to us or our subsidiaries or assert that benefits of tax treaties are not available to us or our subsidiaries, any of which could have a material impact on us and the results of our operations.
loss carryforwards.
position.
rates for the periods.
position.
interpreted broadly and prohibit our companycompanies from authorizing, offering, or providing, directly or indirectly, improper payments or benefits to recipients in the public or private sector. We use third-party law firms, accountants, and other representatives for regulatory compliance, sales, and other purposes in different countries. We can be held liable for the corrupt or other illegal activities of these third-party representatives, our employees, contractors, and other agents, even ifregardless of whether we do not explicitly authorizeauthorized such activities. In addition, although we have implemented policies and procedures to ensure compliance with anti-corruption laws, there can be no assurance that all of our employees, representatives, contractors, or agents will comply with these laws at all times.
position.
civil liabilities for violation of those controls.
privileges for us and fines or imprisonment for certain employees.
We face product liability or other liability risks that could result in large claims against us.
We have risk of exposure to product liability and other liability claims resulting from the useshareholder-elected members of our products, especiallyBoard to the extent customers may depend on our products in public safety situations that may involve physical harm or even death to individuals, as well as exposure to potential loss or damage to property. Despite quality control systemsbe independent of material business relationships with us and inspection, there remains an ever-present risk of an accident resulting from a faulty manufacture or maintenance of products, or an act of an agent outsideany of our orsignificant shareholders. Also, our business partners’ control. Even ifBoard may not include members of our products perform properly, we may become subjectexecutive management. Subject to claims and costly litigation due to the catastrophic nature of the potential injury and loss. A product liability claim, or other legal claims based on
theories including personal injury or wrongful death, made against us could adversely affect operations and financial condition. Although wethese home country requirements, our Board may have insurance to cover product liability claims, the amountmembers who are not considered independent, and holders of coverageour equity securities may not be sufficient.
afforded the same protections otherwise required under Nasdaq corporate governance listing standards applicable to domestic issuers. See “Item 6. Section C. Board Practices—Corporate Governance” for the exemptions to the Nasdaq corporate governance rules applicable to foreign private issuers.
| (a) | a majority of our voting securities must be either directly or indirectly owned of record by non-residents of the United States, or |
| (b) | (i) a majority of our Executive Officers or Directors 2 cannot be U.S. citizens or residents, |
| (a) | the last day of the fiscal year in which we have total annual gross revenue of $1.07 billion or more; |
| (b) | December 31, 2026; |
| (c) | the date on which we have issued more than $1.0 billion in nonconvertible debt over the prior three years; and |
| (d) | the date on which we are considered a “large accelerated filer” under SEC rules. |
| 2 | For a list of our Executive Officers and Directors, see “Item 6. Section A. Directors and senior management.” |
While our ordinary shares
Thein turn could cause the trading price or trading volume of our equity securities to decline.
substantial loss.
actual or anticipated fluctuations in our financial condition and operating results;
variance in ourwhich we are active, including revisions to investment recommendations, estimates of future financial performance from expectations of securities analysts;
changes in the prices of our products and software solutions;
changes in our projected operating and financial results;
changes in laws or regulations applicable to our products and software solutions;
announcements byfor us or our competitors, estimates of significant business developments, acquisitionsgrowth rates for market segments, and other relevant matters, including the launch or new offerings;
our involvement in any litigation;
our saletermination of our ordinary sharesresearch coverage;
changes in senior managementintent of influencing or key personnel;
manipulating the trading volumequoted prices of our ordinary shares;
publication
changes inInternet investment forums, and other unreliable outlets. While we communicate regularly with investors, securities analysts, the anticipated future sizeinvestment press, and growth ratetrade publications, employ a dedicated investor relations professional supporting the investor communications efforts of our market;executives, and
general economic, regulatory maintain an active investor relations program coordinated by a third-party professional services firm, we cannot offer assurances regarding our ability, through our communications and market conditions.
Theseinvestor outreach, to offset the negative influence of rumors, speculative statements, and other marketunreliable information, which may be associated with those engaged in speculative trading activities.
and biometric companies
Some companies thatinvestor. Under current Norwegian law, a public limited liability company may only distribute dividends to the extent it will have experienced volatility innet assets covering the trading price of their sharescompany’s share capital and other restricted equity after the dividend distribution has been made. We have beennever declared or paid a dividend on our Ordinary Shares, and we intend to retain our future net earnings, if any, to fund the subject of securities class action litigation. Any lawsuit to which we are a party, with or without merit, may result in an unfavorable judgment. We also may decide to settle lawsuits on unfavorable terms.
Any such negative outcome could result in payments of substantial damages or fines, damage to our reputation or adverse changes to our business practices. Defending against litigation is costly and time-consuming, and could divert our management’s attention and our resources. Furthermore, during the course of litigation, there could be negative public announcements of the results of hearings, motions or other interim proceedings or developments, which could have a negative effect on the market priceexpansion of our ordinary shares or ADSs.
The dual-listing of ordinary shares and ADSs may adversely affect the liquidity and value of our ordinary shares and ADSs.
Our ordinary shares trade on Oslo Børs and we list our ADSs on Nasdaq. We cannot predict the effect of this dual listing on the value of our ADSs and ordinary shares. However, the dual listing of ADSs and ordinary shares may dilute the liquidity of these securities in one or both markets and may adversely affect the development of an active trading market for our ADSs. The price of our ADSs could also be adversely affected by trading in ordinary shares on Oslo Børs.
We incur increased costs as a result of operating as a company that is both publicly listed on Oslo Børs in the Kingdom of Norway and in the United States, and our senior management are required to devote substantial time to new compliance initiatives and corporate governance practices.
As a company publicly listed in the United States, and particularly after we no longer qualify as an “emerging growth company”, or EGC, we incur significant legal, accounting and other expenses that we did not incur previously. The Sarbanes-Oxley Act of 2002, the Dodd-Frank Wall Street Reform and Consumer Protection Act, the listing requirements of Nasdaq and other applicable securities rules and regulations impose various requirements on non-U.S. reporting public companies, including the establishment and maintenance of effective disclosure and financial controls and corporate governance practices. Our senior management and other personnel devote a substantial amount of time to these compliance initiatives. Moreover, these rules and regulations have increased our legal and financial compliance costs and have made some activities more time-consuming and costly. For example, we expect that these rules and regulations may make it more difficult and more expensive for us to obtain director and officer liability insurance, which in turn could make it more difficult for us to attract and retain qualified senior management personnel or members for our board of directors.
Pursuant to Section 404 of the Sarbanes-Oxley Act of 2002, or Section 404, we are required to furnish a report by our senior management on our internal control over financial reporting beginning with our second annual report to be filed with the SEC. However, while we remain an EGC we are not be required to include an attestation report on internal control over financial reporting issued by our independent registered public accounting firm. To prepare for eventual compliance with Section 404, once we no longer qualify as an EGC, we are engaged in a process to document and evaluate our internal control over financial reporting, which is both costly and challenging. In this regard, we need to continue to dedicate internal resources, potentially engage outside consultants, adopt a detailed work plan to assess and document the adequacy of internal control over financial reporting, continue steps to improve control processes as appropriate, validate through testing that controls are functioning as documented, and implement a continuous reporting and improvement process for internal control over financial reporting. Despite our efforts, there is a risk that we will not be able to conclude, within the prescribed timeframe or at all, that our internal control over financial reporting is effective as required by Section 404. If we identify one or more material weaknesses, it could result in an adverse reaction in the financial markets due to a loss of confidence in the reliability of our financial statements.
Further, being a U.S. listed company and a Norwegian public company with ordinary shares admitted to trading on Oslo Børs impacts the disclosure of information and requires compliance with two sets of applicable rules. From time to time, this may result in uncertainty regarding compliance matters and result in higher costs necessitated by legal analysis of dual legal regimes, ongoing revisions to disclosure and adherence to heightened governance practices.business. As a result, of the enhanced disclosure requirements of the U.S. securities laws, business and financial information that we report is broadly disseminated and highly visible to investors, which we believe may increase the likelihood of threatened or actual litigation, including by competitors and other third parties, which could, evencapital appreciation, if unsuccessful, divert financial resources and the attention of our management from our operations.
We are an “emerging growth company” and as a result of the reduced disclosure and governance requirements applicable to emerging growth companies, the ordinary shares or ADSs may be less attractive to investors.
We are an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. For as long as we continue toany, will be an emerging growth company, we may take advantageinvestor’s sole source of exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies, including not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, and, to the extent we no longer qualify as a foreign private issuer, exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. We may take advantage of these exemptions until we are no longer an emerging growth company. We will remain an emerging growth company until the earliest of (1) the last day of the fiscal year in which we have total annual gross revenue of $1.07 billion or more; (2) December 31, 2026; (3) the date on which we have issued more than $1.0 billion in nonconvertible debt during the previous three years; and (4) the date on which we are deemed to be a large accelerated filer under the rules of the SEC. We cannot predict if investors will find the ordinary shares or ADSs less attractive because we may rely on these exemptions. If some investors find the ordinary shares or ADSs less attractive as a result, there may be a less active trading marketreturn for the ordinary shares or ADSs and the price of the ordinary shares or ADSs may be more volatile.
We are obligated to develop and maintain proper and effective internal controls over financial reporting and any failure to maintain the adequacy of these internal controls may adversely affect investor confidence in our company and, as a result, the value of our ordinary shares.
We will be required, pursuant to Section 404, to furnish a report by management on, among other things, the effectiveness of our internal control over financial reporting for the year ending December 31, 2021. This assessment will need to include disclosure of any material weaknesses identified by our management in our internal control over financial reporting. Our independent registered public accounting firm is not required to attest to the effectiveness of our internal control over financial reporting until our first annual report required to be filed with the SEC following the date we are no longer an “emerging growth company,” as defined in the Securities Act of 1933.
If we identify future material weaknesses in our internal control over financial reporting or fail to meet our obligations as a public company, including the requirements of Section 404, we may be unable to accurately report our financial results, or report them within the timeframes required by law or stock exchange regulations, and we could lose investor confidence in the accuracy and completeness of our financial reports, which would cause the price of our ordinary shares to decline. Under Section 404, we are required to evaluate and determine the effectiveness of our internal control over financial reporting and provide a management report as to internal control over financial reporting. Failure to maintain effective internal control over financial reporting also could potentially subject us to sanctions or investigations by the SEC, Nasdaq, or other regulatory authorities, or shareholder lawsuits, which could require additional financial and management resources. We cannot assure you that additional material weaknesses will not occur in the future, which could materially adversely affect our business, operating results, and financial condition.
Ordinary Shares.dollarDollar and the Norwegian kroneKrone may increase the risk of holding ADSs and ordinary shares.
fluctuate.
intellectual property, future revenue streams, or other sources of value.
To the extent that we raise additional capital through the sale of equity or convertible debt securities, your ownership interest will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect your rights as a shareholder. securities.
corporation domiciled in the United States.
Investors should be aware thata corporation domiciled in the United States.
United States:
company domiciled in the United States and chartered under the corporate laws of a particular state.
rights, must withdraw underlying Ordinary Shares from the Depositary and temporarily register ownership of those withdrawn Ordinary Shares with the appropriate Norwegian authority.
temporarily re-register the underlying ordinary shares on our share register in Norway.time available. We will make all commercially reasonable efforts to cause the depositaryDepositary to extend voting rights to youADS holders, as described, in a timely manner, but we
cannot assure you that youADS holders they will receive voting materials in time to instruct the depositaryDepositary to vote, and itvote. It is possible that you, or persons who hold their ADSs through securities brokers dealers or other third parties,third-parties will not have the opportunity to exercise a right to vote. Furthermore, the depositaryDepositary will not be liable for any failure to carry out any instructions to vote, for the manner in which any vote is cast, or for the effect of any such vote. As a result, youan ADS holder may not be able to exercise yourhis or her right to vote and you may lack recourse if yourhis or her ADSs are not voted as you request. In addition,requested.
this Annual Report and is archived on the SEC website.
Holders of our Ordinary Shares are not subject to many of these charges.
Concentration of ownership of our ordinary shares (including ordinary shares represented by ADSs) among our existing senior management, directors and principal shareholders may prevent new investors from influencing significant corporate decisions and matters submitted to shareholders for approval.
Members of our senior management, directors and beneficial owners of 5% or more of our ordinary shares, in the aggregate, beneficially own approximately 43.7% of our issued and outstanding ordinary shares, based on the number of ordinary shares issued and outstanding as of December 31, 2020. As a result, depending on the level of attendance at general meetings of our shareholders, these persons, acting together, would be able to significantly influence all matters requiring shareholder approval, including the election, re-election and removal of directors, any merger, scheme of arrangement, or sale of all or substantially all of our assets, or other significant corporate transactions, and amendments to our articles of association. In addition, these persons, acting together, may have the ability to control the management and affairs of our company. Accordingly, this concentration of ownership may harm the market price of our ADSs by:
delaying, deferring, or preventing a change in control;
entrenching our management and/or the board of directors;
impeding a merger, scheme of arrangement, takeover, or other business combination involving us; or
discouraging a potential acquirer from making a tender offer or otherwise attempting to obtain control of us.
In addition, some of these persons or entities may have interests different than yours. For example, because many of these shareholders have held their shares for a longer period, they may be more interested in selling our company to an acquirer than other investors, or they may want us to pursue strategies that deviate from the interests of other shareholders.
YouADS holders may not receive distributions on our ordinary shares represented bywe may make to holders of Ordinary Shares underlying the ADSs or any value for themheld, if the Depositary determines it is illegal or impractical to make them availablesuch distributions to holders of ADSs.
distribution available to holders of ADSs.impractical. We have no obligation to register under U.S. securities lawswith the SEC any offering of ADSs, ordinary sharesOrdinary Shares, rights, or other securities received through such distributions. We alsoThe Depositary may determine a distribution made to the holders of Ordinary Shares may be unlawful or impractical if made to ADS holders, and we have no obligation to take any other action to permit such distribution onto ADS holders. As such, an ADS holder is exposed to the ADSs, ordinary shares, rightsrisk he or anything else to holders of the ADSs. This means that youshe may not receive the distributions we make on our ordinary sharesOrdinary Shares, or any value from themsuch distributions, if it is unlawful or impractical to make them available to you.an ADS holder. These restrictions may have an adverse effect on the value of your ADSs.
equity securities.
Furthermore,89,777,824 Ordinary Shares in a private placement.
Because we do not anticipate paying any cash dividends on our ordinary shares (including ordinary shares represented by ADSs) in the foreseeable future, capital appreciation, if any, will be your sole source of gains and you may never receive a return on your investment.
You should not rely on an investment in our ADSs to provide dividend income. Under current Norwegian law, a public limited liability company may only distribute dividends to the extent it will have net assets covering the company’s share capital and other restricted equity after the distribution has been made. In the amount that may be distributed, a deduction shall be made for (i) the aggregate nominal value of treasury shares held by the company, (ii) certain credits and collateral as defined by law and (iii) other dispositions after the balance day which pursuant to law shall lie within the scope of the funds that the company may use to distribute dividend. Even if all other requirements are fulfilled, the company may only distribute dividend to the extent that it maintains a sound equity and liquidity following the distribution. We have never declared or paid a dividend on our ordinary shares in the past, and we currently intend to retain our future earnings, if any, to fund the development and growth of our business. As a result, capital appreciation, if any, on our ADSs will be your sole source of gains for the foreseeable future. Investors seeking cash dividends should not purchase our ADSs.
taxation in the United States.
income, or (2) 50% or more of the of the gross value our assets (determined on the basis of a weighted quarterly average) consists of assets that produce, or are held for the production of, passive income (including cash). For purposes of these tests, passive income includes dividends, interest, gains from the sale or exchange of investment property, and certain rents and royalties. In addition, for purposes of the above calculations, a non-U.S.foreign domiciled corporation that directly or indirectly owns at least 25%, by value, of the shares of another corporation is treated as if it held its proportionate share of thethat corporation’s assets and received, directly itsfrom that corporation, a proportionate share of the income of such other corporation. its income.
ChangesTaxation.”
equity securities.
international tax treaties, and such an assertion, if successful, could increase our expected tax liability in one or more jurisdictions.
subject to an unpredictable outcome.
The
Norwegian exchange. The STA provides a framework within which takeovers of certain companies organized in Norway are regulated and conducted. The provisions of the STA may materially differ from the provisions of other such frameworks (e.g., the takeover provisions of the Delaware General Corporate Law).
Any
Claims of U.S. civil
We qualify as a foreign private issuer and, as a result, we will not be subject to U.S. proxy rules and will be subject to Exchange Act reporting obligations that, to some extent, are more lenient and less frequent than thosea U.S. domestic public company.We report under the Securities Exchange Act of 1934, as amended, or the Exchange Act, as a non-U.S. company with foreign private issuer status. Because we qualify as a foreign private issuer under the Exchange Act, we are exempt from certain provisions of the Exchange Act that are applicable to U.S. domestic public companies, including (i) the sections of the Exchange Act regulating the solicitation of proxies, consents or authorizations in respect of a security registered under the Exchange Act; (ii) the sections of the Exchange Act requiring insiders to file public reports of their share ownership and trading activities and liability for insiders who profit from trades made in a short period of time; and (iii) the rules under the Exchange Act requiring the filing with the SEC of quarterly reports on Form 10-Q containing unaudited financial and other specified information, or current reports on Form 8-K upon the occurrence of specified significant events. In addition, foreign private issuers are not required to file their annual report on Form 20-F until 120 days after the end of each fiscal year, while U.S. domestic issuers that are accelerated filers are required to file their annual report on Form 10-K within 75 days after the end of each fiscal year. Foreign private issuers also are exempt from Regulation Fair Disclosure, aimed at preventing issuers from making selective disclosures of material information. As a result of the above, you may not have the same protections afforded to shareholders of companies that are not foreign private issuers.As a foreign private issuer, we are permitted to adopt certain home country practices in relation to corporate governance matters that differ significantly from Nasdaq corporate governance listing standards. These practices may afford less protection to shareholders than they would enjoy if we complied fully with Nasdaq corporate governance listing standards.As a foreign private issuer listed on Nasdaq, we are subject to corporate governance listing standards. However, Nasdaq rules permit a foreign private issuer like us to follow the corporate governance practices of its home country in lieu of certain Nasdaq corporate governance listing standards. Certain corporate governance practices in the Kingdom of Norway, which is our home country, may differ significantly from Nasdaq corporate governance listing standards. For example, the independence requirements for our board of directors are less stringent than the requirements that would have followed under the Nasdaq rules had we not been a foreign private issuer. In Norway, we are required to follow, and comply with, the Oslo Børs Issuer Rules published by Oslo Børs ASA and have adopted the Corporate Governance Code published by the Norwegian Corporate Governance Board (NUES). It is a requirement in the Oslo Børs Issuer Rules that at least two of the shareholder elected members of the board of directors shall be independent of the company’s executive management, material business contacts and the company’s larger shareholders. Further, our board of directors shall not include representatives of the company’s executive management. The Corporate Governance Code states that the majority of the shareholder-elected members of the board should be independent of the company’s executive personnel and material business contacts and that at least two of the shareholder-elected board members should be independent of the company’s main shareholder(s). Subject to these requirements, our board of directors may contain non-independent directors. Therefore, our shareholders may be afforded less protection than they otherwise would have under Nasdaq corporate governance listing standards applicable to U.S. domestic issuers. See “Item 6. Directors, Senior Management and Employees—C. Board Practices—Corporate Governance Practices” for the exemptions to the Nasdaq corporate governance rules applicable to foreign private issuers.We may lose our foreign private issuer status, which would then require us to comply with the Exchange Act’s domestic reporting regime and cause us to incur significant legal, accounting and other expenses.As a foreign private issuer, we are not required to comply with all of the periodic disclosure and current reporting requirements of the Exchange Act applicable to U.S. domestic issuers. Although we do not expect this to occur in the near term, we may no longer qualify a foreign private issuer as early as June 30, 2021, which would require us to comply with all of the periodic disclosure and current reporting requirements of the Exchange Act applicable to U.S. domestic issuers as of January 1, 2022. In order to maintain our current status asa foreign private issuer, either (a) a majority of our voting securities must be either directly or indirectly owned of record by non-residents of the United States or (b)(i) a majority of our executive officers or directors cannot be U.S. citizens or residents, (ii) more than 50% of our assets must be located outside the United States and (iii) our business must be administered principally outside the United States. If we lose our status as a foreign private issuer, we would be required to comply with the Exchange Act reporting and other requirements applicable to U.S. domestic issuers, which are more detailed and extensive than the requirements for foreign private issuers. We may also be required to make changes in our corporate governance practices in accordance with various SEC and Nasdaq rules. The regulatory and compliance costs to us under U.S. securities laws if we are required to comply with the reporting requirements applicable to a U.S. domestic issuer may be significantly higher than the cost we would incur as a foreign private issuer. As a result, we expect that a loss of foreign private issuer status would increase our legal and financial compliance costs and would make some activities highly time consuming and costly. We also expect that if we were required to comply with the rules and regulations applicable to U.S. domestic issuers, it would make it more difficult and expensive for us to obtain director and officer liability insurance, and we may be required to accept reduced coverage or incur substantially higher costs to obtain coverage. These rules and regulations could also make it more difficult for us to attract and retain qualified members of our board of directors.If equity research analysts do not publish research or reports, or publish unfavorable research or reports, about us, our business or our market, the price and trading volume of our ADSs could decline.The trading market for our ADSs is influenced by the research and reports that equity research analysts publish about us and our business. Equity research analysts may elect not to provide research coverage of our ADSs, and such lack of research coverage may adversely affect the market price of our ADSs. We do not have any control over the analysts, or the content and opinions included in their reports. The price of our ADSs could decline if one or more equity research analysts downgrade our ADSs or issue other unfavorable commentary or research about us. If one or more equity research analysts ceases coverage of us or fails to publish reports on us regularly, demand for our ADSs could decrease, which in turn could cause the trading price or trading volume of our ADSs to decline.You may be subject to limitations on transfers of your ADSs or the right to surrender ADSs for the purpose of withdrawal of ordinary shares.Your ADSs are transferable on the books of the depositary. However, the depositary may close its transfer books at any time or from time to time when deemed necessary or advisable by it in good faith in connection with the performance of its duties or at our reasonable written request, subject in all cases to compliance with applicable U.S. securities laws. In addition, the depositary may refuse to deliver, transfer or register transfers of ADSs generally when our books or the books of the depositary are closed, or at any time if we or the depositary deems it advisable to do so because of any requirement of law or of any government or governmental body, or under any provision of the deposit agreement, or for any other reason, subject to certain rights to cancel ADSs and withdraw the underlying ordinary shares. Temporary delays in the cancellation of ADSs and withdrawal of the underlying ordinary shares may arise because the depositary has closed its transfer books or we have closed our transfer books, the transfer of ordinary shares is blocked to permit voting at a shareholders’ meeting, or because we are paying a dividend on our ordinary shares or similar corporate actions.In addition, holders of ADSs may not be able to cancel their ADSs and withdraw the underlying ordinary shares when they owe money for fees, taxes and similar charges and when it is necessary to prohibit withdrawals in order to comply with any laws or governmental regulations that apply to the ADSs or to the withdrawal of our ordinary shares or other deposited securities.ADS holders may not be entitled to a jury trial with respect to claims arising under the deposit agreement,Deposit Agreement, which could result in less favorable results to the plaintiff(s)a plaintiff in any such action.
In addition, New York courts will not enforce a jury trial waiver provision in order to bar a viable setoff or counterclaimDeposit Agreement.
If any owner or holder of ADSs brings a claim against us or the depositary in connection with matters arising under the deposit agreement or the ADSs, including claims under U.S. federal securities laws, such owner orADS holder may not be entitled to a jury trial with respect to suchhis or her claims which may havearising under the effect of limiting and discouragingDeposit Agreement against us or the Depositary, lawsuits against us or the depositary.Depositary may be discouraged or limited. If a lawsuit is brought against us or the depositaryDepositary under the deposit agreement, itDeposit Agreement, the proceedings may be heard only by a judge or justice of the applicable trial court, which would be conducted according to different civil procedures than a jury trial and may result in different resultsoutcomes than a trial by jury would have had,trial, including results that could be less favorable to the plaintiff(s) in any such action, depending on, among other things, the nature of the claims, the judge or justice hearing such claims, and the venue of the hearing.
Item 4. | Information on the Company. |
| 3 | The International Standards Organization (“ISO”), an independent standard-setting body, uses the term Integrated Circuit Card, or ICC, to encompass all devices in which an integrated circuit is contained within a defined form factor, the ISO ID-1 standard for the dimensions of an identification card. |
Our actual capital expenditures for the years ended December 31, 2020, 2019 and 2018 amounted to $0.3 million, $0.9 million and $1.1 million, respectively. The major item in 2020 was a chip design block. In 2019 and 2018 the capital expenditures primarily consisted of purchases of laboratory and production equipment related to product development and commercialization
only and information contained in, or that can be accessed through, our website or any other website cited in this annual reportherein is not part of this annual report.
Annual Report.
Overview
We are a biometrics company specializing in
IDEX develops and markets differentiated fingerprint authentication solutions optimized for use in smart cards, based on patented and proprietary sensor technologies, integrated circuit designs, and highly-specialized firmware and software. We primarily target fingerprint authentication applications involving standardized smart cards without batteries,although our products also are applicable to battery-powered devices in different form factors. Our extensive intellectual property portfolio, leveraging 146 patents awarded and 66 patents pending, across applicable jurisdictions worldwide (as of December 31, 2021), is a critical enabler of our strategy and competitive positioning. From time to time, we may provide project-oriented engineering or design services to customers. We also license our intellectual property and software to third parties, although licensing currently does not contribute materially to our revenue. |  A standard-format smart card, utilizing our fingerprint authentication solution, offered by Rocker AB and manufactured by our customer, IDEMIA France SAS | |
We offerapplications across varying form factors.
Our largest market opportunity is the biometric payment card market and more specifically our addressable market includes chip enabled cards which also include contactless payment cards. According to EMVCo, the industry standard organization, there are more than 8.2 billion chip-enabled consumer cards—credit and debit—now in use across the world. We believe the addition of a biometric sensor to the payment cards will significantly reduce the opportunity for fraud while making the transaction more convenient while using existing point of sale infrastructure. We believe the continue migration towards contactless payment cards will provide additional opportunities for our technologies. A report, Contactless Payment Market Global Forecast to 2025, published by Markets and Markets indicates that the global contactless credit/debit card payment market size is expected to grow from $10.3 billion in 2020 to $18.0 billion by 2025. This represents a CAGR of 11.7% during the forecast period. The major advantage offered by contactless payments is that customers can instantly complete transactions with the tap of a card. This increases the speed of transactions, making contactless payments even more efficient stated the Markets and Markets report.
In addition, following the COVID-19 outbreak, we believe consumers increasingly are motivated to go cashless. With many businesses discouraging the use of cash, in part due to hygiene questions linked to handling money, the prevalence of contactless payments increased significantly in 2020. For example, a survey in March of 2020 in 19 countries around the world indicated a 25% increase in contactless payments (out of all credit card payments) compared to March 2019, and approximately 79% of consumers worldwide are now using tap and go payments. In an increasingly cashless and contactless society, there is a growing risk of card fraud. We believe that this could have a positive impact on the sale of biometric solutions going forward.
Our patent-protected fingerprint sensors can be integrated on the front side of a payment card, thereby enabling the card to use biometric fingerprint recognition instead of a personal identification number, or PIN, to authenticate the cardholder. To use this feature the cardholder first enrolls their fingerprint. A biometric template, which is representative of the fingerprint, is created and securely stored on the card. When the cardholder uses the card to make a payment, he or she places his or her finger on the card’s sensor. Through fingerprint sensing and biometric authentication, the card can determine if the person using the card is the enrolled user or not.
Our portfolio of products includes fingerprint sensors, fingerprint modules with software and algorithms and remote enrollment devices. Our fingerprint sensors can be used in dual interface, contactless-only and contact-only payment cards. Our fingerprint modules offer a complete biometric solution that integrates fingerprint sensing with additional biometric processing and system power management functions. Additionally, with our remote enrollment solutions, cardholders can easily enroll their fingerprints at home and without the need to visit a bank branch.
Our sensors use a patented off-chip design, which separates the fingerprint sensor into two key components: the sensor array and the silicon chip (Application Specific Integrated Circuit, or ASIC). This off-chip design
architecture allows the sensor array to be made from a flexible and cost-efficient polymer substrate while minimizing the silicon area needed for the ASIC. Compared to conventional silicon sensors, for which the sensor array is made of silicon, the off-chip design allows for a larger sensing area, better matching reliability and lower costs. We believe thatsegments we are targeting, including the only provider supplying capacitive off-chip sensorsextended and biometric algorithms optimizedunpredictable sales cycles frequently associated with marketing new and innovative technology-based products, we expanded our marketing and sales staff in 2021 and increased our marketing budget for integration with payment cards. In 2020, we launched TrustedBio, our next generation of dual interface products and solutions designed to reduce biometric smart card cost while improving both performance and security. TrustedBio utilizes advanced semiconductor technology to transform the sensor ASIC into a complete biometric system on chip, while maintaining all the benefits of the capacitive off-chip sensor architecture.
Our current generation products are commercially available, and we have begun to ship samples of our products on our TrustedBio platform. To date, product revenue has not been material; however, we have seen an increase in product revenues. For the years ended December 31, 2020, 2019, and 2018, product revenues were $1.0 million, $0.2 million and $0.2 million, respectively.
We market our products and solutions to smart card manufacturers and other integrators of biometric sensor technology, such as keyboards, dongles and other information and physical access control devices. 2022.
Over the past three years, we have built a research and development, or R&D, team with deep industry expertise, comprised of systems and technology engineers, software engineers, silicon engineers, sensor engineers and packaging technologists. We are an integrated systems company and we maintain in-house design, testing and supply chain management functions. Manufacturing is outsourced to large and established semiconductor fabrication companiesprecision, as well as other providersconsistency of componentsoutcomes. Matching performance is measured by the correlated rates of false acceptance (“FAR”) and manufacturing services.
During 2020, we raised $18.0 million through private placements. During 2019, we raisedfalse rejection (“FRR”), accuracy and reliability, and computational speed. Matching algorithms can be adjusted to meet the requirements of the application, addressing the trade-offs between desired security levels and
While wesmart card implementation, because of security requirements, matching algorithms are preparing to fully commercialize our products and services, we have begun to generate revenue through the sale of biometric sensors and system solutions that incorporate our technology. In 2020, we generated revenue of $1.1 million, $1.0 million of which was related to product sales and $0.1 million of which was related to engineering services. In 2019, we generated revenue of $0.4 million, $0.2 million of which related to product sales and $0.2 million of which related to engineering services. In 2018, we generated revenue of $0.4 million, $0.2 million of which related to product sales and $0.2 million of which related to engineering services. We have also secured in excess of $7.0 million of business under contract (consisting of current order backlog and committed purchases not yet entered) expected to ship within the next 12 to 24 months, including a $6.0 million minimum commitment to supply fingerprint sensors and software to a major global financial news and IT services company. We had a net loss of $26.8 million, $32.4 million, and $30.2 million in 2020, 2019 and 2018, respectively.
We were incorporated in Norway in 1996, and currently have operationstypically executed in the United Kingdom,SE. However, our TrustedBio is designed to allow matching algorithms to be executed in a distributed (i.e., shared) mode, whereby computationally intensive functions can be executed on our module’s faster ASIC, reducing the United Statescomputational requirements of the SE. This allows customers the flexibility to optimize designs based on application requirements and China.
Industry Background
available processing resources, reducing overall system costs.
access to an electronic device, secure information or a physical facility. It is used involuntary requirements for smart card compatibility. ISO/IEC 7816 addresses a broad range of requirements, including the physical dimensions of a smart card (the
Total Addressable Market
Basedour focus on an analysis by Zion Market Research, the global demand for biometric payments in 2019 was approximately $5.0 billionresearch and is anticipated to reach around $19.0 billion by 2026. The anticipated CAGR for the market is around 19% through 2026.
Our largest market opportunity is the biometric payment card market and more specifically our addressable market includes chip enabled cards which also include contactless payment cards. According to EMVCo, the industry standard organization, there are more than 8.2 billion chip-enabled consumer cards—credit and debit—now in use across the world. development.
| 4 | We derived these estimates from market data regarding SE shipments categorized by smart card applications, published by Eurosmart (February 2022). Subscriber identity modules, also known as SIM cards, are included in this market data, as the enabling SEs and technologies are similar, although the form factors are very different. SIM cards are much smaller devices used in mobile telephony applications for subscriber authentication. Similarly, the subscriber authentication devices used in pay-television applications also are categorized as smart cards. Our fingerprint authentication solutions are not applicable to such telephony orpay-television applications. |
| 5 | Physical access control applications commonly utilize keycards, also known as proximity cards, which are wireless devices enabling a relatively low level of security for contactless identification. Applications include opening facility doors and gates, time and attendance systems, and automated toll collection. Keycards can be passive (i.e., powered by resonant inductive coupling) or active (i.e., powered by a battery). Keycard designs, functionalities, and communication protocols are proprietary to the vendor, resulting in closed systems. Our estimate of smart cards shipped for access control applications considers only those smart cards meeting the relevant ISO/IEC standards. |
We believe that the rapid growth of this market is attributable to an ever-increasing need for highly secure yet safe, fast and convenient identification and authentication solutions. According to the findings of a survey commissioned by Visa, for example, consumers are ready to leave the password behind. 70% of the consumers surveyed believe that biometrics are always more convenient as they do not involve memorizing passwords. More than 65% of consumers are already familiar with biometrics, while 86% are interested in using biometrics to verify the identity or to make payments.
For this reason, the market for mobile devices equipped with fingerprint sensors has grown dramatically in recent years. Led by industry giants, such as Apple and Samsung, an increasing number of smartphone manufacturers have integrated fingerprint sensors in their devices. In 2012, only 2.5 million smartphones were shipped with fingerprint sensors, whereas fingerprint sensors were used in an estimated 797 million smartphones in 2016. In 2017, fifty-five percent of smartphones shipped globally had a fingerprint sensor and according to a publicly available report by Credit Suisse, the shipment of smartphones with fingerprint sensors worldwide stood at 1.1 billion units in 2018.
The rising penetration of biometric solutions and fingerprint sensors in mobile devices has paved the way for the inclusion of such technology into payment cards. Nowadays, cards are routinely used as a payment device in lieu of cash or checks. We believe that the integration of a fingerprint sensor into payment cards will not only enhance security, but also enable financial institutions and other participants in the payments and disbursements ecosystem to pursue new market opportunities.
As the global pandemic of COVID-19 continues to rapidly evolve, we do not yet know the full extent of its potential impacts on our addressable market, business, operations, or the global economy as a whole. While we believe that the pandemic may increase end-user awareness of the benefits of contactless payment solutions such as the ones we offer, and therefore may increase the demand for our products as discussed below, the ultimate impact of the COVID-19 pandemic or a similar health epidemic is highly uncertain and subject to change.
Market Opportunities
Our largest target market is the biometric payment card market. We also offer our products and solutions for the access control market, as well as other adjacent verticals including, government and identification, healthcare and IoT.
We believe that the need for biometric payment cards is driven by consumers’ desire for a completely contactless or touch-free secure payment transaction. Consumers want a fast and frictionless transaction process but with a feeling of enhanced security. In addition, card issuers view innovation as important to remain relevant and “top of wallet” with their customers.
As of December 2018, there were 22 billion payment cards in circulation globally. This number is projected to further grow to 29 billion by 2023. Most of these cards are smart cards, i.e., cards with a chip. Our payment card total addressable market or TAM includes all cards with a chip. According to EMVCo, the industry standard organization, there are more than 8.2 billion chip-enabled consumer cards—credit and debit—now in use across the world.
Touch-free or contactless payment cards are expected to drive significant growth for our products. The global touch-free card transaction value is expected to increase by 300% from $2 trillion to $6 trillion between 2020 and 2024. Touch-free payments have accelerated significantly, and contactless limits have been increased due to the global COVID-19 pandemic driven by concerns for safety. However, these trends increase the risk of fraud and we believe that adding a biometric fingerprint sensor meets the needs of a touch-free payment environment while providing a high level of security.
We expect demand for a contactless, safe and secure payment solution, that a biometric payment card offers, to grow in the near future. We expect to see banks launching more pilots and soft launches in 2021. We also believe our TrustedBio solution offers compelling performance, security, manufacturability and cost benefits which will allow for the large-scale adoption of biometric payment cards beginning in 2022. Also, industry analysts and observers project significant and steep growth in fingerprint biometrics in payment cards. Estimates for biometric payment card shipments in 2021 are several thousand units for pilots, with smaller scale soft launches later in the year and in 2022. Independent third-party research projects that 2021 to 2025 will show significant growth in shipments to as many as 350 million units.
Projected number of biometric payment card shipments (millions of units)
We are already engaged with leading payment card manufacturers and have design wins and supply agreements with some of the industry leaders. In addition, we have formed partnerships with key members of the biometric card ecosystem including SE providers. We expect to continue to establish new partnerships and customers.
Before a payment card can be actively offered to consumers, it must first be certified by the payment network. In the last year several of the largest payment networks, including China UnionPay, or CUP, Mastercard and Visa, have all published their certification processes for biometric smart cards. Certification involves a rigorous multi-step process carried out by third-party testing institutions along with the card network. The process includes testing of biometric performance, such as the fingerprint sensor and the ASIC, and the software and security testing. The card’s physical aspects are also tested, for torsion endurance, scratch resistance and structural strength. Certification represents a high barrier to entry for both new entrants to the market and our existing competitors. All three major global payment networks now have certified biometric payment cards.
During the second quarter of 2020 our technology was certified by two major global payment networks: CUP and a large US-based payment network. The two networks combined issue 70% of global branded payment cards. We were the first fingerprint sensor company to have achieved certification for its system solution with two global payment networks. Certification enables the transition from the pilot phase to commercialization and therefore broader market adoption of biometric payment cards.
In 2020, our fingerprint sensors were selected by IDEMIA France SAS, or IDEMIA, the global leader in augmented identity and a leading global payment card manufacturer. We expect products using our TrustedBio technology to be in the market insegments we target could benefit from the fourth quarterTCO element of 2021.
We continue to seeour value proposition, as only a few global card manufacturers currently have the depth of resources and other suppliers in the ecosystem invest significantly in biometric payments technology.
Impact of COVID-19
In the first quarter of 2020, the World Health Organization declared COVID-19experience to develop a global pandemic. We quickly adopted the guidelines, outlined by the relevant governments where our company operates, to ensure the health of our employees and their families.
We establishedfingerprint authentication solution on an internal virus response team. Effective March 16, 2020, all travel and face-to-face meetings were stopped and we asked most staff to work from home. Staff with specific roles who need to work at one of our facilities are being supported in line with local government guidelines. Our management and board of directors continue to monitor the situation closely and will take further action as appropriate.
There have not been any significant delays in development projects, and we have not incurred any significant additional costs due to the actions taken. The pandemic did cause some short-term delays in early adoption activities, including temporary delays for pilots.
On the other hand, we believe that the pandemic has increased end-user awareness of the benefits of contactless payments. Following the outbreak, consumers are motivated to go cashless more than ever before. With many businesses discouraging the use of cash, because of hygiene questions that surround handling money, contactless payments are front of mind to avoid touching pin pads. In an increasingly cashless ecosystem, there is a growing threat of card fraud from the lack of authentication. Contactless payments need to be made more secure in order to ensure transactions are hygienic, convenient and free from the risk of fraud.
We, and other industry participants, believe this attention to hygienic aspects could have a positive impact on business going forward.
The Importance of Our Solution to the Payment Card Market
The integration of fingerprint sensor into payment cards provides the following benefits:
Higher Level of Security: Payment card fraud is estimated to be a $28 billion problem, globally. Unlike a password, PIN or swipe card, biometrics cannot be lost, stolen, forgotten or easily forged. The
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Frictionless Transaction Experience: Thanks to the proliferation of smartphones embedded with fingerprint sensing technology, consumers nowadays are generally familiar with biometrics and its application to consumer devices. The combination of biometrics with payment cards eliminates the need to remember passwords and simplifies the enrollment and transaction processes. Tap and go contactless transaction is then done with no procedural changes now with biometric identification.
Increased Market Competitiveness for Card Issuers: The average number of payment cards held per consumer is increasing, which means increased competition among card issuers. There needs to be a compelling reason for a user to choose one card over another. The integration of technology, such as fingerprint sensors, transforms payment cards from a static, generic solution, to one that is more personalized and tailored to users, potentially creating card differentiation and brand stickiness.
Lower Cost of Card Ownership: Traditional payment cards typically have a life span of three years, due to the need to update the card’s physical features periodically. As banks and other financial institutions adopt fingerprint sensing technology and look toward technology that extends the lifeexpedited timeline. Design of a card, the costs associated with the manufacturing, issuance and shipping of replacement cards presumptively will decrease.
Our Competitive Strengths
We believe the following strengths will enable us to maintain and extend our position in the global fingerprint sensor and biometric technology market.
Patented Sensor Design: Our fingerprint sensors use a patented off-chip design, which separates the sensor into two key components: the sensor array and the silicon chip (i.e., ASIC). This off-chip design architecture allows the sensor array to be made from a flexible and cost-efficient polymer substrate while minimizing the silicon area needed for the ASIC. Compared to conventional silicon sensors, where the sensor array is implemented directly on silicon, the off-chip design allows for a larger sensing area, better matching reliability and lower costs. We believe that we are the only provider supplying capacitive off-chip sensors and biometric algorithms optimized for integration with payment cards.
Full System Approach: We understand that building a biometric smart card incorporating fingerprint authentication can be challenging, as the interaction between the fingerprint sensor, the smart card electronics, and itsthe environment is complex, particularly when there aregiven the limitations on power, processing capacity, and physical space, while having to satisfyform factor, and the stringent requirements for response time and biometric reliability. Weaccuracy. As such, we are therefore committed to offering a full systemdifferentiated, integrated approach to our customers.
In 2020, we announced the latest generation of this architecture, the TrustedBio family of modules, and, in 2021, released an enhanced version, the TrustedBio Max. |  A TrustedBio module, showing the sensor surface (left) and, on the reverse side (right), our ASIC and connection circuits | |
The capacitive sensor in a TrustedBio module is made using a polymer substrate (i.e., a flex circuit) in which a capacitive sensing array (i.e., a fine-pitched wire mesh, with each wire intersection representing an electrode) is embedded. The platen is covered by a robust, protective coating, allowing for years of usage. Our flexible sensor is relatively inexpensive to manufacture and allows for an approximately 90 square millimeter sensor surface area, more than twice the size of competitive silicon sensors. The capacitive sensor in a TrustedBio module produces a larger image, yielding more data, which enables superior scanning, feature extraction, and |
Clear Focus on Cost-Efficiency: Card cost and manufacturing complexity has been a barrier to mass adoption of biometric smart cards. Now, due to the integration levels of our recently launched TrustedBio solutions, we believe that the cost of building a biometric smart card product will be dramatically reduced, which will accelerate market adoption. We have built on our off-chip sensor technology with new biometric-system-on-chip based products. This system-on-chip approach lowers the cost of materials required to build a biometric smart card, while providing major enhancements to
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Robust Intellectual Property Portfolio: Our technology is baseddata encryption. Depending on a robust portfolio ofcustomer’s design or application requirements, our ASIC also can store and execute our proprietary technologies. We hold over 200 patents and patent applications. Our intellectual property rights cover our complete biometric system ranging from measurement principles, algorithms, sensor design to system solutions.
Customer Collaboration: We continuously work with our partners and customers to ensure we have and maintain a deep understanding of market needs. This continuous approach provides us with deep current and future insightsThe ASIC in our customers and the market aslatest TrustedBio Max module provides a whole. In turn we can use this insight to develop and deliver products and solutions that meet our customers’ demands and anticipate market developments.
Strong management and engineering teams with significant industry expertise: We have deliberately built our management and engineering teams, to include personnel with extensive industry experience and with technical experience in systems and technology engineering, software engineering, silicon engineering, sensor engineering and packaging technology. As of December 31, 2020, we had an engineering and research team of 72 employees and contractors, representing 74% of our workforce. Our company culture encourages all employees to work in a collaborative way to develop innovative solutions for our customers.
Our Growth Strategy
We intend to implement the following strategies to further expand our business:
Continue Advancing Technologies and Products: We are dedicated to enhancing our technologies and products, including end-to-end architectures and match-on-SE algorithms, in order to ensure a continuing high level of security. We plansingle-device functionality for fingerprint authentication in a smart card. Fabricated on a
Maximize Efficiency and Cost Competitiveness: We are focusedproviding a differentiated user experience characterized by fast transaction speed. The groundbreaking functionality of TrustedBio Max reduces computational burdens on continuing to maximize efficiency and cost competitiveness by designing our products using industry standard design processes, incorporating verified high-volume components and materials and utilizing established manufacturing processes.
Mass Production Readiness: In 2019, paymenta smart card’s SE, thereby allowing smart card manufacturers workedto utilize standard,
Form Strategichave assisted issuers and Global Partnerships: As part of our strategy to facilitate the mass production of biometric payment cards, we have partnered with smart card manufacturers in multiple regions who specialize in the development design, manufacturingof
Address Additional Growing Markets: In addition
| 6 | According to a December 2021 issue of Nilson Report, global payment card fraud totaled $28.6 billion in 2020, representing approximately 6.8% of total purchase value. |
In 2017, we introduced a patented enrolment solution, addressing another significant barrier to adoption of fingerprint authentication, particularly within the financial payments market segment: user enrolment (i.e., the process of imaging and storing a user’s fingerprint, in the form of a template, within the memory of the smart card, thereby enabling its use). IDEX was the first to release such an innovative device, incorporating proprietary hardware and software, which we developed in partnership with Mastercard Inc. We license the design to our customers or their end-customers, for use with contactless-only, contact-based, and dual interface smart card designs. Under such a license, we provide a customized design meetingend-customer requirements and coordinate volume manufacturing for theend-customer by a third-party. |  Our on-card, remote enrollment solution, a battery-powered, reusable device enabling creation of a user fingerprint template, which is stored on – and never leaves – the smart card |
Our Products
The products we market are fingerprint sensors and fingerprint modules and solutions which include proprietary software algorithms and remote enrollment technology.
Fingerprint Sensors
We currently market and sell our IDX3200 and IDX3205 fingerprint sensors. These can be used in dual interface, contactless-only as well as contact-only payment cards. The fingerprint sensor is the front end of the fingerprint solution which captures the fingerprint image from which the biometric template is extracted.
In 2017, we launched an ASIC platform for off-chip sensors. The platform delivered both enhanced performance and reduced power consumption at a lower price compared to our previous generation ASIC. The ASIC was designed to be used across multiple product applications in our target markets, including the biometric payment card market, access control market, identification market and IoT market. The chip’s low power consumption increased its compatibility with contactless card applications. Additionally, the ASIC featured increased processing power and enhanced security features. Products designed on this ASIC platform began to ship in volume in 2020.
In February 2020, we launched TrustedBio, our next generation of dual-interface products and solutions designed to reduce biometric smart card, cost while improving both performance and security. The TrustedBio sensor utilizes leading semiconductor technology to implement a biometric-system-on-chip in the ASIC while maintaining all the benefits of the capacitive off-chip sensor architecture. Unlike existing sensors, this new generation of products removes the need to have any electronic components laminated within the card’s inlay. This is expected to lead to an improvement in manufacturing processes and yields, substantially reducing the time to market and cost of the card. We completed the first shipment of TrustedBio in August 2020. We expect to release the first member of the TrustedBio family in the fourth quarter of 2021, in support of customer pilots, and to eventually achieve commercial deployment in the first half of 2022.
Fingerprint Modules
A fingerprint module consists of the fingerprint sensor, together with ancillary components, such as the microprocessor unit and power management needed for a complete solution. In addition to the fingerprint sensor, which comes with the image-capturing ASIC, our fingerprint modules also include circuitry for power harvesting from the card terminal and power management circuitry, microcontroller with software for image processing and
template creation in addition to secure channel communication with the SE. In a payment card, the matching typically takes place in the SE, however for applications which do not require a SE matching can also occur in the module.
Our fingerprint modules offer a turn-key solution for customers to develop, prototype and manufacture their own end-product.
On-Card Enrollment Solutions
We design, develop and license our remote enrollment devices, which enable cardholders to enroll their fingerprints on a payment card. Our on-card enrollment solutions can be used for contactless-only, contact-based as well as dual interface smart card applications. We believe that a low-cost, simple, convenient and secure end-user registration process is the key to accelerating adoption of biometric payment cards by issuers and consumers alike.
Using our device, the enrollment can be completed in less than a minute.minute, following the instructions on the device, guided by LED indicators. A user can simply follow the instructions indicated on the device, further guided by flashing LED light indicators.
Our seamless end-to-end solution allows card users toenroll securely enroll themselves without visiting a physical site, such as a bank branch or ATM.automated teller machine. Enrollment takes placeis completed entirely insidewithin the biometric smart card using its standard secure EMV® chip. There is noand, importantly, without the need to connect the enrollment device or the smart card itself to a computer, smartphone, or any other device connected to a network.
| 7 | We have entered into separate supply agreements with IDEMIA France SAS and Zwipe AS. IDEMIA France SAS, the second largest manufacturer of smart cards globally, utilizes our TrustedBio fingerprint authentication solution in its F.CODE platform, which it markets to issuers in banking and financial services. Zwipe AS utilizes our TrustedBio fingerprint authentication solution in its Pay ONE platform, which Zwipe markets to smart card manufacturers and issuers as a comprehensive design. |
Market Segment | IDEX Solutions | Representative Applications | ||
| Financial Payments | • Smart cards • Dual-interface, NFC powered • Thermoplastic or metal • Customized COS and Applets • Enrolment sleeve or tablet-based solution | • EMV-compliant transaction applications• Credit, debit and stored value cards • Dual- and multi-use applications• Co-branded with partners | ||
| Cyber Authentication | • Smart cards and similar devices • ID-1 form factor or customer design• RFID/NFC or battery powered • Customized COS and Applets • Enrolment sleeve or tablet-based solution | • Secure user authorization for high value assets • Critical networks or applications • High security facilities • Easily integrated with IAM platforms • FIDO Alliance compliance | ||
| Market Segment | IDEX Solutions | Representative Applications | ||
| Digital Currency Storage | • Enhanced smart cards and similar devices • ID-1 form factor or customer design• RFID/NFC or battery powered • Optional displays and keypads • Optional Bluetooth connectivity • Customized COS and Applets • Enrolment sleeve or tablet-based solution | • Secure devices for government digital currency • Example: e-CNY initiative of Chinese central bank• Card-like “wallets” issued by state-owned banks • Dual- and multi-use applications• Secure storage of health and welfare records • Highly secure cryptocurrency management devices • Authorized user access to trading platforms • Secure storage of cryptocurrencies | ||
Our Technology
Off-chip Capacitive Fingerprint Sensing
A fingerprint sensor capturescosts;
Our off-chip sensor product is made up of two key elements: the sensor array and the silicon chip. The sensor array contains a high-density matrix of electrodes embedded within a low-cost, multilayer polymer substrate. The silicon chip (also referred to as the ASIC) drives and measures electrical signals onto these sensor electrodes to measure ridge-valley capacitances and form an overall image of the fingerprint. The ASIC is mounted to the underside of the substrate, whereas the topside of the substrate is covered in a hard-black coating and exposed to the finger.
This off-chip sensor approach, which separates the sensor array from the ASIC, is patented and differs in bothconnective circuits, reducing customer design and construction from conventional silicon sensors. Inprocurement costs; and
Since the off-chip sensor array is made from a bendable polymer substrate, rather than stiff and brittle silicon, our sensor is inherently mechanically bendable, yet robust.released for production. We believe thathave had our fingerprint sensors are particularly suited to integration within smart cards, which must satisfy stringent bending and twisting requirements in order to be compliant with the International Organization for Standardization, or ISO, requirements for smart cards.
Furthermore, since the off-chip sensor decouples the sensor array from the ASIC, it becomes possible to utilize advanced semiconductor lithographies within the smaller silicon ASIC. By using advanced semiconductor lithographies the off-chip sensor can integrate more features and functionality without adding significant system cost. As a result, our off-chip sensor product can become more than just a fingerprint sensing front-end, it can be transformedauthentication solutions incorporated into a complete biometric-system-on-chip. The following graphic demonstrates the conventional structure on a biometric smart card (left) designs approved by Mastercard, VISA, and a biometric smart card with integration of discrete components on onto our ASIC (right):
This biometric integration facilitates cost reduction and reduces the manufacturing complexity of biometric smart cards by allowing the elimination of additional discrete components that would otherwise be required to build an overall biometric system.
Biometric Software and Algorithms
Both software and algorithms are required to make fingerprint sensors and modules operate and communicate with their host device.China UnionPay. We develop software components, ranging from elements such as on-sensor firmware to enrollment software, and extract-and-match algorithms.
We have a range of high-performance embedded ridge-matching algorithms which extract biometric features from sensor images and then perform a proprietary matching process against a reference set of biometric features. These algorithms have been developed for security, performance and convenience in highly resource constrained environments. Our distributed matcher algorithms use a unique partitioning approach to perform processing in both secure and non-secure domains and optimize system performance while meeting the strict security requirements of the payment card schemes.
In 2017, we launched our third-generation system software that is optimized for dual interface biometric cards. The software is designed to be power and memory efficient. In the same year, we introduced a proprietary matcher algorithm for biometric cards. This patented algorithm is rotation insensitive and accepts partial touches. It is designed for use in both smart card and IoT applications.
In the past two years, we released security-enhanced versions of our matcher. The version released in 2019 moves the critical matcher function and template information onto the SE, while the less secure on-card biometric processor performs feature extract functions that do not need to be secured. This distributed matcher architecture meets the biometric performance and security guidelines of multiple global payment schemes. Recently, we becamealso were the first and only biometric sensor companyvendor to achievehave passed a development site EMVCo® Security Evaluation.
Enrollment Solutions
Before usingsecurity evaluation performed by EMV.
Full Systems Approach
The biometric smart card represents a highly challenging and resource constrained environment. The traditional fingerprint sensor captures an image of the fingerprint; however, this image also needs to be processed by a biometric authentication algorithm. This combination of sensor and algorithm form a biometric system which needs to operate seamlessly with the card’s payment chip, the SE, and the associated payment terminal. The resources of the SE also need to be leveraged carefully for control of the biometric system, secure storage of biometric templates and part-execution of the biometric algorithm. The electrical power to operate the biometric system can be supplied by the host device. For example, smart cards can be powered when inserted into a payment terminal. Alternatively, power can be harvested from a magnetic field in the case where a smart card is
being tapped on a contactless payment terminal. The following graphic depictsincorporating fingerprint authentication can be challenging, as the system design within a biometric payment card:
The interaction betweenamong the fingerprint sensor, the smart card electronics, and itsthe environment is complex, particularly when there aregiven the limitations on power, processing capacity, and physical space, while having to satisfyform factor, and the stringent requirements for response time and biometric reliability. Therefore,accuracy.
| 8 | Since 2016, ABI Research no longer tracks the very small volume of purely contactless cards manufactured each year, tracking only dual-interface and contact-only card production. Because approximately 20% of worldwide point-of-sale end-users and issuers prefer dual-interface cards. |
| 9 | Fingerprint authentication occurs within the processing capabilities of the smart card, with the matching algorithm determining if the presented fingerprint template matches the template stored in the memory of the SE. All user information, including the stored template, is encrypted within the smart card and never leaves the smart card at any time. A data element indicating the transaction originated with a smart card incorporating fingerprint authentication is the only additional information communicated to the point-of-sale |
The R&D activities include: (i) designStates. As of December 31, 2021, we had an engineering staff of 77 employees and developments relating toeight individual contractors, representing approximately 70% of our ASIC; (ii) system engineering and software development to create a full biometric system; (iii) activities to extend our existing products and create new intellectual property and know-how related to fingerprint sensors; (iv) industrialization activities including support to our production partners; and (v) activities to enhance our biometric algorithms for improved matching and enrollment, particularly in power-constrained environments.
workforce.
significant reductions in
generation ASIC,enhancing sensor and algorithm design;
enhancements to security through secure end to end architectures,
Developing advanced solutions for in-display sensor integration.
We have built an engineering team with significant industry experience capable of supporting our customers in the integration of complex components within a smart card or other devices. As of December 31, 2020, we had an engineering and research team of 72 employees and contractors, most of whom were based in Europe and the United States, representing 74%enhancement of our workforce. The team is comprisedscanning, feature extraction, and matching algorithms;
requirements.
Our success and ability to compete depend substantially upon our core technology and intellectual property rights. We rely on patent, trademark and copyright laws, trade secret protection and confidentiality agreements to protect our intellectual property rights. In addition, we require employees and consultants to execute appropriate non-disclosure and proprietary rights agreements. These agreements acknowledge our exclusive ownership of intellectual property developed for and by us and require that all proprietary information remain confidential.
positioning. We maintain a program designed to identify technology that is appropriate for patent and trade secret protection, and we file patent applications in the United States and certain other countries for inventions that we
consider significant. AsWe continuously seek to protect aspects of December 31, 2020, we have been granted 127 patents and have 97 pending patent applications. The wordmark ‘IDEX’ and the IDEX logo are registered trademarks of IDEX Biometrics ASA and are owned by IDEX.
our technology that provide significant competitive advantage.
Salesrights at any time in the future.
We sell our productsthe brand name TrustedBio are registered trademarks of, and solutions through a direct sales force. Our sales staff provides product education, application advisory servicesowned by, IDEX Biometrics ASA.
As a result of this direct approach, we have achieved improved visibility into the sales channel as well as valuable real-time customer feedback which directs our on-going technology development and manufacturability improvements.
Our products typically have a long sales cycle, requiring discussions with prospective customers inCompany’s strategy. In order to better understandmaintain our leadership position in fingerprint authentication in a highly competitive employment market, attracting and retaining the best employees and individual contractors worldwide is a priority. Accordingly, we offer compelling compensation and benefits, and seek to foster a culture of innovation in which personnel are empowered to do (and are rewarded for) their application and system level requirements and technology roadmaps. Our customers are predominantly smart card manufacturers, and we have discussions with them regarding the requirements of their end customers, which provides our sales force with insight into how our products will be deployed. We develop strong customer relationships to ensure technical and business alignment. The period of time from our initial contact with a prospective or current customer to the receipt of an actual purchase order is frequently a year or more. Prospective customers perform system and card level testing before the cards are certified and then
deployed by the card network and card issuers. Customers require us to perform extensive verification testing and qualification based on industry standards. This phase of our sales cycle can take several months.
Our in-house sales personnel also assist customers with forecasts, orders, delivery requirements and other administrative functions. Our technical support engineers respond to technical and product-related questions and provide application support to customers.
The Ecosystem of Payment Card Market
The payment card ecosystem is complex and involves many different companies working together to bring biometric payment cards to the addressable markets. The biometric payment card value-chain is shown below:
We are a supplier at the starting point of this value-chain and sell our products and solutions to smart card manufacturers. We also work closely with our customers on manufacturing methodologies and improvements, and alongside other component suppliers within the card ecosystem. For example, we have established partnerships with suppliers of other components of a payment card, including SE producers, card inlay providers and card networks, to help bring biometric smart cards to market. Our strategic rationale is to ensure that crucial components within the biometric smart card ecosystem are compatible and ready for mass production and to enhance our ability to offer comprehensive solutions to our customers.
Our Customers
Our target customers are primarily manufacturers of smart cards, and other electronic devices located in Europe, the United States and Asia. The number of customers who have purchased our products has increased from 7 in 2016 to 23 in 2020.
The largest 3 payment card manufacturers or tier one card manufacturers comprise approximately 60% of EMVCo certified payment cards manufactured. We also serve a number of small or tier two card manufacturers, including Chutian Dragon, Eastcompeace, Feitian Technologies, Goldpac Group, Hengbao, IDEMIA and Quest Payment Systems. At times we also charge a fee for engineering services we provide to our customers in connection with the integration and manufacturing of our fingerprint sensors and software programs.
We have historically generated the majority of our revenue from a few larger customers. In 2020, 2019 and 2018, our five largest customers in each period (which differed by period) collectively accounted for 98%, 91%, and 96% of our revenue, respectively. During 2020, one customer, a leading global provider of financial news
and services, accounted for approximately 88% of our revenue. During 2019, two customers accounted for approximately 69% and 10% of our revenue, respectively. During 2018, three customers accounted for approximately 39%, 36% and 13% of our revenue, respectively.
Orders and Backlog
As of December 31, 2020,2021, we had 111 individuals on staff, consisting of 93 employees and 18 individual contractors (individual contractors typically reside in countries in which we do not have business operations). Of this total, 19 were assigned to our Oslo office, 56 were assigned to our two offices in the United States, 27 were assigned to our office in the United Kingdom, and nine were assigned to our office in China.
Competition
The biometrics market is highly competitive and rapidly evolving. We compete with both U.S. and international companies, someminimizing use of which have substantially greater financialenergy, raw materials, water, and other resources, thanand makes every reasonable effort to minimize the waste we do.generate. We encounter multiple competitorshave recycling programs in place in all our facilities.
The principal competitive factors uponare required to disclose the material risks faced by the Company, which we competedo herein (see “Item 3. Section D. Risk Factors”). However, ESG risks are not required to be addressed when those risks are considered immaterial to our financial statements. We have not identified any such risks that could have the potential to materially harm our business in a
We also may face competition from companies that may expand intosupply investors and other stakeholders with decision-useful information regarding our industryESG objectives and introduce additional competitive products. Existing and potential customers and partners are also potential competitors. These customers may internally develop or acquire additional competitive products or technologies, which may cause them to reduce or cease their purchases from us.
indicators of our progress toward those objectives.
use and adoption of our solutions and services, reduce overall demand for our solutions and services, make it more difficult to meet expectations from or commitments to customers, lead to significant fines, penalties or liabilities for noncompliance or impact our reputation, any of which could harm our business.
The organization structure of our
of IDEX America Inc.), the United Kingdom (IDEX Biometrics UK Ltd.), and China (IDEX Electronics (Shanghai) Co., Ltd.).
Item 4A. | Unresolved Staff Comments. |
Item 5. | Operating and Financial Review and Prospects. |
EU.You should read thereviewperformance and future prospects should be read in conjunction with our audited financial statements and the related notes thereto included elsewhere in this Annual Report. In addition to historical information, the following discussion and analysis contains forward lookingforward-looking statements that reflectreflecting our plans, estimates, and beliefs. Our actual results and the timing of events could differ materially from those anticipated in the forward lookingforward-looking statements. Factors that could cause or contribute to these differences include those discussed below and elsewhere in this Annual Report, particularly in sections titled “Risk Factors” and “Special Note Regarding Forward Looking Statements.Statements” and “Risk Factors.” The audited financial statements as of and for the years ended December 31, 2021, 2020 2019 and 20182019 were prepared in accordance with International Financial Reporting Standards, or IFRS,(“IFRS”), as issued by the International Accounting Standards Board or IASB,(“IASB”) and adopted by the European Union.We are a biometrics company specializingdesign, developmentlatter half of the last decade, IDEX undertook a strategic pivot toward applications for which our differentiated characteristics
We offer fingerprint sensors and biometric solutions tothe date of this Annual Report, we have five design wins (i.e., contractual commitments) for this reference design with worldwide smart card manufacturers and other integratorsanticipate these designs could be in full production in 2023.
on the front side of a payment card, thereby enabling the card to use biometric fingerprint recognition instead of a personal identification number, or PIN, to authenticate the cardholder. To use this feature the cardholder first enrolls their fingerprint. A biometric template, which is representative of the fingerprint, is created and securely stored on the card. When the cardholder uses the card to make a payment, he or she places his or her finger on the card’s sensor. Through fingerprint sensing and biometric authentication, the card can determine if the person using the card is the enrolled user or not.
Our portfolio of products includes fingerprint sensors, fingerprint modules with software and algorithms and remote enrollment devices. Our fingerprint sensors can be used in dual interface, contactless-only and contact-only payment cards. Our fingerprint modules offer a complete biometric solution that integrates fingerprint sensing with additional biometric processing and system power management functions. Additionally,multi-year supply contract we have with our remote enrollment solutions, cardholders can easily enroll their fingerprints at homeearly-adopting customer in the cyber authentication market segment, as individual shipment volumes and withoutscheduled delivery dates are subject to change. The terms of this supply contract provide for automatic extensions of one year. As of December 31, 2021, the needremaining value of these committed deliveries under our supply contract was approximately $1.2 million.
Our sensors use a patented off-chip design, which separatespercentage of total revenue, represented 99.9%, 92.5%, and 37.5% for 2021, 2020, and 2019, respectively. Revenue associated with our early-adopting customer in the fingerprint sensor into two key components: the sensor arraycyber authentication market segment, inclusive of services revenue associated with product development, represented 85.4%, 89.7%, and the silicon chip (Application Specific Integrated Circuit, or ASIC). This off-chip design architecture allows the sensor array to be made from a flexible72.3% of our total revenue for 2021, 2020, and cost-efficient polymer substrate while minimizing the silicon area needed for the ASIC. Compared to conventional silicon sensors, for which the sensor array is made of silicon, the off-chip design allows for a larger sensing area, better matching reliability and lower costs.2019, respectively. We believe that we are the only provider supplying capacitive off-chip sensors and biometric algorithms optimized for integration with payment cards. This year, we launched TrustedBio, our next generation of dual interface products and solutions designed to reduce biometric smart card cost while improving both performance and security. TrustedBio utilizes advanced semiconductor technology to transform the sensor ASIC into a complete biometric system on chip, while maintaining all the benefits of the capacitive off-chip sensor architecture.
Our current generation products are commercially available, and we have begunbegan to ship samplesproduction volumes of our products on our TrustedBio platform. To date, productsolution in 2021 and expect such volumes to represent an increasing percentage of total revenue has not been material; however, we have seen an increase in product revenues. For the years ended December 31, 2020, 2019, and 2018, product revenues were $1.0 million, $0.2 million, and $0.3 million, respectively.
future.
We expect to incur significant expenses and operating losses for the foreseeable future as we further develop our products and software solutions, including introducing new designs and functionality, and as we further expand our business development, sales and customer support teams to drive new customer adoption, expand use cases and integrations, and support international expansion. We will also face increased compliance costs associated with growth and the expansion of our customer base. Furthermore,office in China. While we expect to continueadd personnel to incur additional costsour marketing and sales staff during 2022, we also expect such expansion will be offset largely by staffing reductions through attrition across other areas of the Company.
As a result of these anticipated expenditures, we will need additional financing to support our continuing operations. Until such time as we can generate significant revenue from product sales and services, if ever, we expect to finance our operations through a combination of public or private equity or debt financings or other sources, which may include collaborations with third parties. Adequate additional financing may not be available to us on acceptable terms, or at all. Our inability to raise capital as and when needed would have a negative
impact on our financial condition and our ability to pursue our business strategy. We will need to generate significant revenue to achieve profitability, and we may never do so.
Impact of COVID-19
In December 2019, a novel strain of coronavirus, since named SARS-CoV-2, causing the disease known as COVID-19, was reported in China. Since then, COVID-19 has spread globally, including throughout Europe and the United States. In March 2020, the World Health Organization declared
We could be materially and adversely affectedguidelines, outlined by the risks, orrelevant governments where our company operates, to ensure the public perception of the risks, related to an epidemic, pandemic, outbreak, or other public health crisis, such as the recent outbreak of COVID-19. For example, while many of our business partners in Asia impacted by the COVID-19 pandemic in the first quarter of 2020 have since returned to operations, there is considerable uncertainty surrounding the timing, duration or impact of any future disruptions. We have implemented a work-from-home policy for employees and are evaluating hybrid working models for our operations on a go-forward basis. We will continue to monitor federal, state, and local regulations and the recommendations of public health professionals as we determine which actions are in the best interests of our employees and shareholders. To date, theretheir families. We established an internal virus response team. Effective March 16, 2020, all travel and
We did initiate certain cost reduction actions as a result of our response to the pandemic beginning in Marchpandemic. Disruption of 2020 including temporary salary reductions and travel restrictions. These actions have resulted in lower operating expenses, and therefore lower net loss, duringsupply chains, particularly the second quarter
We did not experience asupply chain disruptions that were material change in liquidityto our operations or cash flows as a resultfinancial results during 2021, operational planning and management of the pandemic.
On the other hand,inventory levels were challenging, given uncertainties associated with vendor capacity availability and allocations to us of such capacity. Because we expect such uncertainties will continue through 2023, we may place orders for, and hold balances of, inventory at higher levels than would be expected if such uncertainties did not exist.
fingerprint authentication solutions.
Financial Operations Overview
Profit and LossResultsConsolidated Statements of Operations
We have not generated significant
Revenue from product sales is recognized at the point in time in which the customer obtains control of the products, which normally is when title passes at the point of delivery, based on the contractual terms of the agreements. Revenue from services is recognized over time pursuant to the terms and conditions in the agreements.
Operating Expenses
Our operating expenses consist of purchases, net of inventory variation, payroll, research and development, sales and marketing, and general and administrative expenses. Personnel and payroll costs are the most significant component of operating expenses. Operating expenses also include overhead costs for facilities, including depreciation expense.
Purchases, net of inventory variation
Purchases, net of inventory variation, primarily consist of materials, contract manufacturing, and transportation related costs. Purchases excludes payroll, allocated overhead, depreciation and amortization.
We intend to continue to invest additional resources in our engineering, supply chain and customer support teams to expand the adoption of our products and services. We sell directly to customers and do not utilize distributors for the resale of our products.
Payroll
Payroll expense consistscaption to better reflect the scope of the category, which includes, for all departments and activities, the following employee-related expenses: salaries, variable, performance-based compensation, sales commissions, benefits, bonuses,and charges for the recognition of share-based compensation expense and sales commissions. We expect that our payroll expense will increase and continue to be our largest operating expense forcosts.
Research and Development
Research and development expenses or Sales and administrative expenses, as applicable, based on the roles assigned to the individuals. While individual contractors may be eligible for awards of subscription rights and may be eligible to participate in variable, performance-based compensation plans, the Company does not provide benefits to individual contractors.
Other Operating Expenses
2019, respectively.
We expect to incur additional expenses as a result of being listed in the United States in addition to Norway, including costs to comply with the rules and regulations applicable to companies listed on a U.S. securities exchange, costs related to compliance andthird-party service providers supporting auditing, financial reporting, obligations, and increased expenses for insurance,human resources, investor relations, and professional services. We expect thatlegal and regulatory activities. Direct administrative costs include those associated with banking and insurance, communications, information systems, occupancy (excluding lease payments), and supplies. Administrative expenses also include the compensation paid to individual contractors assigned to such roles. As of December 31, 2021, one of our generaltotal administrative staff of nine was an individual contractor.
Taxation
General
straight-line method, based on each asset’s estimated useful life.
| 10 | Our subsidiaries do not generate revenue from external sales of products or services. Pursuant to international tax treaties based on the definitions of the Organisation for Economic Co-operation and Development, our subsidiaries are taxed using the cost-plus transfer pricing method, by which a taxable profit is calculated based on the costs of each subsidiary incurred in providing services to our parent company and an assumedarm’s-length level of profitability on such services. |
Current tax liabilities and current tax receivables are recognized in the consolidatedour Consolidated statements of financial position asare adjusted to reflect changes in tax calculated onrates or the taxable income for the year adjusted for tax on previous years’ taxable income and taxes paid on account/prepaid.
Deferred tax is measured according to the statementimposition of financial position liability method in respect of temporary differences between the carrying amount and the tax base of assets and liabilities. new taxes.
Deferred tax liabilities are recognized for taxable temporary differences arising on investments in subsidiaries, except where we are able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets arising from deductible temporary differences associated with such investments and interests are only recognized to the extent that it is probable that there will be sufficientfuture taxable profits, against which a recorded deferred tax asset can be used to utilize the benefitsreduce future taxes due, we do not recognize a deferred tax asset.
The carrying amount ofsuch unrecognized deferred tax assets, is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or partas of the asset to be recovered.
This judgment is made on an ongoing basis and is based on the factor that recent historical loss carries more weight than factors such as budgets and business plans for the coming years, including planned commercial initiatives. The creation and development of biometric products within emerging industries such as payments and access control is subject to considerable risks and uncertainties. So far, we have reported significant losses, and as a consequence, we have unused tax losses. Management has concluded that deferred tax assets should not be recognized at December 31, 2018,2021, 2020, and 2019, and 2020. The tax assets are currently not deemed to meet the criteria for recognition as management determined that it was not probable that future taxable profit will be available against which the deferred tax assets can be utilized.
Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realized based on tax laws and rates that have been enacted or substantively enacted at the balance sheet date.
Income Tax
As a Company headquartered in Norway, our parent company, IDEX Biometrics ASA, is subject to tax under the corporate tax laws of Norway. As our Norwegian operations have been in a loss position since inception, there has been no corporate income taxes paid in Norway.
Pursuant to Norwegian tax legislation for companies incurring research and development costs, we have for several years conducted projects that have qualified us to receive a cash tax credit. We recorded a cash tax credit of $0.5totaled $57.1 million, $0.6$51.3 million, and $0.6$42.8 million, relatingrespectively. The figure as of December 31, 2021, includes, in addition to research and development costs in eachthe
We also have operationscumulative tax losses (i.e., carryforwards), $1.6 million of available tax credits in the United States, United Kingdomrelated to our research and China, through wholly owned subsidiaries in each respective country, and are subject to corporate income taxes in those countries pursuant todevelopment activities.
The accumulated unrecognized deferred tax assets amounting to $51.3 million, $42.8 million and $36.4 million at December 31, 2020, 2019 and 2018, respectively, are related primarily to the tax losses carryforward in Norway and the United Kingdom. At December 31, 2020, there was not sufficiently convincing evidence that sufficient taxable profit will be generated, against which the unused tax losses could be applied. Consequently, no deferred tax asset has been recognized.
Critical Accounting Policies, Judgments and Estimates
In the applicationcalculation of our accounting policies, we are requiredtax provisions, see Footnote 6 to make judgments, estimates, and assumptions about the value of assets and liabilities for which there is no definitive third-party reference. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates. We review our estimates and assumptions on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period or in the period of the revisions and future periods if the revision affects both current and future periods.
The following are our critical judgments that we have made in the process of applying our accounting policies and that have the most significant effect on the amounts recognized in our consolidated financial statements included elsewhere in this report.
Intangible assets
Research costs are expensed as incurred. Our patents and other intellectual property rights created by us are capitalized and held in the consolidated statements of financial position only when they satisfy the criteria for capitalization. No development costs have been capitalized in 2020, 2019 or 2018, thus all development costs and internal costs related to the creation of intellectual property have been expensed when incurred. Acquired intangible assets are capitalized at the price allocated to the various assets based on estimated fair value. Intangible assets are amortized over their useful lives.
Inventory
Raw materials,Consolidated Financial Statements, which are partpresented in Part III of the trade or manufacturing flow in the sense that the item is embedded in or otherwise becomes a part of the physical delivery to the customer (work in process and finished goods), are inventoried if we are in the position to take orders on the related product. Materials and components for research or development are expensed at the time of purchase and not included in inventory. Inventory is held at the lower of cost and net realizable value, less impairment, if any. The determination of net realizable value is subject to judgment, as reselling components may not be easily achieved, and our finished goods are part of a newer market with varying margins.
Deferred tax assets
Deferred tax assets related to net operating loss carryforwards are recognized when it is probable that the net operating loss carryforward may be utilized. Judgment of probability is based on historical earnings, expected future margins and the size of the order backlog.
Significant Accounting Estimates
Share based compensation
We estimate the fair value of incentive subscription rights at the grant date by using the Black-Scholes option pricing model. The valuation is based on share price and exercise price, share price volatility, interest rates and duration of such subscription rights, and assumptions of staff attrition and the likelihood of early exercise. The share-based compensation is expensed as earned over the vesting period. The accrued cost of the employer’s social security tax on the earned intrinsic value of such subscription rights is calculated at each consolidated statement of financial position date.
Impairment evaluation of goodwill
Goodwill amounts to the fair value of the consideration for the assets less the capitalized value of the identifiable assets and any impairment charges, if any. Impairment testing of goodwill is based on the estimated fair value or the value in use of the business. The value in use calculation is based on a discounted cash flow model. The cash flows are derived from the forecast for the next five years. The recoverable amount is sensitive to the discount rate used for the discounted cash flow model as well as the expected future cash-inflows and the growth rate used for extrapolation purposes.
Recent Accounting Pronouncements
IFRS 3 Business Combinations: The amendments to IFRS 3, issued in October 2018 and effective from 1 January 2020, introduce clarification to the definition of a business. The amendments clarify that to be considered a business, an acquired set of activities and assets must include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create outputs, and they narrow the definitions of a business and of outputs by focusing on goods and services provided to customers and by removing the reference to an ability to reduce costs. The amendments also establish an optional test to identify a concentration of fair value that, if applied and met, would lead to the conclusion that an acquired set of activities and assets is not a business. We have implemented the amendments effective from 1 January 2020. We did not have any relevant transactions that occurred on or after the implementation date.
We do not expect that any newly issued, but not yet effective standards, amendments and interpretations will have a significant impact on the consolidated financial statements or notes for our current activity and assets but may affect the accounting for future transactions or arrangements. We will implement the new standards and interpretations as they become effective.
| Year Ended December 31, | ||||||||||||||||||||
| 2020 | 2019 | 2018 | 2020-2019 Change | 2019-2018 Change | ||||||||||||||||
Revenue: | ||||||||||||||||||||
Product | $ | 1,013 | $ | 159 | $ | 268 | 537 | % | (41 | %) | ||||||||||
Service | 82 | 265 | 172 | (69 | %) | 54 | % | |||||||||||||
Total revenue | 1,095 | 424 | 440 | 158 | % | (4 | %) | |||||||||||||
Operating expenses: | ||||||||||||||||||||
Purchases, net of inventory variation | 275 | 62 | 185 | 344 | % | (66 | %) | |||||||||||||
Payroll expenses | 17,672 | 21,750 | 19,770 | (19 | %) | 10 | % | |||||||||||||
Research and development expenses | 1,895 | 4,385 | 5,631 | (57 | %) | (22 | %) | |||||||||||||
Other operating expenses | 5,936 | 4,641 | 3,919 | 28 | % | 18 | % | |||||||||||||
Amortization and depreciation | 1,719 | 1,633 | 842 | 5 | % | 94 | % | |||||||||||||
Total operating expenses | 27,497 | 32,471 | 30,347 | (15 | %) | 7 | % | |||||||||||||
Loss from operations | (26,402 | ) | (32,047 | ) | (29,907 | ) | 18 | % | (7 | %) | ||||||||||
Finance income | 26 | 135 | 134 | (81 | %) | 1 | % | |||||||||||||
Finance cost | (477 | ) | (351 | ) | (411 | ) | (36 | %) | 15 | % | ||||||||||
Loss before tax | (26,853 | ) | (32,263 | ) | (30,184 | ) | 17 | % | (7 | %) | ||||||||||
Income tax expense | (99 | ) | (160 | ) | (41 | ) | 38 | % | 290 | % | ||||||||||
Net loss for the year | $ | (26,754 | ) | $ | (32,423 | ) | $ | (30,225 | ) | 18 | % | (7 | %) | |||||||
2019.
Year Ended December 31, | ||||||||||||||||||||
| ($000s) | 2021 | 2020 | 2019 | 2021-2020 Change | 2020-2019 Change | |||||||||||||||
Revenue: | ||||||||||||||||||||
Product | $ | 2,837 | $ | 1,013 | $ | 159 | 180 | % | 537 | % | ||||||||||
Service | 3 | 82 | 265 | (96 | %) | (69 | %) | |||||||||||||
Total revenue | 2,840 | 1,095 | 424 | 159 | % | 158 | % | |||||||||||||
Operating expenses: | ||||||||||||||||||||
Cost of materials, net of inventory change | 1,254 | 275 | 62 | 356 | % | 344 | % | |||||||||||||
Compensation and benefits | 21,107 | 17,672 | 21,750 | 19 | % | (19 | %) | |||||||||||||
Research and development | 2,680 | 1,895 | 4,385 | 41 | % | (57 | %) | |||||||||||||
Other operating expenses | 7,347 | 5,936 | 4,641 | 24 | % | 28 | % | |||||||||||||
Amortization and depreciation | 1,802 | 1,719 | 1,633 | 5 | % | 5 | % | |||||||||||||
Total operating expenses | 34,190 | 27,497 | 32,471 | 24 | % | (15 | %) | |||||||||||||
Loss from operations | (31,350 | ) | (26,402 | ) | (32,047 | ) | (19 | %) | 18 | % | ||||||||||
Finance income | 11 | 26 | 135 | (58 | %) | (81 | %) | |||||||||||||
Finance cost | (1,123 | ) | (477 | ) | (351 | ) | (135 | %) | (36 | %) | ||||||||||
Loss before tax | (32,462 | ) | (26,853 | ) | (32,263 | ) | (21 | %) | 17 | % | ||||||||||
Income tax expense (benefit) | 90 | (99 | ) | 160 | (190 | %) | 38 | % | ||||||||||||
Net loss for the year | $ | (32,552 | ) | $ | (26,754 | ) | $ | (32,423 | ) | (22 | %) | 18 | % | |||||||
year.
Revenueshare-based compensation costs.
The decrease in product sales of $0.1 million or 41% from 2018 to 2019 relates to our transition to newer product lines as sales of certain products that shipped in 2018 did not recur in 2019, and we began shipping newer products to new customers in 2019. During the year ended December 31, 2019, approximately 10% of revenue came from new customers.
In 2020, 99.5% of our product revenues came from customers outside of the United States, however, 93.9% of our service revenues came from a single customer in the United States due to the aforementioned
non-recurring engineering services related to a $6 million dollar minimum commitment. As product deliveries to this customer only began in 2020, an increased and significant portion of our revenues will come from the United States during 2021. Substantially all of our product revenue in 2019 and 2018 was from customers outside of the United States, comprising 96.9% and 98.9% of product revenue in 2019 and 2018, respectively.
Purchases, net of inventory variation
Purchases increased by $0.2 million, or 344%, for the year ended December 31, 2020, comparedan increase of $3.4 million, or 19%, reflecting a higher number of employees, customary merit-based salary increases, and increased levels of share-based compensation costs. Notably, such expenses for 2020 reflected a temporary reduction of salaries for approximately one quarter of the year, implemented in response to the year ended December 31, 2019. This increase was primarily due to higher product sales to the aforementioned large customer,
Purchases decreased by $0.1 million, or 66%, for the year ended December 31, 2019 compared to the year ended December 31, 2018. This decrease was primarilyemployees, due to lower product salesheadcount reductions and our transition to newer product lines.
Payroll Expenses
Payrollattrition.
| 11 | Under IFRS, the gross margin and ratio figures discussed herein are alternative performance measures (“APMs”), as they are neither specified nor defined in IFRS. As we expect in the future to maintain the current level of product revenue, relative to total revenue, we believe these figures are useful indicators of our performance. We also believe these figures are consistent with IFRS, as no adjustments to other IFRS-defined figures have been made, and their use in no way represents pro forma non-IFRS figures in our Consolidated Financial Statements. |
Payrollof gross expenses through application of grants approved, if any. As described, we regularly apply for and receive grants under government programs, in Norway and the United Kingdom, supporting research and development activities.
Research and Development Expenses
Research and development expenses for the year ended December 31, 2020 were $1.9 million as compared to $4.4 million, for the year ended December 31, 2019, a decreasereflecting gross expenses of $2.5$5.0 million, or 57%. The decline was mainly due to R&Doffset by government grants in the United Kingdom of $1.8 million, which was credited to research and development expenses.
$568 thousand.
approvals. During the first quarter of 2020, we filed amended tax returnsclaims in the United Kingdom for the tax years 2017 and 2018 to claim research and development relief grants for these years,applicable to activities in addition to2017, 2018, and 2019. As a result, we received $1.5 million of grant funds in refunds. 2020, which contributed to the significant increase in grant value for that year.
Other Operating Expenses
Other operatingthese expenses for the foreseeable future.
Taxation
an expense of $160 thousand. During the years ended December 31, 2021, 2020 and 2019, and 2018, the Companyparent company did not payrecord or accruepay income taxes in Norway dueNorway.
We conduct research and development activities in the United States and, in 2020, claimed research and development tax credits relating to 2017, 2018 and 2019. The tax credit in the United States is used to offset a portion of taxable income.
As of December 31, 2020, we have Norwegian and UK tax net operating loss carryforwards of $219.2 million and $5.3 million, respectively, which do not expire.
Net Loss for the Year
year
the Ordinary Share price for the period. Such weight average of dilutive Ordinary Shares shall be calculated on a time-weighting basis, assuming subscription rights vested at the beginning of the period would be exercised at the beginning of the period or, if vesting occurs after the beginning of the period, assuming exercise of subscription rights would occur on the subsequent vesting date.
Ordinary Shares on the Oslo Børs and our ADSs on Nasdaq.
In February 2021, we completed an additional private placement with existing and new shareholders and raised $27.2 million.
While we have been successful in raising funds through private placements of shares in the past, there can be no assurance that such actions will be successful in the future.
Cash Flows
indirect method. The following table summarizes the results of our cash flows for the periods presented:
| Year Ended December 31, | ||||||||||||
| 2020 | 2019 | 2018 | ||||||||||
Net cash flow used in operating activities | $ | (23,294 | ) | $ | (27,168 | ) | $ | (26,775 | ) | |||
Net cash flow provided by (used in) investing activities | (232 | ) | (721 | ) | (970 | ) | ||||||
Net cash flow provided by financing activities | 17,438 | 32,989 | 835 | |||||||||
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Net change in cash and cash equivalents | $ | (6,088 | ) | $ | 5,100 | $ | (26,910 | ) | ||||
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Year Ended December 31, | ||||||||||||
| ($000s) | 2021 | 2020 | 2019 | |||||||||
Net cash used in operating activities | $ | (27,533 | ) | $ | (23,294 | ) | $ | (27,168 | ) | |||
Net cash used in investing activities | (143 | ) | (232 | ) | (721 | ) | ||||||
Net cash provided by financing activities | 54,148 | 17,438 | 32,989 | |||||||||
Net change in cash and cash equivalents | $ | 26,472 | $ | (6,088 | ) | $ | 5,100 | |||||
During the year ended December 31, 2019, cash used in operating activities was $27.2 million,($23.3 million), primarily resulting fromas a result of our net loss before tax of $32.3($26.9 million) and a net working capital increase of ($1.0 million), partially offset by
During the year ended December 31, 2018, cash used in operating activities was $26.8 million, primarily resulting from our net loss before tax of $30.2 million less non-cash charges of $3.8 million included in net loss, and net cash used for working capital of $0.1 million.
Net cash flow used in investing activities was $0.2 million for
Net$135 thousand of interest income associated with higher cash flow used in investing activities was $0.7 millionbalances for the year ended December 31, 2019, compared to $1.0 million for the year ended December 31, 2018. This change was primarily due to a decrease of $0.3 million in purchases of property, plant and equipment investment in 2019 as compared to 2018.
period.
The decrease in net cash flow provided by financing activities to $17.4 million for
The increase in net cash flow provided by financing activities to $33.0 million for the year ended December 31, 2019 from $0.8 million for the year ended December 31, 2018 was due to increases in share issuances of $33.3$34.2 million, partially offset by net payment on a financed asset purchase andreductions of lease liabilities totaling ($675 thousand) and a payment of $1.2 million.
three targeted market segments. Additionally, as a foreign private issuerwe have Ordinary Shares listed on Nasdaq,in Norway and ADSs listed in the United States, we expect we will continue to incur the costs of regulatory compliance.
investment activities for the foreseeable future.
the cost and timing of enhancing sales, marketing and distribution capabilities; and
We have a history
are, or may be, exposed, see “Item 3. Section D. Risk Factors.”
Footnote 5 to our Consolidated Financial Statements, which are presented in Part III of this Annual Report.
DuringCritical Accounting Estimates
F. Tabular Disclosureestimates and assumptions: the recorded values of Contractual Obligations
The following table summarizes our contractual commitmentsgoodwill, intangible assets, and obligations asinventory; the calculation and recognition of December 31, 2020.
| Payments Due by Period | ||||||||||||||||||||
| Total | Less than 1 Year | 1 to 3 Years | 4 to 5 Years | More than 5 Years | ||||||||||||||||
| (in thousands) | ||||||||||||||||||||
Lease obligations(1) | $ | 1,093 | $ | 762 | $ | 331 | $ | — | $ | — | ||||||||||
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Total | $ | 1,093 | $ | 762 | $ | 331 | $ | — | $ | — | ||||||||||
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The commitment amounts inshare-based compensation expenses, and the table above arecalculation and presentation of values associated with contracts that are enforceable and legally binding and that specify all significant terms, including fixed or minimum services to be used, fixed, minimum or variable price provisions,our capitalized leases and the approximate timing of the actions under the contracts. Our lease commitments relate to our office space.
G. Safe Harbor
This annual report contains forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act and as defined in the Private Securities Litigation Reform Act of 1995. See “Special Note Regarding Forward-Looking Statements.”
Item 6. Directors, Senior Management and Employees.
A. Directors and Senior Management
associated
Item 6. | Directors, Senior Management and Employees. |
A. | Directors and senior management |
Name | Age | Position(s) | ||||
| ||||||
Vincent Graziani | Chief Executive Officer | |||||
James A. Simms | Chief Financial Officer | |||||
Anthony Eaton | Chief Technology Officer | |||||
Catharina Eklof | 52 | Chief Commercial Officer | ||||
| ||||||
Morten Opstad | 68 | Chair | ||||
Lawrence J. Ciaccia 2 | 63 | Deputy Chair | ||||
Deborah Lee Davis 1,2 | 58 | Director | ||||
Hanne Høvding 1 | 67 | |||||
Annika Olsson | ||||||
| ||||||
| ||||||
Thomas M. Quindlen | 58 | |||||
Stephen A. Skaggs 1 | 58 | |||||
Member of Audit Committee. |
Member of Compensation Committee. |
|
Officers
Derek P. D’Antilio
BoardUnited Kingdom.
Ourexperience as a global executive leading business transformation across financial services, retail, travel, and information security. Notably, she had roles of increasing responsibility over 12 years with Mastercard. She was instrumental in establishing Mastercard’s global strategic merchant program, bringing digital payment solutions and new, data-driven business models to the organization. Ms. Eklof serves on the board of directors of Avanza Bank Holding AB (Nasdaq Stockholm: AZA). Ms. Eklof holds an M.B.A. in International Business and a M.S. in Economics from the University of Uppsala, Sweden. Ms. Eklof is assigned to our office in Oslo, Norway, but resides in Belgium.
HøHøvdingmember of our board of directorsDirector since December 2007. She is independent of the company’sCompany’s executive management, material business contacts, and the company’s larger shareholders. During her professional career, Ms. Høvding hasheld several management positions within personnel administration, finance, credit card administration, and debt collection. She holds a Bachelor’s DegreeB.S. in Economics and Business Administration from the Norwegian School of Economics and Business Administration. In her professional career Ms. Høvding has held several management positions within personnel administration, finance, credit card administration and debt collection. Ms. Høvding was born in 1954. She1954, is a Norwegian citizen, and resides in Oslo. Ms. Høvding attended all of the boardBoard meetings in the period.
Stephen A. (“Steve”) Skaggs has served
Nevada. Mr. Skaggs attended all Board meetings in the period.
Board Diversity Matrix | Female | Male | ||||||
Part I: Gender Identity | ||||||||
Directors: | 3 | 4 | ||||||
Part II: Demographic Background | ||||||||
Norway Citizen | 1 | 1 | ||||||
Swedish Citizen | 1 | |||||||
United Kingdom Citizen 1 | 1 | |||||||
United States Citizen | 3 | |||||||
Ethnicity: White | 2 | 4 | ||||||
Ethnicity: Underrepresented Individual in Home Country Jurisdiction 2 | 1 | |||||||
| 1. | This Director holds dual citizenship in Australia and the United Kingdom. |
| 2. | Pursuant to Nasdaq instructions, under representation is based definitions of “national, racial, ethnic, indigenous, cultural, religious, or linguistic identity” in the country of the Company’s principal executive offices (i.e., Norway). |
Executive Officer Compensation
Our compensation of officers
40%.
employees, to the extent available in their home country. country of domicile.
Executive Officer.
We periodically grant subscription rights to employees and consultants to enable them to share in our successes and to reinforce a corporate culture that aligns their interests with that of our shareholders.
2021
2021.
| In thousands ($) | Salary | Cash Bonus Paid | Other Benefits | Pension Contribution | Share-Based compensation(1) | Total | ||||||||||||||||||
Vincent Graziani(2) | 312 | — | 23 | — | 120 | 455 | ||||||||||||||||||
Derek P. D’Antilio(3) | 279 | 18 | 25 | — | 84 | 406 | ||||||||||||||||||
Anthony Eaton | 220 | 24 | 1 | 13 | 132 | 390 | ||||||||||||||||||
Stanley A. Swearingen(4) | 227 | 92 | 23 | — | 677 | 1,019 | ||||||||||||||||||
Total | 1,038 | 134 | 72 | 12 | 1,013 | 2,270 | ||||||||||||||||||
| ($000s) | Salary | Cash Bonus Paid | Other Benefits | Pension Contributions | Share-Based Compensation 1 | Total | ||||||||||||||||||
Vincent Graziani 2 Chief Executive Officer | $ | 400 | $ | 44 | $ | 25 | — | $ | 126 | $ | 595 | |||||||||||||
James A. Simms 3 Chief Financial Officer | 211 | — | 20 | — | 180 | 411 | ||||||||||||||||||
Derek P. D’Antilio 4 Chief Financial Officer | 100 | 56 | 10 | — | (25 | ) | 141 | |||||||||||||||||
Anthony Eaton Chief Technology Officer | 254 | 22 | 3 | 15 | 60 | 354 | ||||||||||||||||||
Catharina Eklof 5 Chief Commercial Officer | 259 | 76 | — | — | 108 | 442 | ||||||||||||||||||
Total | $ | 1,224 | $ | 198 | $ | 58 | $ | 15 | $ | 449 | $ | 1,944 | ||||||||||||
The amount represents the amortized cost in the year, Share-based Payments |
Mr. Graziani has served as our Chief Executive Officer since February 27, 2020. |
Mr. Simms was appointed as our Chief Financial Officer effective April 26, 2021. |
| 4 | Mr. D’Antilio tendered his resignation effective April 23, 2021. |
Ms. Eklof was appointed as our Chief |
| Grant date | Number of subscription rights | Exercise price NOK per share | ||||||||||
Vincent Graziani(1) | February 26, 2020 | 5,000,000 | 1.11 | |||||||||
Derek P. D’Antilio(2) | — | — | — | |||||||||
Anthony Eaton(3)(5) | June 17, 2020 | 1,125,000 | 1.71 | |||||||||
Stanley A. Swearingen(4)(5) | June 17, 2020 | 6,815,000 | 1.71 | |||||||||
Grant Date | Number of Subscription Rights | Exercise Price NOK per Share | ||||||||||
Vincent Graziani 1 Chief Executive Officer | August 11, 2021 | 1,210,400 | 2.40 | |||||||||
James A. Simms 2 Chief Financial Officer | | April 20, 2021 August 11, 2021 | | | 2,750,000 247,400 | | | 2.71 2.40 | | |||
Anthony Eaton 3 Chief Technology Officer | August 11, 2021 | 210,300 | 2.40 | |||||||||
Catharina Eklof 4 Chief Commercial Officer | June 3, 2021 | 2,000,000 | 2.38 | |||||||||
As of December 31, |
The Board granted subscription rights to purchase 2,750,000 Ordinary Shares at the time of Mr. Simms’ appointment as CFO. As of December 31, |
As of December 31, |
|
The Board granted subscription rights |
The grants set forth in the table above were made under our 2020 and 2019 subscription rights incentive plans as resolved at the annual general meetings on May 15, 2020 and May 9, 2019, respectively. Unless specifically resolved otherwise, 25% of the subscription rights vest each year. The grants effective June 17, 2020 vest by 1/3 each year. The subscription rights expire on May 15, 2025 and May 9, 2024.
At our annual general meeting held on May 15, 2020, it was resolved that, subject to offer from the Company, our employees may elect to receive part of their compensation in the form of ordinary shares in lieu of cash. If so elected, the employee may purchase our ordinary share at a 15% discount. On July 1, 2020, 59 employees received an aggregate of 4,318,523 shares in lieu of cash incentive compensation of $0.6 million. The shares are subject to a 6-month lock-up period. Messrs. D’Antilio, Eaton and Swearingen acquired 136,479 shares, 181,041 shares and 718,464 shares, respectively, through this program.
Our executive officers may also participate in the ESPP, on the same terms as all other employees in their home country. On December 1, 2020, Messrs. Graziani, D’Antilio, Eaton and Swearingen acquired 125,239 shares, 70,447 shares, 38,534 shares and 31,112 shares, respectively, through the ESPP.
| ($000s) | Cash Compensation | Share-based Compensation | Total | |||||||||
Morten Opstad | $ | 59 | $ | — | $ | 59 | ||||||
Lawrence J. Ciaccia | 28 | 33 | 61 | |||||||||
Deborah Lee Davis | 67 | — | 67 | |||||||||
Hanne Høvding | 52 | — | 52 | |||||||||
Annika Olsson | — | — | — | |||||||||
Thomas M. Quindlen | 2 | 32 | 34 | |||||||||
Stephen A. Skaggs | 4 | 58 | 62 | |||||||||
Total | $ | 212 | $ | 123 | $ | 335 | ||||||
Members of our board of directors had an optionAnnual General Meeting, held on May 12, 2021, it was resolved to allow Directors to elect to receive all or part of their respective boardBoard compensation in the form of sharesOrdinary Shares. During 2021, Directors elected to receive Ordinary Shares as in our company.Thethe following compensation was paid in shares:
Ms. Davisamounts. Shares were acquired 227,073 shares with a purchase priceat their par value of NOK 0.15 per share,0.15:
The following table sets forth the compensation paid to our directors during the year ended December 31, 2020 for service on our board of directors:
Name | Cash Compensation | Share-based compensation | Total | |||||||||
| In thousand | ||||||||||||
Board Members: | ||||||||||||
Morten Opstad | $ | 40 | $ | — | $ | 40 | ||||||
Lawrence John Ciaccia | 38 | — | 38 | |||||||||
Deborah Lee Davis | 10 | 36 | 46 | |||||||||
Hanne Høvding | 32 | — | 32 | |||||||||
Stephen A. Skaggs | 4 | 34 | 38 | |||||||||
Board Observer: | ||||||||||||
Thomas M. Quindlen(1) | — | — | — | |||||||||
|
Our 2020 annual general meeting held on May 15, 2020. approved an option to the board members to take their compensation in connection with board services in full or in part in shares, as described above.
2020
appreciation-based incentiveinstrument as may be designated by our board of directors. Board.
As of our annual general meeting held on May 15, 2020, we had 31,890,450 subscription rights outstanding under the 2016 Plan, 2017 Plan and 2018 Plan, at a weighted average exercise price of NOK 5.40 per share. As the trading price of our shares on Oslo Børs had been significantly lower than such exercise price, these subscription rights had no intrinsic value and represented no actual incentive for our employees. Therefore, at our 2020 annual general meeting, it was resolved that we may offer employees and individual contractors who hold existing subscription rights under the 2016 Plan, 2017 Plan and 2018 Plan an option to surrender and cancel their existing subscription rights granted under such previous plans in exchange for a right to receive new subscription rights under the 2020 Plan. Holders of existing subscription rights pursuant to the previous plans that have an exercise price higher than the fair market value of our shares as of the date of exchange were eligible for the exchange program. At our 2020 annual general meeting, it was further resolved that such exchanged subscription rights shall have a three-year vesting period. One-third of such subscription rights will vest each year, beginning on April 15, 2021. As consideration for the shares to be issued upon exercise of such exchanged subscription rights, the holders of such subscription rights shall pay to us an exercise price of NOK 1.71 per share, which was the closing price of our shares on Oslo Børs on May 11, 2020, the date on which we issued additional shares to existing and new investors through a private placement. Other than the foregoing, the terms and conditions of the 2020 Plan apply correspondingly to these exchanged subscription rights.
On October 2, 2020, our board of directors adopted a resolution to replace subscription rights to purchase an aggregate of 25,962,800 ordinary shares, all of which were granted pursuant to the 2016 Plan, 2017 Plan and
2018 Plan, with new subscription rights under the 2020 Plan, on a one-to-one basis, effective June 17, 2020. The number of outstanding subscription rights remained unchanged following such exchange. As discussed above, such new subscription rights under the 2020 Plan shall have an exercise price of NOK 1.71 per share. One-third of such replacement subscription rights will vest each year, beginning on April 15, 2021. All of such replacement subscription rights will expire on May 15, 2025.
2020
ESPP was adopted.
C. Board Practices
C. | Board Practices |
with us that could compromise his or her ability to exercise independent judgment in carrying out his or her responsibilities. Based upon information requested from, and provided by, each directorDirector concerning such director’sDirector’s background, employment, and affiliations, including family relationships, our board of directorsBoard has determined that allfive of our directors, except for Mr. Opstad,seven Directors qualify as “independent directors” as defined under applicable rules of the Nasdaq Stock Marketrules and the independence requirements contemplated by the Exchange Act. The Board determined that Mr. Opstad, our Board chair, and Mr. Ciaccia, our Deputy chair, do
Furthermore, our board of directors has determined that all of our directors, except for Messrs. Opstad and Ciaccia, are “independent directors”Board made the same determination under the criteria of the Norwegian Code of Practice for Corporate Governance, dated October 17, 2018 or the Code(the “Code of Practice.Practice”). The composition of our board of directorsBoard complies with the independence requirements under the Code of Practice, as well as Oslo Børs’ terms of listing. It also meets the Norwegian statutory gender requirements.
report filed with Norwegian regulatory bodies.
Corporate Governance Practices
principles differ from those generally applicable to public companies listed on Nasdaq. Nasdaq Rule 5615(a)(3) provides thatpermits a foreign private issuer, such as us, maythe Company, to rely on home country corporate governance practices, in lieu of certain of the rules in the Nasdaq Rule 5600 Series and Rule 5250(d), provided that wethe foreign private issuer nevertheless complycomplies with Nasdaq’s Notification of Noncompliance requirement (Rule 5625), the Voting Rights requirement (Rule 5640), and that we haveit maintains an audit committee that satisfiesmeeting the requirements of Rule 5605(c)(3), consisting of committee members that meetof the Board meeting the independence requirements of Rule 5605(c)(2)(A)(ii). We comply with the
However, the Code of Practice, recommends (i) the majority of the Directors be independent of executive personnel and material business contacts, and (ii) at least two Directors be independent of significant shareholders. Accordingly, we do assess the independence of our Directors pursuant to the Code of Practice and have concluded the majority of our Directors are independent, based upon those standards. |
|
20-F
|
if applicable, recommending the policy for, and scope of, retirement fund arrangements for the CEO and executive team;
analyze
assessing the re-election by shareholders of any director, having due regard to his or her performance and ability to continue to contribute to our board of directors in the light of the knowledge, skills and experience required andBoard, as well as the need for progressiveperiodically refreshing the composition of the board of directors.
D. | Employees |
engineering functions (33 in hardware design (i.e., silicon, sensors, and packaging); 21 in systems design; and 18 in software development);
E. | Share Ownership |
Item 7. | Major Shareholders and Related Party Transactions. |
A. | Major Shareholders |
March 31, 2022.
Unless otherwise indicated, the address of each beneficial owner listed in the table below is c/o IDEX Biometrics ASA, Dronning Eufemias gate 16,
| Name of Beneficial Owner(1) | Number of Ordinary Shares Beneficially Owned | Percentage of Ordinary Shares Beneficially Owned | ||||||
5% or Greater Shareholders:(2)(3) | ||||||||
Robert Keith(4) | 166,659,914 | 18.21 | % | |||||
UBS Switzerland AG(5) | 73,574,103 | 8.04 | ||||||
Sundt AS(6) | 61,740,365 | 6.74 | ||||||
Goldman Sachs International(7) | 59,623,073 | 6.51 | ||||||
Sundvall Holding AS(8) | 56,964,051 | 6.22 | ||||||
Executive Officers: | ||||||||
Vincent Graziani(9) | 2,060,239 | * | ||||||
Derek P. D’Antilio(10) | 1,257,926 | * | ||||||
Anthony M. Eaton(11) | 706,525 | * | ||||||
Stanley A. Swearingen(12) | 3,721,467 | * | ||||||
Board of Directors: | ||||||||
Morten Opstad(13) | 7,398,916 | * | ||||||
Lawrence John Ciaccia(14) | 471,563 | * | ||||||
Deborah Lee Davis(15) | 564,479 | * | ||||||
Hanne Høvding(16) | 487,778 | * | ||||||
Stephen A. Skaggs(17) | 764,909 | * | ||||||
Non-Voting Board Observer: | ||||||||
Thomas M. Quindlen(18) | 275,000 | * | ||||||
All current directors (including non-voting board observer) and executive officers as a group (10 persons) | 17,708,802 | 1.93 | ||||||
Name of Reported Beneficial Owner 1 | Number of Ordinary Shares Beneficially Owned | Percentage of Total | ||||||
5% or Greater Shareholders: | ||||||||
Robert N. Keith 2 | 185,344,423 | 18.36 | % | |||||
Société Générale 3 | 72,660,606 | 7.18 | ||||||
Sundt AS 4 | 68,507,977 | 6.77 | ||||||
Sundvall Holding AS 5 | 52,964,051 | 5.23 | ||||||
Executive Officers: | ||||||||
Vincent Graziani 6 | 3,725,725 | * | ||||||
James A. Simms 7 | 2,182,236 | * | ||||||
Anthony M. Eaton 8 | 1,198,539 | * | ||||||
Catharina Eklof 9 | 589,684 | * | ||||||
Name of Reported Beneficial Owner 1 | Number of Ordinary Shares Beneficially Owned | Percentage of Total | ||||||
Board of Directors: | ||||||||
Morten Opstad 10 | 7,398,916 | * | ||||||
Lawrence J. Ciaccia 11 | 815,021 | * | ||||||
Deborah Lee Davis 12 | 564,479 | * | ||||||
Hanne Høvding 13 | 487,778 | * | ||||||
Annika Olsson 14 | 52,631 | * | ||||||
Thomas M. Quindlen 15 | 413,981 | * | ||||||
Stephen A. Skaggs 16 | 1,018,053 | * | ||||||
Directors and Executive Officers as a group (11 persons) | 18,447,043 | 1.81 | % | |||||
| * | Represents beneficial ownership of less than 1%. |
Beneficial ownership presented in this table, as of March 31, 2022, is determined in accordance with the rules of the SEC, which differ from local rules in Norway. Pursuant to the Norwegian Securities Trading Act dated June 29, 2007, no.75, |
| 2 | Pursuant to annual disclosure requirements of 2-5 of the STA, collectively held 185,344,423 Ordinary Shares, representing 18.36% of the total number of our outstanding Ordinary Shares as of that date. According to data from the Euronext VPS, as of March 31, 2022, Mr. Keith has direct holdings of 32,139,394 Ordinary Shares. We believe the balance of Ordinary Shares comprising the total number of Ordinary Shares beneficially owned by Mr. Keith, as of March 31, 2022, are |
Société Générale is a nominee |
|
|
Société Générale. The principal business address for |
The principal business address for Sundt AS is Dronningen 1, 0287 Oslo, Norway. |
|
The principal business address for Sundvall Holding AS is Strømsveien 314B, 1081 Oslo, Norway. |
Represents |
Consists of |
| 8 | Consists of 284,639 Ordinary Shares held |
|
Consists of |
Represents 7,398,916 |
Represents |
Represents 564,479 |
Represents 487,778 |
Represents |
| 15 | Represents 413,981 Ordinary Shares held by Mr. Quindlen as of March 31, 2022. |
| 16 | Represents 1,018,053 Ordinary Shares held by Mr. Skaggs as of |
|
Significant Changes in Percentage
as of December 31, 2021 and December 31, 2018
| December 31, 2020 | December 31, 2017 | |||||||||||||||||
| Shareholder | Number of shares | Percent of shares | Shareholder | Number of shares | Percent of shares | |||||||||||||
UBS Switzerland AG(N) | 73,260,653 | 8.80 | % | The Northern Trust Comp, London Br(N)(2) | 108,420,610 | 19.99 | % | |||||||||||
Robert Keith(1) | 61,639,394 | 7.41 | Sundvall Holding AS | 59,734,299 | 11.01 | |||||||||||||
Goldman Sachs International(N) | 59,623,073 | 7.16 | Invesco Perpetual High Income Fund | 53,228,391 | 9.81 | |||||||||||||
Sundvall Holding AS | 56,964,051 | 6.85 | Charles Street International Ltd.(3) | 38,157,236 | 7.04 | |||||||||||||
Sundt AS | 55,740,365 | 6.70 | Invesco Perpetual Income Fund | 36,771,609 | 6.78 | |||||||||||||
The Northern Trust Comp, London Br(N)(2) | 45,030,909 | 5.41 | The Northern Trust Comp, London Br(N)(2) | 29,597,688 | 5.46 | |||||||||||||
Others | 479,888,303 | 57.67 | Others | 216,473,272 | 39.91 | |||||||||||||
|
|
|
|
|
|
|
| |||||||||||
Total | 832,146,748 | 100.00 | % | Total | 542,383,105 | 100.00 | % | |||||||||||
|
|
|
|
|
|
|
| |||||||||||
December 31, 2021 | December 31, 2018 | |||||||||||||||||
Shareholder | Number of Ordinary Shares | Percent of Total | Shareholder | Number of Ordinary Shares | Percent of Total | |||||||||||||
Société Générale (N) 1 | 72,660,606 | 7.19 | % | The Northern Trust Company (N) 4 | 108,420,610 | 19.92 | % | |||||||||||
Sundt AS 2 | 68,507,977 | 6,78 | Sundvall Holding AS | 56,911,021 | 10.46 | |||||||||||||
Robert N. Keith 3 | 62,139,394 | 6.15 | Invesco Perpetual High Income Fund 5 | 53,228,391 | 9.78 | |||||||||||||
Sundvall Holding AS | 55,964,051 | 5.53 | Charles Street International Holding Ltd. 6 | 38,157,236 | 7.01 | |||||||||||||
Invesco Perpetual Income Fund 5 | 36,771,609 | 6.76 | ||||||||||||||||
The Northern Trust Company (N) 4 | 45,030,909 | 4.46 | The Northern Trust Company any (N) 4 | 29,597,688 | 5.44 | |||||||||||||
Others | 581,806,729 | 57.58 | Others | 221,227,982 | 40.64 | |||||||||||||
Total | 1,010,388,454 | 100.00 | % | Total | 544,314,537 | 100.00 | % | |||||||||||
| (N) | The shareholder on record is a nominee for one or more beneficial |
| 1 | Societé Generale held 0.01% of outstanding Ordinary Shares as of December 31, 2018. We are not aware of the number or identity of |
| 2 | Sundt AS did not hold any Ordinary Shares as of December 31, 2018. |
| 3 | The number of Ordinary Shares includes Mr. Keith’s holding of 30,000,000 Ordinary Shares held by the Depositary for our ADSs, as well as the reported direct ownership of 32,139,394 Ordinary Shares. Pursuant to annual disclosure requirements of the STA, Mr. Keith reported to the Oslo Børs, as of November 10, 2021, that he, together with “related parties,” as such term is 2-5 of the STA, collectively held 185,344,423 Ordinary Shares, representing 18.36% of the total number of our outstanding Ordinary Shares as of that date. |
| 4 | The beneficial owners of the Ordinary Shares held by The Northern Trust Company, London Branch, as nominee, as of December 31, 2018, were funds managed by Woodford Investment Management Ltd. As of December 31, 2021, The Northern Trust Company, London Branch, holds Ordinary Shares as nominee for funds managed by Schroders plc. |
| 5 | Invesco Perpetual High Income Fund and Invesco Perpetual Income Fund held no Ordinary Shares as of December 31, 2021. |
| 6 | Charles Street International Holding Ltd. (“CSIHL”), an entity related to |
Mr. Keith, held no Ordinary Shares as of December 31, 2021. Pursuant to the STA, Mr. Keith reported to the Oslo |
|
|
beneficial shareholders choose to move their holdings between nominee accounts.
total Ordinary Shares outstanding as of that date.
by CSIHL.
Further, aware of the number or identity of the beneficial owners of Ordinary Shares held in Société Générale nominee accounts.
Finally,
Ordinary Shares in 2020 and 2021.
B. | Related Party Transactions |
parties.
In July, 2020,March 2022, we issued 4,318,523 ordinary shares1,765,791 Ordinary Shares to employees who elected to receive sharesparticipating in lieu of cash incentive payment amounting to $0.6 million.our ESPP, raising $341 thousand. Among such employees, our Chief FinancialExecutive Officer, Derek D’Antilio,Vincent Graziani, acquired 136,479 shares,52,446 Ordinary Shares, and our Chief Technology Officer, Anthony Eaton, acquired 181,041 shares.
19,683 Ordinary Shares.
A Director, Ms. Olsson, acquired 52,631 Ordinary Shares.
8,029 Ordinary Shares.
Skaggs.
and $470 thousand in 2019, respectively.
C. | Interests of Experts and Counsel |
Item 8. | Financial Information. |
A. | Consolidated Statements and Other Financial Information |
resolution by a general meeting of shareholders.consolidated financial statementsConsolidated Financial Statements are appended at the end ofpresented within this annual report,Annual Report, starting at pageF-1, and are incorporated by reference herein.ornor paid any dividends on any class of our issued share capital. We intend to retain any earnings for use in our business and do not currently intend to pay dividends on our ordinary shares.Ordinary Shares. The declaration and payment of any future dividends will be subject to a resolution by thea general meeting of shareholders with a simple majority upon a proposal from our board of directorsBoard and will depend upon our results of operations, cash requirements, financial condition, contractual restrictions, any future debt agreements or applicable laws and other factors that our board of directorsBoard may deem relevant.Kingdom of Norway, among other things, a public limited liability company such as usIDEX may only distribute dividends to the extent it will have net assets covering the company’sits share capital and other restricted equity after the distribution has been made. The calculation shall be made on the basis of the balance sheet in the company’s last approved financial statements, provided, however, that it is the registered share capital at the time of decision that applies. Further, extraordinaryExtraordinary dividend payments may be resolved based upon an interim balance sheet prepared no more than six (6) months prior to the date of resolution.thea company may only distribute dividend to the extent that it maintains a sound equity and liquidity post-distribution. See “Description“See Exhibit 2.4—Description of Share Capital and Articles of Association” for additional information.
B. | Significant Changes |
Item 9. | The Offer and Listing. |
A. | Offer and Listing Details |
B. | Plan of Distribution |
C. | Markets |
D. | Selling Shareholders |
E. | Dilution |
F. | Expenses of the Issue |
Item 10. | Additional Information. |
A. | Share Capital |
B. | Memorandum and Articles of Association |
C. | Material Contracts |
We retain theframework supply agreement with IDEMIA France SAS or IDEMIA.(“IDEMIA”). Pursuant to this agreement, we agreed to supply IDEMIA with certain of our fingerprint sensor components,TrustedBio fingerprint sensor modules, and loaded firmware, including our TrustedBio technology, which is to be usedfor use in IDEMIA’s next-generation biometricF.CODE payment cards.retain the intellectual property rights to the products we provide. We are also responsible for monitoring the risk of obsolescence of any components of our products.
2020 and have shipped steady volumes under the agreement through 2021. Under the terms of the agreement, we agreed to indemnify Bloomberg from all claims arising from or in connection with, among other things, our provision of services to Bloomberg, any material breach of the agreement, or any claim alleging infringement upon or misappropriation of any applicable intellectual property rights. The agreement will remain in effect, unless terminated by Bloomberg for cause with immediate effect or otherwise with 90 days’ prior written notice.
D. | Exchange Controls |
E. | Taxation |
Material U.S. Federal Income Tax Considerations for U.S. Holders
| (1) | a citizen or individual resident of the United States; |
| (2) | a corporation, or other entity taxable as a corporation, created or organized in or under the laws of the United States, any state therein, or the District of Columbia; |
| (3) | an estate, the income of which is subject to U.S. federal income taxation regardless of its source; or |
| (4) | a trust, if (a) a U.S. court is able to exercise primary supervision over the administration of the trust and one or more U.S. persons have authority to control all substantial decisions of the trust, or (b) the trust has a valid election to be treated as a U.S. person under applicable |
| 12 | Our annual Subscription Rights Incentive Plans only provide for the award of stock options for the purchase of the Company’s Ordinary Shares. These options may be incentive stock options or nonstatutory stock options, and both are referred to as “subscription rights” pursuant to the Public Limited Companies Act of the Kingdom of Norway dated 13 June 1997, as amended. |
Ordinary Shares.
A
the ordinary sharesOrdinary Shares or ADSs. U.S. Holders should consult their tax advisers as to the possibility and consequences of making a deemed sale election if we ceasethe Company ceases to be a PFIC and such election becomes available.
For each taxable year we areIDEX is treated as a PFIC with respect to U.S. Holders, U.S. Holders will be subject to special tax rules with respect to any “excess distribution” such U.S. Holder receives and any gain such U.S. Holder recognizes from a sale or other disposition (including a pledge) of ordinary sharesOrdinary Shares or ADSs, unless (1) such
A U.S. Holder that makesmaking aordinary sharesOrdinary Shares or ADSs at the close of the taxable year over the U.S. Holder’s adjusted tax basis in the ordinary sharesOrdinary Shares or ADSs. An electing holder may also claim an ordinary loss deduction for the excess, if any, of the U.S. Holder’s adjusted basis in the ordinary shares Ordinary Shares
”
Dollars.
Information with RespectInternal Revenue Service.
Certain U.S. Holders who areforeign companies and individuals (and, under proposed regulations, certain entities) may be required to report information relating to the ordinary shares or ADSs, subject to certain exceptions (including an exception
Norway Taxation
General
Norwegian withholding tax. (See “NORWAY TAXATION” below.)
changes could possibly be made on a retrospective basis. Tax rates indicated below are applicable for the income year 2020. The tax legislation of the investor’s member state in the EEA or country of residence/incorporation and of the issuer’s country of incorporation may have an impact on the income received from the securities.
The following summary is of a general nature and does not purport to be a comprehensive description of all the tax considerations that may be relevant to a decision to acquire, own or dispose shares or subscription rights in our company. Furthermore, the summary only focuses on the shareholder categories explicitly mentioned below (individual shareholders and limited liability companies). Shareholders are advised to consult their own tax advisors concerning the overall tax consequences of their ownership of shares. The summary only addresses Norwegian tax laws.
Norwegian Shareholders
Taxation of dividends—Individual shareholders
Dividends distributed to Norwegian individual shareholders are taxable as general income. The taxable dividend, less a calculated tax-free allowance, is grossed up to 144%, which amount is taxed at the general income tax rate of 22% (resulting in an effective tax rate of 31.68%). The tax-free allowance shall be calculated on a share by share basis, and the allowance for each share will be equal to the cost price of the share, multiplied by a risk-free interest rate. This risk-free interest rate is set in January of the year following the income year. Any part of the calculated allowance one year exceeding the dividend distributed on the share will be carried forward to the following years and reduce the taxable dividend income. Unused allowance will also be included in the basis for calculating the tax-free allowance later years. The tax-free allowance is calculated for each calendar year and allocated solely to Norwegian individual shareholders holding shares at the expiry of the relevant income year.
Taxation of dividends—Corporate shareholders (Limited liability companies)
Dividends distributed to a shareholder, which is a limited liability company residentresidents in Norway for tax purposes or Norwegian corporate shareholders, and holding more than 90% of the shares and votes in the distributing company, are fully exempt from taxation. To other corporate shareholders 3% of the dividends shall be subject to general income tax at the 22% rate (resulting in an effective tax rate of 0.66%
Taxation on realization of shares—Individual shareholders
Sale, redemption or other disposal of shares is considered a realization for Norwegian tax purposes. A capital gain or loss generated by a Norwegian individual shareholder through a disposal of shares is taxable or tax deductible in Norway. Such capital gain or loss is included in or deducted from the basis for computation of general income in the year of disposal. The gain is subject to tax and the loss is tax deductible irrespective of the duration of the ownership and the number of shares disposed of.
The capital gain is calculated on the consideration received less the cost price of the share and transactional expenses. The taxable gain, less any unused calculated tax-free allowance, is grossed up to 144%, which amount is taxed at the general income tax rate of 22% (resulting in an effective tax rate of 31.68%). The tax-free allowance for each share is equal to the total of any unused tax-free allowance amounts calculated for this share for previous years (see “—Taxation of dividends—Individual shareholders” above), which exceeded dividends distributed on this share. The calculated tax-free allowance may only be deducted in order to reduce a taxable gain calculated upon the realization of the share and may not be deducted in order to produce or increase a loss for tax purposes.
If the shareholder owns shares acquired at different points in time, the shares that were acquired first will be regarded as the first to be disposed of, on a first-in first-out basis.
Taxation on realization of shares—Corporate shareholders (Limited liability companies)
Norwegian corporate shareholders are not subject to tax on capital gains related to realization of shares in a Norwegian company, and losses related to such realization are not tax deductible.
Taxation related to independent subscription rights—Individual shareholders
A Norwegian individual shareholder’s subscription for independent subscription rights is not subject to tax in Norway. Costs related to the subscription for independent subscription rights will be added to the cost price of the independent subscription right.
Exercise of independent subscription rights is not taxable; the cost price of the subscription right shall be added to the tax base of the shares acquired.
Sale and other transfer of subscription rights is considered as realization for Norwegian tax purposes. A capital gain or loss generated by a Norwegian individual shareholder through a realization of independent subscription rights is taxable or tax deductible in Norway. Such capital gain or loss is generally included in or deducted from the basis for computation of general income in the year of disposal. The general income grossed up to 144% and taxed at the rate of 22% (resulting in an effective tax-rate of 31.68%).
However, please note that the realized gains related to independent subscription rights granted to Norwegian employees as a consequence of their employment will be included in the basis for calculating their salary payments. Such salary payments are subject to taxation at a marginal tax rate of 46.4%. In addition, the employer will be obligated to pay social security contributions at a rate normally of 14.1%.
Taxation related to independent subscription rights—Corporate shareholders
A Norwegian corporate shareholder’s subscription for independent subscription rights is not subject to taxation in Norway. Costs related to the subscription for independent subscription rights will be added to the cost price of the independent subscription rights.
Norwegian corporate shareholders are generally exempt from tax on capital gains upon the sale or other realization of independent subscription rights to shares in a Norwegian company, and losses are not tax deductible.
Net wealth tax
The value of shares is included in the basis for the computation of wealth tax imposed on Norwegian individual shareholders. The marginal wealth tax rate is 0.85% of the value assessed. The value for assessment purposes for shares on Oslo Børs is 65% (from January 1, 2020) of the listed value as of January 1 in the year of assessment. Norwegian corporate shareholders are not subject to net wealth tax.
Inheritance tax
Effective January 1, 2020, there is no inheritance tax in Norway.
Non-Resident Shareholders
This section summarizes Norwegian tax rules relevant to shareholders who are not resident in Norway for tax purposes, or Non-resident shareholders. Non-resident shareholders’Shareholders’ tax liabilities in their home country or other countries will depend on applicable tax rules in the relevant country.
withholding tax.
Non-resident individual shareholders resident within
Nominee registered sharesnominee will be subject to withholding tax at a rate of 25%, unless the shareholderbeneficial owner has fulfilled specific documentation requirements, and the nominee has obtained approval from the Norwegian Tax Administration for the dividend to be subject to a lower withholding tax rate. shareholderssufferedincurred a higher withholding tax than set out by an applicable tax treaty or the Norwegian Tax Act may apply to the Norwegian tax authoritiesTax Administration for a refund of the excess withholding tax deducted.
VAT and transfer taxes
No VAT, stamp or similar duties are currently imposed in Norway on the transfer of shares whether on acquisition or disposal.
F. | Dividends and Paying |
G. | Statement by |
H. | Documents on |
I. | Subsidiary |
Item 11. | Quantitative and Qualitative Disclosures About Market Risk. |
OurDollars.Dollars (“USD”), the Company’s functional currency. However, we incurthe Company incurs a portion of ourits expenses in other currencies, primarily Norwegian Krone (“NOK”), British Pounds Norwegian Krone, Euros(“GBP”), and Chinese Yuan (“CNY”), and areis exposed to changes in the effectsrates of exchange between the USD and these exchange rates. We seekcurrencies. IDEX seeks to minimize this exposure by maintaining currency cash balances at targeted levels appropriate to meet foreseeable short toExcess cash and cash equivalents have been kept in Norwegian Krone. Starting 2021, excess cash and cash equivalents are held in US Dollar. We doThe Company does not use forward exchange contracts or other hedging strategies to manage exchange rate exposure. Excess cash balances are generally held inNorwegian KroneNOK relative to the U.S. dollar or other currenciesUSD would have had a corresponding effect on the carrying value of our net financial assets and liabilities in foreign currencies at December 31, 2020, and 2019. The amount would have been $0.7 million,December 31, 2019, of approximately $700 thousand and $1.4 million, respectively.20202021, and 2019,2020, we had cash and cash equivalents of $33.8 million and $7.3 million, respectively. As IDEX emphasizes capital preservation and $14.1 million, respectively. Ourliquidity in managing its cash, the Company’s exposure to interest rate sensitivity is impactedinfluenced primarily by changes in the underlying bank interest rates in Norway. Our surplusNorway, where the Company’s cash and cash equivalentsaccounts are investedconcentrated. Cash is held inwith terms up to three months. We have not entered into investments for trading or speculative purposes. Our depositsall of which are considered highly liquid. Accordingly, an immediate one percentage point change in interest rates would not gain or losehave a material effect on the fair market value onthe Company’s cash accounts.changes. Interest income would changerisks associated with variable rate debt. In calculating the recorded and carrying values of leases, interest rate.rates are a variable in the calculations of these values, but do not represent a meaningful level of risk of material changes in these values.We have
Credit and Liquidity Risk
We have a relatively short commercial history and limited revenue in the periods presented. We do not believe we had significant credit risk relating to our trade receivables as of December 31, 2020 and 2019. Our cash and bank deposits are on deposit with financial institutions with a credit rating equivalent to the main Norwegian clearing banks. We have no debt to financial institutions. We maintainmaintains adequate bank balances to meet anticipated liabilities as they fallbecome due throughfor at least twelve months from the second quarterdate of 2022 .
this report.
Item 12. | Description of Securities Other than Equity Securities. |
A. | Debt Securities |
B. | Warrants and Rights |
C. | Other Securities |
D. | American Depositary Shares |
You
As an ADS holder, we
Norway.
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You
Item 13. | Defaults, Dividend Arrearages and Delinquencies. |
Item 14. | Material Modifications to the Rights of Security Holders and Use of Proceeds. |
Item 15. | Disclosure Controls and Procedures. |
A. | Disclosure Controls and Procedures |
B. | Management’s Annual Report on Internal Control Over Financial Reporting |
This annual report does not include a report
C. | Attestation Report of the Registered Public Accounting Firm |
D. | Changes in Internal Control Over Financial Reporting |
Item 16A. | Audit Committee Financial Expert. |
II-1
Item 16B. | Code of Conduct and Code of Ethics. |
Item 16C. | Principal Accountant Fees and Services. |
| Year Ended December 31, | ||||||||
| 2020 | 2019 | |||||||
Audit services | $ | 243 | $ | 476 | ||||
Audit-related services | — | — | ||||||
Tax services | — | 8 | ||||||
Other services | 12 | 5 | ||||||
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| $ | 255 | $ | 489 | |||||
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2020:
Year Ended December 31, | ||||||||
| ($000s) | 2021 | 2020 | ||||||
Audit services | $ | 352 | $ | 235 | ||||
Audit-related services | 22 | 8 | ||||||
Tax services | 7 | — | ||||||
Other services | 24 | 12 | ||||||
| $ | 405 | $ | 255 | |||||
Item 16D. | Exemptions from the Listing Standards for Audit Committees. |
Item 16E. | Purchases of Equity Securities by the Issuer and Affiliated Purchasers. |
Item 16F. | Change in Registrant’s Certifying Accountant. |
Item 16G. | Corporate Governance. |
II-2
are permitted to follow
We do not intendpursuant to comply with Nasdaq Rule 5605(b)(1)5615(a)(3), which requires that our board of directors be comprised of a majority of independent directors. Such requirements are not required under the laws of Norway. However, the Code of Practice recommends that the majority of the board of directors be independent of the company’s executive personnel and material business contacts, and that at least two of the members of the board of directors be independent of the company’s main shareholders. Therefore, we do make an assessment of the independence of our directors under Norwegian corporate governance practices and have concluded that the majority of our directors are independent based upon those standards.
We do not intend to follow Nasdaq Rule 5605(d)(1) regarding the compensation committee charter or Nasdaq Rule 5605(d)(2) regarding compensation committee composition. Such requirements are not required under the laws of Norway. However, we do maintain a compensation committee in line with Norwegian law. See the section entitledsee “Item 6.C.6. Section C. Board Practices—Committees of Our Board of Directors—Compensation Committee” for additional information.
We do not intend to follow Nasdaq Rule 5605(e)(1)(A) with respect to having director nominees selected by independent directors constituting a majority of our board’s independent directors in a vote in which only independent directors participate or Nasdaq Rule 5605(e)(2) regarding the adoption of a formal written charter or board resolution, as applicable, addressing the nominations process. Such requirements are not required under the laws of Norway. However, we do maintain a nomination committee in line with Norwegian law. The establishment of our nomination committee was resolved by our annual general meeting on May 15, 2012, in accordance with the Code of Practice, and the guidelines for such committee were resolved and adopted by the same annual general meeting, which guidelines address the nominations process, among other things. See the section entitled “Item 6.C. Board Practices—Committees of Our Board of Directors—Nomination Committee” for additional information.
We do not intend to comply with Nasdaq Rule 5610, which requires disclosure within four business days of any determination to grant a waiver of the code of business conduct and ethics to directors and officers.
We do not intend to follow Nasdaq Rule 5620(c) regarding quorum requirements applicable to meetings of shareholders. Such quorum requirements are not required under the laws of Norway. In Norway, only a limited number of shareholder decisions require unanimity, which effectively imposes a quorum requirement of 100% on such decisions.
We do not intend to follow Nasdaq Rule 5635 regarding shareholder approval requirements in connection with certain corporate actions, such as a change of control of the company. However, under Norwegian law, any issuance of shares requires shareholder approval or must be resolved by the board of directors in accordance with a board authorization from the general meeting of shareholders. Shareholder approval is also required for share-based compensation to the board of directors and certain major agreements between the company and an affiliated party.
We may utilize these exemptions for as long as we continue to qualify as a foreign private issuer.
Item 16H. | Mine Safety Disclosure. |
II-3
Item 16I. | Disclosure Regarding Foreign Jurisdictions that Prevent Inspections. |
Item 17. | Financial Statements. |
Item 18. | Financial Statements. |
Item 19. | Exhibits. |
III-1
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13.2** | Certification by the Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |||||||||||||||||
15.1* | Consent of Ernst & Young AS, the registrant’s independent registered public accounting firm | |||||||||||||||||
101.INS* | XBRL Instance Document | |||||||||||||||||
101.SCH* | XBRL Taxonomy Extension Schema Document | |||||||||||||||||
101.CAL* | XBRL Taxonomy Extension Calculation Linkbase Document | |||||||||||||||||
101.DEF* | XBRL Taxonomy Extension Definition Linkbase Document | |||||||||||||||||
101.LAB* | XBRL Taxonomy Extension Label Linkbase Document | |||||||||||||||||
101.PRE* | XBRL Taxonomy Extension Presentation Linkbase Document | |||||||||||||||||
104 | Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101) | |||||||||||||||||
| * | Filed herewith. |
| ** | Furnished herewith. |
|
| † | Indicates a management contract or any compensatory plan, contract or arrangement. |
| # | Certain portions of this exhibit have been omitted because they are |
III-2
IDEX BIOMETRICS ASA | ||
| By: | /s/ Vincent Graziani | |
| Name: | Vincent Graziani | |
| Title: | Chief Executive Officer | |
III-3
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| Year Ended December 31, | ||||||||||||||
| Note | 2020 | 2019 | 2018 | |||||||||||
Revenue: | ||||||||||||||
Product | $ | 1,013 | $ | 159 | $ | 268 | ||||||||
Service | 82 | 265 | 172 | |||||||||||
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Total revenue | 3 | 1,095 | 424 | 440 | ||||||||||
Operating expenses: | ||||||||||||||
Purchases, net of inventory variation | 275 | 62 | 185 | |||||||||||
Payroll expenses | 4 | 17,672 | 21,750 | 19,770 | ||||||||||
Research and development expenses | 5, 6 | 1,895 | 4,385 | 5,631 | ||||||||||
Other operating expenses | 20 | 5,936 | 4,641 | 3,919 | ||||||||||
Amortization and depreciation | 10,11,12 | 1,719 | 1,633 | 842 | ||||||||||
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Total operating expenses | 27,497 | 32,471 | 30,347 | |||||||||||
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Loss from operations | (26,402 | ) | (32,047 | ) | (29,907 | ) | ||||||||
Finance income | 26 | 135 | 134 | |||||||||||
Finance cost | 18 | (477 | ) | (351 | ) | (411 | ) | |||||||
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Loss before tax | (26,853 | ) | (32,263 | ) | (30,184 | ) | ||||||||
Income tax benefit (expense) | 8 | 99 | (160 | ) | (41 | ) | ||||||||
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Net loss for the year | $ | (26,754 | ) | $ | (32,423 | ) | $ | (30,225 | ) | |||||
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Loss per share, basic and diluted | 9 | $ | (0.03 | ) | $ | (0.05 | ) | $ | (0.06 | ) | ||||
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Year Ended December 31, | ||||||||||||||||
Note | 2021 | 2020 | 2019 | |||||||||||||
Revenue: | ||||||||||||||||
| Product | $ | 2,837 | $ | 1,013 | $ | 159 | ||||||||||
| Service | 3 | 82 | 265 | |||||||||||||
| Total revenue | 2,840 | 1,095 | 424 | |||||||||||||
| Operating expenses: | ||||||||||||||||
| Cost of materials, net of inventory change | 1,254 | 275 | 62 | |||||||||||||
| Compensation and benefits | 4 | 21,107 | 17,672 | 21,750 | ||||||||||||
| Research and development | 5, 6 | 2,680 | 1,895 | 4,385 | ||||||||||||
| Other operating expenses | 18 | 7,347 | 5,936 | 4,641 | ||||||||||||
| Amortization and depreciation | 8, 9, 10 | 1,802 | 1,719 | 1,633 | ||||||||||||
| Total operating expenses | 34,190 | 27,497 | 32,471 | |||||||||||||
| Loss from operations | (31,350 | ) | (26,402 | ) | (32,047 | ) | ||||||||||
| Finance income | 11 | 26 | 135 | |||||||||||||
| Finance cost | (1,123 | ) | (477 | ) | (351 | ) | ||||||||||
| Loss before tax | (32,462 | ) | (26,853 | ) | (32,263 | ) | ||||||||||
| Income tax expense (benefit) | 6 | 90 | (99 | ) | 160 | |||||||||||
| Net loss for the year | $ | (32,552 | ) | $ | (26,754 | ) | $ | (32,423 | ) | |||||||
| Loss per share, basic and diluted | 7 | $ | (0.04 | ) | $ | (0.03 | ) | $ | (0.05 | ) | ||||||
| Year Ended December 31, | ||||||||||||||||
| Note | 2020 | 2019 | 2018 | |||||||||||||
Net loss for the year | $ | (26,754 | ) | $ | (32,423 | ) | $ | (30,225 | ) | |||||||
Other comprehensive income that may be reclassified to profit (loss) in subsequent periods: | ||||||||||||||||
Foreign currency translation adjustment | 670 | (662 | ) | (455 | ) | |||||||||||
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Total comprehensive income (loss) for the period (net of tax) | $ | (26,084 | ) | $ | (33,085 | ) | $ | (30,680 | ) | |||||||
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Year Ended December 31, | ||||||||||||||||
Note | 2021 | 2020 | 2019 | |||||||||||||
| Net loss for the year | $ | (32,552 | ) | $ | (26,754 | ) | $ | (32,423 | ) | |||||||
| Other comprehensive income that may be reclassified to profit (loss) in subsequent periods: | ||||||||||||||||
| Foreign currency translation adjustment | 10 | 670 | (662 | ) | ||||||||||||
| Total comprehensive income (loss) for the period (net of tax) | $ | (32,542 | ) | $ | (26,084 | ) | $ | (33,085 | ) | |||||||
| Note | December 31, 2020 | December 31, 2019 | ||||||||
Assets | ||||||||||
Non-current assets: | ||||||||||
Goodwill | 10 | $ | 968 | $ | 941 | |||||
Intangible assets | 10 | 2,442 | 2,605 | |||||||
Property, plant and equipment | 11 | 1,667 | 2,013 | |||||||
Right-of-use assets | 12 | 1,016 | 1,375 | |||||||
Non-current receivables | 75 | 152 | ||||||||
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Total non-current assets | 6,168 | 7.086 | ||||||||
Current assets: | ||||||||||
Inventory | 19 | 859 | 686 | |||||||
Trade receivables | 17 | 487 | 31 | |||||||
Prepaid expenses | 1,031 | 769 | ||||||||
Other current receivables | 17 | 1,163 | 772 | |||||||
Cash and cash equivalents | 13 | 7,298 | 14,126 | |||||||
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Total current assets | 10,838 | 16,384 | ||||||||
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Total assets | $ | 17,006 | $ | 23,470 | ||||||
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Equity and liabilities | ||||||||||
Paid-in capital: | ||||||||||
Share capital (NOK 0.15 par value per share, 832,146,748 and 717,988,732 shares issued and outstanding at December 31, 2020 and 2019, respectively. | $ | 17,251 | $ | 15,445 | ||||||
Share premium | 3,608 | 197,639 | ||||||||
Other paid-in capital | 18,664 | 15,903 | ||||||||
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Total paid-in capital | 15,16 | 39,523 | 228,987 | |||||||
Foreign currency translation effects | (12,322 | ) | (12,992 | ) | ||||||
Accumulated loss | (14,687 | ) | (198,183 | ) | ||||||
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Total equity | 12,514 | 17,812 | ||||||||
Non-current liabilities: | ||||||||||
Deferred tax liabilities | 8 | — | 31 | |||||||
Non-current lease liabilities | 12 | 327 | 610 | |||||||
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Total non-current liabilities | 327 | 641 | ||||||||
Current liabilities: | ||||||||||
Accounts Payable | 18 | 631 | 463 | |||||||
Income tax payable | 8 | — | 129 | |||||||
Current lease liabilities | 18 | 731 | 788 | |||||||
Public duties payable | 320 | 357 | ||||||||
Other current liabilities | 18 | 2,483 | 3,280 | |||||||
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Total current liabilities | 4,165 | 5,017 | ||||||||
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Total liabilities | 4,492 | 5,658 | ||||||||
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Total equity and liabilities | $ | 17,006 | $ | 23,470 | ||||||
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Note | December 31, 2021 | December 31, 2020 | ||||||||||
Assets | ||||||||||||
Non-current assets: | ||||||||||||
| Goodwill | 8 | $ | 968 | $ | 968 | |||||||
| Intangible assets | 8 | 1,965 | 2,442 | |||||||||
| Property, plant, and equipment | 9 | 1,301 | 1,667 | |||||||||
Right-of-use | 10 | 357 | 1,016 | |||||||||
Non-current receivables | 87 | 75 | ||||||||||
Total non-current assets | 4,678 | 6,168 | ||||||||||
| Current assets: | ||||||||||||
| Prepaid expenses | 851 | 1,031 | ||||||||||
| Inventory | 13 | 1,234 | 859 | |||||||||
| Accounts receivable, other | 11 | 703 | 1,163 | |||||||||
| Accounts receivable, trade | 11 | 801 | 487 | |||||||||
| Cash and cash equivalents | 14 | 33,759 | 7,298 | |||||||||
| Total current assets | 37,348 | 10,838 | ||||||||||
| Total assets | $ | 42,026 | $ | 17,006 | ||||||||
Equity and liabilities | ||||||||||||
Paid-in capital: | ||||||||||||
Share capital (NOK 0.15 par value per share, 1,010,388,454 and 832,146,748 shares issued and outstanding at December 31, 2021 and 2020, respectively ) | $ | 20,410 | $ | 17,251 | ||||||||
| Share premium | 9,452 | 3,608 | ||||||||||
Other paid-in capital | 21,414 | 18,664 | ||||||||||
Total paid-in capital | 15 | 51,276 | 39,523 | |||||||||
| Foreign currency translation effects | (12,312 | ) | (12,322 | ) | ||||||||
| Accumulated loss | (1,239 | ) | (14,687 | ) | ||||||||
| Total equity | 37,725 | 12,514 | ||||||||||
Non-current liabilities: | ||||||||||||
Non-current lease liabilities | 10 | 11 | 327 | |||||||||
Total non-current liabilities | 11 | 327 | ||||||||||
| Current liabilities: | ||||||||||||
| Accounts payable | 12 | 685 | 631 | |||||||||
| Current lease liabilities | 10 | 362 | 731 | |||||||||
| Public duties payable | 393 | 320 | ||||||||||
| Other current liabilities | 12 | 2,850 | 2,483 | |||||||||
| Total current liabilities | 4,290 | 4,165 | ||||||||||
| Total liabilities | 4,301 | 4,492 | ||||||||||
| Total equity and liabilities | $ | 42,026 | $ | 17,006 | ||||||||
| Share Capital | Share Premium | Other Paid-in Capital | Foreign Currency Translation Effect | Accumulated Loss | Total Equity | |||||||||||||||||||
Balance at December 31, 2017 | $ | 12,467 | $ | 165,618 | $ | 10,404 | $ | (11,875 | ) | $ | (135,535 | ) | $ | 41,079 | ||||||||||
Share issuance | 29 | 801 | — | — | — | 830 | ||||||||||||||||||
Share-based compensation | 5 | — | 2,949 | — | — | 2,954 | ||||||||||||||||||
Loss for the year | — | — | — | — | (30,225 | ) | (30,225 | ) | ||||||||||||||||
Other comprehensive income | — | — | — | (455 | ) | — | (455 | ) | ||||||||||||||||
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Balance at December 31, 2018 | 12,501 | 166,419 | 13,353 | (12,330 | ) | (165,760 | ) | 14,183 | ||||||||||||||||
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Share issuance | 2,940 | 31,220 | — | — | — | 34,160 | ||||||||||||||||||
Share-based compensation | 4 | — | 2,550 | — | — | 2,554 | ||||||||||||||||||
Loss for the year | — | — | — | — | (32,423 | ) | (32,423 | ) | ||||||||||||||||
Other comprehensive income | — | — | — | (662 | ) | — | (662 | ) | ||||||||||||||||
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Balance at December 31, 2019 | 15,445 | 197,639 | 15,903 | (12,992 | ) | (198,183 | ) | 17,812 | ||||||||||||||||
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Share issuance | 1,729 | 16,219 | — | — | — | 17,498 | ||||||||||||||||||
Share-based compensation | 77 | — | 2,761 | — | — | 2,838 | ||||||||||||||||||
Loss for the year | — | — | — | — | (26,754 | ) | (26,754 | ) | ||||||||||||||||
Allocation of share premium | — | (210,250 | ) | — | — | 210,250 | — | |||||||||||||||||
Other comprehensive income | — | — | — | 670 | — | 670 | ||||||||||||||||||
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Balance at December 31, 2020 | $ | 17,251 | $ | 3,608 | $ | 18,664 | $ | (12,322 | ) | $ | (14,687 | ) | $ | 12,514 | ||||||||||
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($000s)
Share Capital | Share Premium | Other Paid-in Capital | Foreign Currency Translation Effect | Accumulated Loss | Total Equity | |||||||||||||||||||
| Balance at December 31, 2018 | $ | 12,501 | $ | 166,419 | $ | 13,353 | $ | (12,330 | ) | $ | (165,760 | ) | $ | 14,183 | ||||||||||
| Share issuance | 2,940 | 31,220 | — | — | — | 34,160 | ||||||||||||||||||
| Share-based compensation | 4 | — | 2,550 | — | — | 2,554 | ||||||||||||||||||
| Net loss for the year | — | — | — | — | (32,423 | ) | (32,423 | ) | ||||||||||||||||
| Other comprehensive income | — | — | — | (662 | ) | — | (662 | ) | ||||||||||||||||
| Balance at December 31, 2019 | $ | 15,445 | $ | 197,639 | $ | 15,903 | $ | (12,992 | ) | $ | (198,183 | ) | $ | 17,812 | ||||||||||
| Share issuance | 1,729 | 16,219 | — | — | — | 17,498 | ||||||||||||||||||
| Share-based compensation | 77 | — | 2,761 | — | — | 2,838 | ||||||||||||||||||
| Net loss for the year | — | — | — | — | (26,754 | ) | (26,754 | ) | ||||||||||||||||
| Allocation of share premium | — | (210,250 | ) | — | — | 210,250 | — | |||||||||||||||||
| Other comprehensive income | — | — | — | 670 | — | 670 | ||||||||||||||||||
| Balance at December 31, 2020 | $ | 17,251 | $ | 3,608 | $ | 18,664 | $ | (12,322 | ) | $ | (14,687 | ) | $ | 12,514 | ||||||||||
| Share issuance | 3,107 | 51,205 | — | — | — | 54,312 | ||||||||||||||||||
| Share-based compensation | 52 | 639 | 2,750 | — | — | 3,441 | ||||||||||||||||||
| Net loss for the year | — | — | — | — | (32,552 | ) | (32,552 | ) | ||||||||||||||||
| Allocation of share premium | — | (46,000 | ) | — | — | 46,000 | — | |||||||||||||||||
| Other comprehensive income | — | — | — | 10 | — | 10 | ||||||||||||||||||
| Balance at December 31, 2021 | $ | 20,410 | $ | 9,452 | $ | 21,414 | $ | (12,312 | ) | $ | (1,239 | ) | $ | 37,725 | ||||||||||
statements.
| Year Ended December 31, | ||||||||||||||||
| Note | 2020 | 2019 | 2018 | |||||||||||||
Operating activities | ||||||||||||||||
Profit (loss) before tax | $ | (26,853 | ) | $ | (32,263 | ) | $ | (30,184 | ) | |||||||
Amortization and depreciation expense | 10,11,12 | 1,719 | 1,633 | 842 | ||||||||||||
Share-based compensation expense | 4 | 2,755 | 2,531 | 2,969 | ||||||||||||
Change in inventories | 19 | (139 | ) | 470 | (112 | ) | ||||||||||
Change in accounts receivable | 17 | (414 | ) | 8 | 26 | |||||||||||
Change in accounts payable | 18 | 141 | (124 | ) | 252 | |||||||||||
Change in other working capital items | (618 | ) | 895 | (280 | ) | |||||||||||
Other operating activities | 579 | 43 | 119 | |||||||||||||
Interest expense | (27 | ) | 103 | 103 | ||||||||||||
Other financial items | — | (238 | ) | (314 | ) | |||||||||||
Taxes paid | (437 | ) | (226 | ) | (196 | ) | ||||||||||
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|
|
|
|
| |||||||||||
Net cash flow from operating activities | (23,294 | ) | (27,168 | ) | (26,775 | ) | ||||||||||
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| |||||||||||
Investing activities | ||||||||||||||||
Purchases of property, plant and equipment | 11 | (152 | ) | (850 | ) | (1,104 | ) | |||||||||
Purchases of intangible assets | 10 | (181 | ) | — | — | |||||||||||
Payments of non-current receivables | 17 | 75 | (6 | ) | — | |||||||||||
Interest received | 26 | 135 | 134 | |||||||||||||
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Net cash flows from investing activities | (232 | ) | (721 | ) | (970 | ) | ||||||||||
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Financing Activities | ||||||||||||||||
Net proceeds from issue of shares | 15,16 | 18,731 | 34,164 | 835 | ||||||||||||
Payments on lease liabilities | 12 | (793 | ) | (675 | ) | — | ||||||||||
Payment related to a financed asset purchase | 18 | (500 | ) | (500 | ) | — | ||||||||||
Net cash flow from financing activities | 17,438 | 32,989 | 835 | |||||||||||||
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| |||||||||||
Net change in cash and cash equivalents | (6,088 | ) | 5,100 | (26,910 | ) | |||||||||||
Effect of foreign exchange rate changes | (740 | ) | (609 | ) | (274 | ) | ||||||||||
Opening cash and cash equivalents balance | 14,126 | 9,635 | 36,819 | |||||||||||||
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Cash and cash equivalents at December 31 | 13 | $ | 7,298 | $ | 14,126 | $ | 9,635 | |||||||||
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($000s)
Year Ended December 31, | ||||||||||||||||
Note | 2021 | 2020 | 2019 | |||||||||||||
Operating activities | ||||||||||||||||
| Profit (loss) before tax | $ | (32,462 | ) | $ | (26,853 | ) | $ | (32,263 | ) | |||||||
| Amortization and depreciation expense | 8, 9, 10 | 1,802 | 1,719 | 1,633 | ||||||||||||
| Share-based compensation expense | 16 | 2,750 | 2,755 | 2,531 | ||||||||||||
Other non-cash operating expenses | 95 | 579 | 43 | |||||||||||||
| (Increase) decrease in inventories | 13 | (375 | ) | (139 | ) | 470 | ||||||||||
| (Increase) decrease in accounts receivable | 11 | (314 | ) | (414 | ) | 8 | ||||||||||
| Increase (decrease) in accounts payable | 12 | 53 | 141 | (124 | ) | |||||||||||
| Change in other working capital items | 482 | (618 | ) | 895 | ||||||||||||
| Interest expense | (11 | ) | (27 | ) | 103 | |||||||||||
| Other financial items | — | — | (238 | ) | ||||||||||||
| Change in income taxes | 447 | (437 | ) | (226 | ) | |||||||||||
| Net cash flows from operating activities | (27,533 | ) | (23,294 | ) | (27,168 | ) | ||||||||||
Investing activities | ||||||||||||||||
| Purchases of property, plant, and equipment | 9 | (141 | ) | (152 | ) | (850 | ) | |||||||||
| Purchases of intangible assets | 8 | 0 | (181 | ) | — | |||||||||||
(Payment) collection of non-current receivables | 11 | (13 | ) | 75 | (6 | ) | ||||||||||
| Interest received | 11 | 26 | 135 | |||||||||||||
| Net cash flows from investing activities | (143 | ) | (232 | ) | (721 | ) | ||||||||||
Financing Activities | ||||||||||||||||
| Net proceeds from issuance of shares | 15 | 54,992 | 18,731 | 34,164 | ||||||||||||
| Payments on lease liabilities | 10 | (844 | ) | (793 | ) | (675 | ) | |||||||||
| Payment related to a financed asset purchase | 9 | — | (500 | ) | (500 | ) | ||||||||||
| Net cash flows from financing activities | 54,148 | 17,438 | 32,989 | |||||||||||||
| Net change in cash and cash equivalents | 26,472 | (6,088 | ) | 5,100 | ||||||||||||
| Effect of foreign exchange on cash balances | (11 | ) | (740 | ) | (609 | ) | ||||||||||
| Opening cash and cash equivalents balance | 7,298 | 14,126 | 9,635 | |||||||||||||
| Cash and cash equivalents at December 31 | 14 | $ | 33,759 | $ | 7,298 | $ | 14,126 | |||||||||
Corporate Information
2. Summary of
IFRS 3 Business Combinations
Standards and interpretations issued but not yet effective:
IDEXaware of, nor does not expect thatit anticipate, any newly issued, but not yet effective, accounting standards, amendments, andor interpretations willthat would have a significant impact on the consolidated financial
presented herein. However, any newly issued, but not yet effective, accounting standards, amendments, or interpretations may affectinfluence the accounting for future transactions or arrangements. IDEXarrangements, as well as the future presentation of the Company’s Consolidated Financial Statements. The Company will implement thesuch new accounting standards, andamendments, or interpretations, if any, as they become effective.
Significant
The preparation of consolidated financial statements in conformity with IFRSstandards requires management to makeconsiderable judgment based upon estimates and assumptions that affectmay involve high levels of uncertainty at the reported amounts of assets, liabilities, expenses,time the estimates are made. Judgments and disclosures. The judgments, estimates are continually evaluated and related assumptions have beenare based on management’s best understanding of the situation, knowledge of past and recent events,historical experience and other factors, whichincluding expectations of future events that are consideredbelieved to be reasonable under the circumstances. Actual resultsoutcomes may deviate from such assumptions. Estimatesestimates.
Significantchanged or when uncertainty is resolved. The following represent the notable accounting judgmentsitems requiring management’s judgement, based on the use of estimates and assumptions.
the assets acquired, less the capitalized value of the identifiable assets and initial impairment charges, if any. As goodwill represents the future economic value of assets acquired in a business combination above the separately recorded values of those assets, subsequent impairment testing involves quantitatively comparing these separately recorded values to the value of the business unit to which the goodwill is assigned. As of December 31, 2021, such comparison indicated the carried value of goodwill was appropriate, and 0 impairment was recorded.
subject to reversal.
Significant accounting estimatesheld for IDEX
Share baseddisposal.
Impairment evaluation of goodwill: Goodwill amounts toand recorded concurrently with the related share-based payment expense.
discount rate used for the discounted cash flow model as well as the expected future cash-inflows and the growth rate used for extrapolation purposes.
Financial risk, market risk and capital management
The business risk may be summarized in five points: (i) IDEX has to date earned insufficient revenues compared to costs. IDEX has reported accumulating losses and expects future losses in the short term. (ii) IDEX’s business plan assumes revenue from products which IDEX has traded commercially in large volumes but not in mass production volumes. (iii) Revenue from IDEX’s products depends, among other things, on market factors, which are not controlledcontribution period, by IDEX. (iv) Competitive products may outperform IDEX’s product offering. (v) Some of IDEX’s intended markets remain immature and all are undergoing rapid technological changes.
IDEX’s trade receivables and other receivables have moderate to low credit risk.
IDEX does not actively manage liquid funds, which means that funds are placed in floating-interest rate bank accounts. Investments in property, plant and equipment are only made when mandatory for the needs of the core business. IDEX has been funded by equity since 2010. IDEX will prepare and implement comprehensive capital management and funding policies as and when needed.
Market risk arises from the Company’s exposure to fluctuation in interest rates and currency exchange rates. These risks are managed by maintaining an appropriate mix of cash deposits in the currencies IDEX operates in, placed with a variety of financial institutions for varying periods according to expected liquidity requirements.
Interest Rate Risk
As of December 31, 2020, IDEX had cash and cash equivalents of $7.3 million. The Company’s exposure to interest rate sensitivity is impacted primarily by changes in the underlying bank interest rates in Norway. IDEX’s cash and cash equivalents are invested in interest-bearing savings accounts. The Company has not entered into investments for trading or speculative purposes. Due to the conservative nature of IDEX’s investment portfolio, which is predicated on capital preservation of investments with short-term maturities, an immediate one percentage point change in interest rates would not have a material effect on the fair market value of its portfolio, and therefore the Company does not expect its operating results or cash flows to be significantly affected by changes in market interest rates.
Currency Risk
IDEX’s transactions are commonly denominated in U.S. dollars. However, the Company incurs a portion of its expenses in other currencies, primarily British pounds, Norwegian krone, Euros and Chinese yuan and is exposed to the effects of these exchange rates. IDEX seeks to minimize this exposure by maintaining currency cash balances at levels appropriate to meet foreseeable short to mid-term expenses in these other currencies, with cash being kept in Norwegian krone. The Company does not use forward exchange contracts to manage exchange rate exposure. A 10% increase in the value of the Norwegian krone relative to the U.S. dollar or other currencies would not have had a material effect on the carrying value of IDEX’s net financial assets and liabilities in foreign currencies at December 31, 2020.
Credit and Liquidity Risk
IDEX has a relatively short commercial history and limited revenue in the periods presented. The Company does not believe it had significant credit risk relating to its trade receivables as of December 31, 2019 and 2020.
IDEX’s cash and bank deposits are on deposit with financial institutions with a credit rating equivalent to, or above, the main Norwegian clearing banks. IDEX invests its liquid resources based on the expected timing of expenditures
to be made in the ordinary course of our activities. The Company has no debt to financial institutions and maintains adequate bank balances to meet liabilities as they fall due through for at least twelve months from the date of this report.
COVID-19
The future progression of the pandemic and its effects on the Company’s business and operations are uncertain. The Company continues to monitor the potential impact of COVID-19 on its business and consolidated financial statements. Effective March 2020, all travel and face-to-face meetings ceased and most staff were asked to work from home. Staff that needed to work at an IDEX facility did so in compliance with local government guidelines. There have not been any significant delays in development projects. However, the pandemic has caused certain customer delays in the short-term, including contact-related activities such as biometric card pilots. In addition, the company took actions during the pandemic to reduce costs and the cash burn rate, including temporary payroll reductions which have now been restored.
Significant accounting policies
Consolidation
The Company’s consolidated financial statements comprise IDEX Biometrics ASA and companies in which IDEX Biometrics ASA has a controlling interest. Controlling interest means that IDEX is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Intercompany transactions, balances, revenues and expenses and unrealized internal profit or losses are eliminated upon consolidation.
Revenue
Revenue from contracts with customers is recognized upon satisfaction of the performance obligations for the transfer of goods and services. The revenue amounts that are recognized reflect the consideration to which IDEX is entitled to. Service revenue from services is recognized over time pursuant to the terms and conditions in the agreements. Payment for delivery of products and services is generally due within 30-45 days from delivery or occasionally due in advance. The Company does not have any significant financing components or obligations for warranties, returns, or refunds.
When a contract contains multiple, distinct performance obligations, the transaction price is allocated to each performance obligation based on relative stand-alone selling prices. The Company has historically had directly observable stand-alone selling prices in such contracts. In contracts covering both services and sale of products, the Company has evaluated the development service and the sale of products as distinct performance obligations.
Sale of products: The Company sells completed biometric fingerprint sensors or modules to its customers. Each sensor or module contains embedded software. The hardware and the embedded software are interdependent – that is, each needs the other to provide the intended function to the customer. Revenue is recognized at the point in time in which the customer obtains control of the products, which normally is when title passes at point of delivery, based on the contractual terms of the agreements.
Development and other engineering services: The Company provides development and engineering services to its customers. Revenue from services is recognized over time, where progress and recognition of services performed is measured based on completion of multiple results-based substantive contractual milestones and acceptance clauses being met. The variable consideration related to these milestones and acceptance clauses meets the criteria to be constrained from the transaction price until the related uncertainty is resolved, when it is probable that a significant reversal of revenue will not occur.
Trade receivables
A receivable is recognized for the unconditional consideration that is due from the customer (i.e., only the passage of time is required before payment of the consideration is due). The Company uses the simplified approach measuring expected credit losses.
Purchases, net of inventory variation
Purchases, net of inventory variation, primarily consist of the cost of raw materials, contract manufacturing, and transportation, net of inventory variation.
Foreign currencies
The Company’s consolidated financial statements are presented in U.S. dollars. IDEX elected to change its presentation currency from Norwegian krone (NOK) to U.S. dollars with effect from January 1, 2020. This change was made as the Company expanded its global investor base and became listed on the U.S. OTC market, and began preparations for a listing on the Nasdaq Capital Market. Figures have been re-presented from January 1, 2018 to reflect the change in presentation currency. The change in presentation currency does not impact the valuation of assets, liabilities, equity or any ratios between these measures.
The functional currency for the foreign subsidiaries is their local currency. Assets and liabilities in foreign operations, including goodwill and fair value adjustments, are translated into U.S. dollars, being the Company’s presentation currency, using the exchange rates on the consolidated statement of financial position date. Equity transactions in the parent company, whose functional currency was NOK through December 31, 2020, has been converted to the presentation currency using the historical exchange rates for each transaction date. Income and expenses are translated into U.S. dollars using the average exchange rates for the period presented, with certain significant transactions translated using the rate on the transaction date.
Foreign exchange differences arising on translation from functional currency to presentation currency are recognized separately in other comprehensive income (OCI). Translation differences previously recognized in comprehensive income are reversed and recognized in the net result of the year if and when the foreign operations are disposed of.
Research and development (R&D) expenses
Research costs are expensed as incurred. Development expenses that do not meet the criteria of capitalization are expensed as incurred. Development expenses are capitalized when it is probable that IDEX will realize future economic benefits from the asset, IDEX has committed itself to complete the asset, the technically feasibility of completing the asset has been demonstrated, and that the cost can be measured reliably. The assets are amortized over their expected useful life once the asset is available for use. Maintenance and training costs are expensed as incurred. Research and development expenses consist primarily of consumed materials costs and certain outsourced development costs. Payroll costs related to research and development employees are classified as payroll expenses as opposed to research and development expenses on the consolidated statements of profit and loss.
Property, plant and equipment
Property, plant and equipment is held at cost less accumulated depreciation and impairment charges. When assets are sold or retired the assets are derecognized. Any gain or loss on the sale or retirement is recognized in the consolidated statements of profit and loss.
The capitalized amount of property, plant and equipment is the purchase price including freight, installation, duties, taxes and direct acquisition costs related to making the asset ready for use. Costs related to training and
commissioning are expensed as incurred. Subsequent costs, such as repair and maintenance expenses, are recognized in the consolidated statements of profit and loss as incurred. Subsequent enhancements giving future economic benefits are recognized in the consolidated statements of financial position as additions to property, plant and equipment.
The assets are depreciated using the straight-line method over each asset’s useful life. The depreciation period and method are assessed each year to ensure that the method and period used is consistent with the status of the non-current asset. The same applies to the residual value.
Intangible assets and goodwill
Acquired identifiable intangible assets are held at cost less accumulated amortization and impairment charges. Goodwill recognized is the difference between the consideration paid and net value of identifiable assets acquired and held, less impairment charges.
Impairment of intangible assets, fixed assets and other non-current assets
An assessment of impairment losses on non-current assets is made when there is an indication of a decrease in value. Goodwill is tested at minimum annually. If an asset’s carrying amount is higher than the asset’s recoverable amount, an impairment loss will be recognized in the consolidated statements of profit and loss. The recoverable amount is the higher of the fair value less costs to sell and the discounted cash flow from continued use. The fair value less costs to sell is the net amount that can be obtained from a sale to an independent third party. The recoverable amount is determined separately for each asset. IDEX has one operating segment, fingerprint imaging and recognition technology.
Impairment losses recognized in the consolidated statements of profit and loss for previous periods are reversed when such is evidenced. Reversal is limited to the lower of the updated recoverable amount and the carrying amount that would have been recognized had no impairment losses been recognized for the asset in prior years. Impairment charges on goodwill are not reversed.
Inventory
Inventory, consisting of raw materials, work in progress and finished goods, is held at the lower of average full acquisition cost and net realizable value.
Cash and cash equivalents
Cash and cash equivalents include cash on hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of three months or less.
Accounts payable
Payables are carried at amortized cost. The interest element is disregarded if it is insignificant.
Finance cost
Finance cost consist of interest expenses and net currency losses.
Finance income
Finance income consist of interest income.
Provisions
Provisions are recognized when and only when the Company has a present obligation (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 that the amount can be measured reliably. Provisions are reviewed on each consolidated statement of financial position date and the amount adjusted to the best estimate of the liability.
When the effect of time is significant, the provision is measured at the present value of future payments. Any increase in the provision due to time is recorded as interest expense.
Income taxes
The income tax expense consists of the tax payable and changes in deferred tax. Deferred tax has been calculated at the applicable tax rate on the temporary differences between the recorded and tax values, as well as on any tax loss carryforward at the consolidated statement of financial position date. Any temporary differences increasing or decreasing 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 Company will have a sufficient profit for tax purposes to apply the tax loss carryforward. At each consolidated statement of financial position date, IDEX reviews its deferred tax assets and the amount to be recognized or not. The Company recognizes an unrecognized deferred tax asset to the extent that is has become probable that the Company can utilize the deferred tax asset. Similarly, the Company will reduce its deferred tax asset to the extent that it can no longer utilize it. Deferred tax and deferred tax assets are calculated at the expected future tax rates. The effect of time is not taken into account.
Other taxes
Any other taxes such as turnover taxes, and other taxes that are unrelated to taxable income or profit, are reported on the other operating expense line of the consolidated statements of profit and loss, and not on the income tax line.
Contingent liabilities and assets
Contingent liabilities are possible liabilities resulting from past events whose existence depends on future events, liabilities that are not recognized because it is not probable that they will lead to an outflow of resources, and liabilities that cannot be measured with sufficient reliability. Contingent liabilities are not recognized in the consolidated financial statements but will be disclosed in the notes as appropriate.
Contingent assets are not recognized in the consolidated financial statements but are disclosed in the notes if it is probable that a benefit will accrue to IDEX.
Share-based compensation
Subscription rights granted to employees and others are recognized as equity-settled share-based compensation, with the employer’s tax cost recognized as a cash-settled element. The cost of equity-settled compensation is the fair value at grant, which is charged to the consolidated statements of profit and loss as earned over the vesting period(s). The fair value is determined using the Black-Scholes option pricing model. The accrued employer’s tax liabilityvaluation is calculatedbased on share price and exercise price, share price volatility, interest rates, and the earned intrinsic valueterm of the subscription rights.contribution period. The liabilityshare-based compensation is remeasured at each consolidated statement of financial position date.
expensed across the contribution period. Employment taxes, if any, are expensed when incurred.
Where
If the rate implicit in the lease cannot be readily determined, management uses the incremental borrowing rate, which represents the rate that the Company would have to pay to borrow the funds necessary to obtain an asset of similar value to the
Extension The values of the lease liability and the associated
The lease term is reassessed ifin the event such an option is actually exercised (or not exercised)exercised, as the case may be) or the Company becomes obliged to exercise (or not exercise) it.such an option. The assessment of reasonable certainty is only revised if a significant event or a significant change in circumstances occurs, which affects this assessment and is within the lessee’s control for example,(e.g., when significant investment in the facility is made which has a useful life beyond the current lease term.
term).
Loss per share
Loss per sharethe date of these Consolidated Financial Statements.
Cash flow
The consolidated statements of cash flow have been prepared by the indirect method with cash flows classified in operating, investing and financing activities.
Government grants
Government grants are recognized when there is reasonable assurancerealistic that the grantapplication or claim will be receivedsuccessful and all attached conditions willthe amount can be complied with. Whendetermined reliably, we credit the value of the grant relatesagainst research and development expenses for that reporting period. Due to an expense item,the timing difference between the completion of the qualifying activities, the approval of our grant application or claim, and the receipt of the funds associated with the grant, iswe may record, pending receipt of funds, the value of the grant as an Account receivable, other.
at
Year Ended December 31, | ||||||||||||
($000s) | 2021 | 2020 | 2019 | |||||||||
Product Revenue: | ||||||||||||
| Europe, Middle East, and Africa | $ | 2,807 | $ | 952 | $ | 47 | ||||||
| Americas | — | 5 | 5 | |||||||||
| Asia-Pacific | 30 | 56 | 107 | |||||||||
| Total product revenue | 2,837 | 1,013 | 159 | |||||||||
| Service Revenue: | ||||||||||||
| Europe, Middle East, and Africa | 3 | 2 | — | |||||||||
| Americas | — | 77 | 265 | |||||||||
| Asia-Pacific | — | 3 | — | |||||||||
| Total service revenue | 3 | 82 | 265 | |||||||||
| Total Revenue | $ | 2,840 | $ | 1,095 | $ | 424 | ||||||
Revenue from contracts with customers by geographical area
IDEX has business operations in four countries. All sales revenues are recorded at IDEX Biometrics ASA, the Norwegian parent company. Sales by geographic region in Note 3 – Revenues from contracts with customers, aredevelopment expenses or Other operating expenses, as applicable, based on the countryroles assigned to the individuals.
Year Ended December 31, | ||||||||||||
($000s) | 2021 | 2020 | 2019 | |||||||||
| Salary, payroll tax, benefits, other | $ | 18,197 | $ | 14,917 | $ | 19,219 | ||||||
| Share-based compensation | 2,910 | 2,755 | 2,531 | |||||||||
| Total | $ | 21,107 | $ | 17,672 | $ | 21,750 | ||||||
December 31, 2021 | December 31, 2020 | December 31, 2019 | ||||||||||||||||||||||
Employees | Contractors | Employees | Contractors | Employees | Contractors | |||||||||||||||||||
| Research and development | 77 | 8 | 75 | 6 | 81 | 8 | ||||||||||||||||||
| Marketing and sales | 6 | 9 | 6 | 5 | 10 | 6 | ||||||||||||||||||
| General and administrative | 8 | 1 | 7 | 1 | 9 | — | ||||||||||||||||||
| Supply chain and distribution | 2 | — | 2 | — | 2 | — | ||||||||||||||||||
| Total staff | 93 | 18 | 90 | 12 | 102 | 14 | ||||||||||||||||||
Non-current operating assets by country
| Year Ended December 31, | ||||||||||||
| 2020 | 2019 | 2018 | ||||||||||
| (in thousands) | ||||||||||||
Non-current operating assets: | ||||||||||||
Norway | $ | 4,014 | $ | 4,256 | $ | 4,072 | ||||||
United States | 1,313 | 1,648 | 1,451 | |||||||||
United Kingdom | 723 | 1,025 | 180 | |||||||||
China | 118 | 5 | 7 | |||||||||
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|
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|
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| |||||||
Total: | $ | 6,168 | $ | 6,934 | $ | 5,701 | ||||||
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| |||||||
Non-current operating assets for this purpose consist of property, plant and equipment, right-of-use assets, goodwill and other intangible assets.
3. Revenues from contracts with customers
The balances of trade receivables at December 31,the years 2021, 2020, and 2019 were $48795, 93, and $31,109
| Year Ended December 31, | ||||||||||||
| 2020 | 2019 | 2018 | ||||||||||
| (in thousands) | ||||||||||||
Product Revenue: | ||||||||||||
Europe, Middle East and Africa | $ | 952 | $ | 47 | $ | 159 | ||||||
Americas | 5 | 5 | 3 | |||||||||
Asia-Pacific | 56 | 107 | 106 | |||||||||
|
|
|
|
|
| |||||||
Total product revenue | 1,013 | 159 | 268 | |||||||||
|
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|
|
|
| |||||||
Service Revenue: | ||||||||||||
Europe, Middle East and Africa | 2 | — | — | |||||||||
Americas | 77 | 265 | 169 | |||||||||
Asia-Pacific | 3 | — | 3 | |||||||||
|
|
|
|
|
| |||||||
Total service revenue | 82 | 265 | 172 | |||||||||
|
|
|
|
|
| |||||||
Total Revenue | $ | 1,095 | $ | 424 | $ | 440 | ||||||
|
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|
|
|
| |||||||
4. Payroll expenses and compensation
| Year Ended December 31, | ||||||||||||
| 2020 | 2019 | 2018 | ||||||||||
| (in thousands) | ||||||||||||
Salary, payroll tax, benefits, other | $ | 14,917 | $ | 19,219 | $ | 16,801 | ||||||
Share-based compensation | 2,755 | 2,531 | 2,969 | |||||||||
|
|
|
|
|
| |||||||
Total | $ | 17,672 | $ | 21,750 | $ | 19,770 | ||||||
|
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| |||||||
the countries in which it operates. No such benefits are provided to individual contractors.
Employees of IDEX America may participate in an insureda health, dental, and vision insurance plan. IDEX America also offers employer-funded plans for life insurance, short-term disability, and long-term disability. IDEX America does not offer or plan to offer any pension plans, except for a 401(k) defined contributiondefined-contribution plan.
The Company currently does not match participant contributions to this plan.
In 2020, IDEX had two
See Note 16.
Key
| Year Ended December 31, | ||||||||||||
| 2020 | 2019 | 2018 | ||||||||||
| (in thousands) | ||||||||||||
Short-term employee benefits | $ | 906 | $ | 1,367 | $ | 1,405 | ||||||
Medical and similar benefits, contributions to pension schemes | 66 | 52 | 26 | |||||||||
Share-based compensation | 449 | 840 | 1,616 | |||||||||
|
|
|
|
|
| |||||||
Total compensation of key management | $ | 1,421 | $ | 2,259 | $ | 3,047 | ||||||
|
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|
| |||||||
Subscription
Year Ended December 31, | ||||||||||||
2021 | 2020 | 2019 | ||||||||||
| (in thousands) | ||||||||||||
| Compensation and short-term benefits | $ | 1,425 | $ | 906 | $ | 1,367 | ||||||
| Medical and similar benefits, contributions to pension schemes | 73 | 66 | 52 | |||||||||
| Share-based compensation | 443 | 449 | 840 | |||||||||
| Total compensation of key management | $ | 1,941 | $ | 1,421 | $ | 2,259 | ||||||
| Number outstanding as of December 31, | ||||||||||||||||||
Grant Date | Expiry Date | Exercise Price (NOK per share) | 2020 | 2019 | 2018 | |||||||||||||
September 15, 2014 | May 7, 2019 | 4.45 | 350,000 | |||||||||||||||
February 26, 2016 | May 12, 2020 | 8.10 | 375,000 | |||||||||||||||
August 10, 2016 | May 11, 2021 | 7.79 | — | 775,000 | 500,000 | |||||||||||||
November 9, 2016 | May 11, 2021 | 6.59 | — | 1,400,000 | 1,400,000 | |||||||||||||
February 24, 2017 | May 11, 2021 | 6.59 | — | 750,000 | 750,000 | |||||||||||||
August 9, 2017 | May 12, 2022 | 7.76 | — | 515,000 | 830,000 | |||||||||||||
February 21, 2018 | May 12, 2022 | 4.67 | — | 4,500,000 | 4,500,000 | |||||||||||||
May 9, 2018 | May 9, 2023 | 4.28 | — | 2,250,000 | 3,000,000 | |||||||||||||
August 14, 2019 | May 9, 2024 | 1.65 | 2,327,800 | 3,774,000 | — | |||||||||||||
February 26, 2020 | May 9, 2024 | 1.11 | 5,000,000 | — | — | |||||||||||||
June 17, 2020 | May 15, 2025 | 1.71 | 1,125,000 | — | — | |||||||||||||
Number outstanding as of December 31, | ||||||||||||||||||||
Grant Date | Expiration Date | Exercise Price (NOK) | 2021 | 2020 | 2019 | |||||||||||||||
| August 10, 2016 | May 11, 2021 | 7.79 | 775,000 | |||||||||||||||||
| November 9, 2016 | May 11, 2021 | 6.59 | 1,400,000 | |||||||||||||||||
| February 24, 2017 | May 11, 2021 | 6.59 | 750,000 | |||||||||||||||||
| August 9, 2017 | May 12, 2022 | 7.76 | 515,000 | |||||||||||||||||
| February 21, 2018 | May 12, 2022 | 4.67 | 4,500,000 | |||||||||||||||||
| May 9, 2018 | May 9, 2023 | 4.28 | 2,250,000 | |||||||||||||||||
| August 14, 2019 | May 9, 2024 | 1.65 | 327,800 | 2,327,800 | 3,774,000 | |||||||||||||||
Number outstanding as of December 31, | ||||||||||||||||||||
Grant Date | Expiration Date | Exercise Price (NOK) | 2021 | 2020 | 2019 | |||||||||||||||
February 26, 2020 | May 9, 2024 | 1.11 | 5,000,000 | 5,000,000 | — | |||||||||||||||
June 17, 2020 | May 15, 2025 | 1.71 | 1,125,000 | 1,125,000 | — | |||||||||||||||
April 20, 2021 | May 15, 2025 | 2.71 | 2,750,000 | |||||||||||||||||
June 3, 2021 | May 12, 2026 | 2.38 | 2,000,000 | |||||||||||||||||
August 11, 2021 | May 12, 2026 | 2.40 | 1,668,100 | |||||||||||||||||
Total | 12,870,900 | 8,452,800 | 8,452,800 | |||||||||||||||||
17.
| Year Ended December 31, | ||||||||||||
| 2020 | 2019 | 2018 | ||||||||||
| (in thousands) | ||||||||||||
Gross R&D expenses | $ | 4,196 | $ | 4,953 | $ | 6,245 | ||||||
Government grants credited to cost | (2,301 | ) | (568 | ) | (614 | ) | ||||||
|
|
|
|
|
| |||||||
Net R&D expenses | $ | 1,895 | $ | 4,385 | $ | 5,631 | ||||||
|
|
|
|
|
| |||||||
6. Government grants
| Year Ended December 31, | ||||||||||||
| 2020 | 2019 | 2018 | ||||||||||
| (in thousands) | ||||||||||||
Norway—SkatteFunn | $ | 506 | $ | 568 | $ | 614 | ||||||
UK—R&D relief grant for SME | 1,795 | — | — | |||||||||
|
|
|
|
|
| |||||||
Total | $ | 2,301 | $ | 568 | $ | 614 | ||||||
|
|
|
|
|
| |||||||
The Norwegian SkatteFunn support for research and development costs when it is delivered throughrealistic that the tax administration. application or claim will be successful and the amount can be determined reliably.
Year Ended December 31, | ||||||||||||
| ($000s) | 2021 | 2020 | 2019 | |||||||||
| Gross research and development expenses | $ | 3,356 | $ | 4,196 | $ | 4,953 | ||||||
| Government grants credited | (676 | ) | (2,301 | ) | (568 | ) | ||||||
| Net research and development expenses | 2,680 | $ | 1,895 | $ | 4,385 | |||||||
Year Ended December 31, | ||||||||||||
| ($000s) | 2021 | 2020 | 2019 | |||||||||
| Norway | $ | 538 | $ | 506 | $ | 568 | ||||||
| United Kingdom | 138 | 1,795 | — | |||||||||
| Total | $ | 676 | $ | 2,301 | $ | 568 | ||||||
The UK R&D grantUnited Kingdom offers financial support for small and medium-sized enterprises is also a grant scheme that is administered through the tax system. IDEX has in 2020 claimedqualifying research and development grantsactivities of small and
7. Related Party Transactions
which it operates. The Company’s significant shareholders, board membersprovision for income taxes (i.e., expense (benefit)) is based on income tax rates in the tax jurisdictions in which it operates, tax credits available in these jurisdictions, and management,reconciliation of differences between financial reporting values and tax reporting values.
Compensationthe Company’s provision for income tax.
There were no overdue balances with any related partiesNorway of $251.1 million, representing a potential deferred tax asset, if recognized and calculated at the endcurrent corporate tax rate of 2020, 2019 or 2018. See22.0%, of $55.2 million. The Company also Note 17.
Board
Board remuneration is paidhas a tax loss carryforward balance in arrears after being approved by the shareholders, normally
United Kingdom of $1.9 million, representing a potential deferred tax asset, if recognized and calculated at the annual general meetingcurrent corporate tax rate of 19.0%, of $361 thousand. The Company also has a tax loss carryforward balance in China of $771 thousand, representing a potential deferred tax asset, if recognized and calculated at the parent company. The following board compensation has been paid in 2020, 2019 and 2018:
| Year Ended December 31, 2020 | ||||||||||||
| Cash Compensation | Shared-based Compensation | Total | ||||||||||
| (in thousands) | ||||||||||||
Morten Opstad, chair | $ | 40 | $ | — | $ | 40 | ||||||
Lawrence John Ciaccia, deputy chair (1) | 38 | — | 38 | |||||||||
Deborah Davis (2) | 10 | 36 | 46 | |||||||||
Hanne Hovding | 32 | — | 32 | |||||||||
Stephen A. Skaggs | 4 | 34 | 38 | |||||||||
|
|
|
|
|
| |||||||
| $ | 124 | $ | 70 | $ | 194 | |||||||
|
|
|
|
|
| |||||||
| Year Ended December 31, 2019 | ||||||||||||
| Cash Compensation | Shared-based Compensation | Total | ||||||||||
| (in thousands) | ||||||||||||
Morten Opstad, chair | $ | 43 | $ | — | $ | 43 | ||||||
Lawrence John Ciaccia, deputy chair | 34 | — | 34 | |||||||||
Deborah Davis | 7 | 34 | 41 | |||||||||
Hanne Hovding | 16 | 23 | 39 | |||||||||
Andre James MacLeod (3) | 7 | 34 | 41 | |||||||||
Stephen A. Skaggs (4) | — | — | — | |||||||||
|
|
|
|
|
| |||||||
| $ | 107 | $ | 91 | $ | 198 | |||||||
|
|
|
|
|
| |||||||
| Year Ended December 31, 2018 | ||||||||||||
| Cash Compensation | Shared-based Compensation | Total | ||||||||||
| (in thousands) | ||||||||||||
Morten Opstad, chair | $ | 20 | $ | 25 | $ | 45 | ||||||
Lawrence John Ciaccia, deputy chair | 2 | 45 | 47 | |||||||||
Deborah Davis | — | 47 | 47 | |||||||||
Hanne Hovding | 37 | — | 37 | |||||||||
Andre James MacLeod | 10 | 35 | 45 | |||||||||
|
|
|
|
|
| |||||||
| $ | 69 | $ | 152 | $ | 221 | |||||||
|
|
|
|
|
| |||||||
|
|
|
|
Followingcurrent corporate tax rate of 2.5%, of $18 thousand. In the annual general meeting of IDEX on May 15, 2020, board members Deborah Davis and Steve Skaggs elected to receive part of the board remuneration in shares. Board member Deborah Davis acquired 227,073 shares against payment of NOK 0.15 per share, instead of $30 of the board remuneration. Ms. Davis took the remainder of the board remuneration in cash. Board member Steve Skaggs acquired 214,909 shares against payment of NOK 0.15 per share, instead of $28 of the board remuneration. Mr. Skaggs took the remainder of the board remuneration in cash.
The chair of the board is a partner at Advokatfirmaet Ræder AS. The law firm provided services toUnited States, the Company amountinghas tax credits, associated with research and development activities in the United States, totaling $1.6 million.
Lawrence John Ciaccia, who was elected board member atit will have sufficient future taxable profit to apply the annual general meeting on May 12, 2015, has served on IDEX’s Strategy Advisory Committee (SAC) since January 2014 and continues his tenure on the SAC. Mr. Ciaccia also provides consulting services to IDEX. The combined fee for SAC service and consulting services amounted to $65 in 2020, $65 in 2019 and $65 in 2018.
Since 2016, former board member Andrew MacLeod had provided consulting services beyond board duty to IDEX. The fees amounted to $26 in 2019 and $73 in 2018. Mr. MacLeod’s service agreement ended on March 27, 2019, and he left the board on May 9, 2019.
Subscription rights to shares held by the board members under the subscription rights incentive plans have the following expiry dates and exercise prices. For further information refer to Note 16 for the plans. These grants have been made to the board members in their capacity of service providers beyond board duty and not as board compensation.
| Subscription rights outstanding as of December 31, | ||||||||||||||||||
Grant Date | Expiry Date | Exercise Price (NOK per share) | 2020 | 2019 | 2018 | |||||||||||||
February 26, 2016 | May 12, 2020 | 8.10 | — | — | 500,000 | |||||||||||||
August 15, 2018 | May 9, 2023 | 5.10 | — | 600,000 | 600,000 | |||||||||||||
June 17, 2020 | May 15, 2025 | 1.71 | 600,000 | — | — | |||||||||||||
The subscription rights granted on August 15, 2018 were replaced the grant on June 17, 2020 as part of a board approved SR exchange.
8. Income tax expense
loss carryforward against future income taxes.
| Tax expense (benefit) for the year | Year Ended December 31, | |||||||||||
| 2020 | 2019 | 2018 | ||||||||||
| (in thousands) | ||||||||||||
Taxes payable on the result of the year | $ | 44 | $ | 160 | $ | 41 | ||||||
Adjustment in respect to prior years | (112 | ) | — | — | ||||||||
Change in deferred tax asset/liability | (31 | ) | — | — | ||||||||
|
|
|
|
|
| |||||||
Income tax expense (benefit) | $ | (99 | ) | $ | 160 | $ | 41 | |||||
|
|
|
|
|
| |||||||
| Specification of deferred tax | Year Ended December 31, | |||||||||||
| 2020 | 2019 | 2018 | ||||||||||
| (in thousands) | ||||||||||||
Employer’s tax on share-based compensation | $ | (216 | ) | $ | (3 | ) | $ | — | ||||
Fixed Assets | 675 | 62 | (52 | ) | ||||||||
Inventory | (213 | ) | (1,154 | ) | (853 | ) | ||||||
Accruals US | (1,144 | ) | — | — | ||||||||
US SME credits, net | (1,787 | ) | — | — | ||||||||
Losses carried forward | (225,951 | ) | (193,497 | ) | (164,537 | ) | ||||||
|
|
|
|
|
| |||||||
Basis for deferred taxes | (228,636 | ) | (194,592 | ) | (165,632 | ) | ||||||
Calculated net deferred tax income, local tax rates 5-22% | 51,251 | (42,772 | ) | (36,365 | ) | |||||||
Unrecognized deferred tax asset * | (51,251 | ) | 42,803 | 36,391 | ||||||||
|
|
|
|
|
| |||||||
Deferred tax liability in the balance sheet | $ | — | $ | (31 | ) | $ | (26 | ) | ||||
|
|
|
|
|
| |||||||
| Reconciliation of tax expense (benefit) | Year Ended December 31, | |||||||||||
| 2020 | 2019 | 2018 | ||||||||||
| (in thousands) | ||||||||||||
Result (loss) before tax | $ | (26,853 | ) | $ | (32,263 | ) | $ | (30,184 | ) | |||
|
|
|
|
|
| |||||||
Norway statutory tax rate of 22% | (5,908 | ) | (7,412 | ) | (7,127 | ) | ||||||
Difference in local tax rates from 22% | 22 | 160 | 41 | |||||||||
Tax on permanent differences | 389 | 640 | 571 | |||||||||
Effect on deferred tax from change in future tax rate from 23% | — | — | 1,763 | |||||||||
Adjustment in respect to prior years | (112 | ) | — | — | ||||||||
Change in deferred tax asset not recognized on December 31 ** | 5,510 | 6,772 | 4,793 | |||||||||
|
|
|
|
|
| |||||||
Actual tax expense (benefit) | $ | (99 | ) | $ | 160 | $ | 41 | |||||
|
|
|
|
|
| |||||||
Tax expense (benefit) for the year | Year Ended December 31, | |||||||||||
| ($000s) | 2021 | 2020 | 2019 | |||||||||
| Taxes payable on the result of the year | $ | 90 | $ | 44 | $ | 160 | ||||||
| Adjustment in respect to prior years | — | (112 | ) | — | ||||||||
| Change in recorded deferred tax liability | — | (31 | ) | — | ||||||||
| Income tax expense (benefit) | $ | 90 | $ | (99 | ) | $ | 160 | |||||
Elements of deferred tax | Year Ended December 31, | |||||||||||
| ($000s) | 2021 | 2020 | 2019 | |||||||||
| Employer’s tax on share-based compensation | $ | (371 | ) | $ | (216 | ) | $ | (3 | ) | |||
Fixed Assets differences | 1,154 | 675 | 62 | |||||||||
Inventory differences | (5 | ) | (213 | ) | (1,154 | ) | ||||||
Accruals differences | (1,152 | ) | (1,144 | ) | — | |||||||
Research and development tax credits | (1563 | ) | (1,787 | ) | — | |||||||
| Losses carried forward | (253,300 | ) | (225,951 | ) | (193,497 | ) | ||||||
| Basis for calculation of deferred tax asset | (255,237 | ) | (228,636 | ) | (194,592 | ) | ||||||
Calculated net deferred tax benefit, local tax rates 5-22% | (55,953 | ) | (51,251 | ) | (42,772 | ) | ||||||
| Unrecognized deferred tax asset * | 55, 953 | 51,251 | 42,803 | |||||||||
| Deferred tax liability in the balance sheet | $ | — | $ | — | $ | (31 | ) | |||||
Reconciliation of tax expense (benefit) | Year Ended December 31, | |||||||||||
| ($000s) | 2021 | 2020 | 2019 | |||||||||
| Loss before tax | $ | (32,552 | ) | $ | (26,853 | ) | $ | (32,263 | ) | |||
| Norway statutory tax, calculated at rate of 22% | (7,132 | ) | (5,908 | ) | (7,412 | ) | ||||||
Difference in subsidiary taxes, using local rates | (179 | ) | 22 | 160 | ||||||||
| Estimated tax on permanent differences | (568 | ) | 389 | 640 | ||||||||
| Prior year adjustments | — | (112 | ) | — | ||||||||
| Change in unrecognized deferred tax asset ** | 7,969 | 5,510 | 6,772 | |||||||||
| Income tax expense (benefit) | $ | 90 | $ | (99 | ) | $ | 160 | |||||
| * |
|
| ** | The various deferred tax assets that have not been recognized are denominated in their respective local currencies. As such, the change in the year-end value in USD of these unrecognized deferred tax year-end. |
9.
calculation
Year Ended December 31, | ||||||||||||
| ($000s) | 2021 | 2020 | 2019 | |||||||||
Net loss for the year | $ | (32,552 | ) | $ | (26,754 | ) | $ | (32,423 | ) | |||
| Number of ordinary shares issued at December 31 | 1,010,388,454 | 832,146,748 | 717,988,732 | |||||||||
| Weighted average basic number of ordinary shares | 918,847,427 | 767,069,645 | 598,392,108 | |||||||||
| Assumed exercise of share equivalents | 21,586,108 | 6,323,417 | 1,759,991 | |||||||||
| Weighted average diluted number of shares | 940,433,535 | 773,393,062 | 600,152,099 | |||||||||
| Loss per share for the year (basic and diluted*) | $ | (0.04 | ) | $ | (0.03 | ) | $ | (0.05 | ) | |||
| * | The effects of potentially dilutive O rdinaryS hares issuable upon exercise of outstanding subscription rights are not included in the calculation due to the Company’s net losses for the periods presented, as their effect would be anti-dilutive. |
| Year Ended December 31, | ||||||||||||
| 2020 | 2019 | 2018 | ||||||||||
Net loss for the year (in thousands) | $ | (26,754 | ) | $ | (32,423 | ) | $ | (30,225 | ) | |||
|
|
|
|
|
| |||||||
Number of ordinary shares issued at December 31 | 832,146,748 | 717,988,732 | 544,314,537 | |||||||||
|
|
|
|
|
| |||||||
Weighted average basic number of ordinary shares | 767,069,645 | 598,392,108 | 542,795,969 | |||||||||
Assumed exercise of share equivalents | 6,323,417 | 1,759,991 | 321,955 | |||||||||
|
|
|
|
|
| |||||||
Weighted average diluted number of shares | 773,393,062 | 600,152,099 | 543,117,924 | |||||||||
|
|
|
|
|
| |||||||
Basic and diluted loss per share in the year | �� | $ | (0.03 | ) | $ | (0.05 | ) | $ | (0.06 | ) | ||
|
|
|
|
|
| |||||||
10. Intangible assets
Goodwill activity consisted ofDecember 31, 2021, and December 31, 2020, reflected the following during 2020 and 2019:
| Year Ended December 31, | ||||||||
| 2020 | 2019 | |||||||
| (in thousands) | ||||||||
Cost at the beginning of the year | $ | 941 | $ | 951 | ||||
Additions | — | — | ||||||
Disposals at cost | — | — | ||||||
Impact of currency translation | 27 | (10 | ) | |||||
|
|
|
| |||||
Cost at the end of the year | $ | 968 | $ | 941 | ||||
|
|
|
| |||||
activity:
Year Ended December 31, | ||||||||
| ($000s) | 2021 | 2020 | ||||||
| Cost at the beginning of the year | $ | 968 | $ | 941 | ||||
| Impact of currency translation | — | 27 | ||||||
| Cost at the end of the year | $ | 968 | $ | 968 | ||||
Acquired identifiable intangible assets, consisting primarily of patents, are held at cost, less accumulated amortization and impairment charges. Other intangible asset (patents) activity consistedbalances as of December 31, 2021, and December 31, 2020, reflected the following during 2020 and 2019
| Year Ended December 31, | ||||||||
| 2020 | 2019 | |||||||
| (in thousands) | ||||||||
Amortization period (straight-line, in years) | 10 - 17 | 10 - 17 | ||||||
Cost at the beginning of the year | $ | 4,835 | $ | 4,919 | ||||
Additions | 181 | — | ||||||
Disposals at cost | — | (33 | ) | |||||
Impact of currency translation | 157 | (51 | ) | |||||
|
|
|
| |||||
Cost at the end of the year | $ | 5,173 | $ | 4,835 | ||||
|
|
|
| |||||
Accumulated Amortization at the beginning of the year | $ | 2,230 | $ | 1,839 | ||||
Amortization and impairment | 396 | 415 | ||||||
Accumulated impairment of disposed items | — | (6 | ) | |||||
Impact of currency translation | 104 | (18 | ) | |||||
|
|
|
| |||||
Accumulated Amortization at the end of the year | 2,731 | 2,230 | ||||||
|
|
|
| |||||
Carrying amount at the end of the year | $ | 2,442 | $ | 2,605 | ||||
|
|
|
| |||||
activity:
Year Ended December 31, | ||||||||
| ($000s) | 2021 | 2020 | ||||||
Amortization period (straight-line, in years) | 10 - 17 | 10 - 17 | ||||||
Cost at the beginning of the year | $ | 5,173 | $ | 4,835 | ||||
Additions | 0 | 181 | ||||||
Impact of currency translation | 0 | 157 | ||||||
Cost at the end of the year | $ | 5,173 | $ | 5,173 | ||||
Accumulated Amortization at the beginning of the year | $ | 2,731 | $ | 2,230 | ||||
Amortization | 477 | 396 | ||||||
Impact of currency translation | 0 | 104 | ||||||
Accumulated Amortization at the end of the year | 3,208 | 2,731 | ||||||
Carrying amount at the end of the year | $ | 1,965 | $ | 2,442 | ||||
11.
2020
(In USD thousands) | Plant and machinery, fixtures and fittings | Office furniture and office equipment | Instruments and lab equipment, software tools | Total | ||||||||||||
Depreciation period (straight line, in years) | 3-5 | 3-5 | 3-5 | |||||||||||||
Accumulated cost at 31 December 2019 | $ | 812 | $ | 701 | $ | 2,076 | $ | 3,589 | ||||||||
Additions | 21 | 6 | 125 | 152 | ||||||||||||
Impact of currency translation | 22 | 3 | 16 | 41 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Accumulated cost at 31 December 2020 | 855 | 710 | 2,217 | 3,782 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Accumulated depreciation at 31 December 2019 | $ | 104 | $ | 453 | $ | 1,019 | $ | 1,576 | ||||||||
Depreciation | 119 | 115 | 275 | 509 | ||||||||||||
Impact of currency translation | 13 | 4 | 13 | 30 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Accumulated depreciation at 31 December 2020 | 236 | 572 | 1,307 | 2,115 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Carrying amount at 31 December 2020 | $ | 619 | $ | 138 | $ | 910 | $ | 1,667 | ||||||||
|
|
|
|
|
|
|
| |||||||||
2019
(In USD thousands) | Plant and machinery, fixtures and fittings | Office furniture and office equipment | Instruments and lab equipment, software tools | Total | ||||||||||||
Depreciation period (straight line, in years) | 3-5 | 3-5 | 3-5 | |||||||||||||
Accumulated cost at 31 December 2018 | $ | 160 | $ | 686 | $ | 1,997 | $ | 2,843 | ||||||||
Additions | 664 | 86 | 100 | 850 | ||||||||||||
Disposals at cost | (13 | ) | (73 | ) | (26 | ) | (112 | ) | ||||||||
Impact of currency translation | 1 | 2 | 5 | 8 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Accumulated cost at 31 December 2019 | 812 | 701 | 2,076 | 3,589 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Accumulated depreciation at 31 December 2018 | $ | 61 | $ | 373 | | $ | 725 | $ | 1,159 | | ||||||
Depreciation | 56 | 152 | 312 | 520 | ||||||||||||
Accumulated depreciation of disposed items | (13 | ) | (73 | ) | (23 | ) | (109 | ) | ||||||||
Impact of currency translation | — | 1 | 5 | 6 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Accumulated depreciation at 31 December 2019 | 104 | 453 | 1,019 | 1,576 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Carrying amount at 31 December 2019 | $ | 708 | $ | 248 | $ | 1,057 | $ | 2,013 | ||||||||
|
|
|
|
|
|
|
| |||||||||
2021 ($000s) | Plant and machinery, fixtures and fittings | Office furniture and office equipment | Instruments and lab equipment, software tools | Total | ||||||||||||
Depreciation period (straight line, in years) | 3-5 | 3-5 | 3-5 | |||||||||||||
| Accumulated cost at December 31, 2020 | $855 | $710 | $2,217 | $3,782 | ||||||||||||
| Additions | — | 74 | 67 | 141 | ||||||||||||
| Impact of currency translation | — | (2 | ) | (3 | ) | (5 | ) | |||||||||
| Accumulated cost at December 31, 2021 | 855 | 782 | 2,281 | 3,918 | ||||||||||||
| Accumulated depreciation at December 31, 2020 | $236 | $572 | $1,307 | $2,115 | ||||||||||||
| Depreciation | 131 | 101 | 275 | 507 | ||||||||||||
| Impact of currency translation | — | (2 | ) | (3 | ) | (5 | ) | |||||||||
| Accumulated depreciation at December 31, 2021 | 367 | 671 | 1,579 | 2,617 | ||||||||||||
| Carrying amount at December 31, 2021 | $488 | $111 | $712 | $1,301 | ||||||||||||
2020 (In $000) | Plant and machinery, fixtures and fittings | Office furniture and office equipment | Instruments and lab equipment, software tools | Total | ||||||||||||
Depreciation period (straight line, in years) | 3-5 | 3-5 | 3-5 | |||||||||||||
| Accumulated cost at December 31, 2019 | $812 | $701 | $2,076 | $3,589 | ||||||||||||
| Additions | 21 | 6 | 125 | 152 | ||||||||||||
| Impact of currency translation | 22 | 3 | 16 | 41 | ||||||||||||
| Accumulated cost at December 31, 2020 | 855 | 710 | 2,217 | 3,782 | ||||||||||||
| Accumulated depreciation at December 31, 2019 | $104 | $453 | $1,019 | $1,576 | ||||||||||||
| Depreciation | 119 | 115 | 275 | 509 | ||||||||||||
| Impact of currency translation | 13 | 4 | 13 | 30 | ||||||||||||
| Accumulated depreciation at December 31, 2020 | 236 | 572 | 1,307 | 2,115 | ||||||||||||
| Carrying amount at December 31, 2020 | $619 | $138 | $910 | $1,667 | ||||||||||||
12.2020.
Right-of-use assets
| Year Ended December 31, | ||||||||
| 2020 | 2019 | |||||||
| (in thousands) | ||||||||
Depreciation period (straight-line, in years) | 3-5 | 3-5 | ||||||
Cost at the beginning of the year | $ | 2,081 | $ | 1,140 | ||||
Additions | 417 | 910 | ||||||
Impact of currency translation | 45 | 31 | ||||||
|
|
|
| |||||
Cost at the end of the year | $ | 2,543 | $ | 2,081 | ||||
|
|
|
| |||||
Accumulated Depreciation at the beginning of the year | $ | 706 | $ | — | ||||
Depreciation | 810 | 698 | ||||||
Impact of currency translation | 11 | 8 | ||||||
|
|
|
| |||||
Accumulated Depreciation at the end of the year | 1,527 | 706 | ||||||
|
|
|
| |||||
Book value at the end of the year | $ | 1,016 | $ | 1,375 | ||||
|
|
|
| |||||
shown below.
Year Ended December 31, | ||||||||
($000s) | 2021 | 2020 | ||||||
Depreciation periods (straight-line, in years) | 3-5 | 3-5 | ||||||
| Cost at the beginning of the year | $ | 2,543 | $ | 2,081 | ||||
| Additions | 158 | 417 | ||||||
| Impact of currency translation | (10 | ) | 45 | |||||
| Cost at the end of the year | $ | 2,691 | $ | 2,543 | ||||
| Accumulated depreciation at the beginning of the year | $ | 1,527 | $ | 706 | ||||
| Depreciation | 818 | 810 | ||||||
| Impact of currency translation | (11 | ) | 11 | |||||
| Accumulated depreciation at the end of the year | 2,334 | 1,527 | ||||||
| Recorded value at the end of the year | $ | 357 | $ | 1,016 | ||||
| Year Ended December 31, | ||||||||
| 2020 | 2019 | |||||||
| (in thousands) | ||||||||
Depreciation | $ | 810 | $ | 698 | ||||
Finance cost | 63 | 50 | ||||||
Profit and Loss
Year Ended December 31, | ||||||||||||
($000s) | 2021 | 2020 | 2019 | |||||||||
| Depreciation | $ | 818 | $ | 810 | $ | 698 | ||||||
| Finance cost | 31 | 63 | 50 | |||||||||
($000s) | 2021 | 2020 | ||||||
| Balance at January 1 | $ | 1,058 | $ | 1,398 | ||||
| Additions | 158 | 317 | ||||||
| Accretion of interest | 31 | 136 | ||||||
| Payments | (874 | ) | (793 | ) | ||||
| Balance at December 31 | 373 | 1,058 | ||||||
Non-current | 11 | 327 | ||||||
| Current | 362 | 731 | ||||||
| Total lease liabilities | $ | 373 | $ | 1,058 | ||||
| 2020 | 2019 | |||||||
| (in thousands) | ||||||||
Balance at January 1 | $ | 1,398 | $ | 1,140 | ||||
Additions | 317 | 846 | ||||||
Accretion of interest | 136 | 87 | ||||||
Payments | (793 | ) | (675 | ) | ||||
|
|
|
| |||||
Balance at December 31 | 1,058 | 1,398 | ||||||
|
|
|
| |||||
Non-current | 327 | 610 | ||||||
Current | 731 | 788 | ||||||
|
|
|
| |||||
Total lease liabilities | $ | 1,058 | $ | 1,398 | ||||
|
|
|
| |||||
condition of the Company’s customers were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances may be required. The Company does not require collateral from its customers, although there have been circumstances when the Company has required cash in advance (i.e., a partial down-payment) to facilitate orders in excess of a customer’s established credit limit. To date, such amounts have not been material.
Maturity | ||||||||||||||||
($000s) | Less than 3 months | 3-6 months | 6-12 Months | Total | ||||||||||||
| Accounts receivable, trade | $ | 801 | $ | 0 | $ | 0 | $ | 801 | ||||||||
| Accounts receivable, other | 133 | 31 | 539 | 703 | ||||||||||||
| $ | 934 | $ | 31 | $ | 539 | $ | 1,504 | |||||||||
Maturity | ||||||||||||||||
($000s) | Less than 3 months | 3-6 months | 6-12 Months | Total | ||||||||||||
| Accounts receivable, trade | $ | 460 | $ | 25 | $ | 2 | $ | 487 | ||||||||
| Accounts receivable, other | 303 | 303 | 557 | 1,163 | ||||||||||||
| $ | 763 | $ | 328 | $ | 559 | $ | 1,650 | |||||||||
Maturity | ||||||||||||||||||||
($000s) | Less than 3 months | 3-6 months | 6-12 months | 1-5 years | Total | |||||||||||||||
Non-current lease liabilities | $ | — | $ | — | $ | — | $ | 11 | $ | 11 | ||||||||||
| Accounts payable | 685 | — | — | — | 685 | |||||||||||||||
| Current lease liabilities | 132 | 107 | 123 | — | 362 | |||||||||||||||
| Other liabilities | 1,640 | 251 | 588 | 371 | 2,850 | |||||||||||||||
| $ | 2,457 | $ | 358 | $ | 711 | $ | 382 | $ | 3,908 | |||||||||||
Maturity | ||||||||||||||||||||
($000s) | Less than 3 months | 3-6 months | 6-12 months | 1-5 years | Total | |||||||||||||||
Non-current lease liabilities | $ | — | $ | — | $ | — | $ | 327 | $ | 327 | ||||||||||
| Accounts payable | 631 | — | — | — | 631 | |||||||||||||||
| Current lease liabilities | 214 | 187 | 330 | — | 731 | |||||||||||||||
| Other liabilities | 1,619 | 121 | 527 | — | 2,267 | |||||||||||||||
| $ | 2,464 | $ | 308 | $ | 857 | $ | 327 | $ | 3,956 | |||||||||||
December 31, | ||||||||||||||||||||||||
2021 | 2020 | |||||||||||||||||||||||
| ($000s) | Cost | Reserves | Net | Cost | Reserves | Net | ||||||||||||||||||
| Raw materials | $ | 562 | $ | 0 | $ | 562 | $ | 460 | $ | (114 | ) | $ | 346 | |||||||||||
| Work in progress | 107 | 0 | 107 | 25 | 0 | 25 | ||||||||||||||||||
| Finished goods | 570 | (5 | ) | 565 | 588 | (100 | ) | 488 | ||||||||||||||||
| Total Inventory | $ | 1,239 | $ | (5 | ) | $ | 1,234 | $ | 1,073 | $ | (214 | ) | $ | 859 | ||||||||||
| Year Ended December 31, | ||||||||
| 2020 | 2019 | |||||||
| (in thousands) | ||||||||
Denominated in NOK | $ | 5,298 | $ | 11,799 | ||||
Denominated in USD | 1,295 | 1,823 | ||||||
Denominated in GBP | 532 | 352 | ||||||
Denominated in CNY | 173 | 152 | ||||||
|
|
|
| |||||
Total | $ | 7,298 | $ | 14,126 | ||||
|
|
|
| |||||
Year Ended December 31, | ||||||||
| ($000s) | 2021 | 2020 | ||||||
Denominated in USD | $ | 28,217 | $ | 1,295 | ||||
Denominated in NOK | 3,707 | 5,298 | ||||||
Denominated in GBP | 978 | 532 | ||||||
Denominated in CNY | 857 | 173 | ||||||
Total | $ | 33,759 | $ | 7,298 | ||||
14. Restricted assets
For certain facilities, the Company has placed an amount corresponding to about 3 months’ rent and allocations of its leasehold facilities in escrow accounts in the landlord’s name for the benefit of the respective landlords. Such escrow accounts and other deposits amounted to $75 at the end of 2020 and $152 at the end of 2019.
No other assets have been pledged as security or are otherwise restricted.
Number of Ordinary Shares | ||||
| ||||
| ||||
| ||||
| ||||
| ||||
| ||||
| ||||
| ||||
Balance at December 31, 2019 | 717,988,732 | |||
Private placement of Ordinary Shares th | 65,341,413 | |||
Share issue | 441,982 | |||
Share issue | 4,318,523 | |||
Private placement of Ordinary Shares th | 42,528,181 | |||
| 1,527,917 | |||
Balance at December 31, 2020 | 832,146,748 | |||
Private placement of Ordinary Shares th | 83,214,674 | |||
| Share issue (exercise of subscription rights) | 1,767,606 | |||
| Share issue (in lieu of Board compensation) | 535,583 | |||
Private placement of Ordinary Shares th | 89,777,824 | |||
| Share issue (Employee Share Purchase Plan) | 2,946,019 | |||
| Balance at December 31, 2021 | 1,010,388,454 | |||
Incentive subscription
plans
terms of each grant.
Year Ended December 31, | ||||||||||||
2021 | 2020 | 2019 | ||||||||||
| Exercise price (NOK) | 2.38 | 1.10 – 1.80 | 0.15 – 3.88 | |||||||||
| Weighted average exercise price per share | 2.53 | 1.62 | 1.38 | |||||||||
| Weighted average share price at date of grant | 2.45 | 1.42 | 1.49 | |||||||||
| Expected term (years) | 4.62 | 4.77 | 4.93 | |||||||||
| Weighted average term (years) | 3.35 | 2.96 | 3.21 | |||||||||
| Share price volatility (percent) | 85 - 112 | 78 – 113 | 63 – 80 | |||||||||
| Risk-free interest rate | 0.983 | 0.354 | 1.16 | |||||||||
| Expected dividend payment | 0 | 0 | 0 | |||||||||
| Forfeiture | None | None | None | |||||||||
| Number of Subscription Rights | Weighted Average Exercise Price (in NOK) | |||||||
Outstanding as of December 31, 2018 | 34,471,050 | 5.52 | ||||||
Granted | 20,414,143 | 1.38 | ||||||
Exercised | — | — | ||||||
Forfeited | (3,236,375 | ) | 4.34 | |||||
Expired | (1,773,775 | ) | 5.27 | |||||
|
|
|
| |||||
Outstanding as of December 31, 2019 | 52,875,043 | 4.01 | ||||||
Granted | 36,414,800 | 1.62 | ||||||
Exercised | (52,150 | ) | 1.65 | |||||
Cancelled | (25,962,800 | ) | 5.40 | |||||
Forfeited | (4,363,500 | ) | 4.28 | |||||
Expired | (2,567,300 | ) | 7.32 | |||||
|
|
|
| |||||
Outstanding as of December 31, 2020 | 56,344,093 | 1.66 | ||||||
|
|
|
| |||||
Subscription Rights exercisable as of December 31, 2020 | 5,024,700 | 3.03 | ||||||
Subscription Rights exercisable as of December 31, 2019 | 13,783,275 | 6.13 | ||||||
| Number of Subscription Rights | Weighted Average Fair Value (in NOK) | |||||||
Subscription Rights granted in 2020 | 36,414,800 | 0.79 | ||||||
Subscription Rights granted in 2019 | 20,414,143 | 0.79 | ||||||
The fair value
Number of Subscription Rights | Weighted Average Exercise Price (NOK) | |||||||
| Outstanding as of December 31, 2019 | 52,875,043 | 4.01 | ||||||
| Granted | 36,414,800 | 1.62 | ||||||
| Exercised | (52,150 | ) | 1.65 | |||||
| Cancelled | (25,962,800 | ) | 5.40 | |||||
| Forfeited | (4,363,500 | ) | 4.28 | |||||
| Expired | (2,567,300 | ) | 7.32 | |||||
| Outstanding as of December 31, 2020 | 56,344,093 | 1.66 | ||||||
| Granted | 21,885,200 | 2.53 | ||||||
| Exercised | (1,767,879 | ) | 1.33 | |||||
| Forfeited | (3,165,015 | ) | 1.97 | |||||
| Expired | (1,540,000 | ) | 5.22 | |||||
| Outstanding as of December 31, 2021 | 56,344,093 | 1.84 | ||||||
| Year Ended December 31, | ||||||||||||
| 2020 | 2019 | 2018 | ||||||||||
Exercise price (NOK) | 1.10 – 1.80 | 0.15 – 3.88 | 4.28 –5.12 | |||||||||
Weighted average per share | 1.62 | 1.38 | 4.55 | |||||||||
Weighted average actual share price at date of grant (per share) | 1.42 | 1.49 | 4.55 | |||||||||
Expected duration up to (years) | 4.77 | 4.93 | 4.93 | |||||||||
Weighted average (years) | 2.96 | 3.21 | 3.32 | |||||||||
Volatility of share price based on share price history (percent) | 78 – 113 | 63 – 80 | 48 – 66 | |||||||||
Weighted average risk-free interest rate | 0.354 | 1.16 | 1.16 | |||||||||
Expected dividend payment | 0 | 0 | 0 | |||||||||
Actual population of subscription rights holders | No attrition | No attrition | No attrition | |||||||||
Outstanding and vested incentiveexercisable subscription rights at December 31, 2021
Outstanding Subscription Rights | Vested (Exercisable) Subscription Rights | |||||||||||||||||||||||||||
Exercise Price (in NOK) | Number of Subscription Rights Outstanding | Weighted Average Exercise Price (NOK) | Weighted Average Remaining Term (Years) | Weighted Average Remaining Time to Vest (Years) | Number of Vested Subscription Rights | Weighted Average Exercise Price (NOK) | Weighted Average Remaining Term (Years) | |||||||||||||||||||||
0.00 - 0.50 | 4,330,366 | 0.15 | 2.36 | 0.04 | 2,165,186 | 0.15 | 2.36 | |||||||||||||||||||||
0.50 - 1.00 | 720,800 | 0.71 | 2.36 | 1.29 | 310,400 | 0.71 | 2.36 | |||||||||||||||||||||
1.00 - 1.50 | 5,542,500 | 1.11 | 2.36 | 1.04 | 1,385,625 | 1.11 | 2.36 | |||||||||||||||||||||
1.50 - 2.00 | 38,760,433 | 1.70 | 3.14 | 0.96 | 14,045,131 | 1.69 | 3.14 | |||||||||||||||||||||
2.00 - 3.00 | 20,588,700 | 2.51 | 4.24 | 2.04 | — | — | 4.24 | |||||||||||||||||||||
3.00 - 5.00 | 1,238,600 | 3.29 | 3.05 | 1.32 | 175,775 | 3.94 | 3.05 | |||||||||||||||||||||
5.00 - 10.00 | 575,000 | 5.53 | 1.23 | — | 575,000 | 5.53 | 1.23 | |||||||||||||||||||||
| Total | 71,756,399 | 1.84 | 3.32 | 1.22 | 18,657,117 | 1.59 | 3.32 | |||||||||||||||||||||
As of December 31, 2020 | As of December 31, 2020 | |||||||||||||||||||||||||||
Outstanding Subscription Rights | Vested Subscription Rights | |||||||||||||||||||||||||||
Exercise Price (in NOK) | Number of Subscription Rights Outstanding | Weighted Average Exercise Price (in NOK) | Weighted Average Remaining Duration | Weighted Average Remaining Time to Vest (in years) | Number of Vested Subscription Rights | Weighted Average Exercise Price (in NOK) | Weighted Average Remaining Duration (in years) | |||||||||||||||||||||
0.00 – 0.50 | 4,938,543 | 0.15 | 3.36 | 0.54 | — | — | — | |||||||||||||||||||||
0.50 – 1.00 | 868,100 | 0.71 | 3.36 | 1.34 | 217,025 | 0.71 | 3.35 | |||||||||||||||||||||
1.00 – 1.50 | 5,542,500 | 1.11 | 3.36 | 1.79 | — | — | — | |||||||||||||||||||||
1.50 – 2.00 | 42,245,000 | 1.70 | 4.10 | 1.35 | 2,843,925 | 1.65 | 3.35 | |||||||||||||||||||||
3.50 – 4.00 | 208,00 | 3.70 | 3.36 | 0.87 | 52,000 | 3.70 | 3.02 | |||||||||||||||||||||
4.00 – 4.50 | 1,339,450 | 4.28 | 1.04 | 0.14 | 871,750 | 4.28 | 1.01 | |||||||||||||||||||||
5.00 – 5.50 | 660,000 | 5.09 | 2.12 | 0.05 | 620,000 | 5.09 | 2.11 | |||||||||||||||||||||
7.50 – 8.00 | 467,500 | 7.76 | 0.86 | 0.12 | 363,750 | 7.76 | 0.87 | |||||||||||||||||||||
8.00 – 8.50 | 75,000 | 8.42 | 1.37 | 0.07 | 56,250 | 8.42 | 1.36 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Total | 56,344,093 | 3.82 | 1.66 | 1.24 | 5,024,700 | 3.03 | 2.59 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
As of December 31, 2019 | ||||||||||||||||||||||||||||
Outstanding Subscription Rights | Vested Subscription Rights | |||||||||||||||||||||||||||
Exercise Price (in NOK) | Number of Subscription Rights Outstanding | Weighted Average Exercise Price (in NOK) | Weighted Average Remaining Duration | Weighted Average Remaining Time to Vest (in years) | Number of Vested Subscription Rights | Weighted Average Exercise Price (in NOK) | Weighted Average Remaining Duration (in years) | |||||||||||||||||||||
0.00 – 0.50 | 4,938,543 | 0.15 | 4.36 | 1.54 | — | — | — | |||||||||||||||||||||
0.50 – 1.00 | 1,253,700 | 0.71 | 4.36 | 2.29 | — | — | — | |||||||||||||||||||||
1.50 – 2.00 | 12,138,200 | 1.65 | 4.36 | 2.04 | — | — | — | |||||||||||||||||||||
3.50 – 4.00 | 896,500 | 3.82 | 3.71 | 1.63 | — | — | — | |||||||||||||||||||||
4.00 – 4.50 | 11,022,200 | 4.28 | 3.14 | 0.91 | 2,987,300 | 4.28 | 2.96 | |||||||||||||||||||||
4.50 – 5.00 | 5,160,000 | 4.67 | 2.37 | 0.78 | 1,290,000 | 4.67 | 2.36 | |||||||||||||||||||||
5.00 – 5.50 | 6,265,900 | 5.09 | 3.16 | 0.93 | 2,338,475 | 5.09 | 3.03 | |||||||||||||||||||||
6.50 – 7.00 | 3,975,000 | 6.59 | 1.33 | 0.28 | 2,406,250 | 6.59 | 1.30 | |||||||||||||||||||||
7.50 – 8.00 | 5,075,000 | 7.77 | 1.84 | 0.35 | 3,135,000 | 7.78 | 1.73 | |||||||||||||||||||||
8.00 – 8.50 | 1,970,000 | 8.24 | 1.11 | 0.16 | 1,446,250 | 8.21 | 0.86 | |||||||||||||||||||||
9.00 – 9.50 | 105,000 | 9.23 | 0.27 | — | 105,000 | 9.23 | 0.27 | |||||||||||||||||||||
9.50 – 10.00 | 75,000 | 9.85 | 0.37 | — | 75,000 | 9.85 | 0.36 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Total | 52,875,043 | 4.01 | 3.15 | 1.13 | 13,783,275 | 6.13 | 2.09 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Outstanding Subscription Rights | Vested (Exercisable) Subscription Rights | |||||||||||||||||||||||||||
Exercise Price (in NOK) | Number of Subscription Rights Outstanding | Weighted Average Exercise Price (NOK) | Weighted Average Remaining Term (Years) | Weighted Average Remaining Time to Vest (Years) | Number of Vested Subscription Rights | Weighted Average Exercise Price (NOK) | Weighted Average Remaining Term (Years) | |||||||||||||||||||||
| 0.00 – 0.50 | 4,938,543 | 0.15 | 3.36 | 0.54 | — | — | — | |||||||||||||||||||||
| 0.50 – 1.00 | 868,100 | 0.71 | 3.36 | 1.34 | 217,025 | 0.71 | 3.35 | |||||||||||||||||||||
| 1.00 – 1.50 | 5,542,500 | 1.11 | 3.36 | 1.79 | — | — | — | |||||||||||||||||||||
| 1.50 – 2.00 | 42,245,000 | 1.70 | 4.10 | 1.35 | 2,843,925 | 1.65 | 3.35 | |||||||||||||||||||||
| 3.50 – 4.00 | 208,00 | 3.70 | 3.36 | 0.87 | 52,000 | 3.70 | 3.02 | |||||||||||||||||||||
| 4.00 – 4.50 | 1,339,450 | 4.28 | 1.04 | 0.14 | 871,750 | 4.28 | 1.01 | |||||||||||||||||||||
| 5.00 – 5.50 | 660,000 | 5.09 | 2.12 | 0.05 | 620,000 | 5.09 | 2.11 | |||||||||||||||||||||
| 7.50 – 8.00 | 467,500 | 7.76 | 0.86 | 0.12 | 363,750 | 7.76 | 0.87 | |||||||||||||||||||||
| 8.00 – 8.50 | 75,000 | 8.42 | 1.37 | 0.07 | 56,250 | 8.42 | 1.36 | |||||||||||||||||||||
| Total | 56,344,093 | 3.82 | 1.66 | 1.24 | 5,024,700 | 3.03 | 2.59 | |||||||||||||||||||||
The first contribution period under the program was September-November 2020. On December 1, 2020, IDEXnewly issued 1,527,917 shares at NOK 1.43 per share.
17. Receivables
Aging in 2020 and 2019 is as follows:
Year ended December 31, 2020
| Maturity | ||||||||||||||||
| Less than 3 months | 3-6 months | 6-12 Months | Total | |||||||||||||
Trade receivables | $ | 460 | $ | 25 | $ | 2 | $ | 487 | ||||||||
Other current receivables | 303 | 303 | 557 | 1,163 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
| $ | 763 | $ | 328 | $ | 559 | $ | 1,650 | |||||||||
|
|
|
|
|
|
|
| |||||||||
Year ended December 31, 2019
| Maturity | ||||||||||||||||
| Less than 3 months | 3-6 months | 6-12 Months | Total | |||||||||||||
Trade receivables | $ | 31 | $ | — | $ | — | $ | 31 | ||||||||
Other current receivables | 203 | — | 569 | 772 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
| $ | 234 | $ | — | $ | 569 | $ | 803 | |||||||||
|
|
|
|
|
|
|
| |||||||||
Trade receivables amounting to $5 were overdue and the loss had been accrued forOrdinary Shares at the end of that offering period at a purchase price equal to 85% of the lesser of the fair market value, based on the closing price of an Ordinary Share reported by the Oslo Børs, on either the first day or the last day of that offering period. The offering periods occur from March through August, and from September through February.
Year Ended December 31, 2021 | ||||||||||||
($000s) | Cash Compensation | Shared-based Compensation | Total | |||||||||
| Morten Opstad, Board chair | $ | 59 | $ | — | $ | 59 | ||||||
| Lawrence J. Ciaccia, Board deputy chair | 28 | 33 | 61 | |||||||||
| Deborah Davis | 67 | 0 | 67 | |||||||||
| Hanne Hovding | 52 | — | 52 | |||||||||
| Annika Olsson | — | — | — | |||||||||
| Thomas M. Quindlen | 2 | 32 | 34 | |||||||||
| Stephen A. Skaggs | 4 | 58 | 62 | |||||||||
| $ | 212 | $ | 123 | $ | 335 | |||||||
Year Ended December 31, 2020 | ||||||||||||
($000s) | Cash Compensation | Shared-based Compensation | Total | |||||||||
| Morten Opstad, Board chair | $ | 40 | $ | — | $ | 40 | ||||||
| Lawrence J. Ciaccia, Board deputy chair | 38 | — | 38 | |||||||||
| Deborah Davis | 10 | 36 | 46 | |||||||||
| Hanne Hovding | 32 | — | 32 | |||||||||
| Stephen A. Skaggs | 4 | 34 | 38 | |||||||||
| $ | 124 | $ | 70 | $ | 194 | |||||||
Year Ended December 31, 2019 | ||||||||||||
| ($000s) | Cash Compensation | Shared-based Compensation | Total | |||||||||
| Morten Opstad, Board chair | $ | 43 | $ | — | $ | 43 | ||||||
| Lawrence J. Ciaccia, Board deputy chair | 34 | — | 34 | |||||||||
| Deborah Davis | 7 | 34 | 41 | |||||||||
| Hanne Hovding | 16 | 23 | 39 | |||||||||
Andre James MacLeod 1 | 7 | 34 | 41 | |||||||||
| Stephen A. Skaggs | — | — | — | |||||||||
| $ | 107 | $ | 91 | $ | 198 | |||||||
| 1 | Mr. MacLeod resigned from theBoard on May 9, 2019. |
Subscription rights outstanding as of December 31, | ||||||||||||||||||
Grant Date | Expiration Date | Exercise Price (NOK per share) | 2021 | 2020 | 2019 | |||||||||||||
| August 15, 2018 | May 9, 2023 | 5.10 | — | — | 600,000 | |||||||||||||
| June 17, 2020 | May 15, 2025 | 1.71 | 600,000 | 600,000 | — | |||||||||||||
Year Ended December 31, | ||||||||||||
| ($000s) | 2021 | 2020 | 2019 | |||||||||
Sales and marketing activities | $ | 1,287 | $ | 764 | $ | 850 | ||||||
Legal, audit, accounting and other services | 2,332 | 2,906 | 1,618 | |||||||||
IT expenses | 2,047 | 1,621 | 1,367 | |||||||||
Travel expenses | 132 | 125 | 635 | |||||||||
Other operating expenses | 1,449 | 520 | 170 | |||||||||
Total other operating expenses | $ | 7,347 | $ | 5,936 | $ | 4,641 | ||||||
Year Ended December 31, | ||||||||||||
| ($000s) | 2021 | 2020 | 2019 | |||||||||
| Audit services | $ | 352 | $ | 235 | $ | 468 | ||||||
| Audit-related services | 22 | 8 | 8 | |||||||||
| Tax services | 7 | — | 8 | |||||||||
| Other services | 24 | 12 | 5 | |||||||||
| $ | 405 | $ | 255 | $ | 489 | |||||||
18. Payables and Financial Liabilities
The Company did not have any liabilities at December 31, 2020 or 2019 which represented debt to financial institutions. The company’s liabilities at December 31, 2020, and 2019 were as follows:
Year ended December 31, 2020
| Maturity | ||||||||||||||||||||||||
| Less than 3 months | 3-6 months | 6-12 months | 1-5 years | More than 5 years | Total | |||||||||||||||||||
Non-current lease liabilities | $ | — | $ | — | $ | — | $ | 327 | | $ | — | $ | 327 | |||||||||||
Accounts payable | 631 | — | — | — | — | 631 | ||||||||||||||||||
Current lease liabilities | 214 | 187 | 330 | — | — | 731 | ||||||||||||||||||
Other Current liabilities | 1,619 | 121 | 527 | — | — | 2,267 | ||||||||||||||||||
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| $ | 2,464 | $ | 308 | $ | 857 | $ | 327 | $ | — | $ | 3,956 | |||||||||||||
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Year ended December 31, 2019
| Maturity | ||||||||||||||||||||||||
| Less than 3 months | 3-6 months | 6-12 months | 1-5 years | More than 5 years | Total | |||||||||||||||||||
Non-current lease liabilities | $ | — | $ | — | $ | — | $ | 610 | $ | — | $ | 610 | ||||||||||||
Accounts payable | 463 | — | — | — | — | 463 | ||||||||||||||||||
Current lease liabilities | 197 | 197 | 394 | — | — | 788 | ||||||||||||||||||
Other Current liabilities | 1,260 | 1,624 | 393 | — | — | 3.277 | ||||||||||||||||||
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| $ | 1,920 | $ | 1,821 | $ | 787 | $ | 610 | $ | $ | 5,138 | ||||||||||||||
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Other current liabilities include accruals for earned compensation, earned vacation days not taken, potential employer’s tax on share-based compensation, and accruals for goods andrelated services receivedprovided by EY, but not yet invoicedlimited to those that only reasonably can be provided by EY, which are reasonably related to the performance of the audit.
the Sarbanes-Oxley Act.
Interest expense including interest on lease liabilities in statement of profitto certain employees and loss in finance expense was $63 in 2020 and $48 in 2019. In 2019 there was also $54 imputed interest on a deferred payment. Remaining amount of finance expense is net currency losses.
IDEX had no other significant current or non-current financial obligations at the end of 2020 or 2019. IDEX had no contingent liabilities at the end of 2020 or 2019.
19. Inventory
| December 31, | ||||||||||||||||||||||||
| 2020 | 2019 | |||||||||||||||||||||||
| Cost | Reserves | Net | Cost | Reserves | Net | |||||||||||||||||||
| (In thousands) | ||||||||||||||||||||||||
Raw materials | $ | 460 | $ | (114 | ) | 346 | $ | 796 | $ | (513 | ) | 283 | ||||||||||||
Work in progress | 25 | — | 25 | 81 | (70 | ) | 11 | |||||||||||||||||
Finished goods | 588 | (100 | ) | 488 | 963 | (571 | ) | 392 | ||||||||||||||||
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Total Inventory | $ | 1,073 | $ | (214 | ) | $ | 859 | $ | 1,840 | $ | (1,154 | ) | $ | 686 | ||||||||||
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Inventory, consisting mainly of fingerprint sensors which are manufactured for sale, is held at cost, which is less than recoverable value. Inventory value has been reduced to reflect aging, obsolescence and estimated shrinkage.
In 2020, 2019, and 2018, $32, $1,079, and $358, respectively, of materials used in new product development was charged to development expense.
20. Other Operating Expenses
| Year Ended December 31, | ||||||||||||
| 2020 | 2019 | 2018 | ||||||||||
| (in thousands) | ||||||||||||
Sales and marketing activities | $ | 764 | $ | 850 | $ | 193 | ||||||
Legal, audit, accounting and other services | 2,906 | 1,618 | 1,036 | |||||||||
IT expenses | 1,621 | 1,367 | 1,247 | |||||||||
Travel expenses | 125 | 635 | 814 | |||||||||
Other operating expenses | 520 | 170 | 630 | |||||||||
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Total other operating expenses | $ | 5,936 | $ | 4,641 | $ | 3,919 | ||||||
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The main reason for the increase from 2019 to 2020 was legal, audit and other services in connection with the company’s listing on the Nasdaq which commenced on March 1, 2021.
21. Subsequent Events
On February 15, 2021 IDEX completed a private placement of shares raising $27.2 million before expenses. Approximately 83.2 million new shares were issued at NOK 2.75 per share. The placement was conducted by a book building with professional investors after market close. The shares have been issued.
On February 24, 2021, the board resolved to issue 934,900 incentive subscription rights (SRs) to IDEX employees.individual contractors. The grant was made under the Company’s 2020 SR plan as resolved at the annual general meeting on May 15, 2020.2021 Subscription Rights Incentive Plan. The exercise price of the SRssubscription rights is NOK 3.102.08 per share. The subscription rightsgrants vest by 25% per year and expire on May 15, 2025.
On2026. Following the grants, there were 80,107,297 subscription rights outstanding.
ESPP.
Followingdate of these Consolidated Financial Statements, the foregoing transactions,Company has not been affected by the company’s share capital is NOK 137,508,072.75 divided into 916,720,485 shares each with a nominal valueoutbreak of NOK 0.15war between Russia and there are a total of 57,032,259 SRs outstanding.
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