☐ | 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 |
☐ | 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) |
Name of each exchange on which registered | ||
American Depositary Shares, each representing 75 Ordinary Shares, nominal value NOK 0.15 per share |
IDBA |
t | ||
Ordinary Shares, nominal value NOK 0.15 per share* |
* |
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Not for trading, but only in connection with the registration of the American Depositary Shares. |
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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F-2 |
• | our expectations regarding our revenue, expenses, and other operating results; |
• | our ability to achieve or maintain market acceptance for our biometric technology and products; |
• | our ability to generate revenue; |
• | our ability to respond to ongoing constraints and uncertainties within the semiconductor supply chain; |
• | our ability to achieve profitability or, once doing so, sustain profitability; |
• | our estimates, and those of others, regarding our current and future capital requirements; |
• | our ability to compete effectively with existing competitors and any new market entrants; |
• | our assessment of the growth rates of the market segments and geographies in which we compete; |
• | the impact of the COVID-19 pandemic on our performance; |
• | our reliance on key personnel and our ability to identify, recruit, and retain skilled personnel; |
• | our ability to protect our intellectual property rights and any costs associated therewith; |
• | regulatory developments in Norway, the United States, the United Kingdom, China, and other jurisdictions; and |
• | other risks and uncertainties, including those listed in this Annual Report. |
Item 1. |
Identity of Director, Senior Management and Advisers. |
Item 2. |
Offer Statistics and Expected Timetable. |
Item 3. |
Key Information. |
• | we have a history of operating losses and may not achieve or sustain profitability; |
• | if we are unable to raise capital if and when needed, we could be forced to delay, reduce, or terminate certain development activities or undertake other cost-reduction steps, including termination of employees, either of which could reduce our ability to execute our strategy, with potential harm to our business, operational performance, and financial position; |
• | our biometric technologies have not yet achieved, and may never achieve, widespread customer acceptance in the market segments we are targeting; |
• | if the estimates and assumptions we have used to calculate the pace of development and ultimate size of our targeted market segments are inaccurate, future revenue growth may take longer than anticipated and reaching the operational scale we believe necessary for sustained profitability may not be achieved; |
• | if we fail to innovate in response to changing customer needs, new technologies, and other evolving competitive requirements, our business, operational performance, and financial position could be harmed; |
• | we are exposed to risks associated with customer concentration and reliance on a limited number of suppliers, and the disruption to a significant customer or supplier could harm our business, operational performance, and financial position; |
• | we expect fluctuations in our quarterly financial results, making it difficult to project future results, and, if we fail to meet the expectations of securities analysts or investors with respect to our performance, the quoted prices of our equity securities could decline; |
• | because the market segments we target are highly competitive, the landscape of competitors, strategic partners, and market participants can change quickly, and because customer demand is difficult to accurately predict, our business, operational performance, and financial position could be harmed if we do not maintain our competitive advantages in response to unexpected developments in the market segments we target; |
• | we are vulnerable to adverse economic conditions, whether the result of business cycles or exogenous disruptions, and may not be able to respond quickly or effectively to unanticipated events or trends, such as a sudden or prolonged decline in business confidence and economic activities, which could harm our business, operational performance, and financial position and limit our ability to access the capital markets; |
• | because we depend on the contributions of very skilled employees across engineering and business disciplines, if these employees were to leave the Company, we may not be able to attract and hire replacements with the same skills in a timely fashion, if at all, which could harm our business, operational performance, and financial position; |
• | although we have not experienced significant delays in development activities or product deliveries to date, the ongoing COVID-19 pandemic could have an adverse impact on the Company and the communities in which we, our customers, our vendors, and our partners operate; |
• | because we are domiciled in Norway, we are subject to Norwegian corporate and securities laws, and, pursuant to certain exemptions under the laws and regulations in the United States, as well as the rules defining the listing requirements of Nasdaq, we are allowed to follow certain Norwegian standards for governance, which may be different from such standards in the United States and, as such, may not provide the same level of investor protections and shareholder rights; |
• | because we list our Ordinary Shares on the Oslo Børs and list our American Depositary Shares (“ADSs”) on Nasdaq, we are subject to two complex sets of corporate and securities laws, which increases the costs and burdens of compliance, while increasing the risk that we may fail to comply with such laws; |
• | failure or perceived failure to comply with existing or future laws, regulations, contracts, self-regulatory schemes, standards, and other obligations related to data privacy and security (including security incidents) could harm our business, and compliance or the actual or perceived failure to comply with such obligations could increase the costs of our products and services, limit their use or adoption, and otherwise negatively affect our operating results and business; and |
• | the provisions of the contractual agreements associated with our ADSs are complex, and, pursuant to those agreements, holders of ADSs are afforded fewer rights and protections than holders of our Ordinary Shares, are subject to transfer and related restrictions, and are required to pay various administrative fees, all of which may reduce investor interest in our ADSs. |
• | potential issuers of biometric payment cards (e.g., banks) have required, and continue to require, extensive education regarding fingerprint authentication, addressing their uncertainties associated with costs, card deployment, user enrolment, reliability, security, and infrastructure requirements, contributing to our extended and unpredictable sales cycles; |
• | our primary customers, the manufacturers of smart cards for financial payment applications, have required, and continue to require, extensive education regarding the opportunity and our differentiated value proposition, frequently followed by an extended period of sales and engineering support necessary for the development and qualification of a biometric payment card that a manufacturer can market to its customers, contributing to our extended and unpredictable sales cycles, resource allocation challenges, and high pre-sale customer engagement costs; |
• | design, development, and qualification of a biometric payment card incorporating fingerprint authentication to a customer’s specifications has required, and may continue to require, customers, which may be resource-constrained or lack the appropriate engineering expertise, to coordinate multiple suppliers of complex components that must be integrated in a timely and cost-efficient manner, a process that has, and may continue to be, a source of delays in customer development of biometric payment cards; |
• | all financial payment cards require approvals from the global operators of payment processing platforms, notably Mastercard, VISA, and China UnionPay, certifying that a new financial payment card meets platform-specific security, reliability, performance, and interoperability requirements, and obtaining such certification has been, and may continue to be, delayed due to challenges card manufacturers have experienced with completing development of biometric payment cards and scheduling their certification with the payment processing platforms and the testing laboratories on which they rely; and |
• | because the added cost of incorporating fingerprint authentication in a financial payment card historically has been economically unjustifiable for many high-volume applications, we, since introducing the ISO ID-1 design in 2015, have aggressively addressed materials and manufacturing costs and, by 2021, with the introduction of our TrustedBio module, achieved a cost profile compelling to manufacturers of smart cards, and we continue our efforts to lower the costs of current and future solutions, although we cannot offer any assurances regarding our ability to so, or the timing thereof. |
• | the degree to which low-cost, low value-added, legacy solutions, based on minimal security requirements, continue to dominate the enterprise market, particularly within physical access control applications; |
• | the slower than expected pace at which physical access control and network user identity authentication are converging into unified, enterprise-wide security solutions; |
• | a relatively concentrated group of global and dominant regional vendors of IAM (Identity and Access Management) platforms and related access control solutions, split between those based on proprietary architectures and components and those integrating best-of-breed |
• | a highly-fragmented range of single- and multi-factor authentication solutions, including various biometric solutions, contributing to price competition and, for less demanding applications, commoditization, thereby potentially limiting opportunities for differentiating our solutions based on performance, total cost of ownership, and other elements of our value proposition. |
• | our ability to further streamline the user enrolment process for issuers, reducing costs and complexity, while enhancing the user experience; |
• | our ability to collaborate with multiple, often competing, organizations and industry bodies on the development of industry- or customer-specific software applets, modification of card operating systems for customer purposes, or obtaining necessary industry or regulatory certifications; |
• | our ability to influence the standardization and simplification of the manner in which fingerprint authentication is integrated into transaction processing systems; |
• | our ability to address public perceptions regarding privacy and the potential exposure of personal biometric information; and |
• | our ability, on a worldwide basis, to address proposed or enacted legislation related to information privacy or the collection and storage of biometric information. |
• | our ability to design, introduce, and implement compelling new technologies, products, and solutions in a timely manner; |
• | our ability to accurately predict and adapt to the evolving needs of our customers and our targeted market segments; |
• | our ability to anticipate and meet our customers’ price and performance requirements, as well as their requirements for product ease of use, reliability, and durability; |
• | our ability to provide responsive, high-quality customer service and support; and |
• | our ability to anticipate and respond to competitors’ product and pricing moves, new product and technology development, marketing initiatives, strategic partnering, and other competitive actions. |
• | the COVID-19 pandemic does not abate, or new variants of the virus are identified, causing governments to prolong current, or impose new, restrictions on activities, potentially contributing to inflationary and recessionary pressures across the global economy; |
• | supply chain constraints and related uncertainties continue indefinitely across industries, or conditions deteriorate, with the potential consequence of increasing inflationary and recessionary pressures in specific geographies or market segments or across the global economy; |
• | the relationships between China and western trading partners, notably the United States, do not improve or deteriorate further, possibly contributing to further trade restrictions, leading to inflationary and recessionary pressures in China and across the global economy; and |
• | the war between Russia and Ukraine and the risk of escalation into a broader conflict does not abate, causing prolonged trade sanctions and other economic restrictions on Russia, potentially contributing to inflationary and recessionary pressures across the global economy. 1 |
1 |
We currently do not have personnel or customers in Russia, Ukraine, or the neighboring countries. |
• | difficulties in staffing and managing international operations; |
• | potentially longer collection cycles, due to currency restrictions or other limitations on customer remittances; |
• | unexpected challenges within or changes to countries’ banking and credit systems; |
• | unexpected changes in government regulatory requirements; |
• | managing complex value added tax, sales, or other indirect tax requirements, regulations, and treaties, which can be burdensome, and potential changes in tax and trade regulations and treaties in and among Norway, the United States, the United Kingdom, China, and in and among countries in which we operate or conduct business; |
• | unexpected changes in international trade policies, including potential adoption and expansion of tariffs or cross- border taxation; |
• | potentially longer inventory cycles, in the event our supply chain partners, which primarily are based in China, Taiwan, and South Korea, experience operational disruptions or are negatively affected by changes in trade policies or taxation; |
• | different, complex, and evolving laws governing intellectual property rights, which in certain countries provide uncertain or reduced protection of intellectual property rights; and |
• | operating in countries with a higher incidence of corruption and fraudulent business practices. |
• | incomplete or inadequate due diligence on our part, regarding the business, operational, financial, and legal characteristics of the business and the development of associated assumptions and estimates; |
• | challenges and difficulties in the integration of acquired business operations into our operations, information systems, and control environment; |
• | challenges and difficulties in assimilating and retaining employees; |
• | challenges and difficulties in integrating technologies, intellectual property, and product development activities; |
• | challenges and difficulties in retaining existing customers of the acquired business and developing new customers after the strategic transaction; |
• | challenges and difficulties in integrating supply chains and inventories; |
• | meeting the terms of contractual liabilities assumed by us, or transferred to us, as a result of the strategic transaction; |
• | unanticipated liabilities and contingent obligations that may arise due to the strategic transaction; |
• | the breach of representations and warranties by one or more parties to the definitive agreement associated with the strategic transaction, for which remedy may be insufficient or unavailable; |
• | the failure of one or more parties to the definitive agreement associated with the strategic transaction to satisfy any obligations to indemnify us against liabilities arising from the strategic transaction; and |
• | development of unfavorable economic or trading conditions in the market segments we target (or are targeted by the acquired business), which could negatively impact the accuracy of our assumptions and estimates associated with the strategic or financial value of the strategic transaction. |
• | delay, defer, or prevent a change in control; |
• | take steps to entrench our management and/or the Boards; |
• | impede or disproportionately influence a merger, change of control transaction, or other business combination involving us; |
• | discourage a potential acquirer from a tender offer or otherwise influence the outcome of any attempt to obtain control of the Company; or |
• | pursue strategies that deviate from the interests of other holders of our equity securities. |
(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.” |
• | our public disclosures, including our regulatory filings, press releases, and other public statements; |
• | publications or statements made by securities analysts regarding our company, our customers, our competitors, or developments in the market segments in which we are active, including revisions to investment recommendations, estimates of future financial performance for us or our competitors, estimates of growth rates for market segments, and other relevant matters, including the launch or termination of our research coverage; |
• | credible news, reported by reliable sources, directly or indirectly related to us, our customers, our competitors, or the market segments in which we are active; |
• | publication of business analyses, industry surveys, or related information authored by organizations focused on the development of market studies and related research products and services; |
• | investor reactions to rumors, speculative statements, and other unreliable information, sometimes deliberately misleading, published by unidentified authors on social media, Internet investment forums, and other unreliable outlets, with the intent of influencing or manipulating the quoted prices of our equity securities; |
• | coordinated buying and/or selling activity in our ADSs and/or Ordinary Shares, including such trading intended to manipulate quoted prices of our equity securities; |
• | large short positions in our Ordinary Shares, publicly reported from time to time; and |
• | sudden and significant news regarding economic, political, and financial market conditions. |
• | Under Norwegian corporate law, a shareholder may, at the general meeting of shareholders, require the Board and the Chief Executive Officer make available information about (i) matters that may affect the consideration of the annual financial statements and report; (ii) any matters that have been submitted to the shareholders for decision; (iii) the company’s financial condition and (iv) any other matters before the general meeting. |
• | Other than the foregoing, or in respect of a formal investigation of the company, as approved by at least 10% of the share capital represented at a general meeting, our shareholders may not ask for an inspection of our corporate records. In contrast, under Delaware corporate law, for example, any shareholder, irrespective of the size of such shareholder’s holdings, may do so. |
• | An individual shareholder of a Norwegian limited liability company is, as a starting point, also unable to initiate a derivative action, a remedy typically available to shareholders of companies domiciled in the United States, in order to enforce our right, in case we fail to enforce such right ourselves, other than in certain cases of Board and management liability under limited circumstances. |
• | Distribution of dividends from Norwegian companies to foreign companies and individuals may be subject to Norwegian non-refundable withholding tax, and not all receiving countries allow for deduction for the Norwegian withholding tax. |
• | The rights as a creditor may not be as strong under Norwegian insolvency law as under United States law or relevant state insolvency law, and, as a consequence, creditors may recover less in the event we are subject to insolvency, compared to a similar case involving an insolvent United States debtor. |
• | The use of a deferred tax asset consisting of accumulated tax losses (i.e., carryforwards) requires that we are able to generate positive taxable income, and the use of tax losses carried forward to offset against future income is subject to certain restrictions and can be restricted further by future amendments to Norwegian tax law. |
• | Norwegian corporate law may not provide appraisal rights in the case of a business combination, in a manner equivalent to those available to a shareholder of a United States company under applicable United States or state laws. |
• | The STA requires any person, entity, or consolidated group that becomes the owner of shares representing more than one-third of the voting rights of a Norwegian company whose shares are listed on a Norwegian regulated exchange to, within four weeks, make an unconditional general offer for the purchase of the remaining shares of that company. |
• | A mandatory offer obligation may be imposed by the Oslo Børs, on which our Ordinary Shares are listed for trading, when a party acquires the right to become the owner of shares that, together with the party’s own shareholding, represent more than one-third of the voting rights in the company, and the Oslo Børs determines this acquisition is regarded as an effective acquisition of the shares in question. The mandatory offer obligation ceases to apply if the person, entity, or consolidated group sells the portion of the shares that exceeds the relevant threshold within four weeks of the date on which the mandatory offer obligation was triggered. |
• | When a mandatory offer obligation is triggered, the person subject to the obligation is required to immediately notify the Oslo Børs and the targeted company. The notification shall state the person’s intentions and whether an offer will be made to acquire the remaining shares in the targeted company. An earlier notification stating an intention to acquire no additional shares or an intention to dispose of acquired shares can be altered to become a notice of an intended offer within the four-week period, while a notification stating an intention to make an offer cannot be retracted and is binding. |
• | The offer price per share associated with a mandatory offer must be at least as high as the highest price paid or agreed by the offeror for the shares in the six-month period prior to the date the ownership threshold was exceeded. If the offeror acquires or agrees to acquire additional shares at a higher price prior to the expiration of the mandatory offer period, the offeror is obligated to restate its offer at such higher price. A mandatory offer must be settled in cash or contain a cash alternative at least equivalent to any other consideration offered. |
• | In case of failure to make a mandatory offer or to sell the portion of the shares that exceeds the relevant threshold within four weeks, the Oslo Børs may force the acquiring party to sell the shares exceeding the threshold through public auction. While the mandatory offer obligation remains in force, an acquiring party failing to make such an offer may not exercise rights in the company, such as voting in a general meeting, without the consent of a majority of the remaining shareholders. The acquiring party may, however, exercise its rights to dividends and pre-emptive subscription rights in the event of a share capital increase by the targeted company. If the acquiring party neglects its duty to make a mandatory offer, Oslo Børs may impose a daily fine that is cumulative until the circumstance has been rectified. |
• | A mandatory offer obligation also is triggered when any person, entity, or consolidated group, already owning shares representing more than one-third of the votes in a Norwegian company listed on a Norwegian regulated exchange, through acquisition of additional shares, becomes the owner of shares representing 40% or more of the votes in the company. Similarly, a mandatory offer obligation is triggered when the person, entity, or consolidated group, through acquisition, becomes the owner of shares representing 50% or more of the votes in the company. The mandatory offer obligation ceases to apply if the person, entity, or consolidated group sells that portion of that shares which exceeds the relevant threshold within four weeks of the date on which the mandatory offer obligation was triggered. |
• | Any person, entity, or consolidated group that has passed any of the stated thresholds in such a way as not to trigger the mandatory bid obligation, and, therefore, has not made an offer previously for the remaining shares in the company in accordance with the mandatory offer rules is required to make a mandatory offer in the event of a subsequent acquisition of shares that increases the acquiring party’s voting rights in the company. |
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. |
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, 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 | |
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 or pay-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. |
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 |
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 meeting end-customer requirements and coordinate volume manufacturing for the end-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 |
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. |
• | with a supply chain partner, we have developed an optimized card inlay, consisting of a card antenna and connective circuits, which should reduce customer design and procurement costs; |
• | with another supply chain partner, we have developed a proprietary card operating system for the TrustedBio-SLC38 reference design which can be installed on the SLC38 prior to shipment to a smart card manufacturer, further reducing costs and process steps; and |
• | we have collaborated with a vendor of equipment used for card manufacturing to optimize tooling and process management software, thereby increasing card production throughput, while lowering yield losses. |
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 |
• | meets end-user requirements for ease of use; |
• | addresses end-user concerns about biometric information collection and storage, as the fingerprint template never leaves the smart card; |
• | addresses end-user concerns about transaction security risks; |
• | provides a secure alternative to vulnerable mobile devices for payments and financial transactions; |
• | enables contactless transactions, while eliminating passwords, PINs, and limits on transaction value; and |
• | maintains the higher security level of MFA, while efficiently combining two authentication factors (“what you have” and “what you are”). |
• | maintaining the superior fraud protection of MFA, while improving end-user experience; |
• | given the improved end-user experience, the possibility of higher frequency card usage (i.e., the “top of wallet” effect), thereby increasing transaction-based revenue; |
• | increased differentiation for their smart card offerings and brands, potentially improving customer retention and customer acquisition rates; |
• | addition of tangible value, potentially supporting new or higher fees for a premium card offering; and |
• | minimal investment in infrastructure to support fingerprint authentication: |
• | no modification of existing protocols for encrypted communications and transactions; |
• | existing contactless point-of-sale |
• | limited modifications to back-end transaction processing. |
• | utilizing a general-purpose SE, thereby reducing component costs and increasing design flexibility; |
• | eliminating the need for separate microcontrollers for biometric processing or power management, reducing component costs, integration challenges, layout complexity, and manufacturing risks; |
• | offering a large, yet flexible, sensor surface, enabling superior image capture, processing, and matching performance, improving user experience; |
• | providing design flexibility (e.g., our matching algorithms can operate entirely on the SE, or be partitioned to also operate on the ASIC within our TrustedBio module, maximizing resource efficiency and system performance). |
• | we can provide a proprietary card operating system, which can be installed on the SLC38 prior to shipment to the customer, substantially reducing software development time and costs; |
• | with a leading inlay vendor, we have developed an optimized, cost-effective card inlay, consisting of a card antenna and connective circuits, reducing customer design and procurement costs; and |
• | with a leading production equipment vendor, we have optimized the vendor’s tooling and process management software, thereby facilitating for a customer rapid creation of manufacturing capacity delivering increased card production volume and lower yield losses. |
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 |
• | Stage 1: an initial trial, consisting of several hundred smart cards, generally distributed to a controlled group within the issuer, intended as “proof of concept” and used to assess systems requirements. Our experience has been that a Stage 1 trial is generally for less than 90 days. |
• | Stage 2: an expanded pilot, consisting of several thousand smart cards, more broadly distributed to a targeted cohort of users, and intended to identify deployment risks and evaluate usage patterns. We anticipate many of the 20 announced programs of which we are aware are Stage 2 deployments. |
• | Stage 3: an initial commercial launch, consisting of multiple, phased deployments of tens of thousands of smart cards over six to 12 months, supported by consumer education and high-touch marketing initiatives. A Stage 3 deployment may be a distinct program, for example, targeting an exclusive customer cohort with a premium service level, or it may be a preparatory deployment in anticipation of a full commercial launch. |
• | Stage 4: a full commercial launch, also consisting of multiple, phased deployments, but of hundreds of thousands of smart cards, over an extended period, with broad marketing support highlighting the program as a mature element of the issuer’s product portfolio. |
• | further reduction of system costs through optimized architecture and integration; |
• | continuous solution performance improvements through enhancing sensor and ASIC designs; |
• | further refinement and enhancement of our scanning, feature extraction, and matching algorithms; |
• | development of compelling software to complement our solution strategy, including innovative software-only enrolment solutions and card-not-present |
• | developing and integrating technologies (e.g., displays) for use in next-generation smart cards. |
• | 72 were engaged in engineering functions (33 in hardware design (i.e., silicon, sensors, and packaging); 21 in systems design; and 18 in software development); |
• | 15 were engaged in marketing and sales functions; |
• | nine were engaged in administrative and financial functions; and |
• | two were engaged in production planning and supply chain management. |
Item 4A. |
Unresolved Staff Comments. |
Item 5. |
Operating and Financial Review and Prospects. |
• | Cost of materials, net of inventory change |
• | Compensation and benefits |
• | Research and development |
• | Other operating expenses |
• | Amortization and depreciation |
• | Finance income may include interest received on bank balances, the net gain associated with aggregated foreign exchange translation adjustments for the period, and upward revisions to provisions, reserves, or the recorded fair values of financial assets or liabilities. |
• | Finance cost may include interest expenses on lease liabilities, interest expenses on VAT obligations, the net loss associated with aggregated foreign exchange translation adjustments for the period, and downward revisions to provisions, reserves, or the recorded fair values of financial assets or liabilities. |
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 assumed arm’s-length level of profitability on such services. |
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 | % | |||||||
|
|
|
|
|
|
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. |
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 | |||||
|
|
|
|
|
|
• | the pace and amount of new production orders placed with us by existing customers and customers with which we have recently secured design wins; |
• | the scope, rate of progress, and costs of our expanded marketing and sales activities; |
• | the scope, rate of progress, and costs of our product development activities; |
• | our ability to secure manufacturing capacity and address other ongoing supply chain uncertainties; |
• | the cost of manufacturing our products and our ability to pass on cost increases to our customers; |
• | the cost of developing our software and the timing thereof; |
• | the costs involved in filing and prosecuting patent applications and enforcing and defending potential patent claims; and |
• | the costs of retaining existing personnel and hiring additional skilled individuals to support our continued growth. |
Item 6. |
Directors, Senior Management and Employees. |
A. |
Directors and senior management |
Name |
Age |
Position(s) | ||||
Executive Officers: |
||||||
Vincent Graziani |
61 | Chief Executive Officer | ||||
James A. Simms |
62 | Chief Financial Officer | ||||
Anthony Eaton |
49 | Chief Technology Officer | ||||
Catharina Eklof |
52 | Chief Commercial Officer | ||||
Directors: |
||||||
Morten Opstad |
68 | Chair | ||||
Lawrence J. Ciaccia 2 |
63 | Deputy Chair | ||||
Deborah Lee Davis 1,2 |
58 | Director | ||||
Hanne Høvding 1 |
67 | Director | ||||
Annika Olsson |
45 | Director | ||||
Thomas M. Quindlen |
58 | Director | ||||
Stephen A. Skaggs 1 |
58 | Director |
1. | Member of Audit Committee. |
2. | Member of Compensation Committee. |
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). |
($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 |
1 |
The amount represents the amortized cost in the year, pursuant to IFRS 2 Share-based Payments |
2 |
Mr. Graziani has served as our Chief Executive Officer since February 27, 2020. |
3 |
Mr. Simms was appointed as our Chief Financial Officer effective April 26, 2021. |
4 |
Mr. D’Antilio tendered his resignation effective April 23, 2021. |
5 |
Ms. Eklof was appointed as our Chief Commercial Officer effective June 1, 2021. As she resides in Belgium, Ms. Eklof serves the Company as an individual contractor. |
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 |
1 |
As of December 31, 2021, Mr. Graziani held subscription rights to purchase an aggregate of 6,210,400 Ordinary Shares. |
2 |
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, 2021, Mr. Simms held subscription rights to purchase an aggregate of 2,997,400 Ordinary Shares. |
3 |
As of December 31, 2021, Mr. Eaton held subscription rights to purchase an aggregate of 1,663,100 Ordinary Shares. |
4 |
The Board granted subscription rights to purchase 2,00,000 Ordinary Shares at the time of Ms. Eklof’ appointment as CCO. As of December 31, 2021, Ms. Eklof held subscription rights to purchase an aggregate of 2,000,000 Ordinary Shares. |
($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 |
• | Mr. Ciaccia acquired 143,458 Ordinary Shares, in lieu of $33 thousand of his total Board compensation. Mr. Ciaccia received the remainder of $28 thousand due in cash; |
• | Mr. Quindlen acquired 138,981 Ordinary Shares, in lieu of $32 thousand of his total board compensation. Mr. Quindlen received the remainder of $2 thousand due in cash; and |
• | Mr. Skaggs acquired 253,144 Ordinary Shares, in lieu of $58 thousand of his total board compensation. Mr. Skaggs received the remainder of $4 thousand due in cash. |
C. |
Board Practices |
• | We do not intend to comply with Nasdaq Rule 5605(b)(1), which requires that our Board be comprised of a majority of independent Directors. Such provisions are not required under the laws of Norway. |
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. |
• | We do not intend to follow Nasdaq Rule 5605(d)(1) regarding the charter of the Compensation Committee of the Board or Nasdaq Rule 5605(d)(2) regarding Compensation Committee composition. Such provisions are not required under the laws of Norway. However, we do maintain a Compensation Committee in compliance with the Code of Practice. See “Item 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 or Nasdaq Rule 5605(e)(2) with respect to the adoption of a formal written charter or Board resolution, as applicable, addressing the Director nomination process. Such provisions are not required under the laws of Norway. In compliance with the Code of Practice, we maintain a Nomination Committee, which is not a subcommittee of our Board, but a separate body elected directly by shareholders at our Annual General Meeting. Members of our Nominating Committee are not Directors of the Company. The establishment of our Nomination Committee was resolved by our Annual General Meeting on May 15, 2012, in accordance with the Code of Practice, along with guidelines for the Nominating Committee addressing the Director nomination process, among other matters. See “Item 6. Section C. Board Practices—Committees of Our Board of Directors—Nomination Committee” for additional information. |
• | We do not intend to comply with the provision of Nasdaq Rule 5610 requiring disclosure within four business days of any determination by our Board to grant a waiver to the Company’s Directors and officers of provisions of the Company’s Code of Conduct and Code of Ethics. However, we do comply with the provision of Nasdaq Rule 5610 requiring that such determination must be disclosed in a Form 6-K or in the next Form 20-F we file. |
• | We do not intend to follow Nasdaq Rule 5620(c), which sets forth quorum requirements applicable to meetings of shareholders. Such quorum requirements are not required under the Norwegian Public Companies Act. |
• | 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 the Companies Act, any issuance of Ordinary Shares by the Company requires shareholder approval or a resolution by the Board in accordance with an authorization from a General Meeting of shareholders. Shareholder approval also is required for share-based compensation programs, as well as compensation to the Board and certain major agreements between the Company and an affiliated party. |
• | overseeing accounting and financial reporting processes, systems of internal control, financial statement audits, and the integrity of our financial statements; |
• | managing the selection, engagement terms, fees, qualifications, independence, and performance of any registered public accounting firm engaged as our independent outside auditor for the purpose of preparing or issuing an audit report or performing audit services, recommending appointment or retention of any such firm to our Board, and approving any non-audit services to be provided by such firm; |
• | reviewing and discussing with management and our independent auditors any financial statements, reports or disclosures required by applicable law and stock exchange listing requirements, and any other financial information issued by us; |
• | overseeing the design, implementation, organization, and performance of our internal control over financial reporting and our internal audit function; |
• | overseeing procedures for reviewing, retaining and investigating complaints regarding accounting, internal accounting controls, or auditing matters; |
• | reviewing and approving any related-party transactions; |
• | helping our Board oversee legal and regulatory compliance, including risk assessment; and |
• | providing regular reports and information to our board. |
• | setting a compensation policy that is designed to promote our long-term success; |
• | ensuring that the overall compensation of employees is in alignment with both their individual performance and their contribution to our overall results, and consistent across the Company; |
• | determining the design of, and targets for, any performance-related variable compensation programs and making a recommendation regarding the total annual payments made under such programs; |
• | investigating any compensation or other payment-related matter it deems appropriate to investigate, and making recommendations to the Board as it may deem necessary; |
• | reviewing the design of all share-based incentive plans to ensure compliance with relevant legislation and good compensation practice and, as necessary, proposing any changes to the Board; and |
• | analyzing appropriate data from comparative companies to review compensation and related policies to support strategy and promotion of sustainable success and, as necessary, proposing any changes to the Board. |
• | regularly reviewing the structure, size, and composition (including the skills, knowledge, experience, and diversity) required of our Board and making recommendations regarding proposed changes to shareholders for approval at the Annual General Meetings; |
• | determining the qualities and experience required of our Directors and identifying suitable candidates, assisted where appropriate by third-party recruitment consultants; |
• | formulating plans for succession for Directors, in particular for the key role of Board chair; and |
• | assessing the re-nomination or re-election of any Director at the conclusion of his or her specified term, having given due regard to the Director’s performance and ability to continue to contribute to the Board, as well as the need for periodically refreshing the composition of the Board. |
D. |
Employees |
• | 72 were engaged in engineering functions (33 in hardware design (i.e., silicon, sensors, and packaging); 21 in systems design; and 18 in software development); |
• | 15 were engaged in marketing and sales functions; |
• | nine were engaged in administrative and financial functions; and |
• | two were engaged in production planning and supply chain management. |
E. |
Share Ownership |
Item 7. |
Major Shareholders and Related Party Transactions. |
A. |
Major Shareholders |
• | each person, or group of affiliated persons, known by us to beneficially own more than 5% of our Ordinary Shares; |
• | each of our Executive Officers; |
• | each of our Directors; and |
• | all of our Executive Officers and Directors as a group. |
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%. |
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, (the “STA”), our shareholders are required to immediately and simultaneously notify us and the Oslo Børs when the shareholder’s holdings, as percentage of total Ordinary Shares outstanding, reaches, exceeds, or falls below the thresholds of 5%, 10%, 15%, 20%, 25%, 1/3, 50%, 2/3, or 90% of the share capital or voting rights of our Company. |
2 | 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 defined in section 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 held in nominee accounts with a limited number of financial institutions. See also “Related Party Transactions—Capital Increases.” |
3 | Société Générale is a nominee shareholder. We are not aware of the number or identity of the beneficial owners of Ordinary Shares held by Société Générale. The principal business address for Société Générale is 92972 Paris—La Défense Cedex France. |
4 | The principal business address for Sundt AS is Dronningen 1, 0287 Oslo, Norway. |
5 | The principal business address for Sundvall Holding AS is Strømsveien 314B, 1081 Oslo, Norway. |
6 | Represents 1,225,725 Ordinary Shares held by Mr. Graziani and 2,500,000 Ordinary Shares issuable pursuant to subscription rights that are exercisable or settled within 60 days of March 31, 2022. |
7 | Consists of 1,494,736 Ordinary Shares held by Mr. Simms and 687,500 Ordinary Shares issuable pursuant to subscription rights that are exercisable or settled within 60 days of March 31, 2022. |
8 | Consists of 284,639 Ordinary Shares held by Mr. Eaton and 913,900 Ordinary Shares issuable pursuant to subscription rights that are exercisable or settled within 60 days of March 31, 2022. |
9 | Consists of 89,684 Ordinary Shares held by Ms. Eklof and 500,000 Ordinary Shares issuable pursuant to subscription rights that are exercisable or settled within 60 days of March 31, 2022. |
10 | Represents 7,398,916 Ordinary Shares held by Mr. Opstad as of March 31, 2022. |
11 | Represents 415,021 Ordinary Shares held by Mr. Ciaccia and 400,000 Ordinary Shares issuable pursuant to subscription rights that are exercisable or settled within 60 days of March 31, 2022. |
12 | Represents 564,479 Ordinary Shares held by Ms. Davis as of March 31, 2022. |
13 | Represents 487,778 Ordinary Shares held by Ms. Høvding as of March 31, 2022. |
14 | Represents 52,631 Ordinary Shares held by Ms. Olsson as of March 31, 2022. |
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 March 31, 2022. |
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 owners. |
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 the beneficial owners of Ordinary Shares held in Société Générale nominee accounts. |
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 defined in section 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 Børs that, as of May 19, 2021, he received 14,905,768 Ordinary Shares as a distribution from CSIHL. |
B. |
Related Party Transactions |
• | the risks, costs, and benefits to us; |
• | the impact on a Director’s independence in the event the related person is a Director, immediate family member of a Director, or an entity with which a Director is affiliated; |
• | the availability of other sources for comparable services or products; and |
• | the terms available to or from, as the case may be, unrelated third parties or to or from employees generally. |
C. |
Interests of Experts and Counsel |
Item 8. |
Financial Information. |
A. |
Consolidated Statements and Other Financial 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 |
D. |
Exchange Controls |
E. |
Taxation |
• | banks, insurance companies, and certain other financial institutions; |
• | U.S. expatriates and certain former citizens or long-term residents of the United States; |
• | dealers or traders in securities who use a mark-to-market |
• | persons holding Ordinary Shares or ADSs as part of a hedging transaction, “straddle,” wash sale, conversion transaction, or an integrated transaction, or persons entering into a constructive sale with respect to Ordinary Shares or ADSs; |
• | persons whose “functional currency” for U.S. federal income tax purposes is not the U.S. Dollar; |
• | brokers, dealers, or traders in securities, commodities or currencies; |
• | tax-exempt entities or government organizations; |
• | S corporations, partnerships, or other entities or arrangements classified as partnerships for U.S. federal income tax purposes (and investors therein); |
• | regulated investment companies or real estate investment trusts; |
• | persons who acquired our Ordinary Shares pursuant to the exercise of a compensatory subscription right awarded by the Company 12 ; |
• | persons that own or are deemed to own 10 percent or more of our Ordinary Shares (by vote or value); and |
• | persons holding our Ordinary Shares or ADSs in connection with a trade or business, permanent establishment, or fixed base outside the United States. |
(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 Treasury Regulations. |
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. |
• | at least 75% of its gross income is passive income (such as interest income); or |
• | at least 50% of its gross assets (determined on the basis of a quarterly average) is attributable to assets that produce passive income or are held for the production of passive income (including cash). |
• | the excess distribution or gain will be allocated ratably over a U.S. Holder’s holding period for the Ordinary Shares or ADSs; |
• | the amount allocated to the current taxable year, and any taxable year prior to the first taxable year in which IDEX became a PFIC, will be treated as ordinary income; and |
• | the amount allocated to each other year will be subject to the highest tax rate in effect for that year and the interest charge generally applicable to underpayments of tax will be imposed on the resulting tax attributable to each such year. |
F. |
Dividends and Paying Agents. |
G. |
Statement by Experts. |
H. |
Documents on Display. |
I. |
Subsidiary Information. |
Item 11. |
Quantitative and Qualitative Disclosures About Market Risk. |
Item 12. |
Description of Securities Other than Equity Securities. |
A. |
Debt Securities |
B. |
Warrants and Rights |
C. |
Other Securities |
D. |
American Depositary Shares |
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 |
C. |
Attestation Report of the Registered Public Accounting Firm |
D. |
Changes in Internal Control Over Financial Reporting |
Item 16A. |
Audit Committee Financial Expert. |
Item 16B. |
Code of Conduct and Code of Ethics. |
Item 16C. |
Principal Accountant Fees and Services. |
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. |
Item 16H. |
Mine Safety Disclosure. |
Item 16I. |
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections. |
Item 17. |
Financial Statements. |
Item 18. |
Financial Statements. |
Item 19. |
Exhibits. |
Incorporation by Reference | ||||||||||
Exhibit |
Description |
Schedule/ Form |
File Number |
Exhibit |
File Date | |||||
13.1** |
||||||||||
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 material and are the type the registrant treats as private or confidential. |
IDEX BIOMETRICS ASA | ||
By: | /s/ Vincent Graziani | |
Name: | Vincent Graziani | |
Title: | Chief Executive Officer |
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 |
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, 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, 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 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
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 | — | (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 | |||||||||
|
|
|
|
|
|
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 | ||||||
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 | ||||||
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 |
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 |
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 | ||||||
|
|
|
|
|
|
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, | 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 | |||||
|
|
|
|
|
|
* | As of December 31, 2021, there was not sufficiently convincing evidence the Company will generate sufficient taxable profit, against which the unused tax losses could be applied. Consequently, no deferred tax asset has been recognized. There are no restrictions as to how long tax losses may be carried forward in Norway or the United Kingdom. In China, tax loss carryforwards expire after five years and $135 thousand will expire at the end of 2022. Tax credits associated with research and development activities in the United States, totaling $1.6 million as of December 31, 2021, can be applied against taxable income for the following for 20 years. |
** | The various deferred tax assets that have not been recognized are denominated in their respective local currencies. As such, the change in the year-end value in USD of these unrecognized deferred tax assets includes foreign currency translation adjustments arising from changes in the exchange rates between USD and these local currencies from the prior year-end. |
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 rdinary S 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, |
||||||||
($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 | ||||
|
|
|
|
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 |
— |
181 |
||||||
Impact of currency translation |
— |
157 |
||||||
|
|
|
|
|||||
Cost at the end of the year |
$ |
5,173 |
$ |
5,173 |
||||
|
|
|
|
|||||
Accumulated Amortization at the beginning of the year |
$ |
2,731 |
$ |
2,230 |
||||
Amortization |
477 |
396 |
||||||
Impact of currency translation |
— |
104 |
||||||
|
|
|
|
|||||
Accumulated Amortization at the end of the year |
3,208 |
2,731 |
||||||
|
|
|
|
|||||
Carrying amount at the end of the year |
$ |
1,965 |
$ |
2,442 |
||||
|
|
|
|
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 | ||||||||||||
|
|
|
|
|
|
|
|
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, |
||||||||||||
($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 | ||||
Maturity |
||||||||||||||||
($000s) |
Less than 3 months |
3-6 months |
6-12 Months |
Total |
||||||||||||
Accounts receivable, trade |
$ | 801 | $ | — | $ | — | $ | 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 | $ | — | $ | 562 | $ | 460 | $ | (114 | ) | $ | 346 | |||||||||||
Work in progress |
107 | — | 107 | 25 | — | 25 | ||||||||||||||||||
Finished goods |
570 | (5 | ) | 565 | 588 | (100 | ) | 488 | ||||||||||||||||
Total Inventory |
$ | 1,239 | $ | (5 | ) | $ | 1,234 | $ | 1,073 | $ | (214 | ) | $ | 859 | ||||||||||
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 |
||||
Number of Ordinary Shares |
||||
Balance at December 31, 2019 |
717,988,732 | |||
Private placement of Ordinary Shares th |
65,341,413 | |||
Share issue (in lieu of Board compensation) |
441,982 | |||
Share issue (in lieu of cash compensation) |
4,318,523 | |||
Private placement of Ordinary Shares th |
42,528,181 | |||
Share issue (Employee Share Purchase Plan) |
1,527,917 | |||
Balance at December 31, 2020 |
832,146,748 | |||
Private placement of Ordinary Shares 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 | |||
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 (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 | ||||||
|
|
|
|
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 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 |
,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 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, 2021 |
||||||||||||
($000s) |
Cash Compensation |
Shared-based Compensation |
Total |
|||||||||
Morten Opstad, Board chair |
$ | 59 | $ | — | $ | 59 | ||||||
Lawrence J. Ciaccia, Board deputy chair |
28 | 33 | 61 | |||||||||
Deborah Davis |
67 | — | 67 | |||||||||
Hanne Hovding |
52 | — | 52 | |||||||||
Annika Olsson |
— | — | — | |||||||||
Thomas M. Quindlen |
2 | 32 | 34 | |||||||||
Stephen A. Skaggs |
4 | 58 | 62 | |||||||||
|
|
|
|
|
|
|||||||
$ | 212 | $ | 123 | $ | 335 | |||||||
|
|
|
|
|
|
Year Ended December 31, 2020 |
||||||||||||
($000s) |
Cash Compensation |
Shared-based Compensation |
Total |
|||||||||
Morten Opstad, Board chair |
$ | 40 | $ | — | $ | 40 | ||||||
Lawrence J. Ciaccia, Board deputy chair |
38 | — | 38 | |||||||||
Deborah Davis |
10 | 36 | 46 | |||||||||
Hanne Hovding |
32 | — | 32 | |||||||||
Stephen A. Skaggs |
4 | 34 | 38 | |||||||||
|
|
|
|
|
|
|||||||
$ | 124 | $ | 70 | $ | 194 | |||||||
|
|
|
|
|
|
Year Ended December 31, 2019 |
||||||||||||
($000s) |
Cash Compensation |
Shared-based Compensation |
Total |
|||||||||
Morten Opstad, Board chair |
$ | 43 | $ | — | $ | 43 | ||||||
Lawrence J. Ciaccia, Board deputy chair |
34 | — | 34 | |||||||||
Deborah Davis |
7 | 34 | 41 | |||||||||
Hanne Hovding |
16 | 23 | 39 | |||||||||
Andre James MacLeod 1 |
7 | 34 | 41 | |||||||||
Stephen A. Skaggs |
— | — | — | |||||||||
|
|
|
|
|
|
|||||||
$ | 107 | $ | 91 | $ | 198 | |||||||
|
|
|
|
|
|
1 | Mr. MacLeod resigned from the Board on May 9, 2019. |
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 | |||||||
|
|
|
|
|
|
Exhibit 1.1
ARTICLES OF ASSOCIATION OF IDEX BIOMETRICS ASA
Corp. ID no. NO 976 846 923 VAT
(last amended on 4 March 2022)
§ 1 | The name of the Company is IDEX Biometrics ASA and it is a public limited company. |
§ 2 | The objective of the Company is to deliver identification systems and other activities related to this. |
§ 3 | The business offices are in the Oslo municipality, Norway. |
§ 4 | The Companys shares shall be registered in the Norwegian Registry of Securities. |
§ 5 | The share capital is NOK 151,882,298.10 divided into 1,012,548,654 shares each with a nominal value of NOK 0.15 per share and issued in name. |
§ 6 | The board of the Company consists of from three to seven members in accordance with the annual general meetings instruction. |
§ 7 | The annual general meeting shall convene in or near Oslo at the boards decision, and shall consider: |
| Determination of the annual financial statements |
| Appropriation of (net) profit or covering of losses |
| Election of chair of the board and board members |
| Election of chair and members of the nomination committee |
| Election of auditor |
| Determination of remuneration to the board of directors, members of the nomination committee and the auditor |
| Other matters which are governed by law |
| Other matters which are mentioned in the notice of the annual general meeting. |
§ 8 | a. The Company shall have a nomination committee. The nomination committee shall have three members, including a chairman. Members of the nomination committee shall be elected by the annual general meeting for a term of two years. |
b. The nomination committee shall: |
| Propose candidates for election to the board of directors |
| Propose the remuneration to be paid to the board members |
| Propose candidates for election to the nomination committee |
| Propose the remuneration to be paid to the nomination committee members |
c. The guidelines for the nomination committee shall be resolved by the annual general meeting. |
§ 9 | Documents which timely have been made available on the Internet site of the Company and which deal with matters that are to be considered at the general meeting need not be sent to the Companys shareholders. |
§ 10 | As a general rule, the Companys general meetings shall be conducted in Norwegian. The general meeting may however resolve by a simple majority vote that English shall be used. Shareholders may present their points of view in the Norwegian or English language. |
§ 11 | A shareholder who wishes to attend the general meeting, in person or by proxy, shall notify his/her attendance to the Company no later than two days prior to the general meeting. If the shareholder does not notify the Company of his/her attendance in a timely manner, the Company may deny him/her access to the general meeting. |
Exhibit 2.4
DESCRIPTION OF SHARE CAPITAL AND ARTICLES OF ASSOCIATION
OF IDEX BIOMETRICS ASA
Introduction
Unless otherwise indicated or the context otherwise requires, all references in this exhibit to the terms IDEX, IDEX Biometrics, IDEX Biometrics ASA, the Company, we, us and our refer to IDEX Biometrics ASA, together with its subsidiaries.
The following description of our share capital, the amended and restated articles of association of IDEX Biometrics ASA (the Articles of Association), and relevant provisions of the Norwegian Public Limited Companies Act dated June 13, 1997 no. 45, as amended from time to time (the Companies Act), is a summary and does not purport to be complete. This summary is subject to and qualified in its entirety by reference to the complete text of the Articles of Association, which are incorporated by reference as Exhibit 1.1 of the Companys Annual Report on Form 20-F to which this description is also an exhibit. The Company encourages readers to review the Articles of Association carefully. Holders of our ADSs will not be treated as one of our shareholders and their names will therefore not be entered in our share register. The Depositary, the custodian, or their nominees will be the registered holder of the Ordinary Shares underlying our ADSs. Holders of our ADSs have a right to receive the Ordinary Shares underlying their ADSs. For discussion on our ADSs and ADS holder rights, see Exhibit 2.5 to the Companys Annual Report on Form 20-F to which this description is also an exhibit.
General
We have the following series of securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934, as amended (the Exchange Act):
Title of Each Class | Trading Symbol | Name of Each Exchange on Which Registered | ||
American Depositary Shares, each representing 75 Ordinary Shares, nominal value NOK 0.15 per share | IDBA | The Nasdaq Capital Market | ||
Ordinary Shares, nominal value NOK 0.15 per share* | * | The Nasdaq Capital Market* |
* | Not for trading, but only in connection with the registration of the American Depositary Shares. |
As of March 4, 2022, our outstanding share capital consisted of 1,012,548,654 Ordinary Shares, with nominal value NOK 0.15 per share. We have no preferred shares outstanding. The principal legislation under which we operate and under which our Ordinary Shares are issued is the Companies Act.
Our Share Capital
We are authorized to issue one class of shares: Ordinary Shares. In accordance with our Articles of Association, the following summarizes the rights of holders of our Ordinary Shares:
| each holder of our Ordinary Shares is entitled to one vote per Ordinary Share on all matters to be voted on by shareholders generally; |
| the holders of the Ordinary Shares shall be entitled to receive notice of, attend, speak, and vote at our general meetings; and |
| holders of our Ordinary Shares are entitled to receive such dividends as are recommended by our directors and declared by our shareholders. |
No person has preferential subscription rights for such authorized capital. See Articles of Association and Norwegian Corporate Law and Preemptive Rights below for additional information on our authorized share capital and preemptive rights.
Shareholder Authorizations Regarding Share Capital
At our Annual General Meeting of shareholders held on May 12, 2021, our Board of Directors (as a whole, the Board, and, and each member thereof, a Director) received the following authorizations from shareholders:
| To issue new Ordinary Shares for the coming year representing a total nominal value of NOK 13,750,807.27, equal to 10 per cent of the registered share capital of the Company (at a par value of NOK 0.15 per Ordinary Share) at the time of the authorization, representing a total of 91,872,048 Ordinary Shares. As of April 25, 2022, 89,777,824 Ordinary Shares have been issued under such authorization. |
| To issue up to 45,836,024 Ordinary Shares in connection with the sale of new shares to our employees under the 2021 Employee Share Purchase Plan, or the 2021 ESPP. |
| To issue Ordinary Shares upon the exercise of subscription rights under our 2021 Subscription Rights Incentive Plan, as well as our 2017, 2018, 2019, and 2020 Subscription Rights Incentive Plans; |
Preemptive Rights
If shareholders at a general meeting resolve to increase a companys share capital by a cash contribution (i.e., a sale for cash of newly issued shares to investors), section 10-4 of the Companies Act will apply. Under that section, shareholders have a pre-emptive right to subscribe for new shares in proportion to their existing shareholdings. However, the pre-emptive right may be deviated from by a majority comprising at least two-thirds of the votes cast, as well as at least two-thirds of the share capital represented at the general meeting. Further, the pre-emptive rights may be suspended by the board of directors based on a valid shareholder authorization at a general meeting to do so; provided, however, that the board of directors must observe the principle of equal treatment of shareholders when exercising a such an authorization.
At our Annual General Meeting on May 12, 2021, our shareholders approved the suspension of preemptive rights until June 30, 2022, in connection with the authorization of the issuance of up to 91,872,048 shares in private placements or rights issues. Also on May 12, 2021, our shareholders approved the suspension of preemptive rights until September 30, 2022, in connection with the authorization of the issuance of up to 45,836,024 shares pursuant to the 2021 ESPP. In addition, in connection with our subscription right incentive plans, our shareholders approved the suspension of preemptive rights in connection with the grant and exercise of subscription rights.
Share Register and Related Considerations under Norwegian Law
Overview
We are required by the Companies Act to keep a register of our shareholders. Under the laws of Norway, the Ordinary Shares are deemed to be issued when the name of the shareholder is entered in our share register. The share register therefore is prima facie evidence of the identity of our shareholders, and the shares they hold.
Our shareholder register is operated through Euronext Verdipapirsentralen (VPS). VPS is the Norwegian paperless centralized securities register. It is an electronic book-keeping system in which the ownership of, and all transactions relating to, Norwegian listed shares must be recorded. VPS and Oslo Børs are both wholly owned by Euronext N.V.
Under Norwegian law, a companys listed shares are registered in the name of the beneficial owner of the shares. As a general rule, there are no arrangements for nominee registration and Norwegian shareholders are not allowed to register their shares with VPS through a nominee. However, foreign shareholders may register their shares with VPS in the name of a nominee (e.g., an authorized bank or securities brokerage) approved by the Financial Supervisory Authority. An approved and registered nominee has a duty to provide information on demand about beneficial
shareholders to a listed company and to the Norwegian authorities. In the case of registration by nominees, the registration with VPS must show that the registered owner is a nominee. A registered nominee has the right to receive dividends and other distributions; however, such registered nominee may not vote in general meetings on behalf of the beneficial owners.
All transactions relating to securities registered with VPS are made through computerized book entries by VPS account operators (e.g., an authorized bank or securities brokerage). No physical share certificates are, or may be, issued. VPS confirms each entry by sending a transcript to the registered shareholder irrespective of any beneficial ownership. To give effect to such entries, the individual shareholder must establish a share account with a Norwegian account agent. Norges Bank (Norways central bank), certain Norwegian banks, certain securities brokerages in Norway, and Norwegian branches of credit institutions established within the European Economic Area are authorized to act as account agents.
As a matter of Norwegian law, the entry of a transaction with VPS is prima facie evidence in determining the legal rights of parties as against the issuing company or any third party claiming an interest in the given security. A transferee or assignee of shares may not exercise the rights of a shareholder with respect to such shares unless such transferee or assignee has registered such shareholding or has reported and shown evidence of such share acquisition, and the acquisition is not prevented by law, the relevant companys articles of association or otherwise.
VPS is liable for any loss suffered as a result of faulty registration or an amendment to, or deletion of, rights in respect of registered securities, unless the error is caused by matters outside VPS control and could not reasonably be expected by VPS such that it can avoid or overcome the consequences thereof. Damages payable by VPS may be reduced in the event of contributory negligence by the aggrieved party.
VPS must provide information to the Financial Supervisory Authority on an on-going basis, as well as any information that the Financial Supervisory Authority requests. Further, Norwegian tax authorities may require certain information from VPS regarding any individuals holdings of securities, including information about dividends and interest payments.
Our share register is maintained by our share registrar, DNB Bank ASA.
Holders of our ADSs will not be treated as one of our shareholders and their names will therefore not be entered in our share register. The Depositary (Bank of New York Mellon), the custodian, or their nominees will be the registered holder of the Ordinary Shares underlying our ADSs. Holders of our ADSs have a right to receive the Ordinary Shares underlying their ADSs. For discussion on our ADSs and ADS holder rights, see Exhibit 2.5 to the Companys Annual Report on Form 20-F to which this description is also an exhibit.
Provisions as to the Level of Equity Investments to be Notified to Us and the Norwegian Authorities
Pursuant to the STA, shareholders in a company incorporated in Norway with its shares admitted to trading and official listing are required to immediately and simultaneously notify the company and the Oslo Børs when the shareholders stake reaches, exceeds, or falls below the thresholds of 5%, 10%, 15%, 20%, 25%, 1/3, 50%, 2/3 or 90% of the share capital or voting rights of that company. Shares held, acquired or disposed of by close associates, as that term is defined in the STA, are regarded as equivalent to the acquirers or disposers own shares. This duty to notify also applies to anyone who directly or indirectly holds (a) financial instruments that afford the holder a right to purchase existing shares (e.g., our subscription rights); and/or (b) financial instruments based on existing shares and with an economic effect equal to that of the financial instruments mentioned under (a), regardless of whether they afford the right to purchase existing shares, (e.g., our ADSs).
EU Regulation No 596/2014 on Market Abuse
EU Regulation No 596/2014 on market abuse, or the Market Abuse Regulation, has been resolved by the Norwegian government. The Market Abuse Regulation came into effect in Norway on March 1, 2021. The Market Abuse Regulation applies to us and dealings concerning our shares and will likewise apply to the ADSs. We have revised our internal code on possession and handling of inside information and with respect to our Directors and employees dealings in our Ordinary Shares, ADSs, or in financial instruments the value of which is determined by
the value of our Ordinary Shares. Furthermore, we have drawn up a list of those persons working for us who could have access to inside information on a regular or incidental basis and have informed such persons of the rules on insider trading and market manipulation, including the sanctions, which can be imposed in the event of a violation of those rules. We have also submitted updated lists of persons discharging managerial responsibilities and their close associates to Oslo Børs.
The EU Short Selling Regulation (EU Regulation 236/2012) Includes Certain Notification Requirements in connection with Short Selling of Shares Admitted to Trading on a Trading Venue (including the Oslo Børs) and Securities or Derivatives that Relate to Such Shares (including the ADSs).
Pursuant to EU regulations, when a natural or legal person reaches or falls below a net short position of 0.2% of the issued share capital of a company that has listed shares, such person shall make a private notification (i.e., such notification will not be made public) to the relevant competent authority, which in Norway is the Financial Supervisory Authority. The obligation to notify the Financial Supervisory Authority, moreover, applies in each case where the short position reaches or no longer reaches each 0.1% above the 0.2% threshold. In addition, when a natural or legal person reaches or falls below a net short position of 0.5% of the issued share capital of a listed company and each 0.1% above that, such person shall make a public notification of its net short position via the Financial Supervisory Authority. The notification requirements apply to both physical and synthetic short positions. In addition, uncovered short selling (i.e., naked short selling) of listed shares is prohibited.
Articles of Association and Norwegian Corporate Law
Objectives and General Corporate Matters
We were established with the objective of developing and commercializing fingerprint authentication solutions and engaging in related activities. Under our Articles of Association, our business offices shall be in the municipality of Oslo, Norway.
While not included in the Articles of Association, we are subject to a registered signatory requirement that requires joint signatures of our Board chair and the Chief Executive Officer, or the joint signatures of two Directors. This requirement may be amended by a resolution with simple majority by our Board. The Board may grant powers of procuration (i.e., powers of attorney), but no such powers are in existence as of the date hereof. Notwithstanding the foregoing, under Norwegian law, the Chief Executive Officer of a company such as ours, and other members of that companys management, shall be authorized signatories for employment matters.
Powers and Rights of Our Board of Directors and Management
Duties of Board Members
Public limited liability companies in Norway are usually subject to a two-tier governance structure with the board of directors having the ultimate responsibility for the overall supervision and strategic management of the company in question and with executive management being responsible for the day-to-day operations. Each board member and member of the executive management is under a fiduciary duty to act in the interest of the company, but shall also take into consideration the interests of creditors and shareholders. Under Norwegian law, the members of the board of directors and the Chief Executive Officer of a limited liability company are liable for losses caused by negligence when shareholders, creditors, or the company itself suffer such losses. However, consequential damages caused by a board member or the Chief Executive Officer to a creditor or shareholder due to the fact that the company itself has suffered losses, may, as a starting point, not be claimed by the creditor or shareholder. The board of directors and the Chief Executive Officer may also be liable for wrongful information given in the annual financial statements or any other public announcements from the company. An investor suing for damages is required to prove its claim with regard to negligence and causation. Norwegian courts, when assessing negligence, have been reluctant to impose liability unless the directors and officers neglected clear and specific duties. This is also the case when it comes to liability with regard to public offerings or liability with regard to any other public information issued by a company.
Composition of Board of Directors
Under our Articles of Association, our Board shall consist of three to seven members in accordance with the Annual General Meetings instruction. For more information regarding the composition of our Board , see Item 6. Section C. Board PracticesComposition of our Board of Directors and Committees of our Board of Directors in the Companys Annual Report on Form 20-F to which this description is also an exhibit.
Formation of Nominating Committee
Our Articles of Association also provide that we shall form and maintain a Nomination Committee, which shall consist of three members, including a chair. Members of the Nomination Committee shall be elected by the Annual General Meeting for a term of two years. Members of our Nominating Committee are not members of our Board.
The Nomination Committee shall propose (i) candidates for election to the Board, (ii) the remuneration to be paid to Directors, (iii) candidates for election to the Nomination Committee, and (iv) the remuneration to be paid to the Nomination Committee members. The guidelines for the Nomination Committee shall be resolved by the Annual General Meeting.
Terms of the Members of Our Board of Directors
Under Norwegian law, the members of a board of directors of a public limited liability company are generally appointed for a two-year term, which also includes any employee-elected board members. There is no limit on the number of consecutive terms the board members may serve.
Pursuant to our Articles of Association, our Directors are appointed by shareholders at an annual general meeting. At a general meeting, shareholders are entitled at all times to dismiss a Director by a simple majority vote.
Board Member Vacancies
Under Norwegian law, members of a board of directors serve for two years. The articles of association may provide for a shorter or longer term of service, although not for more than four years. For the purpose of supplementary elections, the period of service may be made shorter. The period of service commences on the date of the election except as otherwise provided. It terminates at the end of the annual general meeting in the year of expiry of the period of service. Regardless of whether the period of service has expired, the director may remain in office until his replacement has been elected.
A member of the board of directors may retire before his or her period of service has expired. A board member may resign without special reasons. The board of directors and the body having elected the member of the board of directors shall be given reasonable advance notice. A member of the board of directors may be removed by the body having elected him or her.
If the office of a member of the board of directors terminates before the expiration of his or her period of service, and there is no deputy member, the other members of the board of directors shall arrange for the election of a new member of the board of directors for the remainder of his or her period of service. They shall also do so if a member of the board of directors is deprived of legal capacity or barred from serving due to disqualification pursuant to the Bankruptcy Act.
If the election pertains to the general meeting, it may be postponed to the next ordinary general meeting, provided the board of directors still constitutes a quorum.
Conflict-of-Interest Transactions
Under Norwegian law, a member of a board of directors may not participate in the discussion or decision of any matter, which is of such particular importance to himself or herself, or any related party that he or she must be deemed to have a special and prominent personal or financial interest in the matter. This provision is similarly applicable to the companys Chief Executive Officer. A member of a board of directors or that companys Chief Executive Officer also may not participate in any decision to grant a loan or other credit to himself or herself or to issue security for his or her own debt.
Proxy Voting by Directors
In the event a board member in a Norwegian public limited liability company is unable to participate in a board meeting, the elected alternate, if any, shall be given access to participate in the board meeting. A member of the board of directors may not grant a power of attorney to another board member. We have not elected any alternates for our Directors.
Limitation on Liability
Under Norwegian law, members of a board of directors or the companys executive management may be held liable for damages in the event loss is caused due to their negligence. Directors liability is individual, but if two or more of a board of directors are liable for the same damages, they may be held jointly liable. Members of that board of directors may be held jointly and severally liable for damages to the company and to third parties for acting in violation of the companys articles of association and Norwegian law. However, under Norwegian law, members of the board of directors will only be held liable to the extent the directors have made errors beyond taking customary commercial risk.
Rights and Restrictions in Relation to Existing Shares
Our Articles of Association provide for only one class of shares and no special rights for any such shares. Each Ordinary Share has a par value of NOK 0.15 and carries one vote at general meetings. No restrictions apply to the transferability of any such Ordinary Shares. The share capital of the Company and the par value per share shall be specified in our Articles of Association from time to time. Therefore, any change in the share capital of the Company requires an amendment of the Articles of Association.
Under the Companies Act, all Ordinary Shares shall be registered in the name of the holders and shall be entered in our shareholders register.
Shareholder Rights
Annual and Extraordinary General Meetings
Our shareholders exercise the supreme authority in the Company through general meetings, subject to certain limitations provided by Norwegian law. All shareholders are entitled to attend and vote at our general meetings, either in person or by proxy.
Extraordinary general meetings may be called by the Board, and, if stated in the Articles of Association, the chair of the corporate assembly if a corporate assembly exists. In addition, the Board shall call an extraordinary general meeting whenever so demanded in writing by the independent auditor or shareholders representing at least 5% of the outstanding share capital, in order to deal with a specific subject. The extraordinary general meeting must be held within one month from the date of the demand.
Under our Articles of Association, our Annual General Meetings shall be held in or near Oslo, Norway, at the discretion of our Board, and the tasks of the Annual General Meeting may include (i) adoption (i.e., approval) of the Companys annual financial statements, (ii) appropriation (i.e., allocation) of profit or covering of losses; (iii) election of Board chairand Directors; (iv) election of the committee chair and members of the Nomination Committee; (v) election of our independent auditor; (vi) determination of remuneration to the Board, the Nomination Committee, and the independent auditor; (vii) other matters as required by statute; and (viii) other matters which are mentioned in the notice of the annual general meeting.
As a general rule, our general meetings shall be conducted in Norwegian. However, it may be resolved by a simple majority vote at our general meeting that English shall be used. Shareholders may present their points of view in either Norwegian or English.
In addition, our Articles of Association allow us to make certain documents available to our shareholders and prospective investors through our website, and any documents so made available in a timely manner and which deal with matters that are to be considered at the general meeting need not be sent to our shareholders separately.
Notice of Meeting
For a Norwegian public limited liability company, notice of general meeting shall be sent at least two weeks prior to the date of the meeting. However, according to the Companies Act, the notice period is three weeks for a company whose shares are listed on a regulated market (such as the Company). The general meeting is convened by written notice to all shareholders whose address is known. The notice shall set forth the time and place of the meeting. Further, the notice shall include a proposal for an agenda for the meeting that specifies the matters to be dealt with at the general meeting. Any shareholder is entitled to submit proposals to be discussed at general meetings provided such proposals are submitted in writing to the Board with sufficient time such that the proposal(s) can be entered on the agenda of the meeting. Any proposal to amend the Articles of Association shall be quoted in the notice. The notice shall also state the name of the person appointed by the Board to open the general meeting. The Board shall prepare a proposal for the agenda in accordance with the provisions of law and the Articles of Association.
As provided in our Articles of Association, a shareholder who wishes to attend the general meeting, in person or by proxy, shall notify us of hisor her attendance to us no later than two days prior to the general meeting. If the shareholder fails to notify us of attendance in a timely manner, we may deny the shareholder access to the general meeting.
Voting Rights
Each Ordinary Share (other than treasury shares, if any, held by the Company or a subsidiary) gives the holder the right to cast one vote at our general meetings of shareholders. There are no limitations under Norwegian law on the rights of non-residents or foreign owners to hold or vote their Ordinary Shares.
As a general rule, resolutions that shareholders are entitled to make pursuant to the Companies Act or our Articles of Association require a simple majority of the votes cast. In the case of election of Directors, the nominees obtaining the most votes cast are elected to fill vacancies. However, as required under Norwegian law, certain decisions, including resolutions to waive preferential rights in connection with any share issue, to approve a merger or de-merger, to amend the Companys Articles of Association, or to authorize an increase or reduction in the share capital, must receive the approval of at least two-thirds of the aggregate number of votes cast, as well as at least two-thirds of the share capital represented at a shareholders meeting.
Norwegian law further requires that certain decisions, which have the effect of substantially altering the rights and preferences of any shares or class of shares, receive the approval of the holders of such shares or class of shares as well as the majority required for amendments to the companys articles of association. Decisions that (i) would reduce any shareholders right in respect of dividend payments or other rights to the assets of the company or (ii) restrict the transferability of the shares require a majority vote of at least 90% of the share capital represented at the general meeting in question as well as the majority required for amendments to that companys articles of association. Certain types of changes in the rights of shareholders require the consent of all shareholders affected thereby, as well as the majority required for amendments to the companys articles of association.
In general, in order to be entitled to vote, a shareholder must be registered as the beneficial owner of shares in the share register kept by VPS. Beneficial owners of shares that are registered in the name of a nominee have generally not been entitled to vote under Norwegian law, nor have any persons who have been designated in the register as holding such shares as nominees. Readers should note that new legislation has been resolved under Norwegian law which clarifies the beneficial owners right to vote nominee-registered shares. The provisions relating to the right has, as of April 25, 2022, not entered into force in Norway, but will require, following entry into force, that owners of nominee-registered shares notify their intent to participate in the general meeting by way of notification to the company, such notification to be made at the latest two business days prior to the holding of the general meeting to be eligible to participate and to vote.
Voting instructions may be given only in respect of a number of ADSs representing the underlying number of Ordinary Shares. ADS holders may only exercise voting rights with respect to the Ordinary Shares underlying their respective ADSs in accordance with the provisions of the Deposit Agreement, which provides that a holder may vote the Ordinary Shares underlying any ADSs for any particular matter to be voted on by our shareholders either by withdrawing the shares underlying the ADSs or, to the extent permitted by applicable law and as permitted by the Depositary, by requesting temporary registration as shareholder and authorizing the Depositary to act as proxy. The Depositary will try, as far as practical, to vote the Ordianry Shares underlying the ADSs as instructed by the ADS holder.
Shareholder Proposals
According to the Companies Act, extraordinary general meetings of shareholders will be held whenever a companys board of directors or its appointed independent auditor so requires. In addition, one or more shareholders, each representing at least 5% of the registered share capital of a company may, in writing, require a general meeting be convened. If such a demand is made, the companys board of directors shall convene the general meeting within one month thereafter (after providing three weeks notice).
A shareholder has the right to put matters on the agenda of a general meeting. The matter shall be reported in writing to the board of directors within seven days prior to the deadline for the notice to the general meeting, along with a proposal for a resolution or an explanation as to why the matter has been put on the agenda. In the event that the notice has already taken place, a new notice shall be sent if the deadline has not already expired. A shareholder has, in addition, the right to put forward at the meeting a proposal for resolution on an agenda item.
Action by Written Consent
Under Norwegian law, shareholders in a public limited liability company may not take action or pass resolutions by written consent. A general meeting of shareholders, annual or extraordinary, as the case may be, may be a physical meeting or an electronic meeting. Provided that the general meeting is held as a physical meeting, the shareholders must, as a general rule, be given the right to participate by electronic means, including a right for shareholders to exercise his or her shareholder rights by electronic means. Regardless of whether the general meeting is held as a physical meeting or an electronic meeting, the board of directors must ensure that the general meeting can proceed safely and properly and that there are systems that ensure compliance with statutory provisions regarding general meetings.
Appraisal Rights
The concept of shareholder appraisal rights does not exist under Norwegian law, except in connection with statutory rights of first refusal, redemption rights, and rights to forced transfer of shares in subsidiaries according to the Companies Act.
In a Norwegian public limited liability company, it may be provided in the companys articles of association that a shareholder or other person shall have the right to acquire a share that has been or is to be transferred. In such cases, the redemption amount shall be equal to the value of the share at the time the right is exercised. If the articles of association does not set forth the price or the procedure of determining the price, valuation may be requested. Such right of first refusal is not included in the Companys Articles of Association.
Pursuant to the Companies Act and the STA, a shareholder who, directly or through subsidiaries, acquires shares representing 90% or more of the total number of issued shares in a Norwegian public limited liability company, as well as 90% or more of the total voting rights, has a right, and each remaining minority shareholder of the company has a right to require such majority shareholder, to effect a compulsory acquisition for cash of the shares not already owned by such majority shareholder. Through such compulsory acquisition, the majority shareholder becomes the owner of the remaining shares with immediate effect.
If a shareholder acquires shares representing more than 90% of the total number of issued shares, as well as more than 90% of the total voting rights, through a voluntary offer in accordance with the STA, a compulsory acquisition can, subject to the following conditions, be carried out without such shareholder being obliged to make a mandatory offer: (i) the compulsory acquisition is commenced no later than four weeks after the acquisition of shares through the voluntary offer, (ii) the price offered per share is equal to or higher than what the offer price would have been in a mandatory offer, and (iii) the settlement is guaranteed by a financial institution authorized to provide such guarantees in Norway.
A majority shareholder who effects a compulsory acquisition is required to offer the minority shareholders a specific price per share, the acceptance of which is at the discretion of the majority shareholder. However, where the offeror, after making a mandatory or voluntary offer, has acquired more than 90% of the voting shares of a company and a corresponding proportion of the votes that can be cast at the general meeting, and the offeror pursuant to Section 4-25 of the Companies Act completes a compulsory acquisition of the remaining shares within three months after the expiry of the offer period, it follows from the STA that the redemption price shall be determined on the basis of the offer price for the mandatory/voluntary offer unless special circumstances indicate another price.
Should any minority shareholder not accept the offered price, such minority shareholder may, within a specified deadline of not less than two months, request that the price be set by a Norwegian court. The cost of such court procedure will, as a general rule, be the responsibility of the majority shareholder, and the relevant court will have full discretion in determining the consideration to be paid to the minority shareholder as a result of the compulsory acquisition.
Absent a request for a Norwegian court to set the price or any other objection to the price being offered, the minority shareholders would be deemed to have accepted the offered price after the expiry of the specified deadline.
Shareholder Suits
Under Norwegian law, only a company itself can bring a civil action against a third party. An individual shareholder does not have the right to bring an action on behalf of a company. However, if a resolution is passed at a general meeting to grant discharge to a member of the companys board of directors or its Chief Executive Officer or refrain from bringing law suits against, among other persons, a member of the companys board of directors or Chief Executive Officer, then shareholders representing at least 10% of the share capital may bring a derivative action on behalf of that company against, among other persons, a member of the board of directors or Chief Executive Officer. An individual shareholder may, in its own name, have an individual right to take action against such third party in the event that the cause for the liability of that third party also constitutes a negligent act directly against such individual shareholder.
Preemptive Rights
Under Norwegian law, the companys shareholders have a preferential right to subscribe for issues of new shares by the company, in proportion to their existing shareholdings, against cash contribution. The preferential rights to subscribe in an issue may be waived by a resolution in a general meeting by at least two-thirds of the votes cast as well as at least two-thirds of the share capital represented at the general meeting. A waiver of the shareholders preferential rights in respect of bonus issues requires the approval of all outstanding shares, irrespective of class. Under Norwegian law, bonus issues may be distributed, subject to shareholder approval, by transfer from the a companys free equity or from its share premium reserve. Such bonus issues may be effectuated either by issuing shares or by increasing the par value of the shares outstanding.
A board of directors may resolve to increase a companys share capital without pre-emptive subscription rights for existing shareholders pursuant to the authorizations described above under the caption Authorizations to our Board of Directors.
Unless future issuances of new shares are registered under the Securities Act or with any authority outside Norway, U.S. shareholders and shareholders in jurisdictions outside Norway may be unable to exercise their pre-emptive subscription rights under U.S. securities law.
Dividends
Dividends may be paid in cash or in some instances in kind. Pursuant to the Companies Act, a public limited liability company may only distribute dividends to the extent it will have net assets covering the companys 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 a companys last approved financial statements, provided, however, that it is the registered share capital at the time of decision that applies. Further, extraordinary dividend payments may be resolved based upon an interim balance sheet prepared no more than six months prior to the date of resolution.
In the amount that may be distributed, a deduction shall be made for (i) the aggregate amount of any accounts receivable held by the company and dating from before the balance sheet date which are secured by a pledge over shares in the company, (ii) credit and collateral pursuant to Sections 8-7 and 8-10 of the Companies Act, with the exception of credit and collateral repaid or settled prior to the time of decision or credit which is settled by a netting in the dividend, and (iii) other dispositions after the balance sheet date which, pursuant to law, shall lie within the scope of the funds that the company may use to distribute a dividend. Even if all other requirements are fulfilled, a company may only distribute a dividend to the extent that it maintains a sound equity and liquidity post distribution.
Distribution of dividends is resolved by the general meeting of shareholders with simple majority, on the basis of a proposal from the companys board of directors. The general meeting cannot distribute a larger amount than what is proposed or accepted by the board of directors. The general meeting can also, following its approval of the annual financial statements, provide the board of directors with an authorization to resolve distribution of dividends on the basis of the companys financial statements. Such authorization is, however, limited in time to the next annual general meeting.
Repurchase of Shares
Norwegian limited liability companies may not subscribe for newly issued shares in their own capital. Such companies may, however, according to Section 9-2 of the Companies Act, acquire fully paid outstanding shares, provided the board of directors has been authorized to do so by the shareholders at a general meeting. Such authorization can only be given for a maximum period of two years and the authorization shall fix (i) the maximum nominal value of the shares and (ii) the minimum and the highest amount that the company may pay for the shares. A public limited liability company may acquire its own shares if the combined nominal value of the holding of own shares after the acquisition does not exceed ten per cent of its share capital.
Anti-Takeover Provisions and Mandatory Offer Requirements
Under the Code of Practice, a board of directors should establish guiding principles for how it will act in the event of a third party bid to acquire voting control of the companys shares. In such a bid situation, the companys board of directors and management have an independent responsibility to help ensure that shareholders are treated equally and that the companys business activities are not disrupted unnecessarily. The board of directors has a particular responsibility to ensure that shareholders are given sufficient information and time to form a view of the bid. The board of directors should not hinder or obstruct take-over bids for the companys shares. We have currently not adopted any anti-takeover provisions.
The STA requires any person, entity, or consolidated group that becomes the owner of shares representing more than one-third of the voting rights of a Norwegian company whose shares are listed on a Norwegian regulated market to, within four weeks, make an unconditional general offer for the purchase of the remaining shares in that company. A mandatory offer obligation may also be triggered when a party acquires the right to become the owner of shares that, together with the partys own shareholding, represent more than one-third of the voting rights in the company. The mandatory offer obligation ceases to apply if the person, entity, or consolidated group sells the portion of the shares that exceeds the relevant threshold within four weeks of the date on which the mandatory offer obligation was triggered.
When a mandatory offer obligation is triggered, the person, entity, or consolidated group subject to the obligation is required to immediately notify the Oslo Børs and the company in question accordingly. The notification shall state whether an offer will be made to acquire the remaining shares in the company or whether a disposal of shares acquired will take place. A notification informing about a disposal can be changed to a notice of making an offer within the four-week period, while a notification stating that the shareholder will make an offer cannot be retracted and is thus binding.
The offer price per share must be at least as high as the highest price paid or agreed by the offeror for the shares in the six-month period prior to the date the threshold was exceeded. If the person, entity, or consolidated group acquires or agrees to acquire additional shares at a higher price prior to the expiration of the mandatory offer period, that acquirer is obligated to restate its offer at such higher price. A mandatory offer must be settled in cash or contain a cash alternative at least equivalent to any other consideration offered.
In case of failure to make a mandatory offer or to sell the portion of the shares that exceeds the relevant threshold within four weeks, the Oslo Børs may force the acquirer to sell the shares exceeding the threshold by public auction. Moreover, a shareholder who fails to make an offer may not, as long as the mandatory offer obligation remains in force, exercise rights in the company, such as voting in a general meeting, without the consent of a majority of the remaining shareholders. The shareholder may, however, exercise such shareholders rights to dividends and pre-emption rights in the event of a share capital increase. If the shareholder neglects the shareholders duty to make a mandatory offer, the Oslo Børs may impose a cumulative daily fine that runs until the circumstance has been rectified.
Additionally, any person, entity, or consolidated group that owns shares representing more than one-third of the votes in a Norwegian company listed on a Norwegian regulated market is obliged to make an offer to purchase the remaining shares of the company if the person, entity, or consolidated group through acquisition becomes the owner of shares representing 40% or more of the votes in the company. The same applies correspondingly if the person, entity, or consolidated group through acquisition becomes the owner of shares representing 50% or more of the votes in the company. The mandatory offer obligation ceases to apply if the person, entity, or consolidated group sells the portion of the shares that exceeds the relevant threshold within four weeks of the date on which the mandatory offer obligation was triggered.
Any person, entity, or consolidated group that has passed any of the above mentioned thresholds in such a way as not to trigger the mandatory bid obligation, and has therefore not previously made an offer for the remaining shares in the company in accordance with the mandatory offer rules is obliged, as a main rule, to make a mandatory offer in the event of a subsequent acquisition of shares in the company.
Inspection of Books and Records
A shareholder may request members of a companys board of directors and the Chief Executive Officer to furnish at general meetings all available information about matters that may affect the consideration of (i) the adoption of the annual financial statement and the annual report; (ii) any matters that have been submitted to the shareholders for decision; (iii) the companys financial position, and the business of other companies in which the company participates, and (iv) any other matters which the general meeting is to deal with, unless the information required cannot be given without disproportionately harming the company.
If information has to be sought so that answers cannot be given at the general meeting, written answers shall be prepared within two weeks after the meeting. The answers shall be available to the shareholders at the companys office and sent to all shareholders who have asked for the information. An answer that is deemed to be of major importance for the consideration of the matters referenced in the preceding paragraph shall be sent to all shareholders whose address is known.
The person chairing the meeting shall ensure that minutes from the general meeting are taken. The minutes shall be available to the shareholders at the companys offices and shall be adequately stored.
Further, a shareholder may propose that the incorporation of the company, its administration, or specified matters relating to the administration or the accounts be investigated. The proposal may be submitted at an ordinary general meeting or at a general meeting whose agenda sets forth the proposal for an investigation. If the proposal is supported by shareholders owning at least one-tenth of the share capital that is represented at the general meeting, any shareholder may require the Norwegian District Court to pronounce by decree a decision for investigation within one month from the date of the general meeting. The Norwegian District Court shall comply with a requirement for investigation if the court finds that there are reasonable grounds for doing so.
Shareholder Vote on Certain Reorganizations
Under Norwegian law, all amendments to the articles of association shall be approved by the general meeting of shareholders with a minimum of two-thirds of the votes cast and two-thirds of the share capital represented at the general meeting. The same applies to solvent liquidations, mergers in which the company is not the surviving entity, mergers in which the company is the surviving entity if shares are issued in connection therewith, and demergers (i.e., corporate reorganizations by which one or more elements of a companys assets or operations are divested or otherwise separated from the ongoing assets or operations of the company). Under Norwegian law, it is debatable whether the shareholders must approve a decision to undertake a reorganization representing the sale or divestiture of all or virtually all of the companys business or assets, but if the sale in reality causes a change of the companys business purposes, as stated in its articles of association, an approval by two-thirds of the votes cast and two-thirds of the share capital represented at the general meeting would be required.
Amendments to Governing Documents
All resolutions made by the general meeting may be adopted by a simple majority of the votes, subject only to the mandatory provisions of the Companies Act and the articles of association. Resolutions concerning all amendments to the articles of association must be passed by two-thirds of the votes cast as well as two-thirds of the share capital represented at the general meeting. Certain resolutions that (i) would reduce any shareholders right in respect of dividend payments or other rights to the assets of the company or (ii) restrict the transferability of the shares would require a majority vote of at least 90% of the share capital represented at the general meeting in question as well as the majority required for amendments to the companys articles of association. Certain types of changes in the rights of shareholders require the consent of all shareholders affected thereby, as well as the two-thirds majority required for amendments to a companys articles of association.
Comparison of Norwegian Corporate Law and Our Articles of Association and Delaware Corporate Law
The following comparison between Norwegian corporate law, which applies to us, and Delaware corporate law, the law under which many publicly listed companies in the United States are incorporated, addresses additional matters not otherwise discussed in this document. This summary is subject to Norwegian law, including the Companies Act and the STA, as applicable, and Delaware corporate law, including the Delaware General Corporation Law. Further, please note an ADS holder will not be treated as one of our shareholders and will not have any shareholder rights.
Norway Delaware Number of Directors Removal of Directors Vacancies on the Board of Directors
Norway Delaware Annual General Meeting Notice of General Meetings
Norway Delaware
Norway Delaware Liability of Directors and Officers Under Norwegian law, a companys articles of association may not include a provision eliminating or limiting the personal liability of a
director to the company or its shareholders for damages arising from a breach of fiduciary duty as a director. However, the companys general meeting may, on behalf of the company, approve an agreement between the company and a director which
governs or restricts their liability. No provision in such agreement may limit the directors liability for: any breach of the directors duty of loyalty to the company and its shareholders; or acts or omissions involving
culpable negligence or intentional misconduct. Under Delaware law, a corporations certificate of incorporation may include a provision eliminating or limiting the personal liability
of a director to the corporation and its stockholders for damages arising from a breach of fiduciary duty as a director. However, no provision can limit the liability of a director for: any breach of the
directors duty of loyalty to the corporation or its stockholders; acts or omissions not in good faith or that involve intentional misconduct or a knowing violation
of law; intentional or
negligent payment of unlawful dividends or stock purchases or redemptions; or any transaction from which the director derives an improper personal benefit.
Norway Delaware Generally, under Delaware law, unless the certificate of incorporation provides for the vote of a larger portion of the stock, completion of
a merger, consolidation, sale, lease, or exchange of all or substantially all of a corporations assets or dissolution requires: (i) the approval of
the board of directors; and (ii) approval by the vote of the holders of a majority of the outstanding stock or, if the certificate of incorporation provides for more or less than one vote per share, a majority of the votes of the outstanding
stock of a corporation entitled to vote on the matter.
Norway Delaware Public limited liability companies in Norway are usually subject to a two-tier governance structure,
with the board of directors having the ultimate responsibility for the overall supervision and strategic management of the company in question, with executive management being responsible for the day-to-day operations. Each member of the board of directors and member of the executive management is under a fiduciary duty to act in the interest of the company, but also is obliged to take into
consideration the interests of the creditors and the shareholders. The board of
directors has a general responsibility to act in the best interest of the company and may not adopt any measure or resolution by the general meeting, which may tend to give certain shareholders or others an unreasonable benefit at the expense of the
other shareholders or the company. Any resolution by the board of directors is further subject to a general requirement of justifiability, and each director must act in accordance with a duty of loyalty towards the company. The board of directors is also generally responsible for the management of the company,
which includes a responsibility to ensure the proper organization of the business of the company. The management of the company includes, among other things, to ensure that the company is in accordance with applicable law and its articles of
association, as well as resolutions made by the general meeting of shareholders, ensure that the company has a sufficient capital base, to keep informed of the companys financial position, and to ensure that its activities, accounts, and
capital management are subject to adequate control. Delaware law does not contain specific provisions setting forth the standard of conduct of a director. The scope of the fiduciary duties of
directors is generally determined by the courts of the State of Delaware. In general, directors have a duty to act without self-interest, on a well-informed basis and in a manner they reasonably believe to be in the best interest of the
stockholders. Directors of a Delaware corporation owe fiduciary duties of care and loyalty to the corporation and to its shareholders. The duty of care generally requires that a director act in good faith, with the care that an ordinarily prudent
person would exercise under similar circumstances. Under this duty, a director must inform himself or herself of all material information reasonably available regarding a significant transaction. The duty of loyalty requires that a director act in a
manner he or she reasonably believes to be in the best interests of the corporation. He or she must not use his or her corporate position for personal gain or advantage. In general, but subject to certain exceptions, actions of a director are presumed to have been made on an informed basis, in good faith and in the honest
belief that the action taken was in the best interests of the corporation. However, this presumption may be rebutted by evidence of a breach of one of the fiduciary duties. Delaware courts have also imposed a heightened standard of conduct upon
directors of a Delaware corporation who take any action designed to defeat a threatened change in control of the corporation. In addition, under Delaware law, when the board of directors of a Delaware corporation approves the sale or break-up of
a corporation, the board of directors may, in certain circumstances, have a duty to obtain the highest value reasonably available to the shareholders.
Norway Delaware Under Delaware law, a stockholder may initiate a derivative action to enforce a right of a corporation if the corporation fails to enforce
the right itself. The complaint must: state that the plaintiff was a stockholder at the time of the transaction of which the plaintiff
complains or that the plaintiffs shares thereafter devolved on the plaintiff by operation of law; and allege with particularity the efforts made by the plaintiff to obtain the action the plaintiff
desires from the directors and the reasons for the plaintiffs failure to obtain the action; or state the reasons for not making the effort. Additionally, the plaintiff must remain a stockholder through the duration of the
derivative suit. The action will not be dismissed or compromised without the approval of the Delaware Court of Chancery.
Norway Delaware In addition to other aspects of Delaware law governing fiduciary duties of directors during a potential takeover, the Delaware General
Corporation Law also contains a business combination statute that protects Delaware companies from hostile takeovers and from actions following the takeover by prohibiting some transactions once an acquirer has gained a significant holding in the
corporation. Section 203 of the Delaware General Corporation Law prohibits business combinations, including mergers, sales, and leases of assets, issuances of securities, and similar transactions by a corporation or a subsidiary
with an interested stockholder that beneficially owns 15% or more of a corporations voting stock, within three years after the person becomes an interested stockholder, unless: the transaction that will
cause the person to become an interested stockholder is approved by the board of directors of the target prior to the transaction; after the completion of the transaction in which the person becomes an interested stockholder, the
interested stockholder holds at least 85% of the voting stock of the corporation not including shares owned by persons who are directors and officers of interested stockholders and shares owned by specified employee benefit plans; or after the person becomes an
interested stockholder, the business combination is approved by the board of directors of the corporation and holders of at least 66.67% of the outstanding voting stock, excluding shares held by the interested stockholder. A Delaware corporation may elect not to be governed by Section 203 by a provision
contained in the original certificate of incorporation of the corporation or an amendment to the original certificate of incorporation or to the by-laws of the company, which amendment must be approved by a
majority of the shares entitled to vote and may not be further amended by the board of directors of the corporation. Such an amendment is not effective until 12 months following its adoption.
Norway Delaware Transfer Agent and Registrar The transfer agent and registrar for our shares is DNB Bank ASA, Securities Services, Dronning Eufemias gate 30,
NO-0191 Oslo, Norway. The Bank of New York Mellon will serve as the depositary for the ADSs. Stock Exchange
Listings Our ADSs are listed on the Nasdaq Capital Market under the symbol IDBA. Our Ordinary Shares are currently traded on Oslo
Børs, a market operated by the Oslo Stock Exchange, under the ticker symbol IDEX. Registrar of Shares, Depositary for ADSs Our share register is maintained by DNB Bank ASA. The share register reflects only registered holders of our Ordinary Shares. Holders of ADSs representing our
Ordinary Shares will not be treated as our shareholders and their names will therefore not be entered in our share register. The Bank of New York Mellon acts as the depositary for the ADSs representing our Ordinary Shares and the custodian for
Ordinary Shares represented by ADSs is The Bank of New York Mellon, acting through an office located in Norway. Holders of ADSs representing our Ordinary Shares have a right to receive the Ordinary Shares underlying such ADSs.
Under the Companies Act, the board of directors of a public limited liability company shall have at least three members. At least half the members of the board of directors shall reside in Norway (the foregoing does not apply to
nationals of states that are parties to the EEA Agreement, or to nationals of states in the United Kingdom of Great Britain and Northern Ireland, when the nationals are also residents of such states). The Norwegian Ministry of Trade may grant
exemptions. Both genders must be represented at the board of directors, pursuant to the detailed requirements set out in the Companies Act. According to our Articles of Association, our Board shall consist of three to seven board members.
Under Delaware law, a corporation must have at least one director and the number of directors shall be fixed by or in the manner provided in the by-laws.
Under Norwegian law, any director or the entire board of directors may be removed, with or without cause, by the body having elected them (i.e., the general meeting of shareholders), except employee-elected board members, who may
not be removed before the expiration of their term.
Under Delaware law, any director or the entire board of directors may be removed, with or without cause, by the holders of a majority of the shares then entitled to vote at an election of directors, except (a) unless the
certificate of incorporation provides otherwise, in the case of a corporation whose board of directors is classified, shareholders may effect such removal only for cause, or (b) in the case of a corporation having cumulative voting, if less
than the entire board of directors is to be removed, no director may be removed without cause if the votes cast against his or her removal would be sufficient to elect him or her if then cumulatively voted at an election of the entire board of
directors, or, if there are classes of directors, at an election of the class of directors of which he or she is a part.
Under Norwegian law, vacancies due to a board member resigning or being removed before their term has expired, and newly created directorships, shall be filled by the general meeting. However, the election may be put off until the
next general meeting, if the board still has a quorum. The articles of association may determine that the election of board members shall be transferred to a corporate body stipulated in the articles of association.
Under Delaware law, vacancies and newly created directorships may be filled by a majority of the directors then in office (even though less than a quorum) or by a sole remaining director unless (a) otherwise provided in the
certificate of incorporation or by-laws of the corporation or (b) the certificate of incorporation directs that a particular class of stock is to elect such director, in which case a majority of the other
directors elected by such class, or a sole remaining director elected by such class, will fill such vacancy.
Under Norwegian law, the annual general meeting of shareholders shall, provided that the annual general meeting is held as a physical meeting, be held in the municipality where the company has its registered office, unless the
articles of association provide otherwise, on such date and at such time as may be designated from time to time by the board of directors, however, no later than within six months after the end of each fiscal year. The board of directors may resolve
that the annual general meeting is to be held as an electronic meeting.
Under Delaware law, the annual meeting of stockholders shall be held at such place, on such date, and at such time as may be designated from time to time by the board of directors or as provided in the certificate of incorporation
or by the by-laws.
General Meeting
Under Norwegian law, a general meeting may be called by the board of directors, or, if stated in the articles of association, the chairman of the corporate assembly. The independent auditor who audits the companys annual
accounts or shareholders representing at least 5% of the share capital may require the board of directors to call an extraordinary general meeting to address a specific matter.
Under Delaware law, special meetings of the stockholders may be called by the board of directors or by such person or persons as may be authorized by the certificate of incorporation or by the
by-laws.
Under Norwegian law, general meetings in a listed public limited liability companies shall be convened by the board of directors with a minimum of three weeks notice, unless the articles of association provide otherwise, and
shall specify, among other things, the time and place for the meeting, as well as the matters which are to be addressed at the meeting.
Under Delaware law, unless otherwise provided in the certificate of incorporation or by-laws, written notice of any meeting of the stockholders must be given to each stockholder entitled to
vote at the meeting not less than 10 nor more than 60 days before the date of the meeting and shall specify the place, date, hour, and purpose or purposes of the meeting.
Proxy
Under Norwegian law, all shareholders in a public limited liability company are entitled to attend and vote at general meetings by proxy. A proxy is only be deemed valid for the forthcoming general meeting, unless otherwise is
clearly provided. A member of the board of directors may not grant a power of attorney to another board member to represent the directors voting rights as a director.
Under Delaware law, at any meeting of stockholders, a stockholder may designate another person to act for such stockholder by proxy, but no such proxy shall be voted or acted upon after three years from its date, unless the proxy
provides for a longer period. A director of a Delaware corporation may not issue a proxy representing the directors voting rights as a director.
Preemptive Rights
Under Norwegian law, the companys shareholders have a preferential right to subscribe for issues of new shares by the company, in proportion to their existing shareholdings, against cash contribution. The preferential rights
to subscribe in an issue may be waived by a resolution in a general meeting by at least two-thirds of the votes cast as well as at least two-thirds of the share capital
represented at the general meeting. A waiver of the shareholders preferential rights in respect of bonus issues requires the approval of all outstanding shares, irrespective of class.
Under Delaware law, shareholders have no preemptive rights to subscribe to additional issues of stock or to any security convertible into such stock unless, and except to the extent that, such rights are expressly provided for in
the certificate of incorporation.
Authority to Allot
Under Norwegian law, the general meeting may, by two-thirds majority of the votes cast and of the share capital represented at the general meeting, authorize the board of directors to issue
new shares for consideration of cash, any tangible or intangible property, or any benefit to the corporation or any combination thereof, however, assets that cannot be entered in the balance sheet according to the Norwegian Accounting Act may not be
used as contribution for shares. The board of directors may determine the amount of such consideration within the limits of the general meetings authorization, which may not exceed half of the share capital at the time the authorization is
registered in the Norwegian Register of Business Enterprises.
Under Delaware law, if the corporations charter or certificate of incorporation so provides, the board of directors has the power to authorize the issuance of stock. It may authorize capital stock to be issued for
consideration consisting of cash, any tangible or intangible property or any benefit to the corporation or any combination thereof. It may determine the amount of such consideration by approving a formula. In the absence of actual fraud in the
transaction, the judgment of the board of directors as to the value of such consideration is conclusive.
Voting Rights
Under Norwegian law, unless otherwise provided by a companys articles of association, each shareholder is entitled to one vote for each share held by such shareholder.
Delaware law provides that, unless otherwise provided in the certificate of incorporation, each stockholder is entitled to one vote for each share of capital stock held by such stockholder.
Dividends
Under Norwegian law, dividends may be paid in cash or, in some instances, in kind. Pursuant to the Companies Act, a public limited liability company may only distribute dividends to the extent it will have net assets covering the
companys 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 companys last approved financial statements, provided, however, that it is
the registered share capital at the time of decision that applies. Further, extraordinary dividend payments may be resolved based upon an interim balance sheet prepared no more than six months prior to the date of resolution. See
Articles of Association and Norwegian Corporate LawRights and Restrictions in Relation to Existing SharesDividends above.
Under Delaware law, a Delaware corporation may pay dividends out of its surplus (the excess of net assets over capital), or in the event there is no surplus, out of its net profits for the fiscal year in which the dividend is
declared and/or the preceding fiscal year (provided that the amount of the capital of the corporation is not less than the aggregate amount of the capital represented by the issued and outstanding stock of all classes having a preference upon the
distribution of assets). In determining the amount of surplus of a Delaware corporation, the assets of the corporation, including stock of subsidiaries owned by the corporation, must be valued at their fair market value as determined by the board of
directors, without regard to their historical book value. Dividends may be paid in the form of shares, property, or cash.
Repurchase of Shares
Norwegian limited liability companies may not subscribe for newly issued shares in their own capital. Such companies may, however, according to Section 9-2 of the Companies Act, acquire
fully paid outstanding shares, provided the board of directors has been authorized to do so by the shareholders at a general meeting. Such authorization can only be given for a maximum period of two years and the authorization shall fix (i) the
maximum nominal value of the shares and (ii) the minimum and the highest amount that the company may pay for the shares. A public limited liability company may acquire its own shares if the combined nominal value of the holding of own shares
after the acquisition does not exceed ten per cent of the share capital.
Under Delaware law, a corporation may purchase or redeem its own shares unless the capital of the corporation is impaired or the purchase or redemption would cause an impairment of the capital of the corporation. A Delaware
corporation may, however, purchase or redeem out of capital any of its preferred shares or, if no preferred shares are outstanding, any of its own shares if such shares will be retired upon acquisition and the capital of the corporation will be
reduced in accordance with specified limitations.
Shareholder Vote on Certain Transactions
Under Norwegian law, solvent liquidations, mergers in which the company is not the surviving entity, mergers in which the company is the surviving entity if shares are issued in connection therewith, and demergers shall be approved
by the general meeting of shareholders with a minimum of two-thirds of the votes cast and two-thirds of the share capital represented at the general meeting.
Standard of Conduct for Directors
Stockholder Suits
Under Norwegian law, only a company itself can bring a civil action against a third party; an individual shareholder does not have the right to bring an action on behalf of a company. However, if a general meeting has resolved to
grant discharge to a member of the board of directors or the Chief Executive Officer or refrain from bringing law suits against, among other persons, a member of the board of directors or Chief Executive Officer, shareholders representing at least
10% of the share capital may bring a derivative action on behalf of the company against such persons. An individual shareholder may, in its own name, have an individual right to take action against such third party in the event that the cause for
the liability of that third party also constitutes a negligent act directly against such individual shareholder.
Anti-Takeover Provisions and Mandatory Offer Requirements
In Norway, under the Code of Practice, the board of directors should establish guiding principles for how it will act in the event of a take-over bid. In a bid situation, the companys board of directors and management have an
independent responsibility to help ensure that shareholders are treated equally, and that the companys business activities are not disrupted unnecessarily. The board of directors has a particular responsibility to ensure that shareholders are
given sufficient information and time to form a view of the offer. The board of directors should not hinder or obstruct take-over bids. We have currently not adopted any anti-takeover provisions.
Amendments to Governing Documents
Under Norwegian law, all resolutions made by the general meeting may be adopted by a simple majority of the votes, subject only to the mandatory provisions of the Companies Act and the articles of association. Resolutions
concerning all amendments to the articles of association must be passed by two-thirds of the votes cast as well as two-thirds of the share capital represented at the
general meeting. Certain resolutions that (i) would reduce any shareholders right in respect of dividend payments or other rights to the assets of the company or (ii) restrict the transferability of the shares would require a
majority vote of at least 90% of the share capital represented at the general meeting in question as well as the majority required for amendments to the companys articles of association. Certain types of changes in the rights of shareholders
require the consent of all shareholders affected thereby as well as the tho-thirds majority required for amendments to the companys articles of association.
Under Delaware law, a corporations certificate of incorporation may be amended only if adopted and declared advisable by the board of directors and approved by a majority of the outstanding shares entitled to vote, and the by-laws may be amended with the approval of a majority of the outstanding shares entitled to vote and may, if so provided in the certificate of incorporation, also be amended by the board of directors.
Exhibit 2.5
DESCRIPTION OF AMERICAN DEPOSITARY SHARES OF IDEX BIOMETRICS ASA
Introduction
Unless otherwise indicated or the context otherwise requires, all references in this exhibit to the terms IDEX, IDEX Biometrics, IDEX Biometrics ASA, the Company, we, us and our refer to IDEX Biometrics ASA together with its subsidiaries.
The following description of our American Depositary Shares, or ADSs, is a summary and does not purport to be complete. Holders of our ADSs are not treated as our shareholders and do not have any shareholder rights.
American Depositary Shares
The Bank of New York Mellon, as depositary, registers and delivers American Depositary Shares, also referred to as ADSs. Each ADS represents 75 Ordinary Shares (or a right to receive 75 Ordinary Shares) deposited with Nordea Bank Norge, ASA, as custodian for the depositary in the Kingdom of Norway. Each ADS represents any other securities, cash or other property that may be held by the depositary. The deposited shares together with any other securities, cash or other property held by the depositary are referred to as the deposited securities. The depositarys office at which the ADSs are administered and its principal executive office are located at 240 Greenwich Street, New York, New York 10286.
You may hold ADSs either (A) directly (i) by having an American Depositary Receipt, also referred to as an ADR, which is a certificate evidencing a specific number of ADSs, registered in your name, or (ii) by having uncertificated ADSs registered in your name, or (B) indirectly by holding a security entitlement in ADSs through your broker or other financial institution that is a direct or indirect participant in The Depository Trust Company, also called DTC. If you hold ADSs directly, you are a registered ADS holder, also referred to as an ADS holder. This description assumes you are an ADS holder. If you hold the ADSs indirectly, you must rely on the procedures of your broker or other financial institution to assert the rights of ADS holders described herein. You should consult with your broker or financial institution to find out what those procedures are.
Registered holders of uncertificated ADSs will receive statements from the depositary confirming their holdings.
As an ADS holder, we will not treat you as one of our shareholders and you will not have shareholder rights. Norwegian law governs shareholder rights. The depositary will be the holder of the shares underlying your ADSs. As a registered holder of ADSs, you will have ADS holder rights. A deposit agreement among us, the depositary, ADS holders and all other persons indirectly or beneficially holding ADSs sets out ADS holder rights as well as the rights and obligations of the depositary. New York law governs the ADSs and the deposit agreement, except with respect to its authorization and execution by us, which shall be governed by the laws of Norway.
When required in order to comply with applicable laws and regulations or the articles of association or similar document of ours (as in effect from time to time) or the rules and regulations of the Oslo Børs, the Nasdaq Stock Market LLC or of any other stock exchange on which the shares or ADSs are registered, traded or listed or any book-entry settlement system, we may from time to time request, and may from time to time request the depositary to request, certain information from you relating to: (a) the capacity in which you hold ADSs, (b) the identity of any Holders or other persons or entities then or previously interested in those American Depositary Shares and the nature of those interests, (c) if for any reason, the proportion of the shares you own reaches, exceeds or falls below the thresholds specified under Norwegian law and (d) any other matter where disclosure of such matter is, in our reasonable opinion, required for that compliance.
As an ADS holder, you agree to comply with the laws and regulations of United States and Norway (if and to the extent applicable) with respect to the disclosure requirements regarding beneficial ownership of shares, all as if the ADSs were the Shares represented thereby, including requirements to make notifications and filings within the required timeframes to us, the U.S. Securities and Exchange Commission, the Financial Supervisory Authority of Norway and any other authorities in the United States or in Norway.
The following is a summary of the material provisions of the deposit agreement. For more complete information, you should read the entire deposit agreement and the form of ADR, which are incorporated by reference as Exhibits 4.1 and 4.2 to our Annual Report on Form 20-F to which this description is also an exhibit.
Dividends and Other Distributions
How will you receive dividends and other distributions on the shares?
The depositary has agreed to pay or distribute to ADS holders the cash dividends or other distributions it or the custodian receives on shares or other deposited securities, upon payment or deduction of its fees and expenses. You will receive these distributions in proportion to the number of shares your ADSs represent.
Cash. The depositary will convert any cash dividend or other cash distribution we pay on the shares into U.S. dollars, if it can do so on a reasonable basis and can transfer the U.S. dollars to the United States. If that is not possible or if any government approval is needed and cannot be obtained, the deposit agreement allows the depositary to distribute the foreign currency only to those ADS holders to whom it is possible to do so. It will hold the foreign currency it cannot convert for the account of the ADS holders who have not been paid. It will not invest the foreign currency and it will not be liable for any interest.
Before making a distribution, any withholding taxes, or other governmental charges that must be paid will be deducted. See the sections titled TAXATIONMATERIAL U.S. FEDERAL INCOME TAX CONSIDERATIONS FOR U.S. HOLDERS And TAXATIONNORWAY TAXATION of our Annual Report on Form 20-F to which this description is an exhibit. The depositary will distribute only whole U.S. dollars and cents and will round fractional cents to the nearest whole cent. If the exchange rates fluctuate during a time when the depositary cannot convert the foreign currency, you may lose some of the value of the distribution.
Shares. The depositary may distribute additional ADSs representing any shares we distribute as a dividend or free distribution. The depositary will only distribute whole ADSs. It will sell shares which would require it to deliver a fraction of an ADS (or ADSs representing those shares) and distribute the net proceeds in the same way as it does with cash. If the depositary does not distribute additional ADSs, the outstanding ADSs will also represent the new shares. The depositary may sell a portion of the distributed shares (or ADSs representing those shares) sufficient to pay its fees and expenses in connection with that distribution.
Rights to purchase additional shares. If we offer holders of our securities any rights to subscribe for additional shares or any other rights, the depositary may (i) exercise those rights on behalf of ADS holders, (ii) distribute those rights to ADS holders or (iii) sell those rights and distribute the net proceeds to ADS holders, in each case after deduction or upon payment of its fees and expenses. To the extent the depositary does not do any of those things, it will allow the rights to lapse. In that case, you will receive no value for them. The depositary will exercise or distribute rights only if we ask it to and provide satisfactory assurances to the depositary that it is legal to do so. If the depositary will exercise rights, it will purchase the securities to which the rights relate and distribute those securities or, in the case of shares, new ADSs representing the new shares, to subscribing ADS holders, but only if ADS holders have paid the exercise price to the depositary. U.S. securities laws may restrict the ability of the depositary to distribute rights or ADSs or other securities issued on exercise of rights to all or certain ADS holders, and the securities distributed may be subject to restrictions on transfer.
Other Distributions. The depositary will send to ADS holders anything else we distribute on deposited securities by any means it thinks is legal, fair and practical. If it cannot make the distribution in that way, the depositary has a choice. It may decide to sell what we distributed and distribute the net proceeds, in the same way as it does with cash. Or, it may decide to hold what we distributed, in which case ADSs will also represent the newly distributed property. However, the depositary is not required to distribute any securities (other than ADSs) to ADS holders unless it receives satisfactory evidence from us that it is legal to make that distribution. The depositary may sell a portion of the distributed securities or property sufficient to pay its fees and expenses in connection with that distribution. U.S. securities laws may restrict the ability of the depositary to distribute securities to all or certain ADS holders, and the securities distributed may be subject to restrictions on transfer.
The depositary is not responsible if it decides that it is unlawful or impractical to make a distribution available to any ADS holders. We have no obligation to register ADSs, shares, rights or other securities under the Securities Act. We also have no obligation to take any other action to permit the distribution of ADSs, shares, rights or anything else to ADS holders. This means that you may not receive the distributions we make on our shares or any value for them if it is illegal or impractical for us to make them available to you.
Deposit, Withdrawal and Cancellation
How are ADSs issued?
The depositary will deliver ADSs if you or your broker deposits shares or evidence of rights to receive shares with the custodian. Upon payment of its fees and expenses and of any taxes or charges, such as stamp taxes or stock transfer taxes or fees, the depositary will register the appropriate number of ADSs in the names you request and will deliver the ADSs to or upon the order of the person or persons that made the deposit.
How can ADS holders withdraw the deposited securities?
You may surrender your ADSs to the depositary for the purpose of withdrawal. Upon payment of its fees and expenses and of any taxes or charges, such as stamp taxes or stock transfer taxes or fees, the depositary will deliver the shares and any other deposited securities underlying the ADSs to the ADS holder or a person the ADS holder designates at the office of the custodian. Or, at your request, risk and expense, the depositary will deliver the deposited securities at its office, if feasible. However, the depositary is not required to accept surrender of ADSs to the extent it would require delivery of a fraction of a deposited share or other security. The depositary may charge you a fee and its expenses for instructing the custodian regarding delivery of deposited securities.
How do ADS holders interchange between certificated ADSs and uncertificated ADSs?
You may surrender your ADR to the depositary for the purpose of exchanging your ADR for uncertificated ADSs. The depositary will cancel that ADR and will send to the ADS holder a statement confirming that the ADS holder is the registered holder of uncertificated ADSs. Upon receipt by the depositary of a proper instruction from a registered holder of uncertificated ADSs requesting the exchange of uncertificated ADSs for certificated ADSs, the depositary will execute and deliver to the ADS holder an ADR evidencing those ADSs.
Voting Rights
How do you vote?
Under the laws of Norway currently in effect, the depositary is not allowed to vote deposited shares underlying ADSs unless those shares are registered in our VPS registry and with the Norwegian Foreign Registrar in the name of the beneficial owner of those ADSs. Under the deposit agreement, ADS holders may instruct the depositary how to vote the number of deposited shares their ADSs represent. In order to carry out voting instruction received from ADSs holders in accordance with current Norwegian law, the depositary will temporarily re-register deposited shares in the names of the beneficial owners of those ADSs, vote those shares as proxy for those beneficial owners as instructed by the holders of those ADSs and then cause the deposited shares to be re-registered in its name or the name of its nominee immediately after the meeting. If we request the depositary to solicit your voting instructions (and we are not required to do so), the depositary will notify you of a shareholders meeting and send or make voting materials available to you. Those materials will describe the matters to be voted on and explain how ADS holders may instruct the depositary how to vote. Those instructions must identify the beneficial owner of the ADSs (if other than the ADS holder). ADS holders giving instructions will also be required to block transfer of their ADSs until after the shareholders meeting by moving the ADSs to a blocked account within DTC or by authorizing the depositary to enter a stop transfer on the ADS register. For instructions to be valid, they must reach the depositary by a date set by the depositary. The depositary will try, as far as practical, subject to the laws of Norway and the provisions of our articles of association or similar documents, to re-register deposited shares and to vote or to have its agents vote the shares or other deposited securities as instructed by ADS holders. If we do not request the depositary to solicit your voting instructions, you can still send voting and re-registration instructions, and, in that case, the depositary may try to vote as you instruct, but it is not required to do so.
Except by instructing the depositary as described above, you wont be able to exercise voting rights unless you surrender your ADSs and withdraw the shares. However, you may not know about the meeting enough in advance to withdraw the shares. In any event, the depositary will not exercise any discretion in voting deposited securities and it will only vote or attempt to vote as instructed.
We cannot assure you that you will receive the voting materials in time to ensure that you can instruct the depositary to vote your shares. In addition, the depositary and its agents are not responsible for failing to carry out voting instructions or for the manner of carrying out voting instructions. This means that you may not be able to exercise voting rights and there may be nothing you can do if your shares are not voted as you requested.
In order to give you a reasonable opportunity to instruct the depositary as to the exercise of voting rights relating to Deposited Securities, if we request the Depositary to act, we agree to (i) at such time as, in our opinion, there is a strong likelihood that the company will call a general meeting of shareholders on a certain date, but, in the case of an annual general meeting only, not less than 30 days prior to that date, notify the Depositary as to the proposed date of the meeting and, to the extent available at the time, details of the matters proposed to be voted upon at such meeting, which notice is hereinafter referred to as a Preliminary Notice, and (ii) thereafter, give the Depositary formal notice of the meeting, or the Formal Notice, and copies of materials to be made available to shareholders in connection with the meeting not less than 21 days prior to the meeting date, or the Notice Deadline (this being the statutory notice period under Norwegian law). For the avoidance of doubt, we shall be free to make amendments in the Formal Notice compared to the Preliminary Notice, both as to date and matters to be voted upon. The Depositary shall disseminate the Formal Notice as soon as practicable after the Depositary receives it from us.
The deposit agreement permits the depositary and us to modify, amend or adopt additional procedures relating to voting of deposited shares from time to time as we determine may be necessary or appropriate to comply with, or to obtain for ADS holders the benefits of liberalization of, applicable law and our articles of association or similar document.
Fees and Expenses
Persons depositing or withdrawing shares or ADS holders must pay: | For: | |
$5.00 (or less) per 100 ADSs (or portion of 100 ADSs) | Issuance of ADSs, including issuances resulting from a distribution of shares or rights or other property Cancellation of ADSs for the purpose of withdrawal, including if the deposit agreement terminates | |
$.05 (or less) per ADS | Any cash distribution to ADS holders | |
A fee equivalent to the fee that would be payable if securities distributed to you had been shares and the shares had been deposited for issuance of ADSs | Distribution of securities distributed to holders of deposited securities (including rights) that are distributed by the depositary to ADS holders | |
$.05 (or less) per ADS per calendar year | Depositary services | |
Registration or transfer fees | Transfer and registration of shares on our share register to or from the name of the depositary or its agent when you deposit or withdraw shares | |
Expenses of the depositary | Cable (including SWIFT) and facsimile transmissions (when expressly provided in the deposit agreement) Converting foreign currency to U.S. dollars |
Taxes and other governmental charges the depositary or the custodian has to pay on any ADSs or shares underlying ADSs, such as stock transfer taxes, stamp duty or withholding taxes | As necessary | |
Any charges incurred by the depositary or its agents for servicing the deposited securities | As necessary |
The depositary collects its fees for delivery and surrender of ADSs directly from investors depositing shares or surrendering ADSs for the purpose of withdrawal or from intermediaries acting for them. The depositary collects fees for making distributions to investors by deducting those fees from the amounts distributed or by selling a portion of distributable property to pay the fees. The depositary may collect its annual fee for depositary services by deduction from cash distributions or by directly billing investors or by charging the book-entry system accounts of participants acting for them. The depositary may collect any of its fees by deduction from any cash distribution payable (or by selling a portion of securities or other property distributable) to ADS holders that are obligated to pay those fees. The depositary may generally refuse to provide fee-attracting services until its fees for those services are paid.
From time to time, the depositary may make payments to us to reimburse us for costs and expenses generally arising out of establishment and maintenance of the ADS program, waive fees and expenses for services provided to us by the depositary or share revenue from the fees collected from ADS holders. In performing its duties under the deposit agreement, the depositary may use brokers, dealers, foreign currency dealers or other service providers that are owned by or affiliated with the depositary and that may earn or share fees, spreads or commissions.
The depositary may convert currency itself or through any of its affiliates, or the custodian or we may convert currency and pay U.S. dollars to the depositary. Where the depositary converts currency itself or through any of its affiliates, the depositary acts as principal for its own account and not as agent, advisor, broker or fiduciary on behalf of any other person and earns revenue, including, without limitation, transaction spreads, that it will retain for its own account. The revenue is based on, among other things, the difference between the exchange rate assigned to the currency conversion made under the deposit agreement and the rate that the depositary or its affiliate receives when buying or selling foreign currency for its own account. The depositary makes no representation that the exchange rate used or obtained by it or its affiliate in any currency conversion under the deposit agreement will be the most favorable rate that could be obtained at the time or that the method by which that rate will be determined will be the most favorable to ADS holders, subject to the depositarys obligation to act without negligence or bad faith. The methodology used to determine exchange rates used in currency conversions made by the depositary is available upon request. Where the custodian converts currency, the custodian has no obligation to obtain the most favorable rate that could be obtained at the time or to ensure that the method by which that rate will be determined will be the most favorable to ADS holders, and the depositary makes no representation that the rate is the most favorable rate and will not be liable for any direct or indirect losses associated with the rate. In certain instances, the depositary may receive dividends or other distributions from the U.S. dollars that represent the proceeds of a conversion of foreign currency or translation from foreign currency at a rate that was obtained or determined by us and, in such cases, the depositary will not engage in, or be responsible for, any foreign currency transactions and neither it nor we make any representation that the rate obtained or determined by us is the most favorable rate and neither it nor we will be liable for any direct or indirect losses associated with the rate.
Payment of Taxes
You will be responsible for any taxes or other governmental charges payable on your ADSs or on the deposited securities represented by any of your ADSs. The depositary may refuse to register any transfer of your ADSs or allow you to withdraw the deposited securities represented by your ADSs until those taxes or other charges are paid. It may apply payments owed to you or sell deposited securities represented by your ADSs to pay any taxes owed and you will remain liable for any deficiency. If the depositary sells deposited securities, it will, if appropriate, reduce the number of ADSs to reflect the sale and pay to ADS holders any proceeds, or send to ADS holders any property, remaining after it has paid the taxes.
Tender and Exchange Offers; Redemption, Replacement or Cancellation of Deposited Securities
The depositary will not tender deposited securities in any voluntary tender or exchange offer unless instructed to do so by an ADS holder surrendering ADSs and subject to any conditions or procedures the depositary may establish.
If deposited securities are redeemed for cash in a transaction that is mandatory for the depositary as a holder of deposited securities, the depositary will call for surrender of a corresponding number of ADSs and distribute the net redemption money to the holders of called ADSs upon surrender of those ADSs.
If there is any change in the deposited securities such as a sub-division, combination or other reclassification, or any merger, consolidation, recapitalization or reorganization affecting the issuer of deposited securities in which the depositary receives new securities in exchange for or in lieu of the old deposited securities, the depositary will hold those replacement securities as deposited securities under the deposit agreement. However, if the depositary decides it would not be lawful and practical to hold the replacement securities because those securities could not be distributed to ADS holders or for any other reason, the depositary may instead sell the replacement securities and distribute the net proceeds upon surrender of the ADSs.
If there is a replacement of the deposited securities and the depositary will continue to hold the replacement securities, the depositary may distribute new ADSs representing the new deposited securities or ask you to surrender your outstanding ADRs in exchange for new ADRs identifying the new deposited securities.
If there are no deposited securities underlying ADSs, including if the deposited securities are cancelled, or if the deposited securities underlying ADSs have become apparently worthless, the depositary may call for surrender of those ADSs or cancel those ADSs upon notice to the ADS holders.
Amendment and Termination
How may the deposit agreement be amended?
We may agree with the depositary to amend the deposit agreement and the ADRs without your consent for any reason. If an amendment adds or increases fees or charges, except for taxes and other governmental charges or expenses of the depositary for registration fees, facsimile costs, delivery charges or similar items, or prejudices a substantial right of ADS holders, it will not become effective for outstanding ADSs until 30 days after the depositary notifies ADS holders of the amendment. At the time an amendment becomes effective, you are considered, by continuing to hold your ADSs, to agree to the amendment and to be bound by the ADRs and the deposit agreement as amended.
If any governmental body should adopt new laws, rules or regulations which would require an amendment of the deposit agreement to ensure compliance therewith, we and the depositary will amend the deposit agreement at any time in accordance with such changed laws, rules and regulations. Such amendment to the deposit agreement in such circumstances may become effective before a notice of such amendment or supplement is given or within any other period of time as required for compliance with such laws, rules or regulations.
How may the deposit agreement be terminated?
The depositary will initiate termination of the deposit agreement if we instruct it to do so. The depositary may initiate termination of the deposit agreement if:
| 60 days have passed since the depositary told us it wants to resign but a successor depositary has not been appointed and accepted its appointment; |
| we delist the ADSs from an exchange in the United States on which they were listed and do not list the ADSs on another exchange in the United States or make arrangements for trading of ADSs on the U.S. over-the-counter market; |
| we delist our shares from an exchange outside the United States on which they were listed and do not list the shares on another exchange outside the United States; |
| the depositary has reason to believe the ADSs have become, or will become, ineligible for registration on Form F-6 under the Securities Act of 1933; |
| we appear to be insolvent or enter insolvency proceedings; |
| all or substantially all the value of the deposited securities has been distributed either in cash or in the form of securities; |
| there are no deposited securities underlying the ADSs or the underlying deposited securities have become apparently worthless; or |
| there has been a replacement of deposited securities. |
If the deposit agreement will terminate, the depositary will notify ADS holders at least 90 days, and not more than 120 days, before the termination date. At any time after the termination date, the depositary may sell the deposited securities. After that, the depositary will hold the money it received on the sale, as well as any other cash it is holding under the deposit agreement, unsegregated and without liability for interest, for the pro rata benefit of the ADS holders that have not surrendered their ADSs. Normally, the depositary will sell as soon as practicable after the termination date.
After the termination date and before the depositary sells, ADS holders can still surrender their ADSs and receive delivery of deposited securities, except that the depositary may refuse to accept a surrender for the purpose of withdrawing deposited securities or reverse previously accepted surrenders of that kind that have not settled if it would interfere with the selling process. The depositary may refuse to accept a surrender for the purpose of withdrawing sale proceeds until all the deposited securities have been sold. The depositary will continue to collect distributions on deposited securities, but, after the termination date, the depositary is not required to register any transfer of ADSs or distribute any dividends or other distributions on deposited securities to the ADSs holder (until they surrender their ADSs) or give any notices or perform any other duties under the deposit agreement except as described in this paragraph.
Limitations on Obligations and Liability
Limits on our Obligations and the Obligations of the Depositary; Limits on Liability to Holders of ADSs
The deposit agreement expressly limits our obligations and the obligations of the depositary. It also limits our liability and the liability of the depositary. We and the depositary, including any of our directors, officers, employees, agents, controlling persons and affiliates:
| are only obligated to take the actions specifically set forth in the deposit agreement without negligence or bad faith, and the depositary will not be a fiduciary or have any fiduciary duty to holders of ADSs; |
| are not liable if we are or it is prevented or delayed by law or by events or circumstances beyond our or its ability to prevent or counteract with reasonable care or effort from performing our or its obligations under the deposit agreement; |
| are not liable if we or it exercises discretion permitted under the deposit agreement; |
| are not liable for the inability of any holder of ADSs to benefit from any distribution on deposited securities that is not made available to holders of ADSs under the terms of the deposit agreement, or for any special, consequential or punitive damages for any breach of the terms of the deposit agreement; |
| have no obligation to become involved in a lawsuit or other proceeding related to the ADSs or the deposit agreement on your behalf or on behalf of any other person; |
| may rely upon any documents we believe or it believes in good faith to be genuine and to have been signed or presented by the proper person; |
| are not liable for the acts or omissions of any securities depository, clearing agency or settlement system; and |
| the depositary has no duty to make any determination or provide any information as to our tax status, or any liability for any tax consequences that may be incurred by ADS holders as a result of owning or holding ADSs or be liable for the inability or failure of an ADS holder to obtain the benefit of a foreign tax credit, reduced rate of withholding or refund of amounts withheld in respect of tax or any other tax benefit. |
In the deposit agreement, we and the depositary agree to indemnify each other under certain circumstances.
Requirements for Depositary Actions
Before the depositary will deliver or register a transfer of ADSs, make a distribution on ADSs, or permit withdrawal of shares, the depositary may require:
| payment of stock transfer or other taxes or other governmental charges and transfer or registration fees charged by third parties for the transfer of any shares or other deposited securities; |
| satisfactory proof of the identity and genuineness of any signature or other information it deems necessary; and |
| compliance with regulations it may establish, from time to time, consistent with the deposit agreement, including presentation of transfer documents. |
The depositary may refuse to deliver ADSs or register transfers of ADSs when the transfer books of the depositary or our transfer books are closed or at any time if the depositary or we think it advisable to do so.
Your Right to Receive the Shares Underlying your ADSs
ADS holders have the right to cancel their ADSs and withdraw the underlying shares at any time except:
| when temporary delays arise because: (i) the depositary has closed its transfer books or we have closed our transfer books; (ii) the transfer of shares is blocked to permit voting at a shareholders meeting; or (iii) we are paying a dividend on our shares; |
| when you owe money to pay fees, taxes and similar charges; or |
| when it is necessary to prohibit withdrawals in order to comply with any laws or governmental regulations that apply to ADSs or to the withdrawal of shares or other deposited securities. |
This right of withdrawal may not be limited by any other provision of the deposit agreement.
Direct Registration System
In the deposit agreement, all parties to the deposit agreement acknowledge that the Direct Registration System, also referred to as DRS, and Profile Modification System, also referred to as Profile, will apply to the ADSs. DRS is a system administered by DTC that facilitates interchange between registered holding of uncertificated ADSs and holding of security entitlements in ADSs through DTC and a DTC participant. Profile is a feature of DRS that allows a DTC participant, claiming to act on behalf of a registered holder of uncertificated ADSs, to direct the depositary to register a transfer of those ADSs to DTC or its nominee and to deliver those ADSs to the DTC account of that DTC participant without receipt by the depositary of prior authorization from the ADS holder to register that transfer.
In connection with and in accordance with the arrangements and procedures relating to DRS/Profile, the parties to the deposit agreement understand that the depositary will not determine whether the DTC participant that is claiming to be acting on behalf of an ADS holder in requesting registration of transfer and delivery as described in the paragraph above has the actual authority to act on behalf of the ADS holder (notwithstanding any requirements under the Uniform Commercial Code). In the deposit agreement, the parties agree that the depositarys reliance on and compliance with instructions received by the depositary through the DRS/Profile system and in accordance with the deposit agreement will not constitute negligence or bad faith on the part of the depositary.
Shareholder communications; inspection of register of holders of ADSs
The depositary will make available for your inspection at its office all communications that it receives from us as a holder of deposited securities that we make generally available to holders of deposited securities. The depositary will send you copies of those communications or otherwise make those communications available to you if we ask it to. You have a right to inspect the register of holders of ADSs, but not for the purpose of contacting those holders about a matter unrelated to our business or the ADSs.
Jury Trial Waiver
The deposit agreement provides that, to the extent permitted by law, ADS holders waive the right to a jury trial of any claim they may have against us or the depositary arising out of or relating to our shares, the ADSs or the deposit
agreement, including any claim under the U.S. federal securities laws. If we or the depositary opposed a jury trial demand based on the waiver, the court would determine whether the waiver was enforceable in the facts and circumstances of that case in accordance with applicable case law. You will not, by agreeing to the terms of the deposit agreement, be deemed to have waived our or the depositarys compliance with U.S. federal securities laws or the rules and regulations promulgated thereunder.
Each holder of ADSs may be required from time to time to provide certain information, including proof of taxpayer status, residence and beneficial ownership (as applicable), from time to time and in a timely manner as we, the depositary or the custodian may deem necessary or proper to fulfill obligations under applicable law.
Exhibit 12.1
CERTIFICATION PURSUANT TO
RULES 13a-14(a) AND 15d-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934,
AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Vincent Graziani, certify that:
1. | I have reviewed this annual report on Form 20-F of IDEX Biometrics ASA; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report; |
4. | The companys other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the company and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the companys disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the companys internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the companys internal control over financial reporting; and |
5. | The companys other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the companys auditors and the audit committee of the companys board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the companys ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the companys internal control over financial reporting. |
Date: April 29, 2022 | By: | /s/ Vincent Graziani | ||||
Vincent Graziani | ||||||
Chief Executive Officer (Principal Executive Officer) |
Exhibit 12.2
CERTIFICATION PURSUANT TO
RULES 13a-14(a) AND 15d-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934,
AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, James A. Simms, certify that:
1. | I have reviewed this annual report on Form 20-F of IDEX Biometrics ASA; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report; |
4. | The companys other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the company and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the companys disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the companys internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the companys internal control over financial reporting; and |
5. | The companys other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the companys auditors and the audit committee of the companys board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the companys ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the companys internal control over financial reporting. |
Date: April 29, 2022 | By: | /s/ James A. Simms | ||||
James A. Simms | ||||||
Chief Financial Officer (Principal Financial Officer) |
Exhibit 13.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
The certification set forth below is being submitted in connection with the Annual Report on Form 20-F for the year ended December 31, 2021 (the Report) for the purpose of complying with Rule 13a-14(b) or Rule 15d-14(b) of the Securities Exchange Act of 1934 (the Exchange Act) and Section 1350 of Chapter 63 of Title 18 of the United States Code.
I, Vincent Graziani, certify that:
1. | the Report fully complies with the requirements of Section 13(a) or 15(d) of the Exchange Act; and |
2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Date: April 29, 2022 | By: | /s/ Vincent Graziani | ||||
Vincent Graziani | ||||||
Chief Executive Officer (Principal Executive Officer) |
Exhibit 13.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
The certification set forth below is being submitted in connection with the Annual Report on Form 20-F for the year ended December 31, 2021 (the Report) for the purpose of complying with Rule 13a-14(b) or Rule 15d-14(b) of the Securities Exchange Act of 1934 (the Exchange Act) and Section 1350 of Chapter 63 of Title 18 of the United States Code.
I, James A. Simms, certify that:
1. | the Report fully complies with the requirements of Section 13(a) or 15(d) of the Exchange Act; and |
2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Date: April 29, 2022 | By: | /s/ James A. Simms | ||||
James A. Simms | ||||||
Chief Financial Officer (Principal Financial Officer) |
Exhibit 15.1
Consent of Independent Registered Public Accounting Firm
We consent to the incorporation by reference in the following Registration Statements:
(1) | Registration Statement (Form S-8 No. 333-254083) pertaining to the IDEX Biometrics ASA 2020 Subscription Rights Incentive Plan and the IDEX Biometrics ASA 2020 Employee Share Purchase Plan, of IDEX Biometrics ASA, and |
(2) | Registration Statement (Form S-8 No. 333-259210) pertaining to the IDEX Biometrics ASA 2021 Subscription Rights Incentive Plan and the IDEX Biometrics ASA 2021 Employee Share Purchase Plan, of IDEX Biometrics ASA; |
of our report dated April 29, 2022, with respect to the consolidated financial statements of IDEX Biometrics ASA included in this Annual Report (Form 20-F) for the year ended December 31, 2021.
/s/ Ernst & Young AS
Oslo, Norway
April 29, 2022