IDEX company presentation January 2009
About IDEX ASA IDEX ASA is a public company traded on the Oslo OTC list. IDEX is headquartered near Oslo, Norway with its US office in Foster City, California. IDEX has released the SmartFinger IX 10-4 swipe fingerprint sensor based on our patented sensor technology, chip solution and imaging principle. 2
Our business IDEX invents, develops and delivers fingerprint sensor technology. 3
The landscape we explore IDEX single line sensor array, pitch: 0.0508 mm Human fingerprint pitch: ~ 0.6 mm Picture by James Sullivan 4
Sensor geometries Area sensors A full fingerprint area image is acquired directly. Large size, high cost. Swipe sensors The finger is swiped and the fingerprint image is reconstructed from a sequence of partial images. Small size, low cost. 5
The SmartFinger IX 10-4 The SmartFinger microsystem includes a protectively coated silicon sensor chip, an integrated electronic circuit, electrostatic discharge protection and the software algorithms. 6
We have made the world s best swipe fingerprint sensor! 7
SmartFinger features Biometric authentication Navigation Pointing Tap/double tap Scrolling Power saving and wake up functionality 8
The market opportunities
The blockbuster potential for swipe sensors Close to 2 billion USD in 2014 on consumer products. Silicon fingerprint sensor revenue forecast Revenue (USD million) 2000 1800 1600 1400 1200 1000 800 600 400 200 0 2009 2010 2011 2012 2013 2014 Year (Frost & Sullivan) 330 million sensors Physical access Wireless Notebook PCs 10
The mobile phone market; A huge opportunity 2500 2000 Mobile handsets # shipment forecast Sensor shipments for mobile phones as forecasted by Frost & Sullivan; Largely underestimated? 1500 1000 500 0 2006 2007 2008 2009 2010 A market penetration of 20% amounts to 400 million sensors Total 1020 1223 1467 1761 2113 High end share 102 122 147 176 211 Sensor shipment forecast (Frost& Sullivan) 5 14 30 11
Case example: The rapid adoption of cameras on mobile phones 12
The laptop market 20% of laptops ship with fingerprint sensors. ~25 million fingerprint laptops in 2008. The main suppliers to the laptop market at present: Authentec Validity UPEK 13
A fast growing demand in the mobile phone market 40 fingerprint mobile models in the market. ~ 8 million fingerprint phones in 2008. Atrua and Authentec main suppliers. A sensor price level at USD 2 is prerequisite for this market to take off. 14
Additional important emerging markets Personal biometric devices and tokens. ID cards, bank cards, and smartcards. Point-of-sales terminals. Embedded products (door locks, cars etc.). 15
The Smartcard market The recent 'Payments and Settlement System Act' is expected to bring in stringent norms for the banking industry and the third-party vendors, ensuring that all payments are made through secure gateways. In addition to the existing PINs and passwords, banks are expected to follow the biometric way, ensuring that biometrics as a means to security is integrated with the existing security layer. 16
VISA 17
IDEX -The only fingerprint sensor company in this market offering IP and technology licensing The semiconductor manufacturers will become the major suppliers of fingerprint sensors in order to obtain the cost structure required to make the high volume markets to take off. The mobile phone and PC makers will prefer to build on their partnerships with vendors offering well established manufacturing capability, quality management, distribution and support. To take a part in this potentially USD 1.5 billion market (2014) IDEX main business model is to offer licensing partnerships with these manufacturing companies based on the SmartFinger technology and IP. The high biometric performance, ease of integration, and usability of the IX 10-4 also puts IDEX in a very strong position to supply components in a variety of medium volume/large margin markets. 18
Business models IDEX IP Technology Design IX 10-4 implementation Components Value-adding Products Software Medium volume OEMs Door locks Point of sales Health Components ( Buy-back ) License Manufacturing partner Components Marketing & sales Distribution Support Components High volume OEMs Mobile phones Laptops USB sticks End user 19
The IDEX SmartFinger technology
An extensive patent portfolio 14 patent families in USA, Europe and Asia from 1997 and onwards. Image reconstruction scheme based on a single-line sensor. AC capacitive sensing principle. Pointing and navigation functionality. Single-chip and chip scale module solution. Measurement System. Live Finger detection. 21
SmartFinger - Main differentiators. Excellent biometric performance: High security, low false rejections. Swipe speeds up to 60 cm/s. Unmatched skew correction. High dynamic range; accepts wet and dry fingers. Ease of integration. The dual chip solution. 22
Ease of integration Flat surface; all connections at the rear side of sensor. Sensor chip thickness less than 0.8 mm. High flexibility in material choice and packaging solutions. 23
Status The IX 10-4 fingerprint sensor has been successfully realized by industrially established manufacturing processes. Development modules are available for evaluation by potential customers. A demo application including image capture, authentication and navigation is available. A Software Development Kit (SDK) is available. The IX 10-4 is now running with the end-to-end software suite that is bundled with major fingerprint laptop brands. The next generation fingerprint sensors are under development. 24
Business models and forecast
Licensing and product business models To be part of the very high volume markets IDEX offers licensing partnerships with manufacturing companies based on the SmartFinger technology and IP. The performance and usability of the SmartFinger also puts IDEX in a position to provide products to a variety of medium volume/large margin markets. 26
Business model based on licensing and value-added product sales. The figure illustrates the combination of business based on revenue from royalty as well as value-added products. The products can be based on a buy-back agreement with the semiconductor manufacturers and could include sensors, modules and software. 180 160 140 120 100 Revenue 80 60 40 20 0 2009-20 2011 2013 2015 2017 Year Royalty 1 Royalty 2 Products gross profit Total revenues 27
Business vision IDEX will be one among ~5 technology providers in a market forecasted at USD 1,600 million in 2015. Manufacturing costs constitutes 50%, and hence 800 million left for component and technology suppliers. Assuming 25% of the revenue to the technology and IP providers, i.e. 40 million USD each. 28
Conclusion IDEX has extensive and strong IP portfolio. IDEX has demonstrated one of the highest performing fingerprint sensors based on the SmartFinger technology. The biometric market grows rapidly (67% i 2009). There is a large potential for silicon swipe sensor in consumer products such as laptop PCs and mobile phones. The adoption of fingerprint biometrics by governmental and public sector programs will open for new medium volume products. IDEX offers a unique business model enabling semiconductor manufacturers to take part in this market. 29
IDEX invents the ID of you 30
Appendix
Top 20 shareholders VPS as at 13 January 2009 32
Financials Latest published report: Q3/2008
Consolidated Profit and Loss Statement 2008 2007 2008 2007 2007 Unaudited. Amounts in NOK 1,000 1 Jul-30 Sep 1 Jul-30 Sep 1 Jan-30 Sep 1 Jan-30 Sep 1 Jan-31 Dec Operating income Sales revenue 25 25 Other operating revenue 2 225 10 175 Total revenue 25-2 250-10 175 Operating expenses Payroll expense 1 649 3 671 6 735 10 474 14 456 Share-based remuneration (139) 573 548 1 366 1 540 Research and development expenses 784 4 085 3 272 8 811 10 667 Other operating expenses 1 446 4 175 4 226 13 344 16 065 Total operating expenses 3 740 12 504 14 781 33 995 42 728 Profit (loss) before interest, tax, depreciation and amortization (EBITDA) (3 715) (12 504) (12 531) (33 995) (32 553) Depreciation 4 2 14 10 12 Profit before interest and tax (EBIT) (3 719) (12 506) (12 545) (34 005) (32 565) Financial Income and Expenses Interest income 41 11 201 97 236 Other financial income 1 1 8 47 382 Interest expense (553) (2 000) (1 650) (2 001) (1 690) Other financial expense (3) (1) (4) (26) (35) Net financial items (514) (1 989) (1 445) (1 883) (1 107) Net result before tax (4 233) (14 495) (13 990) (35 888) (33 672) Taxes - - Net profit (loss) for the period (4 233) (14 495) (13 990) (35 888) (33 672) Profit (loss) per share -basic and diluted (NOK.øre) (0.15) (0.70) (0.48) (1.73) (1.53) 34
Consolidated Balance Sheet 30 Sep 2008 30 Sep 2007 31 Dec 2007 Unaudited. Amounts in NOK 1,000 ASSETS Long-term assets Fixed assets Machinery and office equipment 36 35 50 Total fixed assets 36 35 50 Financial assets Long-term receivables 766 753 778 Total financial assets 766 753 778 Total long-term assets 802 788 828 Current assets Receivables Account receivables 29 - Other receivables 1 403 1 325 1 376 Prepaid expenses 515 562 522 Total receivables 1 947 1 887 1 898 Cash and bank deposits Cash and bank deposits 9 341 313 14 417 Total cash and bank deposits 9 341 313 14 417 Total current assets 11 288 2 200 16 315 TOTAL ASSETS 12 090 2 988 17 143 35
Consolidated Balance Sheet 30 Sep 2008 30 Sep 2007 31 Dec 2007 Unaudited. Amounts in NOK 1,000 EQUITY AND LIABILITIES Equity Paid-in-capital Share capital 16 206 10 388 14 466 Share premium reserve 7 436 1 293 Other paid-in capital 548 1 366 Total paid-in-capital 24 190 13 047 14 466 Other equity (27 505) (35 862) (15 207) Total equity (3 315) (22 815) (741) Liabilities Short-term liabilities Short-term loan 11 370 11 409 Account payable 1 978 9 975 1 509 Public duties payable 178 551 1 242 Other short-term liabilities 1 879 15 277 3 724 Total short term liabilities 15 405 25 803 17 884 Total liabilities 15 405 25 803 17 884 TOTAL EQUITY AND LIABILITIES 12 090 2 988 17 143 36
Consolidated Cash Flow Statement 2008 2007 2008 2007 2007 Unaudited. Amounts in NOK 1,000 1 Jul-30 Sep 1 Jul-30 Sep 1 Jan-30 Sep 1 Jan-30 Sep 1 Jan-31 Dec Profit (loss) before taxes (4 233) (14 495) (13 990) (35 888) (33 672) Depreciation 4 2 14 10 12 Change in receivables (275) (391) (49) (1 140) 63 Change in payables 375 8 778 (2 440) 6 890 (1 575) Net change in other items 6 504 6 12 750 2 819 Cost of share-based remuneration (139) 573 548 1 366 1 540 Net cash flow from operational activities (4 262) (5 029) (15 911) (16 012) (30 813) Investments (40) Net cash provided by investing activities - - - - (40) Issuance of shares (net) 9 175 9 175 47 19 485 Change in long-term receivables 12 448 (45) Change in short-term loan 552 1 648 10 000 Net cash provided by financing activities 9 727-10 835 495 29 440 Net change in cash and cash equivalents 5 465 (5 029) (5 076) (15 517) (1 413) Opening cash balance 3 876 5 342 14 417 15 830 15 830 Closing cash balance 9 341 313 9 341 313 14 417 Consolidated Statement of Changes in Equity 2008 2007 2008 2007 2007 Unaudited. Amounts in NOK 1,000 1 Jul-30 Sep 1 Jul-30 Sep 1 Jan-30 Sep 1 Jan-30 Sep 1 Jan-31 Dec Equity at start of period (9 811) (8 917) (741) 11 626 11 626 Issuance of shares 9 275 9 275 47 19 832 Share issuance costs (100) (100) (2) (347) Convertible loan 1 688 1 688 280 Share-based compensation (139) 573 548 1 366 1 540 Net result for the period and other items (4 228) (14 471) (13 985) (35 852) (33 672) Equity at end of period (3 315) (22 815) (3 315) (22 815) (741) 37