IDEX Biometrics ASA (IDXAD) F-1/ARegistration statement (foreign) (amended)

As filed with the Securities and Exchange Commission on February 25, 2021.

Registration Statement No. 333-250186

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Amendment No. 3 to

Form F-1

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

IDEX Biometrics ASA

(Exact name of registrant as specified in its charter)

Dronning Eufemias gate 16

NO-0191 Oslo

Norway

Tel: +47 6783 9119

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

IDEX America Inc.

187 Ballardvale Street, Suite B211

Wilmington, MA 01887

Tel: + 1 (339) 215-8020

(Name, address, including zip code, and telephone number, including area code, of agent for service)

Copies of all communications, including communications sent to agent for service, should be sent to:

Approximate date of commencement of proposed sale to public: As soon as practicable after this Registration Statement becomes effective.

If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box.  ☒

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ☐

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act.

Emerging growth company  ☒

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 7(a)(2)(B) of the Securities Act.  ☐

The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended or until the registration statement shall become effective on such date as the Commission, acting pursuant to such Section 8(a), shall determine.

The information contained in this prospectus is not complete and may be changed. No securities may be sold pursuant to this prospectus until the registration statement filed with the Securities and Exchange Commission with respect to such securities has been declared effective. This prospectus is not an offer to sell these securities and no offers to buy these securities are being solicited in any jurisdiction where their offer or sale is not permitted.

SUBJECT TO COMPLETION, DATED FEBRUARY 25, 2021

PROSPECTUS

60,000,000 Ordinary Shares

Represented by 800,000 American Depositary Shares

We have applied to list American Depositary Shares, or ADSs, each representing 75 ordinary shares of IDEX Biometrics ASA, on the Nasdaq Capital Market, or Nasdaq, under the symbol “IDBA”. The ADSs are expected to begin trading on Nasdaq on March 1, 2021. Our ordinary shares are currently traded on Oslo Børs under the symbol “IDEX”. The closing price of our ordinary shares on Oslo Børs on February 24, 2021 was NOK 3.035 per ordinary share, which is equivalent to a price of $0.36 per share based on an exchange rate of NOK 8.3853 per U.S. dollar, as reported by Bloomberg L.P. on February 24, 2021, or $27 per ADS, after giving effect to the ratio of one ADS for every 75 ordinary shares. We have appointed The Bank of New York Mellon to act as the depositary for the ADSs representing our ordinary shares, including the Registered Shares, as defined below. Upon the effectiveness of the registration statement of which this prospectus forms a part, holders of ordinary shares registered hereby are expected to be able to deposit such ordinary shares with the depositary in exchange for ADSs representing such ordinary shares at the ratio referred to in the first sentence of this paragraph. ADSs representing the ordinary shares registered hereby will be freely tradeable on the effective date of the registration statement of which this prospectus forms a part.

We are filing the registration statement of which this prospectus forms a part with respect to an aggregate of 60,000,000 ordinary shares held by the shareholders identified herein. The holder of such ordinary shares is identified in this prospectus as the Selling Shareholder and the aggregate of 60,000,000 ordinary shares registered hereby as the Registered Shares. The Selling Shareholder has not to date entered into any agreement to dispose of the Registered Shares. The Selling Shareholder is offering his securities pursuant to this prospectus in order to create a public trading market for our equity securities in the United States and to satisfy certain listing requirements of the Nasdaq Capital Market on which we have applied to list our equity securities. Although the registration statement of which this prospectus forms a part will, upon effectiveness, permit the Selling Shareholder to dispose of the Registered Shares over time, the Selling Shareholder is not in fact obligated to resell the Registered Shares either pursuant to Nasdaq’s requirements or such registration statement. Any Registered Shares offered and sold in the United States by the Selling Shareholder will be in the form of ADSs. The Selling Shareholder is also permitted to sell ordinary shares not represented by ADSs in private transactions, including on Oslo Børs, which resales are not covered by this prospectus. Unlike an initial public offering, any sale by the Selling Shareholder of the Registered Shares represented by ADSs is not being underwritten by any investment bank. We expect that the opening public price of our ADSs on Nasdaq will be determined by reference to the most recent trading price of our ordinary shares on Oslo Børs, as adjusted for the currency exchange rate and an ADS-to-share ratio of 75 to 1. Thereafter, trades of our ADSs will be made through brokerage transactions on Nasdaq at prevailing market prices or as otherwise provided in the section entitled “Plan of Distribution.” As discussed above, the Selling Shareholder may, or may not, elect to dispose of Registered Shares represented by ADSs as and to the extent that he may individually determine. Such sales, if any, will be made through brokerage transactions on Nasdaq or other securities exchanges in the United States at prevailing market prices. See the section entitled “Plan of Distribution.” We will not receive proceeds from any sale of Registered Shares in the form of ADSs by the Selling Shareholder.

We are an “emerging growth company” and a “foreign private issuer,” each as defined under the federal securities laws, and, as such, we will be subject to reduced public company reporting requirements. See the section entitled “Prospectus Summary—Implications of Being an Emerging Growth Company and a Foreign Private Issuer” for additional information.

Neither the U.S. Securities and Exchange Commission nor any other regulatory body has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense.

Investing in ADSs representing our ordinary shares involves a high degree of risk. Before buying any ADSs representing our ordinary shares you should carefully read the discussion of material risks of investing in such securities in “Risk Factors ” beginning on page 9 of this prospectus.

TABLE OF CONTENTS

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We and the Selling Shareholder are responsible for the information contained in this prospectus and any free writing prospectus that we may prepare or authorize. Neither we nor the Selling Shareholder have authorized anyone to provide you with different or additional information, and neither we nor they take any responsibility for, or provide any assurance as to the reliability of, any other information that others may give you. Neither we nor the Selling Shareholder are making an offer to sell ADSs representing our ordinary shares in any jurisdiction where the offer or sale thereof is not permitted. You should not assume that the information contained in this prospectus is accurate as of any date other than the date on the front cover of this prospectus, regardless of the time of delivery of this prospectus or any sale of our ADSs.

For investors outside the United States: Neither we nor the Selling Shareholder have taken any action to permit the possession or distribution of this prospectus in any jurisdiction other than the United States where action for that purpose is required. Persons outside the United States who come into possession of this prospectus must inform themselves about and observe any restrictions relating to the ADSs and the distribution of this prospectus outside the United States.

We are a public limited company incorporated under the laws of Kingdom of Norway and a majority of our outstanding securities are owned by non-U.S. residents. Under the rules of the U.S. Securities and Exchange Commission, or the SEC, we are currently eligible for treatment as a “foreign private issuer.” As a foreign private issuer, we will not be required to file periodic reports and financial statements with the SEC as frequently or as promptly as domestic registrants whose securities are registered under the Securities Exchange Act of 1934, as amended, or the Exchange Act.

ABOUT THIS PROSPECTUS

Unless otherwise indicated or the context otherwise requires, all references in this prospectus to the terms “IDEX,” “IDEX Biometrics,” “IDEX Biometrics ASA,” “the company,” “we,” “us” and “our” refer to IDEX Biometrics ASA together with its subsidiaries.

This prospectus includes trademarks, tradenames and service marks, certain of which belong to us, including IDEX, TrustedBio and the IDEX logo, and others that are the property of other organizations. Solely for convenience, trademarks, tradenames and service marks referred to in this prospectus appear without the ^®, ^™ and ^SM symbols, but the absence of those symbols is not intended to indicate, in any way, that we will not assert our rights or that the applicable owner will not assert its rights to these trademarks, tradenames and service marks to the fullest extent under applicable law. We do not intend our use or display of other parties’ trademarks, trade names or service marks to imply, and such use or display should not be construed to imply, a relationship with, or endorsement or sponsorship of us by, these other parties.

PRESENTATION OF FINANCIAL AND SHARE INFORMATION

We maintain our books and records in the local currency where we operate and report our consolidated financial statements in U.S. dollars in conformity with International Financial Reporting Standards, or IFRS, as issued by the International Accounting Standards Board, or IASB, and in conformity with IFRS as adopted by the European Union. None of the financial statements included in this prospectus were prepared in accordance with generally accepted accounting principles in the United States. All references in this prospectus to “$” are to U.S. dollars and all references to “NOK” are to Norwegian krone, the currency of our home country. We make no representation that any Norwegian krone or U.S. dollar amounts referred to in this prospectus could have been, or could be, converted into U.S. dollars or Norwegian krone, as the case may be, at any particular rate, or at all. These translations should not be considered representations that any such amounts have been, could have been or could be converted from Norwegian krone into U.S. dollars at that or any other exchange rate as of that or any other date.

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We have made rounding adjustments to some of the figures included in this prospectus. Accordingly, numerical figures shown as totals in some tables may not be an arithmetic aggregation of the figures that preceded them.

All references to “shares” in this prospectus refer to ordinary shares of IDEX Biometrics ASA with a nominal value of NOK 0.15 per share.

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RISK FACTORS

Our operations and financial results are subject to various risks and uncertainties including those described below. You should consider carefully the risks and uncertainties described below, in addition to other information contained in this Registration Statement on Form F-1, including our consolidated financial statements and related notes. The risks and uncertainties described below are not the only ones we face. Additional risks and uncertainties that we are unaware of, or that we currently believe are not material, may also become important factors that adversely affect our business. If any of the following risks or others not specified below materialize, our business, financial condition and results of operations could be materially and adversely affected.

Risks Related to Our Financial Condition, Business and Industry

Since our inception, we have only generated limited revenue and we have incurred significant operating losses and negative cash flows.

We have only generated limited revenue and have incurred significant operating losses and negative cash flows since our inception. We generated net losses of $30.2 million, $32.4 million and $19.5 million for the years ended December 31, 2018 and 2019 and the nine months ended September 30, 2020, respectively. As of September 30, 2020, we had an accumulated deficit of $217.7 million. We are not certain whether or when we will obtain a high enough volume of sales in the future to generate significant revenue, grow our business or achieve or maintain profitability. We also expect our costs and expenses to increase in future periods, which could negatively affect our future results of operations even if we are able to significantly increase our revenue. In particular, we intend to continue to expend significant funds to develop future generations of our products and software solutions, including by introducing new products and functionality, and to expand use cases and integrations. We will also face increased compliance costs associated with growth, the expansion of our customer base, and as a result of the fact that we are publicly listed in both Norway and the United States. Our efforts to grow our business may be costlier than we expect, or the rate of our growth in revenue may be slower than we expect, and we may not be able to increase our revenue enough to offset our operating expenses. We may incur significant losses in the future for a number of reasons, including the other risks described herein, and unforeseen expenses, difficulties, complications or delays, and other unknown events. If we are unable to generate significant revenue and/or achieve and sustain profitability, the value of our business and ordinary shares may significantly decrease.

Based on our limited revenue to date and recurring losses from operations, we and our independent registered public accounting firm have expressed substantial doubt about our ability to continue as a going concern.

Among other factors, our history of losses, limited revenue and negative cash flows from operations raise substantial doubt about our ability to continue as a going concern. As a result, our independent registered public accounting firm has included an explanatory paragraph in their opinion for the year ended December 31, 2019 as to the substantial doubt about our ability to continue as a going concern. Our financial statements have been prepared in accordance with the IFRS, as issued by the IASB, which contemplate that we will continue to operate as a going concern. Historically, we have been able to raise funds through private placements of shares, including private placements of shares that raised $18.0 million before expenses in 2020. We continue to review all strategic options to fund ongoing operations, research and development projects and working capital needs, including a best efforts capital raise. While we have been successful in raising funds through private placements of shares, there can be no assurance that we will be successful this time.

We will require additional funding to finance our operations. If we are unable to raise capital when needed, we could be forced to delay, reduce or terminate certain of our development activities or other operations.

We cannot be certain when, or if, our operations will generate sufficient cash to fully fund our ongoing operations or the growth of our business. We intend to continue to make investments to support our business,

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which may require us to engage in equity or debt financings to secure additional funds. We continue to review all strategic options to fund ongoing operations, research and development projects and working capital needs, including a best efforts capital raise. While we have been able to raise funds in the past through private placements of our shares, additional financing may not be available on terms favorable to us, if at all. If adequate funds are not available on acceptable terms, we may be unable to invest in future growth opportunities, which could harm our business, operating results, and financial condition. If we incur debt, the debt holders would have rights senior to holders of ordinary shares to make claims on our assets, and the terms of any debt could restrict our operations, including our ability to pay dividends on our ordinary shares. Furthermore, if we issue additional equity securities, shareholders will experience dilution. Because our decision to issue securities in the future will depend on numerous considerations, including factors beyond our control, we cannot predict or estimate the amount, timing, or nature of any future issuances of debt or equity securities, and if we are unable to raise sufficient funds we may be unable to maintain our operations. As a result, our shareholders bear the risk of future issuances of debt or equity securities reducing the value of our ordinary shares and diluting their interests.

Our largest potential market is the biometric payment card market. The market for biometric payment cards is an undeveloped and emerging market and it is difficult to predict how large this market could be. In addition, our biometric technology has not yet gained, and may never gain, widespread market acceptance.

We primarily market and sell biometric products and software solutions to the payment card and access control markets. The market for biometric payment cards is an undeveloped and emerging market and it is difficult to predict how large this market could be. Our technology represents a novel security solution and we have not yet generated significant sales. Although recent security concerns relating to identification of individuals and appearance of biometric readers on popular consumer products, including the smart phones, have increased interest in biometrics generally, it remains an undeveloped and emerging market. Biometric based solutions compete with more traditional security methods including keys, cards, personal identification numbers and security personnel. In addition, our biometric technology has not yet gained, and may never gain, widespread market acceptance. Acceptance of biometrics and our technology as an alternative to such traditional methods depends upon a number of factors including:

For these reasons, we are uncertain whether our biometric technology will gain widespread acceptance in any commercial markets or that demand will be sufficient to create a market large enough to produce significant revenue or earnings. Our future success depends, in part, upon business customers adopting biometrics generally, and our solutions specifically.

If the estimates and assumptions we have used to calculate the size of our target markets are inaccurate, our future growth rate may be limited.

Our projections, assumptions and estimates of future opportunities within our target markets are necessarily subject to a high degree of uncertainty and risk due to a variety of factors, including those described in this

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prospectus. If third-party or internally generated data prove to be inaccurate or we make errors in our assumptions based on that data, our future growth rate may be limited. In addition, these inaccuracies or errors may cause us to misallocate capital and other business resources, which could harm our business. Even if our target markets meet our size estimates and experiences the forecasted growth, we may not grow our business at similar rates, or at all. Our growth is subject to many factors, including our success in implementing our business strategy, which is subject to many risks and uncertainties. Accordingly, the expectations of market growth included in this prospectus should not be taken as indicative of our future growth.

We are subject to lengthy development periods and product acceptance cycles, which can result in development and engineering costs without any future revenue.

We provide fingerprint sensors and related software solutions that are incorporated by card manufacturers into the products they sell. They make the determination during their product development programs whether to incorporate our solutions or pursue other alternatives. This process requires us to make significant investments of time and resources in the design of fingerprint sensors and related software solutions for our products well before our customers introduce their products incorporating our solutions into the market, and before we can be sure that we will generate any significant sales to our customers or even recover our investment. During a customer’s entire product development process, we face the risk that our solutions will fail to meet our customer’s technical, performance, or cost requirements, or that our products will be replaced by competitive products or alternative technological solutions. Even if we complete our design process in a manner satisfactory to our customer, the customer may delay or terminate its product development efforts. The occurrence of any of these events could cause sales to not materialize, be deferred, or be cancelled, which could adversely affect our operating results.

A significant portion of our sales comes from one or more large customers, the loss of which could harm our business, financial condition, and operating results.

We have historically generated limited revenue, and most of our revenue we have generated has come from a limited number of customers. During 2018, three customers, Mastercard, IDEMIA France SAS and Yoyon Electronics Technology Co Ltd., accounted for approximately 39%, 36% and 13% of the Company’s revenue, respectively. During 2019, two customers, Bloomberg L.P. and IDEMIA France SAS, accounted for approximately 69% and 10% of the Company’s revenue, respectively. During the first nine months of 2020, Bloomberg L.P. accounted for approximately 84% of the Company’s revenue. While we work to maintain our relationships with our current customers and seek out new business, we may continue to face challenges in diversifying our customer base. The loss of major customers, or a decrease in demand for our products by these customers within a short period of time, could adversely affect our current and future revenue, financial condition and business. The adverse effect could be more substantial if our other customers do not increase their orders or if we are unsuccessful in generating orders for our solutions with new customers. Many of these card manufacturers sell to the same card issuers, and therefore we may be reliant on certain card manufacturers. Concentration in our customer base and partner relationship, now and in the future, may make fluctuations in revenue and earnings more severe and make business planning more difficult.

If we are unable to attract new customers and to retain our existing customers, our growth prospects will be adversely affected.

Our ability to grow our business depends on retaining and expanding our customer base. We must convince prospective customers of the benefits of our services and our existing customers of the continuing value of our services. Our ability to attract new customers and retain existing customers depends in large part on our ability to continue to offer competitive technologies and products. As consumer preferences and technological changes shift market dynamics, we will need to enhance and improve our existing products, introduce new products, and maintain our competitive position with additional technological advances. If we fail to keep pace with technological advances or fail to offer compelling product offerings to meet consumer demands, our ability to grow or sustain the reach of our services, attract and retain customers may be adversely affected.

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Our products and software solutions may contain defects, which will make it more difficult for us to establish and maintain customers.

Although we have completed the development of multiple generations of our core biometric technology, it has only been used by a limited number of business customers. Despite extensive testing during development and certifications by third-party testing facilities, our products and software solutions may contain undetected design faults and errors that are discovered only after it has been installed and used by a greater number of customers. Any such defect or error in new or existing products or software solutions could cause delays in delivering our technology or require design modifications. These could adversely affect our competitive position and cause us to lose potential customers or opportunities. Errors or defects in our software or products could lead to mismatches in fingerprint scans. Since our technologies are intended to be utilized to secure payments and physical and electronic information access, the effect of any such bugs or delays will likely have a detrimental impact on us. In addition, given that biometric technology generally, and our biometric technology specifically, to certain extent, has yet to gain widespread market acceptance, any delays would likely have a more detrimental impact on our business than if we were a more established company.

Potential strategic alliances may not achieve their objectives, and the failure to do so could impede our growth.

We have entered, and we anticipate that we will continue to enter, into strategic alliances. We continually explore strategic alliances designed to enhance or complement our technology or to work in conjunction with our technology; to provide necessary know-how, components, or supplies, and to develop, introduce, and distribute products utilizing our technology. Certain strategic alliances may not achieve their intended objectives, and parties to our strategic alliances may not perform as contemplated. The failure of these alliances to achieve their objectives may impede our ability to introduce new products and enter new markets.

We face intense competition.

We compete with both established companies and startup enterprises that provide biometric solutions, as well as providers of more traditional security methods. Our competitors include, among others, Fingerprint Cards AB, NEXT Biometrics ASA and ELAN Microelectronics Corp. Some of our competitors have substantially greater financial and marketing resources than we do, and may independently develop superior technologies, which may result in our technology becoming less competitive or obsolete. If we are unable to develop new applications or enhance our existing technology in a timely manner in response to technological changes, we will be unable to compete in our chosen markets. Our actual and potential competitors may also have greater name recognition and more extensive customer bases. In addition, if one or more other biometric technologies such as voice, face, iris, hand geometry or blood vessel recognition are widely adopted, it would significantly reduce the potential market for our fingerprint identification technology in certain industries.

Our ability to compete successfully depends on a number of factors, which may be outside our control. These factors include the following:

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Moreover, additional competitors may enter the biometrics market and become significant long-term competitors. In the future, we may encounter competition from other larger, well-established and well-financed entities that may continue to acquire, invest in or form joint ventures with providers of fingerprint recognition technology, and existing providers may elect to consolidate. Our position in the existing markets could be eroded rapidly by product or technology enhancements or the development of new, superior products and technology by competitors. Increased competition could result in price reductions, fewer customer orders, reduced gross margins and lower market prices of our ordinary shares.

The effects of national and global epidemics, including the recent COVID-19 pandemic, could have an adverse impact on our business, operations, and the markets and communities in which we operate.

In March 2020, the World Health Organization declared the outbreak of COVID-19 a pandemic. Our business and operations could be adversely affected by national and global epidemics, including the recent COVID-19 pandemic, impacting the markets and communities in which we operate.

In response to the COVID-19 pandemic, many state, local, and national governments have put in place, and others in the future may put in place, quarantines, executive orders, shelter-in-place orders, and similar government orders and restrictions in order to control the spread of the disease. Although there have not been significant delays in our development activities to date, such orders or restrictions, or the perception that such orders or restrictions could occur, have resulted in business closures, work stoppages, slowdowns and delays, work-from-home policies, and travel restrictions, among other effects that could negatively impact productivity and disrupt our operations. We have implemented a work-from-home policy for employees, and we may take further actions that alter our operations as may be required by federal, state, or local authorities or which we determine are in the best interests of our employees and shareholders.

In addition, while the potential impact and duration of the COVID-19 pandemic on the global economy and our business in particular may be difficult to assess or predict, the pandemic has resulted in, and may continue to result in, significant disruption of global financial markets, potentially reducing our ability to access capital, which could in the future negatively affect our liquidity. The COVID-19 pandemic also could reduce the demand for our customers’ products and services, which could negatively impact our customers’ willingness to renew or enter into contracts with us or our ability to collect accounts receivable on a timely basis, which, if significant, could materially and adversely affect our business, results of operations, and financial condition. For example, many of our business partners in Asia were impacted by the COVID-19 pandemic in the first quarter of 2020, although we believe a majority of such business partners, if not all, have now returned to their offices and factories.

The global pandemic of COVID-19 continues to rapidly evolve, and we will continue to monitor the COVID-19 situation closely. While the pandemic may increase end-user awareness of the benefits of contactless payment solutions such as the ones we offer, and therefore may increase the demand for our products, the ultimate impact of the COVID-19 pandemic or a similar health epidemic is highly uncertain and subject to change. We do not yet know the full extent of potential delays or impacts on our business, operations, or the global economy as a whole, which makes our future results difficult to predict.

Unfavorable conditions in the global economy or the vertical markets we serve could limit our ability to grow our business and negatively affect our operating results.

General worldwide economic conditions have experienced significant instability due to the global economic uncertainty and financial market conditions caused by the COVID-19 pandemic. These conditions make it

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extremely difficult for customers and us to accurately forecast and plan future business activities and could cause customers to reduce or delay their spending. At this time, the potential impact on customer spend from the COVID-19 pandemic is difficult to predict and, therefore, it is not possible to fully determine the impact on our future results. Historically, economic downturns have resulted in overall reductions in spending. If macroeconomic conditions deteriorate or are characterized by uncertainty or volatility, customers may curtail or freeze spending in general and for biometric products such as ours specifically, which could have an adverse impact on our business, financial condition, and operating results.

We target generating revenue from customers in the payment cards and access control verticals. While these verticals have not been affected as severely by weak economic conditions caused by COVID-19 as the retail, hospitality, and entertainment industries, we cannot assure these verticals will not suffer more severe losses in the future as they are in turn impacted by consumer demand and the performance of the retail, hospitality and entertainment industries. Furthermore, we cannot predict the timing, strength, or duration of any economic slowdown or recovery. In addition, even if the overall economy is robust, we cannot assure the market for services such as ours will experience growth or that we will experience growth. Additionally, the increased use of digital payments and virtual credit cards by consumers could pose an obstacle to the growth of our business.

War, terrorism, other acts of violence or natural or manmade disasters such as a global pandemic may affect the markets in which we operate, our customers, our delivery of products and customer service, and could have a material adverse impact on our business, results of operations, or financial condition.

Our business may be adversely affected by instability, disruption or destruction in a geographic region in which we operate, regardless of cause, including war, terrorism, riot, civil insurrection or social unrest, and natural or manmade disasters, including famine, food, fire, earthquake, storm or pandemic events, including COVID-19.

Such events may cause customers to suspend or delay their decisions on using our products and services, make it difficult or impossible to access some of our inventory, and give rise to sudden significant changes in regional and global economic conditions and cycles that could interfere with purchases of goods or services. These events also pose significant risks to our personnel and to physical facilities, which could materially adversely affect our financial results.

We rely on the performance of highly skilled personnel, including senior management and our engineering, professional services, sales and technology professionals; if we are unable to retain or motivate key personnel or hire, retain and motivate qualified personnel, our business would be harmed.

We believe our success has depended, and continues to depend, on the efforts and talents of our senior management team and our highly skilled team members, including our sales personnel, engineering and support personnel. From time to time, there may be changes in our senior management team resulting from the termination or departure of our executive officers and key employees. Our senior management and key employees are employed on an at-will basis, which means that they could terminate their employment with us at any time. Many of our executive officers and key employees receive equity compensation as a portion of their overall compensation package. A substantial decrease in the market price of our ordinary shares would effectively reduce the compensation of such persons and could increase the risk that they depart from our company. The loss of any of our senior management or key employees could adversely affect our ability to build on the efforts they have undertaken and to execute our business plan, and we may not be able to find adequate replacements. We cannot ensure that we will be able to retain the services of any members of our senior management or other key employees.

Our ability to successfully pursue our growth strategy also depends on our ability to attract, motivate and retain our personnel. Competition for well-qualified employees in all aspects of our business, including sales personnel, professional services personnel, and engineering and support personnel, is intense. Our continued

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ability to compete effectively depends on our ability to attract new employees and to retain and motivate existing employees. If we do not succeed in attracting well-qualified employees or retaining and motivating existing employees, our business would be adversely affected.

Because many rapidly growing markets for our products are international, our business is susceptible to risks associated with international operations.

Biometric products including ours are often marketed and sold globally. We currently have offices in Norway, the United States, the UK and China, which focus on selling and implementing our fingerprint sensors and related software solutions in those regions. In the future, we may expand within these countries or to other international locations. This reliance on international sales and marketing subjects us to the risks of conducting business internationally, including risks associated with political and economic instability, global health conditions, currency controls, exchange rate fluctuations and changes in import/export regulations, and tariff and freight rates. For example, the political or economic instability in a given region may have an adverse impact on the financial position of end users in the region, which could affect future orders and harm our results of operations. Our international sales operations involve a number of other risks including, but not limited to:

We cannot guarantee that any potential future expansion efforts that we may undertake will be successful. If we invest substantial time and resources to expand our international operations and are unable to do so successfully and in a timely manner, our business and operating results will suffer.

If currency exchange rates fluctuate substantially in the future, our financial results, which are reported in U.S. Dollars, could be adversely affected.

We incur expenses for employee compensation, property leases, and other operating expenses in the local currencies of the jurisdictions in which we operate. Fluctuations in the exchange rates between the U.S. Dollar

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and other currencies may impact expenses as well as revenue, and consequently have an impact on margin and the reported operating results. This could have a negative impact on our reported operating results. To date, we have not engaged in any hedging strategies, and any such strategies, such as forward contracts, options and foreign exchange swaps related to transaction exposures that we may implement to mitigate this risk may not eliminate our exposure to foreign exchange fluctuations.

We may pursue strategic acquisitions, including acquiring other biometric companies, as part of our growth strategy and that may disrupt our business.

We may pursue strategic acquisitions in the future. Risks in acquisition transactions include difficulties in the integration of acquired businesses into our operations and control environment, difficulties in assimilating and retaining employees and intermediaries, difficulties in retaining the existing customers of the acquired entities, assumed or unforeseen liabilities that arise in connection with the acquired businesses, the failure of counterparties to satisfy any obligations to indemnify us against liabilities arising from the acquired businesses, and unfavorable market conditions that could negatively impact our growth expectations for the acquired businesses. Fully integrating an acquired company or business into our operations may take a significant amount of time. We cannot assure you that we will be successful in overcoming these risks or any other problems encountered with acquisitions and other strategic transactions. These risks may prevent us from realizing the expected benefits from acquisitions and could result in the failure to realize the full economic value of a strategic transaction or the impairment of goodwill and/or intangible assets recognized at the time of an acquisition. These risks could be heightened if we complete a large acquisition or multiple acquisitions within a short period of time. Additional risks may include:

As a result, if we fail to properly evaluate and execute any acquisitions or investments, our business and prospects may be seriously harmed.

Risks Related to Government Regulation, Data Collection, Intellectual Property and Litigation

Our business is subject to a variety of laws around the world. Any changes in government regulations relating to our business or other unfavorable developments may adversely affect our business, operating results, and financial condition.

We are an international company that is registered under the laws of the Kingdom of Norway, with offices and/or operations in the United States, the UK and China. As a result of this organizational structure and the scope of our operations, we are subject to a variety of laws in different countries. The scope and interpretation of the laws that are or may be applicable to us are often uncertain and may be conflicting. It is also likely that if our business grows and evolves and our solutions are used more globally, we will become subject to laws and regulations in additional jurisdictions. It is difficult to predict how existing laws will be applied to our business and the new laws to which we may become subject.

We are subject to various business regulations and laws. Such laws and regulations include, but are not limited to, labor, advertising and marketing, real estate, taxation, user privacy, data collection and protection,

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intellectual property, anti-corruption, anti-money laundering, sanctions, foreign exchange controls, antitrust and competition, electronic contracts, telecommunications, sales procedures, credit card processing procedures and consumer protections. We cannot guarantee that we have been or will be fully compliant in every jurisdiction in which we are subject to regulation, as existing laws and regulations governing issues such as intellectual property, privacy, taxation, and consumer protection, among others, are constantly changing. The adoption or modification of laws or regulations relating to our product development or other areas of our business could limit or otherwise adversely affect the manner in which we currently conduct our business. Further, compliance with laws, regulations, and other requirements imposed upon our business may be onerous and expensive, and they may be inconsistent from jurisdiction to jurisdiction, further increasing the cost of compliance and doing business.

Noncompliance with applicable regulations or requirements could subject us to investigations, sanctions, mandatory product recalls, enforcement actions, disgorgement of profits, fines, damages, civil and criminal penalties, injunctions or other collateral consequences. If any governmental sanctions are imposed, or if we do not prevail in any possible civil or criminal litigation, our business, results of operations, and financial condition could be materially adversely affected. In addition, responding to any action will likely result in a significant diversion of management’s attention and resources and an increase in professional fees. Enforcement actions and sanctions could harm our business, reputation, results of operations and financial condition.

Because our products could be used to collect and store personal information, domestic and international privacy concerns could result in additional costs and liabilities to us or inhibit sales of our products.

Personal privacy has become a significant issue in the United States and in many other countries where we offer our products and related software solutions. The regulatory framework for privacy issues worldwide is rapidly evolving and is likely to remain uncertain for the foreseeable future. Many federal, state and national government bodies and agencies have adopted or are considering adopting laws and regulations regarding the collection, use, storage and disclosure of personal information and breach notification procedures. Interpretation of these laws, rules and regulations and their application to our products and professional services in Norway, the United States and other foreign jurisdictions is ongoing and cannot be fully determined at this time.

In the United States, these include rules and regulations promulgated under the authority of the Federal Trade Commission, the Electronic Communications Privacy Act, Computer Fraud and Abuse Act, the Health Insurance Portability and Accountability Act of 1996, the Gramm Leach Bliley Act, the California Consumer Privacy Act, or the CCPA, and other state laws relating to privacy and data security. The CCPA, which became effective on January 1, 2020, drastically changes the ability for individuals to control the use of their personal data. It contains detailed requirements regarding collecting and processing personal information, imposes certain limitations on how such information may be used, and provides rights to consumers that have never before been available in the past, all of which may be imposed on us by our customers and/or end users. This could increase our costs of doing business. Some observers have noted that the CCPA could mark the beginning of a trend toward more stringent privacy legislation in the United States, which could increase our potential liability and adversely affect our business.

Virtually every jurisdiction in which we operate has established its own data security and privacy legal framework with which we or our customers must comply, including but not limited to the EU. The EU’s data protection landscape is currently unstable, resulting in possible significant operational costs for internal compliance and risk to our business. The EU has adopted the GDPR, which went into effect in May 2018 and contains numerous requirements and changes from previously existing EU law, including more robust obligations on data processors and heavier documentation requirements for data protection compliance programs by companies. Among other requirements, the GDPR regulates transfers of personal data subject to the GDPR to third countries that have not been found to provide adequate protection to such personal data, including the United States. The GDPR also introduced numerous privacy-related changes for companies operating in the EU, including greater control for data subjects (including, for example, the “right to be forgotten”), increased data

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portability for EU consumers, data breach notification requirements and increased fines. In particular, under the GDPR, fines of up to 20 million euros or up to 4% of the annual global revenue of the noncompliant company, whichever is greater, could be imposed for violations of certain of the GDPR’s requirements. Such penalties are in addition to any civil litigation claims by customers and data subjects. The GDPR requirements apply not only to third-party transactions, but also to transfers of information between us and our subsidiaries, including employee information.

In addition to the GDPR, the European Commission has another draft regulation in the approval process that focuses on a person’s right to conduct a private life (in contrast to the GDPR, which focuses on protection of personal data). The proposed legislation, known as the Regulation on Privacy and Electronic Communications, or ePrivacy Regulation, would replace the current ePrivacy Directive. Originally planned to be adopted and implemented at the same time as the GDPR, the ePrivacy Regulation continues to be delayed but could be enacted in 2020. While the new legislation contains protections for those using communications services (for example, protections against online tracking technologies), the timing of its proposed enactment following the GDPR means that additional time and effort may need to be spent addressing differences between the ePrivacy Regulation and the GDPR. New rules related to the ePrivacy Regulation are likely to include enhanced consent requirements in order to use communications content and communications metadata, which may negatively impact our products and our relationships with our customers.

Complying with the GDPR and the ePrivacy Regulation, when it becomes effective, may cause us to incur substantial operational costs or require us to change our business practices. We may not be successful in our efforts to achieve compliance either due to internal or external factors such as resource allocation limitations or a lack of vendor cooperation. Non-compliance could result in proceedings against us by governmental entities, customers, data subjects or others. We may also experience difficulty retaining or obtaining new European or multi-national customers due to the legal requirements, compliance cost, potential risk exposure, and uncertainty for these entities, and we may experience significantly increased liability with respect to these customers pursuant to the terms set forth in our engagements with them.

In addition to government regulation, privacy advocates and industry groups may propose new and different self-regulatory standards that may apply to us. Because the interpretation and application of privacy and data protection laws are still uncertain, it is possible that these laws and other actual or alleged legal obligations, such as contractual or self-regulatory obligations, may be interpreted and applied in a manner that is inconsistent with our existing data management practices or the features of our products and software solutions. If so, in addition to the possibility of fines, lawsuits and other claims, we could be required to fundamentally change our business activities and practices or modify our products and software solutions, which could have an adverse effect on our business. Any inability to adequately address privacy concerns, even if unfounded, or comply with applicable privacy or data protection laws, regulations and policies, could result in additional cost and liability to us, damage our reputation, inhibit sales and adversely affect our business.

Furthermore, the costs of compliance with, and other burdens imposed by, the laws, regulations, and policies that are applicable to the businesses of our customers may limit the use and adoption of, and reduce the overall demand for, our products. Privacy concerns, whether valid or not valid, may inhibit market adoption of our products and software solutions particularly in certain industries and foreign countries.

We face risks associated with security breaches, cyber-attacks and hacking.

We face risks associated with security breaches, cyber-attacks and hacking of our computer systems or those of our third-party representatives, vendors, and service providers. Although we have implemented security procedures and controls to address these threats, our systems may still be vulnerable to data theft, computer viruses, programming errors, attacks by third parties, or similar disruptive problems. If our systems, or systems owned by third parties affiliated with our company, were breached or attacked, the proprietary and confidential information of our company, our employees and our customers could be disclosed and we may be required to

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incur substantial costs and liabilities, including the following: liability for stolen assets or information; fines imposed on us by governmental authorities for failure to comply with privacy laws or for disclosure of any personally identifiable information as a part of such attack; costs of repairing damage to our systems; lost revenue and income resulting from any system downtime caused by such breach or attack; loss of competitive advantage if our proprietary information is obtained by competitors as a result of such breach or attack; increased costs of cyber security protection; costs of incentives we may be required to offer to our customers or business partners to retain their business; damage to our reputation; and expenses to rectify the consequences of the security breach or cyber-attack. In addition, any compromise of security from a security breach or cyber-attack could deter customers or business partners from entering into transactions that involve providing confidential information to us. As a result, any compromise to the security of our systems could have a material adverse effect on our business, reputation, financial condition, and operating results.

Any failure to protect our proprietary technology and intellectual property rights could substantially harm our business and operating results.

We protect our proprietary technology and confidential information through the use of patents, trade secrets, trademarks, confidentiality agreements and other contractual provisions. The process of seeking patent protection is lengthy and expensive. Further, there can be no assurance that even if a patent is issued, that it will not be challenged, invalidated or circumvented, or that the rights granted under the patents will provide us with meaningful protection or any commercial advantage.

Our intellectual property rights cover individual inventions and complete biometric systems ranging from measurement principles, algorithms, sensor design and system solutions. We have filed applications to protect our intellectual property rights in a wide range of countries including the United States, the United Kingdom, Norway and several other countries. As of August 31, 2020, we held 58 patent families with 110 granted patents and 102 pending patent applications. The wordmark ‘IDEX’ and the IDEX logo are registered trademarks of IDEX Biometrics ASA and are owned by IDEX.

There can be no assurance that we will obtain registrations of principal or other trademarks in key markets. Failure to obtain registrations could compromise our ability to fully protect our trademarks and brands, and could increase the risk of challenge from third parties to our use of our trademarks and brands. Effective intellectual property protection may be unavailable or limited in some foreign countries in which we operate. For example, the validity, enforceability and scope of protection of intellectual property in China, where we operate, are still evolving and historically, have not protected and may not protect in the future, intellectual property rights to the same extent as laws developed in certain other countries.

We rely upon written agreements with our customers, suppliers, manufacturers, and other recipients of our technologies and products. However, such confidentiality and non-disclosure agreements may not be adequate to protect our proprietary technologies or may be breached by other parties. Additionally, our customers, suppliers, manufacturers, and other recipients of our technologies and products may seek to use our technologies and products without appropriate limitations. Unauthorized parties may attempt to copy or otherwise use aspects of our technologies and products that we regard as proprietary. Other companies, including our competitors, may independently develop technologies that are similar or superior to our technologies, duplicate our technologies, or design around our patents. If our intellectual property protection is insufficient to protect our intellectual property rights, we could face increased competition in the markets for our technologies and products.

We may pursue, and from time to time defend litigation to enforce our intellectual property rights, to protect our trade secrets, and to determine the validity and scope of the proprietary rights of others. These litigations, whether successful or unsuccessful, could result in substantial costs and diversion of resources, which could have a material adverse effect on our business, financial condition, and operating results.

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Any claims that our technologies infringe the intellectual property rights of third parties could result in significant costs and have a material adverse effect on our business.

We cannot be certain that our technologies and products do not and will not infringe issued patents or other third party proprietary rights. Any claims, with or without merit, could result in significant litigation costs and diversion of resources, including the attention of management, and could require us to enter into royalty or licensing agreements, any of which could have a material adverse effect on our business. There can be no assurance that such licenses could be obtained on commercially reasonable terms, if at all, or that the terms of any offered licenses would be acceptable to us. We may also have to pay substantial damages to third parties, or indemnify customers or licensees for damages they suffer if the products they purchase from us or the technology they license from us violates any third party intellectual property rights. An adverse determination in a judicial or administrative proceeding, or a failure to obtain necessary licenses to use such third-party technology could prevent us from manufacturing, using, or selling certain of our products, and there is no guarantee that we will be able to develop or acquire alternate non-infringing technology.

In addition, we may license certain technology used in and for our products from third parties. These third-party licenses may be granted with restrictions, and there can be no assurances that such third-party technology will be available to us on commercially acceptable terms.

If we are unable to license technology for our products from third parties on commercially acceptable terms, or if any third party initiates litigation against us for alleged infringement of their proprietary rights, we may not be able to sell certain of our products and we could incur significant costs in defending against litigation or attempting to develop or acquire alternate non-infringing products, which would have an adverse effect on our operating results.

Our patents may not provide us with competitive advantages.

We hold numerous patents in the United States and in other countries, which cover multiple aspects of our technology. There can be no assurance that we will continue to develop proprietary products or technologies that are patentable, that any issued patent will provide us with any competitive advantages or will not be challenged by third parties, or that patents of others will not hinder our competitive advantage. Although certain of our technologies are patented, there are other organizations that offer products with comparable functionality that employ different technological solutions and compete with us for market share.

We are a multinational organization faced with increasingly complex tax issues in many jurisdictions, and we could be obligated to pay additional taxes in various jurisdictions.

As a multinational organization, we may be subject to taxation in several jurisdictions around the world with increasingly complex tax laws and the amount of taxes we pay in these jurisdictions could increase substantially as a result of changes in the applicable tax principles, including increased tax rates, new tax laws or revised interpretations of existing tax laws and precedents, which could have a material adverse effect on our liquidity and operating results. Moreover, we generally conduct our international operations through wholly-owned subsidiaries and report our taxable income in various jurisdictions worldwide based upon our business operations in those jurisdictions. Our intercompany relationships are and will continue to be subject to complex transfer pricing regulations administered by taxing authorities in various jurisdictions.

The relevant taxing authorities in these jurisdictions could review our tax returns and impose additional tax, interest and penalties, and the authorities could claim that various withholding requirements apply to us or our subsidiaries or assert that benefits of tax treaties are not available to us or our subsidiaries, any of which could have a material impact on us and the results of our operations.

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Forecasting our estimated annual effective tax rate for financial accounting purposes is complex and subject to uncertainty, and there may be material differences between our forecasted and actual tax rates.

Forecasts of our income tax position and effective tax rate for financial accounting purposes are complex and subject to uncertainty because our income tax position for each year combines the effects of a mix of profits earned and losses incurred by us in various tax jurisdictions with a broad range of income tax rates, as well as changes in the valuation of deferred tax assets and liabilities, the impact of various accounting rules and changes to these rules and tax laws, the results of examinations by various tax authorities, and the impact of any acquisition, business combination or other reorganization or financing transaction. To forecast our global tax rate, we estimate our pre-tax profits and losses by jurisdiction and forecast our tax expense by jurisdiction. If the mix of profits and losses, our ability to use tax credits, or effective tax rates by jurisdiction is different than those estimated, our actual tax rate could be materially different than forecasted, which could have a material impact on our results of business, financial condition and results of operations.

The countries in which we operate may have broad authority to issue regulations and interpretative guidance that may significantly impact how we will apply the law and impact our results of operations in the period issued. As additional regulatory guidance is issued by the applicable taxing authorities, as accounting treatment is clarified, as we perform additional analysis on the application of the law, and as we refine estimates in calculating the effect, our final analysis, which will be recorded in the period completed, may be different from our current provisional amounts, which could materially affect our tax obligations and effective tax rate.

We are subject to anti-corruption, anti-bribery, anti-money laundering, and similar laws, and non-compliance with such laws can subject us to criminal or civil liability and harm our business, financial condition and results of operations.

We are subject to the U.S. Foreign Corrupt Practices Act of 1977, as amended, or the FCPA, the U.S. domestic bribery statute contained in 18 U.S.C. § 201, the U.S. Travel Act, the United Kingdom Bribery Act 2010, and other anti-corruption laws in countries in which we conduct activities. Anti-corruption laws are interpreted broadly and prohibit our company from authorizing, offering, or providing, directly or indirectly, improper payments or benefits to recipients in the public or private sector. We use third-party law firms, accountants, and other representatives for regulatory compliance, sales, and other purposes in different countries. We can be held liable for the corrupt or other illegal activities of these third-party representatives, our employees, contractors, and other agents, even if we do not explicitly authorize such activities. In addition, although we have implemented policies and procedures to ensure compliance with anti-corruption laws, there can be no assurance that all of our employees, representatives, contractors, or agents will comply with these laws at all times.

Noncompliance with these laws could subject us to whistleblower complaints, investigations, sanctions, settlements, prosecution, other enforcement actions, disgorgement of profits, significant fines, damages, other civil and criminal penalties or injunctions, suspension and/or debarment from contracting with certain persons, the loss of export privileges, reputational harm, adverse media coverage, and other collateral consequences. If any subpoenas or investigations are launched, or governmental or other sanctions are imposed, or if we do not prevail in any possible civil or criminal litigation, our business, results of operations and financial condition could be materially harmed. In addition, responding to any action will likely result in a materially significant diversion of management’s attention and resources and significant defense costs and other professional fees. Enforcement actions and sanctions could further harm our business, results of operations, and financial condition. Moreover, as an issuer of securities, we also are subject to the accounting and internal controls provisions of the FCPA. These provisions require us to maintain accurate books and records and a system of internal controls sufficient to detect and prevent corrupt conduct. Failure to abide by these provisions may have an adverse effect on our business, operations or financial condition.

We face product liability or other liability risks that could result in large claims against us.

We have risk of exposure to product liability and other liability claims resulting from the use of our products, especially to the extent customers may depend on our products in public safety situations that may

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involve physical harm or even death to individuals, as well as exposure to potential loss or damage to property. Despite quality control systems and inspection, there remains an ever-present risk of an accident resulting from a faulty manufacture or maintenance of products, or an act of an agent outside of our or our business partners’ control. Even if our products perform properly, we may become subject to claims and costly litigation due to the catastrophic nature of the potential injury and loss. A product liability claim, or other legal claims based on theories including personal injury or wrongful death, made against us could adversely affect operations and financial condition. Although we may have insurance to cover product liability claims, the amount of coverage may not be sufficient.

Risks Related to Our ADSs and Shares and Our Prospective Nasdaq Listing

An active trading market for our ADSs may not develop and you may not be able to resell your ADSs at or above the price you pay for them, if at all.

While our ordinary shares are traded on Oslo Børs, no public market has previously existed for our ADSs or ordinary shares in the United States. Of the 915,361,422 ordinary shares issued and outstanding as of February 18, 2021, 60,000,000 shares have been registered by and will be freely tradeable in the United States upon the effectiveness of the registration statement of which this prospectus forms a part, and of the remaining 855,361,422 shares, 479,091,114 are held by non-affiliates and will also be freely tradeable in the United States upon the effectiveness of the registration statement of which this prospectus forms a part. We have applied to list our ADSs on Nasdaq. Any delay in the commencement of trading of our ADSs on Nasdaq would impair the liquidity of the market for the ADSs and make it more difficult for holders to sell the ADSs. There can be no assurance that an active trading market for the ADSs will develop or be sustained after our ADSs are listed on Nasdaq. The lack of an active trading market may also reduce the fair market value of the ADSs. We cannot predict the extent to which an active market for ADSs representing our ordinary shares will develop or be sustained after the listing of such securities on Nasdaq, or how the development of such a market might affect the market price for our ordinary shares on Oslo Børs. The price at which ADSs representing our ordinary shares trade on Nasdaq may or may not be correlated to the price at which our ordinary shares trade on Oslo Børs.

The trading price of our ADSs may be volatile, and you could lose all or part of your investment.

The trading price of our ADSs following the listing of our ADSs on Nasdaq is likely to be highly volatile and could be subject to wide fluctuations in response to various factors, some of which are beyond our control, including limited trading volume. The stock market in general and the market for biometric companies in particular have experienced extreme volatility that has often been unrelated to the operating performance of particular companies. As a result of this volatility, investors may not be able to sell their ADSs at or above the price paid for the ADSs. In addition to the factors discussed in this “Risk Factors” section and elsewhere in this prospectus, these factors include:

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These and other market and industry factors may cause the market price and demand for our ADSs to fluctuate substantially, regardless of our actual operating performance, which may limit or prevent investors from selling their ADSs at or above the price paid for the ADSs and may otherwise negatively affect the liquidity of our ADSs. In addition, the stock market in general, and biometric companies in particular, have experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of these companies.

Some companies that have experienced volatility in the trading price of their shares have been the subject of securities class action litigation. Any lawsuit to which we are a party, with or without merit, may result in an unfavorable judgment. We also may decide to settle lawsuits on unfavorable terms.

Any such negative outcome could result in payments of substantial damages or fines, damage to our reputation or adverse changes to our business practices. Defending against litigation is costly and time-consuming, and could divert our management’s attention and our resources. Furthermore, during the course of litigation, there could be negative public announcements of the results of hearings, motions or other interim proceedings or developments, which could have a negative effect on the market price of our ADSs.

The dual-listing of ordinary shares and ADSs is costly to maintain and may adversely affect the liquidity and value of our ordinary shares and ADSs.

Our ordinary shares trade on Oslo Børs and we have applied to list our ADSs on Nasdaq. We plan for the foreseeable future to maintain a dual listing, which will generate additional costs, including increased legal, accounting, investor relations and other expenses that we did not incur prior to the listing of our ADSs on Nasdaq, in addition to the costs associated with the additional reporting requirements described elsewhere in this prospectus. We cannot predict the effect of this dual listing on the value of our ADSs and ordinary shares. However, the dual listing of ADSs and ordinary shares may dilute the liquidity of these securities in one or both markets and may adversely affect the development of an active trading market for our ADSs. The price of our ADSs could also be adversely affected by trading in ordinary shares on Oslo Børs.

We will incur increased costs as a result of operating as a company that is both publicly listed on Oslo Børs in the Kingdom of Norway and in the United States, and our senior management will be required to devote substantial time to new compliance initiatives and corporate governance practices.

As a company publicly listed in the United States, and particularly after we no longer qualify as an “emerging growth company”, or EGC, we will incur significant legal, accounting and other expenses that we did not incur previously. The Sarbanes-Oxley Act of 2002, the Dodd-Frank Wall Street Reform and Consumer Protection Act, the listing requirements of Nasdaq and other applicable securities rules and regulations impose various requirements on non-U.S. reporting public companies, including the establishment and maintenance of effective disclosure and financial controls and corporate governance practices. Our senior management and other personnel will need to devote a substantial amount of time to these compliance initiatives. Moreover, these rules and regulations will increase our legal and financial compliance costs and will make some activities more time-consuming and costly. For example, we expect that these rules and regulations may make it more difficult and more expensive for us to obtain director and officer liability insurance, which in turn could make it more difficult for us to attract and retain qualified senior management personnel or members for our board of directors.

However, these rules and regulations are often subject to varying interpretations, in many cases due to their lack of specificity, and, as a result, their application in practice may evolve over time as new guidance is provided by regulatory and governing bodies. This could result in continuing uncertainty regarding compliance matters and higher costs necessitated by ongoing revisions to disclosure and governance practices.

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Pursuant to Section 404 of the Sarbanes-Oxley Act of 2002, or Section 404, we will be required to furnish a report by our senior management on our internal control over financial reporting. However, while we remain an EGC we will not be required to include an attestation report on internal control over financial reporting issued by our independent registered public accounting firm. To prepare for eventual compliance with Section 404, once we no longer qualify as an EGC, we will be engaged in a process to document and evaluate our internal control over financial reporting, which is both costly and challenging. In this regard, we will need to continue to dedicate internal resources, potentially engage outside consultants, adopt a detailed work plan to assess and document the adequacy of internal control over financial reporting, continue steps to improve control processes as appropriate, validate through testing that controls are functioning as documented, and implement a continuous reporting and improvement process for internal control over financial reporting. Despite our efforts, there is a risk that we will not be able to conclude, within the prescribed timeframe or at all, that our internal control over financial reporting is effective as required by Section 404. If we identify one or more material weaknesses, it could result in an adverse reaction in the financial markets due to a loss of confidence in the reliability of our financial statements.

Further, being a U.S. listed company and a Norwegian public company with ordinary shares admitted to trading on Oslo Børs impacts the disclosure of information and requires compliance with two sets of applicable rules. From time to time, this may result in uncertainty regarding compliance matters and result in higher costs necessitated by legal analysis of dual legal regimes, ongoing revisions to disclosure and adherence to heightened governance practices. As a result of the enhanced disclosure requirements of the U.S. securities laws, business and financial information that we report is broadly disseminated and highly visible to investors, which we believe may increase the likelihood of threatened or actual litigation, including by competitors and other third parties, which could, even if unsuccessful, divert financial resources and the attention of our management from our operations.

We are an “emerging growth company” and as a result of the reduced disclosure and governance requirements applicable to emerging growth companies, the ordinary shares or ADSs may be less attractive to investors.

We are an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. For as long as we continue to be an emerging growth company, we may take advantage of exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies, including not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, and, to the extent we no longer qualify as a foreign private issuer, exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. As an emerging growth company, we are required to report only two years of financial results and selected financial data in this prospectus compared to three and five years, respectively, for comparable data reported by other public companies. We may take advantage of these exemptions until we are no longer an emerging growth company. We could be an emerging growth company for up to five years, although circumstances could cause us to lose that status earlier, including if the aggregate market value of our ordinary shares, including ordinary shares represented by ADSs, held by non-affiliates exceeds $700 million as of the end of our second fiscal quarter before that time, in which case we would no longer be an emerging growth company as of the following December 31st (the last day of our fiscal year). We cannot predict if investors will find the ordinary shares or ADSs less attractive because we may rely on these exemptions. If some investors find the ordinary shares or ADSs less attractive as a result, there may be a less active trading market for the ordinary shares or ADSs and the price of the ordinary shares or ADSs may be more volatile.

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We are obligated to develop and maintain proper and effective internal controls over financial reporting and any failure to maintain the adequacy of these internal controls may adversely affect investor confidence in our company and, as a result, the value of our ordinary shares.

We will be required, pursuant to Section 404, to furnish a report by management on, among other things, the effectiveness of our internal control over financial reporting for the year ending December 31, 2021. This assessment will need to include disclosure of any material weaknesses identified by our management in our internal control over financial reporting. Our independent registered public accounting firm will not be required to attest to the effectiveness of our internal control over financial reporting until our first annual report required to be filed with the SEC following the date we are no longer an “emerging growth company,” as defined in the Securities Act of 1933.

If we identify future material weaknesses in our internal control over financial reporting or fail to meet our obligations as a public company, including the requirements of Section 404, we may be unable to accurately report our financial results, or report them within the timeframes required by law or stock exchange regulations, and we could lose investor confidence in the accuracy and completeness of our financial reports, which would cause the price of our ordinary shares to decline. Under Section 404, we are required to evaluate and determine the effectiveness of our internal control over financial reporting and provide a management report as to internal control over financial reporting. Failure to maintain effective internal control over financial reporting also could potentially subject us to sanctions or investigations by the SEC, Nasdaq, or other regulatory authorities, or shareholder lawsuits, which could require additional financial and management resources. We cannot assure you that additional material weaknesses will not occur in the future, which could materially adversely affect our business, operating results, and financial condition.

Fluctuations in the exchange rate between the U.S. dollar and the Norwegian krone may increase the risk of holding ADSs and ordinary shares.

The share price of our ordinary shares is quoted on Oslo Børs in Norwegian krone, while we expect that our ADSs will trade on Nasdaq in U.S. dollars. Fluctuations in the exchange rate between the U.S. dollar and the Norwegian krone may result in differences between the value of our ADSs and the value of our ordinary shares, which may result in heavy trading by investors seeking to exploit such differences. In addition, as a result of fluctuations in the exchange rate between the U.S. dollar and the Norwegian krone, the U.S. dollar equivalent of the proceeds that a holder of the ADSs would receive upon the sale in the Kingdom of Norway of any ordinary shares withdrawn from the depositary, and the U.S. dollar equivalent of any cash dividends paid in Norwegian krone on ordinary shares represented by the ADSs, could also decline.

Raising additional capital may cause dilution to our holders, including holders of our ADSs, restrict our operations or require us to relinquish rights to our technologies.

We expect that significant additional capital may be needed in the future to continue our planned operations, including sales and marketing efforts, expanded research and development activities and costs associated with operating a publicly listed company in both Norway and the United States. Until such time, if ever, as we can generate substantial product revenues, we expect to finance our cash needs through any or a combination of securities offerings, debt financings, supplier and licensing agreements and research grants. If we raise capital through securities offerings, such sales may also result in material dilution to our existing shareholders, and new investors could gain rights, preferences and privileges senior to the holders of our ADSs or ordinary shares.

To the extent that we raise additional capital through the sale of equity or convertible debt securities, your ownership interest will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect your rights as a shareholder. Debt financing and preferred equity financing, if available, could result in fixed payment obligations, and we may be required to accept terms that restrict our ability to incur additional indebtedness, force us to maintain specified liquidity or other ratios or restrict our ability to pay dividends or make acquisitions.

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If we raise additional funds through collaborations, strategic alliances or marketing, distribution or licensing arrangements with third parties, we may be required to relinquish valuable rights to our technologies, future revenue streams, and development activities or to grant licenses on terms that may not be favorable to us. In addition, we could also be required to seek funds through arrangements with collaborators or others at an earlier stage than otherwise would be desirable. If we raise funds through research grants, we may be subject to certain requirements, which may limit our ability to use the funds or require us to share information from our research and development. If we are unable to raise additional funds through equity or debt financings when needed, we may be required to delay, limit, reduce or terminate our product development or future sales and marketing efforts or grant rights to a third party to develop and market products or software solutions that we would otherwise prefer to develop and market ourselves. Raising additional capital through any of these or other means could adversely affect our business and the holdings or rights of our shareholders, and may cause the market price of our ADSs to decline.

The rights of our shareholders may differ from the rights typically offered to shareholders of a U.S. corporation.

We are incorporated under Norwegian law. The rights of holders of ordinary shares and, therefore, certain of the rights of holders of our ADSs, are governed by Norwegian law, including the provisions of the Companies Act, and by our articles of association. These rights differ in certain respects from the rights of shareholders in typical U.S. corporations. See the section titled “Description of Share Capital and Articles of Association—Comparison of Norwegian Corporate Law and Our Articles of Association and Delaware Corporate Law” in this prospectus for a description of the principal differences between the provisions of the Companies Act applicable to us and, for example, the Delaware General Corporation Law relating to shareholders’ rights and protections.

Investors should be aware that the rights provided to our shareholders and holders of ADSs under Norwegian corporate law and our articles of association differ in certain respects from the rights that you would typically enjoy as a shareholder of a U.S. company under applicable U.S. federal and state laws.

Under Norwegian corporate law, a shareholder may, at the general meeting of shareholders, require that 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 position and (iv) any other matters which the general meeting is to deal with. 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. Under Delaware corporate law any shareholder, irrespective of the size of such shareholder’s shareholdings, 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 U.S. companies, in order to enforce a right of our company, in case we fail to enforce such right ourselves, other than in certain cases of board member/management liability under limited circumstances. Additionally, 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. See “Material Norwegian Income Tax Consequences” for a more detailed description of the withholding tax. Also, the rights as a creditor may not be as strong under Norwegian insolvency law as under U.S. law or other insolvency law, and consequently creditors may recover less in the event our company is subject to insolvency compared to a similar case including a U.S. debtor. In addition, the use of the tax asset consisting of the accumulated tax losses 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. Finally, Norwegian corporate law may not provide appraisal rights in the case of a business combination equivalent to those generally afforded a shareholder of a U.S. company under applicable U.S. laws. For additional information on these and other aspects of Norwegian corporate law and our articles of association, see the section herein entitled “Description of Share Capital and Articles of Association.” As a result of these differences between Norwegian corporate law and our

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articles of association, on the one hand, and U.S. federal and state laws, on the other hand, in certain instances, you could receive less protection as an equity holder of our company than you would as a shareholder of a U.S. company.

Holders of ADSs have fewer rights than our shareholders and must withdraw shares from depositary and temporarily register its ownership to the underlying shares with Norwegian registries to exercise their voting rights.

Holders of our ADSs do not have the same rights as our shareholders who hold our ordinary shares directly and may only exercise their voting rights with respect to the underlying ordinary shares in accordance with the provisions of the deposit agreement. ADS holders cannot vote deposited shares underlying ADSs at our general meeting of shareholders, unless those deposited 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 giving voting instructions to the depositary as provided in the deposit agreement, ADS holders may be required to agree to temporary blocking of transfer of their ADSs until after the shareholders’ meeting and disclose the identity of the beneficial owner of the ADSs. When a general meeting is convened, if you hold ADSs, you may not receive sufficient notice of a shareholders’ meeting to permit you to give the depositary instructions in time so it can take the actions required for it to carry out your instructions, which may include instructing the custodian to temporarily re-register the underlying ordinary shares on our share register in Norway. We will make all commercially reasonable efforts to cause the depositary to extend voting rights to you in a timely manner, but we cannot assure you that you will receive voting materials in time to instruct the depositary to vote, and it is possible that you, or persons who hold their ADSs through brokers, dealers or other third parties, will not have the opportunity to exercise a right to vote. Furthermore, the depositary will not be liable for any failure to carry out any instructions to vote, for the manner in which any vote is cast or for the effect of any such vote. As a result, you may not be able to exercise your right to vote and you may lack recourse if your ADSs are not voted as you request. In addition, in your capacity as an ADS holder, you will not be able to call a shareholders’ meeting.

The depositary is entitled to charge holders fees for various services, including annual service fees.

The depositary is entitled to charge holders fees for various services including for the issuance of ADSs upon deposit of ordinary shares, cancellation of ADSs, distributions of cash dividends or other cash distributions, distributions of ADSs pursuant to share dividends or other free share distributions, distributions of securities other than ADSs and annual service fees. In the case of ADSs held through The Depository Trust Company, or DTC, the fees will be charged by the DTC participant to the account of the applicable beneficial owner in accordance with the procedures and practices of the DTC participant as in effect at the time.

Concentration of ownership of our ordinary shares (including ordinary shares represented by ADSs) among our existing senior management, directors and principal shareholders may prevent new investors from influencing significant corporate decisions and matters submitted to shareholders for approval.

Upon the listing of our ADSs on Nasdaq, members of our senior management, directors and current beneficial owners of 5% or more of our ordinary shares will, in the aggregate, beneficially own approximately 47.65% of our issued and outstanding ordinary shares, based on the number of ordinary shares issued and outstanding as of February 18, 2021. As a result, depending on the level of attendance at general meetings of our shareholders, these persons, acting together, would be able to significantly influence all matters requiring shareholder approval, including the election, re-election and removal of directors, any merger, scheme of

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arrangement, or sale of all or substantially all of our assets, or other significant corporate transactions, and amendments to our articles of association. In addition, these persons, acting together, may have the ability to control the management and affairs of our company. Accordingly, this concentration of ownership may harm the market price of our ADSs by:

In addition, some of these persons or entities may have interests different than yours. For example, because many of these shareholders have held their shares for a longer period, they may be more interested in selling our company to an acquirer than other investors, or they may want us to pursue strategies that deviate from the interests of other shareholders.

You may not receive distributions on our ordinary shares represented by the ADSs or any value for them if it is illegal or impractical to make them available to holders of ADSs.

Although we do not have any present plans to declare or pay any dividends, in the event we declare and pay any dividend, the depositary has agreed to pay to you the cash dividends or other distributions it or the custodian receives on our ordinary shares or other deposited securities after deducting its fees and expenses. You will receive these distributions in proportion to the number of our ordinary shares your ADSs represent. However, in accordance with the limitations set forth in the deposit agreement, it may be unlawful or impractical to make a distribution available to holders of ADSs. We have no obligation to register under U.S. securities laws any offering of ADSs, ordinary shares or other securities received through such distributions. We also have no obligation to take any other action to permit distribution on the ADSs, ordinary shares, rights or anything else to holders of the ADSs. This means that you may not receive the distributions we make on our ordinary shares or any value from them if it is unlawful or impractical to make them available to you. These restrictions may have an adverse effect on the value of your ADSs.

Holders of the ADSs may not be able to exercise the pre-emptive subscription rights related to the shares that they represent, and may suffer dilution of their equity holding in the event of future issuances of our shares.

Under the Companies Act, our shareholders benefit from a pre-emptive subscription right on the issuance of shares for cash consideration only and not in the event of issuance of shares against non-cash contribution or debt conversion. Shareholders’ pre-emptive subscription rights, in the event of issuances of shares against cash payment, may be disapplied by a resolution of the shareholders at a general meeting of our shareholders with a majority of two-thirds of the votes cast and the share capital represented at the general meeting and/or the shares may be issued on the basis of an authorization granted to the board of directors pursuant to which the board may disapply the shareholders’ pre-emptive subscription rights. At the extraordinary general meeting held on May 15, 2020, our shareholders agreed to waive their pre-emptive subscription rights with respect to the proposed authorization to our board of directors to effect share capital increases in connection with private placement of shares, such authorization maximized to 10% of the registered share capital at the time of the authorization. The subscription price for such shares will be set by our board of directors and may be issued at, above or below market value subject however to the principle of equal treatment of shareholders. The absence of pre-emptive rights for existing equity holders in case of use of the board authorization for the purpose of a private placement of shares may cause dilution to such holders.

Furthermore, the ADS holders would not necessarily be entitled, even if such rights accrued to our shareholders in any given instance, to receive such pre-emptive subscription rights related to the shares that they

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represent. Rather, the depositary has the option, to the extent permitted by law and practical, to, if requested by us, grant ADS holders rights to instruct the depositary to purchase the securities to which the rights relate and deliver those securities or ADSs to you, or, if requested by us, deliver such rights to you, or sell such rights to the extent practicable and distribute the net proceeds thereof to you pro rata. If any such pre-emptive rights are not so exercised, delivered or disposed of, the depositary is required to permit the rights to lapse unexercised.

Because we do not anticipate paying any cash dividends on our ordinary shares (including ordinary shares represented by ADSs) in the foreseeable future, capital appreciation, if any, will be your sole source of gains and you may never receive a return on your investment.

You should not rely on an investment in our ADSs to provide dividend income. Under current Norwegian law, a public limited liability company may only distribute dividends to the extent it will have net assets covering the company’s share capital and other restricted equity after the distribution has been made. In the amount that may be distributed, a deduction shall be made for (i) the aggregate nominal value of treasury shares held by the company, (ii) certain credits and collateral as defined by law and (iii) other dispositions after the balance day which pursuant to law shall lie within the scope of the funds that the company may use to distribute dividend. Even if all other requirements are fulfilled, the company may only distribute dividend to the extent that it maintains a sound equity and liquidity following the distribution. We have never declared or paid a dividend on our ordinary shares in the past, and we currently intend to retain our future earnings, if any, to fund the development and growth of our business. As a result, capital appreciation, if any, on our ADSs will be your sole source of gains for the foreseeable future. Investors seeking cash dividends should not purchase our ADSs.

If we are a passive foreign investment company, there could be adverse U.S. federal income tax consequences to U.S. Holders.

Under the Internal Revenue Code of 1986, as amended, or the Code, we will be a passive foreign investment company, or PFIC, for any taxable year in which (1) 75% or more of our gross income consists of passive income or (2) 50% or more of the of the gross value our assets (determined on the basis of a weighted quarterly average) consists of assets that produce, or are held for the production of, passive income (including cash). For purposes of these tests, passive income includes dividends, interest, gains from the sale or exchange of investment property and certain rents and royalties. In addition, for purposes of the above calculations, a non-U.S. corporation that directly or indirectly owns at least 25% by value of the shares of another corporation is treated as if it held its proportionate share of the assets and received directly its proportionate share of the income of such other corporation. If we are a PFIC for any taxable year during which a U.S. Holder (as defined below under “Material Income Tax Considerations—Material U.S. Federal Income Tax Considerations for U.S. Holders”) holds our ADSs, the U.S. Holder may be subject to adverse tax consequences regardless of whether we continue to qualify as a PFIC, including ineligibility for any preferred tax rates on capital gains or on actual or deemed dividends, interest charges on certain taxes treated as deferred, and additional reporting requirements.

Based on our analysis of our income, assets, activities, and market capitalization, we do not believe we were a PFIC for our taxable year ended December 31, 2019. Based on our current estimates of expected gross assets and income, we do not believe we will be a PFIC for our taxable year ending December 31, 2020. However, no assurances regarding our PFIC status can be provided for any past, current or future taxable years. The determination of whether we are a PFIC is a fact-intensive determination made on an annual basis and the applicable law is subject to varying interpretation. In particular, the characterization of our assets as active or passive may depend in part on our current and intended future business plans, which are subject to change. In addition, for our current and future taxable years, the total value of our assets for PFIC testing purposes may be determined in part by reference to the market price of our ordinary shares or ADSs from time to time, which may fluctuate considerably. Under the income test, our status as a PFIC depends on the composition of our income which will depend on the transactions we enter into in the future and our corporate structure. The composition of our income and assets is also affected by how, and how quickly, we spend the cash we raise in any offering. Accordingly, in its legal opinion issued in connection with this listing, our U.S. counsel expresses no opinion

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with respect to our PFIC status for our taxable year ended December 31, 2019, and also expresses no opinion with regard to our expectations regarding our PFIC status in the future.

If we are a PFIC, U.S. holders of our ADSs would be subject to adverse U.S. federal income tax consequences, such as ineligibility for any preferred tax rates on capital gains or on actual or deemed dividends, interest charges on certain taxes treated as deferred, and additional reporting requirements under U.S. federal income tax laws and regulations. For further discussion of the PFIC rules and the adverse U.S. federal income tax consequences in the event we are classified as a PFIC, see the section titled ‘‘Material Income Tax Considerations—Material U.S. Federal Income Considerations for U.S. Holders” in this prospectus.

Changes and uncertainties in the tax system in the countries in which we have operations, could materially adversely affect our financial condition and results of operations, and reduce net returns to our shareholders.

We conduct business globally and file income tax returns in multiple jurisdictions. Our consolidated effective income tax rate could be materially adversely affected by several factors, including: changing tax laws, regulations and treaties, or the interpretation thereof; tax policy initiatives and reforms under consideration (such as those related to the Organisation for Economic Co-Operation and Development’s, or OECD, Base Erosion and Profit Shifting, or BEPS, Project, the European Commission’s state aid investigations and other initiatives); the practices of tax authorities in jurisdictions in which we operate; the resolution of issues arising from tax audits or examinations and any related interest or penalties. Such changes may include (but are not limited to) the taxation of operating income, investment income, dividends received or (in the specific context of withholding tax) dividends paid.

Tax authorities may disagree with our positions and conclusions regarding certain tax positions, or may apply existing rules in an unforeseen manner, resulting in unanticipated costs, taxes or non-realization of expected benefits.

A tax authority may disagree with tax positions that we have taken, which could result in increased tax liabilities. For example, the U.S. Internal Revenue Service or another tax authority could challenge our allocation of income by tax jurisdiction and the amounts paid between our affiliated companies pursuant to our intercompany arrangements and transfer pricing policies, including amounts paid with respect to our intellectual property development. Similarly, a tax authority could assert that we are subject to tax in a jurisdiction where we believe we have not established a taxable connection, often referred to as a ‘‘permanent establishment’’ under international tax treaties, and such an assertion, if successful, could increase our expected tax liability in one or more jurisdictions.

A tax authority may take the position that material income tax liabilities, interest and penalties are payable by us, for example where there has been a technical violation of contradictory laws and regulations that are relatively new and have not been subject to extensive review or interpretation, in which case we expect that we might contest such assessment. High-profile companies can be particularly vulnerable to aggressive application of unclear requirements. Many companies must negotiate their tax bills with tax inspectors who may demand higher taxes than applicable law appears to provide. Contesting such an assessment may be lengthy and costly and if we were unsuccessful in disputing the assessment, the implications could increase our anticipated effective tax rate, where applicable.

Provisions found in the Norwegian Securities Trading Act may delay or discourage a takeover attempt, including attempts that may be beneficial to holders of our ADSs.

The Norwegian Securities Trading Act (the “STA”) applies, amongst other things, to an offer for a public company whose registered office is in Norway and whose securities are admitted to trading on a regulated market place in Norway. We are therefore currently subject to the STA

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The STA provides a framework within which takeovers of certain companies organized in Norway are regulated and conducted. The following is a brief summary of some of the most important rules of the relevant sections of the STA:

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Claims of U.S. civil liabilities may not be enforceable against us.

We are incorporated under Norwegian law. Certain members of our board of directors and senior management are non-residents of the United States, and all or a substantial portion of our assets and the assets of such persons are located outside the United States. As a result, it may not be possible to serve process on such persons or us in the United States or to enforce judgments obtained in U.S. courts against them or us based on civil liability provisions of the securities laws of the United States. As a result, it may not be possible for investors to effect service of process within the United States upon such persons or to enforce judgments obtained in U.S. courts against them or us, including judgments predicated upon the civil liability provisions of the U.S. federal securities laws.

The United States and the Kingdom of Norway do not currently have a treaty providing for recognition and enforcement of judgments (other than arbitration awards) in civil and commercial matters. Consequently, a final judgment for payment given by a court in the United States, whether or not predicated solely upon U.S. securities laws, may not automatically be recognized or enforceable in Norway. In addition, uncertainty exists as to whether the courts in Norway would entertain original actions brought in Norway against us or our directors or senior management predicated upon the securities laws of the United States or any state in the United States. Any final and conclusive monetary judgment for a definite sum obtained against us in U.S. courts would not be automatically recognized by Norwegian courts, unless (i) the relevant parties have agreed to such court’s jurisdiction in writing and for a specific legal action or for legal actions that arise out of a particular legal relationship; and (ii) the judgment is not in conflict with Norwegian public policy rules (ordre public) or internationally mandatory provisions. Instead, new proceedings would need to be initiated before the competent court in Norway. However, a judgment obtained in the U.S may still have a strong evidentiary weight in the Norwegian proceedings, depending on the circumstances and the assessment of the court. If the conditions for recognition of a U.S. judgement are satisfied or a Norwegian court gives judgment for the sum payable under a U.S. judgment, the U.S. judgement or the Norwegian judgment (as the case may be) will be enforceable by methods generally available for this purpose. These methods generally permit the Norwegian court discretion to prescribe the manner of enforcement. In addition, it may not be possible to obtain a Norwegian judgment or to enforce that judgment if the judgment debtor is or becomes subject to any insolvency or similar proceedings, or if the judgment debtor has any set-off or counterclaim against the judgment creditor. Also note that, in any enforcement proceedings, the judgment debtor may raise any counterclaim that could have been brought if the action had been originally brought in Norway. As a result, U.S. investors may not be able to enforce against us or certain of our directors any judgments obtained in U.S. courts in civil and commercial matters, including judgments under the U.S. federal securities laws.

We qualify as a foreign private issuer and, as a result, we will not be subject to U.S. proxy rules and will be subject to Exchange Act reporting obligations that, to some extent, are more lenient and less frequent than those of a U.S. domestic public company.

Upon the listing of our ADSs on Nasdaq, we will report under the Securities Exchange Act of 1934, as amended, or the Exchange Act, as a non-U.S. company with foreign private issuer status. Because we qualify as a foreign private issuer under the Exchange Act, we are exempt from certain provisions of the Exchange Act that are applicable to U.S. domestic public companies, including (i) the sections of the Exchange Act regulating the solicitation of proxies, consents or authorizations in respect of a security registered under the Exchange Act; (ii) the sections of the Exchange Act requiring insiders to file public reports of their share ownership and trading activities and liability for insiders who profit from trades made in a short period of time; and (iii) the rules under the Exchange Act requiring the filing with the SEC of quarterly reports on Form 10-Q containing unaudited financial and other specified information, or current reports on Form 8-K upon the occurrence of specified significant events. In addition, foreign private issuers are not required to file their annual report on Form 20-F until 120 days after the end of each fiscal year, while U.S. domestic issuers that are accelerated filers are required to file their annual report on Form 10-K within 75 days after the end of each fiscal year. Foreign private issuers also are exempt from Regulation Fair Disclosure, aimed at preventing issuers from making selective disclosures

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of material information. As a result of the above, you may not have the same protections afforded to shareholders of companies that are not foreign private issuers.

As a foreign private issuer, we are permitted to adopt certain home country practices in relation to corporate governance matters that differ significantly from Nasdaq corporate governance listing standards. These practices may afford less protection to shareholders than they would enjoy if we complied fully with Nasdaq corporate governance listing standards.

As a foreign private issuer listed on Nasdaq, we will be subject to corporate governance listing standards. However, Nasdaq rules permit a foreign private issuer like us to follow the corporate governance practices of its home country in lieu of certain Nasdaq corporate governance listing standards. Certain corporate governance practices in the Kingdom of Norway, which is our home country, may differ significantly from Nasdaq corporate governance listing standards. For example, the independence requirements for our board of directors are less stringent than the requirements that would have followed under the Nasdaq rules had we not been a foreign private issuer. In Norway, we are required to follow, and comply with, the Oslo Børs Issuer Rules published by Oslo Børs ASA and have adopted the Corporate Governance Code published by the Norwegian Corporate Governance Board (NUES). It is a requirement in the Oslo Børs Issuer Rules that at least two of the shareholder elected members of the board of directors shall be independent of the company’s executive management, material business contacts and the company’s larger shareholders. Further, our board of directors shall not include representatives of the company’s executive management. The Corporate Governance Code states that the majority of the shareholder-elected members of the board should be independent of the company’s executive personnel and material business contacts and that at least two of the shareholder-elected board members should be independent of the company’s main shareholder(s). Subject to these requirements, our board of directors may contain non-independent directors. Therefore, our shareholders may be afforded less protection than they otherwise would have under Nasdaq corporate governance listing standards applicable to U.S. domestic issuers. See “Management—Foreign Private Issuer Exemption” for the exemptions to the Nasdaq corporate governance rules applicable to foreign private issuers.

We may lose our foreign private issuer status, which would then require us to comply with the Exchange Act’s domestic reporting regime and cause us to incur significant legal, accounting and other expenses.

As a foreign private issuer, we are not required to comply with all of the periodic disclosure and current reporting requirements of the Exchange Act applicable to U.S. domestic issuers. Although we do not expect this to occur in the near term, we may no longer be a foreign private issuer as early as June 30, 2021 (the end of our second fiscal quarter in the fiscal year after this listing), which would require us to comply with all of the periodic disclosure and current reporting requirements of the Exchange Act applicable to U.S. domestic issuers as of January 1, 2022. In order to maintain our current status as a foreign private issuer, either (a) a majority of our voting securities must be either directly or indirectly owned of record by non-residents of the United States or (b)(i) a majority of our executive officers or directors cannot be U.S. citizens or residents, (ii) more than 50% of our assets must be located outside the United States and (iii) our business must be administered principally outside the United States. If we lose our status as a foreign private issuer, we would be required to comply with the Exchange Act reporting and other requirements applicable to U.S. domestic issuers, which are more detailed and extensive than the requirements for foreign private issuers. We may also be required to make changes in our corporate governance practices in accordance with various SEC and Nasdaq rules. The regulatory and compliance costs to us under U.S. securities laws if we are required to comply with the reporting requirements applicable to a U.S. domestic issuer may be significantly higher than the cost we would incur as a foreign private issuer. As a result, we expect that a loss of foreign private issuer status would increase our legal and financial compliance costs and would make some activities highly time consuming and costly. We also expect that if we were required to comply with the rules and regulations applicable to U.S. domestic issuers, it would make it more difficult and expensive for us to obtain director and officer liability insurance, and we may be required to accept reduced coverage or incur substantially higher costs to obtain coverage. These rules and regulations could also make it more difficult for us to attract and retain qualified members of our board of directors.

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If equity research analysts do not publish research or reports, or publish unfavorable research or reports, about us, our business or our market, the price and trading volume of our ADSs could decline.

The trading market for our ADSs will be influenced by the research and reports that equity research analysts publish about us and our business. As a company admitted to trading on Oslo Børs, our equity securities are currently subject to coverage by Norwegian analysts. However, we do not currently have and may never obtain research coverage by equity research analysts in the United States. Equity research analysts may elect not to provide research coverage of our ADSs, and such lack of research coverage may adversely affect the market price of our ADSs. We will not have any control over the analysts, or the content and opinions included in their reports. The price of our ADSs could decline if one or more equity research analysts downgrade our ADSs or issue other unfavorable commentary or research about us. If one or more equity research analysts ceases coverage of us or fails to publish reports on us regularly, demand for our ADSs could decrease, which in turn could cause the trading price or trading volume of our ADSs to decline.

You may be subject to limitations on transfers of your ADSs or the right to surrender ADSs for the purpose of withdrawal of ordinary shares.

Your ADSs are transferable on the books of the depositary. However, the depositary may close its transfer books at any time or from time to time when deemed necessary or advisable by it in good faith in connection with the performance of its duties or at our reasonable written request, subject in all cases to compliance with applicable U.S. securities laws. In addition, the depositary may refuse to deliver, transfer or register transfers of ADSs generally when our books or the books of the depositary are closed, or at any time if we or the depositary deems it advisable to do so because of any requirement of law or of any government or governmental body, or under any provision of the deposit agreement, or for any other reason, subject to certain rights to cancel ADSs and withdraw the underlying ordinary shares. Temporary delays in the cancellation of ADSs and withdrawal of the underlying ordinary shares may arise because the depositary has closed its transfer books or we have closed our transfer books, the transfer of ordinary shares is blocked to permit voting at a shareholders’ meeting, or because we are paying a dividend on our ordinary shares or similar corporate actions.

In addition, holders of ADSs may not be able to cancel their ADSs and withdraw the underlying ordinary shares when they owe money for fees, taxes and similar charges and when it is necessary to prohibit withdrawals in order to comply with any laws or governmental regulations that apply to the ADSs or to the withdrawal of our ordinary shares or other deposited securities.

ADS holders may not be entitled to a jury trial with respect to claims arising under the deposit agreement, which could result in less favorable results to the plaintiff(s) in any such action.

The deposit agreement governing the ADSs provides that owners and holders of ADSs irrevocably waive the right to a trial by jury in any legal proceeding arising out of or relating to the deposit agreement or the ADSs, including claims under U.S. federal securities laws, against us or the depositary to the fullest extent permitted by applicable law. If this jury trial waiver provision is prohibited by applicable law, an action could nevertheless proceed under the terms of the deposit agreement with a jury trial. Although we are not aware of a specific federal decision that addresses the enforceability of a jury trial waiver in the context of U.S. federal securities laws, it is our understanding that jury trial waivers are generally enforceable. Moreover, insofar as the deposit agreement is governed by the laws of the State of New York, New York laws similarly recognize the validity of jury trial waivers in appropriate circumstances. In determining whether to enforce a jury trial waiver provision, New York courts and federal courts will consider whether the visibility of the jury trial waiver provision within the agreement is sufficiently prominent such that a party has knowingly waived any right to trial by jury. We believe that this is the case with respect to the deposit agreement and the ADSs.

In addition, New York courts will not enforce a jury trial waiver provision in order to bar a viable setoff or counterclaim of fraud or one which is based upon a creditor’s negligence in failing to liquidate collateral upon a

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guarantor’s demand, or in the case of an intentional tort claim (as opposed to a contract dispute). No condition, stipulation or provision of the deposit agreement or ADSs serves as a waiver by any holder or beneficial owner of ADSs or by us or the depositary of compliance with any provision of U.S. federal securities laws and the rules and regulations promulgated thereunder.

If any owner or holder of ADSs brings a claim against us or the depositary in connection with matters arising under the deposit agreement or the ADSs, including claims under U.S. federal securities laws, such owner or holder may not be entitled to a jury trial with respect to such claims, which may have the effect of limiting and discouraging lawsuits against us or the depositary. If a lawsuit is brought against us or the depositary under the deposit agreement, it may be heard only by a judge or justice of the applicable trial court, which would be conducted according to different civil procedures and may result in different results than a trial by jury would have had, including results that could be less favorable to the plaintiff(s) in any such action, depending on, among other things, the nature of the claims, the judge or justice hearing such claims, and the venue of the hearing.

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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This prospectus contains forward-looking statements that involve substantial risks and uncertainties. In some cases, you can identify forward-looking statements by the words “may,” “might,” “will,” “could,” “would,” “should,” “expect,” “intend,” “plan,” “objective,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “continue” and “ongoing,” or the negative of these terms, or other comparable terminology intended to identify statements about the future. These statements involve known and unknown risks, uncertainties and other important factors that may cause our actual results, levels of activity, performance or achievements to be materially different from the information expressed or implied by these forward-looking statements. The forward-looking statements and opinions contained in this prospectus are based upon information available to us as of the date of this prospectus and, while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. Forward-looking statements include statements about:

You should refer to the section of this prospectus titled “Risk Factors” for a discussion of important factors that may cause our actual results to differ materially from those expressed or implied by our forward-looking statements. As a result of these factors, we cannot assure you that the forward-looking statements in this prospectus will prove to be accurate. Furthermore, if our forward-looking statements prove to be inaccurate, the inaccuracy may be material. In light of the significant uncertainties in these forward-looking statements, you should not regard these statements as a representation or warranty by us or any other person that we will achieve our objectives and plans in any specified time frame, or at all. Forward-looking statements speak only as of the date they are made, and we do not undertake any obligation to update them in light of new information or future developments or to release publicly any revisions to these statements in order to reflect later events or circumstances or to reflect the occurrence of unanticipated events.

You should read this prospectus and the documents that we reference in this prospectus and have filed as exhibits to the registration statement, of which this prospectus is a part, completely and with the understanding that our actual future results may be materially different from what we expect. We qualify all of our forward-looking statements by these cautionary statements.

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INDUSTRY AND MARKET DATA

This prospectus contains estimates, projections and other information concerning our industry, our business, and the markets for our products. Information that is based on estimates, forecasts, projections, market research or similar methodologies is inherently subject to uncertainties, and actual events or circumstances may differ materially from events and circumstances that are assumed in this information. Unless otherwise expressly stated, we obtained this industry, business, market and other data from our own internal estimates and research as well as from reports, research surveys, studies and similar data prepared by third parties, industry, medical and general publications, government data and similar sources. While we believe our internal company research as to such matters is reliable, it has not been verified by any independent source.

In addition, assumptions and estimates of our and our industry’s future performance are necessarily subject to a high degree of uncertainty and risk due to a variety of factors, including those described in the section titled “Risk Factors.” These and other factors could cause our future performance to differ materially from our assumptions and estimates. See “Special Note Regarding Forward-Looking Statements.”

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USE OF PROCEEDS

We will not receive proceeds from the sale, if any, of Registered Shares in the form of ADSs by the Selling Shareholder.

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DIVIDEND POLICY

We have never declared or paid any dividends on any class of our issued share capital. We intend to retain any earnings for use in our business and do not currently intend to pay dividends on our ordinary shares. The declaration and payment of any future dividends will be subject to a resolution by the general meeting of shareholders with a simple majority upon a proposal from our board of directors and will depend upon our results of operations, cash requirements, financial condition, contractual restrictions, any future debt agreements or applicable laws and other factors that our board of directors may deem relevant.

Under the laws of Kingdom of Norway, among other things, a public limited liability company such as us may only distribute dividends to the extent it will have net assets covering the company’s share capital and other restricted equity after the distribution has been made. The calculation shall be made on the basis of the balance sheet in the company’s last approved financial statements, provided, however, that it is the registered share capital at the time of decision that applies. Further, extraordinary dividend payments may be resolved based upon an interim balance sheet prepared no more than six (6) months prior to the date of resolution.

In the amount that may be distributed, a deduction shall be made for (i) the aggregate nominal value of treasury shares held by the company, (ii) credit and collateral pursuant to Sections 8-7 and 8-10 of the Norwegian Public Limited Companies Act, dated June 13, 1997 no. 45, or 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 day which pursuant to law shall lie within the scope of the funds that the company may use to distribute dividend. Even if all other requirements are fulfilled, the company may only distribute dividend to the extent that it maintains a sound equity and liquidity post-distribution. See “Description of Share Capital and Articles of Association” for additional information.

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CAPITALIZATION

The following table sets forth our total capitalization, together with our cash and cash equivalents, as of September 30, 2020:

This table should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our audited consolidated financial statements, interim unaudited consolidated financial statements and the related notes included elsewhere in this prospectus.

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SELECTED CONSOLIDATED FINANCIAL DATA

The following tables present selected consolidated financial data as of the dates and for the periods indicated. We have derived the selected consolidated statements of profit and loss data for the years ended December 31, 2018 and 2019 and the statements of financial position as of December 31, 2018 and 2019 from our audited consolidated financial statements included elsewhere in this prospectus. We have derived the selected consolidated statements of profit or loss data for the nine months ended September 30, 2019 and 2020 and the selected consolidated statements of financial position data as of September 30, 2020 from the unaudited interim condensed consolidated financial statements included elsewhere in this prospectus. We have prepared the unaudited interim condensed consolidated financial statements on the same basis as the audited consolidated financial statements, and the unaudited financial data include all adjustments, consisting only of normal recurring adjustments, that we consider necessary for a fair presentation of our consolidated financial position and results of operations as of and for the periods presented.

Our consolidated financial statements are prepared and presented in accordance with IFRS, as issued by the IASB and in conformity with IFRS as adopted by the European Union, and audited in accordance with the standards of the PCAOB (United States). IFRS differ in certain significant respects from U.S. GAAP. Our historical results are not necessarily indicative of results expected for future periods and our operating results for the nine months ended September 30, 2020 are not necessarily indicative of the results that may be expected for the entire year ending December 31, 2020. You should read this data together with our consolidated financial statements and related notes appearing elsewhere in this prospectus and the information under the sections titled “Selected Consolidated Financial Data” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

Selected Consolidated Statements of Profit and Loss Data:

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Selected Data from Our Consolidated Statements of Financial Position:

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MANAGEMENT’S DISCUSSION AND ANALYSIS

OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

You should read the following discussion and analysis of financial condition and operating results together with the information in “Selected Consolidated Financial Data” and our consolidated financial statements as of and for the years ended December 31, 2019 and 2018 and the related notes to those consolidated financial statements included elsewhere in this prospectus. The following discussion is based on our financial information prepared in accordance with International Financial Reporting Standards, or IFRS, as issued by the International Accounting Standards Board, or IASB and in conformity with IFRS as adopted by the European Union.

The statements in this discussion with respect to our plans and strategy for our business, including expectations regarding our future liquidity and capital resources and other non-historical statements, are forward-looking statements. These forward-looking statements are subject to numerous risks and uncertainties, including the risks and uncertainties described in the section of this prospectus titled “Risk Factors” and elsewhere in this prospectus. See “Cautionary Note Regarding Forward-Looking Statements.” Our actual results may differ materially from those contained in or implied by any forward-looking statements.

Overview

We are a biometrics company specializing in the design, development and sale of fingerprint identification and authentication solutions. Our fingerprint sensors and biometric solutions are used in dual interface and contactless or touch-free smart cards, including payment cards, and a range of electronic devices.

We offer fingerprint sensors and biometric solutions to smart card manufacturers and other integrators of biometric fingerprint sensor technology in a broad range of markets, including payments, identification, access control, healthcare and the Internet of Things, or IoT. Our patent-protected fingerprint sensors can be integrated on the front side of a payment card, thereby enabling the card to use biometric fingerprint recognition instead of a personal identification number, or PIN, to authenticate the cardholder. To use this feature the cardholder first enrolls their fingerprint. A biometric template, which is representative of the fingerprint, is created and securely stored on the card. When the cardholder uses the card to make a payment, he or she places his or her finger on the card’s sensor. Through fingerprint sensing and biometric authentication, the card can determine if the person using the card is the enrolled user or not.

Our portfolio of products includes fingerprint sensors, fingerprint modules with software and algorithms and remote enrollment devices. Our fingerprint sensors can be used in dual interface, contactless-only and contact-only payment cards. Our fingerprint modules offer a complete biometric solution that integrates fingerprint sensing with additional biometric processing and system power management functions. Additionally, with our remote enrollment solutions, cardholders can easily enroll their fingerprints at home and without the need to visit a bank branch.

Our sensors use a patented off-chip design, which separates the fingerprint sensor into two key components: the sensor array and the silicon chip (Application Specific Integrated Circuit, or ASIC). This off-chip design architecture allows the sensor array to be made from a flexible and cost-efficient polymer substrate while minimizing the silicon area needed for the ASIC. Compared to conventional silicon sensors, for which the sensor array is made of silicon, the off-chip design allows for a larger sensing area, better matching reliability and lower costs. We believe that we are the only provider supplying capacitive off-chip sensors and biometric algorithms optimized for integration with payment cards. This year, we launched TrustedBio, our next generation of dual interface products and solutions designed to reduce biometric smart card cost while improving both performance and security. TrustedBio utilizes advanced semiconductor technology to transform the sensor ASIC into a complete biometric system on chip, while maintaining all the benefits of the capacitive off-chip sensor architecture.

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Our current generation products are commercially available, and we have begun to ship samples of our products on our TrustedBio platform. To date, product revenue has not been material; however, we have seen an increase in product revenues. For the year ended December 31, 2019, product revenues were $0.2 million and in the nine months ended September 30, 2020, product revenues were $0.4 million.

We do not have a history of generating significant revenue. We generated net losses of $32.4 million and $30.2 million for the years ended December 31, 2019 and 2018, respectively and $22.9 million and $19.5 million for the nine months ended September 30, 2020 and 2019, respectively. As of December 31, 2019 and September 30, 2020, we had an accumulated deficit of $198.2 million and $217.7 million respectively. Our ability to generate revenue sufficient to achieve profitability will depend on our successful development and continuing commercialization of our products and software solutions.

We expect to incur significant expenses and operating losses for the foreseeable future as we further develop our products and software solutions, including introducing new designs and functionality, and as we further expand our business development, sales and customer support teams to drive new customer adoption, expand use cases and integrations, and support international expansion. We will also face increased compliance costs associated with growth and the expansion of our customer base. Furthermore, after the effectiveness of the registration statement of which this prospectus forms a part, we expect to incur additional costs associated with operating as a foreign private issuer listed on Nasdaq, including significant additional legal, accounting, investor relations and other expenses that we did not previously incur.

As a result of these anticipated expenditures, we will need additional financing to support our continuing operations. Until such time as we can generate significant revenue from product sales and services, if ever, we expect to finance our operations through a combination of public or private equity or debt financings or other sources, which may include collaborations with third parties. Adequate additional financing may not be available to us on acceptable terms, or at all. Our inability to raise capital as and when needed would have a negative impact on our financial condition and our ability to pursue our business strategy. We will need to generate significant revenue to achieve profitability, and we may never do so.

Recent Developments

COVID-19 Pandemic

In December 2019, a novel strain of coronavirus, since named SARS-CoV-2, causing the disease known as COVID-19, was reported in China. Since then, COVID-19 has spread globally, including throughout Europe and the United States. In March 2020, the World Health Organization declared the outbreak of COVID-19 as a “pandemic,” or worldwide spread of a new disease. In response, many countries around the world, including European countries and the United States, have imposed quarantines and restrictions on travel and mass gatherings to slow the spread of the virus, and have closed non-essential businesses.

We could be materially and adversely affected by the risks, or the public perception of the risks, related to an epidemic, pandemic, outbreak, or other public health crisis, such as the recent outbreak of COVID-19. For example, many of our business partners in Asia were impacted by the COVID-19 pandemic in the first quarter of 2020, although we believe a majority of such business partners, if not all, have now returned to their offices and factories. We have also implemented a work-from-home policy for employees, and we may take further actions that alter our operations as may be required by local authorities or which we determine are in the best interests of our employees and shareholders.

To date, there have not been any significant delays in development projects, and we have not incurred any significant additional costs due to the actions taken. The pandemic did cause some short-term delays in early adoption activities including temporary delays for pilots. The pandemic did not have a material impact on our revenue as our revenue has not been material to date.

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We did initiate certain cost reduction actions as a result of the pandemic beginning in March of 2020 including temporary salary reductions and travel restrictions. These actions have resulted in lower operating expenses, and therefore lower net loss, during the second quarter of 2020. Salaries were restored in June; however, travel restrictions were still in place. As a result, we expect that operating expenses could increase in future periods if and when certain restrictions are lifted.

We did not experience a material change in liquidity or cash flows as a result of the pandemic.

On the other hand, we believe that the pandemic has increased end-user awareness of the benefits of contactless payments. Following the outbreak, consumers are motivated to go cashless more than ever before. With many businesses discouraging the use of cash, because of hygiene questions that surround handling money, contactless payments are front of mind to avoid touching pin pads. In an increasingly cashless ecosystem, there is a growing threat of card fraud from the lack of authentication. Contactless payments need to be made more secure in order to ensure transactions are hygienic, convenient and protected from the risk of fraud. We believe these trends could have a positive impact on our revenue in future periods, but it is difficult to predict the impact with any certainty.

The ultimate extent of the impact of any epidemic, pandemic, outbreak, or other public health crisis on our business, financial condition and results of operations will depend on future developments, which are highly uncertain and cannot be predicted, including new information that may emerge concerning the severity of such epidemic, pandemic, outbreak, or other public health crisis and actions taken to contain or prevent the further spread, among others. Accordingly, we cannot predict the extent to which our business, financial condition and results of operations will be affected. We remain focused on maintaining liquidity and financial flexibility and continue to monitor developments as we deal with the disruptions and uncertainties from a business and financial perspective relating to COVID-19.

Factors Affecting Our Performance

Market Acceptance of Biometric Technology and Our Products

Our ability to grow our customer base and drive market acceptance of our products is affected by the pace at which our customers adopt biometric technology. We expect that our future ability to generate revenue will be primarily driven by the pace of adoption and penetration of biometric technology generally, and our products and software solutions specifically. We offer leading biometric solutions to enhance security and user experience in a broad range of markets, including payments and access control, and intend to continue to invest to expand our customer base. The degree to which prospective customers recognize the need for biometric solutions, and subsequently purchase and integrate our products and software solutions into their products, will drive our ability to acquire new customers and increase sales to existing customers, which, in turn, will affect our future financial performance. Due to the recent COVID-19 pandemic, for example, we have observed increased end-user awareness of the benefits of contactless payments enabled by technology similar to ours.

Number of Customers and Ability to Achieve Commercial Scale

We believe we have a substantial opportunity to grow our customer base. We define a customer as an entity with an active supply or manufacturing and support capability related to integration of a biometric product or software solution that we offer. We had a total customer count of 13, 15 and 14 as of December 31, 2018, 2019 and September 30, 2020, respectively. Our ability to continue to grow our customer base is dependent, in part, upon our ability to compete within the increasingly competitive markets in which we participate.

In order to drive sales to new customers and achieve commercial scale, we have established relationships with strategic partners such as Feitian Technologies Co., Ltd., or Feitian, a manufacturer of smartcard pre-lam. The pre-lam inlay is a major structural component within the biometric smart card that includes all of the internal

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electronics. This partnership with Feitian allows us to integrate our sensors into critical components of payment cards at the manufacturing stage, thereby becoming part of a mass-produced, low-cost and end-to-end solution for payment card manufacturers. While to date we have not generated substantial sales, we believe that this relationship and other potential future relationships positions us well to deliver product at scale if and when orders materialize.

Sustaining Innovation and Technology Leadership

Our success is dependent on our ability to sustain innovation and technology leadership. We believe that we have developed fingerprint sensors and related system solutions for a broad range of biometrically enabled applications, providing both hardware and software fingerprint solutions suitable to being embedded into products in order to improve security, user interface and convenience. We consider ourselves to be the only vendor capable of supplying off-chip sensor designs and embedded biometric algorithms suited to capacitive fingerprint sensors. While to date we have not generated substantial sales, we believe that our innovative products and solutions position us well as the biometric market matures. While to date we have not generated substantial sales, we believe that our innovative products and solutions position us well as the biometric market matures.

We intend to continue to invest in innovation through research and development and build additional products and software solutions. Our technology roadmap focuses on:

As described below, our research costs are expensed as incurred, and our development costs that do not meet the criteria of capitalization are expensed as incurred. In addition, we intend to continue to evaluate strategic partnerships to help fund additional research and drive product and market expansion. Our future success is dependent on our ability to successfully develop, market and sell existing and new products to both new and existing customers.

Investments in Growth

We have made and plan to continue to make investments for long-term growth, including investment in our research and development efforts to continuously enhance the designs and functionality of our technology to meet the evolving needs of our customers and to take advantage of our market opportunity. For example, we have increased our research and development spending, including related payroll, from $19.9 million in 2018 to $20.5 million in 2019. In the nine months ended September 30, 2020 our research and development spending, including related payroll, was $11.4 million. We intend to continue to increase our investment in sales and marketing, research and development and supply chain teams as we further expand and grow our operations.

Expanding Further Internationally

We are a Norwegian headquartered company with sales and marketing, research and development, supply chain and administrative functions in Norway, the United States, the United Kingdom and China and believe there is a significant opportunity for us to expand into further international markets. For the year ended December 31, 2019, approximately 63.7% of our revenues were generated by customers in the United States and 36.3% from customers outside the United States. For the nine months ended September 30, 2020, approximately 16.3% of our revenues were generated by customers in the United States and 83.7% from customers outside the

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United States. In addition, we have made and plan to continue to make significant investments to expand geographically, particularly in Europe and Asia. Although these investments may adversely affect our operating results in the near term, we believe that they will contribute to our long-term growth.

Intellectual Property

Our intellectual property rights cover individual inventions and complete biometric systems ranging from measurement principles, algorithms, sensor design and system solutions. We have filed applications to protect our intellectual property rights in a wide range of countries including the United States, the United Kingdom, Norway and several other countries. We continue to seek patent protection for aspects of our technology that provide significant competitive advantage.

Our success and ability to compete depend substantially upon our core technology and intellectual property rights. We rely on patent, trademark and copyright laws, trade secret protection and confidentiality agreements to protect our intellectual property rights. In addition, we require employees and consultants to execute appropriate non-disclosure and proprietary rights agreements. These agreements acknowledge our exclusive ownership of intellectual property developed for and by us and require that all proprietary information remain confidential.

We maintain a program designed to identify technology that is appropriate for patent and trade secret protection, and we file patent applications in the United States and certain other countries for inventions that we consider significant. As of September 30, 2020, we held 58 patent families with 112 granted patents and 102 pending patent applications. The wordmark ‘IDEX’ and the IDEX logo are registered trademarks of IDEX Biometrics ASA and are owned by IDEX.

Although our business is not materially dependent upon any one intellectual property right, our intellectual property rights and the products made and sold under them, taken as a whole, are a significant element of our business. In addition to patents, we also possess other forms of intellectual property rights, including trademarks, know-how, trade secrets, design rights and copyrights. We control access to and use of our software, technology and other proprietary information through internal and external controls, including contractual protections with employees, contractors, customers and partners. Our software is protected by United States and international copyright, patent and trade secret laws. Despite our efforts to protect our software, technology and other proprietary information, unauthorized parties may still copy or otherwise obtain and use our software, technology and other proprietary information. In addition, as we further expand our international operations and markets, effective patent, copyright, trademark and trade secret protection may not be available, may be limited, or may not be enforceable in certain foreign countries.

Companies in the markets in which we operate frequently are sued or receive informal claims of patent infringement or infringement of other intellectual property rights. As we become more successful, we believe that competitors will be more likely to try to develop products that are similar to ours and that may infringe our intellectual property rights. It is also possible that competitors or other third parties will claim that our products infringe their intellectual property rights. Successful adjudication of claims of infringement by a third party, could result in injunctions that could prevent us from selling some of our products in certain markets, penalties, settlements or judgements that require payment of royalties or damages, or require us to expend time and money to develop non-infringing products. We cannot assure you that we will not in the future be accused of infringe any third-party intellectual property rights.

Components of Results of Operations

Revenue

We have not generated significant revenue since our inception. We maintain in-house design, testing and supply chain management functions. Manufacturing is outsourced to large and established semiconductor fabrication companies as well as other providers of components and manufacturing services. We generate revenue through the sale of fingerprint sensors and solutions and engineering services.

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Revenue from product sales is recognized at the point in time in which the customer obtains control of the products, which normally is when title passes at the point of delivery, based on the contractual terms of the agreements. Revenue from services is recognized over time pursuant to the terms and conditions in the agreements.

Operating Expenses

Our operating expenses consist of purchases, net of inventory variation, payroll, research and development, sales and marketing, and general and administrative expenses. Personnel and payroll costs are the most significant component of operating expenses. Operating expenses also include overhead costs for facilities, including depreciation expense.

Purchases, net of inventory variation

Purchases, net of inventory variation, primarily consist of materials, contract manufacturing, and transportation related costs. Purchases excludes payroll, allocated overhead, depreciation and amortization.

We intend to continue to invest additional resources in our engineering, supply chain and customer support teams to expand the adoption of our products and services and ensure that our customers are realizing the full benefit thereof. The level, timing and relative investment in our infrastructure and personnel could affect our cost of purchases in the future.

Payroll

Payroll expense consists of salaries, benefits, bonuses, share-based compensation expense and sales commissions. We expect that our payroll expense will increase and continue to be our largest operating expense for the foreseeable future as we expand our business.

Research and Development

Research and development expenses consist primarily of consumed materials costs and certain outsourced development costs related to the creation and improvements of our technology. We currently have multiple research and development projects in process. Research costs are expensed as incurred. Development expenses are capitalized when the criteria for recognition is met. Development costs that do not meet the criteria of capitalization are expensed as incurred. The assets are amortized over their expected useful life once the asset is available for use. Maintenance and training costs are expensed as incurred. Grants to research and development are credited against costs. We expect that our research and development expense will increase as our business grows, particularly as we incur additional costs related to continued investments in our products and technology.

Other Operating Expenses

Other operating expense primarily consist of sales and marketing and general and administrative expenses, including costs of marketing activities, contractor fees for administrative functions and other non-personnel costs, such as legal, accounting and other professional fees, hardware and software costs, certain tax, license and insurance-related expenses and allocated overhead costs.

Following the completion of this listing, we expect to incur additional expenses as a result of also being listed in the U.S., including costs to comply with the rules and regulations applicable to companies listed on a U.S. securities exchange, costs related to compliance and reporting obligations, and increased expenses for insurance, investor relations and professional services. We expect that our general and administrative expense will increase in absolute dollars as our business grows. However, we expect that our general and administrative expense will decrease as a percentage of our revenue as our revenue grows over the longer term.

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Taxation

General

Income tax on results for the year, which is comprised of current tax and changes in deferred tax, is recognized in the consolidated statements of profit and loss, whereas the portion attributable to entries on equity is recognized directly in equity.

Current tax liabilities and current tax receivables are recognized in the consolidated statements of financial position as tax calculated on the taxable income for the year adjusted for tax on previous years’ taxable income and taxes paid on account/prepaid.

Deferred tax is measured according to the statement of financial position liability method in respect of temporary differences between the carrying amount and the tax base of assets and liabilities. Deferred tax liabilities are generally recognized for all taxable temporary differences and deferred tax assets are recognized to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilized. Such deferred tax assets and liabilities are not recognized if the temporary difference arises from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit. In addition, deferred tax liabilities are not recognized if the temporary difference arises from the initial recognition of goodwill.

Deferred tax liabilities are recognized for taxable temporary differences arising on investments in subsidiaries, except where we are able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets arising from deductible temporary differences associated with such investments and interests are only recognized to the extent that it is probable that there will be sufficient taxable profits against which to utilize the benefits of the temporary differences and they are expected to reverse in the foreseeable future.

The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.

This judgment is made on an ongoing basis and is based on the factor that recent historical loss carries more weight than factors such as budgets and business plans for the coming years, including planned commercial initiatives. The creation and development of biometric products within emerging industries such as payments and access control is subject to considerable risks and uncertainties. So far, we have reported significant losses, and as a consequence, we have unused tax losses. Management has concluded that deferred tax assets should not be recognized at December 31, 2018 and 2019 or September 30, 2020. The tax assets are currently not deemed to meet the criteria for recognition as management determined that it was not probable that future taxable profit will be available against which the deferred tax assets can be utilized.

Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realized based on tax laws and rates that have been enacted or substantively enacted at the balance sheet date.

Income Tax

As a Company headquartered in Norway, our parent company, IDEX Biometrics ASA, is subject to tax under the corporate tax laws of Norway. As our Norwegian operations have been in a loss position since inception, there has been no corporate income taxes paid in Norway.

Pursuant to Norwegian tax legislation for companies incurring research and development costs, we have for several years conducted projects that have qualified us to receive a cash tax credit. We recorded a cash tax credit

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of $0.6 million relating to research and development costs in each of 2018 and 2019. These amounts have been credited to research and development expenses.

We also have operations in the United States, United Kingdom and China, through wholly owned subsidiaries in each respective country, and are subject to corporate income taxes in those countries pursuant to the tax laws in each jurisdiction. All income taxes and tax credits mentioned are specific to the country to which they relate.

The accumulated unrecognized deferred tax assets amounting to $36.4 million and $42.8 million at December 31, 2018 and 2019, respectively, are related primarily to the tax losses carryforward in Norway and the United Kingdom. At December 31, 2019, there was not sufficiently convincing evidence that sufficient taxable profit will be generated, against which the unused tax losses could be applied. Consequently, no deferred tax asset has been recognized.

During the first quarter of 2020, we filed amended tax returns in the United States and United Kingdom for the tax years 2017 and 2018 to claim research and development tax credits. As a result, we have received $1.5 million in refunds and have a tax loss carryforward in the United Kingdom of $3.4 million, and the tax loss carryforward in Norway will be reduced by $3.4 million.

Results of Operations

Comparison of Years Ended December 31, 2018 and 2019

The following table summarizes the results of our operations for the years ended December 31, 2018 and 2019.

Revenue

Revenue for the year ended December 31, 2018 was $0.4 million, consisting of $0.3 million of revenue from product sales, and $0.1 million of revenue from services, primarily for non-recurring engineering services.

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Revenue for the year ended December 31, 2019 was $0.4 million, consisting of $0.2 million of revenue from product sales, and $0.2 million of revenue from services, primarily non-recurring engineering services performed as part of a $6 million dollar order from a large customer, a leading global provider of financial news and services. The decrease in product sales of $0.1 million or 40.7% from 2018 to 2019 relates to our transition to newer product lines as sales of certain products that shipped in 2018 did not recur in 2019, and we began shipping newer products to new customers in 2019. In 2020, we continued to ship sales of these newer products, and we expect to continue to ship these products for the next several quarters. During the year ended December 31, 2019, approximately 10% of revenue came from new customers and during the nine months ended September 30, 2020, approximately 4% of revenue came from these same customers. We have begun shipping samples of our newest TrustedBio product during the third quarter of 2020 and expect commercial shipments of TrustedBio products in 2021. In addition, we expect product revenue to comprise the majority of our revenue for the next several periods.

During the year ended December 31, 2019, substantially all of our product revenue was from customers outside the United States, $154 thousand out of the total product revenue of $159 thousand was from customers outside the United States. For the nine months ended September 30, 2020, total product revenue was $420 thousand of which $415 thousand was from customers outside the United States.

The increase in service revenue of $0.1 million or 54.1% from 2018 to 2019 relates to additional non-recurring services in assisting a customer in integrating our technology into their product lines. Additionally, we note that currency rate fluctuations had an impact on the 2018 to 2019 change in total revenue. Excluding the impact of foreign exchange, there would have been a $17,000 increase in total revenue as compared to a $16,000 decrease. During the year ended December 31, 2019 and for the nine months ended September 30, 2020, 100% and 99% respectively of our services revenue was with one customer located in the United States as we worked with them to adapt our products to their end product.

Purchases, net of inventory variation

Purchases decreased by $0.1 million, or 66%, for the year ended December 31, 2019 compared to the year ended December 31, 2018. This decrease was primarily due to lower product sales and our transition to newer product lines.

Payroll Expenses

Payroll expenses for the year ended December 31, 2018 were $19.8 million as compared to $21.8 million for the year ended December 31, 2019, an increase of $2.0 million, or 10.0%. The increase was primarily due to an increase in the average number of full-time equivalents, or FTE, employees during the year as we added additional development and sales staff. The average number of FTEs was 109 in 2019, up from 99 in 2018. However, as a result of cost reduction activities undertaken in the fourth quarter of 2019, we had 100 FTEs as of December 31, 2019, compared to 104 FTEs at the end of 2018.

Research and Development Expenses

Research and development expenses for the year ended December 31, 2018 were $5.6 million as compared to $4.4 million for the year ended December 31, 2019, a decrease of $1.2 million, or 22.1%. The decline was mainly due to the shifting of a portion of outsourced development work to be performed internally.

In addition, we received a research and development grant, or the SkatteFunn grant, in the amount of $0.6 million from the Norwegian government in each of 2018 and 2019. The SkatteFunn grant was credited to research and development expenses.

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Other Operating Expenses

Other operating expenses for the year ended December 31, 2018 were $3.9 million as compared to $4.6 million for the year ended December 31, 2019, an increase of $0.7 million, or 18.4%. The increase was primarily due to outside professional services associated with the two capital raises in the first and fourth quarters of 2019, as well as certain information technology costs and increased operating expenses relating to higher employee headcount.

Taxation

During the years ended December 31, 2018 and 2019, the Company did not pay or accrue income taxes in Norway due to continuing net operating losses. The Company paid and accrued $41,000 and $0.2 million in 2018 and 2019 respectively in the United States and United Kingdom.

We conduct research and development activities in the United States and United Kingdom and have, in 2020, claimed research and development tax credits and grants in these countries relating to 2017, 2018 and 2019. $1.5 million has been received in 2020 related to these claims. The tax credit in the United States is used to offset a portion of taxable income. The tax credit in the UK has been credited to income tax expense to the extent of income taxes paid and then to research and development expenses.

As of December 31, 2019, we have Norwegian and UK tax net operating loss carryforwards of $193.5 million and $3.4 million, respectively, which do not expire.

Net Loss for the Year

Net loss for the year ended December 31, 2018 was $30.2 million, compared to $32.4 million for the year ended December 31, 2019. As of December 31, 2019, we have accumulated losses of $198.2 million.

Comparison of the Nine Months Ended September 30, 2019 and 2020

The following table summarizes the results of our operations for the nine months ended September 30, 2019 and 2020.

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Revenue

Revenue for the nine months ended September 30, 2019 was $0.4 million, consisting of $0.1 million of revenue from product sales, and $0.3 million of revenue from services, primarily for non-recurring engineering services and sales of sensor products. Revenue for the nine months ended September 30, 2020 was $0.5 million, consisting of $0.4 million of revenue from the sale of sensor products, and $0.1 million of revenue from non-recurring engineering services performed as part of a $6 million dollar order from a large customer, a leading global provider of financial news and services. The increase in product sales of $0.3 million or 296.2% from 2019 to 2020 relates to shipments beginning to the global provider of financial news and services customer. The decrease in service revenue of $0.2 million or 68.8% from 2019 to 2020 relates to lower non-recurring services in assisting the large customer in integrating our technology into their product lines as we completed this work and began to ship product.

Purchases, net of inventory variation

Purchases increased by $0.1 million, for the nine months ended September 30, 2020 compared to the nine months ended September 30, 2019. This increase was due to an increase in product sales.

Payroll Expenses

Payroll expenses for the nine months ended September 30, 2019 were $15.1 million as compared to $12.5 million for the nine months ended September 30, 2020, a decrease of $2.6 million, or 17.3%. The decrease was primarily due to a decrease in the average number of full-time equivalents, or FTE, employees during the year as a result of cost reduction activities undertaken in the fourth quarter of 2019. We had 100 FTEs as of September 30, 2020, compared to 104 FTEs at September 30, 2019.

Research and Development Expenses

Research and development expenses for the nine months ended September 30, 2019 were $3.0 million as compared to $2.0 million for the nine months ended September 30, 2020, a decrease of $1.0 million, or 32.6%. The decline was mainly due to the shifting of a portion of outsourced development work to be performed internally.

Other Operating Expenses

Other operating expenses for the nine months ended September 30, 2019 were $3.4 million as compared to $3.8 million for the nine months ended September 30, 2020, an increase of $0.4 million, or 11.3%. The increase was primarily due to outside professional services associated with the filing of a registration statement in the United States.

Taxation

During the nine months ended September 30, 2019 and 2020, the Company did not pay or accrue income taxes in Norway due to continuing net operating losses. During the nine months ended September 30, 2019, the Company paid or accrued $0.4 million in income taxes in the United States and the United Kingdom. During the nine months ended September 30, 2020, the Company received $0.1 million of income tax refunds in the United States and did not pay income tax in the United States or the United Kingdom as a result of research and development tax credits.

We conduct research and development activities in the United States and United Kingdom and have, in 2020, claimed research and development tax credits and grants in these countries relating to 2017, 2018 and 2019. $1.5 million has been received in 2020 related to these claims. The tax credit in the United States is used to offset a portion of taxable income. The tax credit in the UK has been credited to income tax expense to the extent of income taxes paid and then to research and development expenses.

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Net Loss for the Period

Net loss for the nine months ended September 30, 2019 was $22.9 million, compared to $19.5 million for the nine months ended September 30, 2020. As of September 30, 2020, we have accumulated losses of $217.7 million.

Liquidity and Capital Resources

Overview

Since our inception, we have incurred significant operating losses and negative cash flows. We anticipate that we will continue to incur losses for the foreseeable future. We expect that our research and development and other operating expenses will increase in connection with conducting development and marketing activities for our products, as well as costs associated with operating as a foreign private issuer listed on Nasdaq. As a result, we will need additional capital to fund our operations, which we may obtain from additional equity financings, debt financings, research funding, collaborations, contract and grant revenue or other sources. To date, we have financed our operations primarily through the issuances of our equity securities.

As of December 31, 2019 and September 30, 2020, we had cash and cash equivalents of $14.1 million and $5.7 million, representing 60% and 41% respectively, of the total assets.

In May 2020, we raised an additional $10.2 million in a private placement of ordinary shares.

In November 2020 and February 2021, we completed additional private placements with existing and new shareholders and raised $7.8 million and $27.2 million, respectively. In December 2020, we issued shares to employees under our Employee Share Purchase Plan, raising $0.2 million.

We continue to review all strategic options to fund ongoing operations, research and development projects and working capital needs, including a best efforts capital raise. While we have been successful in raising funds through private placements of shares, there can be no assurance that we will be successful this time.

We have no debt to financial institutions or ongoing material financing commitments, such as lines of credit or guarantees, that are expected to affect our liquidity over the next five years, other than our leases.

Cash Flows

The following table summarizes the results of our cash flows for the periods presented:

Net cash flow used in operating activities

During the year ended December 31, 2019, cash used in operating activities was $27.2 million, primarily resulting from our net loss before tax of $32.3 million less non-cash charges of $4.2 million included in net loss, and net cash provided by working capital of $1.2 million.

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During the year ended December 31, 2018, cash used in operating activities was $26.8 million, primarily resulting from our net loss before tax of $30.2 million less non-cash charges of $3.8 million included in net loss, and net cash used for working capital of $0.1 million.

During the nine months ended September 30, 2019, cash used in operating activities was $20.9 million, primarily resulting from our net loss before tax of $22.6 million less non-cash charges of $3.2 million included in net loss, and net cash used for working capital of $1.3 million.

During the nine months ended September 30, 2020, cash used in operating activities was $17.0 million, primarily resulting from our net loss before tax of $19.7 million less non-cash charges of $3.3 million included in net loss, and net cash used for working capital of $1.0 million.

Net cash flow used in investing activities

Net cash flow used in investing activities was $1.0 million for the year ended December 31, 2018, compared to $0.7 million for the year ended December 31, 2019. This change was primarily due to a decrease of $0.3 million in purchases of property, plant and equipment investment in 2019 as compared to 2018.

Net cash flow used in investing activities was $0.4 million for the nine months ended September 30, 2019, compared to $4 thousand for the nine months ended September 30, 2020. This change was primarily due to a decrease of $0.4 million in purchases of property, plant and equipment investment in 2020 as compared to 2019.

Net cash flow provided by financing activities

The increase in net cash flow provided by financing activities of $33.0 million for the year ended December 31, 2019 from $0.8 million for the year ended December 31, 2018 was due to increases in share issuances of $33.3 million, partially offset by net payment on a financed asset purchase and lease liabilities of $1.2 million.

The decrease in net cash flow provided by financing activities of $9.6 million for the nine months ended September 30, 2020 from $23.3 million for the nine months ended September 30, 2019 was due primarily to decreases in share issuances of $13.6 million.

Operating and Capital Expenditure Requirements

We have not achieved profitability on an annual basis since our inception, and we expect to incur net losses in the future. We expect that our operating expenses will increase as we continue to invest to grow our product pipeline, hire additional employees and increase research and development expenses.

Additionally, as a foreign private issuer listed on Nasdaq, we will incur significant additional audit, legal and other expenses.

Our future funding requirements will depend on many factors, including but not limited to:

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We believe that our existing capital resources will be sufficient to fund our operations, including currently anticipated research and development activities and planned capital spending, at least through the fourth quarter of 2020.

Among other factors, our history of losses, limited revenue and negative cash flows from operations raise substantial doubt about our ability to continue as a going concern. As a result, our independent registered public accounting firm has included an explanatory paragraph in their opinion for the year ended December 31, 2019 as to the substantial doubt about our ability to continue as a going concern. Our consolidated financial statements contemplate that we will continue to operate as a going concern. We have been able to raise funds through private placements of shares in the past. During 2020, we raised $18.0 million through private placements. We continue to review all strategic options to fund ongoing operations, research and development projects and working capital needs, including a best efforts capital raise. While we have been successful in raising funds through private placements of shares, there can be no assurance that we will be successful this time.

Contractual Obligations and Commitments

The following table summarizes our contractual commitments and obligations as of December 31, 2019.

The commitment amounts in the table above are associated with contracts that are enforceable and legally binding and that specify all significant terms, including fixed or minimum services to be used, fixed, minimum or variable price provisions, and the approximate timing of the actions under the contracts. Our lease commitments relate to our office space.

Off-Balance Sheet Arrangements

We did not have during the periods presented, and we do not currently have, any off-balance sheet financing arrangements or any relationships with unconsolidated entities or financial partnerships, including entities sometimes referred to as structured finance or special purpose entities, that were established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes.

Quantitative and Qualitative Disclosures about Market Risk

Market risk arises from our exposure to fluctuation in interest rates and currency exchange rates. These risks are managed by maintaining an appropriate mix of cash deposits in the currencies we operate in, placed with a variety of financial institutions for varying periods according to expected liquidity requirements.

Interest Rate Risk

As of December 31, 2019 and September 30, 2020, we had cash and cash equivalents of $14.1 million and $5.7 million, respectively. Our exposure to interest rate sensitivity is impacted primarily by changes in the underlying bank interest rates in Norway. Our surplus cash and cash equivalents are invested in interest-bearing savings accounts. We have not entered into investments for trading or speculative purposes. Due to the

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conservative nature of our investment portfolio, which is predicated on capital preservation of investments with short-term maturities, an immediate one percentage point change in interest rates would not have a material effect on the fair market value of our portfolio, and therefore we do not expect our operating results or cash flows to be significantly affected by changes in market interest rates.

Currency Risk

Our transactions are commonly denominated in U.S. Dollars. However, we incur a portion of our expenses in other currencies, primarily British Pounds, Norwegian Krone, Euros and Chinese Yuan and are exposed to the effects of these exchange rates. We seek to minimize this exposure by maintaining currency cash balances at levels appropriate to meet foreseeable short to mid-term expenses in these other currencies, with excess cash and cash equivalents being kept in Norwegian Krone. We do not use forward exchange contracts to manage exchange rate exposure. A 10% increase in the value of the Norwegian Krone relative to the U.S. dollar or other currencies would not have had a material effect on the carrying value of our net financial assets and liabilities in foreign currencies at December 31, 2019 or September 30, 2020.

Credit and Liquidity Risk

We have a relatively short commercial history and limited revenue in the periods presented. We do not believe we had significant credit risk relating to our trade receivables as of December 31, 2018 and 2019 or September 30, 2020. Our cash and bank deposits are on deposit with financial institutions with a credit rating equivalent to, or above, the main Norwegian clearing banks. We invest our liquid resources based on the expected timing of expenditures to be made in the ordinary course of our activities. We have no debt to financial institutions and we maintain adequate bank balances to meet liabilities as they fall due through the fourth quarter of 2020.

Critical Accounting Policies, Judgments and Estimates

In the application of our accounting policies, we are required to make judgments, estimates, and assumptions about the value of assets and liabilities for which there is no definitive third-party reference. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates. We review our estimates and assumptions on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period or in the period of the revisions and future periods if the revision affects both current and future periods.

The following are our critical judgments that we have made in the process of applying our accounting policies and that have the most significant effect on the amounts recognized in our consolidated financial statements included elsewhere in this prospectus.

Intangible assets

Research costs are expensed as incurred. Our patents and other intellectual property rights created by us are capitalized and held in the consolidated statements of financial position only when they satisfy the criteria for capitalization. No development costs have been capitalized in 2018, 2019 or the nine months ended September 30, 2020, thus all development costs and internal costs related to the creation of intellectual property have been expensed when incurred. Acquired intangible assets are capitalized at the price allocated to the various assets based on estimated fair value. Intangible assets are amortized over their useful lives.

Inventory

Raw materials, which are part of the trade or manufacturing flow in the sense that the item is embedded in or otherwise becomes a part of the physical delivery to the customer (work in process and finished goods), are

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inventoried if we are in the position to take orders on the related product. Materials and components for research or development are expensed at the time of purchase and not included in inventory. Inventory is held at the lower of cost and net realizable value, less impairment, if any. The determination of net realizable value is subject to judgment, as reselling components may not be easily achieved, and our finished goods are part of a newer market with varying margins.

Deferred tax assets

Deferred tax assets related to net operating loss carryforwards are recognized when it is probable that the net operating loss carryforward may be utilized. Judgment of probability is based on historical earnings, expected future margins and the size of the order backlog.

Significant Accounting Estimates

Share based compensation

We estimate the fair value of incentive subscription rights at the grant date by using the Black-Scholes option pricing model. The valuation is based on share price and exercise price, share price volatility, interest rates and duration of such subscription rights, and assumptions of staff attrition and the likelihood of early exercise. The share-based compensation is expensed as earned over the vesting period. The accrued cost of the employer’s social security tax on the earned intrinsic value of such subscription rights is calculated at each consolidated statement of financial position date.

Impairment evaluation of goodwill

Goodwill amounts to the fair value of the consideration for the assets less the capitalized value of the identifiable assets and any impairment charges, if any. Impairment testing of goodwill is based on the estimated fair value or the value in use of the business. The value in use calculation is based on a discounted cash flow model. The cash flows are derived from the forecast for the next five years. The recoverable amount is sensitive to the discount rate used for the discounted cash flow model as well as the expected future cash-inflows and the growth rate used for extrapolation purposes.

Recent Accounting Pronouncements

IFRS 16 Leases (effective on 1 January 1, 2019): IFRS 16 was issued in January 2016 and it replaces IAS 17 Leases, IFRIC 4 Determining whether an Arrangement contains a Lease, SIC-15 Operating Leases-Incentives and SIC-27 Evaluating the Substance of Transactions Involving the Legal Form of a Lease. IFRS 16 sets out the principles for the recognition, measurement, presentation and disclosure of leases and requires lessees to account for all leases under a single on-balance sheet model similar to the accounting for finance leases under IAS 17. The standard includes two recognition exemptions for lessees—leases of ’low-value’ assets (e.g., personal computers) and short-term leases (i.e., leases with a lease term of 12 months or less). At the commencement date of a lease, a lessee will recognize a liability to make lease payments (i.e., the lease liability) and an asset representing the right to use the underlying asset during the lease term (i.e., the right-of-use asset). Lessees will be required to separately recognize the interest expense on the lease liability and the depreciation expense on the right-of-use asset. Lessees will be also required to remeasure the lease liability upon the occurrence of certain events (e.g., a change in the lease term, a change in future lease payments resulting from a change in an index or rate used to determine those payments). The lessee will generally recognize the amount of the remeasurement of the lease liability as an adjustment to the right-of-use asset.

The group has adopted IFRS 16 on January 1, 2019 using the modified retrospective approach. Accordingly, comparable information has not been restated, and the effect is entered in the consolidated statement of financial position at the implementation date. Upon implementation, the right-of-use asset and lease liability will be the same amount and will not impact equity.

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At the commencement date of a lease, a lessee will recognize a liability at the present value of lease payments with a corresponding asset representing the right to use the underlying asset during the lease term (right-of-use asset). The recognized asset is amortized over the lease period and the depreciation expense is recognized as an operating expense on an ongoing basis. The lease liabilities will be discounted at the incremental borrowing rate, and the interest expense on the lease commitment is recognized as a financial expense.

We have identified office buildings to be the only material lease agreements. The group has used the relief option for leases with a duration of less than 12 months, as of January 1, 2019, and leases with low value, and these leases will not be recognized in the consolidated statement of financial position but recognized as an operating expense over the lease period. This approach will be applied consistently to all similar lease contracts.

Lessees are required to remeasure the lease liability upon the occurrence of certain events (e.g., a change in the lease term, a change in future lease payments resulting from a change in an index or rate used to determine those payments). The lessee will generally recognize the amount of the remeasurement of the lease liability as an adjustment to the right-of-use asset.

Other standards or interpretations taking effect in 2019 did not have any impact on our consolidated financial statements.

JOBS Act Exemptions and Foreign Private Issuer Status

We qualify as an “emerging growth company” as defined in JOBS Act. Section 107(b) of the JOBS Act provides that an “emerging growth company,” or EGC, can take advantage of an extended transition period for complying with new or revised accounting standards. Thus, an EGC can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. Given that we currently report and expect to continue to report under IFRS as issued by the IASB, we have irrevocably elected not to avail ourselves of this extended transition period, and, as a result, we will adopt new or revised accounting standards on the relevant dates on which adoption of such standards is required for other public companies in the United States.

We intend to rely on other exemptions and reduced reporting requirements under the JOBS Act. Subject to certain conditions, as an EGC, we may rely on certain of these exemptions, including exemptions from providing an auditor’s attestation report on our system of internal controls over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act .We have also taken advantage of reduced reporting requirements in this prospectus. Accordingly, the information contained herein may be different than the information you receive from other public companies in which you hold equity securities.

We will remain an EGC until the earliest of (a) the last day of our fiscal year during which we have total annual gross revenue of at least $1.07 billion; (b) December 31, 2025; (c) the date on which we have, during the previous three-year period, issued more than $1.0 billion in non-convertible debt; or (d) the date on which we are deemed to be a “large accelerated filer” under the Securities Exchange Act of 1934, as amended, which would occur if the market value of our equity securities that are held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter. Once we cease to be an EGC, we will not be entitled to the exemptions provided in the JOBS Act.

Upon completion of this listing, we will report under the U.S. Securities Exchange Act of 1934, as amended, or the Exchange Act, as a non-U.S. company with foreign private issuer status. Even after we no longer qualify as an EGC, as long as we qualify as a foreign private issuer under the Exchange Act, we will be exempt from certain provisions of the Exchange Act that are applicable to U.S. domestic public companies, including:

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BUSINESS

Overview

We are a biometrics company specializing in the design, development and sale of fingerprint identification and authentication solutions. Our fingerprint sensors and biometric solutions are used in dual interface and contactless or touch-free smart cards, including payment cards, and a range of electronic devices.

We offer fingerprint sensors and biometric solutions to smart card manufacturers and other integrators of biometric fingerprint sensor technology in a broad range of markets, including payments, identification, access control, healthcare and the Internet of Things, or IoT. Based on an analysis by Zion Market Research in February 2020, the size of the global fingerprint sensor market is estimated to be $3.6 billion in 2020 and is projected to expand at a compound annual growth rate, or CAGR, of nearly 15% to $6.7 billion by 2025.

Our largest market opportunity is the biometric payment card market and more specifically our addressable market includes chip enabled cards which also include contactless payment cards. According to EMVCo, the industry standard organization, there are more than 8.2 billion chip-enabled consumer cards—credit and debit—now in use across the world. We believe the addition of a biometric sensor to the payment cards will significantly reduce the opportunity for fraud while making the transaction more convenient while using existing point of sale infrastructure. We believe the continue migration towards contactless payment cards will provide additional opportunities for our technologies. A report, Contactless Payment Market Global Forecast to 2025, published by Markets and Markets indicates that the global contactless credit/debit card payment market size is expected to grow from $10.3 billion in 2020 to $18.0 billion by 2025. This represents a CAGR of 11.7% during the forecast period. The major advantage offered by contactless payments is that customers can instantly complete transactions with the tap of a card. This increases the speed of transactions, making contactless payments even more efficient stated the Markets and Markets report.

In addition, following the COVID-19 outbreak, we believe consumers increasingly are motivated to go cashless. With many businesses discouraging the use of cash, in part due to hygiene questions linked to handling money, the prevalence of contactless payments has increased significantly in 2020. For example, a survey in March of 2020 in 19 countries around the world indicated a 25% increase in contactless payments (out of all credit card payments) compared to March 2019, and approximately 79% of consumers worldwide are now using tap and go payments. In an increasingly cashless and contactless society, there is a growing risk of card fraud. We, and other industry participants, believe that this could have a positive impact on the sale of biometric solutions going forward.

Our patent-protected fingerprint sensors can be integrated on the front side of a payment card, thereby enabling the card to use biometric fingerprint recognition instead of a personal identification number, or PIN, to authenticate the cardholder. To use this feature the cardholder first enrolls their fingerprint. A biometric template, which is representative of the fingerprint, is created and securely stored on the card. When the cardholder uses the card to make a payment, he or she places his or her finger on the card’s sensor. Through fingerprint sensing and biometric authentication, the card can determine if the person using the card is the enrolled user or not.

Our portfolio of products includes fingerprint sensors, fingerprint modules with software and algorithms and remote enrollment devices. Our fingerprint sensors can be used in dual interface, contactless-only and contact-only payment cards. Our fingerprint modules offer a complete biometric solution that integrates fingerprint sensing with additional biometric processing and system power management functions. Additionally, with our remote enrollment solutions, cardholders can easily enroll their fingerprints at home and without the need to visit a bank branch.

Our sensors use a patented off-chip design, which separates the fingerprint sensor into two key components: the sensor array and the silicon chip (Application Specific Integrated Circuit, or ASIC). This off-chip design

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architecture allows the sensor array to be made from a flexible and cost-efficient polymer substrate while minimizing the silicon area needed for the ASIC. Compared to conventional silicon sensors, for which the sensor array is made of silicon, the off-chip design allows for a larger sensing area, better matching reliability and lower costs. We believe that we are the only provider supplying capacitive off-chip sensors and biometric algorithms optimized for integration with payment cards. This year, we launched TrustedBio, our next generation of dual interface products and solutions designed to reduce biometric smart card cost while improving both performance and security. TrustedBio utilizes advanced semiconductor technology to transform the sensor ASIC into a complete biometric system on chip, while maintaining all the benefits of the capacitive off-chip sensor architecture.

Our current generation products are commercially available, and we have begun to ship samples of our products on our TrustedBio platform. To date, product revenue has not been material; however, we have seen an increase in product revenues. For the year ended December 31, 2019, product revenues were $0.2 million and in the nine months ended September 30, 2020, product revenues were $0.4 million.

We market our products and solutions to smart card manufacturers and other integrators of biometric sensor technology, such as keyboards, dongles and other information and physical access control devices. We do not own or operate industrial manufacturing facilities, which could be potentially costly. Instead, we work closely with our customers on manufacturing and alongside other component suppliers within the card ecosystem. We have also established partnerships with secure element, or SE, producers, card inlay providers and card networks to help bring biometric smart cards to market. Our strategic rationale is to ensure that all the crucial components, within the biometric smart card ecosystem, are compatible and ready for mass production and to enhance our ability to offer comprehensive solutions to the market.

Over the past three years, we have built a research and development, or R&D, team with deep industry expertise, comprised of systems and technology engineers, software engineers, silicon engineers, sensor engineers and packaging technologists. We are an integrated systems company and we maintain in-house design, testing and supply chain management functions. Manufacturing is outsourced to large and established semiconductor fabrication companies as well as other providers of components and manufacturing services.

During 2019, we raised a total of $34.2 million in capital. During 2020, we raised $18.0 million through private placements. For further financial information, see the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

While we are preparing to fully commercialize our products and services, we have begun to generate revenue through the sale of biometric sensors and system solutions that incorporate our technology. In 2019, we generated revenue of $0.4 million, $0.2 million of which related to product sales and $0.2 million of which related to engineering services. In the nine months ended September 30, 2020, we generated revenue of $0.5 million, $0.4 million of which was related to product sales and $0.1 million of which was related to engineering services. We have also secured in excess of $7.0 million of business under contract expected to ship within the next 12 to 24 months, including a $6.0 million minimum commitment to supply fingerprint sensors and software to a major global financial news and IT services company. We had a net loss of $32.4 million in 2019 and $19.5 million in the nine months ended September 30, 2020.

We were incorporated in Norway in 1996, and currently have operations in the United Kingdom, the United States and China.

Industry Background

A fingerprint sensor is a biometric security device that combines hardware and software to recognize the fingerprint scans of an individual and in turn to identify and authenticate an individual in order to grant or deny access to an electronic device, secure information or a physical facility. It is used in a broad range of applications, including payments, identification, access control, healthcare and IoT. The size of the global fingerprint sensor market is estimated at $3.6 billion in 2020 and is projected to expand at a CAGR of nearly 15% to $6.7 billion by 2025.

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Total Addressable Market

Based on an analysis by Zion Market Research, the global demand for biometric payments in 2019 was approximately $5.0 billion and is anticipated to reach around $19.0 billion by 2026. The anticipated CAGR for the market is around 19% from 2020 to 2026.

Our largest market opportunity is the biometric payment card market and more specifically our addressable market includes chip enabled cards which also include contactless payment cards. According to EMVCo, the industry standard organization, there are more than 8.2 billion chip-enabled consumer cards—credit and debit—now in use across the world. We believe the addition of a biometric sensor to the payment cards will significantly reduce the opportunity for fraud while making the transaction more convenient while using existing point of sale infrastructure. We believe the continue migration towards contactless payment cards will provide additional opportunities for our technologies. A report, Contactless Payment Market Global Forecast to 2025, published by Markets and Markets indicates that the global contactless credit/debit card payment market size is expected to grow from $10.3 billion in 2020 to $18.0 billion by 2025. This represents a CAGR of 11.7% during the forecast period. The major advantage offered by contactless payments is that customers can instantly complete transactions with the tap of a card. This increases the speed of transactions, making contactless payments even more efficient stated the Markets and Markets report.

We believe that the rapid growth of this market is attributable to an ever-increasing need for highly secure yet safe, fast and convenient identification and authentication solutions. According to the findings of a survey commissioned by Visa, for example, consumers are ready to leave the password behind. 70% of the consumers surveyed believe that biometrics are always more convenient as they do not involve memorizing passwords. More than 65% of consumers are already familiar with biometrics, while 86% are interested in using biometrics to verify the identity or to make payments.

For this reason, the market for mobile devices equipped with fingerprint sensors has grown dramatically in recent years. Led by industry giants, such as Apple and Samsung, an increasing number of smartphone manufacturers have integrated fingerprint sensors in their devices. In 2012, only 2.5 million smartphones were shipped with fingerprint sensors, whereas fingerprint sensors were used in an estimated 797 million smartphones in 2016. In 2017, fifty-five percent of smartphones shipped globally had a fingerprint sensor and according to a publicly available report by Credit Suisse, the shipment of smartphones with fingerprint sensors worldwide stood at 1.1 billion units in 2018.

The rising penetration of biometric solutions and fingerprint sensors in mobile devices has paved the way for the inclusion of such technology into payment cards. Nowadays, cards are routinely used as a payment device in lieu of cash or checks. We believe that the integration of a fingerprint sensor into payment cards will not only enhance security, but also enable financial institutions and other participants in the payments and disbursements ecosystem to pursue new market opportunities.

As the global pandemic of COVID-19 continues to rapidly evolve, we do not yet know the full extent of its potential impacts on our addressable market, business, operations, or the global economy as a whole. While we believe that the pandemic may increase end-user awareness of the benefits of contactless payment solutions such as the ones we offer, and therefore may increase the demand for our products as discussed below, the ultimate impact of the COVID-19 pandemic or a similar health epidemic is highly uncertain and subject to change.

Market Opportunities

Our largest target market is the biometric payment card market. We also offer our products and solutions for the access control market, as well as other adjacent verticals including, government and identification, healthcare and IoT.

We believe that the need for biometric payment cards is driven by consumers’ desire for a completely contactless or touch-free secure payment transaction. Consumers want a fast and frictionless transaction process

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but with a feeling of enhanced security. In addition, card issuers view innovation as important to remain relevant and “top of wallet” with their customers.

As of December 2018, there were 22 billion payment cards in circulation globally. This number is projected to further grow to 29 billion by 2023. Most of these cards are smart cards, i.e., cards with a chip. Our payment card total addressable market or TAM includes all cards with a chip. According to EMVCo, the industry standard organization, there are more than 8.2 billion chip-enabled consumer cards—credit and debit—now in use across the world.

Touch-free or contactless payment cards are expected to drive significant growth for our products. The global touch-free card transaction value is expected to increase by 300% from $2 trillion to $6 trillion between 2020 and 2024. Touch-free payments have accelerated significantly, and contactless limits have been increased due to the global COVID-19 pandemic driven by concerns for safety. However, these trends increase the risk of fraud and we believe that adding a biometric fingerprint sensor meets the needs of a touch-free payment environment while providing a high level of security.

We, and other industry participants, expect demand for a contactless, safe and secure payment solution, that a biometric payment card offers, to grow in the near future. We expect to see banks launching cards and to see more pilots and larger scale commercial launches in 2021. We also believe our TrustedBio solution offers compelling performance, security, manufacturability and cost benefits which will allow for the large-scale adoption of biometric payment cards beginning in 2021.

Also, we, industry analysts and observers all project significant and steep growth in fingerprint biometrics in payment cards. Estimates for biometric payment card shipments in 2020 are 1 to 2 million cards for pilots and smaller scale commercial launches. Our projections for 2021 to 2024 shows significant growth from 25 to 400 million units.

Projected number of biometric payment card shipments (millions of units)

We are already engaged with leading payment card manufacturers and have design wins and supply agreements with some of the industry leaders. In addition, we have formed partnerships with key members of the biometric card ecosystem including SE providers. We expect to continue to establish new partnerships and customers.

Before a payment card can be actively offered to consumers, it must first be certified by the payment network. In the last year several of the largest payment networks, including China UnionPay, or CUP, Mastercard and Visa, have all published their certification processes for biometric smart cards. Certification involves a rigorous multi-step process carried out by third-party testing institutions along with the card network. The process includes testing of biometric performance, such as the fingerprint sensor and the ASIC, and the software and security testing. The card’s physical aspects are also tested, for torsion endurance, scratch resistance and structural strength. Certification represents a high barrier to entry for both new entrants to the market and our existing competitors. All three major global payment networks now have certified biometric payment cards.

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During the second quarter of 2020 our technology was certified by two major global payment networks: CUP and a large US-based payment network. The two networks combined issue 70% of global branded payment cards. We were the first fingerprint sensor company to have achieved certification for its system solution with two global payment networks. Certification enables the transition from the pilot phase to commercialization and therefore broader market adoption of biometric payment cards.

In 2020, our fingerprint sensors were selected by IDEMIA France SAS, or IDEMIA, the global leader in augmented identity and a leading global payment card manufacturer. We expect products using our TrustedBio technology to be in the market in 2021.

We continue to see card manufacturers and other suppliers in the ecosystem invest significantly in biometric payments technology.

Impact of COVID-19

In the first quarter of 2020, the World Health Organization declared COVID-19 a global pandemic. We quickly adopted the guidelines, outlined by the relevant governments where our company operates, to ensure the health of our employees and their families.

We established an internal virus response team. Effective March 16, 2020, all travel and face-to-face meetings had been stopped and we asked most staff to work from home. Staff with specific roles who need to work at one of our facilities are being supported in line with local government guidelines. Our management and board of directors continue to monitor the situation closely and will take further action as appropriate.

There have not been any significant delays in development projects, and we have not incurred any significant additional costs due to the actions taken. The pandemic did cause some short-term delays in early adoption activities, including temporary delays for pilots.

On the other hand, we believe that the pandemic has increased end-user awareness of the benefits of contactless payments. Following the outbreak, consumers are motivated to go cashless more than ever before. With many businesses discouraging the use of cash, because of hygiene questions that surround handling money, contactless payments are front of mind to avoid touching pin pads. In an increasingly cashless ecosystem, there is a growing threat of card fraud from the lack of authentication. Contactless payments need to be made more secure in order to ensure transactions are hygienic, convenient and free from the risk of fraud.

We, and other industry participants, believe this attention to hygienic aspects could have a positive impact on business going forward.

The Importance of Our Solution to the Payment Card Market

The integration of fingerprint sensor into payment cards provides the following benefits:

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Our Competitive Strengths

We believe the following strengths will enable us to maintain and extend our position in the global fingerprint sensor and biometric technology market.

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Our Growth Strategy

We intend to implement the following strategies to further expand our business:

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Our Products

The products we market are fingerprint sensors and fingerprint modules and solutions which include proprietary software algorithms and remote enrollment technology.

Fingerprint Sensors

We currently market and sell our IDX3200 and IDX3205 fingerprint sensors. These can be used in dual interface, contactless-only as well as contact-only payment cards. The fingerprint sensor is the front end of the fingerprint solution which captures the fingerprint image from which the biometric template is extracted.

In 2017, we launched an ASIC platform for off-chip sensors. The platform delivered both enhanced performance and reduced power consumption at a lower price compared to our previous generation ASIC. The ASIC was designed to be used across multiple product applications in our target markets, including the biometric payment card market, access control market, identification market and IoT market. The chip’s low power consumption increased its compatibility with contactless card applications. Additionally, the ASIC featured increased processing power and enhanced security features. Products designed on this ASIC platform began to ship in volume in 2020.

In February 2020, we launched TrustedBio, our next generation of dual-interface products and solutions designed to reduce biometric smart card cost while improving both performance and security. The TrustedBio sensor utilizes leading semiconductor technology to implement a biometric-system-on-chip in the ASIC while maintaining all the benefits of the capacitive off-chip sensor architecture. Unlike existing sensors, this new generation of products removes the need to have any electronic components laminated within the card’s inlay. This is expected to lead to an improvement in manufacturing processes and yields, substantially reducing the time to market and cost of the card. We completed the first shipment of TrustedBio in August 2020. We expect to release the first member of the TrustedBio family in the fourth quarter of 2020, in support of customer pilots, and to eventually achieve commercial deployment in the second half of 2021.

Fingerprint Modules

A fingerprint module consists of the fingerprint sensor, together with ancillary components, such as the microprocessor unit and power management needed for a complete solution. In addition to the fingerprint sensor, which comes with the image-capturing ASIC, our fingerprint modules also include circuitry for power harvesting from the card terminal and power management circuitry, microcontroller with software for image processing and template creation in addition to secure channel communication with the SE. In a payment card, the matching typically takes place in the SE, however for applications which do not require a SE matching can also occur in the module.

Our fingerprint modules offer a turn-key solution for customers to develop, prototype and manufacture their own end-product.

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On-Card Enrollment Solutions

We design, develop and license our remote enrollment devices, which enable cardholders to enroll their fingerprints on a payment card. Our on-card enrollment solutions can be used for contactless-only, contact-based as well as dual interface smart card applications. We believe that a low-cost, simple, convenient and secure end-user registration process is the key to accelerating adoption of biometric payment cards by issuers and consumers alike.

Using our device, the enrollment can be completed in less than a minute. A user can simply follow the instructions indicated on the device, further guided by flashing LED light indicators.

Our seamless end-to-end solution allows card users to securely enroll themselves without visiting a bank branch or ATM. Enrollment takes place entirely inside the smart card using its standard secure EMV^® chip. There is no need to connect the enrollment device or smart card to a computer, smartphone or any other connected device, which prevents tampering or external interference during the enrollment process and eliminates the need for card suppliers and issuers to provide and maintain mobile devices or desktop applications for enrollment purposes.

Our Technology

Off-chip Capacitive Fingerprint Sensing

A fingerprint sensor captures a high-resolution image of a finger for use in biometric identification and authentication applications. Our sensors use an off-chip capacitive sensing approach to measure tiny differences in the three-dimensional ridge and valley profiles that make up a person’s fingerprint.

Our off-chip sensor product is made up of two key elements: the sensor array and the silicon chip. The sensor array contains a high-density matrix of electrodes embedded within a low-cost, multilayer polymer substrate. The silicon chip (also referred to as the ASIC) drives and measures electrical signals onto these sensor electrodes to measure ridge-valley capacitances and form an overall image of the fingerprint. The ASIC is mounted to the underside of the substrate, whereas the topside of the substrate is covered in a hard-black coating and exposed to the finger.

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This off-chip sensor approach, which separates the sensor array from the ASIC, is patented and differs in both design and construction from conventional silicon sensors. In a conventional silicon sensor, the sensor’s pixel array is implemented within the silicon ASIC itself, requiring direct finger contact to the coated surface of the silicon chip and a large silicon area. By leveraging the off-chip sensor architecture the sensor array can be implemented in a low-cost polymer substrate and the total silicon content can be minimized. Since polymer is less expensive than silicon, the overall sensor cost is reduced compared to conventional silicon sensors of the same size. This also offers the possibility of enlarging the off-chip sensing area, whereby a larger portion of the fingerprint is captured, thus improving both usability and security at a lower price.

Since the off-chip sensor array is made from a bendable polymer substrate, rather than stiff and brittle silicon, our sensor is inherently mechanically bendable, yet robust. We believe that our fingerprint sensors are particularly suited to integration within smart cards, which must satisfy stringent bending and twisting requirements in order to be compliant with the International Organization for Standardization, or ISO, requirements for smart cards.

Furthermore, since the off-chip sensor decouples the sensor array from the ASIC, it becomes possible to utilize advanced semiconductor lithographies within the smaller silicon ASIC. By using advanced semiconductor lithographies the off-chip sensor can integrate more features and functionality without adding significant system cost. As a result, our off-chip sensor product can become more than just a fingerprint sensing front-end, it can be transformed into a complete biometric-system-on-chip. The following graphic demonstrates the conventional structure on a biometric smart card (left) and a biometric smart card with integration of discrete components on onto our ASIC (right):

This biometric integration facilitates cost reduction and reduces the manufacturing complexity of biometric smart cards by allowing the elimination of additional discrete components that would otherwise be required to build an overall biometric system.

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Biometric Software and Algorithms

Both software and algorithms are required to make fingerprint sensors and modules operate and communicate with their host device. We develop software components, ranging from elements such as on-sensor firmware to enrollment software, and extract-and-match algorithms.

We have a range of high-performance embedded ridge-matching algorithms which extract biometric features from sensor images and then perform a proprietary matching process against a reference set of biometric features. These algorithms have been developed for security, performance and convenience in highly resource constrained environments. Our distributed matcher algorithms use a unique partitioning approach to perform processing in both secure and non-secure domains and optimize system performance while meeting the strict security requirements of the payment card schemes.

In 2017, we launched our third-generation system software that is optimized for dual interface biometric cards. The software is designed to be power and memory efficient. In the same year, we introduced a proprietary matcher algorithm for biometric cards. This patented algorithm is rotation insensitive and accepts partial touches. It is designed for use in both smart card and IoT applications.

In the past two years, we released security-enhanced versions of our matcher. The version released in 2019 moves the critical matcher function and template information onto the SE, while the less secure on-card biometric processor performs feature extract functions that do not need to be secured. This distributed matcher architecture meets the biometric performance and security guidelines of multiple global payment schemes. Recently, we became the first and only biometric sensor company to achieve a development site EMVCo^® Security Evaluation.

Enrollment Solutions

Before using a fingerprint based biometric authentication system for the first time, the user’s fingers need to be registered and enrolled. This involves going through a process to securely capture a number of fingerprint images and then using a biometric algorithm to extract a set of unique features from the images. These unique features are then stored securely as biometric reference templates for future comparison or matching. Our on-card enrollment devices are secure and low-cost, enabling users to enroll from the comfort of their own home, they leverage the large sensing area of the off-chip sensor to enable a highly effective yet simple remote enrollment process.

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Full Systems Approach

The biometric smart card represents a highly challenging and resource constrained environment. The traditional fingerprint sensor captures an image of the fingerprint; however, this image also needs to be processed by a biometric authentication algorithm. This combination of sensor and algorithm form a biometric system which needs to operate seamlessly with the card’s payment chip, the SE, and the associated payment terminal. The resources of the SE also need to be leveraged carefully for control of the biometric system, secure storage of biometric templates and part-execution of the biometric algorithm. The electrical power to operate the biometric system can be supplied by the host device. For example, smart cards can be powered when inserted into a payment terminal. Alternatively, power can be harvested from a magnetic field in the case where a smart card is being tapped on a contactless payment terminal. The following graphic depicts the system design within a biometric payment card:

The interaction between the fingerprint sensor and its environment is complex, particularly when there are limitations on power, processing capacity and physical space, while having to satisfy stringent requirements for response time and biometric reliability. Therefore, we use a full system approach that includes developing and providing system-level reference designs and software, in addition to our standalone fingerprint sensors. A reference design is a technical blueprint of a system that our customers can use as-is or customize to their own requirements. Our reference design provides a faster path for device manufacturers to imbed our sensors in their products. It typically consists of a complete solution to implement a biometric system including antenna, power management, key external component selection (if any), system software, biometric matching algorithms and enrollment solutions.

Research and Development

Our R&D activities are primarily performed in the United States and the United Kingdom.

The R&D activities include: (i) design and developments relating to our ASIC; (ii) system engineering and software development to create a full biometric system; (iii) activities to extend our existing products and create new intellectual property and know-how related to fingerprint sensors; (iv) industrialization activities including support to our production partners; and (v) activities to enhance our biometric algorithms for improved matching and enrollment, particularly in power-constrained environments.

Innovation through research and development is critical for us to remain competitive and to help our customers maintain cost and performance leadership. Our technology roadmap focuses on:

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We have built an engineering team with significant industry experience capable of supporting our customers in the integration of complex components within a smart card or other devices. As of August 31, 2020, we had an engineering and research team of 72 employees and contractors, most of whom were based in Europe and the United States, representing 73% of our workforce. The team is comprised of systems and technology engineers, software engineers, silicon engineers, sensor engineers and packaging technologists.

Manufacturing and Supply Chain

Our operations strategy is to maximize efficiency and cost competitiveness by designing our products using industry standard design processes, incorporating verified high-volume components and materials, and utilizing established manufacturing processes. In support of the anticipated demand for biometric smart card solutions, we have established a supply chain capable of satisfying expected future market demand. We currently utilize external manufacturing partners for the fabrication, assembly and testing of our products. Our strategy, which is referred to as fabless, is to design and develop our ASIC and outsource the manufacturing to large established semiconductor fabrication foundries. We believe this strategy provides the best combination of performance, cost and feature attributes necessary for our products.

We develop the production test solutions for use by our manufacturing partners. In addition, to accelerate the development of mass production test solutions for our biometric sensor products, we have invested in high-volume test equipment at our facility in Rochester, New York. Production test deployments with the OSAT partners are fully verified in house prior to installation on the production line, reducing cycle time, production engineering support and costs.

Our selected manufacturing partners for sensor production are Amkor Technology, Inc. and Silicon Precision Industries Limited, both of which are leaders in outsourced semiconductor assembly and test, or OSAT, production. We have partnered with Taiwan Semiconductor Manufacturing Corporation, or TSMC, one of the leading semiconductor manufacturers in the world, for volume manufacturing of our ASICs. The TSMC relationship gives us access to the newest and most competitive silicon manufacturing processes and geometries, and provides the capacity and cost structure to serve high volume opportunities.

We select our manufacturing partners based on a supplier capability analysis in order to meet the high quality and reliability standards required of our products. Our engineers and supply chain personnel work closely with manufacturing partners to increase yield, reduce manufacturing costs, improve product quality and ensure that component sourcing strategies are in place to support our manufacturing needs.

We believe our outsourced manufacturing model enables us to focus our resources and expertise on the design, development, sales, marketing and support of our products to best meet customer requirements. We also believe that this manufacturing model provides us with the flexibility required to respond to new market opportunities and changes in customer demand, simplifies the scope of our operations and administrative processes and significantly reduces our working capital requirements, while providing the ability to scale production rapidly.

Intellectual Property

Our intellectual property rights cover individual inventions and complete biometric systems ranging from measurement principles, algorithms, sensor design and system solutions. We have filed applications to protect our intellectual property rights in a wide range of countries including the United States, the United Kingdom, Norway and several other countries. We continue to seek patent protection for aspects of our technology that provide significant competitive advantage.

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Our success and ability to compete depend substantially upon our core technology and intellectual property rights. We rely on patent, trademark and copyright laws, trade secret protection and confidentiality agreements to protect our intellectual property rights. In addition, we require employees and consultants to execute appropriate non-disclosure and proprietary rights agreements. These agreements acknowledge our exclusive ownership of intellectual property developed for and by us and require that all proprietary information remain confidential.

We maintain a program designed to identify technology that is appropriate for patent and trade secret protection, and we file patent applications in the United States and certain other countries for inventions that we consider significant. As of August 31, 2020, we held 58 patent families with 110 granted patents and 102 pending patent applications. The wordmark ‘IDEX’ and the IDEX logo are registered trademarks of IDEX Biometrics ASA and are owned by IDEX.

Although our business is not materially dependent upon any one intellectual property right, our intellectual property rights and the products made and sold under them, taken as a whole, are a significant element of our business. In addition to patents, we also possess other forms of intellectual property rights, including trademarks, know-how, trade secrets, design rights and copyrights. We control access to and use of our software, technology and other proprietary information through internal and external controls, including contractual protections with employees, contractors, customers and partners. Our software is protected by EU, the United States and other international copyright, patent and trade secret laws. Despite our efforts to protect our software, technology and other proprietary information, unauthorized parties may still copy or otherwise obtain and use our software, technology and other proprietary information. In addition, as we further expand our international operations and markets, effective patent, copyright, trademark and trade secret protection may not be available, may be limited, or may not be enforceable in certain foreign countries.

Companies in the markets in which we operate frequently are sued or receive informal claims of patent infringement or infringement of other intellectual property rights. As we become more successful, we believe that competitors will be more likely to try to develop products that are similar to ours and that may infringe our intellectual property rights. It is also possible that competitors or other third parties will claim that our products infringe their intellectual property rights. Successful adjudication of claims of infringement by a third party, could result in injunctions that could prevent us from selling some of our products in certain markets, penalties, settlements or judgements that require payment of royalties or damages, or require us to expend time and money to develop non-infringing products. We cannot assure you that we will not in the future be accused of infringe any third-party intellectual property rights.

Sales and Marketing

We sell our products and solutions through a direct sales force. Our sales staff provides product education, application advisory services to and maintain close relationships with our customers. We also have sales and business development personnel located close to major customers across Europe, the United States and Asia. Our sales and business development teams work closely with our product line management personnel to support strategic sales activities. A broad range of marketing communications activities have also helped us to promote the benefits of our fingerprint sensors and biometric solutions to all members of the value chain. We have invested significant time and resources to meet with card and device manufacturers to understand their requirements and performance issues. These efforts have provided us with a deep understanding of the challenges faced by card manufactures and issuers which, in turn, enabled us to focus our product and technology development efforts to address our customers’ challenges. As an example, we understand that several of our customers are looking to offer a digital currency biometric card, we are therefore developing products to satisfy these requirements.

As a result of this direct approach, we have achieved improved visibility into the sales channel as well as valuable real-time customer feedback which directs our on-going technology development and manufacturability improvements.

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Our products typically have a long sales cycle, requiring discussions with prospective customers in order to better understand their application and system level requirements and technology roadmaps. Our customers are predominantly smart card manufacturers, and we have discussions with them regarding the requirements of their end customers, which provides our sales force with insight into how our products will be deployed. We develop strong customer relationships to ensure technical and business alignment. The period of time from our initial contact with a prospective or current customer to the receipt of an actual purchase order is frequently a year or more. Prospective customers perform system and card level testing before the cards are certified and then deployed by the card network and card issuers. Customers require us to perform extensive verification testing and qualification based on industry standards. This phase of our sales cycle can take several months.

Our in-house sales personnel also assist customers with forecasts, orders, delivery requirements and other administrative functions. Our technical support engineers respond to technical and product-related questions and provide application support to customers.

The Ecosystem of Payment Card Market

The payment card ecosystem is complex and involves many different companies working together to bring biometric payment cards to the addressable markets. The biometric payment card value-chain is shown below:

We are a supplier at the starting point of this value-chain and sell our products and solutions to smart card manufacturers. We also work closely with our customers on manufacturing methodologies and improvements, and alongside other component suppliers within the card ecosystem. For example, we have established partnerships with suppliers of other components of a payment card, including SE producers, card inlay providers and card networks, to help bring biometric smart cards to market. Our strategic rationale is to ensure that crucial components within the biometric smart card ecosystem are compatible and ready for mass production and to enhance our ability to offer comprehensive solutions to our customers.

Our Customers

Our target customers are primarily manufacturers of smart cards, and other electronic devices located in Europe, the United States and Asia. The number of customers who have purchased our products has increased from 7 in 2016 to 19 during both the nine and twelve months ended September 30, 2020. As of September 30, 2020, we had 28 active customers, defined as customers who have purchased our products within the last 2 years.

The largest 3 payment card manufacturers or tier one card manufacturers comprise approximately 60% of EMVCo certified payment cards manufactured. We also serve a number of small or tier two card manufacturers,

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including Chutian Dragon, Eastcompeace, Feitian Technologies, Goldpac Group, Hengbao, IDEMIA and Quest Payment Systems. At times we also charge a fee for engineering services we provide to our customers in connection with the integration and manufacturing of our fingerprint sensors and software programs.

We have historically generated the majority of our revenue from a few larger customers. In 2018, 2019 and the nine months ended September 30, 2020, our five largest customers in each period (which differed by period) collectively accounted for 96%, 91%, and 98% of our revenue, respectively. During 2018, three customers, Mastercard, IDEMIA France SAS and Yoyon Electronics Technology Co Ltd., accounted for approximately 39%, 36% and 13% of our revenue, respectively. During 2019, two customers, Bloomberg L.P. and IDEMIA France SAS, accounted for approximately 69% and 10% of our revenue, respectively. During the nine months ended September 30, 2020, Bloomberg L.P. accounted for approximately 84% of our revenue.

Orders and Backlog

As of August 31, 2020, we had an order backlog of $0.6 million, a substantial portion of which is for an information access control customer. We define backlog as non-cancellable orders, items in deferred revenue and undelivered orders in our backlog report.

Competition

The biometrics market is highly competitive and rapidly evolving. We compete with both U.S. and international companies, some of which have substantially greater financial and other resources than we do. We encounter multiple competitors in most of our markets, although we believe no one competitor competes with us across our full suite of solutions and markets. We compete against other companies that provide biometric sensors and modules and related software, algorithms and enrollment solutions. Our principal competitors include, among others, companies such as Fingerprint Cards AB, NEXT Biometrics ASA and ELAN Microelectronics Corp.

The principal competitive factors upon which we compete include performance, low power consumption, rapid innovation, breadth of product line, availability, product reliability, multi-sourcing and selling price. We believe that we compete effectively by offering high levels of customer value through high speed, high density, low power consumption, broad integration of photonic functions, software intelligence for configuration, control and monitoring, cost-efficiency, ease of deployment and collaborative product design. We cannot be certain we will continue to compete effectively.

We also may face competition from companies that may expand into our industry and introduce additional competitive products. Existing and potential customers and partners are also potential competitors. These customers may internally develop or acquire additional competitive products or technologies, which may cause them to reduce or cease their purchases from us.

Material Agreements

Supply Agreement with IDEMIA

On February 13, 2020, we entered into a framework supply agreement with IDEMIA France SAS, or IDEMIA. Pursuant to this agreement, we agreed to supply IDEMIA with certain of our fingerprint sensor components, fingerprint sensor modules and loaded firmware, including our TrustedBio technology, which is to be used in IDEMIA’s next-generation biometric payment cards.

Under the terms of this agreement, we are responsible for assisting IDEMIA in installing and integrating our products when they are delivered. When needed, IDEMIA may provide us with workspace in their offices for us to work alongside IDEMIA employees to successfully integrate our products into IDEMIA’s systems. We retain the intellectual property rights to the products we provide. We are also responsible for monitoring the risk of obsolescence of any components of our products.

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IDEMIA may place orders for our products on an ongoing basis. IDEMIA placed its first order in September 2020. We have not generated revenue pursuant to this agreement as of the date hereof. In addition, to ensure that IDEMIA can obtain the products that they need from us, we agreed to place into escrow the materials and information needed to manufacture our products, and grant to IDEMIA a license to utilize these materials under certain conditions. The supply agreement runs for a term of three years, and automatically renews for one-year terms thereafter, unless either party terminates the agreement by prior written notice no later than thirty days prior to the expiry of the original three-year term.

Master Services Agreement with Bloomberg

On April 4, 2019, we entered into an agreement to provide services to, Bloomberg L.P., or Bloomberg. Under the initial statement of work, we agreed to provide Bloomberg with sensors, and in certain cases to modify the firmware of such sensors, such that the sensors may be integrated into Bloomberg’s technological infrastructure. We retain the rights to all our pre-existing intellectual property and any future intellectual property that we create. However, we have granted Bloomberg a non-exclusive, royalty-free license so that Bloomberg may use any deliverables that we provide to Bloomberg under the agreement. We began shipping units to Bloomberg’s subcontract manufacturer during the second quarter of 2020.

Under the terms of the agreement, we agreed to indemnify Bloomberg from all claims arising from or in connection with, among other things, our provision of services to Bloomberg, any material breach of the agreement, or any claim alleging infringement upon or misappropriation of any applicable intellectual property rights. The agreement will remain in effect, unless terminated by Bloomberg for cause with immediate effect or otherwise with 90 days’ prior written notice.

Government Regulation

Regulation related to the provision of services over the internet is evolving, as federal, state and foreign governments continue to adopt new, or modify existing, laws and regulations addressing data privacy and the collection, processing, storage, transfer and use of data. In some cases, data privacy laws and regulations, such as the European Union’s General Data Protection Regulation, or GDPR, that took effect in May 2018, impose new obligations on us as a participant in the technology sector, as well as on our customers. In addition, domestic data privacy laws in the United States, such as the California Consumer Privacy Act, or CCPA, which took effect in January 2020, continue to evolve and could expose us to further regulatory burdens. Further, laws such as the EU’s proposed e-Privacy Regulation are increasingly aimed at the use of personal information for marketing purposes, and the tracking of individuals’ online activities.

Although we monitor the regulatory environment and have invested in addressing these developments, these laws may require us to make additional changes to our services to enable us or our customers to meet the new legal requirements, and may also increase our potential liability exposure through higher potential penalties for non-compliance. These new or proposed laws and regulations are subject to differing interpretations and may be inconsistent among jurisdictions. These and other requirements could interrupt our operations, require us to take on more onerous obligations in our contracts, restrict our ability to store, transfer and process data or, in some cases, impact our ability or our customers’ ability to offer our services in certain locations, to deploy our solutions, to reach current and prospective customers, or to derive insights from customer data globally. The costs of compliance with, and other burdens imposed by, privacy laws, regulations and standards may limit the use and adoption of our solutions and services, reduce overall demand for our solutions and services, make it more difficult to meet expectations from or commitments to customers, lead to significant fines, penalties or liabilities for noncompliance or impact our reputation, any of which could harm our business.

Employees

As of August 31, 2020, we had 91.5 full-time equivalent, or FTE, employees and 7 FTE contractors. Of these, 72 individuals are engaged in R&D. Specifically, 33 individuals are engaged in silicon, sensor and

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packaging, 21 in systems and technology and 18 in software. In addition, 13.5 individuals are engaged in sales and marketing and 13 in operations, finance and administration. Of these employees and contractors, 36.5 FTE are based in Europe, 54 in the United States and 8 in China.

We have no collective bargaining agreements with our employees, and we have not experienced any work stoppages.

Facilities

We lease office space in Oslo, Norway for our corporate headquarters under a lease with a three months term at any time. We also lease laboratory space and regional offices in Wilmington, Massachusetts and Rochester, New York, United States, Farnborough, United Kingdom and Shanghai, China.

We do not own or operate industrial manufacturing facilities. As discussed above, our philosophy is to design our products based on proven standard manufacturing techniques. The different components and processing work are sourced from leading industry vendors in various countries.

Insurance

We maintain various insurance policies to insure against certain risks. We maintain insurance to cover our liability should any injuries occur at our facilities. We maintain medical insurance for our employees and management. We also maintain company property insurance and accident insurance, covering property damage and casualty damage in accidents. We maintain directors and officer’s liability insurance. We have selected business interruption, third-party liability and product liability insurances. We may not maintain adequate insurance, which could expose us to significant costs and business disruption. We consider our insurance coverage to be in line with that of other technology companies of similar size and scale that are headquartered in Norway.

Legal Proceedings

We are currently not party to any legal proceedings that are likely to have a material adverse effect on our results of operations, financial condition or cash flows. We may in the future become involved in litigation or other legal proceedings relating to claims arising from the business.

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MANAGEMENT

Executive Officers and Directors

The following table sets forth information regarding our executive officers and directors, including their ages, as of February 18, 2021.

Executive Officers

Vincent (“Vince”) Graziani has served as our Chief Executive Officer since February 2020. Prior to joining us, he served as Vice President of Strategy Development and Implementation of Infineon Technologies AG from October 2015 through February 2020 and was responsible for leading new business development and strategic partnerships. Prior to Infineon Technologies, Mr. Graziani served as Chief Executive Officer of Sand 9 Inc. from January 2010 through May 2015, Vbrick Systems Inc. from August 2007 through December 2009 and Sandburst Inc. from May 2002 through February 2006, where he led these technology companies from the pre-revenue stage to significant revenues and scale. Earlier in his career, Mr. Graziani held positions of increasing responsibility in engineering as well as sales and marketing at Intel Corporation and Broadcom Inc. Mr. Graziani holds a Bachelor of Science in Electrical Engineering from The University of New Hampshire and a Masters degree in Electrical Engineering from Northeastern University.

Derek P. D’Antilio has served as our Chief Financial Officer since July 2019. Prior to joining us, Mr. D’Antilio served as Vice President of Finance and Corporate Controller of MKS Instruments, Inc., a multi-billion Nasdaq-listed global semiconductor equipment supplier, from December 2010 to January 2019. From December 2008 to December 2010, he served as Assistant Controller and Director of Finance at 3Com Corporation (acquired by Hewlett-Packard). Prior to that, Mr. D’Antilio spent nearly a decade in public accounting and audit with BDO Global and PricewaterhouseCoopers LLP. He has held senior finance positions at high-growth US-listed technology companies with responsibility for global accounting and reporting, financial planning, treasury, tax, operations and investor relations. Mr. D’Antilio is a certified public accountant and certified management accountant and holds a B.S.B.A in Accounting and Economics from Salem State University and an M.B.A from Babson College with Honors.

Anthony Eaton has served as our Chief Technology Officer since March 2019. Mr. Eaton served as our Vice President of Systems Engineering from February 2017 to February 2019, and our Senior Director of Engineering from August 2016 to January 2017. From November 2014 through August 2016, he served as Director of System Engineering at Atmel Corporation, where he was responsible for the System Engineering function within Atmel’s MaxTouch Business Unit. Prior to Atmel, Mr. Eaton held senior engineering roles at Nvidia Corporation and

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Mirics Semiconductor, Inc. Earlier in his career he worked for companies such as Sony Semiconductor and Electronic Solutions and PA Consulting Group. Mr. Eaton holds a First Class Bachelor’s degree (B.A. Hons) and Master’s degree (M.Eng) after reading Engineering at Cambridge University, England.

Stanley A. Swearingen has served as our Executive Vice President of Advanced Technology and Strategy since February 2020. Mr. Swearingen served as our Chief Executive Officer from April 2018 through February 2020, and our Chief Product Officer from November 2016 to March 2018. Prior to joining us, from November 2013 to February 2016, Mr. Swearingen served as Senior Vice President & General Manager MaxTouch Business Unit and Chief Technology Officer of Atmel Corporation, where he drove the overall technology strategy and direction for the company. From June 2010 to November 2013, he served as Senior Vice President and General Manager Biometric Products Division and Chief Technology Officer of Synaptics Inc., where he was instrumental in the formulation of the biometric fingerprint strategy, including the acquisition of Validity Sensors, Inc. Prior to Synaptics, Mr. Swearingen held senior positions at various semiconductor companies, such as Scientific Components Corporation (d/b/a Mini-Circuits), Skyworks Solutions, Inc., Agere Systems Inc. and National Semiconductor.

Board of Directors

Morten Opstad has served as chair of our board of directors since March 1997. Mr. Opstad is a partner in Advokatfirmaet Ræder AS in Oslo, Norway. He has rendered legal assistance with respect to establishing and organizing several technology and innovation companies. He currently serves as chair of the board of Thin Film Electronics ASA. Mr. Opstad holds a legal degree (Cand.Jur.) from the University of Oslo. We believe that Mr. Opstad is qualified to serve on our board of directors because of his intimate familiarity with our company, his experience as a director on publicly listed companies and his expertise in the technology and innovation industry.

Lawrence John (“Larry”) Ciaccia has served as a member of our board of directors since May 2015 and was appointed as Deputy Chair of our board of directors in May of 2019. Mr. Ciaccia has extensive experience in the semiconductor industry. He played a pivotal role in transforming AuthenTec, Inc. from a start-up into the world’s leading fingerprint sensor supplier, serving as Chief Executive Officer from September 2010 and instrumental in the acquisition of AuthenTec by Apple in October 2012. He remained with Apple through February 2013 to assist in the acquisition integration and transition. Mr. Ciaccia holds a Bachelor of Science in Electrical Engineering from Clarkson University and a M.B.A. from the Florida Institute of Technology. We believe that Mr. Ciaccia is qualified to serve on our board of directors because of his extensive experience in the semiconductor industry and in executive management.

Deborah Lee (“Deborah”) Davis has served as a member of our board of directors since May 2015. Ms. Davis has served as a non-executive director on the boards of directors of International Personal Finance plc since October 2018, The Institute of Directors since April 2018, Which? since January 2015 and a trustee of Southern African Conservation Trust since July 2013. Earlier in her career, Ms. Davis held senior executive leadership roles at PayPal Inc., eBay Inc., Verizon Business and Symantec Corporation. Ms. Davis holds a Bachelor of Applied Science (Electronics) Honors degree from the University of Melbourne, a Sloan Masters in Science (Management) with Distinction from London Business School, a Diploma in Company Direction with Distinction from Institute of Directors and is a qualified Chartered Director (CDir). We believe that Ms. Davis is qualified to serve on our board of directors because of her extensive industry knowledge.

Hanne Høvding has served as a member of our board of directors since December 2007. Since January 2003, Ms. Høvding is retired from a career in a major Norwegian credit card issuer, now DNB Bank ASA’s credit card division. In her career, Ms Høvding has held several management positions within personnel administration, finance, credit card administration, debt collection and HR. Since November 2005, Ms.Høvding has been Chair of Cama Invest AS, a small private held Norwegian investment company. Ms. Høvding holds a Bachelor’s degree in Economics and Business Administration from the Norwegian School of Economics and

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Business Administration. We believe that Ms. Høvding is qualified to serve on our board of directors because of her diverse experience and strong business acumen and leadership skills.

Stephen A. (“Steve”) Skaggs has served as a member of our board of directors since May 2019. Mr. Skaggs also serves as a non-executive director and audit committee chair of Coherent, Inc., a leading global manufacturer of lasers, since 2013. Mr. Skaggs has more than 25 years of experience in the semiconductor industry, including serving as Senior Vice President and Chief Financial Officer, from 2013 to 2016, and as Senior Vice President of Corporate Development, from 2010 to 2013, of Atmel Corporation, a leading supplier of microcontrollers, prior to its acquisition by Microchip Technology Incorporated. Prior to Atmel, he worked for over 15 years at Lattice Semiconductor, a supplier of programmable logic devices and related software, holding various leadership positions including Chief Executive Officer, President, and Chief Financial Officer. Earlier in his career, he was employed by Bain & Company, a global management consulting firm. Mr. Skaggs holds a B.S. degree in Chemical Engineering from the University of California, Berkeley and an M.B.A degree from the Harvard Business School. We believe that Mr. Skaggs is qualified to serve on our board of directors because of his deep industry experience as an executive at semiconductor companies.

Thomas M. Quindlen has served as a non-voting observer of our board of directors since October 2020. Since January 2014, Mr. Quindlen has served as the Chief Executive Officer and Executive Vice President for Retail Card, a division of Synchrony. Prior to joining Synchrony, Mr. Quindlen held several leadership roles at GE Capital, the financial services subsidiary of the General Electric Company. Mr. Quindlen has worked in the financial services industry for over 30 years. Mr. Quindlen holds a bachelor’s degree in accounting from Villanova University. We believe that Mr. Quindlen brings strong leadership experience in Payments and Sales, Consumer Finance and Payment Card Solutions, Corporate Finance, Client Management, Marketing and Audit and has a proven track record in leading growth companies.

Family Relationships

There are no family relationships between any of the directors. There are no family relationships between any director and any of the senior management of our Company.

Arrangements or Understandings

None of our senior management, directors, or key employees has any arrangement or understanding with our principal shareholder, customers, suppliers, or other persons pursuant to which such senior management, director, or key employee was selected as such.

Foreign Private Issuer Exemption

We are a “foreign private issuer,” as defined by the SEC. As a result, in accordance with Nasdaq rules, we will comply with home country governance requirements and certain exemptions thereunder rather than complying with Nasdaq corporate governance standards. While we expect to voluntarily follow most Nasdaq corporate governance rules, we may choose to take advantage of the following limited exemptions:

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Furthermore, Nasdaq Rule 5615(a)(3) provides that a foreign private issuer, such as us, may rely on home country corporate governance practices in lieu of certain of the rules in the Nasdaq Rule 5600 Series and Rule 5250(d), provided that we nevertheless comply with Nasdaq’s Notification of Noncompliance requirement (Rule 5625), the Voting Rights requirement (Rule 5640) and that we have an audit committee that satisfies Rule 5605(c)(3), consisting of committee members that meet the independence requirements of Rule 5605(c)(2)(A)(ii). We intend to comply with the Nasdaq corporate governance rules applicable to foreign private issuers, which means that we are permitted to follow certain corporate governance rules that conform to Norwegian requirements in lieu of many of the Nasdaq corporate governance rules. Accordingly, our shareholders will not have the same protections afforded to shareholders of companies that are subject to all of the corporate governance requirements of Nasdaq.

We intend to follow Norwegian corporate governance practices in lieu of Nasdaq corporate governance rules as follows:

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We may utilize these exemptions for as long as we continue to qualify as a foreign private issuer. For an overview of differences between corporate governance principles for a Norwegian public limited company such as us and those that are applicable to a Delaware corporation, see “Description of Share Capital and Articles of Association—Comparison of Norwegian Corporate Law and Our Articles of Association and Delaware Corporate Law.”

Composition of our Board of Directors

Our board of directors is currently composed of five members, all of whom are non-executive directors. As a foreign private issuer, under the listing requirements and rules of Nasdaq, we are not required to have independent directors on our board of directors, except that our audit committee is required to consist fully of independent directors, subject to certain phase-in schedules. Nevertheless, our board of directors has undertaken a review of the independence of the directors and considered whether any director has a material relationship with us that could compromise his or her ability to exercise independent judgment in carrying out his or her responsibilities. Based upon information requested from, and provided by, each director concerning such director’s background, employment and affiliations, including family relationships, our board of directors has determined that all of our directors, except for Mr. Opstad, qualify as “independent directors” as defined under applicable rules of the Nasdaq Stock Market and the independence requirements contemplated by the Exchange Act. In making these determinations, our board of directors considered the current and prior relationships that each non-employee director has had with our company and all other facts and circumstances that our board of directors deemed relevant in determining their independence, including the beneficial ownership of our ordinary shares by each non-employee director and his or her affiliated entities (if any).

Furthermore, our board of directors has determined that all of our directors, except for Messrs. Opstad and Ciaccia, are “independent directors” under the criteria of the Norwegian Code of Practice for Corporate Governance dated October 17, 2018, or the Code of Practice. The composition of our board of directors complies with the independence requirements under the Code of Practice, as well as Oslo Børs’ terms of listing. It also meets the Norwegian statutory gender requirements.

Our corporate governance practices were last reviewed and updated in December 2020 in accordance and compliance with the Code of Practice. The Code of Practice stipulates certain compliance and explanatory guidelines. Our board of directors will disclose and explain any deviation from the Code of Practice in our Norwegian annual reports, and our annual reports on Form 20-F to be filed in the U.S. with the SEC. We post our corporate governance statement on our website and in the annual report.

Our Articles of Association provide that the number of directors shall be between three and seven members, as decided at our annual general meeting of shareholders. At the general meeting of shareholders, the board members are elected to serve for a term of two years from the time of election. At our 2020 annual general meeting of shareholders held on May 15, 2020, it was resolved that (i) Mr. Opstad shall continue to serve as chair of our board of directors for the second year of his two-year term, (ii) Mr. Ciaccia shall continue to serve as deputy chair of our board of directors for the second year of his two-year term, and (iii) each of Mses. Davis and Høvding and Mr. Skaggs shall continue to serve as a member of our board of directors for the second year of their respective two-year term. See “Description of Share Capital and Articles of Association—Articles of Association—Board of Directors.”

Committees of our Board of Directors

Our board of directors has two standing committees: an audit committee and a compensation committee. In addition, we have a nomination committee, which composition and mandate are resolved by our annual general meeting of shareholders.

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Audit Committee

Our audit committee will be reconstituted prior to the completion of this listing. Upon the completion of our listing on Nasdaq, our audit committee will consist of Mr. Skaggs and Mses. Høvding and Davis. Mr. Skaggs will serve as chair of the audit committee. The audit committee consists exclusively of members of our board who are financially literate, and Mr. Skaggs is considered an “audit committee financial expert” as defined by applicable SEC rules and has the requisite financial sophistication as defined under applicable Nasdaq rules. Our board has determined that all of the members of the audit committee satisfy the “independence” requirements set forth in Rule 10A-3 under the Exchange Act. The audit committee is governed by a charter that complies with the rules of Nasdaq.

The audit committee’s responsibilities include:

Compensation Committee

Our compensation committee, which consists of Ms. Davis and Mr. Ciaccia, assists the board of directors in determining executive officer compensation. Ms. Davis serves as chair of the compensation committee.

The mandate for our compensation committee is expected to be adopted in the fourth quarter of 2020. We expect the compensation committee’s responsibilities to include advising the board on matters such as:

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Nomination Committee

We do not have a nomination committee formed from our board of directors. Instead, in compliance with the regulations in Norway, the duties of our nomination committee, election of the chair and members of the nomination committee, and the committee’s compensation are determined and approved at our general meetings of shareholders. The requirement to form a nomination committee is set out in our Articles of Association as recommended by the Code of Practice. Our nomination committee consists of Harald Voigt, Robert N. Keith and Rune Sundvall. Mr. Voigt serves as chair of the nomination committee. The nomination committee’s primary duties include proposing candidates for election to the board of directors and nomination committee, and proposing the fees to be paid to members of these bodies.

In addition, the nominations committee’s responsibilities include:

Code of Business Conduct and Ethics

In connection with our listing on Nasdaq, we revised our Code of Business Conduct and Ethics that covers a broad range of matters including the handling of conflicts of interest, compliance issues and other corporate policies such as equal opportunity and non-discrimination standards.

Compensation of Executive Officers and Directors

For the year ended December 31, 2020, the aggregate compensation, including share-based compensation, paid to the members of our board of directors and our executive officers for services in all capacities was $3.1 million (unaudited).

For the year ended December 31, 2019, the aggregate compensation, including share-based compensation, paid to the members of our board of directors and our executive officers for services in all capacities was $2.5 million.

Executive Officer Compensation

Guidelines for Compensation of Officers

Our compensation of officers includes a basic salary and other standard benefits. Performance-based cash bonus and incentive subscription rights may supplement the salary. Cash bonus plans are limited to fixed

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amounts or fixed percentage of base salary. The highest bonus plan for any officer is currently limited to a maximum of 50 percent of base salary, and bonus plan for our Chief Executive Officer is currently limited to a maximum of 70 percent of base salary. In 2019, our board of directors also had an authority to, at its discretion, grant an exceptional bonus of up to 30 percent of base salary to our then-Chief Executive Officer for strategic achievements. This exceptional bonus is no longer available. All components of the compensation of our officers, whether fixed or variable, shall reflect the responsibility and performance of such officer from time to time.

The base salary of our officers is evaluated annually, and our bonus plan cycle is from January 1 to December 31, with a possible midterm evaluation at June 30 of each year and payout in the third quarter. Officers are enrolled in the same pension schemes that we offer to other employees, to the extent available in their home country. The board of directors has the authority to determine the salary and other compensation for the Chief Executive Officer. Our Chief Executive Officer in turn determines the salary and other compensation of all other employees, within the applicable framework set by our board. We do not provide any post-employment compensation beyond conventional notice periods of 3 to 6 months, or such shorter notice period as applicable.

We have not made any advance payments or issued loans to, or guarantees in favor of, any members of the management.

Share-Based Compensation of Officers

We have in place a subscription rights incentive program, which is renewed on an annual basis, whereby independent subscription rights are issued to employees, including our executive officers, and to individual contractors performing similar work. Under the Companies Act, such subscription rights have a maximum duration of five years from the date of the general meeting of shareholders approving the program. To enable a four-year vesting schedule, we renew our subscription rights incentive plans each year at the annual general meetings, whereby the preceding plan is closed for new grants when the new plan takes effect. The maximum number of subscription rights that may be issued under each annual plan, and all plans collectively, may not exceed 10% of our company’s share capital.

At our annual general meeting held on May 15, 2020, our shareholders adopted the 2020 Subscription Rights Incentive Plan, or the 2020 Plan. As a result, each of our previous incentive plans adopted in 2016, 2017, 2018 and 2019 ceased to be available for future issuance as of such date. As of May 15, 2020, we had an aggregate of 31,890,450 subscription rights outstanding under our previous subscription rights incentive plans established in 2016, 2017 and 2018, at a weighted average exercise price of NOK 5.40 per share. As the trading price of our shares on Oslo Børs had been significantly lower than such exercise price, these subscription rights had no intrinsic value and represented no actual incentive for our employees. Therefore, at our 2020 annual general meeting, it was also resolved that we may offer employees, including our executive officers, and individual contractors who hold existing subscription rights under such previous plans, an option to surrender and cancel their existing subscription rights granted under such previous plans in exchange for a right to receive new subscription rights under the 2020 Plan.

On October 2, 2020, our board of directors adopted a resolution to replace subscription rights to purchase an aggregate of 25,962,800 ordinary shares, all of which were granted pursuant to our previous plans adopted in 2016, 2017 and 2018, with new subscription rights granted pursuant to the 2020 Plan, on a one-to-one basis. Such new subscription rights shall have an exercise price of NOK 1.71 per share. One-third of such replacement subscription rights will vest each year, beginning on April 15, 2021. All of such replacement subscription rights will expire on May 15, 2025.

We periodically grant subscription rights to employees and consultants to enable them to share in our successes and to reinforce a corporate culture that aligns their interests with that of our shareholders. Since December 31, 2017, we have granted subscription rights to purchase 51,943,943 ordinary shares to 159 current and former employees who are not executive officers or directors. As of December 31, 2019, subscription rights to purchase 52,875,043 ordinary shares were outstanding.

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In addition, we have established a 2020 Employee Share Purchase Plan, or the ESPP, to secure the services of new employees, to retain the services of existing employees, and to provide incentives for such individuals to exert maximum efforts toward our success and that of our affiliates. Our employees, including executive officers, are eligible to participate in such plan. See “Management—Equity Incentive Plans” below.

Executive Officer Compensation for the Year Ended December 31, 2019

During the year ended December 31, 2019, our executive officers had performance-based compensation programs and amounts paid to provide pension and healthcare benefits. The compensation of our Chief Executive Officer was proposed by the compensation committee and determined by our board of directors.

During the year ended December 31, 2019, subscription rights to purchase 3,774,100 ordinary shares were awarded to our current executive officers. As of December 31, 2019, our current executive officers held subscription rights to purchase 13,964,100 ordinary shares, none of which was exercised by our current executive officers during the year ended December 31, 2019.

The following table sets forth the compensation paid to our executive officers during the year ended December 31, 2019:

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The following table sets forth the subscription rights granted to our executive officers during the year ended December 31, 2019:

As of December 31, 2019, the aggregate number of outstanding subscription rights to purchase ordinary shares held by our then-current officers, including their close associates, was 13,964,100, representing 1.9% of our share capital.

The grants set forth in the table above were made under our 2019 and 2018 subscription rights incentive plans as resolved at the annual general meetings on May 9, 2019 and May 9, 2018, respectively. 25% of the subscription rights vest each year. Such subscription rights expire on May 9, 2024. As discussed above, on October 2, 2020, our board of directors adopted a resolution to replace certain subscription rights granted pursuant to our previous plans with new subscription rights granted pursuant to the 2020 Plan. Messrs. Eaton and Swearingen each elected to participate and surrendered subscription rights to purchase 1,125,800 and 6,815,000 shares, respectively, granted pursuant to the previous plans adopted in 2016, 2017 and 2018. As a result, they received new subscription rights in the same amount under the 2020 Plan. Such new subscription rights have an exercise price of NOK 1.71 per share. One-third of such new subscription rights will vest each year, beginning on April 15, 2021, with an expiration date of May 15, 2025.

In addition, at our annual general meeting held on May 15, 2020, it was resolved that our employees may elect to receive part of their incentive compensation in the form of ordinary shares in lieu of cash. If so elected, the employee may purchase our ordinary share at a 15% discount. As a result, 59 employees received an aggregate of 4,318,523 shares in lieu of cash compensation of $0.6 million. Such shares are subject to a 6-month lock-up period. Messrs. D’Antilio, Eaton and Swearingen acquired 136,479 shares, 181,041 shares and 718,464 shares, respectively, through this program.

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Director Compensation

Our chair and members of our board of directors receive board compensation in arrears, as determined annually at the annual general meeting. At our 2020 annual general meeting of shareholders held on May 15, 2020, it was resolved that the annual board compensation is $34,090 per board member for the period from the date of the 2019 annual general meeting until the date of the 2020 annual general meeting. The chair of our board received an additional amount of $8,522. Each of the compensation committee members received $6,818 in addition to the board compensation and the chair of the committee received a further supplement of $1,704.

Further, members of our board of directors had an option to receive all or part of their respective board compensation in the form of shares in our company.

At our annual general meeting held on May 9, 2019, our shareholders approved the following compensation in shares for Mses. Davis and Høvding, each a member of our board of directors, and a former member of our board of directors:

At our annual general meeting held on May 15, 2020, our shareholders approved the following compensation in shares for Ms. Davis and Mr. Skaggs:

The following table sets forth the compensation paid to our directors during the year ended December 31, 2019 for service on our board of directors:

Our board of directors do not participate in any performance-related incentive schemes, nor do they receive any benefits in connection with their board services other than reimbursement of travel costs for attendance at meetings of our board of directors.

Share-Based Compensation of Directors

We do not grant subscription rights to members of our board of directors in their capacity as directors pursuant to our subscription rights incentive plans, which practice is in line with the recommendations in the

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Code of Practice, except that we have granted Mr. Ciaccia subscription rights to purchase 600,000 ordinary shares as compensation for certain consulting services he provided to us. See “Related Party Transactions—Arrangements with Our Board of Directors.” Pursuant to the resolution by our board of directors adopted on October 2, 2020, Mr. Ciaccia exchanged his subscription rights to purchase the 600,000 ordinary shares in full for new subscription rights under the 2020 Plan. For clarity, said subscription rights were granted to Mr. Ciaccia in his capacity as an adviser to our company and not as a board member.

Equity Incentive Plans

2020 Subscription Rights Incentive Plan

At our annual general meeting held on May 15, 2020, our shareholders adopted the 2020 Subscription Rights Incentive Plan, or the 2020 Plan, to enable our company to offer employees (including any officers or founders) and individual contractors (including any directors, consultants and advisors) equity interests in our company, thereby helping to attract, retain and motivate such persons to exercise their best efforts on behalf of our company. In the past, we have adopted an annual subscription rights incentive plan in each of 2016, or the 2016 Plan, 2017, or the 2017 Plan, 2018, or the 2018 Plan, and 2019, or collectively, the Previous Plans. Each of these previous incentive plans ceased to be available for future issuance immediately prior to the time that the next annual plan became effective.

Our 2020 Plan provides for the grant of awards of share options (also known as “subscription rights” in Norway), including (i) incentive share options within the meaning of Section 422 of the U.S. Internal Revenue Code of 1986, as amended, or the Code, (ii) nonstatutory share options and (iii) independent subscription rights within the meaning of Section 11-12 of the Public Limited Companies Act of the Kingdom of Norway dated June 13, 1997, as amended, or the PLCA, or, if permitted by applicable law and our shareholders, any other appreciation-based incentive as may be designated by our board of directors. The maximum number of shares that may be issued under the 2020 Plan may not exceed 71,798,873 shares; provided, however, that the maximum number of shares that may be outstanding under all the plans may not exceed 10 % of the total authorized number of shares of our company at any given time. As of September 30, 2020, subscription rights to purchase 54,837,143 shares, at exercise prices ranging from NOK 0.15 to NOK 8.42 per share, or a weighted average exercise price of NOK 1.71 per share, were outstanding under all subscription rights incentive plans, including the 2020 Plan and the Previous Plans.

The subscription rights granted under our 2020 Plan generally vest over a four-year period and may be subject to acceleration of vesting and exercisability under certain termination and change of control events. Specifically, the subscription rights generally vest 25% each year, beginning one year after the vesting commencement date, being the latest of the following dates preceding a grant: (i) January 15, (ii) April 15, (iii) July 15 or (iv) October 15. In case the subscription right holder resigns or is terminated, without cause, he or she will be entitled to exercise, within 90 days after end of employment or service, the subscription rights that were vested at the end of the employment or service notice period. Our board of directors may determine an accelerated vesting schedule, if deemed appropriate. The 25% per year vesting is chosen as it balances the short-term incentives and the long-term attractiveness. In case the subscription right holder is terminated for cause, all non-exercised subscription rights will be cancelled. The subscription rights are non-assignable other than by will or by the laws of descent and distribution. The terms and conditions for vesting and exercise of subscription rights under the 2016 Plan, 2017 Plan, 2018 Plan and 2019 Plan are substantially the same as the terms and conditions under the 2020 Plan.

Upon vesting, each subscription right entitles the holder to demand the issuance of one share in our company. As consideration for the shares to be issued upon exercise of the subscription rights issued under the 2020 Plan, the holder of such subscription rights shall pay to us a price per share, which at least shall equal the greater of (i) the average closing price of our shares, as traded on Oslo Børs, over a period of 10 (ten) trading days immediately preceding the date of grant of such subscription rights, and (ii) the closing price of our shares,

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as traded on Oslo Børs, on the trading day immediately preceding the date of grant of such subscription rights. Under certain circumstances, the price per share of such subscription rights may be lower than stated above, as long as it is not less than the par value per share of our shares at any given time. The maximum number of shares that may be issued with a lower price per share shall not exceed 7,179,887 shares. The subscription rights under the 2020 Plan will expire five years after the resolution by our 2020 annual general meeting implementing the 2020 Plan.

As of our annual general meeting held on May 15, 2020, we had 31,890,450 subscription rights outstanding under the 2016 Plan, 2017 Plan and 2018 Plan, at a weighted average exercise price of NOK 5.40 per share. As the trading price of our shares on Oslo Børs had been significantly lower than such exercise price, these subscription rights had no intrinsic value and represented no actual incentive for our employees. Therefore, at our 2020 annual general meeting, it was resolved that we may offer employees and individual contractors who hold existing subscription rights under the 2016 Plan, 2017 Plan and 2018 Plan an option to surrender and cancel their existing subscription rights granted under such previous plans in exchange for a right to receive new subscription rights under the 2020 Plan. Holders of existing subscription rights pursuant to the previous plans that have an exercise price higher than the fair market value of our shares as of the date of exchange were eligible for the exchange program. At our 2020 annual general meeting, it was further resolved that such exchanged subscription rights shall have a three-year vesting period. One-third of such subscription rights will vest each year, beginning on April 15, 2021. As consideration for the shares to be issued upon exercise of such exchanged subscription rights, the holders of such subscription rights shall pay to us an exercise price of NOK 1.71 per share, which was the closing price of our shares on Oslo Børs on May 11, 2020, the date on which we issued additional shares to existing and new investors through a private placement. Other than the foregoing, the terms and conditions of the 2020 Plan apply correspondingly to these exchanged subscription rights.

On October 2, 2020, our board of directors adopted a resolution to replace subscription rights to purchase an aggregate of 25,962,800 ordinary shares, all of which were granted pursuant to the 2016 Plan, 2017 Plan and 2018 Plan, with new subscription rights under the 2020 Plan, on a one-to-one basis. As of October 2, 2020, we had 54,837,143 ordinary shares issuable upon the exercise of outstanding subscription rights. This number remained unchanged following such exchange. As discussed above, such new subscription rights under the 2020 Plan shall have an exercise price of NOK 1.71 per share. One-third of such replacement subscription rights will vest each year, beginning on April 15, 2021. All of such replacement subscription rights will expire on May 15, 2025.

2020 Employee Share Purchase Plan

The ESPP was adopted at our annual general meeting held on May 15, 2020. The purpose of the ESPP is to secure the services of new employees, to retain the services of existing employees, and to provide incentives for such individuals to exert maximum efforts toward our success and that of our affiliates. Our ESPP has three components: (i) a U.S. component intended to qualify as an “employee stock purchase plan” within the meaning of Section 423 of the Code for U.S. employees, (ii) a UK component applicable to UK employees and (iii) a general component applicable to all employees outside the United States and United Kingdom. The ESPP authorizes the issuance of 32,670,706 shares of our share capital under purchase rights granted to our employees or to employees of any of our designated affiliates, representing 5% of our share capital at the time of our 2020 annual general meeting. As of September 30, 2020, 35,899,436 shares of our share capital remain available for future issuance under the ESPP.

The ESPP is structured around four contribution periods a year, each starting on the first day of the calendar month following each planned disclosure of a quarterly report of the company, and lasts for the following three months (i.e. March-May, June-August, September-November, and December-February). During each contribution period, a fixed amount (up to 20% of the employee’s gross base salary) is withdrawn from the employee’s salary. The employee may sign up to participate in the ESPP from the date of a public disclosure of a quarterly report until the beginning of the contribution period. Unless the employee explicitly withdraws from the ESPP, the employee’s participation in the plan is automatically renewed for the same amount for subsequent

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contribution periods. The subscription price per share is equal to the lowest of 85% of i) the closing price of our shares, as traded on Oslo Børs, on the first day of the contribution period, and ii) the closing price of our shares, as traded on Oslo Børs, on the last trading day of the contribution period. Payment of the subscription amount is made by withdrawals from the amount withdrawn from the employees’ salary. The shares will be issued after the end of each contribution period.

Insurance and Indemnification

To the extent permitted by the Companies Act, we are empowered to indemnify our directors against any liability to third parties that they incur by reason of their directorship, subject to approval by the general meeting of shareholders. We maintain directors’ and officers’ insurance to insure such persons against certain liabilities. We entered into an indemnity agreement with each of our directors and executive officers in connection with the listing of our ADSs on Nasdaq. Insofar as indemnification of liabilities arising under the Securities Act may be permitted to our board, executive officers or persons controlling us pursuant to the foregoing provisions, we have been informed that, in the opinion of the SEC, such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.

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RELATED PARTY TRANSACTIONS

Since January 1, 2017, we have engaged in the following transactions with our directors, executive officers or holders of more than 5% of our outstanding share capital and their affiliates, which we refer to as our related parties.

Agreements with Our Executive Officers and Directors

We have entered into service contracts with certain of our executive officers. These agreements contain customary provisions and representations, including confidentiality, non-competition, non-solicitation and inventions assignment undertakings by the executive officers. However, the enforceability of the non-competition provisions may be limited under applicable law. Further, we have granted share-based awards to certain of our directors and executive officers. See “Management—Compensation of Executive Officers and Directors.”

Indemnification Agreements

We entered into an indemnity agreement with each of our directors and executive officers in connection with the listing of our ADSs on Nasdaq. The indemnity agreement requires us to indemnify our directors and executive officers to the fullest extent permitted by law. See “Management—Insurance and Indemnification.”

Capital Increases

In February 2019, we completed a capital increase, by issuing an aggregate of 53,437,500 ordinary shares to certain existing shareholders, members of our management team and our board of directors, including the then Chief Executive Officer, the then Chief Financial Officer, and the chair of our board of directors, subscribing for 250,000, 100,000 and 100,000 shares, respectively, for gross proceeds of approximately $25.0 million.

In December 2019, we completed a capital increase, by issuing an aggregate of 120,000,000 ordinary shares to a number of shareholders, including Robert N. Keith subscribing for 60,000,000 shares and Sundt AS subscribing for 15,000,000 shares, for gross proceeds of approximately $9.9 million.

In May 2020, we completed a capital increase, by issuing an aggregate of 65,341,413 ordinary shares to existing and new shareholders, including a close associate of Robert N. Keith, subscribing for 11,100,000 shares, and Sundt AS, subscribing for 19,000,000 shares, for gross proceeds of approximately $10.2 million.

In November 2020, we completed a capital increase, by issuing an aggregate of 42,528,181 ordinary shares to Norwegian and international investors, including certain existing shareholders, members of our management team and our board of directors, for gross proceeds of approximately $7.8 million. Messrs. Graziani, D’Antilio and Eaton from our management team subscribed for 150,000, 125,000, 30,000 shares, respectively. Members of our board of directors, Messrs. Opstad, Ciaccia and Skaggs, and Mses. Davis and Høvding, subscribed for 100,000, 150,000, 100,000, 50,000 and 25,000 shares, respectively.

In December 2020, we issued 1,527,917 ordinary shares to employees pursuant to our Employee Share Purchase Plan, raising $0.2 million. Among such employees, our Chief Executive Officer, Vince Graziani, acquired 125,239 shares, our Chief Financial Officer, Derek D’Antilio, acquired 70,447 shares, our Chief Technology Officer, Anthony Eaton, acquired 38,534 shares, and our Executive Vice President of Advanced Technology and Strategy, Stanley A. Swearingen, acquired 31,112 shares.

In February 2021, we completed a capital increase, by issuing an aggregate of 83,214,674 ordinary shares to Norwegian and international investors, including Mr. D’Antilio, our Chief Financial Officer, subscribing for 76,000 shares, for gross proceeds of approximately $27.2 million.

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Arrangements with Our Board of Directors

Mr. Opstad, the chair of our board of directors, is a partner at Advokatfirmaet Ræder AS, or Ræder, our Norwegian counsel. Ræder provides legal services to our company. In addition, Mr. Opstad provides certain business and management services to us that are not typical board functions pursuant to an executive function agreement, dated January 30, 2018, by and among Mr. Opstad, IDEX Biometrics ASA and Ræder. Such services include, among other things, shareholder contact, strategic discussions with existing and prospective partners, customers and suppliers, organizational issues, and other projects from time to time. As consideration for such services, Mr. Opstad is entitled to receive a fee per hour at the same level as partners at Ræder invoice us, and such fee is invoiced by Ræder. We paid Ræder for its services in the amount of $0.5 million, $0.3 million and $0.5 million for the years ended December 31, 2019, 2018 and 2017, respectively. The amounts in 2019 included, among other assignments, prospectus, ongoing assistance with various actual and contemplated business agreements and certain employment agreements. Ræder also provided services to us in the first half of 2020, amounting to $0.2 million, which accounts for work related to the private placement in May 2020.

Larry Ciaccia, the deputy chair of our board of directors, is the principal shareholder of Black River Advisors LLC, or Black River. On November 1, 2013, Black River entered into a service framework agreement with us, pursuant to which Black River assigned Mr. Ciaccia to provide certain consulting services to us in the areas of fingerprint imaging and recognition technology. Mr. Ciaccia shall also serve on our strategy advisory committee, effective January 2014. The terms and conditions of this agreement apply solely to Mr. Ciaccia in his capacity as the principal of Black River. Under this agreement, Mr. Ciaccia is entitled to receive $50,000 per annum for the consulting services and $15,000 per annum for services performed by Mr. Ciaccia as a member of our strategy advisory committee. In addition, Mr. Ciaccia is entitled to receive grants of subscription rights to purchase our ordinary shares in such amount and on such terms as may be agreed by the parties and approved by our board of directors. For each of the years ended December 31, 2019, 2018 and 2017, we paid Mr. Ciaccia $65,000 under this agreement. We also granted Mr. Ciaccia subscription rights to purchase 600,000 ordinary shares on August 15, 2018 pursuant to the 2018 Plan. The exercise price of the subscription rights is NOK 5.10 per share. Such subscription rights have become fully vested and will expire on May 9, 2023. The service framework agreement commenced on November 1, 2013 and will expire at such time as may be mutually agreed upon in writing by the parties thereto. Either party may terminate the agreement upon a 90-day written notice.

Andrew MacLeod, a former member of our board of directors, provided consulting services to us from February 2016 through March 2019, for which he received approximately $73,000 in 2018 and $26,000 in 2019. His service agreement with us terminated on March 27, 2019. Mr. MacLeod left our board of directors on May 9, 2019.

Related Party Transactions Policy

In connection with our listing on Nasdaq, we adopted a related party transaction policy requiring that all related party transactions required to be disclosed by a foreign private issuer pursuant to the Exchange Act be approved by the audit committee or another independent body of our board of directors.

The related party transaction policy is in accordance with the provisions on related party transactions of the Companies Act and the Corporate Governance Code (the latter on a comply or explain basis).

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PRINCIPAL SHAREHOLDERS

The following table sets forth information with respect to the beneficial ownership of our ordinary shares as of February 18, 2021 by: