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Idex is a company specialising in on-screen
navigation and fingerprint recognition
technology, the leading field in the high
growth biometrics industry. Our goal is to be
the leading provider of intellectual property
rights (IPR) in this field.
We continue to invest in biometric research
and development and engage in partnerships
with leading producers of semi-conductors
who have the organisation and facilities to
mass produce and market the technology
world-wide.
Revenues will be generated from license fees
on IPR via both third party funding of joint
development with our partners, and royalty
payments on individual module shipments.
IDEX ASAIT FornebuMartin Linges vei 25N-1367 Snarøya
Telephone: (+47) 67 82 72 80Fax: (+47) 67 82 72 88
Web: www.idex.no
Design by D
inamo Effekt, N
orway
SmartFinger sensor:
IdentificationNavigator
Pointing deviceAuthorization
3IDEX ANNUAL REPORT 2003
General introduction 4
Technical update 5 - 6
Sales and Market update 7
Partnership update 9
Report of the Board of Directors for 2003 10 - 12
Profit and Loss Account for IDEX 14
Statement of Financial Position 15 - 16
Statement of Cash Flows 17
Notes to the Financial Statements 18 - 23
Auditor’s report 24
Table of Contents
Biometr ics
The information age is quickly revolutionizing the way
transactions are completed. Everyday actions are incre-
asingly being handled electronically, instead of with
pencil and paper or face to face. This growth in electro-
nic transactions has resulted in a greater demand for
fast and accurate user identification and authentication.
Biometric technology is a way to achieve fast, user-
friendly authentication with a high level of accuracy.
Only biometric authentication
bases identification on
an intrinsic part of
a human being.
Tokens, such as smart cards, magnetic stripe cards and
physical keys can be lost, stolen, duplicated, or left at
home. Passwords and PIN-codes can be forgotten, sha-
red or observed. While all biometric systems have
advantages and disadvantages, there are common
characteristics needed to make a biometric
system usable. The biometric must be based upon a
distinguishable trait and for nearly a century, law
enforcement has used fingerprints to identify people.
There is a great deal of scientific data supporting the
idea that no two fingerprints are alike.
IDEX specialises in Fingerprint Technology.
SmartFinger sensor:
Gaming deviceMicro MouseBiometric ID
Security
General int roduct ion
Idex is a company specializing in on-screen navigation
and fingerprint recognition technology, the leading field
in the high growth biometrics industry. The Company’s
goal is to be the leading provider of intellectual proper-
ty rights in this field. The Company’s business plan is to
design components, then engage in license agree-
ments and development partnerships with leading pro-
ducers of semi-conductors, who have the organization
and facilities to mass produce and market Idex techno-
logy worldwide.
Idex’ core Smartfinger technology for the fingerprint
capturing system comprises an AC capacitive stripe
scanner. During operation a low-level AC current is intro-
duced to the user’s finger, providing a unique
signal/noise ratio. As the user draws a finger over the
sensor surface of the scanner, a row of sensor elements
measure the distance between the sensor surface and
the ridges and valleys of the finger surface. Additional
sensor elements are used to detect the speed of the
finger, and from this the image is re-sampled to create
an image equally scaled in both axes.
Idex’s revolutionary Smartfinger technology has the
inherent advantages of;
• Combining biometric verification and identification
with on-screen navigation capabilities,
• Being small in size which is of great advantage in
mobile telephony and any small electronic devises
where “real estate” is expensive,
• Being “solid state” which makes it robust and
provides for low power consumption,
• Being cheap to mass produce requiring only one
18 mm2 ASIC per unit.
General int roduct ion
The main technical activities during 2003 were based on
the re-spin of the fingerprint sensor in accordance with
the ST Microelectronics (STM) contract. During the re-spin
all the technical flaws were fixed and in October 2003
Idex had fully working sensors available for testing.
Another major technical achievement in 2003 was the
development of a Technology Evaluation Kit (TEK)
based upon a USB solution. This has put Idex in the
position of being able to ship sensors to potential cus-
tomers for testing and evaluation.
During 2003 Idex initiated several new projects with
focus on improving the technology. This is part of an
ongoing process vital in maintaining Idex’s position as
the leading provider of intellectual property within the
field of fingerprint swipe sensors.
The “first spin” of the sensor for the SmartFinger
module was concluded, under Idex’s contract with ST
Microelectronics in February 2003. The first series of
SmartFinger modules showed design faults and during
testing malfunctions were observed that affected the
image quality for certain finger types and the robust-
ness of the pointer functionality.
Following this failure Idex decided to re-spin a new
batch of sensors comprising six different designs opti-
ons. The sensors were re-spun at STMicroelectronic’s
plant in Tours, France a facility which specialises in pro-
ducing sensors. STM’s unique Via process was employ-
ed to link the sensor to the control ASIC. The sensors
were then sent to STMicroelectronics in Grenoble for
mounting and assembly. A full testing programme was
run on the Smartfinger modules to establish if any of
the new designs had resolved the previously identifi-
ed problems. Initial tests showed that two design
alternatives seem to have overcome the previous
design errors. After a meeting with STMicroelectronics
in Tours in early October 2003 it was decided to pro-
ceed to process the remaining wafers using the two
successful designs. This is estimated to give us chips in
sufficient numbers to send to customers for further
testing and evaluation.
Initial test results have left us cautiously optimistic that
our re-design work has been successful but we have
further work to do on the packaging solution (to
enable volume manufacturing) and on the coating pro-
perties for wear ability and robustness. Work is contin-
uing in both areas.
In June 2003 we finalised the design of a USB perip-
heral (Universal Serial Bus) and in September 2003 we
assembled the components into a working device. This
latest design contains the sensor, mounted inside a
module and USB communication between the module
and a PC. An installation program has been written
which installs all necessary software on the PC from an
accompanying CD. Together the USB peripheral and the
installation CD will make up Idex’ Technology
Evaluation Kit (TEK). The TEK can be shipped to poten-
tial customers or partners who would like to evaluate
the technology.
Work in this area was identified in the 2002 Annual
Report and we are pleased to report that in May 2003
the first step towards this goal was achieved. One of
the algorithms was successfully encoded in VHDL (Very
High Speed Integrated Circuit Hardware Description
Language) and implemented in an FPGA (Field
Programmable Gate Array). This work gives Idex a
5IDEX ANNUAL REPORT 2003
Technica l update
Int roduct ion
Re-Spin of Sensors
USB Per iphera l
DHW (Direct hardware)
unique position in the market as we are the only com-
pany that is able to successfully port sensor specific
algorithms to hardware and include them into the sen-
sors ASIC. From a mobile handset manufacturers per-
spective this means they can save on power con-
sumption from the device as this can now be derived
directly from the ASIC.
Idex has continued work to develop a
robust coating technology for the sen-
sor. In addition to being more wear-
resistant, the new coating material
also enhances the image quality. We
are working with a number of diffe-
rent specialist research companies in
this field and whilst the research has
been time consuming, early results indicate that we
are on the right track.
Idex has developed a packaging solution for the sen-
sor where the sensor is molded in plastic. The packa-
ged sensor is only 0.7 mm thick and can be mounted
directly onto a circuit board. The plastic package can
replace or be used in conjunction with the former
“elastomer” packaging solution. This new packaging
concept is more robust and makes it easier for poten-
tial customers to implement the sensor into cellular
phones, smart phones and PDAs.
Idex has continued to work on improving the sensor
specific algorithms during the last year. Specifically, we
have put much effort into improving the image recon-
struction algorithm. This algorithm combines each line
scanned by the Smartfinger‘ sensor into a true image
of the finger. The improvements made during the last
period gives Idex the most flexible fingerprint swipe
sensor solution on the market. Now, the sensor hand-
les finger swiping speeds varying from 0-56 cm/s and
finger swiping directions deviating as much as 40∞
from the direction of the sensor line. Work is ongoing
to include this algorithm into the ASIC of the sensor.
Idex has also focused resources on improving the poin-
ter algorithm for on-screen navigation. This algorithm
enables the user to work the sensor as a mouse. We
have implemented scrolling which makes the pointer
more user-friendly especially when navigating on
large screens. More features will be added in order to
make the Idex sensor the ultimate choice for hand-
held devices enabling simple navigation through
menus and advanced gaming.
One of the strengths of any company involved in tech-
nology development lies in its intellectual property
rights (IPRs). Idex has worked closely with Sintef
(Norway’s SINTEF Group is the largest independant
research organization in Scandinavia) since 1997 and
has an exclusive world wide license to use, develop
and commercially exploit Sintef’s main patent relating
to fingerprint recognition devices. During the period
Idex has filed an additional 4 patent applications and
withdrawn 1 which means the company has a total of
23 separate patents either granted or pending in addi-
tion to the Sintef agreement.
Technica l update
6 IDEX ANNUAL REPORT 2003
Packaging
Coat ing issues
Algor i thms
Patents
7IDEX ANNUAL REPORT 2003
During the period IDEX has been present
at the following trade shows:
Cartes 2003
Paris, France
Biometrics 2003
London, England
Consumer Electronics Show
Las Vegas, USA
GSM World Conference
Cannes, France
Cebit
Hanover, Germany
We continue to address the same market
segments
• PDA
• Smart Cards and Payment processing
• Wireless/Cell Phone
• PC and Lap Top
• Biometric Software
• Foundries
After a year of strong growth for the Mobile
Handset market in 2003, which saw sales above
460 million units the market is forecast to expand
in 2004 to over 500 million units as shipments of
2.5G and 3G mobiles accelerate worldwide (source
Gartner). This is of course one of Idex’ main target
markets together with the lap Top, PDA, AND Smart
Card markets.
Idex is now in the position of having produced wor-
king prototypes which prove the technology and
highlight the inherent advantages of the technolo-
gy. Moreover, Idex now has the means to demon-
trate the technology to partners who may also con-
duct their own testing and evaluation. Looking for-
ward into 2004 Idex will be focused on taking the
technology to partners as the best route foward to
commercial production. In-house the Company will
maintain its research and development efforts in
keeping the core technology at the cutting edge.
Future Out look Sales and
Market update
Sales & Marketing update
Sales & Marketing update
The Idex SmartFinger“ module was presented at the
International Solid-State Circuits Conference (ISSCC
2003) February 9-13 2003, San Francisco, CA.
The conference covered the most advanced solid
state circuits, spanning from microprocessors opera-
ting at 5GHz, to non-volatile memory including the
use of novel 3-D architectures, to fingerprint sen-
sors, MEMS/BioMEMS/implantable devices and RF
circuits for next generation mobile phones.
For IDEX and SINTEF the conference had a special
signification since the presentation was the first
from a Norwegian company in the 50 years history
of the Conference.
The quality of 2003 technical papers was extremely
high, continuing the tradition of excellence long
associated with ISSCC. The acceptance of the paper
is recognition for the originality of the SmartFinger®
module developed by IDEX, SINTEF and ST
Microelectronics.
The SINTEF 2003 Award for Outstanding Research
has gone to four scientists who have been central to
the development of the SmartFinger Module. The
award winners have won international recognition
for developing a system which is both inexpensive
and robust.
The four prize-winners, Ovidiu Vermesan and Helge
Rustad at SINTEF and Sigmund Clausen and Jon B.
Nysæther at IDEX, have played a key role in the
development process within their own area of
expertise.
Conference Presentation
The S INTEF 2003 Award
for Outstanding
Research:
9IDEX ANNUAL REPORT 2003
Partnership update
STMicroelectronics (ST), the world’s third largest
independent semiconductor company, is a global
leader in developing and delivering semiconductor
solutions across the spectrum of microelectronics
applications.
Bård Eker Industrial Design (BEID) develop
complete products from idea to industrialisation
and has expertise within industrial design,
mechanics, thermal engineering, electronics
and optics.
Kitron Development in Norway and Sweden is one
of the major R&D pools in Scandinavia, comprising
more than 180 engineers. We hold competences
within microelectronics, electronics and mechatro-
nics. In addition we have unique access to produc-
tion competence and facilities through our owner
Kitron ASA, the second largest electronic products
manufacturer in Scandinavia.
Kitron Development have services within develop-
ment and re-engineering of complete electronic
products or sub systems like electronic modules,
enclosures or software modules. We also perform
feasibility studies and consultancy on per hour
basis. Kitron Development is ISO 9001: 2000
qualified.
IDEX ASA has had extensive collaboration with the
Bioimpedence Group of the Department of Physics,
University of Oslo. This group’s expertise from
more than 20 years of active research on the
electrical properties of biomaterials, and in particu-
lar human skin, has enabled further development in
areas like sensor layout optimisation and live fing-
er detection.
SINTEF is one of Europe’s larger Advanced Research
Centers with more than 1600 employees. IDEX
continue to work with the Electronics/Cybernetics
Institute on the Smartfinger® development.
Partnership update
10 IDEX ANNUAL REPORT 200310
Idex ASA is a Norwegian research and development
company specialising in on-screen navigation and
fingerprint recognition technology, the leading field of
endeavour in the high growth biometrics industry. The
Company’s goal is to be the leading provider of intel-
lectual property in this field. The Company’s business
plan is to design and prove leading edge fingerprint
technology and to patent and protect the Intellectual
Property Rights (IPR) to this technology. Idex will then
engage in licence agreements and development part-
nerships with the leading producers of semi-conduc-
tors, who have the organization and facilities to mass
produce and market Idex technology worldwide. Idex
is a Norwegian public company, its activities are
based in Bærum and its shares are traded on the A
List of the Norwegian Stockbrokers Association OTC
List.
Activities in 2003
The period under review has been a frustrating period
for the Company as we waited for the results of the re-
spin program agreed with STMicroelectronics. During
this time we were unable to actively market the Idex
navigation and fingerprint capturing technology until
we were sure that the identified malfunctions in the
first spin of the technology had been corrected in the
re-design.
By year-end we had received the first batch of the re-
designed sensors. Initial testing has left us optimistic
that our re-design work has been successful but rese-
arch is continuing on both coating and packaging solu-
tions, activity which is covered in the technical activi-
ties report.
This situation has meant that the Company received no
revenues for the period as it was not possible to enter
into detailed negotiations with other chip manufacturers
before we could understand the results of the re-design
and demonstrate a fully working prototype to potential
partners.
The Company undertook both a Private Placing and
Rights Issue during the Third Quarter to strengthen the
Company’s Balance Sheet, to give the Company the
financial strength and resources to maintain its inde-
pendence from its business partners and to broaden its
shareholder base. The increased cash resource has
enabled Idex to continue its development program
and also to apply for additional patents for technology
in areas which enable us to be partner independent at
the technology level. The ongoing protection of our
Intellectual Property Rights (IPR) is essential to give us
the opportunity to enter into partnerships with other
international semi-conductor manufacturers.
As highlighted in the 3rd Quarter Report 2003 the Idex
Board felt it was appropriate to develop a level of
reporting which shareholders should expect from an
SMB listed company and sought permission from the
Oslo Stockbrokers Association to admit the Companys
shares to the ‘A’ list of the OTC List. The company’s sha-
res were admitted to the ‘A’ list on 2 February 2004.
Financial Statements
Idex had zero operating revenues in 2003 compared
with NOK 8,012,000 in 2002 this was a direct result of
the failure of the first batch of chips from
STMicroelectronics. The successful re-spin was delivered
too late in the year to have any effect on sales and
therefore revenues in 2003.
Manning was reduced from 17 to 6 during the year.
This reduced the payroll expense to NOK 4,310,714
compared to NOK 9,972,052 in 2002. In contrast and in
consequence external re-search and development
expenses increased from NOK 1,609,942 in 2002 to
NOK 4,347,991 as Idex replaced direct research capa-
bilities with external and consultant work. In both
2002 and 2003 Idex received NOK 800,000 in research
and development grants from Skattefunn such that net
research and development expenses were NOK
3,547,991 in 2003 verses NOK 809,942 in 2002.
Depreciation on fixed assets remained steady at NOK
378,771 against Nok 343,799 in 2002.
Report of the Board
of D i rectors for 2003
11IDEX ANNUAL REPORT 2003
Other operating expenses in 2003 were NOK
5,206,673 against NOK 5,806,080 in 2002. One of the
components of these expenses was the lease costs on
the Company’s facilities at Asker. The lease
expired on 31 January 2004 and the facilities have
been moved to Fornebu at much reduced cost to be
reflected in the accounts for 2004.
Although Total operating expenses had been success-
fully reduced in 2003 to NOK 13,444,149 against NOK
16,931,873 in 2002 in response to the deteriorating
operating circumstances the failure to secure any reve-
nues meant that the Operating loss increased from
NOK 8,919,873 in 2002 to NOK 13,444,149 in 2003.
Net financial profit decreased to NOK 1,373,751
against NOK 1,665,712 in 2002. Interest income was
down significantly to NOK 1,392,107 from NOK
2,599,258 in 2002 as Idex’s cash balance dwindled and
interest rates fell during the year. This was partly com-
pensated by a reduction in Other financial expenses
which were cut from NOK 984,128 in 2002 to only NOK
14,342 in 2003.
Net loss for the year was NOK 12,070,398 against NOK
7,254,161 in 2002. The Board proposes to charge the
loss, in full, to the Share Premium Reserve.
Total cash and bank deposits were Nok 31,528,527 at
year-end compared to NOK 31,961,507 at year-end
2002. Idex raised NOK 7,816,989 net of expenses by
way of issuing new shares during the year.
Furthermore, the Company has warrants outstanding
which, if fully exercised, would raise a further NOK 15,
341,215 for the Company in the period up to 1 April 2006.
The Share Capital increased from NOK 3,985,634 at
year-end 2002 to NOK 5,579,888 at year-end 2003 by
way of Private Placement and Rights Issue, see below.
The Share Premium Reserve increased by NOK
6,377,012 as a result of the share issues, but, after
allowing for costs and Year-end allocation of Losses the
Year-end Share Premium Reserve stood at NOK
27,151,508 verses NOK 32,999,171 in 2002. The total
equity of NOK 32,731,396 of 31th December 2003 is
restricted. The annual report is issued assuming continu-
ed operation.
The Organisation
As reported last year, during a period of great uncer-
tainty, Idex reduced the number of staff it employed in
order to conserve resources. The cuts fell primarily
in the research department. At the end of the year, the
group had 5 employees – down from 17 at the end
of 2002. Idex also significantly reduced the amount of
subcontracting of tasks to outside research organisati-
ons. The Company does make use of consultants or
persons on temporary contracts as required.
The company practices equal opportunities in all
aspects. Traditionally, fewer women than men have
graduated or obtained a PhD degree in sciences rele-
vant for Idex’s activities: physics, chemistry and elec-
tronic components design. Because of the highly
specialised field of work, the candidates available for
recruiting have often been all male. The management
structure reflects the composition of the technical staff.
Since 2002, the Company has not recruited during the
year which limits the possibilities to balance the work-
force. All facilities are equally well equipped for both
women and men. There are no instruments, machinery
or tools that require particular strength or other physi-
cal ability. All assignments and training/development
activities are offered equally. The Company offers fle-
xible work hours to all employees, and staffs have
been equipped with home/portable office equipment.
The Board considers the equality as good as can be
and have not found reason to initiate any particular
program.
The lease on the offices in Asker terminated at the end
of January 2004 and the Company has moved into
smaller premises at IT Fornebu. The move generates a
significant cost saving in rent and services. The wor-
king environment at Idex is pleasant, stimulating and
safe, and beneficial for all employees. The working
environment complies in all respects with the relevant
laws and regulations. No specific actions have been
12 IDEX ANNUAL REPORT 200312
considered necessary. There have not been any injuries
to the company’s employees at the place of work
causing absence from work. No significant incidents
involving the company’s assets have occurred. The sick
leave remains less than 2%.
Shareholders
At the start of the year the share capital of the
Company was Nok 3,985,634 consisting of 7,971,269
ordinary shares in issue. During the year the Company
conducted shares capital increases totaling NOK
1,594,254 million by way of issuing new ordinary sha-
res. The issued share capital of the Company at year-
end 2003 was NOK 5,579,888 consisting of 11,159,774
ordinary shares, each share having a par value of NOK
0.50. There are also 7,293,012 warrants in issue. If all
of these warrants should be exercised the Company
would recieve total proceeds of NOK 18,492,530 and
the total number of shares in the Company would be
18,452,986. At 31st December 2003 the largest twenty
shareholders held 68,91% of the shares in issue compa-
red to 63.49% in 2002. The Board of Directors held a
combined 17,67% of the shares in issue against 16,41%
in 2002. There were a total of 658 share-holders in the
Company at year-end 2003 compared to 672 in 2002.
Outlook
Idex has developed an advanced technological appro-
ach to create a unique system which allows for finger-
print capturing and on-screen navigation within the
same module. The technology is based on a patented
miniaturised hardware solution driven by advanced
proprietary algorithms giving key advantages. The system
combines finger navigation with biometric verification
within a single module, it is miniaturised and suitable
for use on all advanced mobile/handheld devices, and
it is simple, robust and cheap to produce. The technology
is proven and now in late stage development.
During 2003 Idex reorganized, cutting costs, reduced
its research capabilities and it has now moved to new
offices. This leaves the Company in a position to better
pursue its business model of entering into license and
development agreements with partners to fully exploit
its IPR. The Company raised sufficient funds during the
year to ensure it has sufficient resources for the fore-
seeable future.
Idex’ target market is in all forms of hand held device.
After a year of strong growth for the Mobile Handset
market in 2003, which saw sales above 460 million
units the market, is forecast to expand in 2004 to over
500 million units as shipments of 2.5G and 3G mobi-
les accelerate worldwide. Other target markets inclu-
ding computer laptops, PDAs, and Smart Card are all
experiencing large annual growth rates.
As the economic outlook continues to improve, espe-
cially in our key markets, we are optimistic that Idex
can now benefit from an increase in our sales and
marketing efforts in promoting what is outstanding
technology in its field.
We would look to update shareholders with any deve-
lopments at the General Meeting.
Finally we would like to thank the staff and our part-
ners for helping to achieve the progress through a dif-
ficult period and we look forward to a renewed period
of growth and success.
The Board of Directors of Idex ASA
Bærum 11th June 2004
Morten Opstad
Chairman of the board
John Andrew Heap
Board member/CEO
Robert Keith
Board member
Thomas Fussell
Board member
13IDEX ANNUAL REPORT 2003
F INANCIALSTATEMENT
• 2 0 0 3 •
14 IDEX ANNUAL REPORT 2003 – This translation from the official version is for information purposes only.
PROFIT AND LOSS ACCOUNT 1 JAN. - 31 DEC .
OPERATING REVENUE AND EXPENSES 2003 2002 2001
Operating income (Amount in NOK)
Sales revenue Note 10 0 8 012 000 8 921 375
Other operating revenue 0 0 1 586 836
Total revenues 0 8 012 000 10 508 211
Operating expenses
Payroll expense Note 3 4 310 714 9 972 052 8 899 254
Research and development expense Note 5 3 547 991 809 942 11 308 871
Depreciation expense Note 4 378 771 343 799 186 116
Other operating expenses Note 9 5 206 673 5 806 080 7 148 797
Total operating expenses 13 444 149 16 931 873 27 543 038
Operating loss -13 444 149 -8 919 873 -17 034 827
FINANCIAL INCOME AND EXPENSES
Interest income 1 392 107 2 599 258 3 526 651
Other financial income 0 51 558 10 500
Interest expense 4 014 976 942
Other financial expenses 14 342 984 128 21 093
Net financial profit 1 373 751 1 665 712 3 515 116
Net result before taxes -12 070 398 -7 254 161 -13 519 711
Taxes Note 6 0 0 0
Net loss for the year -12 070 398 -7 254 161 -13 519 711
COVER OF NET LOSS
Share premium reserve Note 7 12 070 398 7 254 161 13 519 711
Total disposition 12 070 398 7 254 161 13 519 711
15This translation from the official version is for information purposes only. – IDEX ANNUAL REPORT 2003
STATEMENTS OF F INANCIAL POSIT ION AS OF 31 DEC .
ASSETS 2003 2002
Long-term assets (Amount in NOK)
Intangible assets
Deferred tax asset Note 6 1 260 000 1 260 000
Total intangible assets 1 260 000 1 260 000
Fixed assets
Machinery and office equipment Note 4 623 681 1 002 452
Total fixed assets 623 681 1 002 452
Financial assets
Long-term receivables and other assets Note 9 525 259 500 352
Total financial assets 525 259 500 352
Total long-term assets 2 408 940 2 762 804
Current assets
Receivables
Accounts receivable 0 0
Other receivables 1 045 888 1 230 274
Prepaied expenses 0 4 172 700
Total receivables 1 045 888 5 402 974
Cash and bank deposits
Cash and bank deposits Note 2 31 528 527 31 961 507
Total cash and bank deposits 31 528 527 31 961 507
Total current assets 32 574 415 37 364 481
TOTAL ASSETS 34 983 355 40 127 285
16 IDEX ANNUAL REPORT 2003 – This translation from the official version is for information purposes only.
STATEMENTS OF F INANCIAL POSIT ION AS OF 31 DEC .
EQUITY AND LIABILITIES 2003 2002
Equity (Amount in NOK)
Paid-in-capital
Share capital Note 7 5 579 888 3 985 634
Share premium reserve Note 7 27 151 508 32 999 171
Total equity 32 731 396 36 984 805
Liabilities
Short-term liabilities
Trade accounts payable 355 751 275 413
Payroll taxes payable and social security 152 098 492 958
Other short-term liabilities 1 744 110 2 374 109
Total liabilities 2 251 959 3 142 480
TOTAL EQUITY AND LIABILITIES 34 983 355 40 127 285
17This translation from the official version is for information purposes only. – IDEX ANNUAL REPORT 2003
STATEMENT OF CASH FLOWS
CASH FLOWS FROM OPERATING ACTIVITIES 2003 2002
(Amount in NOK)
Operating result before taxes -12 070 398 -7 254 161
Depreciation expense 378 771 343 799
Loss on disposal of assets 0 9 151
Change in receivables 0 7 662 250
Change in payables 80 338 -9 592 518
Net change in other current assets and liabilities 3 386 227 -4 540 522
Net change in other current assets and liabilities -8 225 062 -13 372 001
CASH FLOWS FROM INVESTING ACTIVITIES
Investments 0 -501 006
Net cash provided by investing activities 0 -501 006
CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of shares 7 816 989 270 684
Change in long-term receivables -24 907 -44 452
Net cash provided by financing activities 7 792 082 226 232
Net change in cash and cash equivalents -432 980 -13 646 755
Cash and cash equivalents-balance at the beginning of the year 31 961 527 45 608 282
CASH AND CASH EQUIVALENTS-BALANCE AT THE
END OF THE YEAR 31 528 527 31 961 527
18 IDEX ANNUAL REPORT 2003 – This translation from the official version is for information purposes only.
NOTES TO THE FINANCIAL STATEMENTS – 31 DEC . 2003
Note 1 – Accounting principles
The financial statements are prepared in accordance
with the Norwegian Accounting Act and Norwegian
generally accepted accounting principles.
Classification and evaluation of
balance sheet items
Assets of a long-term nature are classified as fixed
assets. Other assets are classified as current assets.
Receivables that will be collected within one year
are classified as current assets. The classification of
short and long term liabilities is based on the same
criteria as for assets.
Fixed assets are valued at cost, but written down to
realisable value if the decline in value is expected
to be permanent. Fixed assets are depreciated over
their economic useful lives.
Current assets are valued at the lower of cost and
net realisable value. Short-term debt is stated at the
historical nominal balance. Short-term debt is not
revalued to market value following changes in the
interest rates.
Currency
Monetary balances in foreign currencies are valued
at the exchange rate ruling at the closing balance
sheet date.
Research and developments costs
All research and developments costs have been
expensed.
Fixed assets
Fixed assets are valued at cost and depreciated over
their economic life.
Accounts receivable
Trade accounts receivable and other debtors are stated
at face value reduced by a provision for anticipated
losses.
Taxes
The tax expense in the profit and loss account inclu-
des the tax on the ordinary result for the period as
well as the change in deferred taxes. Deferred tax is
calculated with 28% on the temporary differences
between the recorded and tax values, as well as on
any tax loss carry-forwards at the balance sheet clo-
sing date. Any temporary differences increasing or
reducing tax that will, or may, reverse in the same
period are netted.
Note 2 – Cash and cash equivalents
Cash and cash equivalents are NOK 31 528 526. Of
this amount NOK 95 611 is restricted for the use
of employees payroll tax withholding.
19This translation from the official version is for information purposes only. – IDEX ANNUAL REPORT 2003
Note 4 - Fixed assets
Machinery / office equip.
Cost at 1.1.03 1 738 712
Purchases during the year 0
Disposals at cost 0
Acc. Depreciation 1 115 031
Book value 31.12.03 623 681
Annual depreciation 378 771
Depreciation rate 20-33%
The Company leases office equipment with a total
expense of NOK 10 694 for the year 2003.
Note 5 – Research and developments expenses
External direct research and development costs are
expensed, and amounted to NOK 4 347 991 in 2003
compared to NOK 1 609 942 in 2002. In 2003 IDEX ASA
has been granted NOK 800 000 in research and deve-
lopment grants from SKATTEFUNN, a governmental
research and development grant which is managed by
Norsk Forskningsråd. The research and development
grant has been recorded as a reduction in external
research and development expenses. In 2003, net
research and development expenses amounted to
NOK 3 547 991.
In addition, a significant amount of the salary costs
are related to research and development. Indirect
research and development costs are included in the
profit and loss account as “other operating expenses”.
NOTES TO THE FINANCIAL STATEMENTS – 31 DEC . 2003
Note 3 – Salaries and other personnel expenses.
2003 2002
Salaries 3 190 727 7 778 476
Social security taxes 313 506 999 057
Other personnel expenses 806 481 1 194 519
Total 4 310 714 9 972 052
Average annual
number of employees 5 14
The Managing Director has received a remuneration
of NOK 1 166 667 in 2003. In addition he will recei-
ve a fee of NOK 200 000 as a member of the board,
subject to the approval of the general assembly. The
Managing Director is engaged by the Board of
Directors through a management for hire contract
that could be terminated on a six-month notice.
From 1 December 2003 the yearly remuneration is
set to NOK 1 500 000.
Subject to the approval of the general assembly,
the Board of Directors’ remuneration for 2003
is NOK 800 000. The amount has been accrued as of
31 December 2003. The chairman of the board
is partner in the law firm Ræder Wisløff Aasland
Ottesen DA. In 2003 Ræder Wisløff Aasland Ottesen
DA has been paid NOK 435 585 for legal services.
Two other board members received NOK 250 000
each through a consultancy firm for business develop-
ment services rendered during the year.
In 2003 fees to the auditors related to audit of
the statutory accounts have been expensed with
NOK 57 750. Other audit related fees amounts to
NOK 39 700. Fees to the auditors related to technical
assistance regarding preparation of annual report
and tax return and other related tax services have
been expensed with NOK 73 450.
20 IDEX ANNUAL REPORT 2003 – This translation from the official version is for information purposes only.
Note 7 - Equity
Share capital Share premium TOTAL
reserve
Equity 01.01.03 3 985 634 32 999 171 36 984 805
Shares issued in 2003 1 594 254 6 377 012 7 971 266
Share issuance costs -154 277 -154 277
Net loss for the year -12 070 398 -12 070 398
Equity 31.12.03 5 579 888 27 151 508 32 731 396
The share capital of IDEX ASA consists of 11 159 774 shares with a par value of NOK 0.50.
NOTES TO THE FINANCIAL STATEMENTS – 31 DEC . 2003
Note 6 - Taxes
Specification of the tax expense for the year: 2003 2002
Payable taxes on the profit of the year 0 0
Change in deferred taxes 0 0
Tax expense on ordinary profit 0 0
Reconciliation of tax expenses against ordinary profit before taxes:
Computation of taxes payable for the year: 2003 2002
Ordinary profit before taxes -12 070 398 -7 254 161
Permanent differences -558 825 -543 104
Changes in temporary differences -481 732 45 006
Basis for taxes payable -13 110 955 -7 752 259
28% tax, constituting total taxes payable on current year’s profit 0 0
Specification of taxes payable in the balance sheet: 2003 2002
Taxes payable on this year’s profit 0 0
Total taxes payable 0 0
Specification of the basis for deferred taxes: 2003 2002
Fixed assets -132 375 -22 366
Accruals 0 -591 741
Tax loss carry forward -76 841 468 -63 730 513
Total -76 973 843 -64 344 620
Deferred tax asset, 28% -21 552 676 -18 016 493
Capitalized deferred tax asset -1 260 000 -1 260 000
The entire deferred tax asset has not been capitalized as future utilization is uncertain.
21This translation from the official version is for information purposes only. – IDEX ANNUAL REPORT 2003
NOTES TO THE FINANCIAL STATEMENTS – 31 DEC . 2003
Shares, options and warrants direct and indirectly held by the CEO and members of the board.
At an extraordinary General Meeting held 4 September 2003 6 377 012 independent subscrption rights (ISR) in
the series A/2003 through D/2003 were issued. No consideration was received. The purchase price per share
of a subscription right is set to NOK 2,50. The ISR in series A/2003 through D/2003 needs to be exercised
before 1 April 2006.
At the ordinary General Meeting held 23 May 2002 a proxy to issue ISR to employees and Board of Directors
was granted. The Board of Directors resolved 3 September 2003 to issue 100 000 ISR to Idex ASA employees.
The purchase price per share of a subscription right was set to NOK 2,50. The ISR needs to be exercised before
23 May 2007. The Board of Directors resolved 28 October 2003 to issue 16 000 ISR to Idex ASA employees.
The purchase price per share of a subscription right was set to NOK 4,25. The ISR needs to be exercised before
23 May 2007.
Note 8 – Share capital and shareholder information
Among the 20 largest shareholders, the following had ownership of more than 1%:
Number Share
Charles Street International 1 120 000 14,56%
Pål Gundersen 1 000 400 13,01%
GPR Technology 988 237 12,85%
Euroclear Bank S.A 878 420 11,42%
Per Valvik 727 768 9,46%
John Andrew Heap 652 461 8,48%
Food International Ltd. 582 158 7,57%
Hyson Limited 233 333 3,03%
Chaos AS 221 761 2,88%
Panares Resources Inc. 180 833 2,35%
A. Sundvall ASA 148 765 1,93%
Spenser Finance Corporation 125 695 1,63%
Rune Sundvall 123 178 1,60%
Merrill Lynch 111 666 1,52%
Perco AS 112 750 1,47%
Simen Engelstad 99 205 1,29%
Kristian Wiermyhr 98 550 1,28%
Marco Polo Norge AS 98 000 1,27%
Per M Christensen 92 000 1,20%
Jens Andre Henriksen 89 808 1,17%
Total 7 689 988 68,91%
Total all other shareholders 3 469 786 31,09%
Grand total 11 159 774 100%
22 IDEX ANNUAL REPORT 2003 – This translation from the official version is for information purposes only.
NOTES TO THE FINANCIAL STATEMENTS – 31 DEC . 2003
At the ordinary General Meeting held 23 May 2003 800 000 were issued to members of the Board. The purcha-
se price per share of a subscription right was set to NOK 19. At the ordinary General Meeting held 26 June
2003 its was resolved to change the purchase price per share to the average share price in the three-month
period ended 26 June 2003. After this change the purchase price per share is set to NOK 2,79.
As of 31 December 2003 Idex ASA has issued the following ISR:
Number Purchase Price Due Date
Serie A/2003 1 594 253 2,50 01.04.06
Serie B/2003 1 594 253 2,50 01.04.06
Serie C/2003 1 594 253 2,50 01.04.06
Serie D/2003 1 594 253 2,50 01.04.06
Serie 2002 100 000 2,50 23.05.07
Serie 2002 16 000 4,25 23.05.07
Serie 2001 800 000 2,79 31.10.06
Total 7 293 012
Idex ASA employees and members of the Board have also been granted options. As of 31 December 2003
Idex ASA has issued the following options:
Number Purchase Price Due Date
Options issued in 2001 22 726 2,79 26.04.04/06.06.04
Options issued in August/October 2000 315 000 2,79 16.08.05/19.10.05
Options issued in October 2000 9 292 2,79 28.10.04
Total 347 018
The strike prize for options issued in 2000 and 2001 has been changed in 2003 based on a resolution made by
the General Meeting held 26th of June 2003. In October 2003 it was resolved to extend the date og experation
for some of the options issued in October 2002 with one year. Shares, options and subscription rights (ISR)
directly and indirectly held by the CEO and members of the board.
Shares Options ISR ISRprice 2,79 price 2,50
Serie A-D
Morten Opstad (Chairman of the board) 199 695 0 50 000 162 000
John Andrew Heap (Board member/CEO) 652 461 115 000 250 000 364 922
Robert Keith (Board member/Consultant) 1) 100 000 250 000 1)
Thomas Fussell (Board member/Consultant) 1) 100 000 250 000 1)
Total 315 000 800 000
1) Roberth Keith and Thomas Fussell have a beneficial ownership of 1 120 000 shares and 640 000 subscripti-
on rights in IDEX ASA.
23This translation from the official version is for information purposes only. – IDEX ANNUAL REPORT 2003
NOTES TO THE FINANCIAL STATEMENTS – 31 DEC . 2003
Note 9 – Long term lease arrangement
Idex ASA has in 2003 rented office space in Asker at NOK 850 000 a year. The agreement ran until 31 January
2004. The Company has rented new office facilities at IT Fornebu from February 2004. The new rental agree-
ment runs until 31 December 2006. The new rental fee amounts to NOK 616 800 per year. As of 31th
December 2003 Idex ASA has deposted NOK 455 000 in a banned account with respect to the rented office
facilities in Asker.
Idex ASA had no revenue in 2003.
Note 10 - Sales
2003 2002
Technology transfer 0 8 012 000
Research support 0 0
Total 0 8 012 000
Note 11 – Financial market risks
The Company has little exposure towards financial market risks, and possible exchange gains and losses
are recorded as they occur.
The Board of Directors of Idex ASA
Bærum 11th June 2004
Morten Opstad
Chairman of the board
John Andrew Heap
Board member/CEO
Robert Keith
Board member
Thomas Fussell
Board member
24 IDEX ANNUAL REPORT 2003 – This translation from the official version is for information purposes only.
Audi tor ’s report for 2003
We have audited the annual financial statements of Idex ASA as of 31 December 2003, showing a loss of
NOK 12 070 398. We have also audited the information in the Directors' report concerning the financial state-
ments, the going concern assumption, and the proposal for the coverage of the loss. The financial statements
comprise the balance sheet, the statements of income and cash flows and the accompanying notes.
These financial statements and the Directors’ report are the responsibility of the Company’s Board of Directors
and Managing Director. Our responsibility is to express an opinion on these financial statements and on other
information according to the requirements of the Norwegian Act on Auditing and Auditors.
We conducted our audit in accordance with the Norwegian Act on Auditing and Auditors and auditing standards
and practices generally accepted in Norway. Those standards and practices require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.
An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation. To the extent required by law
and auditing standards, an audit also comprises a review of the management of the Company's financial affairs
and its accounting and internal control systems. We believe that our audit provides a reasonable basis for our opinion.
In our opinion,
• the financial statements have been prepared in accordance with law and regulations and present the financial
position of the Company as of 31 December 2003, and the results of its operations and its cash flows for the year
then ended, in accordance with accounting standards, principles and practices generally accepted in Norway
• the Company's management has fulfilled its duty to properly register and document the accounting information
as required by law and accounting standards, principles and practices generally accepted in Norway
• the information in the Directors' report concerning the financial statements, the going concern assumption, and
the proposal for the coverage of the loss is consistent with the financial statements and comply with law and
regulations.
Oslo, 11th June 2004
ERNST & YOUNG AS
Leiv Aschehoug
State Authorised Public Accountant (Norway)
Note: The translation to English has been prepared for information purposes only.