NEXT Biometrics Recaps Second Half 2015 Progress & Details 2016

NEXT Biometrics Group ASA (Oslo Bors: NEXT) in 2016 plans to focus on developing the most cost-effective, flexible and highly-reliable fingerprint sensors for use in the vast global Smartcard market, where near 100% secure, convenient performance is required for card customers, announced CEO Tore Etholm-Idsoe in a letter to investors recapping NEXT’s significant progress during the second half of 2015.

The CEO added, “NEXT sensors are up to 70% less expensive than comparable-sized fingerprint sensors of competitors and allow manufacturers to offer customers consistent security and convenience at mass market prices.”

Etholm-Idsoe detailed NEXT accomplishments during the second half of 2015, including:

  • Launch of NEXT’s first tier-1 customer, Dell Inc.
  • Product offering enhanced by the new ultrathin and bezel-free modules.
  • Financing of future growth secured through a private placement of 120 million Norwegian Krone ($14.5 million USD).
  • Termination of a significant royalty agreement with inventor Ngoc Minh Dinh.
  • Transfer of NEXT shares from Oslo Axess to Oslo Stock Exchange (Oslo Børs), and
  • Major advances within the NEXT smartcard project, targeting the first credible solution for a vast world market.

PRODUCT OFFERING:

NEXT said it continued to expand its product offering throughout 2015. In the first half of the year six different NEXT fingerprint sensor modules were released, to cover all major customer needs. In the third quarter these were further enhanced by a new generation of thinner and design focused modules.

“Guided by NEXT, almost every customer lead started the transition to the new NEXT module sets. This further enhanced the company’s offering while hurting sales in 2015 but paving the way for significant sales in 2016,” said the NEXT CEO.

SALES AND MARKET:

Capitalizing on significant NEXT advantages, uncompromised-performance at market-low manufacturing costs, NEXT targets a leading position in the “non-smartphone markets,” which include smartcards, notebooks, traditional and new NEXT-enabled segments.

“Within the NEXT-Enabled segment we have seen a continued and steady growth of new leads from quality players planning launch of exiting new concepts. A number of these with 7-digit annual volume potential. The company will continue to work actively to further enhance its product offering within this major opportunity segment,” said Etholm-Idsoe.

He noted that, “Within the Traditional markets the target is to replace existing suppliers of large and costly silicon area sensors or big and bulky optical sensors with our high performance low cost sensors. Some key players have already made the move, some are in sampling stage and yet others will follow in 2016. With the launch of Dell products in October, NEXT sensors are successfully implemented in products from one of the top 3 world manufacturers of Notebooks and further wins are targeted.”

SMARTCARDS:

So far no player has been able to demonstrate a credible solution implementing fingerprint area sensors in smartcards. Conceptual pilots using silicon swipe or silicon area sensors have been seen. These are, however, not able to offer the physical flexibility, nor size and cost requirements needed for true mass market implementation in smartcards, said the NEXT CEO.

Silicon, as opposed to the NEXT poly-silicon material, is a porous-brittle material which at any relevant size will break when flexed. Smartcards, as opposed to smartphones, are applications in which sensors will need to serve close to 100% of its targeted users securely and conveniently.

The NEXT sensors are based on LTPS (low temperature poly silicon), a completely different production process, proven well positioned to create fully flexible displays and fingerprint sensors. NEXT is now further increasing the resources committed to the smartcard project, with the target of delivering the first solutions truly compliant with all requirements in payment and public ID cards, said Etholm-Idsoe.

SENSOR SIZE:

When studying the fingerprint sensor market, it is key to understand the difference between “quality critical” and “non-critical” market segments. In a smartphone, the sensor system quality is not critical as it is offered as a convenience feature only. A user not able or willing to use the system is immediately offered simple pin-code or password based access. Hence, the system does not offer any added security. Furthermore, in present smartphones, it is of no consequence whether 20% or 50% or 80% of the users are actually using the sensor, said NEXT.

The company said that in all other devices and applications where security is important or a pin-code cannot be entered or the sensor is a key-focused feature, fingerprint sensors will need to work conveniently and securely for close to 100% of the targeted end users. In such systems, sensor size cannot be compromised. This is documented both by the fact that suppliers of quality critical traditional sensor systems (doors, point-of-sales etc.) always offer larger and more expensive sensors. It´s furthermore proven in the “Madrid Report,” a large scale third party test initiated by NEXT. Results and methodology are published, and the full report can be downloaded at NEXTBiometrics.com front-page. In the study, more than 180,000 fingerprints were collected and same size sensors from three suppliers were blind tested. The study proved that sensor system performance deteriorates fast when sensor size is reduced. It also documented that NEXT sensors perform in line with competitors’ same size sensors that are 3-to-5 times more expensive.

FINANCE:

In October, NEXT made a private placement of 2 million shares to Greenbridge Partners Ltd, raising NOK 120 million ($14.5 million USD). Greenbridge is a privately held investment company founded by Melker Schörling and Ola Rollén, highly respected Swedish industrialists with a deep understanding of the fingerprint sensor industry.

“The NEXT board and management believe Greenbridge will significantly increase the company´s chances of capitalizing on its excellent competitive position,” said Etholm-Idsoe.

On December 17, NEXT shares were listed on the Oslo Børs with symbol “NEXT,” thus being transferred from the smaller Oslo Axess. Traded volume in the stock has been among the highest on the Oslo Stock Exchange since October. The number of shareholders have grown from 580 to more than 5,000 and the new listing is expected to result in higher visibility and to attract a larger pool of international shareholders, the CEO told investors.

COST REDUCTION:

As previously communicated, the new ASIC being designed is somewhat delayed. It is targeted to be integrated into NEXT modules during the 2nd half 2016, and bring NEXT production costs further down. This is the last major step in the company roadmap for cost reduction, said NEXT.

During the fall, the company successfully negotiated a termination of the royalty agreement held by the inventor of the NEXT technology, Ngoc Minh Dinh. Under this agreement Mr. Dinh was entitled to 5 per cent of the gross margin proceeds from all sales. The board and management want to thank Dinh for his flexibility in this matte, said Etholm-Idsoe.

ORGANIZATION:

By year end, NEXT has 55 employees, half at the Seattle office. Going forward, the company will continue to expand, with new hirings in R&D, sales and operations. A significant part of the new hirings will be related to the company strategic interest in smartcards, noted Etholm-Idsoe.

ABOUT NEXT BIOMETRICS:

Enabled by its patented Active Thermal Principle, NEXT offers high quality area fingerprint sensors at a fraction of the prices of comparable competitors. A wide range of product formats including Smartphones, Tablets, PC’s, Doors, Time registration systems, Payment terminals, Flashdrives, USB-tokens, Key fobs and many more are targeted.

NEXT BIOMETRICS GROUP ASA, online at www.NEXTbiometrics.com, is a publicly-listed company headquartered in Oslo, Norway, with sales, support and development subsidiaries in Seattle, Silicon Valley, Prague, Taipei and Shanghai. Media and Investor contacts for NEXT Biometrics: Tore Etholm-Idsøe, CEO, Tore.Idsoe@NEXTbiometrics.com  and Knut Stalen, CFO, Knut.Stalen@NEXTbiometrics.com.