<<<<<

NEXT BIOMETRICS

<<<<<

NEXT management team Inc Board of Directors and Advisory Board

Tore Etholm-Idsøe, CEO (MBA)

• CEO of NEXT Biometrics since 2004

• Extensive experience as business architect and

entrepreneur in a number of successful and fast

growing IT, retail and marketing concepts

• Former founding CEO of Binders AS

• Co-founder of UNIC-Gruppen AS,

Matias Troccoli, VP Technology (PhD)

• Joined Next in 2006 and manages all technology

projects from Seattle, where the engineering team

is based.

• Matias has 12 years’ experience within the area of

low temperature poly silicon (LTPS) technology and

systems: NEXT’s core production process

Vincent Su, Manger Taiwan (MBA)

• Prior to joining NEXT in 2013, he worked 2 years

as manager for Authentec Taiwan (acquired by

Apple)

• Vincent has 19 years of experience working for

international companies like Phoenix, Sandisk,

Insilicon and Seagate in the Taiwanese market

Ngoc Minh Dinh, Chief Technologist (MS)

• Inventor of the Active Thermal Principle and founder of the

Company

• More than 20 years experience within the area of

fingerprint sensor technology

• Focusing core sensor design research and development

activities

Robert Muller, System Level Fingerprint Technology

Expert (PhD)

• Joined NEXT in 2009

• Over 15 years experience within Biometrics, Smartcards,

Data security and NFC-Payments

• He has worked more than 10 years for Munich-based

Giesecke & Devrient - one of the world leading suppliers of

authentication-related security solutions

Dr Lunji Qiu, GM China Operations (PhD)

• Dr. Qiu previously held positions as VP and GM of

Authentec China, GM of Atrua China (acquired by

Authentec), GM of Broadcom China, and before this

multiple positions within Motorola in Singapore.

• Dr. Qiu will oversee all aspects of NEXT BIOMETRICS

China, including business development activities and the

expansion of the customer support, logistics and sales

teams in the largest world market.

TROND WENNBERG (FINANCING) / PROFESSOR MILTIADIS HATALIS (LTPS TECHNOLOGY) /

BRUCE GRANT (TELECOM, FINANCIAL, STRATEGIC) / BERT NORDBERG (TELECOM) /

MAX WU (IT-INDUSTRY, STRATEGIC) / JOAO NETO ( BRAZIL), X (INDIA) , NEW RESOURCES (2-3 HIGH LEVEL PERS.)

Board of Directors

JAN EIVIND FONDAL (CHAIRMAN) / KETIL FRIDHEIM (PAYMENT INDUSTRY EXECUTIVE) / NGOC MINH DINH (INVENTOR) /

TORE ETHOLM-IDSOE (CEO) / RALPH HØIBAKK (IT-INDUSTRY) / MARIT INSTANES (INVESTOR REPRESENTATIVE)

Advisory Board

Management

INCLUDING :

Ex. SONY ERICSSON CEO

Ex. ACER AMERICAS CEO

Ex. TANDBERG DATA CEO

2

NEXT

employees:

Seattle:

12

Taipei:

2

Shanghai:

5

Norway /

Germany:

3

++

10+ man-years

outsourced

<<<<<

The NEXT fingerprint opportunity

Fingerprint biometrics

market set to take off

Proven technology at

specs with credible mass

market references

Significant cost

advantage

3

Production cost reduced

by 70 – 80% vs

same quality

alternatives..

Patents, Mobile & IPO

NEXT BIOMETRICS GROUP AS

ESTABLISHED 2001

$ 14 MILL RAISED 2004-2013

$ 15.8 MILL RAISED SEPT 2013

<<<<<

SILICON AREA SENSORS

SALES PRICES $ 15 -30

COST PROBLEM

VOLUMES

(MILL UNITS)

CHECK-IN AT AIRPORTS

CORPORATE/PUBLIC ACCESS CONTROL

CORPORATE TIME & ATTENDENCE

MOBILE LAW ENFORCEMENT SYSTEMS

SAFES, GUNS, ETC……

MANY

CREDIBLE

EXISTING

REFERENCES

Credible mass market references

LEVEL OF SECURITY & CONVENIENCE

WORLD MARKET SYSTEM INTEGRATORS

DO NOT MAKE COMPROMISES ON…

-SENSOR SIZE

-SENSOR RESOLUTION

-SYSTEM ERGONOMICS

-ENROLMENT PROCEDURE

-USER GUIDANCE

-QUALITY OF ALGORITHM

<<<<<

«We have investigated every

biometric trait, the only solid

technology is fingerprint»

«Swipe sensors are inconvenient and

unreliable»

«We want to move away from swipe

sensors»

THE FINGERPRING SENSOR

MARKET NOW ENJOYS THE

STRONGEST POSSIBLE

DRIVERS

INDUSTRY LEADER

STATEMENTS AND ACTIONS

ALL CONFIRM THE UNIQUE

POSITIONING OF

THE NEXT TECHNOLOGY

The new industry drivers… Mass market biometric user authentication

Area sensor

launched

September 10th

2013

«Our intention is to obliterate User

IDs, Password and Pins, including in

enterprises around the world»

- Michael Baret, PayPal

5

<<<<<

100’EDS

10’S

1’S

VOLUMES

(MILL UNITS)

Existing market sensors

SILICON AREA SENSORS

Sales price $ 15 -35

Mass market disqualified

SILICON SWIPE SENSORS

Sales price $ 2-5

Poor quality & user experience

OPTICAL SENSORS

Sales price $ 4-30

Bulky format

6 LEVEL OF SECURITY & CONVENIENCE

2014

SMALL AREA SENSORS

Sales price $ 8-10

Fingerprint sensor market - 2013 Changes

x

<<<<<

100’EDS

10’S

1’S

The NEXT sensor…

VOLUMES

(MILL UNITS)

Production cost reduced

by 70 – 80% vs

same quality alternatives..

Opens new markets today using:

Pin codes, passwords, signature,

photo ID and/or physical keys

Competitive positioning – Going forward Unique value proposition

Existing market sensors

SILICON AREA SENSORS

Sales price $ 15 -35

Mass market disqualified

SILICON SWIPE SENSORS

Sales price $ 2-5

Poor quality & user experience

OPTICAL SENSORS

Sales price $ 4-30

Bulky format

7 LEVEL OF SECURITY & CONVENIENCE

2014

SMALL AREA SENSORS

Sales price $ 8-10

x

DEMO…

<<<<<

Players

The core technology

Area sensor technology

Thermal conductivity Capacitive sensing

A heat pulse is generated and a response measured by every

pixel An electrical radio frequency signal is generated and response

is measured by every pixel

Players

8

MULTILEVEL

DEFENCE :

5 APPROVED PATENTS

(ALL MAJOR MARKETS)

2 PENDING PATENTS

+

TRADE SECRETS

+

FIRST MOVER

ADVANTAGE

=

2-5 YEARS..

<<<<<

The importance of sensor size NEXT sensor size is defined by leading system integrators

NIST

RECOMMENDATION

256 mm2

AUTHENTEC ( DP)

230 mm2

NEXT BIOMETRICS

201 mm2

FINGERPRINTC (FPC)

AUTHENTEC (DP)

148 mm2

2014:

FPC & VALIDITY

100 mm2

iPhone 5S

64 mm2

Its small size is

outside of historic

system spec

Security level allow

access control and

payments on

iTunes

Convenient and secure mass market proven formats

Forced into smaller

area sizes due to

market verdict on

swipe sensors

+

high cost of silicon

Smallest sensor

area ever sold in

volumes to mass

market system

integrators

Size defined in

collaboration with

major world player

in payments and

public ID

No #1 in silicon

area sensor

markets

10 mill + sold

(and used)

FIPS approved

Recommended size

for one-to-one

matching

applications

is 16.4 *16.4 mm

Smaller formats

N/A Sales

price: USD 8 – 10

(Expected)

USD 15 - 20 (Historic / Present)

USD 28 – 35

(Historic / Present)

9

FPC – Q1 / Q2

VALIDITY – Q2 / Q3

<<<<<

Q1/Q2/Q3 – 2013…

10

<<<<<

Investment case summary

Fingerprint biometrics

market set to take off

Proven technology with

credible mass market

references

Significant cost

advantage over

competitors

Unique investment

opportunity

6

Production cost reduced

by 70 – 80% vs

same quality

alternatives..

Jan Mar May Jul Aug Sep

Second Lot of 25k Sensors

PCB Modules and USB

Sensors

200.000

ASIC’s

produced

Mobile

Module

Qualified

Android SDK w/Sensors

Delivered to Customer

Distribution, Logistics

&

Warehousing Deal

Signed

Production Ready

Mobile Module

<<<<<

Investment case summary

Fingerprint biometrics

market set to take off

Proven technology with

credible mass market

references

Significant cost

advantage over

competitors

Unique investment

opportunity

6

Production cost reduced

by 70 – 80% vs

same quality

alternatives..

PO Production Lot of

180.000 Sensors

ETA Nov.

1’st Smartphone

Project Initiated

$ 15.8 mill equity

raised

<<<<<

OCTOBER – 2013…

11

Week 1 Week 2 Week 3 Week 4

First commercial PCB-

module completed

Seattle staff with three new

experienced engineers.

Out of 11 Seattle engineers, five

speaks mandarin.

First silicon of new cost

and space saving

ASIC received in Seattle

<<<<<

Investment case summary

Fingerprint biometrics

market set to take off

Proven technology with

credible mass market

references

Significant cost

advantage over

competitors

Unique investment

opportunity

6

Production cost reduced

by 70 – 80% vs

same quality

alternatives..

INNOLUX CORPORATION CEO

and CTO pledges increased project

support

Hunter Hu recruited as Sales

Manager of NEXT China.

First complete phone

demonstrated to

NEXT in Asia (not this design)

2 experienced FAE’s recruited

in Shanghai

<<<<<

New sensor markets identified Existing sensor markets

PCs

Smartphone access

Flash drives

USB tokens (e.g. Chinese internet banking)

Smartcard reader

USB sensors (e.g. mouse and keyboards) Doors & Turnstiles

OTP generators

Global market for fingerprint biometrics is projected to

reach USD 10 billion by 2018

Source: GIA, “Fingerprint Biometrics: A Global Strategic Business Report”

(February 2013)

Significant “NEXT-enabled” growth opportunities Multiple applications identified for the sensor – the first contracts already in place

Time & Attendance Payment terminals

Biometric “Keyfobs”

Sales contract II • 3.6 million sensors • 12 million sensor min

target • Industry record size

Sales contract I • 4 million sensors • Grant support • Industry record size

12

Smartphone based MORE DEMANDING :

Payments Cloud access

Physical access

Existing fingerprint sensor markets represents the

fastest route to sales and profitability

Replacements of existing high cost capacitive area

sensors are margin-attractive targets

<<<<<

NEXT Smartphone Project #1 Shipping in volumes in Q1/14

Competitors w/ potential solutions NEXT’s sensor for smartphone

13

Q1-Q3 / 2014..

FINGERPRINTCARDS

& VALIDITY

USD 8 – 10 (Expected)

USD 5 – 8

Q4-13/Q1-14

NEXT

NEXT SENSOR SMARTPHONE

LAUNCHES IN CHINA IN DEC-13

<<<<<

ASIC size and cost road map Continuously working towards reducing size and cost

Module V1: - ASIC

- M0

- Miscl.

Module V0: - ASIC

- M0

- Miscl.

- Bias Ckt

Module V2: - SiP

- Miscl.

ASIC SIZE REDUCTION

TO

TA

L C

OS

T Oct. 2013

July 2013

Dec. 2013

Mar. 2014

Module V3: - SiP-cs

- Miscl.

Jun 2014

Demo Module: - ASIC

- M0

- Miscl.

- Bias Ckt

- Power IC

Power IC

Removed &

other

Considerations

Current Sources

Removed

Multi-Die Package

Lower Cost ASIC

* Total Listed Components (excl. Sensor, Coating, FPC & Assembly)

14

<<<<<

Asset light business model Contracts in place with highly renowned manufacturers and system integrators

Manufacturing

Assembly and

system

integration

Product development/

Sensor design

Partner Partner

NEXT team dedicated to

sensor design,

technology development

and IP

Production of the NEXT

sensors & ASICS

outsourced to leading

global manufacturing

partners

/ Partner

Sales &

Marketing

/ Partner

NEXT team dedicated to

sensor sales and

marketing

15

Market leading system

integrators will develop

a long range of

applications based on

NEXT technology

<<<<<

Significant “NEXT-enabled” growth opportunities Bottom-up model on identified market opportunities

0

50

100

150

200

250

300

350

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Un

its (

millio

n)

EXISTING MARKETS

Projected sales level

based on existing and

new markets

MOBILE DEVICES

KEYFOBS

SENSOR SMARTCARDS

2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 16

Apple effect not included

2023 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

<<<<<

Financial forecasts

Revenues and gross margin ambitions

Q3

2014

10

15

20

25

0

-5

Q4

2015

Q3

2015

5

Q1

2015

Q2

2014

Q4

2014

Q2

2015

USD million

30

Q1

2014

Q4

2013

Q3

2013

17

Targeting positive cash generation from Q3 2014

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

55%

60%

60

Gross margin %

2015

164

2014

37

2013

0

USD million

0

120

30

45

165

15

75

90

105

135

150

Gross margin

Total Revenues

Firm contracts

Estimated revenue from first two contracts as % of total forecasted revenue:

2013 100%

2014 25%

2015 14%

<<<<<

Investment case summary

Fingerprint biometrics

market set to take off

Firm trends backing convenient security solutions that eliminates passwords and pin codes

Industry leaders’ (Apple, Microsoft, PayPal) statements and actions all support fingerprint

recognition as the superseding technology – iPhone 5S launched 10 September 2013

Already large existing markets such as Physical Access Control

Significant growth from new markets such as mobile phone expected from 2014

Proven technology with

credible mass market

references

NEXT’s proprietary and patented technology a result of more than 15 years of research

NEXT utilize area (touch) sensors, which are proven to be superior to the now

commonly used swipe sensors

The size of NEXT’s sensor is defined in collaboration with major global leaders in

payments and public ID – providing the required level of security

Significant cost

advantage over

competitors

Production cost currently significantly below competitors with area sensors due to

proprietary and patented technology

Capital light with manufacturing, assembly and integration outsourced to industry leaders

Clear cost road map with highly achievable goal of reducing cost by a further 66%

Unique investment

opportunity

Highly talented and experienced management team and Advisory Board

2 industry record sized sales contracts with revenues from Q4 -2013 signed

Smartphone development project with major Asian mobile phone producer

Opportunity to come in at attractive pricing level – IPO planned in Q2-2014

18