Lund, Sweden. February 4, 2004

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					                                                                                    Lund, Sweden. February 4, 2004



Precise Biometrics AB (publ), corporate identity number 556545-6596
Financial statement, January-December 2003


           The Group’s net sales for the financial year totaled SEK 13.6 million (22.5) and for
           the fourth quarter SEK 2.8 million (10.6).

           The bottom line for the financial year was SEK -54.1 million (-73.6) and for the
           fourth quarter SEK -12.6 million (-19.2).

           Losses per share for the financial year amounted to SEK -2.34 (-18.60) and for the
           fourth quarter SEK -0.35 (-4.84).

           Liquid capital at the close of the financial year was SEK 19.2 million (28.0).


     Events occurring since the end of the financial year:

           At the company’s EGM of January 20, the board was authorized to resolve upon a
           new share issue with deviation from the existing shareholders’ pre-emption rights
           and/or a new share issue with pre-emption rights for the existing shareholders. The
           board is currently evaluating various options to create room to maneuver for the
           company and intends to resolve the issue shortly.

           The company received two orders for a pilot project within the framework of a
           national ID card program in the US. The orders primarily concern licenses for
           Precise Match-on-Card™, a deal worth about SEK 1.5 million.

           Together with Saflink, the company has received an order from First National Bank
           in Texas concerning 500 users. Saflink has also received an order based on Precise
           Biometrics’ technology from the international manufacturing company Molded Fiber
           Glass Companies in Ohio concerning 2,500 users.

           The company signed a partnership agreement with the Japanese company Silex
           Technology, Inc. The introductory collaboration involves launching Precise Match-
           on-Card™ on the Japanese market.




For further information, please contact:
Christer Bergman, Group President and CEO, Precise Biometrics AB
Telephone: +46-(0)-46-31 11 26, +46-(0)-730-35 67 26. E-mail: christer.bergman@precisebiometrics.com

Precise Biometrics AB, Scheelevägen 19 C, SE-223 70 Lund, Sweden. Telephone: +46-(0)-46-31 11 00

Precise Biometrics AB (publ.) is an innovative security company that supplies world-leading systems for authentication using
fingerprints. The company's solutions replace keys, PIN codes and passwords. The company's products are cost effective and provide
security and comfort combined with top-class protection of personal integrity. The range of products includes systems for access control
to buildings, computers and networks and for integration into mobile and fixed terminals, such as mobile phones and computers. The
company headquarters are in Lund, Sweden. It also has offices in Stockholm and a U.S. subsidiary in Washington, DC. Precise
Biometrics is listed on the O-list of the Stockholm Stock Exchange (symbol: PREC A).
For more information, please visit http://www.precisebiometrics.com/
CEO’s comments on the financial statement
“2003 was characterized by considerably lower sales that we had expected, as several of the
projects we were involved with were delayed in part due to the economic slowdown and, on the US
market, due to the Iraq war,” says Christer Bergman, CEO of Precise Biometrics.

“At the same time, activity on the biometrics market, such as the number of ongoing projects for
Precise Biometrics, is greater than ever. It is also satisfying to start the new financial year by
introducing a number of deals with great potential.”

Sales and profitability

Financial year 2003
Sales during the financial year totaled SEK 13.6 million (22.5). The bottom line for the Group
during the financial year was SEK -54.1 million (-73.6). Operating costs for the financial year
totaled SEK 58.2 million (77.5), including depreciation and write-down of SEK 12.6 million (10.0)
and capitalization of expenses for development work of SEK 2.4 million (6.4). Losses per share
(average number of shares) over the financial year amounted to SEK -2.34 (-18.60).

Fourth quarter, 2003
Sales for the fourth quarter totaled SEK 2.8 million (10.6) and the Group’s losses were SEK -12.6
million (-19.2). Operating costs for the fourth quarter totaled SEK 13.2 million (19.5), including
depreciation and write-down of SEK 4.2 million (4.3) and capitalization of expenses for
development work of SEK 0.5 million (0.9). Losses per share (average number of shares) over the
fourth quarter totaled SEK -0.35 (-4.84).

The current business operations during the quarter featured cost-savings and rationalization.
Operating costs, excluding write downs and depreciation and capitalization of development costs,
now amount to an average of SEK 3.2 million per month.

During the fourth quarter, operations have produced a small amount as a result of customer-
financed development projects, which is in line with the company’s amended business model with
an increased focus on consulting services.

The majority of Precise Biometrics’ invoicing is done in US dollars (USD), which has entailed that
the company’s sales for the financial year, recorded in Swedish crowns, have been affected by the
sinking dollar exchange rate. The bottom line for the financial year has been affected only
marginally, however, because the company’s production costs are primarily in dollars (USD), as
are the operating costs referable to the subsidiary’s operations in the US.

Financing and liquidity
Shareholders’ equity, as of December 31, 2003, amounted to SEK 50.1 million (67.2) and the
equity/share ratio totaled SEK 1.41 (17.00).

Cash flow from current operations amounted to SEK –43.2 million (–58.7), cash flow for the year
from investment operations totaled SEK –2.5 million (–6.9) and cash flow for the year from
financing operations totaled SEK 36.9 million (54.9), which adds up to a total cash flow for the
year of SEK –8.8 (–10.7).

The company’s liquid capital as of December 31, 2003 was SEK 19.2 million (28.0).

During the fourth quarter, the parent company has been granted a line of credit for invoicing of
SEK 5.0 million.
At the company’s EGM of January 20, the board was authorized to resolve upon a new share issue
with deviation from the existing shareholders’ pre-emption rights and/or a new share issue with
pre-emption rights for the existing shareholders. The board is currently evaluating various options
to create room to maneuver for the company and intends to resolve the issue shortly.

Operations
Precise Biometrics develops and markets products for fingerprint-based identification. Operations
are based on in-house-developed technology for fingerprint identification, Precise BioMatch™. In
concert with a large number of select partners, the company offers customers in security-conscious
industries convenient, secure and cost-effective solutions that can replace keys, PIN codes, and
passwords.

The company has a strong patent portfolio, primarily within the strategically important match-on-
card segment, which combines fingerprints and smart cards. Precise Match-on-Card™ further
increases security by making it possible to store and match fingerprints on a smart card without the
fingerprint data ever having to leave the card. The technology also ensures stronger protection of
personal integrity as fingerprints are not stored in a central database. By encouraging leading smart
card manufacturers to integrate the technology in their products, the goal is to make Precise Match-
on-Card™ a de facto global standard. Precise Biometrics is working together with a majority of the
world’s foremost smart card manufacturers, which is of particular importance for the company’s
future success within large scale smart card projects such as national ID cards and future payment
cards.

Marketing and sales
The company’s sales activity during the fourth quarter, as during the rest of the year, was
characterized by lower order intake. This development is a consequence of delays in several of the
projects in which the company is involved, as a result of the economic downturn and the war in
Iraq.

At the same time, this year’s marked increase political and commercial interest in biometrics
became stronger in the fourth quarter. This is indicated by a significant rise in the number of
projects in which the company is involved, both in Europe and the US.

In 2003, the US Department of Homeland Security heightened controls over travelers entering the
country by introducing the “US-VISIT” program. The program entails that everyone entering the
US with a visa will be identified using biometrics; it aims to prevent terrorists from entering the
country. The fingerprint technology implemented in the first test system during January 2004
entails storage and matching of fingerprints in a central database. This differs from Precise
Biometrics’ technology, where storage and matching of the fingerprint can be done directly on a
smart card, which protects the user’s personal integrity. A final determination on which technology
will be implemented has not yet been made.

During 2003, the International Civil Aviation Organization, ICAO presented its recommendations
that future travel documents (such as passports) should contain biometrics. Both the US and the
European Commission have proposed that all new passports should contain fingerprints and other
biometric security features. As passports are issued and administered at the national level in the
EU, investigations into how the new passports will be designed are ongoing in several countries;
such investigations will consider how personal integrity will be protected. Precise Biometrics is
well positioned, through its technology and its partnerships, for this type of project.
During the fourth quarter, Precise Biometrics enhanced its partnership with Sun Microsystems. As
a consequence of increasing demand for biometrics on Java™-based smart cards, Precise
Biometrics has developed its Precise Match-on-Card™ technology, in partnership with Sun, in
order to offer support for Sun’s operating system, Solaris™. During the quarter, Sun demonstrated
the solution based on the collaboration work at the Cartes smart card exhibition, which was held
November 18-20 in Paris and at the Inside ID exhibition in Washington D.C. in December.

The company entered a licensing agreement with SCsquare, an Israeli computer security company,
which has won a contract to provide Israel’s national ID cards. In order to meet increased demand
for biometrics from its customers, SCsquare has integrated Precise Biometrics’ technology for
storing and matching fingerprints on smart cards, Precise Match-on-Card™, in its card operating
system Apollo OS and its PC software.

At the Cartes smart card exhibition, the company took a major step towards its goal of establishing
Precise Match-on-Card™ technology as a global de facto standard, because a majority of the
world’s leading smart card suppliers were demonstrating solutions based on the technology.
Besides Sun Microsystems and SCsquare, the technology was also displayed by Axalto (formerly
SchlumbergerSema), beTrusted, Hypercom, Infineon, Keycorp, Maosco, Philips and Tarmin
Solutions. Collaboration and business negotiations continue with several of the aforementioned
companies as a facet of the company’s operations.

Within the framework of the previously announced partnership between Precise Biometrics and
RSA Security, the most trusted name in e-security®, RSA Security released a new version of its
security software RSA SecurID Passage, with support for Precise Biometrics’ fingerprint
technology. The software is being marketed and sold by RSA Security globally together with IT
security products from Precise Biometrics.

US Sales Business Area:
Sales for the business area during the financial year were SEK 6.5 million and operating losses
totaled SEK –1.5 million. Sales for the fourth quarter totaled SEK 0.9 million and the operating
losses for the fourth quarter were SEK –0.6 million.

European Sales Business Area:
Sales for the business area during the financial year were SEK 4.5 million and operating losses
totaled SEK –2.3 million. Sales for the fourth quarter totaled SEK 1.7 million and the operating
losses for the fourth quarter were SEK –0.3 million.

Rest of the World Sales/Global Partner Group:
Sales for the Group during the financial year were SEK 2.0 million and operating losses totaled
SEK –4.4 million. Sales for the fourth quarter totaled SEK 0.1 million and the operating losses for
the fourth quarter were SEK –0.4 million.

During the fourth quarter, the company has noted an increase in the number of projects on the
European market in which the company is participating. This means that the company is presently
involved in about an equal number of projects in Europe and the US, unlike earlier this year when
the US market dominated in the number of projects.

As of January 2004, the company’s three former business areas were amalgamated into two
primary business areas – the Americas, which deal with both North and South American markets –
and EMEA, which is primarily responsible for sales to Europe, but also to Africa and the Middle
East.
Products
During the fourth quarter, solutions based on the company’s new generation product for embedded
solutions, Precise BioCore™ II were presented for the market. This included demonstrations at the
Cartes exhibition by the company’s partner Hypercom Financial Terminals of a prototype Point of
Sale terminal where the product has been integrated. Combining fingerprints and smart cards has
the advantage of simplifying the identification process when using the terminal while at the same
time preserving the user’s personal integrity. The prototype was also demonstrated by Precise
Biometrics at the Inside ID exhibition in Washington, D.C. in the beginning of December.

Investments
During the financial year, the group made investments of SEK 0.1 million (0.4) in fixed capital
assets.

Patents
With its patent strategy, the company aims to secure rights in proprietary technology, to build
structural capital for future business or transactions and to preserve its ability to obstruct
competitors.

During the fourth quarter (December 2003), another of the company’s patent applications was
approved. The patent covers the design of the company’s combined fingerprint and smart card
readers, Precise 100 MC and Precise 100 SC, which makes it possible to remove a smart card
manually from the reader.

The company has filed patent applications for seventeen different innovations in several different
countries. So far, the company has been granted nine patents, eight in Sweden and one in the US.

Capitalized expenditure for development
During the financial year, expenses for development work have been capitalized in the order of
SEK 2.4 million (6.4). Depreciation and write-down of expenses for capitalized development work
totaled, during the financial year, SEK 10.1 million (7.7), of which is write-down of SEK 2.6
million (0.9). Depreciation of patents and capitalized computing fees totaled, during the financial
year, SEK 872 thousand (872) and SEK 151 thousand (151) respectively.

Shares
The company stock has been listed on the Stockholm Stock Exchange O-list since October 3, 2000.
The total number of registered shares at end of the financial year was 35,610,300. During the
financial year, average sales per day were SEK 541,000, and the listed share price ranged between
SEK 7.45 and SEK 1.81.

The five largest shareholders as of December 31, 2003 were the following:

Name                             Proportion of capital and votes
Odin fonder (Norge)              7.3 %
Fjärde AP-fonden                 6.3 %
Storebrand fonder                4.8%
Christer Fåhraeus                4.5 %
Banco fonder                     3.8 %

Source: SIS Ägarservice
Organization and staff
Precise Biometrics consists organizationally of the parent company, Precise Biometrics AB, with
headquarters in Lund and a sales office in Stockholm, and subsidiaries Precise Biometrics Inc. and
Precise Biometrics Services AB. As of December 31, 2003, the Group had 32 (47) employees, 28
in Sweden and 4 in the USA. Of our employees, 25 (36) were men and 7 (11) were women.

Parent company
The parent company’s sales for the financial year totaled SEK 11.9 million (24.7) and for the
fourth quarter SEK 2.4 million (12.9). The operating loss for the parent company during the
financial year was SEK –51.5 million (–64.1). At the end of the financial year, 28 people were
employed in the parent company. Liquid funds at the close of the interim year totaled SEK 18.8
million (26.8). The parent company has no debts to credit institutions, as of the end of financial
year. The group made investments of SEK 0.1 million (0.4) in fixed capital assets. During the
financial year, expenses for development work have been capitalized in the order of SEK 2.4
million (6.4).

Nomination committee
A nomination committee, consisting of Lars Grönberg (chairman), Ragnhild Wiborg (Odin
fonder), Stefan Johnson (Fjärde AP-fonden), Johan Ågren (Banco fonder) and Christer Fåhraeus,
will present their proposals for a new board of directors well in advance of the next annual general
meeting.

Events occurring since the end of the financial year

        At the company’s EGM of January 20, the board was authorized to
        to resolve upon a new share issue with deviation from the existing shareholders’ pre-
        emption rights and/or a new share issue with pre-emption rights for the existing
        shareholders. The board is currently evaluating various options to create room to maneuver
        for the company and intends to resolve the issue shortly.

        The company received two orders for a pilot project within the framework of a national ID
        card program in the US. The orders primarily concern licenses for Precise Match-on-
        Card™ but also a small number of fingerprint readers and technical development work, a
        deal worth about SEK 1.5 million. The pilot project will take place during 2004 and
        comprises 90,000 users. The ID card program will be introduced during 2005 and will
        comprise several million users.

        Together with Saflink, the company has received an order from First National Bank in
        Texas concerning 500 users. Saflink has also received an order based on Precise
        Biometrics’ technology from the international composite company Molded Fiber Glass
        Companies in Ohio concerning 2,500 users.

        The company signed a partnership agreement with the Japanese company Silex
        Technology, Inc., which supplies among other things IT security products based on
        fingerprint identification. Within the framework of the partnership, Silex will market and
        sell licenses for Precise Match-on-Card™, Precise Biometrics’ technology for storing and
        matching fingerprints on smart cards, alongside Silex’s Digitus products for fingerprint
        identification, on the Japanese market.
Future outlook
Precise Biometrics is a market leader within fingerprint-based biometrics in combination with
smart cards, i.e. Precise Match-on-Card™. In order to meet the market demand for multi-
biometrics, the company has initiated a partnership with the German company, Cognitec, which is
active within facial recognition.

Precise Biometrics is currently in a good position in supplier evaluations for a number of very
large biometrics projects. This primarily concerns a couple of large ID card projects on the US and
European markets.

At the company’s EGM of January 20, the board was authorized to resolve upon a new share issue
with deviation from the existing shareholders’ pre-emption rights and/or a new share issue with
pre-emption rights for the existing shareholders.

The earlier-than-expected need for further capital in 2004 depends on several factors:
        The growing size and increasing complexity of projects entail a greater potential for
        Precise Biometrics but also mean longer lead times.
        Revenues from major projects are being delayed, and the company must enhance its
        staying power.
        The projects may require increased tying of operating capital.


Future reporting dates and general shareholders’ meetings
Interim report, January-March               April 26, 2004
Annual General Shareholders’ Meeting        April 26, 2004
Interim report, January-June                August 11, 2004
Interim report, January-September           October 20, 2004


Accounting principles
This interim report has been drafted in accordance with the recommendations of the Swedish
Financial Accounting Standards Council (RR20), Interim Reports. The accounting principles and
calculation methods remain unchanged from the last annual report.

Lund, Sweden, February 4, 2004

Christer Bergman, Chief Executive Officer, Precise Biometrics AB (publ)

The Board of Directors moves that there be no dividends for the 2003 operational year.

The Annual General Shareholders’ meeting for Precise Biometrics AB (publ) will be held on
Monday, April 26, 2004, 16:00, at the company’s premises at Scheelevägen 19 C in Lund, Sweden.

The Annual Financial Report will be distributed by mail to shareholders no later than the beginning
of April and can be ordered from Precise Biometrics at tel +46-46-31 11 47, fax +46-46-31 11 01
or by e-mail to investor@precisebiometrics.com.
Review report
We have reviewed this summarized financial statement in a summary manner in accordance with
the recommendation issued by the Swedish Institute of Authorized Public Accountants (FAR). A
review is considerably more limited in scope compared with an audit. Nothing has come to light to
indicate that the summarized financial statement does not fulfill the requirements of the Stock
Exchange Act and the Annual Accounts Act.

Lund, Sweden, February 4, 2004

Öhrlings PricewaterhouseCoopers AB

Per Wardhammar, Authorized public accountant, primarily responsible

Dan Andersson, Authorized public accountant
Income statement, Group


(Figures in thousands SEK)
                                                             Oct-Dec          Oct-Dec        Full year         Full year
                                                                  2003            2002            2003             2002


Net sales                                                        2 807          10 630          13 645           22 469
Cost for goods sold*                                            -2 187         -10 385          -9 822          -19 334


Gross profit/loss                                                   620             245          3 823            3 135


Sales costs                                                     -4 252          -8 672         -25 056          -38 023
Administration costs**                                          -1 463          -1 771          -5 801           -8 415
R&D costs***                                                    -6 278          -7 933         -23 195          -28 394
Other operating income                                               0             138             107              299
Other operating costs                                           -1 200          -1 214          -4 284           -2 970
                                                               -13 193         -19 452         -58 229          -77 503


Operating profit/loss                                          -12 573         -19 207         -54 406          -74 368


Income/expense from financial investments
Other interest revenue and similar items                            107             160             483             952
Interest costs and similar items                                   -130            -110            -189            -191
Total income from financial investments                             -23              50             294             761

Profit/loss after financial
income/expenses                                                -12 596         -19 157         -54 112          -73 607

Deferred tax                                                           9            -10               -6              -4


Profit/loss for the period                                     -12 587         -19 167         -54 118          -73 611

* During the fourth quarter of 2003, write-downs for obsolescence have been made in the order of SEK 2,033 thousand,
which is included in the figure for cost for goods sold.
  During the second quarter 2003, write-downs for obsolescence have been made in the order of SEK 435 thousand,
which is included in the figure for cost for goods sold.

** The operating costs for the fourth quarter of 2002 include costs of SEK 1,204 thousand in connection with moving the
company’s headquarters.
*** The operating costs for the fourth quarter of 2003 include write-down of intangible assets of SEK 1,665 thousand.
   The operating costs for the full year 2003 include write-down of intangible assets of SEK 2,571 thousand.



Profit/loss per share, SEK
Before dilution                                                   -0.35           -4.84           -2.34          -18.60
After dilution                                                    -0.35           -4.84           -2.34          -18.60
Balance Sheet, Group
(Figures in thousands SEK)

                                             Dec 31, 2003 Dec 31, 2002
Assets
Intangible fixed assets                           26 025       34 730
Tangible fixed assets                              1 628        3 105
Inventories                                        5 254        6 790
Accounts receivable                                3 667       11 142
Other current receivables                          2 578        3 414
Cash and bank                                     19 224       28 004
Total assets                                      58 376       87 185



Shareholders’ Equity and
Liabilities
Shareholders’ equity                              50 072       67 245
Reserves                                             321        1 452
Current liabilities/accounts payable               7 983       18 488
Total shareholders’ equity and liabilities        58 376       87 185



Pledged assets                                     6 715         1 924


Contingent liabilities                                  -            -



Cash Flow Analysis, Group
(Figures in thousands SEK)
                                                Full year    Full year
                                                    2003         2002
Cash flow for current operations
before changes in working capital                 -43 053      -62 602
Cash flow from changes in working capital            -181        3 858


Cash flow from current operations                 -43 234      -58 744


Cash flow from investments                         -2 490       -6 877


Cash flow from financing operations               36 944       54 881


Year’s cash flow                                  -8 780       -10 740
Liquid assets at the beginning of the year        28 004        38 744
Liquid assets at the end of the year              19 224        28 004
Business Ratios, Group
                                                                              Dec 31, 2003 Dec 31, 2002


Working capital (thousands SEK)                                                        22 740             30 862
Liquid ratio                                                                            319%               230%
Equity/assets ratio                                                                       86%                77%
Return on shareholders’ equity                                                           -92%               -93%
Capital employed (thousands SEK)                                                       50 072             67 424
Return on capital employed                                                               -92%               -96%
Losses after net financial income/expenses per share,
before dilution (SEK)                                                                    -2.34             -18.60
Losses after net financial income/expenses per share, after
dilution (SEK)                                                                           -2.34             -18.60
EBITDA (thousands SEK)                                                                -41 757            -64 410
Shareholders’ equity per share, before dilution (SEK)                                     1.41              17.00
Shareholders’ equity per share, after dilution (SEK)                                      1.41              17.00
Number of shares before dilution                                                 35 610 300           3 956 700
Number of shares after dilution                                                  35 610 300           3 956 700
Number of employees at end of period                                                          32                47
Average number of employees during the period                                                 40                60



Definitions – Business ratios
Working capital: Current assets less current liabilities.
Liquid ratio: Current assets less inventories divided by current liabilities.
Equity/assets ratio: Shareholders’ equity as of the balance sheet date divided by the total
assets as of the balance sheet date.
Return on shareholders’ equity: Profit/loss after tax as a percentage of average
shareholders’ equity.
Capital employed: Balance sheet total less non-interest-bearing liabilities and reserves.
The average capital employed has been calculated as initial plus outgoing capital employed divided by two.
Return on capital employed: Profit/loss after net financial income/expenses plus financial costs as a
percentage of average capital employed.
Profit/loss per share: Profit/loss after net financial income/expenses divided by the average number of shares.
Recalculation after dilution may not produce a better profit/loss figure per share compared with that before dilution.
EBITDA: Profit/loss before net financial income/expenses, depreciation and write downs and tax.
Shareholders’ equity per share: Shareholders’ equity as of the balance sheet date divided by the number
of shares as of the balance sheet date.
Changes in Shareholders’ Equity,
Group
(Figures in thousands SEK)
                                                                  Full year                   Full year
                                                                       2003                       2002


Initial shareholders’ equity                                         67 245                     91 295
Effect of change of accounting principles*                                -                     -8 679
Initial shareholders’ equity adjusted in
accordance with new accounting principles                            67 245                     82 616


New share issue**                                                         -                     27 650
New share issue***                                                      469                     27 367
New share issue****                                                  36 475                          -
Option redemption                                                         -                      3 222
Year’s profit/loss                                                  -54 118                    -73 611
Sum at the close of the year                                         50 072                     67 245

* The effect of altered accounting principles has been entered against
accumulated deficit.


** At a subscription price of SEK 87 per share.
*** At a subscription price of SEK 4 per share.
    The sum for 2003 concerns remaining liquid capital from the new share issue of 2002 less
associated issue costs.
**** At a subscription price of SEK 1.70 per share.

Turnover and profitability by business area, Oct-Dec 2003
(Figures in thousands SEK)              US    European     Global Partner
                                      Sales        Sales          Group       Miscellaneous
Net sales                              882         1 724            100               101
Expenses*                           -1 433        -1 998           -549              -269
Operating profit/loss                 -551          -274           -449              -168


Sales and profitability by business area, Jan-Dec 2003
(Figures in thousands SEK)              US    European     Global Partner
                                      Sales        Sales          Group       Miscellaneous
Net sales                            6 481         4 510          1 987               667
Expenses*                           -8 018        -6 836         -6 350            -1 254
Operating profit/loss               -1 537        -2 326         -4 363              -587


* The expenses figure set out above includes costs for goods sold and direct costs
for each business area.