NEXT Biometrics Announces Interim Results 4th Quarter and Year 2014

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Key milestone was securing NEXT fingerprint sensor design-win with major international company

NEXT Biometrics, based in Oslo, Norway, offers high quality area fingerprint sensor at a fraction of the prices of comparable competitors.

The key milestone in the 4th quarter of 2014 was securing the design-win with one of the major international players after 12 months of intense effort and in competition with the world`s leading fingerprint sensor suppliers.

NEXT Biometrics Group ASA (OAX: NEXT) today announced interim results for the 4th quarter and year 2014. NEXT summarized 2014 highlights:

  • NEXT Biometrics secures first multi-national, brand name design-win (7 digits)
  • NEXT ships in excess of 100 000 sensors in Q4
  • Launch of sensor coating compliant with design requirements of phones, tablets and PC's.
  • NEXT coating machine passes the acceptance testing, and is ready to be shipped to Taiwan
  • NEXT signs distribution agreement with Japanese Hakuto Co Ltd.
  • Strong distribution network established.

NEXT Biometrics CEO Tore Etholm-Idsøe commented, “The key milestone in the 4th quarter of 2014 was securing the design-win with one of the major international players after 12 months of intense effort and in competition with the world`s leading fingerprint sensor suppliers. The contract confirms that NEXT`s dedication to a no-compromise line concerning sensor size and quality is accepted and appreciated by tier ones in the market. Design-in of sensors in the customer`s product lines typically requires 8-12 months. Volume shipments will start in the second half of 2015.”

The company said during the 4th quarter NEXT invested in substantial ramp up activities and has written down the value of existing inventory in the quarter, related to the cost down activities in 2015. This includes the impact of the new coating machine.

NEXT said it earned revenues of NOK 4.4 million in the fourth quarter of 2014, compared with NOK 1.6 million in the previous quarter and NOK 33 thousand in the fourth quarter of 2013. The revenue in the fourth quarter of 2014 consisted of operating revenue and was generated by shipment of in excess of 100 000 sensors.

For the year 2014 NEXT earned revenue amounting to NOK 6.7 million, which was split between NOK 6.3 million in operating revenue and NOK 0.4 million in other revenue. The operating revenue for the year 2014 was generated by shipment of more than 150 000 sensors. Other revenue consisted of grants from Innovasjon Norge.

The company noted that due to initial low production volumes and high manufacturing and coating costs, the calculated gross margin is negative. The Cost of goods sold for these initial delivered sensors are currently included in other operating expenses. Several of the initial cost elements related to production and delivery of these units are one-offs and do not give a clear and relevant cost of goods sold amount for these levels of production.

NEXT said payroll expenses in the fourth quarter of 2014 amounted to NOK 6.4 million, compared with NOK 5.2 million in the previous quarter and NOK 6.7 million in the corresponding quarter of 2013. The quarterly increase of NOK 1.2 million from the third quarter was primarily due to accrued board remuneration for 2014. Research and development (R&D) costs included in payroll expenses amounted to NOK 2.8 million in the fourth quarter of 2014, compared with NOK 3.0 million in the previous quarter and NOK 2.8 million in the corresponding quarter of 2013. Payroll expenses for the year 2014 amounted to NOK 21.9 million, compared with NOK 12.1 million for the year 2013. R&D costs included in payroll expenses increased to NOK 11.1 million for the year 2014 compared with NOK 5.8 million for the year 2013.

The company said other operating expenses in the fourth quarter of 2014 amounted to NOK 33.6 million, compared with NOK 10.9 million in the previous quarter and NOK 10.7 million in the corresponding quarter of 2013. R&D cost included in other operating expenses amounted to NOK 7.3 million in the fourth quarter of 2014, compared with NOK 5.4 million in the previous quarter and NOK 10.0 million in the corresponding quarter of 2013. Ramp-up cost, including cost of goods sold and write-down of inventories, amounted to NOK 23.5 million in the fourth quarter. The write-down is related to the company’s execution of cost down projects, including reduced bill of materials and the installation of the new coating machine.
NEXT added that other operating expenses for the year 2014 amounted to NOK 66.8 million, compared with NOK 24.9 million for the year 2013. The increase was mainly due to increased R&D expenses, ramp-up costs related to test production, cost of goods sold, write-down of inventories and other one-off items. R&D costs included in other operating expenses increased to NOK 27.7 million for the year 2014 compared with NOK 17.6 million for the year 2013.

Total Research and Development expenses, included in both payroll and other operating expenses, increased to NOK 38.8 million for the year 2014 compared with NOK 23.4 million for the year 2013, the company said.

NEXT said that net loss in the fourth quarter of 2014 was NOK 33.4 million, compared with a loss of NOK 18.6 million in the fourth quarter of 2013. The increased loss was due to increased activities within Sales and R&D, including test production and one-offs.

The company said, net loss for the year 2014 amounted to NOK 79.7 million, compared with a loss of NOK 38.8 million for the year 2013. The increased loss was due to increased activities within Sales and R&D, including test production and one-offs.

ABOUT NEXT Biometrics (http://www.NEXTbiometrics.com)

Enabled by its patented Active Thermal Principle, NEXT offers high quality area fingerprint sensor 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.

NEXT Biometrics Group ASA is a publicly-listed company on the OSLO Axess Bors (symbol NEXT) and is headquartered in Oslo, Norway, with sales, support and development subsidiaries in Seattle, Silicon Valley, Prague, Taipei and Shanghai. Contacts: Tore Etholm-Idsoe, CEO, tore.idsoe (at) NEXTbiometrics.com and Knut Stalen, CFO, Knut.stalen (at) NEXTbiometrics.com.

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