ANNUAL REPORT 2014

PRECiSE™
BIOMETRICS

CONVENIENT AND SECURE IDENTITY AUTHENTICATION FOR EVERYONE, EVERYWHERE

CONTENT | 3

CONTENT

Important events during the year 4
Precise Biometrics in one minute 5
CEO comments 6
Vision and objectives 10
Innovative products for convenient and secure identification 12
Market 14
Sustainability 19

The share & shareholders 20
Share capital development 21
Shareholder statistics 24
Five-year overview 26
Administration report 28
Corporate governance report 2014 36
Income statement 44
Balance sheet 48
Change in equity 52
Cash flow statement 54
Notes 55
Provision for accumulated loss and assurance 89
Auditor's report 91
Financial glossary 94
Board of directors 96
Management team 100
Annual general meeting 102
Financial calendar 103

IMPORTANT EVENTS DURING THE YEAR

Net annual sales...

... for the group amounted to SEK 31.4 million (34.9) at the end of the fiscal year.

Profit/loss for the year...

... amounted to SEK -44.5 million (-42.2) after tax.

Profit/loss per share...

... for the fiscal year amounted to SEK -0.12 (-0.14).

Liquid assets...

... at the end of the fiscal year amounted to SEK 59.7 million (101.2).

Precise BioMatch™ Mobile integrated into the world's first mobile phone...

... based on the Android operating system with a "touch" fingerprint sensor.

Precise BioMatch Mobile integrated into another mobile phone...

... from the Asian manufacturer Oppo as a result of cooperation with Fingerprint Cards.

A partnership agreement with Synaptics, one of the leading sensor manufacturers

... was reached, which enables the integration of Precise BioMatch™ Mobile with Synaptics' fingerprint sensors and solutions with touch-functionality.

A leading global energy company chose Tactivo™...

... for implementation of a smart card based mobile solution with secure access to information from iPhone and iPad.

The US Department of Defense bought 1100 Tactivo...

... for secure email and access to information from iPhone and iPad.

The Company won an order for 2000 Tactivo from a South American insurance company...

... to enable verification of the identity of individuals through fingerprint recognition on mobile devices.

Five new models of Tactivo launched...

... including one for iPhone 6, to support Apple's product portfolio of iPhone and iPad devices.

The Company implemented changes in the focus of our operations to achieve profitability in 2015 ...

... through a greater market presence via partners in Asia within the business area Fingerprint Technology, more efficient utilization of the Company's partner network for sales of Tactivo, and a reduction in costs.

PRECISE BIOMETRICS IN ONE MINUTE | 5

PRECISE BIOMETRICS IN ONE MINUTE

Precise Biometrics has close to 20 years of experience of products for fingerprint recognition and smart cards. Together with strong partners the Company supplies authentication of digital identities that enables convenient and secure access to systems, information and resources.

THE COMPANY'S OFFERING

Precise Biometrics offers products for secure and convenient authentication of digital identities. These products include both software and hardware for identity verification of individuals through fingerprint technology and smart cards. The Company sells its products in a global market through a strong network of partners consisting of sensor manufacturers, smart card manufacturers, systems integrators, local resellers and developers of desktop and mobile solutions.

BUSINESS AREAS

Fingerprint Technology

This business area includes products based on Precise Biometrics' core technology, an algorithm that enables fingerprint recognition. The product portfolio consists of software that can be integrated into mobile phones, national ID cards and other products.

Mobile Smart Card Solutions

This business area includes Precise Biometrics' product portfolio Tactivo™, which consists of smart card and fingerprint readers for smartphones and tablets. Tactivo enables secure and convenient mobile access to systems and applications in organizations that use smart cards as a security solution.

Desktop & Physical Access Solutions

This business area includes Precise Biometrics' offering of fingerprint and smart card readers for authentication to desktop computers and physical access through fingerprint recognition to offices and buildings.

BUSINESS MODEL

The products are sold directly to the customer and via a network of carefully selected partners that enables broad-based and cost-efficient sales and distribution. Earnings from the business area Fingerprint Technology mainly accrue from the licensing of software, but also from support, maintenance and services. Earnings from the business areas Mobile Smart Card Solutions and Desktop & Physical Access come from hardware sales.

CUSTOMERS

Sales of the Company's software products in the business area Fingerprint Technology mainly take place to providers in the telecom industry, for example, manufacturers of mobile phones, sensors and mobile platforms. Sales of products in Mobile Smart Card Solutions and Desktop & Physical Access Solutions target government agencies, companies and healthcare providers.

ORGANIZATION

The parent company Precise Biometrics AB has offices in Lund and Karlstad in Sweden and a subsidiary in the US, Precise Biometrics, Inc.

CEO COMMENTS

BREAKTHROUGH FOR FINGERPRINT TECHNOLOGY IN THE MOBILE MARKET

2014 was the breakthrough year for fingerprint technology in mobile devices. We are very pleased that our product was integrated into the world's first smartphone based on the Android operating system with a "touch" fingerprint sensor.

As a result of further investment in the business area Fingerprint Technology and more effective processing of end customers together with our partners in the business area Mobile Smart Card Solutions, we succeeded at the close of 2014 in achieving the best sales figures for the year in the fourth quarter. For the year as a whole we increased our earnings in both business areas.

At the end of the year we reached an agreement on the licensing of Precise BioMatch™ Mobile with Synaptics, one of the leading sensor manufacturers. This agreement means that they can use our product for their fingerprint sensors and solutions with touch functionality, which reinforces our position as an independent supplier of fingerprint algorithms for mobile devices. We already have a similar agreement with Fingerprint Cards.

Several of the largest manufacturers of smartphones launched products with fingerprint technology in 2014 and this technology has been given a warm reception by consumers. The user experience of the fingerprint technology in the phone launched in September with our product has received top rankings. The demand for mobile security solutions continues to increase as mobile phones and tablets become an ever more natural part of our lives, both in private and at work. According to a report from IHS Technology Research, volumes of smartphones and tablets with fingerprint technology will continue to expand and surpass 1.4 billion devices in 2020.

Despite these positive signals in the mobile market I can confirm that sales and profits for 2014 as a whole were disappointing, primarily because of lower sales levels than expected for Tactivo.

> Several of the largest manufacturers of smartphones launched products with fingerprint technology in 2014 and this technology has been given a warm reception by consumers

CEO COMMENTS | 7

We receive positive signals from several of the major vendors in the market

We implemented changes in the focus of our operations and our organization in August as a result of the current trends in the market and our profit levels. We have enhanced our market presence in the business area Fingerprint Technology and we are making more efficient use of investments made in the partner network surrounding Tactivo. These measures, in combination with cost savings, have been taken with a view to achieving profitability during 2015.

GREATER PRESENCE IN ASIA

types of sensors and platforms. The software aspect of fingerprint technology is complex, and during the year we have put much more effort into developing and reinforcing the know-how, functionality and technology that hardware providers demand.

Providers in Asia account for a large part of overall growth when it comes to the implementation of fingerprint technology in mobile devices. We have therefore established a local market presence via partners in Korea, China and Taiwan to increase sales efforts directed towards the large manufacturers of mobile devices, and their ecosystems consisting of sensor manufacturers, module suppliers and platform companies. This investment has significantly increased awareness of our fingerprint technology and products.

As a result we have moved during the year from participating in general discussions towards participating in well-defined projects, which create excellent prospects for the launch of more devices with our products in the market.

CEO COMMENTS

We are seeing a greater demand for Tactivo and have won several important orders during the year

HEALTHY POTENTIAL FOR MOBILE SECURITY SOLUTIONS

We are seeing a greater demand for Tactivo and have won several important orders during the year. A world-leading energy company implemented a mobile solution for simple and secure access to critical information. Defense Logistics Agency, part of the US Department of Defense, has initiated a project where they implement a mobile solution for secure email and access to information from iPhone and iPad. A South American insurance company implemented an innovative solution for more efficient business processes through identity verification of individuals with fingerprints on mobile devices.

Developments in the US government agency market have been slower than anyone could have foreseen, primarily because of the lack of explicit directives from government agencies for how solutions should be implemented. Integration of Tactivo with end user applications and underlying systems has continued during the year. Demand for mobile security solutions in the US government agency market remains strong, and the order we won in December from Defense Logistics Agency shows that there is potential for a broad implementation of Tactivo.

More and more pieces of the puzzle are falling into place within the Swedish healthcare sector. There are several pilot projects in progress involving mobile access to journal systems and elderly care systems through the use of the SITHS card, a service identification method frequently used in Swedish healthcare for both physical and electronic identification. Tactivo creates the

prerequisites for secure mobile solutions that can significantly improve efficiency in the Swedish healthcare system by making it possible to use the systems near the patients. Similar projects are also underway in the healthcare sector in the UK where there is a higher level of maturity, and what for us is a favorable combination of a greater need for security and an increasing need for mobile access to systems.

During the year we have launched five new models of Tactivo, including one for iPhone 6, as part of our ambition to support Apple's product portfolio of iPhone and iPad.

GROWING INTEREST IN BIOMETRICS IN THE MOBILE MARKET PROVIDES EXCELLENT MARKET OPPORTUNITIES

The rapid growth in fingerprint technology for mobile devices, in combination with the fact that we have established a strong position in the mobile industry's ecosystem, means that we are confident of seeing opportunities for a healthy expansion in the business area Fingerprint Technology in the near future. We are well-positioned in the market for mobile security solutions and hope to benefit during the year from the investments we have made in the business area Mobile Smart Card Solutions. Our ambition to achieve profitability during 2015 remains.

Håkan Persson, CEO of Precise Biometrics AB

VISION AND OBJECTIVES

CORE V

RELIABLE

DEDICATED

QUA MIN

VISION

Convenient and secure identity authentication for everyone, everywhere.

VISION AND OBJECTIVES | 11

BUSINESS CONCEPT

Precise Biometrics' business concept is, together with strong partners, to offer authentication of digital identities that enable convenient and secure access to systems, information and resources.

The Company's products make it possible for companies and government agencies to offer better and more secure solutions that safeguard the identity of individuals. For users this is a convenient and integrity-protecting way of identifying themselves.

OBJECTIVES

The main objective is to create long-term growth in value for Company shareholders. Growth and profitability are important criteria for success and form the basis for the strategic choices the Company makes to develop its operations.

STRATEGY

Precise Biometrics has extensive experience with fingerprint technology and smart card solutions, which forms the basis for the Company's strategy, together with its partners, to offer authentication of digital identities that enables convenient and secure access to systems, information and resources. The Company implements this strategy by offering solutions in three business areas.

Fingerprint Technology
Mobile Smart Card Solutions
Desktop & Physical Access Solutions

The strategy and business models differ between respective business areas and are described in more detail in the section on markets.

VALUES

MISSION

We provide convenient and secure authentication of digital identity, enabling access to systems, information and resources.

INNOVATIVE PRODUCTS FOR CONVENIENT AND SECURE IDENTIFICATION

PRECISE BIOMATCH MOBILE SIMPLIFIES OUR DAILY LIVES

Precise Biometrics has almost 20 years of experience in offering products for fingerprint recognition and has been a driving force in the development of biometric solutions. Biometric authentication has mainly been implemented in the past in environments that require an extremely high level of security, above all within government agencies. Today, biometrics is in the process of simplifying our daily lives.

The introduction of fingerprint readers in mobile devices has resulted in biometric identification being used every day by millions of people for everyday things, such as a secure and simple way of unlocking their mobile phones, managing images, and for access to applications. In a short space of time the technology has created user behavior that enables the further rapid development of new applications for biometrics. The applications that are expected to grow at the fastest rate are mobile payments. Several of the world's leading IT and e-commerce companies have already launched payment services where verification of an individual's identity is performed via fingerprint recognition. This development will set important requirements for the biometric solution.

Precise BioMatch Mobile enables convenient and secure access to the device as well as applications and services. The product has been developed for small sensors and meets the high technical requirements set for the software to be able to provide end users an excellent user experience together with a high degree of security in the verification of a person's identity.

In a short space of time the technology has created user behavior that enables the further rapid development of new applications for biometrics

HIGH LEVEL OF MOBILE SECURITY WITH SMART CARDS AND TACTIVO

Increased security risks are a global problem and during the year we have seen examples of intrusion that have caused major damage. It is driving the development of, and demand for, new ways of protecting businesses from intrusion. The demand for efficiency and mobile solutions that give staff rapid access to information and resources wherever they are is also increasing. Today people often find themselves in situations where they cannot depend on their computers to access information. Mobile solutions for convenient and secure access to critical information, emails, contacts, calendars and document processing are therefore, to an increasingly greater extent, an essential requirement for efficient ways of working.

Smart cards are a widespread solution to safeguard the identity of individuals and have been implemented by government agencies and businesses all over the world. The smart card is used in a variety of different applications, but in the transition to a mobile work mode the card has involved limitations for some activities because there have not been any good solutions to combine the card with the mobile device.

For businesses that use smart cards as a security solution for access to systems and information, Precise Biometrics' Tactivo makes it possible to implement a mobile work mode with a high level of security. Tactivo is a product portfolio of smart card readers for iOS and Android devices that enable convenient and secure access to systems and applications. This high level of security is achieved by means of two-factor authentication with the smart card and either a PIN code or fingerprint recognition.

In 2014 a leading energy company implemented a global mobile solution with Tactivo for secure email and document processing at the executive level. One of the reasons why they chose Tactivo was because they wanted to make sure that sensitive information did not leave the company, and also that the product's form factor for iPhone and iPad provides a good user experience. The mobile solution with Tactivo also enables the user to use their own mobile at work, because critical business information can only be accessed in combination with the smart card and a PIN code.

MARKET

The Company has three business areas:

FINGERPRINT TECHNOLOGY

MOBILE SMART CARD SOLUTIONS

DESKTOP & PHYSICAL ACCESS SOLUTIONS

FINGERPRINT TECHNOLOGY

The business area Fingerprint Technology includes products based on Precise Biometrics' core technology, algorithms for fingerprint recognition. The product portfolio consists of three products:

Precise BioMatch™ Mobile, software which is developed and optimized for integration of fingerprint recognition into smartphones and tablets.
Precise BioMatch™ Embedded, software for integration of fingerprint recognition into third-party hardware.
Precise Match-on-Card™, software for integration of fingerprint recognition into cards, for example, bank and ID cards.

Precise Biometrics' algorithms have achieved high ranking in several independent tests, including the US government agency tests Minex II and Ongoing Minex. The algorithms we offer are also stand-alone variants and can be implemented in all the different types of sensors. The technology has been implemented for over 160 million users.

Goal

Precise Biometrics aspires to offer the best user experience in the market for fingerprint recognition, and to be a technology leader in the field of fingerprint algorithms.

Strategy

The Company's strategy to become the leading supplier of fingerprint software is to offer products with a performance, functionality and user experience that is far superior to its competitors. By offering market-leading products for matching of fingerprints on small sensors, Precise Biometrics can in the long term become established as a leading and independent supplier of algorithms for integration into hardware, irrespective of the end product.

Business model and customers

Products in this business area are primarily sold to sensor manufacturers, smart card manufacturers and systems integrators, which generates license earnings based on volumes.

The market for fingerprint technology is a global market, with leading providers based in Asia, Europe and the US. The Asian market is especially interesting, with several leading manufacturers of smartphones based on the Android operating system and its growing ecosystem of subcontractors.

Market development

As a result of the Company's sharper focus on this business area, more resources have been allocated to

MARKET

During the year two smartphones containing Precise Biometrics' fingerprint algorithm Precise BioMatch Mobile were launched

sales. The potential that the Company has evaluated to exist in the market is the platform on which further investments will be made. In 2014 the three largest manufacturers of smartphones launched products with fingerprint technology and this technology received a very good reception from consumers for its first-class user experience. According to a report from IHS Technology Research, volumes of smartphones and tablets with fingerprint technology will successively increase to exceed 1.4 billion devices in 2020, and there is also additional potential for fingerprint technology in other industries and products.

During the year two smartphones containing Precise Biometrics' fingerprint algorithm Precise BioMatch Mobile were launched by manufacturers in Asia, one of which is the world's first smartphone based on the Android operating system with a "touch" fingerprint sensor. This is one indicator that the strategy of focusing more on, and allocating resources to, this business area will produce results. Both of these business transactions were carried out through cooperation with Fingerprint Cards. In December 2014, Precise Biometrics reached an agreement with another leading sensor manufacturer, Synaptics, for licensing of Precise BioMatch Mobile. This license agreement enables Synaptics to use the Company's product for their fingerprint sensors and solutions with touch-functionality. The partnership reinforces the Company's position as an independent supplier of fingerprint algorithms.

Sales to existing customers of Precise Match-On-Card continued during the year, most of which came from the roll-out of the current national ID card project in Portugal. The Company monitors market developments in national ID cards and evaluates future applications where Match-On-Card technology can be competitive.

Product development

The market for fingerprint technology is characterized by fast-paced innovation. During the year the Company has reallocated resources from the development of products in the business areas Desktop & Physical Access Solutions and Mobile Smart Card Solutions to Fingerprint Technology. A sharper focus on fingerprint technology for mobile devices was the main reason for this reallocation of resources, and these enhanced resources have been a critical factor in the success of the commercialization of Precise BioMatch Mobile. The Company has made significant improvements in the fingerprint algorithm to further optimize it for small sensors in mobile environments. This work has resulted in a powerful increase in performance and user friendliness for end users, with an even better user experience as a direct result.

MARKET

MOBILE SMART CARD SOLUTIONS

This business area consists of the Company's Tactivo™ products, which are a product portfolio of smart card and fingerprint readers for smartphones and tablets. Tactivo enables secure and convenient mobile access to systems and applications in organizations that use smart cards as a security solution. Tactivo is available with or without fingerprint readers. The smart card readers for iPhone and iPad are designed as a sleek casing, which while enhancing the user experience protects the device.

Goal

Precise Biometrics shall be a leading supplier of products and services for companies and organizations that use smart cards as security solutions by offering convenient and secure access to systems and applications from mobile devices.

Strategy

The Company's strategy is, together with partners, to offer complete smart card solutions that enable secure, convenient and reliable mobile access to systems and applications for government agencies, organizations and companies. By using a secure mobile solution with smart cards and Tactivo, staff can improve the efficiency of their work. This solution also ensures that the right persons gain access to the right information.

Business model and customers

Tactivo is sold through a network of carefully selected partners, which enables widespread and cost-efficient sales and distribution of the products as part of complete mobile solutions for organizations that use smart cards.

The Company focuses on three segments that consist of government agencies, the healthcare sector and international companies. Within US government agencies there is a demand for secure mobile access to emails and information. The European healthcare sector is also looking for mobile applications for access to existing care systems in order to improve the efficiency of the way staff work and to increase the time spent with patients. The corporate market is in need of secure document processing and email.

Market development

Demand is increasing within the corporate market and during the year one of the leading global energy companies and a South American insurance company chose to implement mobile solutions with Tactivo, which has generated earnings. In addition, several pilot projects have been initiated with companies in the banking and finance sector.

During the year the Company has continued to focus on the European healthcare market, where smart cards

MARKET

During the year one of the leading global energy companies and a South American insurance company chose to implement mobile solutions with Tactivo

are used to access different types of care systems. Mobile solutions have attracted a great deal of interest, above all in Sweden, the UK and the Benelux countries, because they give nursing staff the opportunity to spend more time with patients and less time on administration. Pilot projects have been initiated in all the markets and have produced positive results.

The implementation of secure mobile solutions based on smart cards in the US is taking longer than first expected, primarily because of the lack of explicit directives from government agencies for how solutions should be implemented. An investigation is also under way as to whether derived credentials can be used as a supplementary authentication method to smart card readers. These factors have resulted in the demand for smart card readers developing at a slower pace, although the Company is confident that there is still plenty of potential in the US government agency market. The potential for Tactivo in the US is based on a directive that all government employees should use their smart cards to access sensitive information. The order for 1,100 Tactivo the Company received in December from the Defense Logistics Agency shows that there is a commitment to initiate large imple

mentation projects within US government agencies. Pilot projects have also been initiated in government agency markets outside the US.

During 2014, Precise Biometrics has continued to develop the Company's strong partner network of solutions suppliers and distribution channels that reflect the Company's prioritized areas and markets. Work continues to reinforce market penetration and secure Tactivo as a component for the roll-out of mobile solutions. The partner network also enables cost-efficient sales and distribution.

Product development

The Company has launched five new models of Tactivo in 2014, including one for iPhone 6, to support Apple's product portfolio of iPhone and iPad. The new products have a user-friendly "one-piece" design and enable two-factor authentication with card and PIN codes, as opposed to earlier models which included fingerprint readers.

MARKET

DESKTOP & PHYSICAL ACCESS SOLUTIONS

The business area Desktop & Physical Access Solutions includes the Company's traditional product offering, fingerprint readers for desktop workplaces and physical access to premises. It includes, for example, combined fingerprint and smart card readers for secure login to systems and networks, and physical access control.

Goals

To benefit from the Company's position as a leading supplier of fingerprint technology for sales of fingerprint readers for desktop applications to existing customers.

Strategy

The Company's strategy is to offer secure and proven fingerprint readers, primarily to government agencies and existing customers.

Business model and customers

Products are sold directly and indirectly via a network of partners. Sales mainly go to a number of established customers.

Market development

This business area has been stable during the year with regular sales to already established customers in the Middle East and the US who use Precise Biometrics' fingerprint readers for secure login to networks.

Product development

The development of new hardware within the business area takes place according to specific customer requirements and orders.

SUSTAINABILITY | 19

SUSTAINABILITY

A HEALTHY BUSINESS FOR SUSTAINABILITY

Precise Biometrics has a responsible approach and the determination to achieve long-term sustainability. The Company acts with the same respect towards customers, owners and employees as towards other interested parties, the world at large and the environment.

Minimizing the environmental impact

For Precise Biometrics sustainability is an integral part of the development of the business. The Company continuously strives to choose the most efficient and sustainable alternatives as possible to reduce its impact on the environment.

The Company's hardware products, including Tactivo™, which are used in combination with smartphones and tablets, are manufactured or assembled by carefully selected and established manufacturers. These partner manufacturers purchase components for the products according to Precise Biometrics specifications. The Company endeavors to manufacture products with the most efficient use of resources possible to minimize their environmental impact. Tactivo is one example of this, where the efficiency of the product family for each new generation is improved at both the component and production level. The Tactivo family is CE and FCC marked, which guarantees high quality and compliance with current regulations and standards.

Secure identity and preservation of integrity

In today's information society information is processed, stored, communicated and reproduced in greater volumes than ever before. This involves a challenge to the integrity of both private persons and organizations. The right to feel safe and secure, and to be able to identify yourself and protect your integrity and property, is one of the most important fundamental principles in a well-functioning society. It becomes increasingly important in the transition to a mobile world.

Precise Biometrics offers user-friendly solutions for the purpose of enhancing security during personal identification, while also preserving or reinforcing personal integrity. People, companies and government agencies all over the world use Precise Biometrics' systems every day to secure their identities and to gain access to specific information in a secure and convenient way.

The Company's Code of Conduct

The Code of Conduct highlights the fundamental principles that Precise Biometrics observes when conducting its business operations, and supports the Company's employees in their relations with business partners and other interested parties. All employees are expected to support and uphold the Company's values and responsibilities. Precise Biometrics also encourages its suppliers and other business partners to follow these principles. The Code of Conduct includes a policy structure that helps employees to act and make decisions in accordance with the code.

Good employer

Precise Biometrics shall be a safe and stimulating workplace. All forms of discrimination are unacceptable, which is regulated in the Company's HR policy. All employees are entitled to annual developmental conversations with their immediate manager and a personal development plan.

THE SHARE & SHAREHOLDERS

HISTORY

Precise Biometrics' share was listed on the Stockholm Stock Exchange on October 3, 2000 at a quotation price of SEK 63.19. As of December 31, 2014 the Company had 345,306,094 shares listed on the Nasdaq Stockholm Small Cap list. A standard trading unit is one share. The short name is PREC and the ISIN code is SE0001823303.

SHARE PRICE DEVELOPMENT

In 2014 there was a total turnover of 886,211,870 PREC shares, i.e., an average turnover of 3,559,084 shares per day of trading. The closing price on December 31, 2014 was SEK 0.97. During the year the quotation has fluctuated from SEK 0.73 to 2.27.

OWNERSHIP STRUCTURE

The number of shareholders at the end of the year was 12,760 (14,281). Foreign shareholders accounted for 11.7 per cent (16.6). See table, that shows shareholder statistics as of December 31, 2014.

OPTION PROGRAM

The option program initiated in 2011 and which matured in 2014 did not lead to the subscription of shares, since the stock price were below the strike price. In 2014 an option program was issued that included all employees in the Company. The program includes warrants that have been transferred to the employees at market rates. The allocated volume was accommodated within an authorization for a maximum of 8,000,000 share warrants by the AGM 2014.

The market values have been established by an external valuer using the Black-Scholes model. At the time of the valuation the share price was SEK 1.13, which was based on the volume-weighted average share price during the period May 5, 2014 to May 16, 2014.

The subscription price was set at SEK 2.50.

A total of 2,610,000 options were subscribed to by employees in 2014, which supplied Precise Biometrics with liquid assets in an amount of SEK 261,000.

Shares may be subscribed to through the exercise of share warrants during the period July 1 - December 31, 2017.

See Note 17 for additional information.

SHAREHOLDER INFORMATION

Previously published annual reports, interim reports and other information can be found at www.precisebiometrics.com. It is also possible to order information by calling +46 (0)46 31 11 00. Questions can be addressed directly to the Company via email to [email protected].

SHARE CAPITAL DEVELOPMENT | 21

SHARE CAPITAL DEVELOPMENT

	Increase in number of shares	Total number of shares	Change in share capital, SEK	Total share capital, SEK	Nominal amount, SEK
1997 - Company registered	1,000	1,000	100,000	100,000	100
1997 - New issue	220	1,220	22,000	122,000	100
1998 - Split	1,218,780	1,220,000	-	122,000	0.10
1998 - New issue	180,000	1,400,000	18,000	140,000	0.10
1998 - New issue	223,700	1,623,700	22,370	162,370	0.10
1999 - Bonus issue	-	1,623,700	487,110	649,480	0.40
1999 - New issue	720,000	2,343,700	288,000	937,480	0.40
2000 - New issue 1)	250,000	2,593,700	100,000	1,037,480	0.40
2000 - Redemption of share warrants	74,000	2,667,700	29,600	1,067,080	0.40
2000 - New issue 2)	600,000	3,267,700	240,000	1,307,080	0.40
2000 - Redemption of share warrants	204,500	3,472,200	81,800	1,388,880	0.40
2001 - Redemption of share warrants	54,500	3,526,700	21,800	1,410,680	0.40
2002 - New issue 3)	350,000	3,876,700	140,000	1,550,680	0.40
2002 - Redemption of share warrants	80,000	3,956,700	32,000	1,582,680	0.40
2002 - New issue 4)	7,913,400	11,870,100	3,165,360	4,748,040	0.40
2003 - New issue 5)	23,740,200	35,610,300	9,496,080	14,244,120	0.40
2004 - New issue 6)	5,000,000	40,610,300	2,000,000	16,244,120	0.40
2004 - New issue 7)	20,305,150	60,915,450	8,122,060	24,366,180	0.40
2005 - New issue 8)	1,050,000	61,965,450	420,000	24,786,180	0.40
2005 - New issue 9)	1,053,750	63,019,200	421,500	25,207,680	0.40
2005 - New issue 10)	8,700,000	71,719,200	3,480,000	28,687,680	0.40
2005 - New issue 11)	71,250	71,790,450	28,500	28,716,180	0.40
2006 - New issue 12)	1,125,000	72,915,450	450,000	29,166,180	0.40
2006 - New issue 13)	24,305,150	97,220,600	9,722,060	38,888,240	0.40
2007 - New issue 14)	4,000,000	101,220,600	1,600,000	40,488,240	0.40
2009 - New issue 15)	33,740,200	134,960,800	13,496,080	53,984,320	0.40
2011 - New issue 16)	53,984,320	188,945,120	21,593,728	75,578,048	0.40
2012 - New issue 17)	75,578,048	264,523,168	30,231,219	105,809,267	0.40
2012 - Reduction of share capital 18)	-	264,523,168	-31,742,780	74,066,487	0.28
2013 - New issue 19)	58,782,926	323,306,094	16,459,219	90,525,706	0.28
2013 - New issue 20)	22,000,000	345,306,094	6,160,000	96,685,706	0.28

THE SHARE & SHAREHOLDERS

1) Issue directed to institutional investors. The subscription rate amounted to SEK 160 and Precise Biometrics received an issue amount of SEK 40 million.

2) Issue directed to institutional investors. The subscription rate amounted to SEK 225 and Precise Biometrics received an issue amount of SEK 135.3 million.

3) Issue directed to institutional investors and a small number of large private investors. The subscription rate amounted to SEK 87 and Precise Biometrics received an issue amount of SEK 30.5 million.

4) Issue with preferential rights to existing shareholders. The subscription rate amounted to SEK 4 and Precise Biometrics received an issue amount of SEK 31.7 million.

5) Issue with preferential rights to existing shareholders. The subscription rate amounted to SEK 1.70 and Precise Biometrics received an issue amount of SEK 40.4 million.

6) Issue directed to institutional investors and a small number of large private investors. The subscription rate amounted to SEK 3.10 and Precise Biometrics received an issue amount of SEK 15.5 million.

7) Issue with preferential rights to existing shareholders. The subscription rate amounted to SEK 2.25 and Precise Biometrics received an issue amount of SEK 45.7 million.

8) Issue directed to the Japanese partner Silex Technology Inc. The subscription rate amounted to SEK 7.04 and Precise Biometrics received an issue amount of just over SEK 7 million.

9) Issue directed to Loqware Sweden AB's main shareholders for acquisition of the company at a value of SEK 8.3 million.

10) Issue directed to European institutional investors. The subscription rate amounted to SEK 7.25 and Precise Biometrics received approx. SEK 63 million before deductions for issue costs.

THE SHARE & SHAREHOLDERS | 23

11) Issue for acquisition of the remaining shares in Loqware Sweden AB. Precise Biometrics received approx. SEK 580,000.

12) Non-cash issue for acquisition of 30 per cent of Smart Unicorn Solutions.

13) Issue with preferential rights to existing shareholders. The subscription rate amounted to SEK 3.50 and Precise Biometrics received an issue amount of SEK 85 million.

14) Non-cash issue for acquisition of 8 per cent of Smart Unicorn Solutions.

15) Issue with preferential rights to existing shareholders. The subscription rate amounted to SEK 1.60 and Precise Biometrics received an issue amount of SEK 54 million.

16) Issue with preferential rights to existing shareholders. The subscription rate amounted to SEK 1.00 and Precise Biometrics received an issue amount of SEK 54 million.

17) Issue with preferential rights to existing shareholders. The subscription rate amounted to SEK 0.72 and Precise Biometrics received an issue amount of SEK 54.4 million.

18) Reduction of share capital. The AGM decided, in accordance with the board's proposal, that the Company's share capital will be reduced by SEK 31,742,780,16 to cover the loss. The reduction means a reduction in the nominal value of the shares by SEK 0.12 from SEK 0.40 to 0.28.

19) Issue with preferential rights to existing shareholders. The subscription rate amounted to SEK 0.93 and Precise Biometrics received an issue amount of SEK 54.7 million.

20) Special issue of 22 million shares. The subscription rate amounted to SEK 3.90 and Precise Biometrics received an issue amount of SEK 85.8

SHAREHOLDER STATISTICS

SHAREHOLDER REGISTER

	No. of shares	No. in % of capital stock and votes
Avanza Pension Försäkring AB	27,042,481	7.8%
Swedbank Försäkring AB	7,140,513	2.1%
Bengt Andersson and company	6,860,000	2.0%
Nordnet Pensionsförsäkring AB	5,553,092	1.6%
Torgils Bonde	4,150,000	1.2%
Can Durmaz and company	4,000,000	1.2%
HJ Byggkonsulter AB	2,700,000	0.8%
Hapsuno Üre	2,441,926	0.7%
Johnny Ludvigsson	2,200,000	0.6%
Flemming Grothe Jensen	1,996,622	0.6%
Others	281,221,460	81.4%
Total	345,306,094	100.0%

ALLOCATION OF SHAREHOLDERS

	No. of shares	No. in %
Foreign owners	40,491,389	11.7%
Swedish owners	304,814,705	88.3%
of which
Institutions	44,667,831	12.9%
Unit trusts	2,107,630	0.6%
Private persons	258,039,244	74.8%

ALLOCATION OF SHARES

	No. in %
10 largest shareholders	18.0%
25 largest shareholders	23.9%
100 largest shareholders	36.7%

SHAREHOLDER STATISTICS | 25

SHAREHOLDER STATISTICS (NUMBER OF SHARES OWNED)

	No. of shareholders	No. in %	No. of shares	Proportion of votes
1-2,000	4,667	36.6%	4,015,120	1.2%
2,001-10,000	4,384	34.3%	24,084,757	7.0%
10,001-100,000	3,184	24.9%	103,489,645	29.9%
100,001-1,000,000	496	3.9%	125,349,115	36.3%
1,000,001-50,000,000	29	0.3%	88,367,457	25.6%
Total	12,760	100.0%	345,306,094	100.0%

GEOGRAPHIC DISTRIBUTION OF SHAREHOLDINGS IN PER CENT

	Share
Sweden	88.2%
Denmark	4.7%
Norway	1.5%
Luxemburg	1.1%
Switzerland	0.9%
Great Britain	0.8%
US	0.7%
Isle of Man	0.3%
Ireland	0.3%
Finland	0.2%
Belgium	0.2%
Others	1.1%
	100.0%

FIVE-YEAR OVERVIEW

INCOME STATEMENT

KSEK	2014	2013	2012	2011	2010
Net sales	31,387	34,944	28,281	21,615	44,944
Cost of goods and services sold	-14,208	-15,976	-12,495	-9,548	-17,425
Gross profit	17,179	18,968	15,786	12,067	27,519
Selling, administration and R&D expenses	-63,234	-60,790	-57,960	-45,189	-40,831
Other operating income/expenses	1,508	-358	-728	-290	-1,185
Operating profit/loss	-44,547	-42,180	-42,902	-33,412	-14,497
Net financials	502	-1,092	-4,050	208	-135
Profit/loss after financial items	-44,045	-43,272	-46,952	-33,204	-14,632
Tax	-	-	-	-12	-16
Profit/loss for the year	-44,045	-43,272	-46,952	-33,216	-14,648

BALANCE SHEET

KSEK	2014	2013	2012	2011	2010
Assets
Intangible fixed assets	17,360	21,574	18,358	12,778	6,664
Tangible fixed assets	2,784	3,475	1,829	1,070	704
Financial fixed assets	-	-	-	-	-
Current assets	86,056	127,875	65,464	50,557	40,723
of which liquid assets and current investments	59,659	101,197	37,584	28,930	24,544
Total assets	106,200	152,924	85,651	64,405	48,091
Equity and liabilities
Equity	91,983	134,547	48,195	46,988	31,244
Current liabilities	14,217	18,377	37,456	17,417	16,847
Total equity and liabilities	106,200	152,924	85,651	64,405	48,091

FIVE-YEAR OVERVIEW | 27

CASH FLOW STATEMENT

KSEK	2014	2013	2012	2011	2010
Cash flow from current operations before changes in working capital	-30,664	-36,942	-44,620	-32,147	-13,257
Changes in working capital	-3,265	2,723	-4,252	-4,099	2,781
Cash flow from investing activities	-7,870	-11,749	-9,143	-8,679	-4,710
Cash flow from financing activities	261	109,580	66,669	49,015	-1,492
Change in liquid assets	-41,538	63,612	8,654	4,090	-16,678

KEY RATIOS

	2014	2013	2012	2011	2010
Gross margin	55%	54%	56%	56%	61%
Working capital, KSEK	71,839	109,498	28,008	33,140	23,876
Liquid ratio	522%	618%	145%	235%	192%
Equity/assets ratio	87%	88%	56%	73%	65%
Return on equity	neg	neg	neg	neg	neg
Average capital employed, KSEK	113,265	91,371	58,297	40,447	39,575
Earnings per share, SEK	-0.12	-0.14	-0.23	-0.20	-0.11
EBITDA, KSEK	-31,773	-35,293	-40,100	-31,213	-12,485
Equity per share, SEK	0.27	0.39	0.18	0.25	0.23
No. of shares, thous.	345,306	345,306	264,523	188,945	134,961
Average number of shares during period, thous.	345,306	306,147	207,840	166,452	134,961
Operating cash flow per share, SEK	-0.10	-0.10	-0.18	-0.19	-0.07
Number of employees at the end of the year	22	29	37	35	34
Average number of employees	27	34	37	34	34

ADMINISTRATION REPORT

The board of directors and the CEO of Precise Biometrics AB (publ), Corporate Identity Number 556545-6596, with headquarters in the municipality of Lund, Sweden, hereby submit their Annual Report and consolidated financial statements for the fiscal year 2014.

ACTIVITIES

Precise Biometrics offers products for secure and convenient authentication of digital identities. The products include both software and hardware for identity verification of individuals through fingerprint technology and smart cards. The Company sells its products in a global market through a strong network of partners consisting of sensor manufacturers, smart card manufacturers, systems integrators, local resellers and developers of desktop and mobile solutions.

Precise Biometrics' business concept is to offer, together with strong partners, authentication of digital identities that enable convenient and secure access to systems, information and resources. The Company's products make it possible for companies and government agencies to offer better and more secure solutions that safeguard the identity of individuals. For users this is a convenient and integrity-protecting way of identifying themselves.

The business area Fingerprint Technology includes products based on Precise Biometrics' core technology algorithms for fingerprint recognition. As a result of the Company's sharper focus on this business area, more resources have been allocated to sales for this business area. The potential the Company has evaluated to exist in the market is the platform on which further investments will be made. During the year two smartphones containing Precise Biometrics' fingerprint algorithm Precise BioMatch Mobile were launched by manufacturers in Asia, one of which is the world's first smartphone based on the Android operating system with a "touch" fingerprint sensor. Both of these business transactions were made through cooperation with Fingerprint Cards.

In December 2014, Precise Biometrics reached an agreement with another leading sensor manufacturer, Synaptics, for licensing of Precise BioMatch Mobile. This license agreement enables Synaptics to use the Company's product for their fingerprint sensors and solutions with touch-functionality. The partnership reinforces the Company's position as an independent supplier of fingerprint algorithms.

Sales to existing customers of Precise Match-On-Card continued during the year, of which the main part came from the continuation of the roll-out of the current national ID card project in Portugal. The Company monitors market developments in national ID cards and evaluates future applications where Match-On-Card technology can be competitive.

The business area Mobile Smart Card Solutions includes the Company's Tactivo™ products, which are a product portfolio of smart card and fingerprint readers for smartphones and tablets. The corporate market saw demand rise to new levels and one of the leading global energy companies and a South American insurance company chose to implement mobile solutions with Tactivo. In addition, several pilot projects have been initiated with companies in the banking and finance sector.

ADMINISTRATION REPORT | 29

During the year the Company has continued to focus on the European healthcare market, where smart cards are used to login to different types of care systems. Mobile solutions have attracted a great deal of interest, above all in Sweden, the UK and the Benelux countries, where they give nursing staff the opportunity to spend more time with patients and less time on administration. Pilot projects have been initiated in all the markets and have produced positive results.

In the fourth quarter the Company took an important step in the US government agency market as a result of an order from the US Defense Logistics Agency (DLA). The order from DLA is the first major Tactivo implementation among government agencies in the US. The solution is based on the existing infrastructure for smart cards, Common Access Card (CAC), and improves the user-friendliness of the existing system. The agency has initiated a project where they implement a mobile solution for secure email and access to information on iOS units (iPhone and iPad devices). If this project is successful it can be followed by further orders and influence the decision-making processes of other agencies.

Pilot projects with Tactivo solutions have also been initiated in government agency markets outside the US.

Development continued at a stable level in the business area Desktop & Physical Access Solutions, which includes the Company's traditional product offering such as fingerprint readers for desktop workplaces and physical access to premises. Sales continued to already established customers in the Middle East and the US, who use Precise Biometrics' fingerprint readers for secure login to networks.

FOCUS AREAS FOR THE FUTURE

Precise Biometrics aspires to create growth and achieve profitability by offering the best user experience in the market for fingerprint recognition, and to be a technology leader in the field of fingerprint algorithms. Precise Biometrics will be a leading supplier of products and services for companies and organizations that use smart cards as security solutions, by offering simple and secure login to systems and applications from mobile units. In addition the Company will benefit from its position as a leading supplier of fingerprint technology and sales of fingerprint readers for desktop applications to existing customers.

SALES ORGANIZATION

The parent company Precise Biometrics AB has offices in Lund and Karlstad in Sweden and a subsidiary in the US, Precise Biometrics Inc. During 2014 the Company has built up sales organizations, primarily for Fingerprint Technology, in Asia where most of the potential customers are based. The Company has sales representatives in Korea, Taiwan and China.

Further information on the business areas can be found under Note 2.

ADMINISTRATION REPORT

IMPORTANT EVENTS IN 2014

Precise BioMatch Mobile was integrated into the world's first mobile phone based on the Android operating system with a "touch" fingerprint sensor.
Precise BioMatch Mobile was integrated into another mobile phone from the Asian manufacturer Oppo as a result of cooperation with Fingerprint Cards.
A partnership agreement was signed with Synaptics, one of the leading sensor manufacturers, which enables the integration of Precise BioMatch Mobile in Synaptics' fingerprint sensors and solutions with touch-functionality.
A leading global energy company chose Tactivo for implementation of a smart card based mobile solution with secure access to information from iPhone and iPad devices.
The US Department of Defense purchased 1,100 Tactivo for secure email and access to information from iPhone and iPad devices.
The Company won an order for 2,000 Tactivo from a South American insurance company to enable verification of the identity of individuals via fingerprint recognition in mobile units.
Five new models of Tactivo were launched, including one for iPhone 6, to support Apple's product portfolio of iPhone and iPad devices.
The Company implemented changes in the focus of its activities to achieve profitability in 2015 through a more efficient utilization of its partner network for sales of Tactivo.
The Company increased its market presence via partners in Asia in the business area Fingerprint Technology.

IMPORTANT EVENTS AFTER THE YEAR-END

There have been no important events after the year-end.

PATENTS

The Company's overall patent strategy has the objective of securing the rights to our own technology, creating value for future business, and enhancing the Company's competitiveness. Since 2001 the patent portfolio has been successively reinforced to include 77 different registered patents and 15 patent applications within 18 different patent families at the end of 2014.

BRANDS

Precise Biometrics works actively and strategically with a brand portfolio consisting of a small number of carefully selected brands:

TACTIVO™ - the brand for Precise Biometrics' mobile smart card readers. The brand is registered in the EU, the US and Australia, and patents are pending in Canada, China and Russia.

PRECISE BIOMETRICS™ - registered as both a brand image and brand name in several countries.

ADMINISTRATION REPORT | 31

PRECISE BIOMATCH™ - the overall brand for the technology, and also used as the basis for the naming of software products. The brand is registered in both the EU and the US.

BIOMATCH™ - the overall brand for Precise Biometrics' technology. The brand is registered in both the EU and the US.

PRECISE MATCH-ON-CARD™ - the established and very well-known brand for Precise Biometrics' technology to save and match a fingerprint on a smart card. The brand is registered in the EU.

PRECISE SENSE™ - the brand for the version of biometric readers developed in 2011.

SALES AND EARNINGS

Sales during the year amounted to SEK 31.4 million (34.9). Sales for the business areas Fingerprint Technology and Mobile Smart Card solutions increased during the year. Fingerprint Technology had sales of SEK 8.3 million (7.8), which is an increase of 6 per cent. The main parts of sales were to the sensor manufacturer Fingerprint Cards and partners in the national ID card projects. Sales in Mobile Smart Card Solutions increased to SEK 5.1 million (4.3), which is an increase of 19 per cent. Just over 6,000 Tactivo readers were sold during the year. The two largest customers were the US government agency DLA and a South American insurance company. Despite a downturn in comparison with the previous year, the main part of sales for the year continued to come from the business area Desktop & Physical Access Solutions, in the amount of SEK 18.0 million (22.8). During 2014 the Company continued to supply access solutions to Fitness24Seven's gyms and fingerprint readers to customers in the Middle East and the US.

The gross margin during the year amounted to 55 per cent (54).

Operating expenses for the year amounted to SEK 61.7 million (61.1). The main explanation for the fact that the cost level for the year is on par with the previous year, despite the implementation of the cost-saving programs, is the restructuring costs of SEK 3.2 million during the third quarter and write-downs of older Tactivo models as a result of Apple's introduction of new iPhone and iPad models. In total write-downs affected costs to an amount of SEK 7.4 million during the year. An additional impact of SEK 4.4 million comes from accelerated depreciation rates for capitalized development costs in comparison with previous years. This has, however, been offset to some extent by lower current operating costs during the last quarter in comparison with the previous year.

The group's net profit/loss for the year amounted to SEK -44.0 million (-43.3).

Earnings per share (average number of shares) for the interim period amounted to SEK -0.13 (-0.14).

FINANCING AND LIQUIDITY

Equity amounted as of 31 December 2014 to SEK 92.0 million (134.5) and equity/share to SEK 0.27 (0.39).

Liquid assets at the end of the year amounted to SEK 59.7 million (101.2).

The cash flow from current operations during the year amounted to SEK -34.5 million (-34.2).

ADMINISTRATION REPORT

INVESTMENTS IN TANGIBLE FIXED ASSETS

During 2014 the group invested SEK 1.2 million (2.4) in tangible fixed assets. Tools for manufacturing older Tactivo models have been written down during the year by SEK 0.8 million.

CAPITALIZATION AND DEPRECIATION OF DEVELOPMENT WORK

In 2014 costs for development work were capitalized at an amount of SEK 6.6 million (9.4), of which half were investments in the development of products in Fingerprint Technology; the rest are related to new versions of Tactivo. A development project for Tactivo for iPhone 6 has been completed and production will now commence. In conjunction with the launch of new generations of iPhone and iPad, the Company's opportunity to sell older Tactivo models has been revalued. This has led to write-downs for a total of SEK 2.3 million on previously capitalized development projects for the older Tactivo models. Planned depreciation of capitalized costs for development work amounted to SEK 8.5 million (4.1) during the year. The reason for the accelerated depreciation rate in 2014, compared with the corresponding period in the previous year, is that the Company made a modified assessment in the fourth quarter of 2013 for the estimated useful lifespan of development projects related to Tactivo. The products in the Tactivo product family have a shorter lifespan in comparison with the Company's more traditional products, and are therefore written down over a shorter period.

RESEARCH AND DEVELOPMENT

Research at Precise Biometrics is of fundamental importance for the Company and enables it to remain competitive in an industry that is continuously developing. The main objective of research and development is to further develop the fingerprint algorithms on which the Company's products are based. Precise Biometrics' research and development department works with the development of existing products and patents, and to develop new solutions.

The department works both on customer-specific projects and internal development projects related to the Company's products and its offering. The department also conducts support and consultancy services for customers.

ORGANIZATION AND STAFF

The organization consists of Precise Biometrics AB, with headquarters in Lund and an office in Karlstad in Sweden and Precise Biometrics Inc. in Reston, Virginia, in the US.

As of 31 December 2014, the group had 22 (29) employees; of which 21 (26) are in Sweden and 1(3) in the US.

The share

As of 31 December 2011, the Company had 345,306,094 shares listed on the Nasdaq Stockholm Small Cap list, Sector Industrial Goods & Services. A standard trading unit is one share.

The short name is PREC and the ISIN code is SE0001823303.

Share price development

In 2014 there was a total turnover of 886,211,870 PREC shares, i.e., an average turnover of 3,559,084 shares per day of trading. The closing price on 31 December 2014 was SEK 0.97. During the year the price has fluctuated from SEK 0.73 to 2.27.

Ownership structure

The number of shareholders at the end of the year was 12,760 (14,281). The proportion of foreign owners was 11.7

ADMINISTRATION REPORT | 33

per cent (16.6). No single shareholder represents, directly or indirectly, one tenth or more of the number of votes for all shares in the Company. Refer to shareholder statistics under "The share & the shareholders", which shows the ownership structure as of 31 December 2014.

Transferability of shares

There are no limits to the transferability of the shares. Nor are there any agreements known to the Company between shareholders that can involve limitations to the right to transfer shares.

RISKS

The following specification of risk factors does not claim to be complete, nor are the risks ranked in their order of importance.

RISKS RELATED TO OPERATIONS

Technological development

The market in which the Company operates is subject to rapid changes. New technology and new vendors are constantly emerging. Precise Biometrics technology must therefore to a large extent be accepted by the leading companies in the market, both by suppliers and customers. The market must be mature enough to understand and accept the new technology supplied by the Company.

Market trends

As the market in which the Company operates grows and the number of companies increases, there is a risk that alternative technologies will be developed and that the price of comparable products will thereby be reduced. This can mean that large investments in marketing and sales may be necessary to achieve the expected sales volumes.

Production capacity

The Company relies on external production capacity. If the demand for components and production capacity should increase, the manufacturing costs for the Company's products will also increase. An increase in the demand for components could also lead to delayed deliveries, which could result in the displacement of earnings.

Staff

There are several key persons in Precise Biometrics who are important for the business, especially in research and development, where they possess unique competence. If one or more of these key persons should leave the Company it could, in the short term, have a negative impact on the business. There is also a risk that the recruitment of new staff for these positions could take time and result in additional costs for the Company.

Partners

The Company cooperates with several partners. They include smart card manufacturers, chip manufacturers and suppliers of applications. The Company relies on these partnerships so it can offer end customers complete security solutions. There is a risk of closure for one or more of these partnerships, or that they fail to achieve the expected results, which would lead to a loss in expected future revenues.

Patents and industrial and intellectual property rights

It is important for the Company to protect its technology and products through patents or other industrial and intellectual property rights in order to create opportunities for future revenues. The company therefore pursues an

ADMINISTRATION REPORT

active patent strategy, which involves applying for patents for strategically important inventions in the countries where this is considered to be relevant. Nevertheless, it cannot be guaranteed that the Company will obtain patents in the countries where it has made applications, or that it can protect patents that have been granted. Over and above this there is a risk that new technologies will be developed, which could circumvent the Company's patents. The Company cannot guarantee that its products will not be considered to infringe on other granted patents or other industrial and intellectual property rights, and if such is the case the Company's business, profits, opportunities to deliver products and its financial position, could be negatively affected.

Competitors

The Company is active in the market for biometrics. The competition in this market is severe. The competing companies can have substantially larger financial and industrial resources at their disposal than the Company, and it cannot be ruled out that competition from companies like this will lead to diminished market shares and/or a reduction in Precise Biometrics' profitability.

Sales

The biometrics market is still a young industry. Judgments and decisions in such a rapidly developing industry are made with reservation for uncertainty factors. There is a dependency on partners and the development of competitors, as well as the market's acceptance of biometrics. Another important factor is the development rate and penetration of services that biometric solutions will be used in, which leads to difficulties in predicting the future development of the business. The development of the Company depends on the continued expansion of the market for biometrics. A delay in the penetration of fingerprint technology will affect sales and profits. For the business area Fingerprint Technology there are risks involved in the fact that Precise Biometrics has been dependant on a small number of hardware partners for its sales. These risks diminish by having more customers and a stand-alone product portfolio platform.

FINANCIAL RISKS

Future capital

There is no guarantee that the capital will be sufficient until the Company achieves a positive cash flow. Nor is there any guarantee that new capital can be acquired if the need should arise or that such capital can be acquired on preferential terms.

Forecasting problems

The Company operates in a rapidly changing market. The market for Fingerprint Technology products is in an early stage of development and revenues are to a large extent based on royalties from customers using them. All products are characterized by long selling-in processes. Earlier or later submissions of orders can have a significant effect on sales and profits. These factors make forecasting very difficult.

Currency exposure risks

The main part of the Company's costs is in Swedish kronor (SEK) while a significant part of revenues and production costs are generated in foreign currency (mainly USD) which increases the Company's currency exposure risks. The Company has adopted a risk policy for currency exposure in order to minimize the risks to the business.

Credit risk

The Company has guidelines on the issue of credit to its customers. The Company is of the opinion that there is no essential concentration of credit risk in relation to any individual customer or counterpart.

ADMINISTRATION REPORT | 3 5

Cash flow

The Company works hard to minimize the time capital is tied up, for example in inventories and accounts receivable. To reduce the risk involved in tied-up capital the Company works actively to improve the internal process for forecasting and production planning.

CHANGE IN CONTROL CLAUSE

There are no agreements to which the Company is a party and which would have an effect or change or cease to be valid if control of the Company is changed as a result of a public takeover bid, and no agreements of such a nature that their publication would in all probability seriously damage the Company.

CORPORATE GOVERNANCE

Precise Biometrics' corporate governance report has been prepared as a separate document in relation to the Annual Report, and information in accordance with the Annual Account Act, chapter 6 §, can be found on pages 36-42.

GUIDELINES FOR REMUNERATION TO LEADING EXECUTIVES

The board's proposal on the establishment of guidelines for remuneration to leading executive means that remuneration and terms of employment shall be in line with the market and competitive, and that there will be a predetermined cap on remuneration. Flexible salaries will not exceed 75 per cent of the fixed annual salary for the CEO and 50 per cent for other executives. Flexible remuneration for staff in the US will not exceed 50 per cent of basic salary. Remuneration will also be provided in the form of options or other share-related incentive schemes.

The CEO is subject to a mutual term of notice of 6 months, and the other executives to a term of notice of 3-6 months. Severance pay for the CEO may not exceed 6 months' salary if employment is terminated on the initiative of the Company. Other executives are not entitled to severance pay.

The retirement age is 65 and pension premiums are calculated on a scale based on age and salary and may amount to a maximum of 25 per cent of fixed salary. The proposal implies a level of remuneration that basically corresponds to the one from the previous year.

THE BOARD'S PROPOSAL ON GUIDELINES FOR REMUNERATION TO LEADING EXECUTIVES

The board proposes that the AGM 2015 make a decision on guidelines for remuneration to leading executives that corresponds with the guidelines decided by the AGM 2014.

PARENT COMPANY

Parent company sales for the fiscal year amounted to SEK 26.4 million (28.5). Operating loss before tax for the fiscal year amounted to SEK -36.8 million (-43.1). At the end of the fiscal year there were 21 persons employed in the parent company. Liquid assets at the end of the year amounted to SEK 57.0 million (97.0).

PROPOSED TREATMENT OF ACCUMULATED LOSS

The proposal for treatment of the accumulated loss is indicated in the Provision for accumulated loss and Assurance on page 89.

CORPORATE GOVERNANCE REPORT 2014

This Corporate Governance Report has been prepared as a separate document to the Annual Report. Some information in chapter 6 § of the Annual Accounts Act is to be found in the Administration Report on pages 28-35 in the Annual Report. The Corporate Governance Report provides a general description of how Precise Biometrics works, how the Company's decision-making works and how the Company applies the Swedish Corporate Governance Code ("the Code").

CONTROL OF PRECISE BIOMETRICS

Corporate governance is the system through which the owners, directly or indirectly, govern and control a company. In a limited company like Precise Biometrics governance, control and management are allocated between the shareholders, auditors, board of directors and the CEO in accordance with current legislation, regulations and instructions. The governance of Precise Biometrics is based on the Swedish Companies Act, the Company's articles of association, the Nasdaq Stockholm rules for issuers, the Code and internal control documents such as financial policy and information policy.

In 2014 Precise Biometrics has departed from the rules of the Code in one respect. The nomination committee's proposals concerning the election of board members and the chairman, remuneration to the board, and its motivating statement to this effect, had not been received by the Company at the time notice was given of the Annual General Meeting (AGM), which meant that the committee's proposals in these respects could not be presented in the notice, nor could the motivating statement be published on the Company's website along with the notice.

ANNUAL GENERAL MEETING

The AGM is Precise Biometrics' highest ranking decision-making body and the forum through which shareholders can exercise their influence over the Company. There are no limitations in Precise Biometrics with regard to how many votes each shareholder can submit at the AGM, and each shareholder can vote for their full number of shares. Nor are there any special provisions in the Company's articles of association concerning the appointment or dismissal of board members, or concerning amendments to the articles of association.

At the AGM the shareholders exercise their right to vote by appointing board members and external auditors, making decisions on the adoption of the income statement and balance sheet, expressing an opinion on the discharge of liability for board members and the CEO in relation to the Company, determining principles for how the nomination committee is to be elected and establishing guidelines for remuneration to leading executives. Shareholders also have the opportunity at the AGM to ask questions concerning the Company and in normal circumstances all the members of the board, the group executive and the auditors must be present to answer such questions.

CORPORATE GOVERNANCE REPORT 2014 | 37

Precise Biometrics' AGM 2014 was held at the Company headquarters in Lund, Sweden, on 29 April 2014. Torbjörn Clementz, Anders Harrysson, Torgny Hellström, Matts Lilja and Eva Maria Matell were re-elected as board members, while Lisa Thorsted had declined re-election. Mats Lindoff was elected as a new board member and Torgny Hellström was appointed chairman. The meeting also decided to increase the remuneration for the board and the committee and established guidelines for remuneration to leading executives to the effect that such remuneration and terms of employment should be in line with the market and competitive. In addition the board was authorized, as in previous years, to make a decision on the new issue of a maximum of 34.5 million shares/and or convertibles, with or without departure from the preferential rights of shareholders, for the purpose of enabling the Company to receive a capital infusion from new owners, which are considered to be strategically important from an operational, financial, structural or other perspective. The meeting also decided to introduce a new incentive program for the Company's employees through the issue of a maximum of 8 million share warrants, also including several minor amendments to the articles of association.

For further information on the decisions made at the AGM 2014, please refer to the Company's website under Corporate Governance/Annual General Meeting.

NOMINATION COMMITTEE

According to the principles for the organization of the nomination committee adopted at the AGM 2014, the nomination committee shall consist of one representative from each of the three largest shareholders as of 30 April 2014 and the chairman of the board.

The nomination committee prior to the AGM 2015 consists of Torgils Knutsson Bonde (own holding), Robert Andersson (Limhamns Förvaltning AB), Can Durmaz (own holding and via own company) and Torgny Hellström (chairman of the board). In addition to the chairman of the board, the members represent the three largest shareholders in the Company as of 30 April 2014 who have agreed to participate in the nomination committee.

The nomination committee is tasked with submitting proposals at the AGM to the chairman and other board members, including a motivating statement concerning the proposals, propose remuneration for board members and auditors, propose compensation for committee work where appropriate, and submit a proposal for a person to be chairman at the AGM. In addition the nomination committee shall also express an opinion on the independence of the board members in relation to the Company and major shareholders.

The nomination committee has had five meetings at which minutes were taken, including the statutory meeting. In addition the nomination committee has had several meetings, mainly by phone, of a preparatory nature of which minutes have not been taken in that no decisions were made during these meetings.

CORPORATE GOVERNANCE REPORT 2014

COMPOSITION OF THE BOARD

Precise Biometrics' board of directors shall in accordance with the articles of association consist of a minimum of three, and a maximum of seven members. Following the AGM 2014 the board has consisted of six members: Torgny Hellström (chairman), Torbjörn Clementz, Eva-Maria Matell, Anders Harrysson, Matts Lilja and Mats Lindoff. All the board members are independent in relation to Precise Biometrics AB and to the corporate management. The age, education and other assignments of board members, including holdings of financial instruments in the Company, are indicated under the heading "Board of directors" on pages 99-100 at the end of the Annual Report.

THE WORK OF THE BOARD OF DIRECTORS

The work of the board of directors complies with annual rules of procedure. The rules of procedure include instructions for the Company's CEO, the assignments incumbent on the chairman, the agenda of board meetings, and decision-making procedures. In accordance with the rules of procedure, six ordinary board meetings shall be held in addition to the statutory board meeting. In addition to these, the board convenes whenever necessary. In 2014 the board held 18 board meetings at which minutes were taken, of which two were held per capsulam. The table below reports the attendance of members at board meetings, year of election, remuneration, and independence:

Members	Election year	Attendance 2014	Committee work	Board remun. (SEK)	Committee remun. (SEK)	Independent from Company and executive
Torgny Hellström 1)	2013	18 av 18	Audit committee	235 000	25 000	Yes
Lisa Thorsted 2)	2006	6 av 18	Audit committee, Compensation committee	70 000	8 333	Yes
Torbjörn Clementz	2009	18 av 18	Audit committee	135 000	25 000	Yes
Eva Maria Matell	2007	18 av 18	Audit committee	135 000	25 000	Yes
Anders Harrysson	2013	17 av 18	Compensation committee	135 000	25 000	Yes
Matts Lilja	2013	14 av 18	Compensation committee	135 000	25 000	Yes
Mats Lindoff 3)	2014	11 av 18	Compensation committee	100 000	16 667	Yes
				945 000	150 000

1) Chairman from AGM April 2014.
2) Left the board at AGM in April 2014, Chairman January-Aprill.
3) Elected to the board at AGM in April 2014.

The chairman organizes and leads the work of the board. Issues dealt with during the year have included strategy and long-term focus, organization, recruitment of the CEO, corporate governance, financing, and interim and year-end reports. A board assessment has been completed during the year.

The CEO keeps the board of directors up-to-date at all times on the development of the business. In addition to the ordinary meetings, the chairman and other board members have been in continuous contact with leading executives in the Company, primarily the CEO and CFO. In addition to meetings where minutes were taken, the board has received monthly updates on the Company's financial results and position. Remuneration to board members is also indicated in Note 22 of the Annual Report.

CORPORATE GOVERNANCE REPORT 2014 | 39

COMPENSATION COMMITTEE

Precise Biometrics' compensation committee has since the AGM 2014 consisted of board members Mats Lindoff, Matts Lilja and Anders Harrysson (chairman). The duties of the compensation committee include issues concerning salaries, pension terms and conditions, incentive schemes and other terms and conditions for the employment of Company executives. In 2014 the committee has primarily focused on remuneration to leading executives, including incentive schemes and option programs. The committee has also prepared board proposals for guidelines for remuneration to leading executives, which can be found in the Administration Report. The compensation committee has held three meetings at which minutes were taken during the year.

AUDIT COMMITTEE

Since the AGM 2014 the Company's audit committee has consisted of board members Torbjörn Clementz (committee chairman), Eva Maria Matell and Torgny Hellström. The audit committee is assigned to exercise supervision and prepare a number of questions to the board in support of their work to fulfill their responsibility within auditing, internal control and financial reporting. In 2014 the committee has primarily focused on reporting (quarterly reports, annual financial reporting and internal reporting), business related risks and internal control. The committee holds meetings twice a year and in conjunction with the compilation of each interim report. The committee had six meetings during the year, of which four were in conjunction with the quarterly reports.

GROUP EXECUTIVE

Precise Biometrics' group executive is based at the headquarters in Lund, Sweden. The group executive has changed several positions during 2014 and consisted at the end of 2014 of a CEO, CFO, COO, R&D Director and Corporate Marketing Manager. The composition of the group ensures short decision-making channels. The group held formal weekly meetings during the year and a strategy and budget meeting. A more detailed presentation of the executive can be found under the heading "Group executive" on pages 102-103 in the Annual Report.

AUDITORS

Öhrlings PricewaterhouseCoopers AB, with Eva Carlsvi as head auditor, was appointed Precise Biometrics' auditor at the AGM 2014 until the next AGM in 2015. Öhrlings PricewaterhouseCoopers AB has been the auditor since the Company was first established in 1998 but there have been different head auditors during this time. The auditors undertake assignments for other listed companies, but not to such an extent that this would interfere with the proper auditing of Precise Biometrics. None of the auditors have any assignments that would question their independence.

As part of her audit assignment Eva Carlsvi has participated in several board meetings and audit committee meetings and has been in regular contact with CEO, CFO and the chairman.

Information on remuneration to the auditors, both for the parent company and the group, can be found in Note 7 on page 73 in the Annual Report.

POLICY (WITHIN THE FRAMEWORK OF CORPORATE GOVERNANCE)

The board of Precise Biometrics has adopted several policies that form the basis for the way in which the board and the executive govern the organization. The policies adopted by the Company are reported below. They are evaluated and revised on an annual basis.

CORPORATE GOVERNANCE REPORT 2014

Finance policy

This policy has the objective of establishing guidelines concerning how the Company manages financing, currency exposure, investments, insurance, and accounting and financial reporting.

Information policy

The information policy ensures that the Company issues consistent and correct information on its business activities and complies with stock exchange requirements for the disclosure of information.

Information security policy

This policy covers all information processing within the group that is in IT, mobile communication, emails, phones, physical access and archiving of hard copy, etc. It simplifies work within the group involving the security of information and is binding on all employees.

Insider policy

This policy ensures that there is no insider trading with the Company's share. The Company keeps a log of all circumstances that can affect the share price and who in the Company, on the board or externally is aware of such circumstances.

IT policy

This policy is intended to establish guidelines for ownership rights and the purchase of computers. The IT policy also includes regulations concerning which programs are allowed and the procedures applicable for installation of software. Rules for internet use also form part of the IT policy.

Ethics policy

The Company's ethics policy deals with issues and values concerning the Company's relations with the world at large, the staff, markets and shareholders.

Environmental policy

The Company's environmental policy has the objective of ensuring that all its work, investments and other activities pay due attention to environmental impact.

CORPORATE GOVERNANCE REPORT 2014 | 4 1

REPORT SUBMITTED BY THE BOARD ON INTERNAL CONTROL FOR THE FISCAL YEAR 2014

Under the Swedish Companies Act and the Code the board is responsible for internal control. In compliance with the Code the board shall ensure that the Company maintains a satisfactory level of internal control and is regularly informed of and evaluates how the Company's system for internal control is working. The report has been restricted to the inclusion of only the internal control over the financial reporting. The report has not been reviewed by the auditors.

Control environment

In order to create and maintain a functional control environment the board has prepared several important documents for the financial reporting. These documents consist of the rules of procedure as applied by the board and instructions for the CEO. The CEO keeps a check on the guidelines the board issues to make sure they are implemented on a daily basis. The CEO briefs the board on a fixed regular basis at board meetings and more informal meetings focusing on updates.

The Company's auditors also brief the board at least twice during the fiscal year. A general assessment of internal control has also been carried out as part of the external audit of the Company's annual financial statements. The head auditor also maintains regular contact with the chairman.

The most important parts of the control environment are the documents that govern the accounting and financial reporting. The Company follows a well-defined procedure in relation to annual and monthly financial reporting. The closing financial statements are presented to the board every month according to a predetermined template. The organization of the Company and the way in which the business is run also form an important platform for the internal control. All areas of responsibility and employees have clearly defined roles. The policies of the Company are an important platform to ensure that the control environment works.

Risk assessment and inspection activities

Precise Biometrics constantly assesses the current risk situation applying to financial reporting. The Company pays special attention to risks in the financial reporting, i.e., whether there are any accounting errors, how assets and liabilities are valued, and their completeness. The management of internal transactions within the group can also be subject to risks. These risks are considered, however, to be of minor importance in that the Company has a well-defined monthly financial reporting process and established follow-up procedures and policies. It should also be noted that the Company continuously updates its financial handbook.

Manual inspections are carried out to prevent errors in the financial reporting. These inspections are also integrated into the accounting and other IT systems.

CORPORATE GOVERNANCE REPORT 2014

Information and communication

The board receives monthly reports from the CEO and CFO about the Company's financial position, development and projects in progress.

The Company continuously informs the staff of updates to accounting principles, policies and other changes in reporting requirements.

All external information and communication is regulated by the Company's information policy.

Follow-up

The board and the auditing committee continually assess the information submitted by the group executive. The Company's financial position is discussed at every board meeting and at more informal monthly update meetings. Budget comparisons and forecasts, including analysis of any variances are described in the monthly reports.

The board of directors examines interim and year-end financial statements before they are published.

The assignments of the external auditors also include auditing the administration of the Company.

In the general context of these activities all together the board has not found it necessary to establish a separate internal audit.

INCOME STATEMENT

GROUP

Thousands SEK	Note	2014	2013
Net sales	2	31,387	34,944
Cost of goods and services sold		-14,208	-15,976
Gross profit		17,179	18,968
Selling expenses		-19,907	-24,777
Administration expenses		-14,343	-14,706
R&D expenses	9	-28,984	-21,307
Other operating income		1,508	0
Other operating expenses		-	-358
		-61,726	-61,148
Operating profit/loss	6,7,8,25	-44,547	-42,180
Interest revenue		510	479
Interest expenses	27	-8	-1,571
		502	-1,092
Profit/loss before tax		-44,045	-43,272
Income tax	10	-	-
LOSS FOR THE YEAR		-44,045	-43,272
Loss attributable to:
Parent company shareholders		-44,045	-43,272
Earnings per share, attributable to parent company shareholders during the year (SEK per share)
Earnings per share, SEK (before/after dilution)	11	-0.13	-0.14

INCOME STATEMENT | 4 5

Group report on comprehensive income
Loss for the year	-44,045	-43,272
Other comprehensive income:
Items that can be reclassified into profit or loss
Changes in accumulated exchange rate differences	1,220	43
Other comprehensive income for the year, net of tax	1,220	43
Total comprehensive income for the year	-42,825	-43,229
Attributable to:
Parent company shareholders	-42,825	-43,229

INCOME STATEMENT

PARENT COMPANY

Thousands SEK	Note	2014	2013
Net sales	2	26,394	28,517
Cost of goods and services sold		-13,933	-18,875
Gross profit		12,461	9,642
Selling expenses		-15,373	-15,859
Administration expenses		-14,342	-14,704
R&D expenses		-28,984	-21,307
Other operating expenses		8,291	-356
		-50,408	-52,226
Operating profit/loss	6,7,8	-37,947	-42,584
Interest revenue		1,130	1,058
Interest expenses		-8	-1,566
		1,122	-508
Profit/loss before tax		-36,825	-43,092
Income tax		-	-
LOSS FOR THE YEAR		-36,825	-43,092
Parent company report on comprehensive income
Loss for the year		-36,825	-43,092
Attributable to:
Parent company shareholders		-36,825	-43,092

BALANCE SHEET

GROUP

Thousands SEK

ASSETS	Note	Dec 31, 2014	Dec 31, 2013
Fixed assets
Intangible fixed assets	3,29	17,360	21,574
Tangible fixed assets	5,29	2,784	3,475
Total fixed assets		20,144	25,049
Current assets
Inventories	13,29	11,860	14,228
Accounts receivable and other receivables	14	14,537	12,450
Liquid assets	15	59,659	101,197
Total current assets		86,056	127,875
TOTAL ASSETS		106,200	152,924

BALANCE SHEET | 49

EQUITY & LIABILITIES	Note	Dec 31, 2014	Dec 31, 2013
EQUITY
Capital stock	17	96,685	96,685
Other paid-in capital		689,643	689,382
Reserves	17	1,896	676
Retained loss and loss for year		-696,241	-652,196
Total equity		91,983	134,547
Current liabilities
Trade accounts payable and other liabilities	18	13,813	17,869
Other provisions	19	404	508
Total current liabilities		14,217	18,377
TOTAL EQUITY AND LIABILITIES		106,200	152,924
Pledged assets	20	None	24,000
Contingent liabilities		None	None

BALANCE SHEET

PARENT COMPANY

Thousands SEK

ASSETS	Note	Dec 31, 2014	Dec 31, 2013
Fixed assets
Intangible fixed assets	4,29	17,360	21,574
Tangible fixed assets	5,29	2,784	3,475
Financial fixed assets	16	1,058	1,058
Total fixed assets		21,202	26,107
Current assets
Inventories	13,29	7,437	10,913
Accounts receivable	14	4,435	1,777
Receivables from group companies		39,605	35,497
Other receivables		3,855	5,345
Prepaid expenses and accrued income	23	3,719	2,860
Liquid assets	15	56,979	96,976
Total current assets		116,030	153,368
TOTAL ASSETS		137,232	179,475

BALANCE SHEET | 51

EQUITY & LIABILITIES	Note	Dec 31, 2014	Dec 31, 2013
EQUITY
Capital stock	17	96,685	96,685
Statutory reserve		1,445	1,445
Total restricted equity		98,130	98,130
Share premium reserve		63,869	106,961
Profit/loss for the year		-36,825	-43,092
Total unrestricted equity		27,044	63,869
Total equity		125,174	161,999
Provisions
Other provisions	19	212	100
Current liabilities	18
Accounts payable		2,825	6,258
Other liabilities		996	448
Accrued expenses and prepaid income	28	8,025	10,670
Total current liabilities		11,846	17,376
TOTAL EQUITY AND LIABILITIES		137,232	179,475
Pledged assets	20	None	24,000
Contingent liabilities		None	None

CHANGE IN EQUITY

GROUP

Thousands SEK
Attributable to parent company owners

	Share Capital	Other paid-in capital	Reserves	Retained loss for the year	Total equity
Opening balance as of January 1, 2013	105,809	582,420	727	-640,761	48,195
Comprehensive income
Loss for the year	-	-	-	-43,272	-43,272
Other comprehensive income
Exchange rate differences	-	-	43	-	43
Total other comprehensive income	-	-	43	-	43
Total comprehensive income	-	-	43	-43,272	-43,229
Transactions with shareholders
Reduction in nominal value of shares	-31,743	-	-94	31,837	-
New share issue	16,459	32,204	-	-	48,663
New share issue	6,160	74,758	-	-	80,918
Total transactions with shareholders	-9,124	106,962	-94	31,837	129,581
Closing balance as of December 31, 2013	96,685	689,382	676	-652,196	134,547
Opening balance as of January 1, 2014	96,685	689,382	676	-652,196	134,547
Comprehensive income
Loss for the year	-	-	-	-44,045	-44,045
Other comprehensive income
Exchange rate differences	-	-	1,220	-	1,220
Total other comprehensive income	-	-	1,220	-	1,220
Total comprehensive income	-	-	1,220	-44,045	-42,825
Transactions with shareholders
Option program¹)	-	261	-	-	261
Total transactions with shareholders	-	261	-	-	261
Closing balance as of December 31, 2014	96,685	689,643	1,896	-696,241	91,983

¹) Issue of 2,610,000 share warrants to all employees at a price of SEK 0.10.

CHANGE IN EQUITY | 53

PARENT COMPANY

Thousands SEK
Attributable to parent company owners

	Share capital	Statutory reserve	Share premium reserve	Loss brought forward and loss for the year	Total equity
Opening balance as of January 1, 2013	105,809	1,539	17,785	-49,622	75,511
Comprehensive income
Profit/loss for the year	-	-	-	-43,093	-43,093
Other comprehensive income
Transfer of annual profit/loss	-	-	-17,785	17,785	-
Total other comprehensive income	-	-	-17,785	17,785	-
Total comprehensive income	-	-	-17,785	-25,308	-43,093
Transactions with shareholders
Reduction in nominal value of shares	-31,743	-94	-	31,837	-
New share issue	16,459	-	32,204	-	48,663
New share issue	6,160	-	74,758	-	80,918
Total transactions with shareholders	-9,124	-94	106,962	31,837	129,581
Closing balance as of December 31, 2013	96,685	1,445	106,962	-43,093	161,999
Opening balance as of January 1, 2014	96,685	1,445	106,962	-43,093	161,999
Comprehensive income
Loss for the year	-	-	-	-36,825	-36,825
Other comprehensive income
Transfer of annual loss	-	-	-43,093	43,093	-
Total other comprehensive income	-	-	-43,093	43,093	-
Total comprehensive income	-	-	-43,093	6,268	-36,825
Transactions with shareholders
Total transactions with shareholders	-	-	-	-	-
Closing balance as of December 31, 2014	96,685	1,445	63,869	-36,825	125,174

CASH FLOW STATEMENT

	Group			Parent company
(Thousands SEK)	Note	2014	2013	2014	2013
Cash flow from current operations
Cash flow from current operations	24	-34,383	-32,520	-32,634	-34,943
Interest income paid		510	479	1,130	1,058
Interest cost paid		-8	-1,571	-8	-1,566
Taxes paid		-615	-600	-615	-600
Cash flow from current operations		-34,496	-34,212	-32,127	-36,051
Cash flow from investing activities
Capitalized development work		-6,657	-9,368	-6,657	-9,368
Acquisition of tangible fixed assets		-1,213	-2,381	-1,213	-2,381
Cash flow from investing activities		-7,870	-11,749	-7,870	-11,749
Cash flow from financing activities
Payment for issue of common stock		0	129,580	0	129,580
Amortization of loans		0	-20,000	0	-20,000
Payment for issue of options		261	0	0	0
Cash flow from financing activities		261	109,580	0	109,580
Decrease/Increase in liquid assets		-42,105	63,619	-39,997	61,780
Opening liquid assets		101,197	37,584	96,976	35,196
Exchange rate differences		565	-6	0	0
Closing liquid assets		59,659	101,197	56,979	96,976

NOTES | 55

NOTES

Note 1 Accounting policies
Note 2 Segment information
Note 3 Intangible fixed assets, group
Note 4 Intangible fixed assets, parent company
Note 5 Tangible fixed assets
Note 6 Costs allocated per type
Note 7 Auditors' remuneration
Note 8 Operational leasing agreements
Note 9 Government subsidies
Note 10 Income tax
Note 11 Earnings per share
Note 12 Deferred tax
Note 13 Inventories
Note 14 Accounts receivable and other receivables
Note 15 Liquid assets
Note 16 Financial fixed assets
Note 17 Equity
Note 18 Accounts payable and other liabilities
Note 19 Other provisions
Note 20 Pledged assets
Note 21 Employee and personnel expenses
Note 22 Remuneration to leading executives
Note 23 Prepaid expenses and accrued income
Note 24 Cash flow from operations
Note 25 Purchases and sales between group companies and transactions
Note 26 Financial risk factors
Note 27 Interest expense
Note 28 Accrued expenses and prepaid income
Note 29 Write-downs
Note 30 Important events after the year-end

CASH FLOW STATEMENT

NOTE 1 - ACCOUNTING POLICIES

GENERAL BASIS FOR THE PREPARATION OF THE REPORTS

The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) and IFRIC as adopted by the EU, the Swedish Annual Accounts Act, and RFR1, Supplementary Accounting Regulations for Groups.

The consolidated financial statements have been prepared in accordance with the acquisition method, with the exception of financial assets valued at fair value in the income statement.

The parent company essentially applies the same accounting policies as the group and RFR2, Supplementary Accounting Regulations for Legal Entities.

All amounts are given unless otherwise stated in Thousands SEK, and unless otherwise stated amounts in parentheses refer to comparable amounts in the previous fiscal year.

The board of directors approved these consolidated financial statements for publication on March 20, 2015.

NEW AND AMENDED STANDARDS APPLIED BY THE GROUP FROM 1 JANUARY 2014

None of the IFRS or IFRIC interpretations, which for the first time are mandatory for the fiscal year that began on January 1, 2011, have had any essential impact on the group.

NEW IFRS, SUPPLEMENTS TO IAS AND IFRIC INTERPRETATIONS, TAKING EFFECT IN 2015 OR LATER

IFRS 15 "Revenue from contracts with customers" regulates how revenues should be reported. The policies that IFRS 15 is based on should give users of financial reports more useful information on the company's revenues. The augmented disclosure obligation means that information on the type of revenues, date of regulation, uncertainties related to revenue reporting and cash flows attributable to the company's contracts with customers, must be disclosed. Revenue in accordance with IFRS 15 must be reported when the customer receives control over the sold product or service and has the opportunity to use or derive benefit from the product or service.

IFRS 15 replaces IAS 18 Revenues and IAS 11 Contract Agreements, including other related SIC and IFRIC. IFRS 15 comes into force on January 1, 2017. Application in advance is permissible. The group has not yet evaluated the effects of the introduction of the standard.

CASH FLOW STATEMENT | 57

CONSOLIDATED FINANCIAL STATEMENTS

Subsidiaries

Subsidiaries are all those companies, including companies for special purposes, where the group is entitled to configure financial and operating strategies in such a way as is normally associated with a shareholding exceeding more than half of the voting rights. The group also evaluates whether there is a controlling influence even if it does not have a shareholding of more than half of the voting rights, but where it still has the opportunity to control financial and operating strategies through de-facto control. De-facto control can come into play in situations where the proportion of the group's voting rights in relation to the size and distribution of the other shareholders' voting rights gives the group the opportunity to control financial and operating strategies, etc.

Subsidiaries are included in the consolidated financial statements from the date the controlling influence is transferred to the group. They are excluded from the consolidated financial statements as of the date when the controlling influence no longer exists. The acquisition method is used to report the group's business acquisitions. The purchase price for the acquisition of a subsidiary consists of the fair value of the transferred assets, liabilities that the group incurs from previous owners of the acquired company, and the shares issued by the group. The purchase price also includes the fair value of all the assets and liabilities resulting from an agreement on a conditional purchase price. Identifiable acquired assets and transferred liabilities in a business acquisition are initially valued at the fair value on the date of acquisition. For each acquisition, i.e., acquisition by acquisition, the group determines if holdings without a controlling influence in the acquired company will be reported at the fair value, or at the proportional share of the holding in the reported value of the acquired company's identifiable net assets.

Acquisition-related expenses are written off when they arise. If the business acquisition is implemented in several stages the previous equity in the acquired company will be revalued to its fair value at the time of the acquisition. Any realized profit or loss will be reported in income.

Each conditional purchase amount that is to be transferred to the group is reported at the fair value on the acquisition date. Subsequent changes in the fair value of a conditional purchase amount classified as an asset or liability are reported in accordance with IAS 39, either in the income statement or in other comprehensive income. Conditional purchase prices classified as equity are not revalued and any subsequent adjustment is reported in equity.

Intergroup transactions, balance sheet items, revenues and transaction expenses between group companies are eliminated. Profit and loss resulting from intergroup transactions, and which are reported in assets, are also eliminated.

The accounting policies for subsidiaries have, where appropriate, been changed to guarantee a consistent application of group policy.

CASH FLOW STATEMENT

SEGMENT REPORTING

Business segments are reported so as to correspond with the internal reporting submitted to the group executive. The group executive is the function responsible for allocation of resources and assessment of the business segment's profits. In the group this function has been identified as the group executive, including the CEO, which makes strategic decisions.

In 2013 the business was organized into two business areas, Mobile and IAM (Identity and Authentication Management). As of January 1, 2014 the business has been divided into three different business areas: Mobile Smart Card Solutions (Tactivo), Fingerprint Technology (licensing of algorithms) and Desktop & Physical Access Solutions (fingerprint readers and access solutions, for access to offices and computers). The comparable figures for 2013 have therefore been recalculated for the three new business areas.

The group executive does, however, also follow up business activities from a product perspective. The group has three types of product categories, which are products, licenses and services. See also Note 2, Segments.

The group executive evaluates the business segments on the basis of results defined in Note 2, Segments.

TRANSLATION OF FOREIGN CURRENCY

Functional currency

Items included in the financial reports for the different units in the group are valued in the currency used in the financial environment where the respective companies conduct most of their business (functional currency). The consolidated financial statements use Swedish kronor (SEK), which is the parent company's functional and reporting currency.

Transactions and balance sheet items

Transactions in foreign currency are translated to the functional currency according to the exchange rates applicable on the transaction date. Exchange profits and losses incurred during the payment of such transactions and during translation to monetary assets and liabilities in foreign currency at the closing day rate are reported in the income statement. All accrued exchange rate differences are reported in other comprehensive income. Exchange rate differences on financial transactions that are classified as net investments in foreign business are reported in other comprehensive income.

Group companies

The earnings and financial position of all group companies (none of which have a high inflation currency), which have a different functional currency than the reporting currency, are translated to the group's reporting currency as follows:

Assets and liabilities for each of the balance sheets are translated at the closing day rate.

CASH FLOW STATEMENT | 59

Revenues and expenses for each of the income statements are translated at the average exchange rate (insofar as this average rate is not a reasonable approximation of the accumulated effect of the rates applicable on the transaction date, in which case revenues and expenses are translated as per the transaction date).
All accrued exchange rate differences are reported as a separate part of equity.

TANGIBLE FIXED ASSETS

Tangible fixed assets are reported at the acquisition value, with a reduction for accumulated depreciation. The acquisition value includes expenditures that can be directly attributed to the acquisition of the asset.

Additional expenditures are added to the asset's reported value, or reported as a separate asset, depending on which is most appropriate, only if it is likely that the future financial benefit associated with the asset will benefit the group and the asset's acquisition value can be measured in a reliable way. All other forms of repairs and maintenance are reported as expenses in the income statement in the period in which they accrue.

Straight-line depreciation is applied for tangible fixed assets, to reduce their acquisition value to the calculated residual value according to plan over the estimated period of their utilization, as follows:

Computers 3 years
Equipment 5 years

Depreciation of tangible fixed assets is included in Selling expenses, Administration expenses and R&D expenses in the income statement. The allocation of functions is carried out with a formula based on the number of employees per function.

The residual values and lifespan of assets are assessed on the balance sheet date, and adjusted when necessary.

In those cases where the reported value of an asset is considered to exceed its estimated recovery value, the asset is immediately written down to its recovery value.

Gains and losses on disposals are determined through a comparison between the proceeds of sale and the reported value, and are reported in the income statement.

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INTANGIBLE ASSETS

Research and development

Research expenses are reported when they are incurred. Development expenses consist of costs for the further development of equipment and software for biometric fingerprint recognition. They are reported as intangible assets when in all probability the project will be successful, considering its commercial and technical potential, and if the costs can be estimated correctly. Other development expenses are written off when they accrue. Development expenses that have previously been written off are not carried forward in the following period. Development expenses have a limited lifespan and are written off on a straight-line basis from the date when commercial production of the product can begin. The estimated lifespan is from two to five years. From October 1, 2013 there has been a reassessment of development projects related to the Tactivo product family, which since then are estimated to have shorter lifespans than the group's other products.

Depreciation of capitalized development expenses is reported in its entirety in the item R&D expenses in the income statement.

Software

Expenses for maintenance of software are written off when they are incurred. Expenses for acquisition and development of software are capitalized as intangible fixed assets if the criteria in accordance with IAS 38 and IFRS 3 are met. Expenses are capitalized on the basis of the expenses incurred when the actual software was acquired and used, or when expenses for development are incurred. These expenses are depreciated during their estimated lifespan, which extends for five years.

Patents

Patents have a limited lifespan and are therefore reported at the acquisition value, minus accumulated depreciation. Depreciation is charged on a straight-line basis over ten years.

Write-downs

Assets that have an indeterminable lifespan are not depreciated, but are assessed on an annual basis in relation to write-down requirements. The Company does not at the present time have any assets that have an indeterminable lifespan. Assets that are depreciated are assessed in relation to the depreciation in value whenever events or different circumstances indicate that the reported value is not recoverable. A write-down is recorded by the amount in which the asset's reported value exceeds its recovery value, which is the higher of the net sales value and the utility value. When calculating the utility value, the future cash flow is discounted at an interest rate that takes into consideration the market assessment of risk-free interest and risk associated with the specific asset. For an asset, the recovery value is calculated for the cash generating unit that the asset belongs to, i.e., the lowest levels where there are identifiable cash flows.

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FINANCIAL INSTRUMENTS

Loans receivable and accounts receivable

Accounts receivable are non-derivative financial assets with fixed or fixable payments that are not listed in an active market. One of their distinguishing features is that they are incurred when the group supplies products or services directly to a customer without the intention of negotiating with the incurred receivable. Accounts receivable are included in the item Accounts receivable and other receivables in the balance sheet.

Accounts receivable

Accounts receivable are initially reported at fair value and thereafter at the accrued acquisition value with the application of the effective interest method, minus a possible provision for a decrease in value. A provision for a decrease in value of accounts receivable is made when there is objective evidence that the group will not be able to receive all the amounts due in accordance with the original conditions for the receivable. The size of the provision is determined by the difference between the asset's reported value and the current value of estimated future cash flows, discounted at the effective rate.

Liquid assets

Liquid assets consist of cash and bank deposits.

Financial fixed assets

Financial investments consist of financial fixed assets when the expected holding period is longer than one year, or when the due date for loan receivables and accounts receivable is longer than one year.

Capital stock

Common stock is classified as equity. Transaction costs directly attributable to the issue of new common stock or options are reported in equity as a deduction from the issue liquidity. Repurchasing of own shares is reported in equity.

Income taxes

Tax expenses for the period include current and deferred taxes. Tax is reported in the income statement, except when it refers to items reported in other comprehensive income, or directly in equity. In such cases the tax is also reported in other comprehensive income and equity.

The valuation of all tax liabilities/receivables is carried out at nominal amounts and the actual tax cost is calculated on the basis of the tax regulations enacted on the balance sheet date, or in practice enacted in the countries where the parent company and its subsidiaries are active and generate taxable revenues. The executive regularly assesses the claims made in tax returns concerning situations where the applicable tax regulations are subject to interpretation. When appropriate it allocates provisions for amounts that will in all probability be paid to the tax authority.

Deferred tax is reported, in accordance with the balance sheet method, on all temporary differences incurred

CASH FLOW STATEMENT

between the taxable value of assets and liabilities and their reported values in the consolidated financial statements. Deferred tax liabilities are not reported, however, if they are incurred as a result of the first reporting of goodwill. Nor is deferred tax reported if it is incurred as a result of a transaction that constitutes the first reporting of an asset or liability that is not a business acquisition, and which at the time of the transaction neither affects reported or taxable income. Deferred income tax is calculated by applying tax rates (and tax laws) that have been enacted or notified on the balance sheet date, and which are expected to apply when the deferred tax liability in question is realized, or the deferred tax liability is settled.

Deferred tax receivables relating to deficit deductions are reported to the extent that it is probable that deductions can be offset against future surpluses for tax purposes. In the context of the group's past development of its earnings, no deferred tax receivables relating to deficit deductions have been reported. Deferred tax for temporary differences attributable to investments in subsidiaries are not reported because the parent company can control the date for reversal of the temporary differences and it is not considered likely that a reversal will take place within the foreseeable future.

Inventories

Inventories have been valued, with the application of the FIFO method, at the lesser of the acquisition value and the netsales value.

REMUNERATION TO EMPLOYEES

Pensions

The group only has defined contribution pension plans. The pension plans are financed through payments from the respective group companies.

For defined contribution pension plans, the group pays contributions to privately managed pension insurance plans on a contractual basis. The group has no additional payment obligations after the contributions have been paid. The payments are reported as payroll expenses when they fall due for payment. Prepaid contributions are reported as an asset to the extent that cash repayment or the reduction of future payments can benefit the group.

Severance pay

Severance payments are made when employees are given notice of termination prior to the normal pension date, or when an employee accepts voluntary retirement in exchange for such payments. The group reports severance pay when it is demonstrably obliged either to terminate an employee's contract according to a detailed, formal and irrevocable plan, or to provide compensation as a result of an offer made to encourage voluntary retirement from employment. Benefits due more than 12 months after the balance sheet date are discounted to the current value.

Bonus plans

The group reports a liability and cost for a bonus on the basis of the result for the year when an obligation exists.

Option programs

Precise Biometrics has an outstanding option program for employees in Sweden and the US. Warrants have been issued to employees in Sweden and the US as part of the program on ordinary market terms.

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On acquisition of warrants by employees, the payments received are reported in Other paid-in capital. On the utilization of the options the capital stock is increased by each newly issued share's nominal value and the corresponding share premium is carried over to Other paid-in capital.

ACCOUNTS PAYABLE

Accounts payable are initially valued at the fair value and thereafter at the accrued acquisition value with the application of the effective rate method.

PROVISIONS

Provisions are reported when the group has an existing legal or informal obligation as a result of previous events, whereby it is more likely that an outflow of resources will be required to settle the obligation than the reverse, and the amount has been estimated in a reliable way.

Provisions are recorded for expected guarantee requirements relating to products that have been sold in the last fiscal year. Provisions are currently recorded at approx. 2 per cent of booked revenues, which reflects the estimation of the amount that will be settled. Expenses are estimated to be incurred in the following fiscal year.

REVENUES

Group revenues mainly consist of sales of products and are reported on delivery of the products to the customer, in accordance with the terms and conditions of delivery. Sales are reported net of VAT, discounts and exchange rate differences for sales in foreign currency. In the consolidated financial statements, intragroup sales are eliminated. Intragroup sales are priced according to current market conditions.

License revenues are reported when license agreements, without consequential loss clauses, have been signed and delivery has taken place, and when the price and payment plans have been established and where there are no other commitments apart from the delivery of the licenses. Licenses sold in combination with hardware, which is a prerequisite for the functionality of the software, are reported as revenue when the hardware has been delivered. Royalty is reported as revenue for the period the customer reports the use of the licenses, and is based on received royalty reporting. Consultancy services performed on current account are reported at the rate the work is completed. Support and maintenance revenues are reported on the basis of the length of the agreement. Revenues from sales of services are reported in the period in which the services are carried out. The revenues are calculated on the basis of the degree of completion for the specific transaction or the proportion of incurred expenses in relation to the total expenses in the project.

LEASING AGREEMENTS

Leasing where a substantial part of the risks and benefits of ownership are retained by the lessor is classified as operational leasing. Payments made during the leasing period (after deductions for any incentives from the lessor) are written off in the income statement on a straight-line basis over the leasing period. The group has no financial leasing contracts.

CASH FLOW STATEMENT

GOVERNMENT SUBSIDIES

Subsidies from the government are reported at fair value when there is a reasonable assurance that the subsidy will be received and that the group will satisfy the conditions attached to the subsidy. Government subsidies applicable for expenses are accrued and reported in the income statement over the same periods as the expenses which the subsidies are intended to cover.

Government subsidies for the purchase of fixed assets are reported as a reduction of the acquisition value of the fixed asset.

IMPORTANT ESTIMATES AND ASSESSMENTS FOR ACCOUNTING POLICIES

In order to prepare the financial statements in accordance with generally accepted accounting principles, it is necessary to make estimates and assumptions that affect the income statement, balance sheet and other disclosures. Actual outcomes may differ from the estimates made.

A) Important estimates and assumptions for accounting policies

Capitalization of development expenses

The area where estimates and assumptions could involve risks for the adjustment of reported values for assets and liabilities during the next fiscal year is mainly related to capitalized development expenses. The group regularly examines if it will be necessary to write-down capitalized development expenses in accordance with the accounting policies described under Intangible assets. This examination is carried out through an assessment of the project in relation to future cash flows. Projects that will not bring the Company any future financial benefits are written down. Forecasts for future cash flows are based on the best possible estimates of future revenues and expenses.

Income tax

The group has to pay taxes in several different countries. With due consideration to the historical development of the group's earnings, an assessment has been made that the group only has a limited exposure to tax expenses.

The group makes regular assessments concerning the opportunity to utilize deficit deductions in the future, based on its historical and expected future development of earnings.

B) Important assessments during the application of the group's accounting policies

Assessment concerning the future survival of the Company

In the fall of 2014 the Company implemented a reorganization and focusing of its activities to achieve profitability in 2015. Further investment will be made in the new business area Fingerprint Technology, with more resources devoted to sales, primarily in Asia. This reorganization is expected to reduce the Company's operating costs by a significant amount.

Within the business area Fingerprint Technology the Company sees an important potential to increase its sales of

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software licenses, primarily to the mobile phone industry. The positive trend in 2014 is expected to continue during 2015 and after. The Company has signed partnership agreements with the two largest sensor manufacturers, and therefore its market positioning is considered to be very satisfactory.

The parent company has a net group receivable in the US subsidiary. The Company has valued this receivable by forecasting future cash flows for the subsidiary's business activities.

Further investments have also been made in 2014 in the business area Mobile SmartCard Solutions and the in-house developed product Tactivo™. Sales continued to remain at low levels in 2014, but in the fourth quarter two significant business transactions were implemented. Precise Biometrics has assessed that sales of Tactivo will continue to develop in 2015, above all in the US with the government agency market in focus, and in the European health care and corporate markets.

Within the business area Desktop & Physical Access, existing customer relations will be maintained and continue to generate revenues in 2015.

The Company estimates that the liquidity situation is satisfactory, but that new capital acquisitions cannot be excluded. The Company's cash flow forecasts indicate that a positive cash flow should be achieved by the end of 2015. Nevertheless, there is considerable uncertainty surrounding all of the Company's forecasts.

DEVIATIONS BETWEEN ACCOUNTING POLICIES FOR THE GROUP AND FOR THE PARENT COMPANY

Financial fixed assets

Shares and participations in subsidiaries are reported at the acquisition value, after deductions for depreciation. The acquisition value is included in acquisition related costs and, where appropriate, supplementary purchase prices. Dividends received are reported as financial revenues. Dividends that exceed the subsidiary's comprehensive income for the period, or which result in the book value of the holding's net assets in the consolidated financial statements being less than the book value of participations, is an indication that there is a write-down requirement.

When there is an indication that shares and participations in a subsidiary have diminished in value, an estimate is made of the recovery value. A write-down is recorded if this is lower than the reported value. Write-downs are reported in the item Results from participations in group companies.

CASH FLOW STATEMENT

NOTE 2 - SEGMENT INFORMATION

Business segments are reported in such a way that they correspond with the internal reporting submitted to the group executive, and also the CEO.

In 2013 Precise Biometrics had two business areas, but when the Company identified considerable potential for its core technology - software algorithms - it decided to report this as a new separate business area. As of January 2014 the three business areas are: Fingerprint Technology (licensing of algorithms), Mobile Smart Card Solutions (Tactivo) and Desktop & Physical Access Solutions (fingerprint readers and access solutions for access to offices and computers). Comparable figures for 2013 have been recalculated for the new business areas.

The group executive also assesses business activities from a product perspective. The product categories that are followed up are products, licenses and services.

The group executive assesses the business segments on the basis of earnings per business area. For a definition of earnings, see the table below.

The segment information, regarding the segments for which information is submitted to the group executive for the fiscal year 2014, are as follows:

	Mobile Smart Card Solutions		Fingerprint Technology		Desktop & Physical Access Solutions		Unallocated^{3)}		Total
	2014	2013	2014	2013	2014	2013	2014	2013	2014	2013
Revenues
External sales^{1)}	5,147	4,325	8,289	7,822	17,951	22,797	0	0	31,387	34,944
Total profit/loss
Earnings per segment^{1)}	-33,812	-37,924	-9,439	-10,158	3,580	3,823	-4,876	2,079	-44,547	-42,180
Operating profit/loss									-44,547	-42,180
Interest revenue									510	479
Interest expenses									-8	-1,571
Tax expenses for year									-	-
Net loss for the year									-44,045	-43,272

1) As of January 2014 there is a new business area division and therefore 2013 has been recalculated accordingly.
2) Earnings per segment consist of revenues minus costs for sold products and direct, and a proportion of indirect, costs.
3) Unallocated consists of capitalization of development expenses, depreciation of tangible and intangible fixed assets, and other revenues and changes in value. These costs have been reported when incurred in the above table.

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Internal pricing between the parent company and foreign subsidiaries is based on the Transactional Net Margin Method and the profitlevel is determined in accordance with Return on Sales, which for 2014 amounted to 2.83 per cent. No sales take place between segments, internal sales take place within all segments. Internal pricing between Swedish companies takes place according to market conditions.

An allocation of revenues per product category is as follows:

	Products		Licenses		Services		Total
	2014	2013	2014	2013	2014	2013	2014	2013
Revenues
External sales	18,616	21,834	9,102	8,114	3,669	4,996	31,387	34,944

The group's revenues from external customers in Sweden amount to SEK 12.4 million (3.9) and total revenues from external customers in other countries amount to SEK 19.0 million (31.0), of which revenues from the US are 6.7 million (10.3) and the Middle East 4.2 million (14.9).

Revenues from external customers which consist of ten per cent or more of group revenues can be attributed to the Nordic region at SEK 9.2 million and the Middle East at 4.2 million (13.2).

Segment division parent company:

	Mobile Smart Card Solutions		Fingerprint Technology		Desktop & Physical Access Solutions		Total
	2014	2013	2014	2013	2014	2013	2014	2013
Revenues
External sales^{1)}	2,429	407	8,289	7,822	15,676	20,288	26,394	28,517

The parent company revenues from external customers in Sweden amounts to SEK 12.4 million (3.9) and total revenues from external customers in other countries amount to SEK 10.5 million (12.1), of which revenues from the US SEK are 2.9 million (5.2).

CASH FLOW STATEMENT

NOTE 3 - INTANGIBLE FIXED ASSETS, GROUP

	Capitalized development	Patents	Capitalized data expenses	Total
As of January 1, 2013
Acquisition value	79,477	11,563	4,214	95,254
Accumulated depreciation and write-downs	-61,118	-11,563	-4,214	-76,895
Book value	18,359	-	-	18,359
Opening book value	18,359	-	-	18,359
Acquisitions during the year	9,368	-	-	9,368
Write-down	-2,096	-	-	-2,096
Depreciation	-4,057	-	-	-4,057
Closing book value	21,574	-	-	21,574
As of December 31, 2013
Acquisition value	88,845	11,563	4,214	104,622
Accumulated depreciation and write-downs	-67,271	-11,563	-4,214	-83,048
Book value	21,574	-	-	21,574
Opening book value	21,574	-	-	21,574
Acquisitions during the year	6,657	-	-	6,657
Write-down^{1)}	-2,351	-	-	-2,351
Depreciation	-8,520	-	-	-8,520
Closing book value	17,360	-	-	17,360
As of December 31, 2014
Acquisition value	95,502	11,563	4,214	111,279
Accumulated depreciation and write-downs	-78,142	-11,563	-4,214	-93,919
Book value	17,360	-	-	17,360

Comments on the table:
Depreciation is included in the items Selling expenses, Administration expenses and R&D expenses in the income statement. The basis for the allocation consists of the number of employees per function.

1) Regarding write-downs for the year, see comments in Note 29.

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NOTE 4 - INTANGIBLE FIXED ASSETS, PARENT COMPANY

	Capitalized development	Patents	Capitalized data expenses	Total
As of January 1, 2013
Acquisition value	77,162	8,721	972	86,855
Accumulated depreciation and write-downs	-58,804	-8,721	-972	-68,497
Book value	18,358	-	-	18,358
Opening book value	18,358	-	-	18,358
Acquisitions during the year	9,368	-	-	9,368
Write-down	-2,096	-	-	-2,096
Depreciation	-4,057	-	-	-4,057
Closing book value	21,573	-	-	21,573
As of December 31, 2013
Acquisition value	86,530	8,721	972	96,223
Accumulated depreciation and write-downs	-64,957	-8,721	-972	-74,650
Book value	21,573	-	-	21,573
Opening book value	21,573	-	-	21,573
Acquisitions during the year	6,657	-	-	6,657
Write-down^{1)}	-2,351	-	-	-2,351
Depreciation	-8,520	-	-	-8,520
Closing book value	17,359	-	-	17,359
As of December 31, 2014
Acquisition value	93,187	8,721	972	102,880
Accumulated depreciation and write-downs	-75,828	-8,721	-972	-85,521
Book value	17,359	-	-	17,359

1) Regarding write-downs for the year, see comments in Note 29.

CASH FLOW STATEMENT

NOTE 5 - TANGIBLE FIXED ASSETS

	Inventories and equipment
	Group	Parent company
As of January 1, 2013
Acquisition value	10,776	9,371
Accumulated depreciation and write-downs	-8,947	-7,542
Book value	1,829	1,829
Opening book value	1,829	1,829
Acquisitions during the year	2,381	2,381
Depreciation	-735	-735
Closing book value	3,475	3,475
As of December 31, 2013
Acquisition value	13,157	11,752
Accumulated depreciation and write-downs	-9,682	-8,277
Book value	3,475	3,475
Opening book value	3,475	3,475
Acquisitions during the year	1,213	1,213
Write-down^{1)}	-846	-846
Depreciation	-1,058	-1,058
Closing book value	2,784	2,784
As of December 31, 2014
Acquisition value	14,370	12,965
Accumulated depreciation and write-downs	-11,585	-10,180
Book value	2,784	2,784
Bokfört värde	2 784	2 784

Comments on the table:

Depreciation is included in the items Selling expenses, Administration expenses and R&D expenses in the income statement. The basis for the allocation consists of the number of employees per function.

1) Regarding write-downs for the year, see comments in Note 29.

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NOTE 6 - COSTS ALLOCATED PER TYPE

	Group		Parent Company
	2014	2013	2014	2013
Depreciation and write-downs (Notes 3, 4 and 5)	12,774	6,888	12,774	6,888
Personnel expenses	28,696	33,342	25,680	26,861
Goods for resale	14,209	15,976	13,933	18,875
Travel expenses	1,544	2,781	1,464	2,272
Telephone costs	536	833	473	683
Insurance expenses	960	674	888	478
Consultancy costs	5,721	1,530	5,173	748
Premises costs	3,897	3,753	3,224	3,362
Development costs (net of subsidies received)	4,835	6,472	4,835	6,472
Other sales expenses	2,073	2,365	2,050	2,019
Management expenses	1,606	1,310	1,606	1,310
Exchange rate adjustments	-1,507	358	-8,291	356
Other external income and costs	590	843	531	778
Total	75,934	77,125	64,340	71,102

NOTE 7 - AUDITORS' REMUNERATION

	Group		Parent company
	2014	2013	2014	2013
PwC
Audit assignment	335	325	320	325
Extra audit assignment	218	143	218	143
Tax advice	20	161	20	161
Other services	30	74	30	74
Total	603	703	588	703

CASH FLOW STATEMENT

NOTE 8 - OPERATIONAL LEASING AGREEMENTS

	Group		Parent company
	2014	2013	2014	2013
Leasing costs during the year	2,859	2,524	2,235	2,224
Other leasing	305	421	305	421
Total	3,164	2,945	2,540	2,645
Nominal value of agreed future leasing charges:
Due for payment in 1 year	2,283	2,804	1,868	2,470
Due for payment after 1 year, but within 5 years	443	1,756	443	1,756
Due for payment after 5 years	-	-	-	-
Total	2,726	4,560	2,311	4,226

Operational leasing agreements mainly refer to office rent

NOTE 9 - GOVERNMENT SUBSIDIES

Precise Biometrics has received SEK 0 thousand (550) in development subsidies from the EU. The amount is included in R&D expenses.

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NOTE 10 - INCOME TAX

Neither the parent company nor the group reports current tax or deferred tax (Note 12.).

	Group		Parent Company
	2014	2013	2014	2013
Profit/loss before tax	-44,045	-43,272	-36,825	-43,092
Tax calculated as per national tax rates applicable for profit in respective countries	9,690	9,520	8,102	9,520
Tax effect on taxable income	-	-	-	-
Tax effect on non-deductible costs	22	32	22	32
Tax deficit for which no deferred tax claim has been reported	-9,712	-9,552	-8,124	-9,552
Tax expenses	-	-	-	-

The tax on group profit before tax differs from the theoretical amount that would have resulted from a weighted average tax rate for the results in the consolidated companies as follows:

NOTE 11 - EARNINGS PER SHARE

Before dilution

Earnings per share before dilution is calculated by dividing earnings attributable to parent company owners by a weighted average number of outstanding common shares during the period, excluding repurchased shares of the parent company. (See Note 17)

	Group
	2014	2013
Earnings attributable to parent company shareholders (Thousands SEK)	-42,825	-43,229
Weighted average number of outstanding common stock (thousands)	345,306	306,147
Earnings per share before dilution (SEK per share)¹	-0.12	-0.14

¹Earnings attributable to parent company shareholders refers to earnings after the change in accumulated translation differences.

CASH FLOW STATEMENT

Earnings per share after dilution

To calculate earnings per share after dilution, the weighted average number of outstanding common stock is adjusted for the dilution effect of all potential common stock. The parent company only has one category of potential common stock with a dilution effect, i.e., share warrants.

For share warrants, a calculation is made for the number of shares that could have been purchased at fair value (calculated as the average market price for the year for parent company shares), for an amount corresponding to the monetary value of the subscription rights linked to the outstanding share warrants.

The number of shares calculated as per the above is compared with the number of shares that would have been issued on the assumption that share warrants were utilized. If all outstanding subscription option programs were redeemed in their entirety the maximum dilution would amount to 2,610,000 shares.

Because the market price on 31 December 2014 was less than the redemption price of outstanding share warrants and Earnings attributable to parent company shareholders is negative, outstanding share warrants have not been taken into account in the following calculation.

	Group
	2014	2013
Earnings attributable to parent company shareholders	-42,825	-43,229
Weighted average number of outstanding common stock (thousands)	345,306	306,147
- adjustment for warrants	-	-
Weighted average amount of common stock for calculation of earnings per share after dilution (thousands)	345,306	306,147
Earnings per share after dilution (SEK per share)^{1)}	-0.12	-0.14

1) Earnings per share is calculated on comprehensive income, which has been affected by changes in the accumulated translation differences.

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NOTE 12 - DEFERRED TAX

The parent company does not have any deferred recoverable tax.

In consideration of the historical development of earnings for the group, no deferred recoverable tax for deficit deductions is reported. Future deficit deductions do not have a time limit in terms of their utilization.

Deferred tax for temporary differences attributable to investments in subsidiaries is not reported, because the parent company can control the date for the reversal of the temporary differences and it is not considered likely that a reversal will take place within the foreseeable future.

Accumulated, taxed deficit deductions, excluding net profit/loss for the year, amounted in the parent company to approx. SEK 591 million (549) and in the US subsidiary to SEK 31 million (31).

NOTE 13 - INVENTORIES

	Group
	2014	2013
Components	6,400	6,724
Goods for resale	5,460	7,504
Total	11,860	14,228

The cost of goods sold for the group includes write-downs¹) of inventories in an amount of Thousands SEK 4,299 (1,674). No essential reversals of previously recorded write-downs have been made in 2014 or in 2013.

	Moderbolaget
	2014	2013
Components	6,400	6,757
Goods for resale	1,037	4,156
Total	7,437	10,913

CASH FLOW STATEMENT

NOTE 14 - ACCOUNTS RECEIVABLE AND OTHER RECEIVABLES

	Group		Parent company
	2014	2013	2014	2013
Accounts receivable	6,759	3,997	4,435	1,777
Other receivables	3,988	5,455	3,855	5,345
Prepaid expenses and accrued income	3,791	2,998	3,719	2,860
Total	14,538	12,450	12,009	9,982

There is a write-down for one account receivable amounting to Thousands SEK 91, but apart from this there are not considered to be any write-down requirements for accounts receivable that are due. As of 31 December 2014 accounts receivable amounting to Thousands SEK 1807 (1016) were due without any write-down requirement considered necessary. This concerns several independent customers that have not previously had difficulties with payments.

The aging analysis of accounts receivables is shown below:

	Group		Parent company
	2014	2013	2014	2013
Not due	4,952	3,235	3,794	1,305
Less than 3 months	1,807	789	641	402
3 to 6 months	-	106	-	70
Of which written down	-	-133	-	-
More than 6 months	91	-	91	-
Of which written down	-91	-	-91	-
Total	6,759	3,997	4,435	1,777

The remaining categories in accounts receivable and other receivables do not include any assets for which there is a write-down requirement.

The maximum exposure to credit risk on the balance sheet date is the fair value for each category of receivables. The group has no collateral as security.

The reported amounts, per currency, for the group's accounts receivable and other receivables are as follows:

	2014	2013
SEK	1 700	837
USD	491	446
EUR	129	28

CASH FLOW STATEMENT | 77

NOTE 15 - LIQUID ASSETS

	Group		Parent company
	2014	2013	2014	2013
Cash and bank balances	59,659	101,197	56,979	96,976
Total	59,659	101,197	56,979	96,976

NOTE 16 - FINANCIAL FIXED ASSETS

Similar to the previous year, financial fixed assets amount to Thousands SEK 1058 and the entire amount is long term.

Participations in subsidiaries

	Parent company
	2014	2013
Precise Biometrics Services AB
Corporate Identity Number 556582-9347, headquarters: Lund municipality.
No. of shares	1,000	1,000
Share of equity	100%	100%
Book value	100	100
Precise Biometrics Inc.
Reston, Virginia, US
No. of shares	10	10
Share of equity	100%	100%
Book value	958	958

CASH FLOW STATEMENT

NOTE 17 - EQUITY

Share Capital

	No. of shares
As of January 1, 2013	264,523,168
New issue of shares with preferential rights for Company shareholders	58,782,926
Special issue	22,000,000
As of December 31, 2013	345,306,094
As of December 31, 2014	345,306,094

Warrants:

An option program was issued in 2014 for all employees for a maximum of 8,000,000 options following a decision at the AGM 2014. A total of 2,610,000 options have been subscribed and Precise Biometrics obtained an infusion of SEK 261,000 to liquid assets. Subscription of shares with utilization of share warrants can take place during the period June 1– December 31, 2017 at a price of SEK 2.50. The market values have been established by an external valuer using the Black-Scholes model. At the time of the valuation the share price amounted to SEK 1.13, which is based on the volume-weighted average share price during the period May 52014 to May 16, 2014. The subscription price corresponded to 220 per cent of the volume-weighted average price at the time of valuation.

Full utilization of the share warrants will increase the share capital by SEK 730,800, which corresponds to approx. 0.7 per cent of the Company's current share capital. The liquid funds Precise Biometrics has obtained during the transfers have been transferred to Other paid-in capital.

The nominal value of one share is SEK 0.28.

The option program initiated in 2011 and which matured in 2014 did not lead to the subscription of shares.

CASH FLOW STATEMENT | 79

The change in the number of outstanding share warrants and their weighted average redemption price is as follows:

	2014		2013
	Red. price in	Options	Red. price in	Options
	SEK per share		SEK per share
As of January 1	2.4	4,400,000	2.6	4,400,000
Allocated	2.5	2,610,000	-	-
Due		-4,400,000	-	-
Change in redemption price	-	-	-0.2	-
As of December 31	2.50	2,610,000	2.40	4,400,000
	Translation reserve
---	---
Opening balance as of January 1, 2013	727
Exchange rate differences:
- Group	43
Reduction in nominal value of shares
- Group	-94
Closing balance as of December 31, 2013	676
Exchange rate differences:
- Group	1,220
Reduction in nominal value of shares
- Group	0
Closing balance as of December 31, 2014	1,896

NOTE 18 - ACCOUNTS PAYABLE AND OTHER LIABILITIES

	Group		Parent company
	2014	2013	2014	2013
Accounts payable	2,897	6,487	2,825	6,258
Accrued payroll costs	6,059	6,686	5,152	6,582
Payroll overhead and other taxes	2,346	2,936	2,271	2,923
Accrued expenses	1,394	1,199	602	1,166
Other liabilities	1,117	560	996	447
Total	13,813	17,868	11,846	17,376

CASH FLOW STATEMENT

NOTE 19 OTHER PROVISIONS

	Guarantee provisions
	Group	Parent company
As of January 1, 2014	508	100
Change in guarantee provisions for the year	-104	112
As of December 31, 2014	404	212
		212

Provisions only consist of a short-term portion.

NOTE 20 - PLEDGED ASSETS

The amount of Thousands SEK 24,000 as of December 31, 2013 refers to non-utilized chattel mortgages due to closure of underlying credit agreements.

NOTE 21 - EMPLOYEE AND PERSONNEL EXPENSES

Gender balance in group	2014		2013
	Men	Women	Men	Women
Precise Biometrics AB, Sweden	19	6	21	8
Precise Biometrics Inc, US	1	1	3	2
	20	7	24	10
Gender balance in corporate management	Group		Parent company
Proportion of women	2014	2013	2014	2013
Board of directors	22%	40%	22%	40%
CEO and leading executives	19%	25%	19%	25%

CASH FLOW STATEMENT | 81

Salaries and remuneration are allocated as follows:

	Konzernen		Moderbolaget
	2014	2013	2014	2013
Board and CEO, Sweden
Salaries and other remuneration	4,191	7,268	4,191	7,268
Pension expenses	188	9	188	9
Payroll overhead, including payroll tax	602	2,112	602	2,112
Total	4,980	9,389	4,980	9,389
Others, Sweden
Salaries and other remuneration	17,621	15,921	17,621	15,921
Pension expenses	3,109	2,508	3,109	2,508
Payroll overhead, including payroll tax	6,390	5,630	6,390	5,630
Total	27,120	24,059	27,120	24,059
SUMMA SVERIGE	32,101	33,448	32,101	33,448
Others, US
Salaries and other remuneration	1,777	4,865	-	-
Pension expenses	18	164	-	-
Payroll overhead	191	339	-	-
Total	1,987	5,368	-	-
TOTAL, US 1)	1,987	5,368	-	-
TOTAL	34,088	38,816	32,101	33,448

1) No remuneration is paid to the CEO or board in the subsidiary in the US.

CASH FLOW STATEMENT

NOTE 22 - REMUNERATION TO LEADING EXECUTIVES

Principles

Remuneration is paid to the chairman and board members in accordance with the decision of the AGM.

Remuneration to the CEO and other leading executives consists of basic salary, flexible remuneration and pension benefits. Håkan Persson was appointed interim CEO on November 8, 2013. He was to be employed on August 8, 2014. In addition to a period of notice of 6 months, severance pay for 6 months is also included.

Other leading executives refers to the persons who together with the CEO constitute the group executive. There was an average of four leading executives during the year. For the composition of the group executive, refer to the section, Group executive in the Annual Report.

The division between basic salary and flexible remuneration is proportional to responsibility and powers of the group executives. For the CEO flexible remuneration is set at a maximum of 75 per cent of basic salary. For other leasing executives flexible remuneration is set at a maximum of 50 per cent of basic salary. For staff in the US flexible remuneration is set at a maximum of 50 per cent of basic salary.

Remunerations and other benefits in 2013

	Basic salary/ board remun.	Flexible remuneration	Other benefits	Pension expenses	Other remuneration	Total
Lisa Thorstedt, Chairman	227	-	-	-	-	227
Torgny Hellström, board member	87	-	-	-	-	87
Matts Lilja, board member	35	-	-	-	-	35
Mats Lindoff, board member	35	-	-	-	-	35
Eva-Maria Matell, board member	122	-	-	-	-	122
Anders Harrysson, board member	87	-	-	-	-	87
Torgny Hellström, board member	87	-	-	-	-	87
Torbjörn Clementz, board member	122	-	-	-	-	122
CEO, Håkan Persson	5,477	266	153	9	27	5,932
Other chief executives	-	-	-	-	543	543
4 persons (see below)
Total	5,667	209	106	526	225	6,633
Total	11,846	475	259	535	795	13,910

CASH FLOW STATEMENT | 83

Remunerations and other benefits in 2014

	Basic salary/ board remun.remuneration	Flexible remuneration	Other benefits	Pension expenses	Other remuneration	Total
Lisa Thorstedt, Chairman	78	-	-	-	-	78
Matts Lilja, board member	217	-	-	-	-	217
Erwin F Leichtle, board member	160	-	-	-	-	160
Lena Klasén, board member	117	-	-	-	-	117
Eva-Maria Matell, board member	160	-	-	-	-	160
Anders Harrysson, board member	169	-	-	-	-	169
Torgny Hellström, board member	43	-	-	-	-	43
Torbjörn Clementz, board member	160	-	-	-	-	160
CEO, Thomas Marschall	718	113	-	188	2,263	3,281
CEO, Håkan Persson
Other leading executives, average of 4 persons (see below)	3,857	323	112	851	36	5,179
Total	5,671	436	112	1,038	2,299	9,555

Comments on the tables:

The amounts in the tables are exclusive of payroll overhead. Remuneration to the CEO Håkan Persson (assumed office 8 November 2013) was invoiced as consultancy fees for first 9 months.

Payment of remuneration to the board takes place monthly with 1/12 of the remuneration decided by the AGM. Payment of remuneration to the committee takes place monthly with 1/12 of the remuneration decided by the AGM. Payment of remuneration has been written off. The above remuneration refers to expenses that have affected net profit/loss for the year.

The group only has defined contribution pension plans. Pension expenses refer to the expenses that have affected net profit/loss for the year. The chairman has not received any remuneration in addition to the board remuneration.

Flexible remuneration

Flexible remuneration for the CEO and group executives is based on group earnings and individual targets. These targets are set by the board for the CEO, and by the board and the CEO for leading executives. The maximum amount for flexible remuneration that can be paid to the CEO amounts to 75 per cent of basic salary. Flexible remuneration corresponded to 21 per cent of the salary for the calendar year of 2014 for the CEO. For other leading executives flexible remuneration can amount to a maximum of 50 per cent of basic salary. In 2014 the flexible remuneration to leading executives corresponded to 5-15 per cent.

Other benefits

Other benefits consist of benefits for cars and insurance.

CASH FLOW STATEMENT

Share related compensation

A new option program was issued in 2014 where a total of 2,610,000 options were subscribed by employees, of which the CEO had 1,000,000 options and other group executives 700,000 options. Precise Biometrics received an infusion of SEK 261,000 into liquid funds. Subscription of shares with the utilization of share warrants can take place during the period 1 June – 31 December 2017 at a price of SEK 2.50. With full utilization of the share warrants the capital stock will increase by SEK 730,800, which corresponds to approx. 0.7 per cent of the Company's current capital stock. The liquid funds Precise Biometrics has obtained during the transfers have been transferred to Other paid-in capital.

Precise Biometrics currently has an ongoing option program. Of the 2,610,000 outstanding options (4,400,000 options), it was not possible to utilize any of the options during the year. The previous option program from 2011, which matured in 2014, did not lead to any subscription of shares.

The nominal value of one share is SEK 0.28.

The weighted average actual value for options that were allocated in 2014 was established with the help of an external valuer and the Black-Scholes valuation model and amounts to SEK 0.10 per option. Important input data in the model is the volume-weighted average share price during the period 5 May 2014 to 16 May 2014 of SEK 1.13, the above redemption price, volatility at 40 per cent, an expected option term of 3.6 years and an annual risk-free interest rate of 0.87 per cent. The volatility is measured as the standard deviation for the expected return on the share price and is based on a statistical analysis of daily share prices during the last 7 years.

No cost has been reported in the income statement since the allocated options have been paid for by employees.

The subscription price corresponded to 220 per cent of the volume-weighted average price at the time of valuation.

Pensions

The retirement age for the CEO is 65. The pension premium shall amount to a maximum of 25 per cent of the fixed salary. For other leading executives the retirement age is 65. In accordance with the pension agreement, pension premiums are calculated according to a scale based on age and salary. For the highest current age interval the premium amounts to a maximum of 6 per cent of the pension-based salary up to 7.5 base amounts, a maximum of 39 per cent of the pension-based salary between 7.5 and 20 base amounts and a maximum of 19 per cent of the pension-based salary for salaries over 20 base amounts.

For further information on accounting, see Note 1 in the "Pensions" section.

Severance pay

There is a mutual period of 6 months' notice for the Company and the CEO. Severance pay of 6 monthly salaries will also be paid if the CEO is given notice by the Company.

A period of notice of 3-6 months is applicable for the Company and other leading executives. No severance pay is paid for other leading executives.

CASH FLOW STATEMENT | 85

Change in control

There are no agreements between the company and its employees, with the exception of the employment contracts commented on above, under which compensation must be paid to employees if their employment is terminated as a result of a public takeover bid.

Preparation and decision-making process

The remuneration committee is assigned to consider issues related to salaries, pension conditions, incentive schemes and other terms and conditionsof employment for the executive. In 2014 the committee has primarily focused on remuneration to the CEO and leading executives, as well as incentive schemes and option programs.

The board makes decisions on remuneration to the CEO, based on the recommendations of the remuneration committee within the framework of the guidelines decided at the AGM. Remuneration to other leading executives has been decided by the CEO following consultation with the remuneration committee and the board. At the AGM 2014 guidelines were adopted for the determination of salaries and other remuneration to the CEO and other leading executives.

NOTE 23 - PREPAID EXPENSES AND ACCRUED INCOME

	Parent company
	2014	2013
Prepaid rents	513	382
Prepaid insurance	39	770
Prepaid sales expenses	-	292
Accrued income	2,300	645
Prepaid car leasing	129	192
Prepaid pension premiums	241	203
Prepaid patent expenses	141	-
Other items	356	376
Total	3,719	2,860

CASH FLOW STATEMENT

NOTE 24 - CASH FLOW FROM OPERATIONS

	Group		Parent company
	2014	2013	2014	2013
Result for period before financial items	-44,547	-42,180	-37,947	-42,584
Adjusted for:
- depreciation and write-downs^{1)} of tangible and intangible fixed assets	12,774	6,887	12,775	6,887
- other items with no influence on liquidity	655	50	-	-
Changes in working capital
- inventories	2,368	-3,243	3,475	-1,103
- accounts receivable and other receivables	-1,473	5,045	-5,519	-209
- accounts payable and other liabilities	-4,160	921	-5,418	2,066
Cash flow from operations	-34,383	-32,520	-32,634	-34,943

1) Regarding write-downs for the year, see comments in Note 29.

NOTE 25 - PURCHASES AND SALES BETWEEN GROUP COMPANIES AND TRANSACTIONS WITH ASSOCIATES

Parent company sales to other group companies amounted to SEK 3.4 million (12.5). Purchases from group companies amounted to SEK 4.7 million (6.4). For information on transactions with associated persons, refer to Note 22 Remuneration to leading executives.

Internal pricing between the parent company and foreign subsidiaries is based on the Transactional Net Margin Method and the profit level is determined in accordance with Return on Sales, which for 2014 amounted to 2.83%. Internal pricing between Swedish companies takes place according to market conditions.

NOTE 26 - FINANCIAL RISK FACTORS

The following specification of financial risk factors does not claim to be complete, nor are the risks ranked in their order of importance.

Management of capital

The Company's objective in relation to the capital structure is to assure that the group has the capacity to continue its operations and generate returns for the shareholders and benefit other interested parties, while also maintaining an optimal capital structure to reduce the cost of capital.

CASH FLOW STATEMENT | 87

Capital risk and future capital

Up to the present the Company has generated losses, and has therefore relied on financing from the shareholders. There is no guarantee that capital will be sufficient until the Company achieves a positive cash flow. Nor is there any guarantee that new capital can be acquired if the need should arise, or that such capital can be acquired on preferential terms.

Forecasting problems

The Company operates in a rapidly changing market. The market for Fingerprint Technology products is in an early stage of growth and revenues have largely consisted of royalties based on customer utilization. All the products are characterized by long selling-in processes. The advanced issue or postponement of orders can have a significant effect on sales and earnings, which makes forecasting very difficult.

Currency exposure risks

A large part of the Company's expenses are in Swedish kronor (SEK), while a significant part of revenues and production costs are generated in foreign currency (mainly USD), which increases the Company's currency exposure risks. The Company has adopted a risk policy for currency exposure in order to minimize the risks to the business.

Sensitivity analysis

If the Swedish krona (SEK) had increased/decreased by 5 per cent in value in relation to the US dollar while all other variables remained constant, annual earnings as of December 31, 2014 would have been Thousands SEK 859 (701) higher/lower, mainly as a result of gains/losses on the translation of internal and external receivables and loan receivables in USD.

Equity would have been K SEK 751 (612) lower/higher, mainly as a result of exchange rate differences on the translation of the items as above and the translation of subsidiaries.

Credit risk

Credit risks are mainly incurred through receivables and agreed transactions. The Company has guidelines on issuing credit to its customers. An external credit assessment is made for large orders to new customers. An individual assessment is made for orders from known customers. No new orders are delivered if customers have accounts receivable due for payment. If there are doubts regarding a credit rating, advance payment shall be applicable before delivery is made. The Company believes that there is no significant concentration of credit risks in relation to any individual customer or counterparty.

Cash flow

The Company works hard to minimize the time capital is tied up, for example, in inventories and accounts receivable. To reduce the risk involved in tied-up capital, the Company works actively to improve the internal process for forecasting and production planning.

Liquidity risk

Cash flow forecasts are established by the finance department. The board and the executive pay close attention to the liquidity situation to ensure that the group has adequate liquidity to meet demands in current business activities. Forecasts measure how long liquidity will last, or alternatively when the business is expected to achieve a positive cash flow. Excess liquidity is placed in interest bearing bank accounts and can quickly be converted to cash to handle liquidity risks.

CASH FLOW STATEMENT

NOTE 27 - INTEREST EXPENSE

	Group
	2014	2013
Interest expense credit facility	-	1,536
Other interest expense	8	35
Total	8	1,571

NOTE 28 - ACCRUED EXPENSES AND PREPAID INCOME

	Parent company
	2014	2013
Accrued payroll costs	5,152	6,582
Payroll overhead and other taxes	2,271	2,923
Other accrued expenses	602	1,165
Total	8,025	10,670

NOTE 29 - WRITE-DOWNS

As a result of the new iPhone and iPad versions launched by Apple in 2014 and low sales levels of older Tactivo models, Precise Biometrics has revalued its options to sell them. On the basis of this the balance sheet values attributable to older Tactivo models have been written down. Price adjustments to the older Tactivo models have been implemented, which has reduced the net sales value. In addition, further assessments of obsolescence have resulted in write-downs of the balance sheet values relating to older Tactivo models.

These balance sheet values can be found under several balance sheet items - Intangible fixed assets, tangible fixed assets and inventories. A collective assessment has been made of these balance sheet values. In addition component stock for other older fingerprint readers has also been revalued, which has also resulted in write-downs to the estimated net sales value.

A total net write-down amount of SEK 7.4 million has affected the group in 2014. This amount has reduced intangible fixed assets by SEK 2.3 million, tangible fixed assets by SEK 0.8 million and inventories by SEK 4.3 million. For the parent company a write-down amount for a net total of SEK 6.3 million has affected earnings. This amount has reduced intangible fixed assets by SEK 2.3 million, tangible fixed assets by SEK 0.8 million and inventories by SEK 3.2 million.

NOTE 30 - IMPORTANT EVENTS AFTER THE YEAR-END

For information on important events after the year-end, refer to the Administration Report.

PROVISION FOR ACCUMULATED LOSS AND ASSURANCE | 89

PROVISION FOR ACCUMULATED LOSS AND ASSURANCE

PROPOSED TREATMENT OF ACCUMULATED LOSS

Parent company

The following assets remain at the disposal of the AGM:

Share premium reserve, SEK	63,868,877
Net loss for the year, SEK	-36,824,588
Total	27,044,289

The board proposes to carry forward SEK 27,044,289 in a new account, whereby SEK -36,824,588 will be offset against the share premium reserve.

The board proposes that no dividends are issued by the AGM for the fiscal year 2014.

PROVISION FOR ACCUMULATED LOSS AND ASSURANCE

ASSURANCE

The board of directors and the CEO give their assurance that the consolidated financial statements have been prepared in accordance with international accounting standards IFRS, as adopted by the EU, and give a fair view of the group's financial position and results.

The Annual Report has been prepared in accordance with generally accepted accounting principles and gives a fair view of the parent company's financial position and results.

The Administration Report for the group and the parent company gives a fair view of the group's and the parent company's activities, financial position and results, and describes the essential risks and uncertainty factors that the parent company and the companies within the group face.

The income statements and balance sheets, including the consolidated financial statements, will be presented to the AGM on 27 April 2015 for adoption.

Lund, March 20, 2015

Torgny Hellström
Chairman of the board

Torbjörn Clementz
Board member

Anders Harrysson
Board member

Mats Lindoff
Board member

Eva Maria Matell
Board member

Mats Lilja
Board member

Håkan Persson
CEO

Our audit report has been submitted on March 20, 2015
Öhrlings PriceWaterhouseCoopers AB

Eva Carlsvi
Authorized public accountant
Head auditor

AUDITOR'S REPORT | 91

AUDITOR'S REPORT

To the Annual General Meeting of the shareholders of Precise Biometrics AB (publ), corporate identity number 556545-6596

REPORT ON THE ANNUAL ACCOUNTS AND CONSOLIDATED ACCOUNTS

We have audited the annual accounts and consolidated accounts of Precise Biometrics AB (publ) for the year 2014 except for the corporate governance statement on pages 36-42. The annual accounts and consolidated accounts of the company are included in the printed version of this document on pages 28-93.

RESPONSIBILITIES OF THE BOARD OF DIRECTORS AND THE MANAGING DIRECTOR FOR THE ANNUAL ACCOUNTS AND CONSOLIDATED ACCOUNTS

The Board of Directors and the Managing Director are responsible for the preparation and fair presentation of these annual accounts in accordance with the Annual Accounts Act and of the consolidated accounts in accordance with International Financial Reporting Standards, as adopted by the EU, and the Annual Accounts Act, and for such internal control as the Board of Directors and the Managing Director determine is necessary to enable the preparation of annual accounts and consolidated accounts that are free from material misstatement, whether due to fraud or error.

AUDITOR'S RESPONSIBILITY

Our responsibility is to express an opinion on these annual accounts and consolidated accounts based on our audit. We conducted our audit in accordance with International Standards on Auditing and generally accepted auditing standards in Sweden. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the annual accounts and consolidated accounts are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the annual accounts and consolidated accounts. The procedures selected depend on the auditor's judgement, including the assessment of the risks of material misstatement of the annual accounts and consolidated accounts, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the company's preparation and fair presentation of the annual accounts and consolidated accounts in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Board of Directors and the Managing Director, as well as evaluating the overall presentation of the annual accounts and consolidated accounts.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.

AUDITOR'S REPORT

OPINIONS

In our opinion, the annual accounts have been prepared in accordance with the Annual Accounts Act and present fairly, in all material respects, the financial position of the parent company as of December 31, 2014 and of its financial performance and its cash flows for the year then ended in accordance with the Annual Accounts Act. The consolidated accounts have been prepared in accordance with the Annual Accounts Act and present fairly, in all material respects, the financial position of the group as of December 31, 2014 and of their financial performance and cash flows for the year then ended in accordance with International Financial Reporting Standards, as adopted by the EU, and the Annual Accounts Act. Our opinions do not cover the corporate governance statement on pages 36-42. The statutory administration report is consistent with the other parts of the annual accounts and consolidated accounts. We therefore recommend that the annual meeting of shareholders adopt the income statement and balance sheet for the parent company and the group.

REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS

In addition to our audit of the annual accounts and consolidated accounts, we have also audited the proposed appropriations of the company's profit or loss and the administration of the Board of Directors and the Managing Director of Precise Biometrics AB (publ) for the year 2014. We have also conducted a statutory examination of the corporate governance statement.

RESPONSIBILITIES OF THE BOARD OF DIRECTORS AND THE MANAGING DIRECTOR

The Board of Directors is responsible for the proposal for appropriations of the company's profit or loss, and the Board of Directors and the Managing Director are responsible for administration under the Companies Act and that the corporate governance statement on the pages 36-42 has been prepared in accordance with the Annual Accounts Act.

AUDITOR'S RESPONSIBILITY

Our responsibility is to express an opinion with reasonable assurance on the proposed appropriations of the company's profit or loss and on the administration based on our audit. We conducted the audit in accordance with generally accepted auditing standards in Sweden.

As a basis for our opinion on the Board of Directors' proposed appropriations of the company's profit or loss, we examined the Board of Directors' reasoned statement and a selection of supporting evidence in order to be able to assess whether the proposal is in accordance with the Companies Act.

As a basis for our opinion concerning discharge from liability, in addition to our audit of the annual accounts and consolidated accounts, we examined significant decisions, actions taken and circumstances of the company in order to determine whether any member of the Board of Directors or the Managing Director is liable to the company. We also examined whether any member of the Board of Directors or the Managing Director has, in any

AUDITOR'S REPORT | 93

other way, acted in contravention of the Companies Act, the Annual Accounts Act or the Articles of Association. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinions.

Furthermore, we have read the corporate governance statement and based on that reading and our knowledge of the company and the group we believe that we have a sufficient basis for our opinions. This means that our statutory examination of the corporate governance statement is different and substantially less in scope than an audit conducted in accordance with International Standards on Auditing and generally accepted auditing standards in Sweden.

OPINIONS

We recommend to the annual meeting of shareholders that the loss be dealt with in accordance with the proposal in the statutory administration report and that the members of the Board of Directors and the Managing Director be discharged from liability for the financial year. A corporate governance statement has been prepared, and its statutory content is consistent with the other parts of the annual accounts and consolidated accounts.

Malmö, March 20, 2015

Öhrlings PricewaterhouseCoopers AB

Eva Carlsvi

Authorized Public Accountant

Chief Auditor

FINANCIAL GLOSSARY

SHARE PRICE

The last price paid during the period.

PROPORTION OF RISK-BEARING CAPITAL

Equity and deferred tax liabilities divided by closing balance.

NUMBER OF SHARES

The number of shares at the end of the year.

BALANCE SHEET TOTAL

The value of all assets on the balance sheet date.

GROSS MARGIN

Gross profit/loss divided by net sales.

EBITDA

Operating profit/loss before depreciation and net financials.

EQUITY

Equity at the end of the year. The average equity has been calculated as opening equity plus closing equity divided by two.

EQUITY PER SHARE

Equity at the end of the year divided by the number of shares at the end of the year.

Average number of outstanding shares during the year
Number of shares at the beginning of the year plus the number of shares at the end of the year divided by two.

LIQUID RATIO

Current assets minus inventories, divided by current liabilities.

FINANCIAL GLOSSARY | 95

EARNINGS PER SHARE

Earnings after net financials divided by the average number of shares. The calculation has been made in accordance with IAS 33 Earnings per share. In accordance with IAS 33, recalculation after dilution must not produce a better earnings per share compared with before dilution.

RETURN ON EQUITY

Profit/loss for the year divided by average equity.

RETURN ON CAPITAL EMPLOYED

Earnings after net financials plus financial expenses, divided by average capital employed.

WORKING CAPITAL

Current assets minus current liabilities.

OPERATING MARGIN

Operating profit/loss divided by net sales.

DEBT/EQUITY RATIO

Interest bearing liabilities divided by equity.

EQUITY/ASSETS RATIO

Equity on the balance sheet date divided by total assets on the balance sheet date.

CAPITAL EMPLOYED

Balance sheet total minus non interest-bearing liabilities and reserves. Average capital employed has been calculated as opening plus closing capital employed, divided by two.

DIVIDEND

Dividend per share during the year.

BOARD OF DIRECTORS

TORGNY HELLSTRÖM

Chairman of the Board

BORN
1958

EDUCATION
Master of Law Stockholm University, IBM Executive Education with Thunderbird (University of Phoenix)

CURRENT POSITION
Founder and Senior Management Consultant Ruddex International AB

BOARD MEMBER SINCE
2013

PREVIOUS ASSIGNMENTS
CEO, COO and General Counsel Anoto Group AB, Vice President Telefonaktiebolaget LM Ericsson (publ), senior positions within Ericsson, IBM Europe and IBM Nordics' legal departments

OTHER ASSIGNMENTS
Member of the Board of DDM Holding AG, Switzerland

SHARES IN PRECISE BIOMETRICS
25,000

EVA MARIA MATELL

Board member

BORN
1958

EDUCATION
MSc Industrial Engineering, International Marketing, Linköping University

CURRENT POSITION
General Manager at Cintos Consulting

BOARD MEMBER SINCE
2007

PREVIOUS ASSIGNMENTS
Managing Director at Kaspersky Lab AB, Sales and Marketing Director XponCard AB

OTHER ASSIGNMENTS
Board member STI, Stockholm Technical Institute

SHARES IN PRECISE BIOMETRICS
31,939

BOARD OF DIRECTORS | 97

ANDERS HARRYSSON

Board member

BORN
1959

EDUCATION
MSc in Physics at Linköping University, MSc and Senior Thesis in Electrical Engineering at Stanford Graduate School, Dept of Electrical Engineering, Stanford University

CURRENT POSITION
–

BOARD MEMBER SINCE
2013

PREVIOUS ASSIGNMENTS
CEO at Birdstep Technology ASA, Vice President North Europe at Sun Microsystems, various position within IBM Sweden and global

OTHER ASSIGNMENTS
Board Member at NetInsight AB, Chairman of the Board at Aditro Group AB, Ewalie AB and Qmatic AB

SHARES IN PRECISE BIOMETRICS
0

TORBJÖRN CLEMENTZ

Board member

BORN
1961

EDUCATION
Bachelor of Science in Business Administration and Economics at University of Växjö

CURRENT POSITION
CFO, One Nordic AB

BOARD MEMBER SINCE
2009

PREVIOUS ASSIGNMENTS
CFO and deputy CEO, BE Group AB

OTHER ASSIGNMENTS
Board member in subsidiaries within One Nordic Group, Sport och Rehabkliniken i Ängelholm AB and Euro Football Partners AB

SHARES IN PRECISE BIOMETRICS
59,555

BOARD OF DIRECTORS

MATTS LILJA

Board member

BORN

1965

EDUCATION

Technical college graduate

CURRENT POSITION

CEO Ammeraal Beltech AB

BOARD MEMBER SINCE

2013

PREVIOUS ASSIGNMENTS

CEO OPAX AB and OPAX AS, Business Developer at SAAB

Security, CEO ISG Systems AB

OTHER ASSIGNMENTS

SHARES IN PRECISE BIOMETRICS

25,000

MATS LINDOFF

Board member

BORN

1961

EDUCATION

M.Sc. Electronic Engineering Lunds Institute of

Technology, Lund

CURRENT POSITION

Consultant in own company Lindoff Technology AB and

CTO Zenterio AB

BOARD MEMBER SINCE

2014

PREVIOUS ASSIGNMENTS

CTO Sony Ericsson, CEO C Technologies, VP Product

Development Mobile Phones Ericsson

OTHER ASSIGNMENTS

Board member Enea AB, Combiab AB and SP Devices AB

SHARES IN PRECISE BIOMETRICS

MANAGEMENT TEAM

HÅKAN PERSSON

CEO

BORN

1961

EDUCATION

Bachelor degree in Business Administration, University of Lund

EMPLOYED SINCE

2013

PREVIOUS ASSIGNMENTS

CEO Scalado AB, Interim Manager Enea, Country Manager IBM Software Group, Director System Sales IBM Rational, President Market Division EMEA Telelogic AB

SHARES IN PRECISE BIOMETRICS

1,000,000 share warrants

BO-GÖRAN JAXELIUS

CFO

BORN

1971

EMPLOYED SINCE

2014

PREVIOUS ASSIGNMENTS

Management positions as CEO, CFO and Director of Finance at Scalado AB, Zi Corporation and Decuma AB. Auditor with Deloitte

EDUCATION

Bachelor of Science in Business Administration and Economics, Lund

SHARES IN PRECISE BIOMETRICS

10,000 shares

MANAGEMENT TEAM | 101

PATRIK LINDEBERG

COO
BORN
1973
EMPLOYED SINCE
2007
PREVIOUS ASSIGNMENTS
VP R&D and CTO at Precise Biometrics. Manager Technical Account Management at Teleca and Obigo
EDUCATION
Master of Science E.E. at Lund University
SHARES IN PRECISE BIOMETRICS
150,000 share warrants

RUTGER PETERSSON

R&D Director
BORN
1975
EMPLOYED SINCE
2007
PREVIOUS ASSIGNMENTS
Various technical positions at Precise Biometrics, Ericsson and Teleca Mobile, primarily with project and program management
EDUCATION
Masters degree in Computer Science, Växjö University
SHARES IN PRECISE BIOMETRICS
150,000 share warrants

DANIEL EDLUND

Corporate Marketing Manager
BORN
1979
EMPLOYED SINCE
2014
PREVIOUS ASSIGNMENTS
Management positions within the ICT industry as Director of communications, Sales & marketing manager and Account management at Huawei Technologies Nordics, Axicom Cohn & Wolfe, and Porter Novelli
EDUCATION
Master of Science in Business Administration, School of Business and Commercial Law, Gothenburg University
SHARES IN PRECISE BIOMETRICS
25,000 shares and 200,000 share warrants

ANNUAL GENERAL MEETING

The Annual General Meeting for shareholders in Precise Biometrics AB (publ) will be held on Tuesday 27 April 2015 at 16:00, at Precise Biometrics' headquarters in Lund, Scheelevägen 30.

Shareholders who wish to participate in the AGM must be registered in the share register kept by Euroclear Sweden AB on 21 April 2015, and also notify their participation to Precise Biometrics AB no later than Tuesday 21 April 2015 at 16.00.

Registration in the share register

Shareholders who have their shares registered through a bank or in the name of an authorized agent must in order to participate in the meeting temporarily register the shares in their own name in the share register kept by Euroclear Sweden AB no later than Tuesday 21 April 2015.

Shareholders must inform the administrator in good time.

Registering to attend the AGM

Shareholders must notify their intention to attend the AGM no later than 21 April 2015 at 16.00. Registration can be done by mail or email:

Email: [email protected]

Mail: Precise Biometrics AB, "Årsstämma", Box 798, SE-220 07 Lund

Applications must include:

Name
Social security number/Corp ID
Address
Phone number
Number of shares
Assistants, if appropriate

Representatives

Shareholders who are represented by an agent must issue a power of attorney to the agent. If powers of attorney are issued by legal entities, a copy of the registration certificate (or if such a document does not exist, a similar document) for the legal entity must be enclosed. The document must not be older than one year. These documents must be forwarded to Precise Biometrics no later than Tuesday 21 April 2015.

Shareholder contact

Håkan Persson, CEO of Precise Biometrics

Telephone: 046 31 11 05

E-post: [email protected]

FINANCIAL CALENDAR | 103

FINANCIAL CALENDAR

Interim report, first quarter
May 12, 2015.

Interim report, second quarter
August 18, 2015.

Interim report, third quarter
November 10, 2015.

Year-end report
February 16, 2016.

Financial reports are published in Swedish and English at precisebiometrics.com

CONTACT

Precise Biometrics AB
Box 798
220 07 Lund
Sweden
Phone: +46 46-311100

Investor contact
Håkan Persson, CEO
Phone: +46 46-311105
E-mail: [email protected]

precisebiometrics.com

PRECiSE™
BIOMETRICS

AI assistant

Precise Biometrics — Annual Report 2014

3189_10-k_2020-09-11_cc34c985-fd3a-456b-b5da-89f31c286abc.pdf

ANNUAL REPORT 2014

CONVENIENT AND SECURE IDENTITY AUTHENTICATION FOR EVERYONE, EVERYWHERE

CONTENT

IMPORTANT EVENTS DURING THE YEAR

Net annual sales...

Profit/loss for the year...

Profit/loss per share...

Liquid assets...

Precise BioMatch™ Mobile integrated into the world's first mobile phone...

Precise BioMatch Mobile integrated into another mobile phone...

A partnership agreement with Synaptics, one of the leading sensor manufacturers

A leading global energy company chose Tactivo™...

The US Department of Defense bought 1100 Tactivo...

The Company won an order for 2000 Tactivo from a South American insurance company...

Five new models of Tactivo launched...

The Company implemented changes in the focus of our operations to achieve profitability in 2015 ...

PRECISE BIOMETRICS IN ONE MINUTE

THE COMPANY'S OFFERING

BUSINESS AREAS

Fingerprint Technology

Mobile Smart Card Solutions

Desktop & Physical Access Solutions

BUSINESS MODEL

CUSTOMERS

ORGANIZATION

CEO COMMENTS

BREAKTHROUGH FOR FINGERPRINT TECHNOLOGY IN THE MOBILE MARKET

We receive positive signals from several of the major vendors in the market

GREATER PRESENCE IN ASIA

VISION AND OBJECTIVES

VISION

BUSINESS CONCEPT

OBJECTIVES

STRATEGY

VALUES

MISSION

INNOVATIVE PRODUCTS FOR CONVENIENT AND SECURE IDENTIFICATION

PRECISE BIOMATCH MOBILE SIMPLIFIES OUR DAILY LIVES

HIGH LEVEL OF MOBILE SECURITY WITH SMART CARDS AND TACTIVO

MARKET

FINGERPRINT TECHNOLOGY

Goal

Strategy

Business model and customers

Market development

During the year two smartphones containing Precise Biometrics' fingerprint algorithm Precise BioMatch Mobile were launched

Product development

MOBILE SMART CARD SOLUTIONS

Goal

Strategy

Business model and customers

Market development

During the year one of the leading global energy companies and a South American insurance company chose to implement mobile solutions with Tactivo

Product development

DESKTOP & PHYSICAL ACCESS SOLUTIONS

Goals

Strategy

Business model and customers

Market development

Product development

SUSTAINABILITY

A HEALTHY BUSINESS FOR SUSTAINABILITY

Minimizing the environmental impact

Secure identity and preservation of integrity

The Company's Code of Conduct

Good employer

THE SHARE & SHAREHOLDERS

HISTORY

SHARE PRICE DEVELOPMENT

OWNERSHIP STRUCTURE

OPTION PROGRAM

SHAREHOLDER INFORMATION

SHARE CAPITAL DEVELOPMENT

SHAREHOLDER STATISTICS

SHAREHOLDER REGISTER

ALLOCATION OF SHAREHOLDERS

ALLOCATION OF SHARES

Precise Biometrics Annual Report 2014