A French Société Anonyme with a Management Board and A
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A French société anonyme with a Management Board and a Supervisory Board and with share capital of EUR 17,647,664.80 Registered offices: rue de la Carrière de Bachasson – CS 70025 – Arteparc Bachasson – 13590 Meyreuil, France Registered on the Trade and Companies Registry of Aix-en-Provence, France under no 399 275 395 REGISTRATION DOCUMENT ANNUAL REPORT MANAGEMENT REPORT REPORT ON CORPORATE GOVERNANCE The English version of this Registration Document is a free translation of the official “Document de Référence” prepared in French and filed with the Autorité des marchés financiers on April 10, 2018, in accordance with Article 212-13 of its General Regulation. The original French version may be used in support of a financial transaction if it is combined with a Securities Note approved by the AMF. This document was prepared by the issuer, and its signatories assume responsibility for the information contained therein. Hard copies of this document are available free of charge at the headquarters of the Company, and digital copies can be downloaded from both the AMF’s website (www.amf-france.org) and the Company’s website (www.insidesecure.com). All possible care has been taken to ensure that the translation is an accurate representation of the original. However, in all matters of interpretation of information, views or opinions expressed therein, the original version of the document in French shall prevail. EUI-1201989684v2 TABLE OF CONTENTS 1. PERSONS RESPONSIBLE ................................................................................................... 9 1.1 Person responsible for the Registration Document ................................................................................................... 9 1.2 Statement from the person responsible for the Registration Document ...................................................................... 9 1.3 Person responsible for the financial information....................................................................................................... 9 2. STATUTORY AUDITORS .................................................................................................. 10 2.1 Permanent statutory auditors ................................................................................................................................. 10 2.2 Alternate statutory auditors ................................................................................................................................... 10 3. SELECTED FINANCIAL INFORMATION ...................................................................... 11 4. RISK FACTORS .................................................................................................................. 14 4.1 Risks associated with the business ......................................................................................................................... 14 4.2 Risks associated with intellectual property ............................................................................................................. 19 4.3 Risks associated with the Group’s organizational structure ..................................................................................... 21 4.4 Legal Risks .......................................................................................................................................................... 25 4.5 Financial Risks ..................................................................................................................................................... 25 4.6 Changes in legislation and tax and regulatory policies ............................................................................................ 30 4.7 Insurance and risk coverage .................................................................................................................................. 30 5. INFORMATION ABOUT THE COMPANY ...................................................................... 31 5.1 History and Development of the Company ............................................................................................................ 31 5.2 Investments .......................................................................................................................................................... 33 6. BUSINESS OVERVIEW ...................................................................................................... 35 6.1 General overview ................................................................................................................................................. 35 6.2 Main markets........................................................................................................................................................ 39 6.3 Technologies and products .................................................................................................................................... 43 6.4 Customers ............................................................................................................................................................ 48 6.5 Competition.......................................................................................................................................................... 48 6.6 Organizational structure ........................................................................................................................................ 49 6.7 Geographic distribution......................................................................................................................................... 50 6.8 Regulations applicable to the Group’s cryptology business..................................................................................... 50 6.9 Degree of the issuer’s dependence on patents or licenses, industrial, sales, or financial contracts or new manufacturing methods ......................................................................................................................................... 51 7. ORGANIZATIONAL CHART ............................................................................................ 52 7.1 Overview of the Group ......................................................................................................................................... 52 7.2 Business of subsidiaries and of branches and representation offices ........................................................................ 53 8. PROPERTY, PLANTS AND EQUIPMENT ....................................................................... 55 8.1 Real estate property .............................................................................................................................................. 55 8.2 Corporate social responsibility .............................................................................................................................. 55 9. REVIEW OF THE COMPANY’S INCOME AND FINANCIAL POSITION ................... 61 9.1 General presentation of the Group’s results............................................................................................................ 61 9.2 Financial information and consolidated income of the Group ................................................................................. 63 9.3 Qualitative and quantitative assessment of the market risks the Group faces ........................................................... 66 2 10. CASH AND EQUITY POSITION ....................................................................................... 67 10.1 Equity and share capital ........................................................................................................................................ 67 10.2 Cash flow ............................................................................................................................................................. 68 10.3 Information on borrowing conditions and the structure of financing ....................................................................... 70 10.4 Restriction on the use of capital ............................................................................................................................. 71 10.5 Future necessary sources of financing .................................................................................................................... 71 11. RESEARCH AND DEVELOPMENT, PATENTS, AND LICENSES ................................ 72 11.1 Research and development .................................................................................................................................... 72 11.2 Intellectual property .............................................................................................................................................. 73 12. TRENDS ............................................................................................................................... 76 13. PROFIT FORECASTS OR ESTIMATES........................................................................... 77 14. GOVERNING, MANAGEMENT AND SUPERVISORY BOARDS AND SENIOR MANAGEMENT .................................................................................................................. 78 14.1 Members of the Management Board and members of the Supervisory Board .......................................................... 78 14.2 Conflicts of interest at the level of the governing and senior management bodies .................................................... 86 15. COMPENSATION AND BENEFITS