Techstep ASA — Interim / Quarterly Report 2013

Feb 12, 2014

Quarterly Report Q4 2013

Content

• 1. Q4 Summary
• 1. CEO update
• 1. Business focus
• 1. Highlights / Milestones
• 1. Market Outlook
• 1. Result of Operations
• 1. Cash flow
• 1. Financial statements
• 1. Notes
• 1. Financial Calendar

Positive EBITDA and cash flow

consecutive quarters of year-over-year growth

23 Million

With 23 million users Birdstep is the largest solution provider in the market for operator initiated offload

Successful completion of phase one of the Hewlett Packard contract Several expansion orders on different continents proves

customer satisfaction

Birdstep Technology ASA Interim report

OCTOBER - DECEMBER

• Revenue was NOK 19.1 (13.4) million, representing an increase of 42.9% over the same period, fuelled by the rapid growth of Smart Mobile Data.

• EBITDA ended at NOK 1.0 (-5.1) million, representing an improvement of NOK 6.1 million over the same period last year.

• Continuing operating earnings per share amounted to NOK -0.02 (-0.20).

• Total net cash flow amounted to NOK 20.6 (8.0) million.

• Net cash from operating activities was NOK 4.1 (-14.6) million.

• Cash balance was NOK 22.3 (16.9) million.

• Successful Private placement completed amounting to NOK 19.7 million (net of transaction cost).

JANUARY – DECEMBER

• Revenue was NOK 71.2 (44.1) million, representing an increase of 61.3% over the same period last year.

• EBITDA ended at NOK 0.2 (-25.0) million, representing an improvement of NOK 25.2 million over the same period last year.

• Continuing operating earnings per share amounted to NOK 0.09 (-0.57).

• Total net cash flow amounted to NOK 5.4 (-17.9) million.

• Net cash from operating was NOK -6.8 (-32.5) million.

The CEO update

With a positive EBITDA, a positive cash flow and 19.1 MNOK revenue we delivered our sixth consecutive quarter of year-over-year growth. Our performance reflects our continued ability to execute our strategy in a dynamic market. The full

year FY13 EBITDA was NOK 0.2 million compared to NOK -25.0 million for the previous year.

In the quarter the company carried out a private placement of new shares. The net proceeds from the Private Placement will primarily be used to strengthen the company's financial flexibility and to invest in the necessary growth needed to meet the market demands in 2014.

Business performance

The results for the fourth quarter were driven by a strong performance by both our Smart Mobile Data and Secure Mobility businesses. The numbers were positively impacted by a successful completion of phase one of the Hewlett Packard contract. HP's new range of notebooks, detachables and tablets for the Windows and Android operating systems now includes Birdstep's Smart Mobile Data family of products giving support to seamless and automatic connection to the new HP DataPass service. Phase two, commencing now, will continue to expand geographically. Turning to our second line of business, Secure Mobility proved our customer satisfaction with our solutions by closing several expansion orders during the quarter. The company also extended its footprint in new markets as a leading OEM (Original Equipment Manufacturer) in the development and deployment of public safety networks expanded our license agreement from the US to global coverage. While continuing to see strong demand from mobile operators and enterprise customers we are now also gaining traction among OEMs, MSO Cable TV Operators (Multiple System Operator) and MVNOs (Mobile Virtual Network Operator). It is evidence that our innovative and differentiated product portfolio is aligned with the needs of our customers as they look to build the most secure networks and provide its end users with EXPERIENCE CONTINUITY over cellular and Wi-Fi network services.

Market regions

In the US the focus of the operators has shifted from voice calls to data and video. Mobile broadband has become the most lucrative source of revenue for the wireless operators. The rapidly growing Asian market has become an increasingly important focus for our products and to meet the demands we have begun to invest in the region to drive sales with our ongoing trial customers. In Europe the environment remains challenging. According to Etno´s annual economic report Europe lags behind in the investments race; in the period 2011-2012 the overall CAPEX (Capital Expenditure) growth in the EU was negative (-0.2%), compared to strong growth in the US (+6.7%) and Japan (+7.5%). Still, despite the continuance of challenging market condition, European telecom operators in countries with stable economies are upholding their investment efforts to roll out fast networks; in 2012, the overall CAPEX reached 46bn EUR, of which 26bn EUR were channelled to fixed networks and 20bn EUR went into mobile. But even though Europe needs high levels of investment to deliver next generation networks to EU citizens and businesses, Birdstep has noticed positive signals from mobile operators in the region. A number of interesting ongoing discussions and negotiations make us believe that 2014 can be the year

when operators enter the early phase of increasing investment. As a natural next step they will start looking at Wi-Fi solutions to minimize the impact on capex.

New opportunities

Wi-Fi offload has grown up since it first emerged in the early smartphone era. Today, Wi-Fi is being used by operators in fundamentally 2 ways; first as a way of coping with proliferating mobile data traffic more cost effectively than just building out the cellular infrastructure. Secondly, some operators are using Wi-Fi to increase data consumption with new, innovative services. Birdstep has, the largest market share in the market today for operator initiated offload. But also more exciting business opportunities have opened up during the year. While traffic growth remains the single biggest driver of offload, the emphasis has changed subtly from offloading, or shunting, data to a Wi-Fi network, to selecting the best network, Wi-Fi or cellular, through intelligent application of real time analytics. We now use the term Intelligent Network Selection (INS) to describe the technologies applied in our platform to give operators the best of both worlds; being able to offer a high quality user experience while optimizing network costs. At Birdstep our intelligent network selection strategy is governed by the principle of "always smartest connected", emphasizing the growing focus on the user experience.

The key is to give operators full awareness of the user experience and the status of the Wi-Fi network to optimize control over a Smartphone's selection of using cellular or Wi-Fi, at the most granular level. This involves taking into account a growing range of contextual information to make network selection decisions, in addition to the basic parameters such as time, location, network congestion, and individual subscriber information. For such reasons operators with heterogeneous cellular and Wi-Fi networks, or HetNet's (Heterogeneous Networks), need a flexible added value solution with the agility to offer the best user experience while dealing cost effectively with the data explosion. With our new product portfolio approach we are well equipped to meet those needs.

In closing, our FY13 results reflect continued momentum in revenue and earnings growth. We have also gained market recognition; in the quarter Birdstep was nominated for "The Best Use Of Wi-Fi Award" by Telecom.com. We remain focused on growing top-line revenue, maintaining healthy margins and strengthening our business model. I am pleased with the team's efforts and commitment to gaining efficiencies throughout the company as we look to capture the many market opportunities ahead. I look forward to 2014 and reporting back to you again next quarter.

Lonnie Schilling Chief Executive Officer

Business Focus

Smart Mobile Data - the largest market share on the market today for operator initiated offload.

This quarter the company successfully completed phase one of the Hewlett Packard contract. HP's new range of notebooks, detachables and tablets for the Windows and Android operating now systems includes Birdstep's Smart Mobile Data family of products giving support to seamless and automatic connection to the new HP DataPass service. The solution was initially available on three different devices in Sweden, Denmark and United Kingdom. Phase two, commencing in Q1, will continue to expand geographically.

The commercial rollout of Sprint's data offload project with Birdstep's EasySmart solution again resulted in a high activation rate. Birdstep has, with a total of 23 million users for all its customers, the largest market share on the market today for operator initiated offload.

With several ongoing trials for its EasySmart solutions the company continues to gain traction in the US and ASIAPAC regions. To begin meeting the demands the company has started to invest in local sales organizations in both in the US and in Japan. Birdstep is also in the final stage of the commercial roaming initiative trial with a large North American operator, mentioned in the Q3 report. If successful,

the solution from Birdstep will save millions of US dollars in roaming fees for the operator.

Secure Mobility strengthens its position globally through extended license contracts while continuously increasing its visibility in the EMEA region

This quarter Birdstep closed several extension orders proving both its customers loyalty and the company´s product strategy. Among those were a SafeMove Crypto IP license extension contract with a US based OEM (Original Equipment Manufacturer) in the public safety industry, a SafeMove Mobile VPN license extension contract with a company operating in the UK utility industry and two SafeMove Mobile Router Toolkit license extension contracts; one with a US based OEM customer providing mobile asset management solutions and the other with a US based OEM in the aviation industry. The company also made progress in the domestic Finnish market by signing license extension contracts with an organization in the Finnish Government and with a local partner.

The company also extended its footprint in new markets as a leading OEM in the development and deployment of public safety networks expanded its licenses to global coverage. This contract originally covered the US.

To further strengthen its position the company also signed a new partner agreement with a procurement partner for NHS UK.

Highlights / Milestones

Milestones & Significant Events

• Positive EBITDA and positive cash flow.

• With 19.1 MNOK revenue Birdstep delivered its sixth consecutive quarter of year-over-year growth.

• The company carried out a private placement of new shares. The net proceeds from the Private Placement will primarily be used to strengthen the company's financial flexibility and to invest in the necessary growth needed to meet the market demands in 2014.

• The company extended its footprint in new markets as a leading OEM (Original Equipment Manufacturer) in the development and deployment of public safety networks expanded its licenses to global coverage.

• The company successfully completed phase one of the Hewlett Packard contract. Phase two, commencing now, will continue to expand geographically.

• The company received recognition and attention by attending several events during the quarter: Nordic Small Cell Integration, EHI Live, Broadband World Forum and Next Generation Workforce Management.

Market Outlook

Birdstep has in 2013 continuously stated that mass market proliferation of mobile applications and devices has led to increased data traffic flowing across wireless broadband networks. With smartphone adoption and bandwidth intensive services such as streaming video continuing to rise, existing cellular networks are becoming increasingly constrained. Mobile networks in North America were first to experience this and as a result the early adaption of Wi-Fi by mobile operators to augment their cellular networks.

Wi-Fi is uniquely positioned to add capacity to an operators service reach and operators are now using Wi-Fi as an increasingly critical tool to meet capacity demands. In addition to service reach and capacity gains, operators with more mature Wi-Fi services are beginning to focus much more on delivering a better customer experience and consistency in the usage experience when a customer service switches between cellular to Wi-Fi and back to cellular again. To provide a better end user experience, Birdstep's operator customers are using our Intelligent Network Selection and Always Smartest Connected technologies to provide ubiquitous mobile broadband access across heterogeneous cellular and Wi-Fi networks, or HetNet's (Heterogeneous Networks).

The amount of traffic carried over mobile networks is growing exponentially and is being driven by many factors. Chief among them is the tremendous growth in rich media applications on mobile devices, such as streaming video and music, video conferencing and social networking. Given the constraints on the operators licensed spectrum cellular networks, Wi-Fi is often used to offload this type of traffic in order to free up cellular resources, often for better quality telephony voice services. As users appetite for data intensive applications continue to exceed cellular capacity, the more critical Wi-Fi has become in meeting this demand.

In fact, the exponential growth of data traffic on the cellular infrastructure over the last several years has been matched or even surpassed by a phenomenal increase in Wi-Fi traffic originating from Wi-Fi enabled smartphones and tablets.

Wi-Fi is used on every smartphone built today and its use is broadening across the entire realm of consumer electronic devices. According to the Wireless Broadband Alliance, figures for 2012 put the total number of public Wi-Fi hotspots worldwide at 5.2 million and that number is forecasted to take a huge leap to 10.5 million by 2018.

In addition to service reach and traffic growth, subscriber expectations are also changing. They expect ubiquitous access to applications and content whether they are at home, at work or on the go. Increasingly, they expect the experience to be seamless, transparent and consistent whether on cellular or Wi-Fi. At Birdstep we call this EXPERIENCE CONTINUITY, or EXO, enabled through our Smart Mobile Data family of products.

The ability to exploit Wi-Fi networks in addition to cellular networks while providing an EXPERIENCE CONTINUITY has clear appeal for MNO's (Mobile Network Operator), MVNO's (Mobile Virtual Network Operator) and MSO's (Multiple System Operator) alike. Mobile operators are starting to view Wi-Fi as a wireless technology that can augment their macro and small cell networks with affordable coverage and capacity, and with nearly universal device support. In particular, operators can leverage Wi-Fi to:

• offer a fast, reliable and cost-effective wireless broadband access

• offload 3G/4G mobile data to relieve constrained cellular networks

• offer a seamless Wi-Fi and cellular service as part of a HetNet access/service strategy, or

• offer a more complete bundled onload experience and solution

Therefore, MNO's and MVNO's realize that they need a combined Wi-Fi and cellular strategy to deliver the best data services and mobile user experience at the highest margins. Additionally, cable MSO's are also looking to Wi-Fi to enable new revenues, extend service reach, and offer their TV-Everywhere services in more ways to more devices and improve brand loyalty.

Another area where Birdstep continues to innovate and deliver value to our customers is with our EasyAnalytics products. Big Data has become a fashionable buzzword for a technology that has the potential to transform mobile operators and MSO's around the world. Big Data and analytics can be used to gain insights into customers, products, markets and improve operational efficiencies. The introduction of Big Data and analytics allows OTT's (Over The Top players), MNO's and device OEM's to identify profitable customers and ensure that investment is directed at the most profitable customer segments. While the growth of Big Data is posing challenges for all operators, Birdstep's customers are well positioned to use our capable EasyAnalytics real-time analytics to benefit from Big Data.

Our customers, and the broader telecom industry, are at the early stage of adopting real-time analytics to better understand their networks and, more importantly, their customers.

MNO's, MVNO's and MSO's across the globe are expected to adopt real-time analytics solutions that are able to provide insights, per defined KPIs (Key Performance Indicators) to assist them in optimizing their network performance, better understand their customers, what's important to their customers and to create more personalized and higher margin services.

It's the combination of these trends that continue to create and grow opportunities for Birdstep and our EXPERIENCE CONTINUITY strategy.

Result of operations

Fourth quarter

Fourth quarter revenue was NOK 19.1 (13.4) million, which represents an increase in revenue of 42.9% over the same quarter last year. The increase in revenue, compared to the same quarter last year is due to growing usage of our product Easy Smart, specifically in North America.

Salaries and wages were NOK 11.7 (11.4) million. The number of employees as at 31.12.2013 was 61 (61).

Other operating expenses for the quarter were NOK 5.3 (6.0) million.

The quarterly Other financial items, net of NOK 0.2 million consists of currency gains from re-evaluating all claims and debts in foreign currency. The quarterly Other financial items, net from the same quarter last year, was NOK -1.4 million.

As a result of the above factors, Income (Loss) from continuing operations before taxes NOK -1.2 (-17.7) million was recorded in the quarter.

EBITDA ended at NOK 1.0 (-5.1) million which represents a decreased loss of NOK 6.1 million compared with the same period last year.

Twelve Months

Revenue for the year was NOK 71.2 (44.1) million and represents an increase in revenue of 61.3% over the same period last year. The increasing revenue trend for Easy Smart started to take effect in Q4 as the newer product line was rolled out in the market.

Salaries and wages were NOK 45.0 (40.8) million. The increase in salaries and wages is due to a decrease in capitalized R&D.

Other operating expenses were NOK 22.0 (23.7) million.

As a result of the above factors, Loss from continuing operations, before taxes NOK -8.1 (-43.7) million was recorded for the period.

EBITDA ended at NOK 0.2 (-25.0) million which represents a decreased loss of NOK 25.2 million compared to the same period last year.

	For the three months ended		For the full year
	31.12.2013 31.12.2012		2013	2012
OPERATING REVENUES	19 149	13 403	71 185	44 131
Cost of Sales	(1 157)	(1 079)	(4 047)	(4 603)
TOTAL OPERATING EXPENSES	(17 014)	(17 392)	(66 977)	(64 532)
EBITDA	979	(5 068)	161	(25 004)
Depreciation and amortization	(2 415)	(4 133)	(8 576)	(10 240)
Write down and impairment of intangible assets	-	(6 900)	-	(6 900)
EBIT	(1 436)	(16 102)	(8 416)	(42 143)

Cash flow

Fourth quarter

Net cash balance increased with NOK 20.6 million to NOK 22.3 million. The private placement completed October 15th increased cash by NOK 19.7 million (net of transaction costs). Net cash flow excluding the new issue was positive NOK 0.9 million for the fourth quarter. Net cash from operating activities was NOK 4.1 million compared to NOK -14.6 million in the same period last year.

Twelve Months

Net Cash flow for the whole year was NOK 5.4 million compared to NOK -17.9 million in the same period last year. Net cash from operating activities was NOK -6.8 million for the whole year, compared to NOK -32.5 million in the same period last year.

Financial statements

Condensed Consolidated Statements of Operations

(In thousands of NOK, except share and per share data)

	For the three		For the full
	months ended		year
	31.12.2013 31.12.2012		2013	2012
OPERATING REVENUES	19 149	13 403	71 185	44 131
Cost of Sales	(1 157)	(1 079)	(4 047)	(4 603)
Salaries and wages	(11 721)	(11 376)	(44 959)	(40 829)
Share-based compensation	-	-	-	(16)
Depreciation and amortization	(2 415)	(4 133)	(8 576)	(10 240)
Write down and impairment of intangible assets	-	(6 900)	-	(6 900)
Other operating expenses	(5 292)	(6 016)	(22 018)	(23 687)
TOTAL OPERATING EXPENSES	(20 585)	(29 505)	(79 600)	(86 275)
Operating income (loss)	(1 436)	(16 102)	(8 416)	(42 143)
OTHER INCOME (EXPENSE)
Interest income, net	73	(142)	213	(52)
Other financial items, net	167	(1 445)	67	(1 533)
OTHER INCOME, NET	240	(1 587)	281	(1 585)
INCOME(LOSS) FROM CONTINUING OPERATIONS
OPERATIONS BEFORE TAXES	(1 196)	(17 689)	(8 135)	(43 729)
Income taxes	(701)	(726)	(701)	(726)
INCOME(LOSS) FROM CONTINUING OPERATIONS	(1 897)	(18 415)	(8 836)	(44 455)
Gain/loss on disposal of discontinued operations	-	-	-	4 152
NET INCOME(LOSS)	(1 897)	(18 415)	(8 836)	(40 303)
Earnings and diluted earnings per share (NOK)
Continuing operations	(0,02)	(0,20)	(0,09)	(0,57)
Discontinued operations				0,06
Total	(0,02)	(0,20)	(0,09)	(0,51)

Condensed Consolidation Statements of Comprehensive Income

(In thousands of NOK, except share and per share date)

	For the three		For the full
	months ended		year
	31.12.2013	31.12.2012	2013	2012
Net income (loss) for the period	(1 897)	(18 415)	(8 836)	(40 303)
OTHER COMPREHENSIVE INCOME
Currency translation effect	1 222	1 291	1 344	(999)
TOTAL COMPREHENSIVE INCOME	(675)	(17 124)	(7 492)	(41 301)
Attributable to:
Equity holder of the parent company	(675)	(17 124)	(7 492)	(41 301)
Minority interests	-	-	-	-
TOTAL COMPREHENSIVE INCOME	(675)	(17 124)	(7 492)	(41 301)

Condensed Consolidation Balance Sheets

(In thousands of NOK, except share and per share date)

	As of
	31.12.2013 31.12.2012
Non-current assets:
Intangible assets	50 111	50 734
Property and equipment	256	62
Total non-current assets	50 367	50 796
Current assets:
Accounts receivable	14 488	11 840
Other current assets	2 278	1 275
Cash & cash equivalents	22 331	16 921
Total current assets	39 096	30 036
Total assets	89 463	80 832
Shareholders' equity:
Share capital	10 012	9 198
Share premium fund	36 037	17 165
Other equity, including translation reserves	24 767	32 259
Total shareholders' equity	70 816	58 622
Non-current liabilities:
Deferred tax liabilities	175	158
Other liabilities	3 285	3 229
Total non-current liabilities	3 460	3 387
Current liabilities:
Accounts payable	3 126	4 138
Deferred revenue	1 405	2 248
Accrued expenses and other liabilities	10 656	12 437
Total current liabilities	15 187	18 823
Total Liabilities and Shareholders' Equity	89 463	80 832

Condensed Consolidated Statements of Cash Flows

(In thousands of NOK)

		For the three	For the full
		months ended	year
	31.12.2013	31.12.2012	2013	2012
Cash flow from operating activities
Net income (loss)	(1 196)	(17 689)	(8 135)	(39 577)
Depreciation and amortization	2 415	3 964	8 576	10 070
Write down and impairment of intangible assets	-	7 069	-	7 069
Share based compensation	-	-	-	16
Change in working capital	2 865	(7 971)	(7 213)	(10 092)
Net cash from operating activities	4 083	(14 626)	(6 772)	(32 512)
Cash flow from Finacial activities
New Issue	19 692	19 071	19 692	19 071
Net cash from finacial activities	19 692	19 071	19 692	19 071
Cash flows from investing activities
Purchase of fixed and intangible assets	(1 964)	(2 005)	(6 521)	(9 345)
Effect of foreigin exchange rate changes	-	-	-	-
Earnout from discontinued operations	-	4 152	-	4 152
Change in loan balance with affiliated company	-	-	-	-
Net cash provided by (used in) investing activities	(1 964)	2 147	(6 521)	(5 193)
Effect of foreign exchange rate changes	(1 247)	1 411	(990)	773
Net cash flow	20 564	8 003	5 410	(17 861)
Cash at beginning of period	1 767	8 918	16 921	34 782
Cash at end of period	22 331	16 921	22 331	16 921

Condensed Consolidated Statements of Changes in Shareholders' Equity

(In thousands of NOK, except share and per share date)

	Share capital	Share premium	Other paid equity	Other equity	Translation reserves	Total equity
Equity as at 31 December 2012	9 199	17 165	61 232	(40 304)	11 330	58 621
Net income (loss)	-	-	-	(8 836)	-	(8 836)
Other comprehensive income for the period
Foreign currency exchange	-	-	-	-	1 344	1 344
Total comprehensive income	-	-	-	(8 836)	1 344	(7 492)
Transactions with shareholders:
Issue of ordinary shares	813	18 879	-	-	-	19 692
Sale of treasury shares	-	-	-	-	-	-
Recognition of share-based payments	-	(6)	-	-	-	(6)
Total transactions with shareholders	813	18 873	-	-	-	19 686
Equity as at 31 Dec 2013	10 012	36 037	61 232	(49 140)	12 674	70 816

	Share capital	Share premium	Other paid equity	Other equity	Translation reserves	Total equity
Equity as at 31 December 2011	7 137	171	61 217	-	12 329	80 853
Net income (loss)	-	-	-	(40 304)	-	(40 304)
Other comprehensive income for the period
Foreign currency exchange	-	-	-	-	(999)	(999)
Total comprehensive income	-	-	-	(40 304)	(999)	(41 303)
Transactions with shareholders:
Issue of ordinary shares	2 062	16 994	-	-	-	19 056
Sale of treasury shares	-	-	-	-	-	-
Recognition of share-based payments	-	-	15	-	-	15
Total transactions with shareholders	2 062	16 994	15	-	-	19 071
Equity as at 31 Dec 2012	9 199	17 165	61 232	(40 304)	11 330	58 621

Notes

Accounting Policies

The accompanying consolidated financial statements are prepared under International Financial Reporting Standards (IFRS). Our fiscal year runs from January 1 to December 31.

The accompanying condensed consolidated statements of operations and cash flows cover the twelve months of 2013, and the related information on Birdstep included in these notes to the financial statements is unaudited. In the opinion of management, such interim statements include all adjustments, which consist only of the normally recurring adjustments necessary for a fair presentation of the consolidated results of operations, financial position and cash flows for each period presented. The interim consolidated results are not necessarily indicative of results for the full year.

The same accounting policies and methods of computation are followed in the interim financial statements as those of the most recent annual financial statements.

These interim financial statements are presented in Norwegian crowns (NOK). The functional currency of Birdstep's foreign operations is the currency of the country in which the operations are conducted. The accounts of Birdstep are translated into the reporting currency, NOK, using exchange rates in effect at period-end for assets and liabilities, and at average exchange rates during the period for the results of operations.

EBITDA is equivalent to operating income (loss) excluding both discontinued operations and non-cash charges, such as depreciation and amortization.

Income per share is calculated by dividing net income available to common shareholders for the period by the weighted average number of common shares outstanding during the period.

As of December 31, 2013, the Company has 100.121.627 shares issued and 100.100.572 shares outstanding, the difference of 21.055 representing treasury shares.

Changes of historical numbers

The previous quarterly reports in Q1-Q3 2013 have included the following presentation / errors regarding 2012 historical numbers. The correct 2012 numbers are shown in this report.

Earn out

The earn-out provision from the Orbyte transaction received August 1st 2012 was identified as a financial item and shown in "Other financial item, net". This has been reclassified and is now showed in "Gain/loss on disposal of discontinued operations". Due to this change Earnings per share has been affected and is adjusted accordingly.

Depreciation and amortization

"Write down and impairment of intangible assets" has been extracted from "Depreciation and amortization" and is now shown in a separate line. The change is implemented for Q4 2012 and the full year 2012.

Cashflow

2012 year´s figures Net income (loss) have changed and are now based on Net income (loss) before taxes.

The text "change in restricted cash balances" under cash flow from investing activities is changed to "earn out from discontinued operations" as the amount is related to the earn out from the Orbyte transaction.

Segment Reporting

The Company is divided into two separate operating segments (Smart Mobile Data and Secure Mobility).

	months ended	For the three	For the full Year
MNOK	31.12.2013	31.12.2012	2013	2012
Smart Mobile Data
Operating Revenues	12 845	8 389	51 812	28 413
Operating income (loss)	(1 784)	(6 912)	(5 884)	(25 625)
Secure Mobility
Operating Revenues	6 303	5 014	19 372	15 718
Operating income (loss)	348	* (9 189)	(2 532)	* (16 518)

* In Q4 2012 a write down of intangible assets of NOK 6.9 million was made in Secure Mobility

Risks

This report contains statements regarding the future in connection with the company's growth expectations, general and specific market outlook and objectives. All statements about the future are subject to inherent risks and uncertainties, and many factors can lead to actual profits and developments deviating substantially from that which has been expressed or implied in such statements.

Birdstep Technology is exposed to various forms of market, operational and financial risk.

Financial instruments that potentially subject Birdstep to concentrations of credit risk consist primarily of cash and accounts receivable. Birdstep performs ongoing evaluations of customers' financial condition to determine if any reserve for potential uncollectible amounts is needed. As of December 31, 2013, no potential uncollectible amounts had been made.

The company's various risks have been described in the Annual Report/ Prospectus in further detail and no other risks has been identified.

Financial Calendar 2014

Preliminary financial calendar, with reservations for changes:

Earnings Reports 29 Apr 2014 Q1 2014 - Interim financial report

1. Aug 2014 Q2 2014 - Interim financial report

2. Nov 2014 Q3 2014 - Interim financial report

Other 29. Apr 2014 at 14.00 (Oslo) Annual General Meeting

Birdstep Technology ASA invites shareholders, investors, media and other stakeholders to a phone conference following the announcement of the quarterly earnings reports.

Time and call-in details or place of the events above will be communicated at a later stage via OSE, Oslo Stock Exchange and www.birdstep.com.

Investor presentations

Birdstep Technology is hosting investor and analyst meetings in Oslo and London to present its Q4 result, industry outlook and roadmap. The company welcomes private and institutional investors and buyand sell-side analysts.

Dates and times in Oslo:

February 12, 2014, 12.00 – 17.00 CET February 13, 2014, 09.00 – 17.00 CET February 14, 2104, 09.00 – 12.00 CET

Location: Hotel Radisson Blu Plaza, Sonja Henies Plass 3, Oslo

Dates and times in London:

March 5, 2014, 12.00 – 17.00 CET Investor meetings March 6, 2014, 09.00 – 17.00 CET Investor meetings March 7, 2014, 09.00 – 12.00 CET Investor meetings

Location in London: One Alfred Place, 1 Alfred Place, London

For more information, please view invitationson on www.birdstep.com or contact: Marie-Louise Nilsson-Kanon VP Market Communication Email: mani@birdstep.com