Techstep ASA — Interim / Quarterly Report 2015

Nov 4, 2015

QUARTERLY REPORT Q3 2015.

CONTENT

BIRDSTEP TECHNOLOGY ASA INTERIM REPORT	3
CEO UPDATE	4
MARKET OUTLOOK Q3 2015	6
RESULTS OF OPERATIONS	8
CASH FLOW	9
COST REDUCTION	10
FINANCIAL STATEMENTS	11
NOTES	16
DISCONTINUED OPERATIONS	18
RISKS	20
FINANCIAL CALENDAR 2015	21

BIRDSTEP TECHNOLOGY ASA INTERIM REPORT.

JULY - SEPTEMBER 2015

• > Revenue was NOK 12.5 (12.0) million, representing an increase of 4.2 % over the same period last year.
• > EBITDA ended at NOK -1.6 (-1.2) million, representing an increased loss of NOK 0.4 million over the same period last year.
• > Write-down of goodwill were -40,2 (0,0)
• > Continuing operating earnings per share amounted to NOK -0.42 (-0.01).
• > Total net cash flow amounted to NOK -7.7 (1.7) million.
• > Cash balance was NOK 13.2 (12.4) million.

JANUARY - SEPTEMBER 2015

• > Revenue was NOK 39.0 (39.4) million, representing a decrease of 1.1 % over the same period last year.
• > EBITDA ended at NOK -11.2 (-4.9) million, representing an increased loss of NOK 6.3 million over the same period last year.
• > Write-down of goodwill were -40,2 (0,0)
• > Continuing operating earnings per share amounted to NOK -0.54 (-0.08).
• > Total net cash flow amounted to NOK -3.5 (-5.5) million.
• > Cash balance was NOK 13.2 (12.4) million.

SIGNIFICANT EVENTS AFTER THE PERIOD

Birdstep's largest customer by revenue has reported a cost cutting initiative to reduce expenses by as much as \$2.5 billion during the next six months. As a result Birdstep's customer, Sprint, is eliminating their Sprint Connection Optimizer branded product, which is based upon Birdstep's SmartSELECT product. The contract between Sprint and Birdstep remains and Sprint will continue to use Birdstep products. Additionally, Birdstep is working to position new products into the Sprint network. Birdstep revenue from the

SmartSELECT product to Sprint expects to continue through Q4 2015. For the period of January to September 2015, the revenue from the SmartSELECT product to Sprint, was 33.0 MNOK.

CEO UPDATE.

THIS QUARTER CLOSED WITH A REVENUE OF NOK 12.5 MILLION. THE 4.2 % INCREASE OVER THE SAME PERIOD LAST YEAR WAS POSITIVELY IMPACTED BY CURRENCY EFFECT. OPEX (OPERATING EXPENSES) ENDED AT NOK 12.8 MILLION AND EBITDA AT NOK -1,6 MILLION. IN THE QUARTER WE REPORTED A NEGATIVE CASH FLOW AND OUR NET CASH BALANCE DECREASED TO NOK 13.2 MILLION. IF THE REVENUE GOAL ARE NOT MET, THE COMPANY WILL, IN LIGHT OF THE CURRENT CASH BALANCE, EXECUTE ON ITS PLAN TO RAISE MORE FUNDING.

Even though we have been successful in developing products to meet the needs in this evolving market I am dissatisfied and concerned that our business has been too dependent on one major customer. We have, despite continuous efforts, not been able to diversify the business risks. Moving forward we will intensify our actions to avoid a position where any change could have an impact on our financial condition and results of operations.

This quarter closed with a revenue of NOK 12.5 million, representing a growth with revenues of 4.2 % compared to the same period last year. In the quarter we reported a negative cash flow and our net cash balance decreased with NOK 7.7 million to NOK 13.2 million. The third quarter last year showed a cash balance increase of NOK 1.7 million. OPEX (Operating Expenses) ended at NOK 12.8 million compared to NOK 12.4 million for the same period last year. If the company´s revenue goal are not met, the company will execute on its plan to raise more funding.

Scalability of services as business demands increase or decrease is critical. The cost reduction program that was implemented and executed according to plan in the third quarter will therefore continue in the fourth quarter. The company expects the actions to bring development and sales capabilities in line with current and expected demand, to better balance operating expenses with revenue, to preserve cash and secure the businesses' global competitiveness over the longer term.

Despite the challenges, our activities and trials around the globe continue and we still see real potential in this growing market. Mobile operators are continuously on the search for the next service that can enable new revenue streams or reduce costs. Interestingly, operators have been sitting on top of one for years but have been slow to utilize it. I am talking about data monetization – the selling and delivery of user-specific intelligence to help businesses improve sales. Advertising, location-based services, location analytics, consumer engagement, international roaming, and Wi-Fi offload are all part of a complex fabric of new business models. The three factors – knowledge, location and context – can be uniquely combined over Wi-Fi to deliver highly targeted offers that are specific to a given user, time and place. This potential is now well recognized by analysts, with some predictions that Wi-Fi advertising in public places such as malls, arenas and airports will generate \$30 billion of incremental revenue by 2018. That is a huge opportunity and MNOs will be competing with OTT (Over The Top) service providers, pay TV operators and others for a decent slice of it.

Given that a lot of the advertising will be via the devices issued as part of mobile service contracts MNOs (Mobile Network Operators) should be well placed. But they need the data and this is where an intelligent network selection solution comes in.

I am excited that Birdstep in the quarter has further enhanced its latest generation SmartAnalytics platform to give operators greater control over the mobile data they collect. With the new version of SmartAnalytics operators can specify precise rules governing what data to collect, when to collect it and how frequently in order to provide maximized targeting and export of the relevant and most valuable data.

Another opportunity to expand the business case for existing Wi-Fi operators is Wi-Fi calling. This is an area we believe will grow and where Birdstep´s technology fits in well. Wi-Fi calling is nothing new; apps like Skype, Google Hangouts and WhatsApp make it easier for smartphone users to place calls over the Internet and mobile networks altogether. But as this option becomes increasingly more beneficial to users, carriers have shown increasing interest in adopting Wi-Fi calling themselves. Whether it's because they want to bolster their network coverage or improve user experience, some US carriers already provide the service, and now Google has jumped into the ring as well with its newly launched Project Fi service. We have elaborated further on the exciting Wi-Fi calling area in the Market Outlook section on page 6 in this report. In closing, despite the slowdown and the recent events we are determinded and committed to maximize the company´s potential, drive new business and bring value to our shareholders. I still believe that the company can weather the current downturn and I look forward to report back to you again next quarter.

Lonnie Schilling Chief Executive Officer

MARKET OUTLOOK Q3 2015.

VOICE OVER WI-FI OLD NEWS WITH NEW OPPORTUNITIES

The importance of Wi-Fi continues to grow around the world, with iPass estimating that the number of public hotspots will increase almost 8-fold over the next four years to cover 1 out of every 20 people on the planet.

Due to cost, coverage and bandwidth challenges of mobile cellular networks, Wi-Fi will be the key connectivity technology for home, business and public IoT (Internet of Things) deployments. As the users are

more or less expecting public Wi-Fi to be essentially free, businesses will look to new monetization models, like advertising, data analytics and advanced location-based services, to recover Wi-Fi network costs. We have recently spoken a lot about Birdstep´s Smart-Analytics solutions but we also see other opportunities to expand the business case for existing Wi-Fi operators. One of the areas we believe will expand further and where Birdstep´s technology is a match, is voice over Wi-Fi, also called Wi-Fi calling.

Voice over Wi-Fi has been a topic for a long time, but is it really old news? Maybe it is from a technical point of view but voice remains an important service despite the rising use of other methods of communication. Bad voice coverage does not promote the user experience. So even if mobile operators don't make much money on voice, voice coverage and quality is critical to reduce churn. With intensified competition when it comes to both quality and price Wi-Fi calling is something that can make a big difference for when consumers choose operator.

Source: MaRe operator survey March 2015

One indication of the importance is when Apple in September last year launched native Wi-Fi calling for iOS6. Right after that, T Mobile in the US jumped on it with 'Wi-Fi un-leashed' that includes the CellSpot home router and native Wi-Fi calling in all smartphone devices. This year mobile operators like Vodafone and EE in the UK and Republic Wireless and Scratch Wireless in US, launched their Wi-Fi-first services. Shortly thereafter, Google launched their Google Fi Wi-Fi-first service. It is assumed to be hard to generate profits from voice. Consumer cellular and wireline voice revenues are in decline and there are many over-the-top offerings, like Skype and Whats App, which generate little for the network provider. In 2014 enterprise telephony usage was actually up 13% and revenue increased 5%. However, there are several business cases emerging around enhanced voice services, which go beyond current offerings, particularly for the enterprise. Voice communication is very sensitive to packet loss and delay in the network. When a circuit switched alternative is available and Wi-Fi does not provide adequate quality, voice should travel on the mobile circuit switched network. We believe there is a need for a client based policy control on the handset supporting Wi-Fi calling. Birdstep offers solutions to meet the market demands in this area.

RESULTS OF OPERATIONS.

THIRD QUARTER 2015 NINE MONTHS 2015

Third quarter revenue was NOK 12.5 (12.0) million, representing an increase of 4.2 % over the same period last year. Currency effect impacted sales positively, mainly due to a continued strengthening of the USD towards the NOK compared to the same period last year. The majority of the revenues originated from our tier 1 customer in North America and accounted for 11.2 MNOK for the period.

Salaries and wages were NOK 9.0 (8.8) million. The number of employees as of 30.09.2015 was 32 (46).

Other operating expenses for the quarter were NOK 3.8 (3.6) million. The increase is mainly related to consultancy fees within sales and marketing function. The number of consultants as of 30.09.2015 was 6 (7), and the total number of full time equivalent (FTE) engaged in the company were 38 (53).

EBITDA ended at NOK -1.6 (-1.2) million which represents an increased loss of NOK 0.4 million compared to the same period last year.

Write-down of goodwill were -40.2 (0.0).

As a result of the above, Income (Loss) from continuing operations before taxes of NOK -42.8 (-1.4) million was recorded in the quarter.

Revenue for the first nine months was NOK 39.0 (39.4) million, representing a decrease of 1.1 % over the same period last year. Currency effect impacted sales positively, mainly due to a continued strengthening of the USD towards the NOK compared to the same period last year. The majority of the revenues originated from our tier 1 customer in North America and accounted for 36.1 MNOK for the period.

Salaries and wages were NOK 29.2 (29.1) million.

Other operating expenses for the period were NOK 17.8 (13.1) million. The increase is mainly related to consultancy fees within sales and marketing function.

EBITDA ended at NOK -11.2 (-4.9) million which represents an increased loss of NOK 6.3 million compared to the same period last year.

Write-down of goodwill were -40.2 (0.0).

As a result of the above, Income (Loss) from continuing operations before taxes of NOK -54.7 (-8.4) million was recorded compared to the same period last year.

CASH FLOW.

THIRD QUARTER 2015 NINE MONTHS 2015

Cash flow for the third quarter was negative and our net cash balance decreased by NOK 7.7 million to NOK 13.2 million. The third quarter last year showed a cash balance increase of NOK 1.7 million.

Net cash flow from operating activities for the quarter was NOK -7.3 million. Third quarter last year, net cash flow from operating activities was NOK 4.0 million.

Cash flow for the first nine months was negative and our net cash balance decreased by NOK 3.5 million to NOK 13.2 million. The first nine months last year showed a cash balance decrease of NOK 5.5 million.

Net cash flow from operating activities for the period was NOK -16.4 million. For the period last year, net cash flow from operating activities was NOK -1.2 million.

COST REDUCTION.

A cost reduction programme was implemented during the third quarter due to previous decrease in revenue and further delays in order intake, in order to better balance revenue with operating expenses and to preserve cash. The program has been executed according to plan, but the company will continue during the fourth quarter to take additional cost saving measures to further reduce the operating expenses.

Additional savings will include both headcount reductions as well as savings in external costs. In short term Birdstep expects to return to the 2014 year cost level for the full year of 2015.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

		For the three	For the nine	For the full
		months ended		months ended	year
	30.09.2015	30.09.2014	30.09.2015	30.09.2014	2014
OPERATING REVENUES	12.478	11.979	38.984	39.427	51.482
Cost of Sales	(1.333)	(825)	(3.119)	(2.130)	(2.766)
OPERATING EXPENSES
Salaries and wages	(8.991)	(8.824)	(29.244)	(29.091)	(37.346)
Other operating expenses	(3.767)	(3.560)	(17.788)	(13.058)	(22.376)
TOTAL OPERATING EXPENSES	(12.758)	(12.384)	(47.031)	(42.149)	(59.722)
Operating income loss before
depreciation and amortization (EBITDA)	(1.613)	(1.230)	(11.166)	(4.852)	(11.006)
Depreciation and amortization	(2.608)	(1.905)	(6.014)	(6.015)	- (7.700)
Write down & impairment of intangible assets Operating income loss after	(40.226)		(40.226)
depreciation and amortization (EBIT)	(44.448)	(3.135)	(57.406)	(10.867)	(18.706)
OTHER INCOME (EXPENSE)
Interest income, net	112	85	185	225	352
Other financial items, net	1.580	1.608	2.532	2.237	3.108
OTHER INCOME, NET	1.692	1.693	2.717	2.462	3.460
INCOME(LOSS) FROM CONTINUING
OPERATIONS BEFORE TAXES	(42.756)	(1.442)	(54.690)	(8.405)	(15.246)
Income taxes	(12)	-	(18)	-	(186)
INCOME(LOSS) FROM CONTINUING OPERATIONS	(42.768)	(1.442)	(54.718)	(8.405)	(15.432)
Profit from discontinued operations	-	933	12.863	2.574	5.596
NET INCOME(LOSS)	(42.768)	(509)	(41.845)	(5.831)	(9.836)
Earnings and diluted earnings per share
Continuing operations	(0,42)	(0,01)	(0,54)	(0,08)	(0,15)
Discontinued operations	-	0,01	0,13	0,03	0,06
Total	(0,42)	0,00	(0,41)	(0,06)	(0,09)

CONDENSED CONSOLIDATION STATEMENTS OF COMPREHENSIVE INCOME

		For the three months ended	For the nine months ended	For the full year
	30.09.2015	30.09.2014	30.09.2015	30.09.2014	2014
Net income (loss) for the period	(42.768)	(509)	(41.845)	(5.831)	(9.836)
OTHER COMPREHENSIVE INCOME
Currency translation effect	1,288	316	1,697	(647)	2.626
TOTAL COMPREHENSIVE INCOME	(41.480)	(193)	(40.147)	(6,477)	(7,210)
Attributable to:
Equity holder of the parent company	(41.480)	(193)	(40.147)	(6.477)	(7.210)
TOTAL COMPREHENSIVE INCOME	(41.480)	(193)	(40.147)	(6.477)	(7.210)

CONDENSED CONSOLIDATION BALANCE SHEETS

		As of	As of
	30.09.2015	30.09.2014	2014
NON-CURRENT ASSETS:
Intangible assets	7.116	46.353	48.246
Tangible assets	319	1.126	1.235
Other non-current assets	-	-	-
TOTAL NON-CURRENT ASSETS	7.435	47.480	49.481
CURRENT ASSETS: Accounts receivable	12.558	12.924	7.876
Other current assets	1.014	1.290	3.678
Restricted cash	-	-	-
Cash & cash equivalents	13.183	12.378	16.539
TOTAL CURRENT ASSETS	26.754	26.592	28.093
Assets of disposal group classified as held for sale		10.464	6.937
TOTAL ASSETS	34.189	84.536	84.511
SHAREHOLDERS' EQUITY:
Share capital	10.162	10.162	10.162
Share premium fund	38.272	38.272	38.272
Retained earnings, including translation reserves	(22.590 )	18.290	17.557
TOTAL SHAREHOLDERS' EQUITY	25.844	66.724	65.991
NON-CURRENT LIABILITIES
Deferred tax liabilities	192	175	178
Other liabilities	-	-	-
TOTAL NON-CURRENT LIABILITIES	192	175	178
CURRENT LIABILITIES
Accounts payable	1.205	3.101	3.110
Deferred revenue	323	832	488
Accrued expenses and other liabilities	6.626	6.106	9.406
TOTAL CURRENT LIABILITIES	8.154	10.040	13.004
Liabilities of disposal group classified as held for sale		7.597	5.338
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	34.189	84.536	84.511

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

		For the three	For the nine	For the full
		months ended		months ended	year
	30.09.2015	30.09.2014	30.09.2015	30.09.2014	2014
OPERATING ACTIVITIES
Income (loss) from continuing operations
before taxes	(42.756)	(1.442)	(54.690)	(8.368)	(15.246)
Income (loss) from discontinuing operations
before taxes	-	933	12.863	2.574	5.596
Depreciation and amortization	2.608	2.153	6.014	6.446	8.386
Write down & impairment of intangible assets	40.226		40.226
Profit on sales of discontinued operations	-	-	(12.863)	-	-
Change in receivables and payables	(7.422)	2.343	(7.972)	(1.775)	865
NET CASH FROM OPERATING ACTIVITIES	(7.344)	3.987	(16.421)	(1.159)	(398)
INVESTING ACTIVITIES
Capitalized development	(453)	(1.377)	(2.354)	(4.579)	(6.548)
Furniture, Machinery and Equipment
and leashold improvments	-	(1.086)	-	(1.086)	(1.086)
Change in loan balance with affiliated company	-	-	-	-	(722)
Disposal of discontinued operations net of cash
disposed off	-	-	14.462	-	-
NET CASH FROM INVESTING ACTIVITIES	(453)	(2.463)	12.108	(5.665)	(8.356)
FINANCIAL ACITIVITIES
New Issue	-	-	-	2.385	2.385
NET CASH FROM FINANCIAL ACTIVITIES	-	-	-	2.385	2.385
Effect of foreign exchange rate changes	109	207	788	(1.013)	746
Net increase(decrease) in cash & cash equivalents	(7.687)	1.731	(3.525)	(5.452)	(5.623)
Cash & cash equivalents, beginning of period	20.869	15.148	16.708	22.331	22.331
Cash & cash equivalents, classified as held for sale	-	(4.501)	-	(4.501)	(168)
Cash & cash equivalents, end of period	13.183	12.378	13.183	12.378	16.539

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

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

	Birdstep Technology ASA
	Share	Share	Other paid	Other	Translation	Total
	capital	premium	equity	equity	reserves	equity
Equity as at 31 December 2014	10.162	38.272	61.232	(58.976)	15.301	65.991
Net income (loss)	-	-	-	(41.845)	-	(41.845)
Other comprehensive income for the period:
Displacements between restricted and unrestricted reservs	-	-	-	-	-	-
Foreign currency exchange	-	-	-	-	1.697	1.697
Total comprehensive income	-	-	-	(41.845)	1.697	(40.147)
Transactions with shareholders:
Net issue of ordinary shares	-	-	-	-	-	-
Reduction in share capital and transfer of share premium	-	-	-	-	-	-
Total transactions with shareholders	-	-	-	-	-	-
Equity as at 30 September 2015	10.162	38.272	61.232	(100.820)	16.998	25.844

	Share	Share	Other paid	Other	Translation	Total
	capital	premium	equity	equity	reserves	equity
Equity as at 31 December 2013	10.012	36.037	61.232	(49.140)	12.675	70.816
Net income (loss)	-	-	-	(5.830)	-	(5.830)
Other comprehensive income for the period:
Displacements between restricted and unrestricted reservs	-	-	-	-	-	-
Foreign currency exchange	-	-	-		(647)	(647)
Total comprehensive income	-	-	-	(5.830)	(647)	(6.477)
Transactions with shareholders:
Net issue of ordinary shares	150	2.235	-	-	-	2.385
Reduction in share capital and transfer of share premium	-	-	-	-	-	-
Total transactions with shareholders	150	2.235	-	-	-	2.385
Equity as at 30 September 2014	10.162	38.272	61.232	(54.970)	12.028	66.724

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 nine first months of 2015, 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 September 30, 2015, the Company has 101,621,627 shares issued and 101,600,572 shares outstanding, the difference of 21,055 representing treasury shares.

IMPAIRMENT OF INTANGIBLE ASSETS

At the end of each reporting period, the company reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. At the balance day there was insecurity of future revenue from the Sprint contract, which was confirmed 15.11.02, and considering the historically record of new customer acquisition, a write-down of goodwill of 40,2 MNOK was made per the balance day following the impairment test and recognized directly in profit or loss. After the write-down the amount of goodwill is reduced to zero.

SIGNIFICANT EVENTS AFTER THE PERIOD

Birdstep's largest customer by revenue has reported a cost cutting initiative to reduce expenses by as much as \$2.5 billion during the next six months. As a result Birdstep's customer, Sprint, is eliminating their Sprint Connection Optimizer branded product, which is based upon Birdstep's SmartSELECT product. The contract between Sprint and Birdstep remains and Sprint will continue to use Birdstep products. Additionally, Birdstep is working to position new products into the Sprint network. Birdstep revenue from the SmartSELECT product to Sprint expects to continue through Q4 2015. For the period of January to September 2015, the revenue from the SmartSELECT product to Sprint, was 33.0 MNOK.

GOING CONCERN

It is a substantial financial risk for the company if the negative cash flow trend continues. Birdstep's business is heavily dependent on the capital spending patterns of its customers in a period of market uncertainty. Any decrease or delay in capital spending by its customers means reduced revenues for Birdstep. If cash flow from new contracts do not materialize in time to replace the cash flow

generated by the Sprint SCO (Sprint Connection Optimizer) product, there is a risk that the current 13.2 MNOK in cash balance, together with expected future cash flows from operations, will not be sufficient to meet the company's anticipated cash requirements for working capital and capital expenditures for a foreseeable future.

SEGMENT REPORTING

(In thousands of NOK)

	For the three months ended		For the nine months ended	For the full
			30.09.2015	30.09.2014	2014
Smart Mobile Data
Operating Revenues	12.478	11.979	38.984	39.427	51.482
EBIT	(44.448)	(3.135)	(57,406)	(10.867)	(18.706)

DISCONTINUED OPERATIONS.

On January 2nd, 2015, the Company and EB entered into a Share Purchase Agreement on whereby EB acquired 100% of the shares in Birdstep Technology OY from the Company as of the same date.

The debt free, net of cash and cash equivalents purchase price for the transaction was EUR 2.0 million in cash on the closing date and before account for transaction costs. Profit from discontinued operations recorded in the financial statement as of 30.09.2015 was NOK 12.9 million, which is representing the full gain from the sale of Birdstep Technology OY.

The assets and liabilities related to Birdstep Technology OY have been presented as held for sale following the sale of 100 % of the shares in the company on January 2nd, 2015.

	For the nine months ended	For the full year
	30.09.2014	2014
NON-CURRENT ASSETS:
Intangible assets	2.405	2.484
Tangible assets	66	65
TOTAL NON-CURRENT ASSETS	2.471	2.548
CURRENT ASSETS:
Accounts receivable	3.045	3.825
Other current assets	447	395
Cash & cash equivalents	4.501	168
TOTAL CURRENT ASSETS	7.993	4.389
Assets held for sale	10.464	6.937
NON-CURRENT LIABILITIES
Other liabilities	3.293	935
TOTAL NON-CURRENT LIABILITIES	3.293	935
CURRENT LIABILITIES
Accounts payable	323	861
Deferred revenue	1.719	367
Accrued expenses and other liabilities	2.262	3.175
TOTAL CURRENT LIABILITIES	4.304	4.403
Liabilities held for sale	7.597	5.338

DISCONTINUED OPERATIONS

Analysis of the result of discontinued operations is as follows

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

	For the three months ended	For the nine months ended	For the full year
	30.09.2014	30.09.2014	2014
OPERATING REVENUES	5.791	17.525	23.922
Cost of Sales	-398	-1.882	-2.765
OPERATING EXPENSES
Salaries and wages	-2.787	-8.921	-12.589
Other operating expenses	-1.132	-3.250	-4.534
TOTAL OPERATING EXPENSES	-3.919	-12.171	- 17.123
Operating income loss before depreciation and amortization (EBITDA)	1.474	3.472	4.034
Depreciation and amortization	-248	-431	-686
Write down and impairment of intangible assets	0	0	0
Operating income loss after depreciation and amortization (EBIT)	1.226	3.041	3.348
OTHER INCOME (EXPENSE)
Interest income, net	0	0	25
Other financial items, net	-293	-467	2.223
OTHER INCOME, NET	-293	-467	2.248
PROFIT FROM DISCONTINUED OPERATIONS BEFORE TAXES	933	2.574	5.596
Income taxes	0	0	0
PROFIT FROM DISCONTINUED OPERATIONS	933	2.574	5.596

Cash Flow

	For the three	For the nine	For the full
	months ended	months ended	year
	30.09.2014	30.09.2014	2014
Operating Cash flow	135	2.987	-929
Investing cash flow	-184	-1.109	-1.526
Financing cash flow	0	0	0
Total cash Flow	-49	1.878	-2.455

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.

There is a risk that the current cash balance, together with expected future cash flows from operations, will not be sufficient to meet the company's anticipated cash requirements for working capital and capital expenditures for a foreseeable future. If Birdstep will require additional funding, there is a risk if such funding will not succeed.

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 provision for potential uncollectible amounts is needed. As of September 30, 2015, no provisions for 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.

			January							Febuary				March					April
		M Tu W Th F Sa Su						M Tu W Th F Sa Su							M Tu W Th F Sa Su									M Tu W Th F		Sa Su
			$\mathbf{1}$	$\overline{2}$	$\overline{3}$	$\frac{1}{4}$							$\mathbf{1}$							$\mathbf{1}$			1	$\overline{2}$	$\overline{3}$	4	5
5	6	$7\overline{ }$	8	9	10 11		$\overline{2}$	$\overline{3}$	4	5	6	7	8	$\overline{2}$	3	4	5	6	7	8	6	7	8	9	10	11 12
12	13		14 15	16	17	18	$\overline{9}$	10		11 12 13		14	15	9	10		11 12 13		14 15		13	14	15	16	17	18 19
19	20		21 22 23 24 25				16			17 18 19 20 21 22				16			17 18 19 20 21 22				20	21	22 23			24 25 26
		26 27 28 29 30 31						23 24 25 26 27 28							23 24 25 26 27 28 29							27 28 29 30
															30 31
			May							June							July							August
		M Tu W Th F Sa Su						M Tu W Th F Sa Su							M Tu W Th F Sa Su									M Tu W Th F Sa Su
				$\mathbf{1}$	$\overline{2}$	$\overline{3}$	$\mathbf{1}$	$\overline{2}$	3	$\overline{4}$	5	6	$\overline{7}$			$\mathbf{1}$	$\overline{2}$	3	$\overline{4}$	5						$\mathbf{1}$	$\overline{2}$
	5	6	$\overline{7}$	8	9	10	8	9		10 11 12 13			14	6	$\overline{7}$	8	9	10	11	12	$\overline{3}$	$\overline{4}$	5	6	$\overline{7}$	8	9
		11 12 13 14 15 16				17	15			16 17 18 19 20			21		13 14		15 16 17 18 19				10	11	12	13	14	15 16
18	19	20	21 22		23	24	22			23 24 25 26 27 28				20	21		22 23 24 25 26				17	18	19	20	21	22 23
25		26 27 28 29 30 31						29 30							27 28 29 30 31									24 25 26 27 28 29 30
																					31
		September								October							November							December
		M Tu W Th F Sa Su						M Tu W Th F Sa Su							M Tu W Th F Sa Su									M Tu W Th F		Sa Su
	$\mathbf{1}$	$\overline{2}$	$\overline{3}$	4	5	6				$\mathbf{1}$	$\overline{2}$	$\overline{3}$	4							$\mathbf{1}$		$\mathbf{1}$	$\overline{2}$	$\overline{3}$	4	5	6
	8	9		10 11 12 13			5	6	7	8		9 10 11		$\overline{2}$	$\overline{3}$	4	5	6	7	8	$7\overline{ }$	8	9	10	11	12 13
14		15 16 17 18			19	20	12	13		14 15	16	17 18		9	10 1		11 12 13		14 15		14	15	16	17	18	19 20
21	22		23 24 25 26 27				19	20		21 22 23 24			25	16	17	18	19	20	21 22		21	22	23	24		25 26 27
28		29 30					26			27 28 29 30 31				23			24 25 26 27 28 29				28	29	30 31
														30

FINANCIAL CALENDAR 2015/16.

Preliminary financial calendar, with reservations for changes:

11.02.2016	QUARTERLY REPORT - Q4 2015
27.04.2016	QUARTERLY REPORT - Q1 2016
29.07.2016	QUARTERLY REPORT - Q2 2016
03.11.2016	QUARTERLY REPORT - Q3 2016

BIRDSTEP IS HEADQUARTERED IN OSLO, NORWAY, WITH ITS OPERATIONAL HEADQUARTER IN STOCKHOLM, SWEDEN, A SUBSIDIARY IN SAN FRANCISCO, USA AND SALES OFFICES IN KANSAS CITY, USA, KUALA LUMPUR, MALAYSIA, UK AND TOKYO, JAPAN.

WWW.BIRDSTEP.COM