Techstep ASA — Interim / Quarterly Report 2015

Jul 31, 2015

QUARTERLY REPORT Q2 2015.

CONTENT

BIRDSTEP TECHNOLOGY ASA INTERIM REPORT	3
CEO UPDATE	4
BUSINESS FOCUS	6
MARKET OUTLOOK Q2 2015	7
RESULTS OF OPERATIONS	9
CASH FLOW	10
COST REDUCTION	11
FINANCIAL STATEMENTS	12
NOTES	17
DISCONTINUED OPERATIONS	19
RISKS	21
RESPONSIBILITY STATEMENT	22
FINANCIAL CALENDAR 2015	23

BIRDSTEP TECHNOLOGY ASA INTERIM REPORT.

APRIL - JUNE 2015

• > Revenue was NOK 10.8 (13.7) million, representing a decrease of 20.9 % over the same period last year.
• > EBITDA ended at NOK -6.3 (-2.4) million, representing an increased loss of NOK 3.9 million over the same period last year.
• > Continuing operating earnings per share amounted to NOK -0.11 (-0.04).
• > Total net cash flow amounted to NOK 6.5 (1.0) million.
• > Cash balance was NOK 20.9 (12.5) million.

JANUARY - JUNE 2015

• > Revenue was NOK 26.5 (27.4) million, representing a decrease of 3.4 % over the same period last year.
• > EBITDA ended at NOK -9.6 (-3.6) million, representing an increased loss of NOK 6.0 million over the same period last year.
• > Continuing operating earnings per share amounted to NOK -0.12 (-0.07).
• > Total net cash flow amounted to NOK 4.2 (-7.2) million.
• > Cash balance was NOK 20.9 (12.5) million.

CEO UPDATE.

THREE YEARS AGO BIRDSTEP EMBARKED ON A NEW PATH LOOKING TO EXPLOIT A NEW AND EMERGING MARKET IN WHICH MOBILE NET-WORK OPERATORS BEGAN TO USE WI-FI TECHNOLOGY TO AUGMENT THEIR NETWORK OFFERINGS WHEN CELLULAR CAPACITY WAS TOO LIMITED OR COVERAGE WAS SIMPLY NOT AVAILABLE.

This new eco-system for carrier Wi-Fi continues to evolve and Birdstep has established itself as a leader in the area of Intelligent Network Selection. We believe as carrier Wi-Fi continues to grow, augmenting cellular networks, operators and service providers will require, and deploy, technologies that aids in driving down their costs in delivering service. We also believe those same operators and service providers will strive to provide a better customer experience, using technology which instructs the consumer mobile devices to intelligently use either cellular or Wi-Fi services based on criteria such as cost, location, resource availability or the best service available at that moment. This is where Birdstep is positioned. While this market sector is evolving, it is doing so at a much slower pace than we had anticipated. There is still a great deal of education needed when working with operators. Business models are still being developed and the technology requires long and intense evaluation.

Therefore, I can only be dissatisfied with the second quarter revenue of NOK 10.8 (13.7) million, representing a decrease of 20.9 % over the same period last year. This is the first quarter we report a negative growth of revenues in North America. The slower activity in North America, and technical evaluations in Asia continuing, both attributed to the lower than expected revenues for the second quarter.

In the quarter we reported a positive cash flow and our net cash balance increased with NOK 6.5 million to NOK 20.9 million. The second quarter last year showed a cash balance increase of NOK 1.0 million. OPEX (Operating Expenses) ended at NOK 16.3 million compared to NOK 15.5 million for the same period last year.

The Asian activities mentioned in our previous report continue. On the positive side we have not lost any of the potential deals but the decisions have again been postponed. Nonetheless, we remain close to these opportunities. We still see large potential in this evolving market and our pipeline and rate of deal flow continue to increase.

To address the challenges we are currently facing, the company is implementing cost reduction activities that are expected to result in approximately the same level as 2014 operating expense for the full year of 2015. At the same time, we are adjusting our business models and marketing plans to address our immediate top-line concerns. While we recognize that we are in the early stages of these initiatives, we believe these actions will enable us to overcome the current economic challenges we face and enhance our competitive standing.

Now, I am excited that Birdstep has launched its 3rd generation SmartANALYTICS platform providing operators and service providers with a unique set of tools to gain deep insights at the device and network level into the mobile service quality of experience being delivered to the consumer. The platform enables MNOs (Mobile Network Operators), MVNOs (Mobile Virtual Network Operators) and MSO Cable Operators to improve their quality of service being delivered across both Wi-Fi and cellular networks through traditional heuristics and also by measuring QoE (Quality of Experience) metrics and providing dynamic feedback to the network to adjust QoE parameters. SmartANALYTICS collects, computes, correlates and visualizes a wide range of information, including where the end user is consuming data, what type of data is being consumed, how much data is consumed, and how long the user stays on a given network that has been clearly identified by the system. The information gained can be used to determine and visualize traffic patterns and app usage, as well as undesired network behaviors, which in turn can be applied to optimize a HetNet (Heterogenious Network) environment and better monetize the user experience.

In the quarter the company continued to enhance its position as thought leaders in order to gain market share and to support the company´s sales activities. Birdstep became member of Wireless Broadband Alliance, the premier Wi-Fi industry consortium and attended events in all its focus areas with new business leads as a result. We also took part in a webinar with the topic: Learn how to turn the HetNet into profit: The importance of a faultless experience. During the webinar we released our new white paper which is written in conjunction with Rethink Technology Research Ltd. The white paper is based on a survey of over 45 senior executives within communications service providers and focused on in-depth insight into operators' plans to deploy carrier-grade Wi-Fi as part of HetNet strategies requiring Wi-Fi and cellular integration. The white paper is available on the company´s website www.birdstep.com.

In closing, clearly this year has gotten off to a challenging start. But I am confident we are taking the necessary steps to address our near term challenges and position Birdstep to deliver value over the long term.

I look forward to reporting back to you again next quarter.

Lonnie Schilling Chief Executive Officer

BUSINESS FOCUS.

LARGE POTENTIAL REMAINS IN ASIA PACIFIC

As stated in the previous reports Asia Pacifics continues to be an opportunity rich environment. Birdstep is engaged in activities especially in The Philippines, Thailand, Singapore and Japan. The company is also starting to make progress in India. Since many of the Asia Pacific mobile operators are now gradually starting to realize the importance of HetNets (Heterogeneous Networks) by deploying their own Carrier Wi-Fi networks, they are starting to look into more customer centric services such as Wi-Fi calling and seamless mobility.

Currently the sales cycles are long and the monetization aspects of Wi-Fi networks are not clearly defined from the MNO's (Mobile Network Operator) perspective. Hence the strong interest in Asia Pacific for Birdstep´s SmartCONTROL, SmartCOMMERCE and SmartSELECT. Several trials and other sales activities are both ongoing and scheduled to demonstrate Birdstep's value towards HetNet deployments and customer centric services value-adds. Even though progress seems slow it is steady and the key factor towards our success will be our ability to differentiate Birdstep from the basic Wi-Fi off-load and large vendor initiatives (like Google, Microsoft etc.)

The revenue growth in North America declined this quarter. Nonetheless the company still sees an increased interest in MVNOs (Mobile Virtual Network Operator) and believes Birdstep is well positioned with its Smart Solution Suite to optimize HetNet strategies for both MVNOs and their MNO partners in this market.

MARKET OUTLOOK Q2 2015.

ACTIONABLE ANALYTICS PROPELS HETNET GROWTH

Two key and intimately related markets for Birdstep, smart mobile analytics and HetNets (Heterogeneous Networks) combining cellular and Wi-Fi, have been singled out by various analysts for spectacular growth over the next five years. The global HetNet market is set to grow at a Compound Annual Growth Rate (CAGR) of 15.19% over the next five years to be worth \$25.34 billion then compared with \$12.50 billion in 2015, according to a report issued in Q2 2015 by MarketsandMarkets.

Behind such headline figures lies an equally impressive increase in HetNet value, both to mobile operators and their customers, which will be driven by the expanding scope of predictive and actionable mobile analytics. Unlike HetNets, online analytics is a mature field, but one that has reached a major point of inflection in 2015, according to Frost & Sullivan, by becoming more prevalent on mobile networks and at the same time much more intelligent. It refers to predictive analytics on mobile devices and networks as the "secret sauce for monetization".

For Birdstep such predictions and insights come as little surprise, since we have been focusing strongly on HetNets driven by smart analytics for several years now. One key point that comes out of recent analyst forecasts is that mobile analytics is not just expanding but moving to a new level of intelligence capable of fulfilling the business requirements of operators while giving users the best quality of experience possible at all times wherever they are. Traditional mobile analytics tools, like Google Analytics, have been very successful at identifying basic metrics such as number of users, OS used, and breakdown of the customer's geographic movements, but have failed to provide the deeper underlying analysis of the user's activities.

For successful HetNet operation, analytics needs to focus much more on the user view from the device, which has been a fundamental design principle for Birdstep's latest Smart Analytics 3.0. This meets growing demand from operators for actionable analytics combining data from the device and the two networks to gain insight into factors that affect revenue generation and then take immediate actions to remedy these. In order to maintain a continuously good user experience, operators need a clear view of which networks each device can see, which it connects to and which it has difficulty connecting to. Decisions can then be made to steer traffic from one to another network based on performance.

Predictive analytics will also be applied increasingly to upselling as operators seek to extract additional revenues from existing subscribers in saturated mobile markets. It is already common for mobile subscribers on the lowest tier data plans to generate a lot of Wi-Fi traffic as they actively seek out hot spots. With Smart Analytics 3.0 operators can readily identify these target subscriber groups that consumer a lot of Wi-Fi data and offer them an attractive package to encourage more use of mobile data when out of range of a Wi-Fi hot spot.

Above all there is a huge opportunity to capitalize on a fast growing market for scalable predictive and actionable analytics that embraces mobile devices and the networks they connect to.

RESULTS OF OPERATIONS.

SECOND QUARTER 2015 SIX MONTHS 2015

Second quarter revenue was NOK 10.8 (13.7) million, representing a decrease of 20.9 % over the same period last year. The decrease was driven by the slower activity in North America in the second quarter.

Currency effects impacted revenues positively, mainly due to a continued strengthening of the USD towards the NOK.

Salaries and wages were NOK 10.0 (10.5) million. The decrease in salaries and wages compared to the same quarter last year is due to a decrease in headcount. The number of employees as of 30.06.2015 was 39 (40).

Other operating expenses for the quarter were NOK 6.3 (5.0) million. The increase is mainly related to consultancy fees within sales and marketing function. The total number of full time equivalent (FTE) including consultants, engaged in the company were 46 (44).

EBITDA ended at NOK -6.3 (-2.4) million which represents an increased loss of NOK 3.9 million compared to the same period last year.

As a result of the above, Income (Loss) from continuing operations before taxes of NOK -11.5 (-3.8) million was recorded in the quarter.

Revenue for the first six months was NOK 26.5 (27.4) million, representing a decrease of 3.4 % over the same period last year. Currency effects impacted sales positively, mainly due to a continued strengthening of the USD towards the NOK.

Salaries and wages were NOK 20.3 (20.3) million.

Other operating expenses for the period were NOK 14.0 (9.5) million. The increase is mainly related to consultancy fees within sales and marketing function.

EBITDA ended at NOK -9.6 (-3.6) million which represents an increased loss of NOK 6.0 million compared to the same period last year.

As a result of the above, Income (Loss) from continuing operations before taxes of NOK -11.9 (-7.0) million was recorded in the period.

CASH FLOW.

SECOND QUARTER 2015 SIX MONTHS 2015

Cash flow for the second quarter was positive and our net cash balance increased by NOK 6.5 million to NOK 20.9 million. The second quarter last year showed a cash balance increase of NOK 1.0 million.

Net cash flow from operating activities for the quarter was NOK 3.7 million. Second quarter last year, net cash flow from operating activities was NOK 0.6 million.

Cash flow for the first six months was positive and our net cash balance increased by NOK 4.2 million to NOK 20.9 million. The first six months last year showed a cash balance decrease of NOK 7.2 million.

Net cash flow from operating activities for the period was NOK -9.1 million. For the period last year, net cash flow from operating activities was NOK -5.1 million.

COST REDUCTION.

We have begun implementing cost reductions due to the second quarter decrease in revenue and further delays in order intake, in order to better balance revenue with operating expenses and to preserve cash. The company will take efficiency measures who primarily relate to three areas: consolidation of representative offices; focus on core products R&D; reduced marketing activities.

Savings will include both headcount reductions as well as savings in external costs. Measures will include both new and already initiated reduction, such as the initiated reduction of a total of 10 FTE, including consultants, during the second quarter.

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 six	For the full
		months ended		months ended	year
	30.06.2015	30.06.2014	30.06.2015	30.06.2014	2014
OPERATING REVENUES	10,846	13,704	26,506	27,449	51,482
Cost of Sales	(833)	(597)	(1,786)	(1,305)	(2,766)
OPERATING EXPENSES
Salaries and wages	(10,000)	(10,475)	(20,253)	(20,267)	(37,346)
Other operating expenses	(6,325)	(4,988)	(14,020)	(9,498)	(22,376)
TOTAL OPERATING EXPENSES	(16,325)	(15,463)	(34,273)	(29,765)	(59,722)
Operating income loss before
depreciation and amortization (EBITDA)	(6,312)	(2,356)	(9,553)	(3,622)	(11,006)
Depreciation and amortization	(1,647)	(2,028)	(3,406)	(4,110)	(7,700)
Operating income loss after
depreciation and amortization (EBIT)	(7,959)	(4,384)	(12,959)	(7,732)	(18,706)
OTHER INCOME (EXPENSE)
Interest income, net Other financial items, net	102 (3,660)	80 510	73 952	140 629	352 3,108
OTHER INCOME, NET	(3,559)	591	1,025	769	3,460
INCOME(LOSS) FROM CONTINUING
OPERATIONS BEFORE TAXES	(11,517)	(3,793)	(11,934)	(6,963)	(15,246)
Income taxes	(6)	-	(6)	-	(186)
INCOME(LOSS) FROM CONTINUING OPERATIONS	(11,524)	(3,793)	(11,940)	(6,963)	(15,432)
Profit from discontinued operations	-	1,235	12,863	1,641	5,596
NET INCOME(LOSS)	(11,524)	(2,558)	923	(5,322)	(9,836)
Earnings and diluted earnings per share
Continuing operations	(0.11)	(0.04)	(0.12)	(0.07)	(0.15)
Discontinued operations	-	0,01	0.13	0,02	0,06
Total	(0.11)	(0.03)	0.01	(0.05)	(0.09)

CONDENSED CONSOLIDATION STATEMENTS OF COMPREHENSIVE INCOME

		For the three	For the six	For the full
	30.06.2015	months ended 30.06.2014	months ended 30.06.2015	30.06.2014	year 2014
Net income (loss) for the period	(11,524)	(2,558)	923	(5,322)	(9,836)
OTHER COMPREHENSIVE INCOME
Currency translation effect	3,724	(273)	410	(962)	2,626
TOTAL COMPREHENSIVE INCOME	(7,800)	(2,830)	1,333	(6,284)	(7,210)
Attributable to:
Equity holder of the parent company	(7,800)	(2,830)	1,333	(6,284)	(7,210)
TOTAL COMPREHENSIVE INCOME	(7,800)	(2,830)	1,333	(6,284)	(7,210)

CONDENSED CONSOLIDATION BALANCE SHEETS

		As of
	30.06.2015	30.06.2014	2014
NON-CURRENT ASSETS:
Intangible assets	47,579	46,613	48,246
Tangible assets	1,073	324	1,235
Other non-current assets	-	-	-
TOTAL NON-CURRENT ASSETS	48,651	46,937	49,481
	-	-	-
CURRENT ASSETS:	-	-	-
Accounts receivable	7,228	16,163	7,876
Other current assets	1,083	1,760	3,678
Restricted cash	1,755	-	-
Cash & cash equivalents	19,114	12,492	16,539
TOTAL CURRENT ASSETS	29,179	30,415	28,093
Assets of disposal group classified as held for sale	-	9,719	6,937
TOTAL ASSETS	77,831	87,071	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	18,890	18,482	17,557
TOTAL SHAREHOLDERS' EQUITY	67,324	66,916	65,991
NON-CURRENT LIABILITIES
Deferred tax liabilities	179	175	178
Other liabilities	-	80	-
TOTAL NON-CURRENT LIABILITIES	179	175	178
CURRENT LIABILITIES
Accounts payable	1,511	3,277	3,110
Deferred revenue	332	895	488
Accrued expenses and other liabilities	8,484	7,660	9,406
TOTAL CURRENT LIABILITIES	10,328	11,832	13,004
Liabilities of disposal group classified as held for sale	-	8,068	5,338
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	77,831	87,071	84,511

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

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

		For the three		For the six	For the full
		months ended		months ended	year
	30.06.2015	30.06.2014	30.06.2015	30.06.2014	2014
OPERATING ACTIVITIES
Income (loss) from continuing operations
before taxes	(11,517)	(3,793)	(11,934)	(5,322)	(15,246)
Income (loss) from discontinuing operations
before taxes	-	1,235	12,863	-	5,596
Depreciation and amortization	1,647	2,132	3,406	4,293	8,386
Profit on sales of discontinued operations	-	-	(12,863)	-	-
Change in receivables and payables	13,570	1,030	(550)	(4,118)	865
NET CASH FROM OPERATING ACTIVITIES	3,700	604	(9,078)	(5,146)	(398)
INVESTING ACTIVITIES
Capitalized development	(805)	(1,364)	(1,901)	(3,202)	(6,548)
Furniture, Machinery and Equipment
and leashold improvments	-	-	-	-	(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	(805)	(1,364)	12,561	(3,202)	(8,356)
FINANCIAL ACITIVITIES New Issue	-	2,385	-	2,385	2,385
NET CASH FROM FINANCIAL ACTIVITIES	-	2,385	-	2,385	2,385
Effect of foreign exchange rate changes	3,564	(606)	679	(1,220)	746
Net increase(decrease) in cash & cash equivalents	6,459	1,019	4,162	(7,183)	(5,623)
Cash & cash equivalents, beginning of period	14,411	14,129	16,708	22,331	22,331
Cash & cash equivalents, classified as held for sale	-	(2,656)	-	(2,656)	(168)
Cash & cash equivalents, end of period*	20,869	12,492	20,869	12,492	16,539

* Including restricted cash

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)	-	-	-	923	-	923
Other comprehensive income for the period:
Displacements between restricted and unrestricted reservs	-	-	-	-	-	-
Foreign currency exchange	-	-	-		410	410
Total comprehensive income	-	-	-	923	410	1,333
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 June 2015	10,162	38,272	61,232	(58,053)	15,711	67,324

			Birdstep Technology ASA
	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)	-	-	-	(5,322)	-	(5,322)
Other comprehensive income for the period
Displacements between restricted and unrestricted reservs	-	-	-	-	-	-
Foreign currency exchange	-	-	-	-	(963)	(963)
Total comprehensive income	-	-	-	(5,322)	(963)	(6,285)
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 June 2014	10,162	38,272	61,232	(54,462)	11,712	66,916

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 six 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 periodend 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 June 30, 2015, the Company has 101,621,627 shares issued and 101,600,572 shares outstanding, the difference of 21,055 representing treasury shares.

SEGMENT REPORTING

(In thousands of NOK)

	For the three			For the six	For the full
	months ended		months ended	year
	30.06.2015	30.06.2014	30.06.2015	30.06.2014	2014
Smart Mobile Data
Operating Revenues	10,846	13,704	26,506	27,449	51,482
EBIT	(7,959)	(4,384)	(12,959)	(7,732)	(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 30.06.2015 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 six months ended	For the full year
	30.06.2014	2014
NON-CURRENT ASSETS:
Intangible assets	2,524	2,484
Tangible assets	71	65
TOTAL NON-CURRENT ASSETS	2,595	2,548
CURRENT ASSETS: Accounts receivable	3,890	3,825
Other current assets	578	395
Cash & cash equivalents	2,656	168
TOTAL CURRENT ASSETS	7,124	4,389
Assets held for sale	9,719	6,937
NON-CURRENT LIABILITIES
Other liabilities	3,262	935
TOTAL NON-CURRENT LIABILITIES	3,262	935
CURRENT LIABILITIES
Accounts payable	1,245	861
Deferred revenue	523	367
Accrued expenses and other liabilities	3,038	3,175
TOTAL CURRENT LIABILITIES	4,806	4,403
Liabilities held for sale	8,068	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 six months ended	For the full year
	30.06.2014	30.06.2014	2014
OPERATING REVENUES	6,243	11,734	23,922
Cost of Sales	-684	-1,484	2,765
OPERATING EXPENSES
Salaries and wages	-3,151	-6,133	-12,589
Other operating expenses	-1,218	-2,118	-4,534
TOTAL OPERATING EXPENSES	-4,370	-8,252	-17,123
Operating income loss before depreciation and amortization (EBITDA)	1,189	1,998	4,034
Depreciation and amortization	-104	-183	-686
Write down and impairment of intangible assets	0	0	0
Operating income loss after depreciation and amortization (EBIT)	1085	1,815	3,348
OTHER INCOME (EXPENSE)
Interest income, net	0	0	25
Other financial items, net	150	-174	2,223
OTHER INCOME, NET	150	-174	2,248
PROFIT FROM DISCONTINUED OPERATIONS BEFORE TAXES	1,235	1,641	5,596
Income taxes	0	0	0
PROFIT FROM DISCONTINUED OPERATIONS	1,235	1,641	5,596

Cash Flow

	For the three	For the six	For the full
	months ended	months ended	year
	30.06.2014	30.06.2014	2014
Operating Cash flow	-1,385	1,142	-929
Investing cash flow	-509	-1,109	-1,526
Financing cash flow	0	0	0
Total cash Flow	-1,894	33	-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.

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 June 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 have been identified.

RESPONSIBILITY STATEMENT.

We confirm to the best of our knowledge that the condensed set of financial statements for the period January 1 to June 30, 2015 has been prepared in accordance with IAS 34 - Interim Financial Reporting, and gives a true and fair view of the Birdstep Group's assets, liabilities, financial position and result for the period. We also confirm to the best of our knowledge that the financial review includes a fair review of important events that have occurred during the first six months of the financial year and their impact on the financial statements, any major related parties transactions, and a description of the principal risks and uncertainties for the remaining six months of the financial year

Tom Nyman Board member (Chairman)

Ian Jenks Board member

Urban Gillström Board member

Kirsten English Board member

Lonnie Schilling Chief Executive Officer

Regina Nilsson Board member

			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
			$\mathbf{1}$	$\overline{2}$	$\overline{3}$	$\frac{1}{4}$														$\mathbf{1}$			$\mathbf{1}$	$\overline{2}$	$\overline{3}$	$\overline{4}$	5
5	6	$7\overline{ }$	8	9	10 11		$\overline{2}$	$\overline{3}$	$\frac{1}{4}$	5	6	$7\overline{ }$	$\mathcal{B}$	$\overline{2}$	$\overline{3}$	4	5	6	7	$\mathbf{B}$	6	7	8	9	10		11 12
12	13	14	15	16	17	18	$\overline{9}$	10	11	12	13	14	15	$\overline{9}$	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
				$\mathbf{1}$	$\overline{2}$	$\overline{\mathbf{3}}$	$\mathbf{1}$	$\overline{2}$	$\overline{3}$	4	5	6	$\overline{7}$			$\mathbf{1}$	$\overline{2}$	3	4	5						$\mathbf{1}$	$\overline{2}$
	5	6	$\overline{7}$	8	$\overline{9}$	10	8	$\overline{9}$		10 11 12 13			14	6	$\overline{7}$	8	9	10	11	12	3	$\overline{4}$	5	6	7	8	$\mathbf{q}$
	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
	$\mathbf{1}$	$\overline{2}$	$\overline{3}$	$\overline{4}$	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 °		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.

Preliminary financial calendar, with reservations for changes:

04.11.2015 QUARTERLY REPORT - Q3

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