Techstep ASA — Interim / Quarterly Report 2016

Jul 29, 2016

QUARTERLY REPORT Q2 2016.

CONTENT

TECHSTEP ASA INTERIM REPORT	3
CEO UPDATE	4
RESULTS OF OPERATIONS	6
CASH FLOW	7
FINANCIAL STATEMENTS	8
NOTES	13
RISKS	18
RESPONSIBILITY STATEMENT	19
FINANCIAL CALENDAR 2016	20

TECHSTEP ASA INTERIM REPORT.

HIGHLIGHTS SECOND QUARTER 2016

The sale of all shares in Birdstep Technology AB to Smith Micro Software Inc was finalized 7 April. The purchase price was USD 2.0 million free of cash and net debt. The total net cash effect from the Transaction is expected to be approximately NOK 15.4 million representing NOK 1.14 per share in value to Techstep's shareholders.

In accordance with the above sale of Birdstep Technology AB to Smith Micro Software, Inc, the Company on 2 June registered its name change, from Birdstep Technology ASA, to Techstep ASA with the new ticker TECH.

KEY FIGURES

APRIL - JUNE 2016

• > Revenue was NOK 0.0 (0.0) million.
• > EBITDA ended at NOK -9.9 (-2.5) million, repre senting an increased loss of NOK 7.4 million over the same period last year.
• > Continuing operating earnings per share amount ed to NOK -0.59 (-0.44).
• > Total net cash flow amounted to NOK 7.4 (6.5) million.
• > Cash balance was NOK 36.2 (20.9) million at the end of period.

JANUARY - JUNE 2016

• > Revenue was NOK 0.0 (0.0) million.
• > EBITDA ended at NOK -12.3 (-5.0) million, repre senting an increased loss of NOK 7.3 million over the same period last year.
• > Continuing operating earnings per share amount ed to NOK -0.97 (-0.36).
• > Total net cash flow amounted to NOK 21.1 (4.2) million.

SUBSEQUENT EVENTS

On 1 July 2016, Techstep ASA (TECH) entered into an agreement with Zono Holding AS, a company controlled by Middelborg AS, of a transaction whereby TECH will acquire 100% of the shares in Zono AS ("Zono") in exchange for shares to be issued in TECH. The assets of Zono will comprise 24.22% of the shares in Teki Solutions AS, 5.12% of the shares in Kjedehuset AS and approximately NOK 55 million in net cash balance.

On 1 July 2016, TECH entered into an agreement in principle with Teki Gruppen AS to acquire an additional 53.94% of the shares in Teki Solutions AS, also this in exchange for shares to be issued in TECH. On 5 July Techstep announced to conduct a subsequent offering by issuing up to 678,108 new shares at NOK 2.20 per share

CEO UPDATE.

IN THE SECOND QUARTER OF 2016 TECHSTEP ASA (TECH) FINAL-IZED THE SALE OF ITS WHOLLY OWNED SUBSIDIARY BIRDSTEP TECHNOLOGY AB (BIRDSTEP AB) TO SMITH MICRO SOFTWARE, INC. (SMSI) FOR USD 2.0 MILLION ON CASH FREE NET DEBT BASIS. THE COMPANY ALSO CHANGED ITS CORPORATE NAME FROM BIRDSTEP TECHNOLOGY ASA TO TECHSTEP ASA.

I am very pleased that the transaction with SMSI was finalized on 7 April. With the sale of Birdstep AB, we managed to avoid financial difficulties and we set a foundation to create a strong industrial partnership going forward.

In the previous quarterly report I explained the rationale behind the sale and I also presented the actions we had started to create value for our shareholders. Its been an intensive quarter were we have focused on processing those transactions forward. The letter of intent between TECH and SMSI was after the quarter replaced with a process agreement between SMSI and Teki Solutions. The aim is to establish a long-term partnership between Teki Solutions and SMSI, where Teki Solutions' subsidiary SmartWorks will be heavily involved, covering the Nordic region. At the same time, on July 1, we also announced the acquisition of Zono AS (former MergerCo) and an agreement for TECH to aquire a majority stake in Teki Solutions AS. You can read more about those activities in the section Subsequent Events.

I am also pleased that the corporate name change was resolved at the Annual General Meeting on April 28. The Company´s corporate name is now Techstep ASA, with the ticker TECH, and the Company´s website address is www.techstep.no. The reasons behind the name change were a combination of the sale of Birdstep AB and the fact that times change and business names change with them - meaning that whenever a company recognises that the landscape of the industry or the company´s direction changes it might have to change its core business and with it its name. In order to create value for our shareholders it was also cruicial to build a strong and believable strategy to go with the new company structure. A strategy with continuity from the past but well positioned for the future.

TECH´s strategy is to build on its knowledge and background in mobile technology to establish the company as a driver of consolidation within the mobility and communications sector. The mobility and communications market is undergoing disruptive shifts where work is increasingly mobile and the value proposition is changing from telecoms' infrastructure towards a fragmented ecosystem of software and digital solutions. The competitive landscape of this market in Norway is still fragmented. The changes in market dynamics require larger, but agile players that both have the ability to deliver innovative services and solutions at pace with technology development, and the security and performance needed to move business critical process and sensitive data out on handheld devices. TECH aims to be an attractive driver of consolidation, innovation and product development within the mobility and communications segment.

Given completion of the planned transactions, I believe that we have a solid foundation for growth and further consolidation with our evolving industry sector. We are at the start of an exiting journey for our stakeholders, including customers, partners, employees and shareholders.

Lonnie Schilling Chief Executive Officer

RESULTS OF OPERATIONS.

The sale of all shares in Birdstep Technology AB (Birdstep AB) to Smith Micro Software Inc was finalized 7 April. As a result of the sale the operations in the US subsidiary, Birdstep Technology Inc (Birdstep Inc), have ceased and the company is under liquidation. The financial figures presented below are excluding Birdstep AB and Birdstep Inc due to discontinued operation. Assets and liabilities related to these entities were reclassified as held for sale, and its profit as profit from discontinued operations. Detailed information on discontinued operations is presented in the notes section.

SECOND QUARTER 2016 SIX MONTHS 2016

Second quarter revenue was NOK 0.0 (0.0) million. Birdstep AB was the operational unit performing all business transactions, and after the sale of Birdstep AB leading to the above mentioned reclassification, there is no revenue reported in the quarter. Salaries and wages were NOK 7.9 (1.1) million. Included in the above second quarter salary and wages number, are reservations for the previously announced retention remuneration for CEO and COO, and an eventual 6 month severance cost for CEO, all in all totalling NOK 6.1 million. The number of employees as of 30.06.2016 was 3 (1).

Other operating expenses for the quarter were NOK 2.0 (1.4) million. EBITDA ended at NOK -9.9 (-2.5) million which represents an increased loss of NOK 7.4 million compared to the same period last year. As a result of the above, Income (Loss) from continuing operations before taxes of NOK -10.3 (-5.9) million was recorded in the quarter.

First six months revenue was NOK 0.0 (0.0) million. As mentioned above, Birdstep AB was the operational unit performing all business transactions, and after the sale of Birdstep AB leading to the above mentioned reclassification, there are no revenue reported in the first six months. Salaries and wages were NOK 8.5 (2.3) million.

Other operating expenses for the first six months were NOK 3.8 (2.7) million. EBITDA ended at NOK -12.3 (-5.0) million which represents an increased loss of NOK 7.3 million compared to the same period last year. As a result of the above, Income (Loss) from continuing operations before taxes of NOK -13.2 (-4.9) million was recorded in the period.

CASH FLOW.

SECOND QUARTER 2016 SIX MONTHS 2016

Cash flow for the second quarter was positive and our net cash balance increased by NOK 7.4 million to NOK 36.2 million. The second quarter last year showed a cash balance increase of NOK 6.5 million.

Net cash flow from operating activities for the quarter was NOK -6.0 million. Second quarter last year, net cash flow from operating activities was NOK 3.7 million. Net cash flow from investing activities was NOK 13.0 (-0.8) million originating from the sale of Birdstep AB.

Cash flow for the first six months was positive and our net cash balance increased by NOK 21.3 million to NOK 36.2 million. The first six months last year showed a cash balance increase of NOK 4.2 million.

Net cash flow from operating activities for the period was NOK 0.6 million. First six months last year, net cash flow from operating activities was NOK -9.1 million. Net cash flow from investing activities was NOK 13.0 (12.6) million and net cash flow from financial activities was NOK 7.5 (0.0) million for the period.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

	For the three		For the six	For the full
		months ended	months ended	year
	30.06.2016	30.06.2015	30.06.2016	30.06.2015	2015
OPERATING REVENUES	-	-	-	-	-
Cost of Sales	-	-	-	-	(69)
OPERATING EXPENSES
Salaries and wages (Note 2)	(7 885)	(1 086)	(8 530)	(2 307)	(3 427)
Other operating expenses	(1 992)	(1 386)	(3 796)	(2 708)	(4 379)
TOTAL OPERATING EXPENSES	(9 878)	(2 472)	(12 326)	(5 015 )	(7 807)
Operating income loss before depreciation
and amortization (EBITDA)	(9 878)	(2 472)	(12 326)	(5 015 )	(7 876)
Depreciation and amortization	-	-	-	-	-
Write down and impairment of intangible assets	-	-	-	-	-
Operating income loss after
depreciation and amortization (EBIT)	(9 878)	(2 472)	(12 326)	(5 015)	(7 876)
OTHER INCOME (EXPENSE)
Interest income, net Other financial items, net	- (389)	102 (3 571)	78 (906)	73 77	303 (90)
OTHER INCOME, NET	(389)	(3 469)	(828)	150	213
INCOME(LOSS) FROM CONTINUING OPERATIONS
BEFORE TAXES	(10 267)	(5 941)	(13 154)	(4 865)	(7 663)
Income taxes	-	-	-	-	160
INCOME(LOSS) FROM CONTINUING OPERATIONS	(10 267)	(5 942)	(13 154)	(4 865)	(7 503)
Profit from discontinued operations (Note 3)	33 902	(5 582)	25 277	5 788	(35 585)
NET INCOME(LOSS)	23 635	(11 524)	12 123	923	(43 088)
Earnings and diluted earnings per share
Continuing operations	(0.59)	(0,44)	(0.97)	(0,36)	(0,55)
Discontinued operations	2,33	(0.41)	1,86	0,43	(2,62)
Total	1,74	(0,85)	(0,89)	0,07	(3,18)

CONDENSED CONSOLIDATION STATEMENTS OF COMPREHENSIVE INCOME

	For the three months ended		For the six months ended		For the full year
	30.06.2016	30.06.2015	30.06.2016	30.06.2015	2015
Net income (loss) for the period	23 635	(11 524)	12 123	923	(43 088)
OTHER COMPREHENSIVE INCOME
Currency tranlation effect (including recycled accumu-	(16 838)	3 724	(17 171)	410	2 029
lated translation effects from discontinued operations)
TOTAL COMPREHENSIVE INCOME	6 797	(7 800)	(5 048)	1 333	(41 059)
Attributable to;
Equity holder of the parent company	6 797	(7 800)	(5 048)	1 333	(41 059)
TOTAL COMPREHENSIVE INCOME	6 797	(7 800)	(5 048)	1 333	41 059)

CONDENSED CONSOLIDATION BALANCE SHEETS

	As of
	30.06.2016	30.06.2015	2015
NON-CURRENT ASSETS:
Intangible assets	-	47 579	-
Tangible assets	-	1 073	305
Other non-current assets	-	-	-
TOTAL NON-CURRENT ASSETS	-	48 652	305
CURRENT ASSETS:
Accounts receivable	-	7 228	20 309
Other current assets	446	1 083	1 056
Restricted cash	-	1 755	-
Cash & cash equivalents	36 224	19 114	15 090
TOTAL CURRENT ASSETS	36 669	29 179	36 455
TOTAL ASSETS	36 669	77 831	36 760
SHAREHOLDERS' EQUITY:
Share capital (Note 4)	13 562	10 162	10.162
Share premium fund	38 272	38 272	38 272
Retained earnings, including translation reserves	(24 470)	18 890	(23 502)
TOTAL SHAREHOLDERS' EQUITY	27 365	67 324	24 932
NON-CURRENT LIABILITIES
Deferred tax liabilities	-	179	-
Other liabilities	-	-	-
TOTAL NON-CURRENT LIABILITIES	-	179	-
CURRENT LIABILITIES
Accounts payable	702	1 511	1 319
Deferred revenue	-	332	5 267
Accrued expenses and other liabilities	8 603	8 484	5 242
TOTAL CURRENT LIABILITIES	9 305	10 328	11 828
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	36 669	77 831	36 760

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

	For the three months ended		For the six month ended		For the full year
	30.06.2016	30.06.2015	30.06.2016	30.06.2015	2015
OPERATING ACTIVITIES
Income (loss) fr. continuing operations before taxes	(10 267)	(5 941)	(13 154)	(4 865)	(7 663)
Income (loss) fr. discontinuing operations
before taxes ( Note 3)	34 192	(5 582)	25 743	5 788	(35 585)
Depreciation and amortization	-	1 647	-	3 406	6 983
Write down and impairment of intangible assets	-	-	-	-	47 283
Profit on sales of discontinued operations	(34 233)	-	(34 233)	(12.863)	(12 863)
Change in receivables and payables	4 347	13 570	22 268	(550)	(14 128)
NET CASH FROM OPERATING ACTIVITIES	(5 960)	3 694	624	(9 085)	(14 128)
INVESTING ACTIVITIES
Capitalized development	-	(805)	-	(1 901)	(3 238)
Furniture, Machinery and Equipment
and leashold improvments	-	-	-	-	-
Change in loan balance with affiliated company	-	-	-	-	-
Disposal of discontinued operations net of cash
disposed off	13 021	-	13 021	14.462	14 462
NET CASH FROM INVESTING ACTIVITIES	13 021	(805)	13 021	12 561	11 224
FINANCIAL ACITIVITIES
New Issue (Note 4)	-	-	7 480	-	-
NET CASH FROM FINANCIAL ACTIVITIES	-	-	7 480	-	-
Effect of foreign exchange rate changes	312	3 570	8	685	1 287
Net increase(decrease) in cash & cash equivalents	7 374	6 458	21 134	4 161	(1 618)
Cash & cash equivalents, beginning of period	28 850	14 411	15 090	16 708	16 708
Cash & cash equivalents, classified as held for sale	-	-	-	-	-
Cash & cash equivalents, end of period	36 224	20 869	36 224	20 869	15 090

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

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

Share	Share	Other paid	Other	Translation	Total
capital	premium	equity	equity	reserves	equity
10 162	38 272	61 232	(102 064)	17 330	24 932
-	-	-	12 123	-	12 123
-	-	-	-	-	-
-	-	-	-	(17 330)	(17 330)
-	-	-	-	159	159
-	-	-	12 123	(17 171)	(5 048)
3 400	-	4 080	-	-	7 480
-	-	-	-	-	-
3 400	-	4080	-	-	7 480
13 562	38 272	65 312	(89 940)	159	27 365

		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

NOTE 1: 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 first six months of 2016, and the related information on Techstep 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 Techstep's foreign operations is the currency of the country in which the operations are conducted. The accounts of Techstep 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 June 30, 2016, the Company has 13,562,163 shares issued and 13,560,249 shares outstanding, the difference of 1,914 representing treasury shares.

NOTE 2: RELATED PARTY TRANSACTIONS

After the end of the period, on 1 July 2016, Techstep ASA (TECH) (former Birdstep Technology ASA) entered into an agreement with Zono Holding AS (Zono Holding), a company controlled by Techsteps largest owner Middelborg AS, of a transaction whereby TECH will acquire 100% of the shares in Zono AS (Zono) in exchange for shares to be issued in TECH (the Zono Transaction). Please see further details under subsequent event.

A retention remuneration for the CEO with a total cost of NOK 3.0 million and the same for the COO with a total cost around NOK 1.6 million have been reserved in the quarter

NOTE 3: DISCONTINUED OPERATIONS

On 8 March 2016 Techstep signed a share purchase agreement for sale of all shares in Birdstep Technology AB (Birdstep AB) to Smith Micro Software Inc for USD 2.0 million free of cash and net debt before account for transaction costs. as a result of the sale the operations in the US subsidiary, Birdstep Technology Inc (Birdstep Inc), have ceased and the company is under liquidation.

Analyzis of the result of discontinued operations is as follows

	For the three		For the six		For the full
		month ended		months ended
	30.06.2016	30.06.2015	30.06.2016	30.06.2015	2015
OPERATING REVENUES	-	10 944	1 693	26 506	56 410
Cost of Sales	> -	(833)	(549)	(1 786)	(3 562)
OPERATING EXPENSES
Salaries and wages	131	(8 914)	(6 951)	(17 945)	(32 358)
Other operating expenses	(97)	(5 036)	(2 754)	(11 312)	(17 669)
TOTAL OPERATING EXPENSES	34	(13 950)	(9 705)	(29 257)	(50 027)
Operating income loss before depreciation and
amortization (EBITDA)	34	(3 839)	(8 561)	(4 537)	2 730
Depreciation and amortization	-	(1 647)	(47)	(3 406)	(6 983)
Write down and impairment of intangible assets	-	-	-	-	(47 283)
Operating income loss after depreciation
and amortization (EBIT)	34	(5 487)	(8 608)	(7 943)	(51 535)
OTHER INCOME (EXPENSE)
Interest income, net	-	-	-	-	-
Other financial items, net	-	(89)	17	875	3 087
OTHER INCOME, NET	-	(89)	17	875	3 087
INCOME LOSS FROM DISCONTINUED OPERATIONS BEFORE TAXES	34	(5 576)	(8 591)	(7 069)	(48 449)
Income taxes	(365)	(6)	(365)	(6)	-
Profit from sale of Birdstep OY Profit from sale of Birdstep AB	- 16 903	- -	- 16 903	12 863 -	12 864 -
Recycled accumulated translation effects	17 330	-	17 330	-	-
INCOME LOSS FROM DISCONTINUED OPERATIONS	33 902	(5 582)	25 277	5 788	(35 585)

NOTE 4: SHARE CAPITAL AND SHAREHOLDERS

The Company's current share capital, including the private placement of 3 400 000 shares to Middelborg Invest AS, is NOK 13 562 163 divided on 13 562 163 ordinary shares with a par value of NOK 1.00. Subject to the below, the shares are issued and fully paid up. Birdstep has only one class of shares and all shareholders have equal rights according to Norwegian law.

Middelborg Invest AS's 3 400 000 shares from the private placement will not be admitted to trading on Oslo Børs until the Financial Supervisory Authority (Finanstilsynet) has approved and the Company has published a listing prospectus according to Section 7-3 of the Securities Trading Act, but each of these shares gives right to one vote at the Company's general meeting. All other shares are freely transferable, and each share gives the right to one vote at the Company's general meeting.

As of the date of this report the Company holds 1 914 treasury shares.

The Company's 5 largest shareholders are as follow:

Investor	Number of shares *	% of total	Type	Country
MIDDELBORG INVEST AS	4 508 041	33,24%	Comp.	NOR
MP PENSJON PK	758 286	5,59%	Comp.	NOR
VINTERSTUA AS	633 331	4,67%	Comp.	NOR
PETROLEUM INVEST	485 704	3,58%	Comp.	NOR
STROMLAND SIVERT NOTSUND	347 090	2,56%	Priv.	NOR

* Shareholding as per 16.07.22

After the end of the period the Company announced the full subscription of the Subsequent offering of 678.108 offer shares.

Following the registration of the Subsequent Offering with the Norwegian Register of Business Enterprises in August, the share capital of the Company will be NOK 14,240,271 divided into 14,240,271 shares, each with a par value of NOK 1.00. Please see further details under Subsequent Event.

NOTE 5: SUBSEQUENT EVENTS

ACQUISITION OF ZONO AS AND AGREEMENT TO ACQUIRE A MAJORITY STAKE IN TEKI SOLUTIONS AS

On 1 July 2016, Techstep ASA (TECH) (former Birdstep Technology ASA) entered into an agreement with Zono Holding AS (Zono Holding), a company controlled by Techsteps largest owner Middelborg AS, of a transaction whereby TECH will acquire 100% of the shares in Zono AS (Zono) in exchange for shares to be issued in TECH (the Zono Transaction). The assets of Zono will comprise 24.22% of the shares in Teki Solutions AS (Teki Solutions), 5.12% of the shares in Kjedehuset AS (Kjedehuset) and approximately NOK 55 million in net cash balance. In the Zono Transaction, Zono is valued at NOK 128 million, which will be settled by issuance of 58,181,818 TECH shares at a subscription price of NOK 2.20 per TECH share.

The Zono Transaction is expected to be completed ultimo August 2016, subject to the approval by an extraordinary general meeting of TECH expected to take place medio August 2016, and subject to fulfillment of certain customary terms and conditions.

Further, on 1 July 2016, TECH entered into an agreement in principle with Teki Gruppen AS (Teki Gruppen) to acquire an additional 53.94% of the shares in Teki Solutions, also this in exchange for shares to be issued in TECH (the Teki Gruppen Transaction).

The Teki Gruppen Transaction involves a price on the same general terms on valuation of Teki Solutions as implied in the Zono Transaction. The transaction is to be settled in full with TECH shares to be issued at a subscription price based on the volume weighted average share price at Oslo Børs over 15 trading days following completion of the Zono Transaction. However, the subscription price shall not be below NOK 2.5 and not above NOK 4.3.

The Teki Gruppen Transaction is, inter alia, conditioned upon the successful outcome of a financial and legal due diligence and approval at an extraordinary general meeting in TECH. If all conditions are satisfied the transaction is expected to be completed during Q3 2016.

The contemplated acquisitions support TECH's strategy to build on its knowledge and background in mobile technology to establish TECH as a driver of consolidation within the mobility and communications sector. The mobility and communications market is undergoing disruptive shifts where work is increasingly mobile and the value proposition is changing from telecoms' infrastructure towards a fragmented ecosystem of software and digital solutions.

The competitive landscape of this market in Norway is still fragmented. The changes in market dynamics require larger, but agile players that both have the ability to deliver innovative services and solutions at pace with technology development, and the security and performance needed to move business critical process and sensitive data out on handheld devices. TECH aims to be an attractive driver of consolidation, innovation and product development within the mobility and communications segment.

Teki Solutions provides B2B mobility and communications products and services in Norway. Its mobile device product offering is branded as Nordialog, and its solutions and service offering as SmartWorks. With a customer base of 3,600 companies with 220,000 end users, Teki Solutions has an extensive reach within the Norwegian business segment.

Kjedehuset, in which Zono AS owns 5.12%, is Telenor's Norwegian B2B sales and distribution organisation. Teki Solutions' Nordialog business has a franchise agreement with Kjedehuset and has together with SmartWorks a close relationship with Telenor. The contemplated transactions are expected to strengthen the combined distribution power and thereby strengthen the alliance with Kjedehuset and Telenor through a more rapid development of value adding services towards their joint extensive customer base. Zono has a net cash position of approximately NOK 55 million that will be part of the Zono Transaction. The strengthened cash position will be important in financing TECH's further organic and structural growth. The combined competence, network, assets and financial resources of TECH, Teki Solutions, Middelborg and Teki Gruppen is expected to catalyse growth.

RESULT OF SUBSEQUENT OFFERING

The Subsequent Offering announced by Techstep ASA (the "Company") on 5 July 2016, which offering expired on the 25 July 2016 was 8 times oversubscribed.

Based on the subscriptions received, including oversubscriptions, the Board of Directors, pursuant to an authorization from the Annual General Meeting dated 28 April 2016, has resolved to allocate and issue the maximum of 678,108 Offer Shares at a subscription price of NOK 2.20 per Offer Share. The oversubscribed shares have been allotted pro rata with the number of subscription rights exercised by the oversubscribing shareholder.

Following the registration of the Subsequent Offering with the Norwegian Register of Business Enterprises, the share capital of the Company will be NOK 14,240,271 divided into 14,240,271 shares, each with a par value of NOK 1.

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.

Techstep is exposed to various forms of market, operational and financial risk. Techstep´s business is dependent on the the contemplated transactions with Zono and Teki Group and also the partnerships under establishment between Smith Micro, Techstep and Teki solutions. Any delay or negative development regarding the partnerships or the contemplated transactions may have negative impact. Financial instruments that potentially subject Techstep to concentrations of credit risk consist primarily of cash.

The company's various risks have been described in the Annual Report for 2015 in further detail and no other risks has 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, 2016 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.

Oslo, 29 July 2016 Board of Techstep ASA

Ian Jenks Chairman of the Board

Tore Traaseth Board member

Ingrid Leisner Board member

January	February	March	April
sun mon tue wed thu fri sat 2 8 9 3 7 5 6 5 10 16 22 23 17 18 q 21 25 28 29 30 26 27 24 31	tue wed thu fri sun mon sat 5 3 Δ. -6 $\overline{7}$ 8 12 g $\Omega$ 13 14 15 6 18 19 20 21 22 23 24 25 26 27 28 29	fri sun mon tue wed thu sat 3 4 5 10 6 8 9 12 18 13 5 19 6 20 24 25 23 26 30 31 27 28 29	sun mon tue wed thu fri sat $\overline{2}$ 3 8 $\mathbf Q$ 6 7 5 10 13 15 16 14 17 8 21 22 23 9 20 24 25 27 28 26 29 30
May	June	July	August
fri tue wed thu sat sun mon 2 3 4 6 5 7 1 13 8 q 14 15 6 21 g 26 27 25 28 22 23 24 29 30 31	fri sun mon tue wed thu sat 2 3 4 8 $\overline{Q}$ 5 6 7 10 11 12 13 18 Δ 19 23 24 25 20 22 27 28 29 30 26	sun mon tue wed thu fri sat 2 8 $\mathbf Q$ 3 10 15 13 16 14 17 18 22 23 19 25 24 26 27 28 29 30 31	fri sun mon tue wed thu sat 2 3 4 5 6 $\overline{7}$ 8 q 13 5 20 14 18 9 6 21 25 26 27 22 24 23 29 30 31 28
September	October	November	December
sun mon tue wed thu fri sat 3 2 9 10 8 4 5 6 16 17 12 15 11 23 18 19 20 24 27 29 30 25 26 28	sun mon tue wed thu fri sat $\overline{2}$ 3 5 6 9 15 13 ⊥ 19 22 16 18 20 26 27 28 23 25 29 24 30 31	sun mon tue wed thu fri sat 3 2 4 5 8 6 g 13 5 8 19 4 6 24 20 23 25 26 27 28 29 30	sun mon tue wed thu fri sat 2 3 7 8 9 4 10 6 12 13 14 15 16 17 11 19 22 24 18 20 21 26 27 28 29 30 31 25

FINANCIAL CALENDAR 2016.

Preliminary financial calendar, with reservations for changes:

03.11.2016 QUARTERLY REPORT - Q3 2016

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