Techstep ASA — Interim / Quarterly Report 2015

Feb 11, 2016

QUARTERLY REPORT Q4 2015.

CONTENT

BIRDSTEP TECHNOLOGY ASA INTERIM REPORT	3
CEO UPDATE	4
MARKET OUTLOOK Q4 2015	6
RESULTS OF OPERATIONS	8
CASH FLOW	9
COST REDUCTION	10
FINANCIAL STATEMENTS	11
NOTES	16
DISCONTINUED OPERATIONS	18
RISKS	20
FINANCIAL CALENDAR 2016	21

BIRDSTEP TECHNOLOGY ASA

OCTOBER - DECEMBER 2015

• > Revenue was NOK 17.4 (12.1) million, representing an increase of 44.6 % over the same period last year.
• > EBITDA ended at NOK 6.0 (-6.2) million, representing an increased profit of NOK 12.2 million over the same period last year.
• > Write-down of intangible assets were NOK 7.1 million
• > Continuing operating earnings per share amounted to NOK -0.01 (-0.07).
• > Total net cash flow amounted to NOK 1.9 (-0.2) million.
• > Cash balance was NOK 15.1 (16.5) million.

JANUARY - DECEMBER 2015

• > Revenue was NOK 56.4 (51.5) million, representing an increase of 9.6 % over the same period last year.
• > EBITDA ended at NOK -5.1 (-11.0) million, representing a decreased loss of NOK 5.9 million over the same period last year.
• > Write-down of goodwill and intangible assets were NOK 47.3 million
• > Continuing operating earnings per share amounted to NOK -0.55 (-0.15).
• > Total net cash flow amounted to NOK -1.6 (-5.6) million.
• > Cash balance was NOK 15.1 (16.5) million.

SIGNIFICANT EVENTS AFTER THE PERIOD

The company held an Extraordinary General Meeting on January 29, 2016. 17.1 percent of the shares were represented and all proposals to the Extraordinary General Meeting were approved, including;

• * Share Consolidation 10:1
• * Board authorization for a rights issue / private placement up to 50% of the registered share capital
• * Election of new board members Ingrid Leisner and Tore Traaseth.

The Minutes of the meeting are posted through OSE and on www.birdstep.com.

CEO UPDATE.

EVEN THOUGH THIS QUARTER CLOSED WITH POSITIVE RESULTS, BUSINESS CONDITIONS REMAIN CHALLENGING. REVENUE ENDED WITH NOK 17.4 MILLION. THE 44.6% INCREASE OVER THE SAME PERIOD LAST YEAR WAS POSITIVELY IMPACTED BY ONE TIME REVENUES AND CURRENCY EFFECT. OPEX (OPERATING EXPENSES) ENDED AT NOK 10.8 MILLION AND EBITDA AT NOK 6.0 MILLION, POSITIVELY IMPACTED BY THE ABOVE MENTIONED ONE TIME REVENUES AND EFFECTS OF THE COST SAVINGS. IN THE QUARTER WE REPORTED A POSITIVE CASH FLOW AND OUR NET CASH BALANCE INCREASED TO NOK 15.1 MILLION. HOWEVER, IF ONGOING REVENUE GOALS ARE NOT MET, THE COMPANY WILL EXECUTE ITS PLAN TO RAISE MORE FUNDING.

This quarter closed with a revenue of NOK 17.4 million, representing revenue growth of 44.6% compared to the same period last year. In the quarter we reported a positive cash flow and our net cash balance increased by NOK 1.9 million to NOK 15.1 million.

The fourth quarter last year showed a cash balance decrease of NOK 0.2 million. OPEX (Operating Expenses) ended at NOK 10.8 million compared to NOK 17.6 million for the same period last year.

Despite reporting both positive EBITDA and increased revenue, business conditions remain challenging. As reported Birdstep's largest customer by revenue reported a cost cutting initiative to reduce expenses by as much as \$2.5 billion during the next six months (Read more here). As a result revenue from the Smart-SELECT product to the customer ended December 2015, with exception of support and maintenance, which was recently prolonged through the end of 2016. The message from last quarter remains; if the company´s revenue goal are not met, the company will execute on its plan to raise more funding.

In spite of the challenges mentioned above we are still occupying an expanding market, particularly in the sphere of mobile analytics where we have established a reputation as a specialist provider to both MNOs (Mobile Network Operators) and other parties in the mobile ecosystem.

Analytics has risen sharply up the agenda for most MNOs over the last year, accompanied by a rebalancing of emphasis from the network to the consumer and client device. The backdrop is an ongoing plunge in the price of mobile data as the value of mobile services continues to shift from the raw commodity itself to the services and apps that exploit it. The challenge for MNOs lies in capturing as much of their subscribers' air time as possible rather than allowing OTT service and app providers to capture the revenue from these services. The good news is that mobile services are accounting for an ever greater proportion of all time spent on digital devices including PCs and laptops, accounting for over 50% of the total in the US by the end of 2015, according to research firm eMarketeer.

Mobile analytics is growing at a similar rate, not just with MNOs but also device makers, brands and other players focusing on the consumer digital lifestyle in an attempt to capitalize on this trend. The global market is forecast to grow from \$1.36 billion in 2015 to \$4.12 billion by 2020 at a Compound Annual Growth Rate (CAGR) of almost 25% according to business intelligence website MarketsAnd Markets. This includes mobile advertising and behavioural analytics but also the device, network and application performance analytics where Birdstep specializes. We have been quietly gaining a firm foothold in analytics and in particular a reputation for enabling various players in the telecom ecosystem to exploit the synergies with Wi-Fi in HetNets.

At the same time we have worked hard to expand our presence both geographically and in market breadth to exploit our expanding analytics capabilities and reduce our historical dependence on just one or two key clients.

It is still then a mixed picture but with our focus on exploiting all the work we have put into our Smart Analytics 3.0 platform to recharge the company during 2016.

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

Lonnie Schilling Chief Executive Officer

MARKET OUTLOOK Q4 2015.

ANALYTICS COMES HOME TO USERS IN 2016

Analytics is already an essential competitive weapon for many MNOs in a market now dominated by data and beset by fast declining margins per MB. The main focus so far has been on the network in the quest for efficiencies and management of offload to Wi-Fi, but that is changing with a fast growing emphasis on the consumer and associated end device in a bid to combat churn and open up new revenues by improving the user Quality of Experience (QoE). This trend is already evident and we predict that 2016 will be the year when consumer and device analytics comes of age not just for MNOs but right across the mobile value chain. This will include device OEMs and data market research firms, app providers and others.

Data from the device will complete the picture of end to end mobile activity, adding to what is already available from the cellular network and also increasingly from the Wi-Fi side. After all only around one third of all mobile data is carried over a cellular network with most of the rest going over Wi-Fi. Furthermore at least 40% of the information about the service as a whole can only be obtained from the devices themselves. On top of that the device is the only place where information about user activities and behavior can readily be obtained.

During 2016 then, we anticipate consumer analytics starting to have a significant impact on the bottom line for MNOs, both by applying it themselves for actions that boost customer satisfaction and upsell services, and by providing reports and insights to third parties.

By building a complete picture of the service and user experience, MNOs will be ready to enter the era of consumer analytics where not only can they optimize service performance but also add value in many other ways during their subscribers' digital journeys. Some of these benefits will be aimed at improving customer satisfaction and so reducing churn, such as increasing device battery life, which remains a major bugbear for mobile users. Battery capacity has struggled to keep pace with the increasingly voracious appetite for power of mobile devices and services, while discharge time has barely increased over the history of cellular services. Technologies, however, are already in place to track power consumption across different networks, including Wi-Fi as well as cellular, and combine this with knowledge of different apps.

Hence, in 2016, Operators can start to actively manage the user experience based on insights derived from the device end, such as switching off the Wi-Fi radio when not needed to improve battery life, which has already been shown to raise customer satisfaction and cut churn significantly. Access to accurate real time device data will also enable performance to be optimized and balanced against power saving.

Even more interesting perhaps from the MNO's perspective is the potential for observing the changing circumstances of their customers' digital journeys during the day and combining that with known preferences to generate relevant actions designed to add value and derive revenue. MNOs can combine device location with knowledge of the user's interests as well as immediate activities. This brings together data from three different sources, the network, customer database and the device.

Such information can be highly valuable not just to operators themselves but also third parties such as brands and app providers. Until now location based promotion and advertising has been fairly negligible compared with other forms of online targeting but there are signs that is changing too. A panel held by the magazine Advertising Week in September 2015 discussed how location based advertising was now gaining momentum as the technology matures, but with the message that to really take off, brands and app providers needed to tap information from devices that was currently beyond their reach.

Birdstep´s SmartANALYTICS platform provide operators and service providers with a unique set of tools to gain non-personal 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, which apps are consuming data, how much data is consumed by the apps, how frequently and how long apps are being used 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.

RESULTS OF OPERATIONS.

FOURTH QUARTER 2015 FULL YEAR 2015

Fourth quarter revenue was NOK 17.4 (12.1) million, representing an increase of 44.6% over the same period last year. One time revenues and 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 fourth quarter revenue originated from the end of the quarter eliminated Sprint SmartSelect product and accounted for 13.3 MNOK or 76.4% of total revenue.

Salaries and wages were NOK 6.5 (8.2) million. The number of employees as of 31.12.2015 was 26 (46).

Other operating expenses for the quarter were NOK 4.3 (9.3) million. The decrease is mainly related to less consultancy fees within sales and marketing function and the closure of the San Francisco office. The number of consultants as of 31.12.2015 was 3 (9), and the total number of full time equivalent (FTE) engaged in the company were 29 (55).

EBITDA ended at NOK 6.0 (-6.2) million which represents an increased profit of NOK 12.2 million compared to the same period last year.

Due to insecurity regarding future revenue, a write down of intangible assets of 7.1 MNOK was made in the quarter.

As a result of the above, Income (Loss) from continuing operations before taxes of NOK -1.4 (-6.8) million was recorded in the quarter.

Revenue for full year was NOK 56.4 (51.5) million, representing an increase of 9.6 % over the same period last year. Currency effect impacted sales positively during the year, mainly due to a continued strengthening of the USD towards the NOK compared to the same period last year. The majority of the revenue originated from the end of the year eliminated Sprint SmartSelect product, and accounted for 48.8 MNOK or 87.0% of total revenue.

Salaries and wages were NOK 35.8 (37.3) million.

Other operating expenses for the period were NOK 22.0 (22.4) million.

EBITDA ended at NOK -5.1 (-11.0) million which represents an decreased loss of NOK 5.9 million compared to the same period last year.

During the year write-downs of intangible assets of NOK 47.3 million have been made due to insecurity regarding future revenue.

As a result of the above, Income (Loss) from continuing operations before taxes of NOK -56.1 (-15.2) million was recorded for the year.

CASH FLOW.

FOURTH QUARTER 2015 FULL YEAR 2015

Cash flow for the fourth quarter was positive and our net cash balance increased by NOK 1.9 million to NOK 15.1 million. The fourth quarter last year showed a cash balance decrease of NOK 0.2 million.

Net cash flow from operating activities for the quarter was NOK 2.3 million. Fourth quarter last year, net cash flow from operating activities was NOK 0.8 million.

Cash flow for the full year was negative and our net cash balance decreased by NOK 1.6 million to NOK 15.1 million. The full year last year showed a cash balance decrease of NOK 5.6 million.

Net cash flow from operating activities for the period was NOK -14.1 million. For the period last year, net cash flow from operating activities was NOK -0.4 million.

COST REDUCTION.

A cost reduction programme was implemented during the third quarter in order to reduce cost and to preserve cash. The program has been executed according to plan, and the operating expenses have been reduced from 16.3 MNOK in the second quarter to 10.8 MNOK in the fourth quarter, representing a decrease of 34% between the quarters. The Company will continue to operate in cost saving mode.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

	For the three months ended		For the full year
	31.12.2015	31.12.2014	2015	2014
OPERATING REVENUES	17.426	12.055	56.410	51.482
Cost of Sales	(603)	(636)	(3.721)	(2.766)
OPERATING EXPENSES		-
Salaries and wages	(6.542)	(8.242)	(35.785)	(37.346)
Other operating expenses	(4.261)	(9.330)	(22.048)	(22.376)
TOTAL OPERATING EXPENSES	(10.803)	(17.572)	(57.834)	(59.722)
Operating income loss before
depreciation and amortization (EBITDA)	6.021	(6.154)	(5.145)	(11.006)
Depreciation and amortization	(969)	(1.686)	(6.983)	(7.700)
Write down and impairment of intangible assets	(7.057)	-	(47.283)	-
Operating income loss after
depreciation and amortization (EBIT)	(2.005)	(7.839)	(59.411)	(18.706)
OTHER INCOME (EXPENSE)
Interest income, net	118	127	303	352
Other financial items, net	465	871	2.997	3.108
OTHER INCOME, NET	583	998	3.300	3.460
INCOME(LOSS) FROM CONTINUING OPERATIONS BEFORE TAXES	(1.422)	(6.842)	(56.111)	(15.246)
Income taxes	178	(186)	160	(186)
INCOME(LOSS) FROM CONTINUING OPERATIONS	(1.244)	(7.028)	(55.951)	(15.432)
	-
Profit from discontinued operations	-	3.022	12.863	5.596
NET INCOME(LOSS)	(1.244)	(4.006)	(43.088)	(9.836)
Earnings and diluted earnings per share
Continuing operations	(0,01)	(0,07)	(0,55)	(0,15)
Discontinued operations	-	0,03	-	0,06
Total	(0,01)	(0,04)	(0,55)	(0,09)

CONDENSED CONSOLIDATION STATEMENTS OF COMPREHENSIVE INCOME

	For the three months ended		For the full year
	31.12.2015	31.12.2014	2015	2014
Net income (loss) for the period	(1.244)	(4.006)	(43.088)	(9.836)
OTHER COMPREHENSIVE INCOME
Currency translation effect	332	3.620	2.024	2.626
TOTAL COMPREHENSIVE INCOME	(912)	(386)	(41.059)	(7.210)
Attributable to:
Equity holder of the parent company	(912)	(733)	(41.059)	(7.210)
TOTAL COMPREHENSIVE INCOME	(912)	(733)	(41.059)	(7.210)

CONDENSED CONSOLIDATION BALANCE SHEETS

		As of
	31.12.2015	31.12.2014
NON-CURRENT ASSETS:
Intangible assets	-	48.246
Tangible assets	305	1.235
Other non-current assets	-	-
TOTAL NON-CURRENT ASSETS	305	49.481
CURRENT ASSETS:
Accounts receivable	20.309	7.876
Other current assets	1.056	3.678
Restricted cash	-	-
Cash & cash equivalents	15.090	16.539
TOTAL CURRENT ASSETS	36.455	28.093
Assets of disposal group classified as held for sale	-	6.937
TOTAL ASSETS	36.760	84.511
SHAREHOLDERS' EQUITY:
Share capital	10.162	10.162
Share premium fund	38.272	38.272
Retained earnings, including translation reserves	-23.502	17.557
TOTAL SHAREHOLDERS' EQUITY	24.932	65.991
NON-CURRENT LIABILITIES	-	-
Deferred tax liabilities	-	178
Other liabilities	-	-
TOTAL NON-CURRENT LIABILITIES	-	178
CURRENT LIABILITIES
Accounts payable	1.319	3.110
Deferred revenue	5.267	488
Accrued expenses and other liabilities	5.242	9.406
TOTAL CURRENT LIABILITIES	11.828	13.004
Liabilities of disposal group classified as held for sale	-	5.338
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	36.760	84.511

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

	For the three months ended			For the full year
	31.12.2015	31.12.2014	2015	2014
OPERATING ACTIVITIES
Income (loss) from continuing operations before taxes	(1.422)	(6.842)	(56.112)	(15.246)
Income (loss) from discontinuing operations before taxes	-	3.022	12.863	5.596
Depreciation and amortization	969	1.940	6.983	8.386
Write down and impairment of intangible assets	7.057	-	47.283	-
Profit on sales of discontinued operations	-	-	(12.863)	-
Change in receivables and payables	(4.311)	2.640	(12.283)	865
NET CASH FROM OPERATING ACTIVITIES	2.293	761	(14.129)	(398)
INVESTING ACTIVITIES
Capitalized development	(884)	(1.969)	(3.238)	(6.548)
Furniture, Machinery and Equipment
and leashold improvments	-	-	-	(1.086)
Change in loan balance with affiliated company	-	(722)	-	(722)
Disposal of discontinued operations net of cash disposed off	-	-	14.462	-
NET CASH FROM INVESTING ACTIVITIES	(884)	(2.691)	11.224	(8.356)
FINANCIAL ACITIVITIES
New Issue	-	-	-	2.385
NET CASH FROM FINANCIAL ACTIVITIES	-	-	-	2.385
Effect of foreign exchange rate changes	498	1.759	1.287	746
Net increase(decrease) in cash & cash equivalents	1.907	(172)	(1.618)	(5.623)
Cash & cash equivalents, beginning of period	13.183	16.879	16.708	22.331
Cash & cash equivalents, classified as held for sale	-	(168)	-	(168)
Cash & cash equivalents, end of period	15.090	16.539	15.090	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
	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)	-	-	-	(43.088)	-	(43.088)
Other comprehensive income for the period:
Displacements between restricted and unrestricted reservs	-	-	-	-	-	-
Foreign currency exchange	-	-	-	-	2.029	2029
Total comprehensive income	-	-	-	(43.088)	2.029	(41.059)
Transactions with shareholders:
Net issue of ordinary shares	-	-	-	-	-	-
Reduction in share capital and transfer of share premium	-	-	-	-	-	-
Total transactions with shareholders	-	-	-	-	-	-
Equity as at 31 December 2015	10.162	38.272	61.232	(102.064)	17.330	24.932

	Birdstep Technology ASA
	Share	Share Other paid Other Translation
	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)	-	-	-	(9.836)	-	(9.836)
Other comprehensive income for the period:
Displacements between restricted and unrestricted reservs	-	-	-	-	-	-
Foreign currency exchange	-	-	-	-	2.626	2.626
Total comprehensive income	-	-	-	(9.836)	2.626	(7.210)
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 31 December 2014	10.162	38.272	61.232	(58.976)	15.301	65.991

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 full year 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 December 31, 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 and considering the historically record of new customer acquisition, a write-down of intangible assets of 7.1 MNOK was made per the balance day and recognized directly in profit or loss. After the write-down the amount of intangible assets is reduced to zero.

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 SmartSelect product, there is a risk that the current 15.1 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 full year
	31.12.2015	31.12.2014	2015	2014
Smart Mobile Data
Operating Revenues	17.426	12.055	56.410	51.482
EBIT	(2.005)	(7.839)	(59.411)	(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 31.12.2015 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 full
	year
	2014
NON-CURRENT ASSETS:
Intangible assets	2.484
Tangible assets	65
TOTAL NON-CURRENT ASSETS	2.548
CURRENT ASSETS:
Accounts receivable	3.825
Other current assets	395
Cash & cash equivalents	168
TOTAL CURRENT ASSETS	4.389
Assets held for sale	6.937
NON-CURRENT LIABILITIES
Other liabilities	935
TOTAL NON-CURRENT LIABILITIES	935
CURRENT LIABILITIES
Accounts payable	861
Deferred revenue	367
Accrued expenses and other liabilities	3.175
TOTAL CURRENT LIABILITIES	4.403
Liabilities held for sale	5.338

Analysis of the result of discontinued operations is as follows

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

	For the three	For the full
	months ended 31.12.2014	year 2014
OPERATING REVENUES	6.397	23.922
Cost of Sales	-883	-2.765
OPERATING EXPENSES
Salaries and wages	-3.681	-12.589
Other operating expenses	-1.272	-4.534
TOTAL OPERATING EXPENSES	-4.953	-17.123
Operating income loss before depreciation and amortization (EBITDA)	561	4.034
Depreciation and amortization	-254	-686
Write down and impairment of intangible assets	0	0
Operating income loss after depreciation and amortization (EBIT)	307	3.348
OTHER INCOME (EXPENSE)
Interest income, net	25	25
Other financial items, net	2.690	2.223
OTHER INCOME, NET	2.715	2.248
PROFIT FROM DISCONTINUED OPERATIONS BEFORE TAXES	3.022	5.596
Income taxes	0	0
PROFIT FROM DISCONTINUED OPERATIONS	3.022	5.596

Cash Flow

	For the three	For the full
	months ended	year
	31.12.2014	2014
Operating Cash flow	-3.783	-929
Investing cash flow	-550	-1.526
Financing cash flow	0	0
Total cash Flow	-4.333	-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 December 31, 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
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$\overline{2}$ $\mathbf{1}$	$\overline{3}$ $\frac{1}{4}$			$\mathbf{1}$		$\mathbf{1}$	$\overline{2}$ 4 $\overline{3}$ 5 1
8 5 9 6 $7^{\circ}$	10 11	$\overline{2}$ $\overline{3}$ 4	5 6 7	8 $\overline{2}$	$\overline{3}$ 5 4	8 6 7	7 8 9 10 6 11 12
12 13 14 15 16	17 18	$\overline{9}$	10 11 12 13 14	15 9	10 11 12 13	14 15	14 15 16 17 18 19 13
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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
$\mathbf{1}$	$\overline{2}$ $\overline{3}$ $\mathbf{1}$	3 $\overline{2}$	5 6 4	$\overline{7}$	$\overline{2}$ $\mathbf{1}$	3 4 5	$\overline{2}$ $\mathbf{1}$
7 8 5 6	9 10 8	9	10 11 12 13 14	6	8 9 $\overline{7}$	10 11 12	6 8 $\overline{4}$ 5 $\overline{7}$ $\overline{9}$ $\overline{3}$
11 12 13 14 15 16 17	15		16 17 18 19 20	21		13 14 15 16 17 18 19	12 13 14 15 16 10 1 11
20 21 22 23 19 18	24 22	23	24 25 26 27 28	20	21	22 23 24 25 26	20 22 23 18 19 21 17
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
$\overline{3}$ $\frac{1}{4}$ $\overline{2}$ $\mathbf{1}$	5 6		$\mathbf{1}$ $\overline{2}$ $\overline{3}$	$\frac{1}{4}$			$\overline{2}$ $\overline{3}$ 4 5 $\mathbf{1}$ 6
10 11 12 13 8 $\mathbf{q}$		5 6 $\overline{7}$	8 $\overline{9}$ 10 11	$\overline{2}$	$\overline{3}$ 5 4	6 $\mathcal{B}$ 7	10 8 9 11 12 13 $7\overline{ }$
15 16 17 18 19 14	20 12	13 14	15 16 17	18 9	10	11 12 13 14 15	17 18 19 20 15 16 14
23 24 25 26 27 22 21	19	21 20	22 23 24	25 16	18 19 17	20 21 22	22 23 24 25 26 27 21
29 30 28		26 27 28 29 30 31				23 24 25 26 27 28 29	29 30 31 28
				30

FINANCIAL CALENDAR 2016.

Preliminary financial calendar, with reservations for changes:

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 AND SALES OFFICES IN KANSAS CITY, USA AND KUALA LUMPUR, MALAYSIA