quarterly report q2 2015.towards hetnet deployments and customer centric services value-adds. even...

QUARTERLY REPORTQ2 2015.

CONTENT

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

QUARTERLY REPORT Q2 20152

CONTENT


BIRDSTEP TECHNOLOGY ASA INTERIM REPORT.

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

CEO UPDATE.

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, aug-menting cellular networks, operators and service pro-viders 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 expe-rience, using technology which instructs the consum-

er 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 devel-oped and the technology requires long and intense evaluation.

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.


CEO UPDATE

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 activ-ity 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 com-pared 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 op-portunities. 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 activi-ties 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 op-erators 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 Opera-tors to improve their quality of service being deliv-ered across both Wi-Fi and cellular networks through traditional heuristics and also by measuring QoE (Quality of Experience) metrics and providing dy-namic feedback to the network to adjust QoE param-

eters. 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 infor-mation 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) environ-ment and better monetize the user experience.

In the quarter the company continued to enhance its position as thought leaders in order to gain mar-ket share and to support the company´s sales activi-ties. Birdstep became member of Wireless Broadband Alliance, the premier Wi-Fi industry consortium and attended events in all its focus areas with new busi-ness leads as a result. We also took part in a webinar with the topic: Learn how to turn the HetNet into prof-it: 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 inte-gration. The white paper is available on the company´s website www.birdstep.com.

In closing, clearly this year has gotten off to a chal-lenging start. But I am confident we are taking the nec-essary 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 SchillingChief Executive Officer

BUSINESS FOCUS


BUSINESS FOCUS.

As stated in the previous reports Asia Pacifics contin-ues 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 net-works, 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 monetiza-tion 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 suc-cess 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 in-creased 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.

LARGE POTENTIAL REMAINS IN ASIA PACIFIC


MARKET OUTLOOK Q2 2015

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 Mar-ketsandMarkets.


MARKET OUTLOOK Q2 2015

Behind such headline figures lies an equally impres-sive increase in HetNet value, both to mobile opera-tors 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 inflec-tion 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 ana-lytics 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 intelli-gence 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 grow-ing demand from operators for actionable analytics combining data from the device and the two networks to gain insight into factors that affect revenue genera-tion and then take immediate actions to remedy these. In order to maintain a continuously good user experi-ence, 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 rev-enues 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 tar-get 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

RESULTS OF OPERATIONS.

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 activ-ity 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 head-count. 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) includ-ing consultants, engaged in the company were 46 (44).

EBITDA ended at NOK -6.3 (-2.4) million which repre-sents 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 posi-tively, 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 consul-tancy fees within sales and marketing function.

EBITDA ended at NOK -9.6 (-3.6) million which repre-sents 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.

SECOND QUARTER 2015 SIX MONTHS 2015


CASH FLOW

CASH FLOW.

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.

SECOND QUARTER 2015 SIX MONTHS 2015


COST REDUCTION

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 rev-enue with operating expenses and to preserve cash. The company will take efficiency measures who pri-marily relate to three areas: consolidation of repre-sentative 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 con-sultants, during the second quarter.

In short term Birdstep expects to return to the 2014 year cost level for the full year of 2015.


FINANCIAL STATEMENTS

FINANCIAL STATEMENTS.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(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 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 102 80 73 140 352 Other financial items, net (3,660) 510 952 629 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 0,06Total (0.11) (0.03) 0.01 (0.05) (0.09)




CONDENSED CONSOLIDATION STATEMENTS OF COMPREHENSIVE INCOME


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

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


OPERATING ACTIVITIESIncome (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 410Total 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

(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 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 - - - 2,385Equity as at 30 June 2014 10,162 38,272 61,232 (54,462) 11,712 66,916


NOTES

NOTES.

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 state-ments 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 state-ments is unaudited. In the opinion of management, such interim statements include all adjustments, which consist only of the normally recurring adjust-ments necessary for a fair presentation of the consoli-dated results of operations, financial position and cash flows for each period presented. The interim consoli-dated results are not necessarily indicative of results for the full year.

The same accounting policies and methods of compu-tation 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) ex-cluding 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 out-standing 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.

ACCOUNTING POLICIES


NOTES

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)



(In thousands of NOK , except share and per share data) For the six For the full months ended year 30.06.2014 2014

NON-CURRENT ASSETS: Intangible assets 2,524 2,484Tangible assets 71 65TOTAL NON-CURRENT ASSETS 2,595 2,548 CURRENT ASSETS: Accounts receivable 3,890 3,825Other current assets 578 395Cash & cash equivalents 2,656 168TOTAL CURRENT ASSETS 7,124 4,389 Assets held for sale 9,719 6,937 NON-CURRENT LIABILITIES Other liabilities 3,262 935TOTAL NON-CURRENT LIABILITIES 3,262 935 CURRENT LIABILITIES Accounts payable 1,245 861Deferred revenue 523 367Accrued expenses and other liabilities 3,038 3,175TOTAL CURRENT LIABILITIES 4,806 4,403 Liabilities held for sale 8,068 5,338

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 Compa-ny 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 finan-cial 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.

DISCONTINUED OPERATIONS.



DISCONTINUED OPERATIONS

(In thousands of NOK , except share and per share data) For the three For the six For the full months ended months ended year 30.06.2014 30.06.2014 2014

OPERATING REVENUES 6,243 11,734 23,922Cost of Sales -684 -1,484 2,765 OPERATING EXPENSES Salaries and wages -3,151 -6,133 -12,589Other operating expenses -1,218 -2,118 -4,534TOTAL 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 -686Write 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 25Other financial items, net 150 -174 2,223OTHER 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

Analysis of the result of discontinued operations is as follows

Cash Flow

(In thousands of NOK , except share and per share data) For the three For the six For the full months ended months ended year 30.06.2014 30.06.2014 2014

Operating Cash flow -1,385 1,142 -929Investing cash flow -509 -1,109 -1,526Financing cash flow 0 0 0Total cash Flow -1,894 33 -2,455


RISKS

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 ongo-ing 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 ac-cordance 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

RESPONSIBILITY STATEMENT.

Tom NymanBoard member (Chairman)

Ian JenksBoard member

Urban GillströmBoard member

Kirsten EnglishBoard member

Lonnie SchillingChief Executive Officer

Regina NilssonBoard member

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

FINANCIAL CALENDAR 2015.Preliminary financial calendar, with reservations for changes:

04.11.2015 QUARTERLY REPORT - Q3

quarterly report q2 2015.towards hetnet deployments and customer centric services value-adds. even...

Documents