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ANNUAL REPORT

2013

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Contents

Highlights 2013 ___________________________________________________________________________________________ 3

Report from the Board of Directors _____________________________________________________________________ 4

Consolidated Income Statement ______________________________________________________________________ 17

Consolidated Statement of Financial Position ________________________________________________________ 18

Consolidated statement of cash flow __________________________________________________________________ 21

Notes to the consolidated financial statements ______________________________________________________ 22

Profit and loss statements Cxense AS _________________________________________________________________ 51

Balance sheet Cxense AS _______________________________________________________________________________ 52

Cash flow statement Cxense AS _______________________________________________________________________ 54

Notes to the annual financial statements Cxense AS _________________________________________________ 55

Responsibility statement ______________________________________________________________________________ 63

CSR, working environment, discrimination and external environment ____________________________ 64

Auditors report _________________________________________________________________________________________ 65

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Highlights 2013

During the year, Cxense expanded its footprint with existing customers and secured a range of new

customers across the globe, including:

Dow Jones & Company, the New York based financial publisher, chooses Cxense Big Data,

Advertising and Content to power subscription optimization on the online edition of the Wall Street

Journal, the largest US newspaper by circulation

Globo Comunicaça o e Participaço es, the largest media group in Brazil and Latin America, signs a

commercial pilot agreement to explore the opportunities with the Cxense Solution Suite

Forecast Communication, the online technology provider controlled by the Nippon Television

Network Corporation of Japan, chooses Cxense to replace a number of local search and

recommendation solutions used to power their services

Grupo RBS, one of Brazil’s largest media conglomerates, chooses Cxense Content to power

personalized article recommendations on the front page of Zero Hora, Brazil’s sixth largest online

newspaper

Yomiuri of Japan, the largest newspaper in the world by circulation, expands their contract with

Cxense as they see further Cxense Analytics and Content use for their online site

Summit Media, the leading consumer magazine publisher in the Philippines, chooses the Cxense

Solution Suite to improve monetization of their 120 million monthly page views. They will use

Cxense Advertising, Content and Analytics

Polaris Media, the large media group in Norway, expands their use of Cxense Analytics following the

new Analytics features that were launched during 2H 2013. Customizable dashboards and better

user interest visualization are new features that increase the attractiveness of Cxense Analytics.

Furthermore, we made a strategic acquisition:

By acquiring Emediate, the leading Nordic ad serving technology provider, Cxense more than

doubled its customer base, enabling us to significantly expand the footprint for our unique SaaS

solution suite

Finally, we continued the development of our unique real-time SaaS solution suite:

Cxense technology empowers our customers to track their users across any device in real time and

over time, to gain deep audience insight, which can be used both to drive Cxense solutions

(Advertising, Analytics, Big Data/DMP, Content, and Search), and for customer applications, such as

email marketing and CRM systems.

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Report from the Board of Directors

OUR BUSINESS

Cxense was founded in February 2010. The Company provides cloud-based Software-as-a-Service (SaaS)

solutions to media and e-commerce companies that want to increase the functionality, relevance and overall

performance on their Internet sites.

Cxense has built the Extraordinary Insight EngineTM (EIE) for real-time analysis of content, user context, and

user data, including 1st and 3rd party data. The EIE is fully integrated with a range of solutions (Cxense

Advertising, Analytics, Big Data/DMP, Content, and Search), which are used by Cxense customers to increase

advertising revenue, user engagement, conversions to digital subscriptions and product sales.

The solutions based on the

EIE are provided as SaaS

(Software-as-a-Service)

services with monthly

recurring software service

fees and/or royalty payments

dependent on advertising

volume and transaction levels.

In addition, we charge

implementation fees and

consultancy services

amounting to 5-10% of

revenues in each quarter. The

sale of our SaaS solutions is

reported in the Cxense SaaS

business area and represents

the Company’s core business.

The EIE™ (Extraordinary Insight Engine™)

The EIE analyzes the behavior of more than 350 million Internet users and detect their location and device

and deduces their interest, intent, and much more. The EIE gives our customers a 360 degree view of their

online users, including also customer 1st party data, as well as 3rd party data.

The EIE technology has several unique aspects. It is end-to-end real time; from data capture, through

processing to actionable output. It is also mobile optimized through its non-cookie based data capture

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methodologies and low bandwidth consumption. With highly flexible APIs the EIE can power any

application and make it context aware.

It employs a unique behavioural, contextual and semantic processing; thus making user and content insight

actionable in real time.

Cxense Advertising

Cxense Advertising is our technology platform for high yield targeted advertising. Online companies use this

solution to increase their advertising revenue by serving relevant advertising and promotions to their users.

The Advertising solution provides targeted advertising on multiple cost models (cost-per-click, cost-per-

impression and cost-per-action basis), cross devices (computer, tablet and mobile) and with every

advertising formats (text, image and video/rich media). The Advertising solution can also be combined with

other Cxense applications for advanced promotion of digital subscriptions and for mixing targeted

advertising with relevant content (natural advertising).

Cxense Content

Cxense Content is used for content optimization and personalization on selected sections of a site or on the

complete site. By providing a personalized and more relevant experience to each user, the publishers

achieve increasing site traffic, readership and dwell time.

Cxense Search

Cxense Search is a cloud-based and easy to implement enterprise search solution. It represents a very

affordable, top quality, low maintenance, enterprise search solution for online companies. It is easy to

integrate with other Cxense applications, and it offers unique personalization and advertising monetization

opportunities for the search results pages.

Cxense Big Data/DMP

The Cxense Big Data solution offers extended APIs for integration with first and third party applications

with the Extraordinary Insight Engine (EIE). Thereby Cxense Big Data can serve as a general purpose Data

Management Platform (DMP) for customers’ marketing solutions. It can also serve as an enterprise

actionable data solution, enabling Cxense to compete in the rapidly developing market for Enterprise Big

Data processing solutions.

Cxense Analytics

Cxense Analytics is the analytics and reporting dashboard of the Cxense EIE – here our customers can

monitor real-time visualizations of traffic patterns, audience interests, content popularity, first party

customer input data across single sites and group of sites.

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Privacy and Transparency

Cxense is fully aware that the type of technology and services the Company provides has the potential to

conflict with the interests of end users, if used inappropriately. Therefore, Cxense is committed to safeguard

its services and only providing them in a way that improves the end-user experience. This is conducted in

collaboration with the Cxense customers, the data owners.

Cxense has a clearly stated Privacy Policy and is required to conform to the European Union’s Data

Protection Directive (Directive 95/46/EC, which is also embodied in the US Safe Harbor Privacy Principles

of Notice, Choice, Onward Transfer, Security, Data Integrity, Access and Enforcement, and Safe Harbor

Policies).

Cxense regularly reviews its operations in order to be in compliance in view of this Directive.

Hosting and SaaS operations

Cxense delivers its software-as-a-service from scalable outsourced data centres in both USA and Europe.

The Cxense software solutions are based on distributed software architecture making them data centre

agnostic – thus hosting capacity can be purchased choosing between several reputable providers at a

market price. With the Emediate acquisition, Cxense also got a physical data centre hosting most of the

Emediate advertising business.

The PCAN business segment

Cxense has also helped establish a range of Publisher-Controlled Advertising Networks (PCANs). The PCANs

act as publisher-controlled broker between the advertisers and the publishers, distributing and sharing the

advertising revenues generated in the network with the publishers. Cxense is an advertising technology

provider to the PCANs and charges a fee based on the PCAN revenues, thus aligning the interest of Cxense

and our customers. In Spain, the Company has retained a 56% ownership interest, and because of its

majority ownership, this PCAN is consolidated into the Group accounts, and it is reported in the Cxense

PCAN business area.

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2013 IN BRIEF

2013 was an exciting year for Cxense, with a range of new and important customer wins for our Software-

as-a-Service (SaaS) segment and with the completion of the acquisition of Emediate, the leading Nordic

advertising technology company.

During 2013 Cxense developed from an emerging SaaS company within the big data space to become a

recognized brand among online publishers that seek advanced technology solutions to improve the

performance of their sites through increasing individualization and relevancy. Most of the new customers

were online publishers, but we also acquired customers within the e-commerce vertical.

The software development teams also made good progress with continuous improvements to the Cxense

software Solution Suite.

2013 revenues for the Cxense SaaS segment

amounted to USD 5.6 million, a growth of 143%

compared to 2012 revenues of 2.3 million

There was also a quarter on quarter increase in every

quarter through the year with an average quarterly

CAGR of 16%.

Q4 2013 revenues for the Cxense SaaS segment

amounted to USD 2.65 million, a growth of USD 1.91

million (or 258%) compared to Q4 2012 revenues of

USD 0.74 million.

The Q4 2013 revenues from Cxense SaaS, excluding

the acquired entity Emediate, amounted to USD 1.3

million. This represents a 77% growth compared to

Q4 2012 revenues of USD 0.74 million.

The organic growth through 2013 was driven by

several new customer contracts, up-sales on existing

contracts and improved metrics for existing contracts. The contract with the North American publisher

Dow Jones & Company was the most significant addition to the customer portfolio. Dow Jones chose Cxense

Big Data, Advertising and Content to power digital subscription optimization for the Wall Street Journal.

USD 1.34 million of the Q4 2013 revenues came from the acquired entity Emediate, contributing for the two

months November and December 2013, i.e not a full quarter.

The Emediate acquisition more than doubles the Cxense SaaS segment revenue base. Emediate also adds a

portfolio of 150 customers with recurring SaaS revenues to Cxense, and creates the opportunity for sales

growth synergies going forward. Emediate is known for an efficient high quality ad-serving offering

2012: 2,300

2013: 5,573

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supported by a strong support team. By combining this offering with Cxense’ unique audience insight and

targeting capabilities to the Extraordinary Insight Engine (EIE), we believe we can offer a unique and future-

proof digital advertising offering to our customers.

Emediate was acquired for USD 10.28 million. The acquisition was financed through an issue of 3,691

Cxense shares, each at a subscription price of NOK 25 thousand (USD 4,255). Total proceeds from the stock

issue were USD 15.7 million. At the end of Q4 2013 the Company had 16,612 shares outstanding and 573

share options were allocated.

In 2013 Cxense SaaS established new corporate functions to scale the organization for future growth. The

Company established a Marketing function to increase brand awareness and Cxense corporate web site was

re-designed to increase lead generation. The Company also re-branded the Cxense solution suite and

established a Sales Development function to work with sales lead qualification and conversion at the

beginning of the customer funnel.

During 2013 Cxense established a dedicated Onboarding and Customer Success team to ensure efficient

best-practice implementation for new customers. Combined with the Emediate Support and Retention

teams we have built a new strong Customer Success operation that represents a significant improvement in

customer account management capabilities.

At the end of 2013, the Cxense SaaS area (including Emediate) had 92 employees (whereof six are working

as contractors with costs booked to other opex). 39 out of the 92 employees are working within software

development. 28 of the 92 employees joined through the Emediate acquisition.

Following the acquisition, the software development teams have developed a common road map for a new

combined Cxense Advertising platform that includes the best from Emediate Ad and Cxense Advertising.

Development of the other Cxense software solutions, with the Extraordinary Insight Engine (EIE) at the

core, continued to show good progress in Q4 2013. Non-cookie based data capture methodologies were

further developed to strengthen the user profile generation on mobile and tablet devices. In addition cross-

site tracking was developed further by utilizing more cross-site identifiers than previously.

Cxense Content that was launched in 2012 was further developed in 2013 with a new and extended

configuration interface integrated into Cxense Analytics.

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Cxense group – financial development summary

1) Q2 2013 cont’d excludes the discontinued operations of PPN AG (See note 4 for details). All other quarters are presented including PPN AG.

Segment results excluding the discontinued operations can be found in note 3.

2) Cost of sales includes the elimination difference from elimination of inter group transactions. For 2011 other cost of sales also includes

governmental R&D refunds booked as negative costs.

3) FY 2013 for the PCAN Segment includes continued operations only (excludes the discontinued operations of PPN Switzerland)

4) Emediate is included within operations for the months of November and December in the Q4 2013 and the FY 2013 figures above as the

company was acquired with effect as of Nov 1 (i.e not a full quarter effect).

5) Direct acquisition costs include cost to lawyers and financial advisors that performed due-diligence and general advisory services in

connection with the acquisition of Emediate (Transactions costs related to the share issue financing the acquisition are booked against other

paid-in capital and therefore visible in the consolidated statement of changes in equity, i.e. not in the profit and loss statement).

USD 1,000 Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013

Q2 2013

cont'd.

Qtr 3

2013

Qtr 4 2013

excl.

Emediate

Qtr 4 2013

incl. Emediate

Nov & Dec 13 FY 2013

IFRS IFRS IFRS IFRS IFRS IFRS IFRS IFRS IFRS IFRS IFRS

SaaS segment

Revenues total 389 503 674 736 840 993 993 1 090 1 314 2 650 5 573

Cost of sales 10 134 58 117 146 203 203 179 244 501 1 030

- - -

Gross profit 379 369 616 619 694 790 790 911 1 070 2 149 4 543

Gross magin % 97 % 73 % 91 % 84 % 83 % 80 % 80 % 84 % 81 % 81 % 82 %

Personnel 1 206 1 443 1 312 1 579 1 790 1 832 1 832 1 833 2 383 2 935 8 390

Other OPEX 218 348 489 221 676 802 802 643 1 566 1 835 3 956 Whereof direct acqusition costs 436 436 436

OPEX 1 423 1 791 1 801 1 800 2 466 2 633 2 633 2 476 3 950 4 770 12 346

- - - - - - - -

EBITDA -1 044 -1 422 -1 185 -1 181 -1 772 -1 844 -1 844 -1 565 -2 879 -2 621 -7 802 EBITDA before direct acqusition cost -2 444 -2 186 -7 366

PCAN segment

Revenues total 809 976 1 437 1 375 1 534 547 685 634 634 2 247

- - - - - - - -

Cost of Goods Sold 765 965 1 443 1 390 1 263 487 523 450 450 1 905

- - - - - - - -

Gross profit 43 11 -5 -15 272 60 162 184 184 342

Gross magin % 5 % 1 % 0 % -1 % 18 % 11 % 24 % 29 % 29 %

Personnel 180 202 226 238 291 124 109 107 107 427

Other OPEX 119 66 107 97 129 73 35 78 78 239

OPEX 299 268 332 335 419 196 144 185 185 666

- - - - - - - -

EBITDA -256 -257 -338 -350 -148 -137 18 -1 -1 -324

GROUP

Revenues all segments 389 1 312 1 650 2 173 2 215 2 527 1 540 1 775 1 948 3 284 7 820

Intra-segment eliminations - -61 -84 -112 -110 -126 -40 -67 -72 -72 -208

Revenues consolidated 389 1 251 1 566 2 061 2 105 2 401 1 500 1 708 1 876 3 212 7 612

EBITDA -1 044 -1 678 -1 442 -1 519 -2 122 -1 991 -1 980 -1 547 -2 880 -2 622 -8 126

EBITDA before direct acqusition cost -2 445 -2 186 -7 690

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ORGANIZATIONAL DEVELOPMENT AND THE ENVIRONMENT

The Board of Directors would like to thank all Cxense employees for their contribution throughout the year.

The commercial achievements and the application improvements represent a significant leap in the right

direction.

The Cxense overall headcount grew from 58 at the beginning of 2013 to 101 at the end of the year, a growth

of 43 employees. The group parted with 7 employees as a result of the PPN divestment, so gross growth of

51 employees.

The Cxense SaaS business area headcount grew from 45 at the beginning of the year to 92 at the end of the

year (including Emediate), a growth of 47 employees. 28 new employees came with the Emediate

acquisition. Sales, marketing & sales support grew from 14 to 21, Development grew from 21 to 39,

Customer Success (including implementation, first line support and retention) grew from 5 to 25 and

Management & Admin grew from 5 to 7.

During 2013 Cxense experienced a good interest for vacant positions, both within the R&D teams and for

Sales & Marketing as well as management.

The Cxense SaaS business area has Software development offices in Oslo, Norway, Stockholm Sweden and

Melbourne, Australia. The Sales & Implementation resources are located in Oslo, Denmark, Copenhagen,

Melbourne, Tokyo, Singapore, London, San Francisco, Boston, Miami, Rio de Janeiro and Buenos Aires. The

marketing, first line support and retention resources are located in Oslo and Copenhagen, Denmark. The

Cxense group is headquartered in Oslo, Norway.

Cxense has implemented cloud-based collaboration tools to communicate efficiently in all functional areas

of the organization to ensure efficient communication, project management and implementation of routines

throughout the organization.

During 2013 Cxense had employees from thirteen different nationalities. Within the group 16 out of the

total 101 employees at the end of 2013 were women, and 85 were men. For the PCAN segment 5 out of 9

were woman, and for the SaaS segment 11 out of 92 were woman. Within the SaaS segment the recruiting

base for R&D and Sales resources comprise of mostly men. We seek to identify highly qualified candidates

for all positions and maintain an environment that is “gender and background neutral”. In its hiring process

the Group tries to hire the candidates considered to be the ones with the best future potential regardless of

ethnic origin, religious beliefs or orientation, nationality or other criteria not relevant to their work. The

group does not classify its employees based on such criteria nor does it consider them relevant in relation to

careers within Cxense.

The Board of Directors have six board members. Three of the board members are employed by the

Company. All board members are men.

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The Board believes that the working environment at Cxense is in compliance fully with relevant laws and regulations. There were no workplace injuries to the Company's employees causing absence from work, and no significant incidents involving the Company's assets have occurred. Sick leave was less than 3% in 2013, and has been at the same level in previous years.

There is very limited pollution of the environment as a result of Cxense activities. Pollution is related to

business travel, normal office activities as well as electric consumption from hosting of services.

GROUP FINANCIAL STATEMENTS

The 2013 Group Revenue for continuing operations amounted to USD 7.6 million, an increase of USD 4.6

million from 2012 (USD 3.0 million). The increase in Revenue is due to the acquisition of the Emediate

business in November 2013, which contributed USD 1.34 million of the revenue as well as organic growth.

The Cxense SaaS segment excluding Emediate experienced a USD 3.3 million revenue increase as a result of

the continued growth in the number of customers and the PCAN business segment had increased sales of

USD 1.6 million due to the inclusion of the business for a full year in 2013 and increased advertising,

advertising performance and advertising requests from publishers.

The 2013 Cost of Sales amounted to USD 2.7 million, compared to USD 1.0 million in 2012. The SaaS

Segment Cost of Sales for 2013 was USD 1.0 million, while the PCAN segment Cost of Sales was USD 1.9

million before inter group eliminations of USD 0.2 million. Cost of Sales within the SaaS segment relates to

the hosting of the software applications used by our customers as well as sales partner commission from the

Emediate business. Cost of Sales within the PCAN segment relates to revenue share paid to publishers

providing their advertising space, as well as agency commission paid to advertising agencies. The 2013

Gross Profit for the SaaS segment amounted to USD 4.5 million (gross margin of 86%). The gross profit for

the continuing PCAN segment was USD 0.34 million (gross margin of 15%).

The 2013 Employee Benefit Expenses were USD 8.8 million, compared to USD 5.7 million in 2012. The

increase is due to a headcount of 92 at December 2013 compared to 58 at December 2012. The acquisition

of Emediate incurred USD 0.55 million of employee benefit expenses and 28 additional employees. At 31

December 2013, 92 employees were employed within the SasS segment (28 within the Emediate business)

and 9 within the PCAN segment.

The group depreciation expense in 2013 was USD 0.23 million compared to USD 0.021 million in 2012.

Traditionally the Depreciation Expense has been consistently low due to the limited non-current assets. The

large distributed cloud- based systems operated by Cxense are hosted on platforms leased from large scale,

reputable hosting suppliers. Since the acquisition of Emediate the depreciation expense now includes

amortization of identifiable intangible assets of USD 0.19 million. The Groups R&D cost is expensed (not

capitalized).

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Other operating expenses for 2013 amounted to USD 4.2 million compared to USD 1.4 million in 2012. The

majority of the expenses related to marketing and external consulting (audit, legal, and other), the latter

driven by activities such as conversion to IFRS, the sale of PPN AG, the acquisition of Emediate and the

connected financing. The increase is in line with the expansion of the existing SaaS business and the

inclusion of the Emediate business since November 2013. Additionally USD 0.43 million of costs associated

with the acquisition of Emediate has been charged to other operating expenses

The Finance Income in 2013 was USD 0.37 million, largely relating to interest earned on bank deposits and

cash arising from the share issue proceeds in 2012 and 2013. Finance Income in 2012 was USD 0.02

million. Finance Expenses, mostly relating to currency expenses, amounted to USD 0.18 million in 2013 and

USD 0.09 in 2012.

Income Tax Expense for 2013 was a positive USD 0.015 million compared to negative USD 0.03 in 2012. The

Income Tax Expense arises in the Cxense SaasS subsidiaries in USA, Japan and Australia that perform Sales &

Marketing and Research & Development activities. Positive Emediate Tax Adjustments arising from carry

forward tax losses have offset this.

The Group Net Loss from continuing operations for 2013 amounted to USD 8.2 million, compared to a Net

Loss of USD 5.3 million in 2012. The continuing PCAN operation contributed USD 0.36 of the operating loss.

The Emediate business contributed a net profit of USD 0.2 million. Overall the Net Result for 2013

represents a loss of USD 60 per share, comparable to 2012 of USD 57 per share.

The accounting entries for sale of the PCAN subsidiary resulted in a gain of USD 0.14 million. The full details

of the sale of the PCAN subsidiary are outlined in Note 4 to the accounts.

Total Assets at the end of 2013 amounted to USD 23.3 million compared to USD 13.0 million at 2012. The

increase is mainly due to the investment of the Emediate Business resulting in the recording of Goodwill and

Intangible Assets amounting to USD 9.2 million. Cash and cash equivalents amounted to USD 8.8 million at

the end of 2013 and USD 10.2 million at the end of 2012. Trade Receivables were USD 3.0 million at the end

of 2013, compared to USD 1.9 million at the end of 2012. The increase in 2013 Receivables is due to the

growth in external customers billings in the SaaS Cxense and the PCAN segment and includes the Emediate

receivables balance of USD 1.5 million at the end of 2013. Short term assets at the end of 2013 increased by

USD 1.1 million on the 2012 amount of 0.76 million mostly due to the USD 1.3 million Escrow account

balance related to the delayed payments of parts of the Emediate acquisition proceeds (booked as short

term assets).

Total Current Liabilities at the end of 2013 were USD 5.8 million compared to USD 3.3 million at the end of

2012. The increase is mainly due to the inclusion of the payment outstanding on the Emediate acquisition

on escrow account of USD 1.3 million as well as the inclusion of the Emediate balance sheet and unpaid

transaction fees of USD 0.8 million related to the Emediate acquisition and the corresponding share issue.

These transaction fees were paid in January 2014. Total transaction costs related to the acquisition of

Emediate and the corresponding share issue was USD 1.1 million.

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The deferred tax balance outstanding of USD 0.65 million at the end of 2013 relates to the Emediate

business.

Net Cash Flow used in Operating Activities during 2013 was USD -7.8 million compared to USD -5.0 during

2012.

Net Cash flow used in Investing activities was USD -9.8 million in 2013 compared to USD 0.09 million in

2012. The funds were predominantly used to acquire the Emediate business. The total acquisition price

was USD 10.28 million and was financed by the issue of 3,691 Cxense shares towards existing and selected

new shareholders.

Net Cash flow from financing activities was USD 16.2 million in 2013 compared to USD 13.4 million in 2012.

Both amounts relate to share issue proceeds. The proceeds from the 2013 share issues were largely used to

acquire the Emediate business.

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PARENT COMPANY FINANCIAL STATEMENTS

Revenue in the parent company amounted to NOK 23.3 million in 2013 compared to NOK 12.7 million in

2012. Personnel and payroll costs were NOK 24.8 million in 2013, up from NOK 10.5 million in the

preceding year. The increase is largely explained by higher average manning levels and increased notional

(non-cash) cost of share-based remuneration. The parent company employed on average 28 full-time

employees compared to 14 in 2012.

Cost of services amounted to NOK 32.2 million in 2012, an increase of NOK 4.0 million the preceding year

(2012: 28.2 million NOK). The cost of services largely relates to the purchases of services from subsidiaries.

All subsidiaries experienced increased activity in research and development activities and sales and

marketing costs.

Other operating expenses amounted to NOK 14.3 million compared to NOK 3.5 million in 2012. Of this NOK

5.2 million related to travel and marketing costs, NOK 1.3 million related to other operating expenses and

NOK 1.3 million was associated with office expenses. During the year a total 6.7 million NOK was spent on

audit, consulting and legal fees. The audit fee relating to the 2012 audit and expensed in 2013 was 0.3

million NOK. Higher consulting and legal expenses were incurred largely associated with costs involved in

the acquisition of Emediate.

Financial items amounted to a net gain of NOK 1.2 million in 2013, compared to loss of NOK 0.04 million in

2012. Interest income on cash deposits amounted to NOK 0.93 in 2013 compared to NOK 0.28 in 2012.

Other financial income amounted to NOK 1.3 million compared to NOK 0.2 in 2012. A write down in 2013

of NOK .09 million was recorded against financial assets. Other financial expense relating to foreign

exchange adjustments of NOK 1.0 million was recorded compared to NOK 0.2 million in 2012.

The net result for 2013 for Cxense AS was a loss of NOK 46,850,808.

The Board of Directors proposes that NOK 45,684,056 of the loss is carried forward as an uncovered loss

and NOK 1,166,752 is transferred to other equity. Cxense AS does not have any unrestricted equity. The

Board does not propose to pay a dividend for 2013.

SHARE CAPITAL

During the year Cxense made 3 private placement share issues. The first was made in July 2013 where 37

shares were issued at NOK 23,000 per share raising NOK 0.85 million. The second placement was made in

November 2013 where 35 shares were issued at NOK 23,000 per share raising NOK 0.81 million. The third

placement was made in December issuing 3,910 shares at a price of NOK 25,000 per share, thereby raising

NOK 97.7 miilion. In total all share issues raised NOK 99.4 million in new capital.

As at 31st Decmeber 2013 Cxense AS has share capital of NOK 16, 612, 000 consisting of 16 612 shares,

with a nominal value of NOK 1 000 each.

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The Board of Directors has been authoirsed to issue 1040 shares as part of the share based program

payment. At the end of December 2013 the board has allocated 573 share options. Costs of share based

payments are booked to the profit and loss statement according to the IFRS 2 accounting standard.

RISKS AND RISK MANAGEMENT

Cxense is exposed to a number of risks of a financial and operational nature. Cxense markets are undergoing

rapid technological change and the Company’s future success will depend on its ability to meet the changing

needs of the industry.

Cxense is subject to certain financial risks associated with currency and interest rates. There is a broad

currency mix on both the revenue and the cost side so there is no single large currency risk identified.

Cxense has not entered into any hedging agreements.

Cxense operates at a loss and does not have any assets suitable for secured borrowing. This may lead to

requiring additional capital, which if obtainable, could dilute the ownership interest of investors.

Going forward Cxense may be subject to government regulations affecting the industry, which could

adversely affect the current business model. The Company is not aware of any forthcoming legislation or

regulation that will affect the business negatively.

GOING CONCERN, EVENTS IN 2014

The board confirms that the financial statements of the company as well as the parent company have been

prepared under the going concern assumption. The Board has a reasonable expectation that the Company

has adequate resources to continue in operational existence, based on revenue forecast and projected

expenses. The company operates in immature markets, and the Board is prepared to take the measures

necessary to secure continued operations, either through reducing cost or through funding the company

with equity.

Between 31 December 2013 and the presentation of this report, no events have occurred which

substantially impact on the result for 2013 or the value of Cxense assets and liabilities at the end of the 2013

except for the following: The Cxense Board of Directors has allocated 90 share options so the total number

of allocated share options at the date of the report was 663 compared to 573 at the end of 2013. On March

21 2014, the Company’s CEO John Markus Lervik assumed a new position in the organisation with the title

«Founder», and Raman Bhatnagar was appointed as the new CEO.

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OUTLOOK

Cxense experiences increasing customer interest for its solutions for real-time analytics, digital advertising,

actionable Big Data processing, content optimization and personalization, and search. Online publishers and

media companies continue to be the main customers targeted in the near term, with interesting market

opportunities within the e-commerce sector emerging in the medium term.

In the longer term, we also see opportunities in other business verticals for EIE, our Big Data platform, as

companies seek to improve customer understanding, analytics and communication.

Most online companies are experiencing significant growth on new devices and formats, mainly tablets and

mobile smart phones. This requires adaptation of their content and monetization methods. The Cxense

solutions have cross-device support (laptop, mobile tablet) and mobile growth represents a significant

market opportunity for us.

Our commercial product platform addresses large and fast-growing markets. The global online advertising

market is estimated to be more than USD 100 billion in 2013, and is expected by leading industry groups to

grow to more than USD 200 billion by 2020. The global e-commerce market is estimated to pass the USD

1,000 billion mark by 2013, and is growing about 20% per year. Industry analyst group, Gartner expects that

Big Data will drive USD 230 billion in IT spending through 2016, up from USD 96 billion in 2012(1).

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Consolidated Income Statement

USD 1,000 Note

Year ended

31 December

2013

Year Ended

31

December

2012

Continuing operations:

Revenue 3, 4,5 7 612 2 961

Operating expense

Cost of sales 3,4,5 2 728 1 061

Employee benefit expense 6 8 814 5 700

Depreciation expense 11 227 21

Other operating expense 7 4 209 1 446

Total operating expense 15 978 8 228

Net operating income/(loss) (8 366) (5 266)

Financial income and expense

Finance income 8 367 89

Finance expense 8 (179) (95)

Net financial income/(expense) 188 (7)

Net income/(loss) before taxes (8 178) (5 273)

Income tax expense 9 (15) 33

Net income/(loss) for the period from continuing operations (8 163) (5 306)

Discontinued operations

Net income/(loss) for the period from

discontinuing operations 4 (24) (442)

Total net income/(loss) for the period (8 187) (5 748)

Net income/(loss) attributable to:

Owners of the Company (8 041) (5 564)

Non-controlling interests (147) (183)

Earnings per share:

Basic and diluted 10 (0,60) (0,57)

Statement of comprehensive income

Net income/(loss) for the period (8 187) (5 748)

Other comprehensive income:

- Currency translation differences 562 (72)

Total comprehensive income/(loss) (7 625) (5 820)

Total comprehensive income/(loss) attributable to:

Owners of the Company (7 478) (5 636)

Non-controlling interests (147) (183)

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Consolidated Statement of Financial Position

USD 1,000 Note

As at 31 December

2013

Assets

Non-current assets

Goodwill 11 3,807

Deferred tax asset 9 36

Intangible assets 11 5,429

Office machinery, equipment,etc. 11 295

Other financial assets 12 20

Total non-current assets 9,586

Current assets

Trade receivables 13 3,000

Other short-term assets 14 1,870

Cash and cash equivalents 15 8,843

Total current assets 13,714

Total assets 23,300

As at 31 December

2012

-

14

2

82

12

110

1,873

764

10,210

12,847

12,958

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USD 1,000 Note

As at 31 December

2013

As at 31 December

2012

Equity and liabilities

Equity

Share capital 16 2,713

Own shares (56)

Other paid in capital 22,914

Currency translation differences 764

Retained earnings (9,179)

Equity attributable to the holders of the Company 17,155

Non-controlling interest 20 (272)

Total equity 16,883

Liabilities

Non-current liabilities

Deferred tax liabilities 9 654

Total non-current liabilities 654

Current liabilities

Trade payables 18 1,933

Current taxes 9 35

Other short-term liabilities 17 3,794

Total current liabilities 5,763

Total liabilities 6,417

Total equity and liabilities 23,300

2,269

-

13,803

201

(6,453)

9,820

(125)

9,695

-

-

1,651

76

1,536

3,263

3,263

12,958

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Consolidated statements of changes in equity

USD 1,000

Nominal

share

capital

Other paid

in capital

Currency

translation

differences

Retained

earnings

Attributable to

owners of

parent company

Non

Controlling

interest

Total

equity

Total equity as at 1 January 2012 1,505 4,939 273 (4,663) 2,054 2,054

0 0

Profit for the period (5,564) (5,564) (183) (5,748)

Other comprehensive income (72) (72) (72)

Total comprehensive income/(loss) for the year 0 (72) (5,564) (5,636) (183) (5,820)

Reduction of paid in capital (4,311) 4,311 0 0

Transaction costs (193) (193) (193)

Share based payments 56 56 56

Increase in share capital 649 12,934 13,583 58 13,641

Currency effects from translation of equity 115 378 (537) (43) (43)

Total equity as at 31 December 2012 2,269 13,803 201 (6,453) 9,820 (125) 9,695

USD 1,000

Nominal

share

capital Own shares

Other paid

in capital

Currency

translation

differences

Retained

earnings

Attributable to

owners of

parent

company

Non

Controlling

interest Total equity

Total equity as at 1 January 2013 2,269 13,803 201 (6,453) 9,820 (125) 9,695

0 0

Profit for the period (8,041) (8,041) (147) (8,187)

Other comprehensive income 562 562 562

Total comprehensive income/(loss) for the year 0 562 (8,041) (7,478) (147) (7,625)

Reduction of paid in-capital (4,773) 4,773 0 0

Transaction costs (633) (633) (633)

Share- based payments 191 191 191

Increase in share capital 650 15,583 16,233 16,233

Purhcase own shares (56) (56) (56)

Currency effects from translation of equity (206) (1,256) 541 (922) (922)

Total equity as at 31 December 2013 2,713 (56) 22,913 764 (9,179) 17,154 (272) 16,882

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Consolidated statement of cash flow

USD 1,000 Note

Cash flow from operating activities

Profit / (loss) before income tax (including disposal group)

Adjustments:

Income tax payable

Share- based payments 6

Result from investment in associates 12

Depreciation and amortization 11

Impairment

Net interest expense

Currency translation effects

Change in trade receivables

Change in trade payables

Change in other accrual and non-current items

Net cash flow from / (used in) operating activities

Cash flow from investing activities

Investment in furniture, fixtures and office machines 11

Investment in intangible assets 11

Investment in associated companies 12

Investment in subsidiary (1) 3

Sale of subsidiary (1) 4

Net cash flow from / (used in) investing activities

Cash flow from financing activities

Year Ended

31 December

2013

(8,202)

199

227

(364)

465

(544)

409

(7,810)

(62)

(0)

(9,809)

55

(9,817)

Year ended

31 December

2012

(5,715)

(3)

53

52

23

(113)

(1,737)

1,602

750

(5,088)

(34)

(2)

(52)

(87)

Net proceeds from share issues

Proceeds from minority interest

16,260 13,390

58

Net cash flow from / (used in) financing activities

Net increase/ (decrease) in cash and cash equivalents

Cash and cash equivalents at the beginning of the period

Cash and cash equivalents at the end of the period

(1) Cash effects are presented net of cash held by subsidiaries acquired, and cash held by subsidiary sold. Gross amounts

are disclosed in note 3 (Acquisition) and note 4 (Sale of subsidiary).

16,260

(1,367)

10,210

8,843



13,448

8,272

1,938

10,210



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Notes to the consolidated financial statements

NOTE 1 GENERAL INFORMATION

Cxense AS which is the parent company of the Cxense group (the Group) is a limited liability

company incorporated and domiciled in Norway, with its Head Office in Oslo. The Group is a global

technology company delivering innovative and intuitive products that help companies build

unique online experiences.

The financial statements were approved by the company’s board on 25 March 2014.

This is the Groups second audited consolidated financial statements, and covers the period from 1

January 2011 up until 31 December 2013.

NOTE 2.1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The principal accounting policies applied in the preparation of these consolidated financial

statements are set out below.

Basis for preparation

The consolidated financial statements have been prepared in accordance with International

Financial Reporting Standards (IFRS) as adopted by the European Union (EU) and in accordance

with the additional requirements following the Norwegian Accounting Act.

The financial statements have been prepared on a historical cost basis.

Basis of consolidation

The Group’s consolidated financial statements comprise Cxense AS and its subsidiaries.

Subsidiaries are fully consolidated from the date of acquisition, being the date on which the Group

obtains control, and continue to be consolidated until the date that such control ceases. The

financial statements of the subsidiaries are prepared for the same reporting period as the parent

company, using consistent accounting policies. All intra-group balances, income and expenses,

unrealized gains and losses and dividends resulting from intra-group transactions are eliminated

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in full. A change in the ownership interest of a subsidiary, without a change of control, is

accounted for as an equity transaction.

FOREIGN CURRENCY

Functional currency, presentation currency and consolidation:

The Group’s presentation currency is USD. The functional currency of the Parent Company is NOK.

For consolidation purposes, the balance sheet figures for subsidiaries with a different functional

currency than USD are translated into the presentation currency (USD) at the rate applicable at

the balance sheet date. Income statements are translated at the exchange rate that approximate

the prevailing rate at the date of transaction. Exchange differences from translating subsidiaries

are recognised in other comprehensive income. Currency effects from translating equity items in

the Parent Company, are presented within equity.

Transactions in foreign currency

Foreign currency transactions are translated into the functional currency using the exchange rates

at the transaction date. Monetary balances in foreign currencies are translated into the functional

currency at the exchange rates on the date of the balance sheet. Foreign exchange gains and losses

resulting from the settlement of such transactions and from the translation of monetary assets

and liabilities denominated in foreign currencies are recognised in the income statement.

PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment are stated at historical cost less accumulated depreciation and any

impairment charges. Depreciations are calculated on a straight line basis over the assets expected

useful life and adjusted for any impairment charges. Expected useful lives of long-lived assets are

reviewed annually and where they differ significantly from previous estimates, depreciation

periods are changed accordingly. Ordinary repairs and maintenance costs are charged to the

income statement during the financial period in which they are incurred. Gains and losses on

disposals are determined by comparing the disposal proceeds with the carrying amount and are

included in operating profit. Major assets with different expected useful lives are reported as

separate components.

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Property, plant and equipment are reviewed for potential impairment whenever events or changes

in circumstances indicate that the carrying amount of an asset exceeds its recoverable amount.

The difference between the assets carrying amount and its recoverable amount is recognised in

the in income statement as impairment. Property, plant and equipment that have suffered

impairment are reviewed for possible reversal of the impairment at each reporting date.

INTANGIBLE ASSETS

Intangible assets acquired separately that have a finite useful life are carried at cost less

accumulated amortisation and any impairment charges. Amortisation is calculated on a straight

line basis over the assets expected useful life and adjusted for any impairment charges.

Internally generated intangible assets

Expenditures on research activities, undertaken with the prospects of gaining new technical

knowledge and understanding, are recognised in profit or loss as incurred.

Development activities shall be capitalised if specific requirements are met. The Group works

continuously on improving its technical platforms. This work involves both maintenance, research

and development. Most of these activities are very integrated and there is often no clear

distinction between them, making it difficult to assess if the activities are maintenance, research

or development. Currently it is assessed that the Group cannot, according to strict IFRS

requirements, demonstrate how this work will generate probable future economic benefits, and

thus expenses in this respect have been expensed as incurred.

GOODWILL

All business combinations are accounted for by applying the purchase method. Goodwill represents the difference between the cost of the acquisition and the fair value of all identifiable assets and liabilities acquired.

Goodwill is not amortised, but tested yearly for impairment. Goodwill is allocated to the relevant

cash-generating unit, and if the related discounted cash flow does not exceed the carrying amount

of goodwill, the goodwill will be written down to its fair value

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TRADE RECEIVABLES AND OTHER CURRENT RECEIVABLES

Trade receivables and other current receivables are initially recognised at fair value plus any

transaction costs. The receivables are subsequently measured at amortised cost using the effective

interest method, if the amortisation effect is material, less provision for impairment. Other current

receivables include prepayments, and receivables on related parties.

CASH AND CASH EQUIVALENTS

Cash and the equivalents include cash on hand, deposits with banks and other short-term highly

liquid investments with original maturities of three months or less.

TRADE CREDITORS

Trade creditors are recognised initially at fair value and subsequently measured at amortised cost

using the effective interest method, if the amortisation effect is material.

TAXES

Income tax expense for the period comprises current tax expense and deferred tax expense.

Tax is recognised in the income statement, except to the extent that it relates to items recognised

in other comprehensive income or directly in equity. In this case the tax is also recognised in other

comprehensive income or directly in equity.

Deferred tax assets and liabilities are calculated on the basis of existing temporary differences

between the carrying amounts of assets and liabilities in the financial statement and their tax

bases, together with tax losses carried forward at the balance sheet date. Deferred tax assets and

liabilities are calculated based on the tax rates and tax legislation that are expected to apply when

the assets are realised or the liabilities are settled, based on the tax rates and tax legislation that

have been enacted or substantially enacted on the balance sheet date. Deferred tax assets are

recognised only to the extent that it is probable that future taxable profits will be available against

which the assets can be utilised. Deferred tax assets and liabilities are not discounted. Deferred tax

assets and liabilities are offset when there is a legally enforceable right to offset current tax assets

against current tax liabilities and when the deferred taxes assets and liabilities relate to income

taxes levied by the same taxation authority on the same taxable entity.

The companies included in the consolidated financial statement are subject to income tax in the

countries where they are domiciled.

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REVENUE RECOGNITION

In general, revenue comprises the fair value of the consideration received or receivable for the sale

of goods and services in the ordinary course of the Group’s activities. Revenue is shown net of

value-added tax, returns, rebates and discounts and after eliminating sales within the Group. The

group recognises revenue when the amount of revenue can be reliably measured, it is probable

that future economic benefits will flow to the entity and when specific criteria have been met for

each of the Group’s activities as described below.

Sale of right to use software

Revenue from the use of the Groups technological platforms are recognised in the month the

service is provided. Revenue is based on fixed monthly software fees and/or royalty payments

dependent on platform utilization. There are few difficult judgments in determining the amount of

revenue.

Revenue from advertising activities

The Group generates revenue from the sale of online advertising on the sites of various

publishers.. The Group receives a pre-determined share of the revenue generated in the network

with the publishers. Amounts of revenue generated can be measured continuously, but are

invoiced from the Group the following month.

Income received from advertisers and costs incurred from advertising agencies and publishers are

presented gross, which reflects that the Group do have separate transactions with separate

counterparty risks. That is, the Group does not act only as an agent in these transactions.

Segment reporting

An operating segment is a component of an entity that engages in business activities from which it

may earn revenues and incur expenses. Furthermore, the entity’s component’s operating results

are regularly reviewed by the entity’s chief operating decision maker to make decisions about

resources to be allocated to the segment and assess its performance, and thus separate financial

information is available. Cxense is organized into two operating segments; Cxense SaaS and PCAN.

See note 5 for financial segment reporting.

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PENSION PLANS

The Group has a defined contribution plan for some of its employees. The Group’s payments are

recognised in the income statement as employee benefits expense for the year to which the

contribution applies.

PROVISIONS

A provision is recognised when the Group has a present legal or constructive obligation as a result

of past events, it is probable (i.e. more likely than not) that an outflow of resources will be

required to settle the obligation, and the amount can be reliably estimated. Provisions are

reviewed at each balance sheet date and adjusted to reflect the current best estimate. Provisions

are measured at the present value of the expenditures expected to be required to settle the

obligation. The increase in the provision due to passage of time is recognised as finance cost.

LEASES (AS LESSEE)

Financial leases

Leases where the group assumes most of the risk and rewards of ownership are classified as

financial leases. The group currently does not have any such leases.

Operating leases

Leases in which most of the risks and rewards of ownership are retained by the lessor are

classified as operating leases. Payments made under operating leases are charged to the income

statement on a straight-line basis over the period of the lease.

Share-based payment

Some of the employees in the Group have been granted options to shares in the Company, if

certain vesting conditions are met. Equity settled share-based payments are measured at fair

value of the equity instrument at the grant date. The fair values calculated are expensed on a

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straight line basis over the vesting period with a corresponding entry in the equity (other paid in

capital).

Government grants

Government grants, such as “Skattefunn” is recognized in profit and loss in the period it is granted

for. The grants are presented as a reduction of the applicable costs.

Government grants related to capitalized expenses is presented in the balance by deducting the

grant in arriving at the carrying amount of the asset.

CONTINGENT LIABILITIES

Contingent liabilities are not recognised in the financial statements. Significant contingent

liabilities are disclosed, with the exception of contingent liabilities where the probability of the

liability occurring is remote.

EARNINGS PER SHARE

The calculation of basic earnings per share is based on the profit attributable to ordinary shares

using the weighted average number of ordinary shares outstanding during the year after

deduction of the average number of treasury shares held over the period.

The calculation of diluted earnings per share is consistent with the calculation of the basic

earnings per share, but gives at the same time effect to all dilutive potential ordinary shares that

were outstanding during the period, by adjusting the profit/loss and the weighted average

number of shares outstanding for the effects of all dilutive potential shares, i.e.:

• The profit/loss for the period attributable to ordinary shares is adjusted for changes in

profit/loss that would result form the conversion of the dilutive potential ordinary shares.

• The weighted average number of ordinary shares is increased by the weighted average number

of additional ordinary shares that would have been outstanding assuming the conversion of all

dilutive potential ordinary.

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EQUITY RESERVES – CURRENCY TRANSLATION DIFFERENCES

Exchange differences relating to the translation of the net assets of the Group's foreign operations

from their functional currency to the Group's presentation currency is recognised directly in other

comprehensive income.

COST OF EQUITY TRANSACTIONS

Transaction costs directly attributable to an equity transaction are recognised directly in equity,

net after deducting tax.

CASH FLOW STATEMENT

The cash flow statement is prepared by using the indirect method.

EVENTS AFTER THE BALANCE SHEET DATE

The financial statements are adjusted to reflect events after the balance sheet date that provides

evidence of conditions that existed at the date of the balance sheet (adjusting events). The

financial statements are not adjusted to reflect events after the balance sheet date that is

indicative of conditions that arose after the date of the balance sheet (non-adjusting events). Non-

adjusting events are disclosed if significant.

2.2 IFRS AND IFRIC ISSUED BUT NOT ADOPTED BY THE GROUP

Standards, amendments and interpretations to existing standards that are not yet effective and have not

been early adopted by the group are listed below.

It is assessed that none of the standards, amendments and interpretation to existing standards will have

material impact on the Group’s financial statements.

IAS 27 Separate Financial Statements (as revised in 2011)

As a consequence of the new IFRS 10 and IFRS 12, what remains of IAS 27 is limited to accounting for

subsidiaries, jointly controlled entities, and associates in separate financial statements. The amendment

becomes effective for annual periods beginning on or after 1 January 2014 (IASB effective date is 1 January

2013).

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IAS 28 Investments in Associates and Joint Ventures (as revised in 2011)

As a consequence of the new IFRS 11 and IFRS 12. IAS 28 has been renamed IAS 28 Investments in Associates

and Joint Ventures, and describes the application of the equity method to investments in joint ventures in

addition to associates. The amendment becomes effective for annual periods beginning on or after 1 January

2014 (IASB effective date is 1 January 2013).

IAS 32 - Amendment: Offsetting Financial Assets and Financial Liabilities.

These amendments clarify the meaning of "currently has a legally enforceable right to set-off" and also

clarify the application of the IAS 32 offsetting criteria to settlement. The amendment becomes effective for

annual periods beginning on or after 1 January 2014.

IFRS 9 Financial Instruments: Classification and Measurement

IFRS 9 as issued reflects the first phase of the IASBs work on the replacement of IAS 39 and applies to

classification and measurement of financial assets and financial liabilities as defined in IAS 39. According to

IASB the standard is effective for annual periods beginning on or after 1 January 2015. EU has not yet

decided on effective date. The adoption of the first phase of IFRS 9 may have an effect on the classification

and measurement of the Group’s financial assets and financial liabilities.

IFRS 10 Consolidated Financial Statements

IFRS 10 replaces the portion of IAS 27 Consolidated and Separate Financial Statements that addresses the

accounting for consolidated financial statements. It also includes the issues raised in SIC-12 Consolidation —

Special Purpose Entities. IFRS 10 establishes a single control model that applies to all entities including

special purpose entities. The changes introduced by IFRS 10 will require management to exercise significant

judgement to determine which entities are controlled, and therefore, are required to be consolidated by a

parent, compared with the requirements that were in IAS 27. This standard becomes effective for annual

periods beginning on or after 1 January 2014. (IASB effective date is 1 January 2013).

IFRS 11 Joint Arrangements

IFRS 11 replaces IAS 31 Interests in Joint Ventures and SIC-13 Jointly-controlled Entities — Non-monetary

Contributions by Venturers. IFRS 11 removes the option to account for jointly controlled entities (JCEs) using

proportionate consolidation. Instead, JCEs that meet the definition of a joint venture must be accounted for

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using the equity method. This standard becomes effective for annual periods beginning on or after 1 January

2014 (IASB effective date is 1 January 2013).

IFRS 12 Disclosure of Involvement with Other Entities

IFRS 12 includes all of the disclosures that were previously in IAS 27 related to consolidated financial

statements, as well as all of the disclosures that were previously included in IAS 31 and IAS 28. These

disclosures relate to an entity’s interests in subsidiaries, joint arrangements, associates and structured

entities. A number of new disclosures are also required. This standard becomes effective for annual periods

beginning on or after 1 January 2014. (IASB effective date is 1 January 2013).

NOTE 2.3 KEY SOURCES OF ESTIMATION UNCERTAINTY AND CRITICAL ACCOUNTING JUDGEMENTS

The preparation of the financial statements in accordance with IFRS requires management to make

judgements, use estimates and assumptions that affect the reported amounts of assets and liabilities,

income and expenses.

The estimates and associated assumptions are based on historical experience and various other factors that

are considered to be reasonable under the circumstances. The estimates and underlying assumptions are

reviewed on an ongoing basis. The management does not assess that there is any specific areas for which

there has been much estimation uncertainty..

Critical accounting judgements:

a) Capitalisation of intangible assets

Development costs have been expensed as incurred as described in the accounting policies above. The

management has thus assessed that the specific criteria in IAS 38 for capitalisation of development costs

have not been met.

b) Business combination

Assets acquired and liabilities assumed in acquiring the Emediate Group shall (with some exceptions) be

recognized at fair value at the acquisition date. Valuing intangible assets such as customer relationship and

technology are subject to substantial judgment. The Company has used external parties to give assessments

to the purchaser price allocation. See note 3 for further information.

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Note 3 Business combinations

USD thousands

Fair value

recognised at

acquisition

Intangible assets 5,610

Deferred tax asset 747

Office machinery, equipment, etc. 191

Trade receivables 1,592

Other short-term assets 239

Cash and cash equivalents 471

8,851

Deferred tax liabilities on excess values (1,402)

Trade payables (167)

Other short-term liabilities (808)

(2,377)

Total identifiable net assets 6,474

Goodwill 3,807

Total consideration 10,281

Acqusition impact on Group results

Had the business combination been effective at 1 January 2013, the revenue of the Group would have been UDS 16,340

thousands, and loss for the year would have been USD 8,179 thousands. From January to October 2013 (prior to the acquisition)

the Emediate Aps entity included the Pentamind operations (13 R&D employees that incurred additional cost but limited

attributable revenues to the Emediate Aps entity). The Pentamind operations did R&D work for the ad Pepper group that was

not related to the Emediate advertising technology business. With effect as of 31.10.2013 the Pentamind operations were carved

out of Emediate Aps, thus it is the Emediate November and December 2013 figures included in the Cxense SaaS segment that

represents the run-rate contribution from the acquired entity excluding the Pentamind operations.

On 15 November 2013 the group acquired 100% of the shares in Emediate Aps from ad Pepper media International N.V. for

USD 10,281 thousands. Emediate Aps, and its subsidiaries ("Emediate") is the Nordic's largest ad serving company. By

combining the Emediate ad serving techology with the unique audience insight and targeting capabilities of the Cxense

Extraordinary Insight Engine (EIE), Cxense believes it can create a unique and future proof next generation adserving

technology.

The following table summarises the consideration paid for Emediate, the fair value of assets acquired and liabilities assumed:

Acquisition-related costs of USD 436 thousands have been charged to other operating expenses in the consolidated income

statement for the year ended 31 December 2013.

The fair value of the acquired identifiable intangible assets of USD 5,610 thousands. Identifiable intangible assets consists of

customer related assets USD 4,747 thousands and technology related assets USD 863 thousands are both depreciated over 5

years.

Goodwill arises as a residual and is assumed to mainly comprise a) the ability to capture synergies from being able to combine

the Emediate market position with Cxense technology, and b) the assembled workforce of Emediate.

Included in the profit/(loss) for the year is a net profit of USD 207 thousands from the business generated by Emediate (includes

amortisation of excess values). This contribution corresponds to the months of November and December 2013 (i.e. from

acquisiton effective date). Revenue for the year includes USD 1,335 thousands in respect of Emediate.

Of the total consideration of USD 10.28 million and amont of USD 1.3million is placed in an Escrow account to serve as security

for the Purchasers claims agains the Seller under the Share Purchase Agreement. 50% of the Escrow amount shall be released

on May 15 2015 and 50% on November 15 2015.

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Note 4 Discontinuing operations

Profit from the discontinued operations

USD 1,000

Year Ended

December 2013

Year ended

31 December 2012

Revenue 1,982 2,515

Operating expenses 2,139 2,954

Net operating income/(loss) (156) (440)

Net finance (11) (2)

Income tax expense 0 0

Gain from sale of discontinued operation 143 0

Net income/(loss) for the period from discontinuing operations (24) (442)

(1) All of operating income in 2013 comes from the six months ending 30 June, since the subsidiary was sold effective

from 1 July 2013.

Earnings per share:

Basic and diluted (0.002) (0.045)

Cash flow from discontinuing operations

USD 1,000

Year Ended

December 2013

Year ended

31 December 2012

Net cash flow from operating activities (88) (469)

Net cash flow from investing activities 0 (9)

Net cash flow from financing activities 0 58

Net cash inflow/(outflow) (88) (420)

(1) All of operating income in 2013 comes from the six months ending 30 June, since the subsidiary was sold effective

from 1 July 2013. Cash effects acquisition in 2012 and disposal are not included cash flow summary above.

At the end of Q2 2013 Cxense negotiated an agreement to sell the PCAN subsidiary PPN AG to

Tamedia AG, the Swiss based media group. The transaction is effective as of July 1, 2013. PPN AG is

presented as discontinuing operations through out this report.

Tamedia AG has been the most significant publisher in the Publisher Controlled Advertising Network

alongside a number of other publishers in the Swiss market. Tamedia states that the rationale for the

transaction is to improve the control of PPN and to use PPN as part of their strategy to develop an

exclusive networked advertising offering for their online publications. Tamedias intention is to continue

to cooperate with the other existing publishers in PPN around click-based performance advertising.

One hundred percent of the shares in PPN AG were sold for USD 103 thousand. The final transaction

values have subject to a separate audit of the PPN AG accounts and now fully finalised. The sale

resulted in a gain of USD 143 thousand.

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Note 5 Segment information

For management purpose the Group is organized into business units based on its product and services and has two reportable segments:

- Cxense Saas, which sells software-as-a-service applications based on the Extraordinary Insight Engine™ (EIE™) for real-time analysis of

content, user context, and behaviour. The EIE is fully integrated by a range of applications (web analytics, recommendations, search and

targeted advertising), which are used by Cxense customers to improve their online businesses by increasing advertising revenue, page

views, readership and conversion. The business generated by Emediate is included in the Cxense Saas segment below. Information

regarding revenue and Net income/(loss) generated by Emediate after the acquisition is disclosed in note 3.

- Publisher-Controlled Advertising Networks (PCANs) which sell online advertising on the sites of various publishers, and distribute and

share the advertising revenues generated in the network with publishers.

Segment performance is evaluated by the management based on operating profit or loss and is measured consistently with operating profit

in the financial statements. Transfer prices between operating segments are on an arm's length basis in a manner similar to transactions with

third parties.

Discontinued operations:

To be consistent with the presentation in the income statement and statement of financial position, the PCAN segment presented below is

exclusive to the discontinued operations. Furthermore, Cxense SaaS sale to the discontinued operation is presented as a sale to external

customers.

Year ended 31 December 2013

USD 1,000 Cxense SaaS PCAN Eliminations Consolidated

Revenue

External customers 5,367 2,245 7,612

Inter-segment 206 2 (208) 0

Revenues total 5,573 2,247 (208) 7,612

Cost of goods sold 1,030 1,905 (206) 2,728

Gross profit 4,543 342 (2) 4,884

Employee benefit expense 8,389 427 (2) 8,814

Depreciation expenses 223 4 0 227

Other operating expense 3,970 239 0 4,209

EBIT (8,039) (327) 0 (8,366)

Net finance income/(expense) 194 (6) 0 188

Income tax income/(expense) 15 0 0 15

Net income/(loss) before continuing operation (7,830) (333) 0 (8,163)

Net income/(loss) for the period from discontinuing operations 0 (24) (24)

Total net income/(loss) for the period (7,830) (358) 0 (8,187)

Balance sheet information 31 December 2013

USD 1,000 Cxense SaaS PCAN

Eliminations

and

unallocated Consolidated

Segment assets:

Non-current assets 9,543 24 20 9,586

Current assets

- Trade receivables 2,459 541 3,000

- Other short term assets 1,832 102 (63) 1,870

- Cash and cash equivalents 8,815 28 8,843

Total segment assets 22,648 695 (43) 23,300

Segment liabilities:

Non-current liabilities 654 0 0 654

Current liabilities 4,852 1,007 (97) 5,763

Total segment liabilities 5,507 1,007 (97) 6,417

PCAN segment in 2012:

The business incorporated as the PCAN segment was established at the beginning of Q2 2012.

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12 mnths to 31 December 2012

USD 1,000 Cxense SaaS PCAN Eliminations Consolidated

Revenue

External customers 2,038 708 0 2,746

Inter-segment 264 (49) 216

Revenues total 2,302 708 (49) 2,961

Cost of goods sold 319 791 (49) 1,061

Gross profit 1,983 (84) 0 1,900

Employee benefit expense 5,540 159 0 5,700

Depreciation expenses 20 1 0 21

Other operating expense 1,276 170 0 1,446

EBIT (4,852) (414) 0 (5,266)

Net finance income/(expense) 48 (54) 0 (7)

Income tax income/(expense) (33) 0 0 (33)

Net income/(loss) before continuing operation (4,838) (468) 0 (5,306)

Net income/(loss) for the period from discontinuing operations 0 (442) 0 (442)

Total net income/(loss) for the period (4,838) (910) 0 (5,748)

Balance sheet information 31 Dec 2012

USD 1,000 Cxense SaaS PCAN

Eliminations

and

unallocated Consolidated

Segment assets:

Non-current assets - - 110 110

Current assets

- Trade receivables 705 1,169 1,873

- Other short term assets 648 146 -30 764

- Cash and cash equivalents 10,036 174 10,210

Total segment assets 11,388 1,489 80 12,958

Segment liabilities:

Non-current liabilities - - - -

Current liabilities 1,697 1,583 -17 3,263

Total segment liabilities 1,697 1,583 -17 3,263

Geographic information

Revenues from external customers: 2013 2012

EMEA 7,568 3,933

Americas 984 502

Pacific 882 826

Total revenue from external customers 9,435 5,260

Information about major customersThe Company does not have single customers that generate 10% or more of the entity's total revenue.

The revenue information above is based on the location of the entity generating the revenue and includes sales generated by discontinued

operations. Revenues from discontinued operations is included and has solely been booked to the EMEA segment in the table above.

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Note 6 Employee benefit expense

Specification of employee expense

USD 1,000

Payroll expense

Share-based payments

Social security tax

Pensions

Other personnel expense

Presented as part of discontinued operations

Total employee benefit expense

2013

7,502

228

860

277

265

(318)

8,814

2012

5,226

53

464

219

186

(449)

5,700

See note 19 for information regarding remuneration to management.

Pensions

Share based payments

Option series Number Grant date Expiry date

Grant 1: August 2012 157 24/08/2012 24/08/2016

Grant 2: December 2012 164 9/12/2012 9/12/2016

Grant 3: April 2013 49 22/04/2013 22/04/2017

Grant 4: August 2013 40 26/08/2013 26/08/2017

Grant 5: October 2013 124 14/10/2013 14/10/2017

Grant 6: December 2013 39 9/12/2013 9/12/2017

Other inputs to the fair value measurement:

Grant 1 Grant 2

Option life 4 years 4 years

Expected volatility 70% 70%

Risk free interest rate 1.60% 1.60%

Expected dividends 0 0

The Group has in 2012 established a share-based payment programme for

executives and senior employees in the Group. The exercise price of the share

options is equal to the market price of the Cxense AS share on the date of grant. The

share options vest over a four-year period, if the employee still is employed by the

Group.

None of the options granted have been forfeited during the year, thus total numbers

Cxense AS (parent company) is required to have an occupational pension scheme in

accordance with the the Norwegian law of mandatory occupational pension (lov om

obligatorisk tjenestepensjon). The company's pension scheme fulfils the

requirements of that law.

See note 19 for information regarding remuneration to management.

Exercise price

(USD)

9 570

11 963

12 228

12 228

12 228

13 292

The Group has in 2012 established a share-based payment programme for

executives and senior employees in the Group. The exercise price of the share

options is equal to the market price of the Cxense AS share on the date of grant. The

share options vest over a four-year period, if the employee still is employed by the

Group.

None of the options granted have been forfeited during the year, thus total numbers

Cxense AS (parent company) is required to have an occupational pension scheme in

accordance with the the Norwegian law of mandatory occupational pension (lov om

obligatorisk tjenestepensjon). The company's pension scheme fulfils the

requirements of that law.

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Note 7 Other operating expense

Specification of other operating expense

USD 1,000

Audit, legal and other consulting fees

Office rental and related expenses

Marketing and representation

Travel expenses

Other operating expense

Presented as part of discontinued operations

Total other operating expense

2013 2012

1,876 431

526 343

729 263

906 474

271 56

(100) (121)

4,209 1,446

Specification of auditor's fees

USD 1,000

Statutory audit

Other assurance services

Tax advisory services

Other advisory services

Total auditor's fees (excl. VAT)

2013 2012

109 15

25 8

21 2

22 1

177 26

Note 8 Finance income and expense

USD 1,000

Interest income

Currency income

Other finance income

Total finance income

Interest expense

Other financial expenses

Currency expenses

Investment in associate company 1)

Total finance expense

Net financial income/(expense)

1) Refer to note note 12 for further information.

Note 8 Finance income and expense

2013 2012

161 53

206 36

0 1

367 89

1 2

7 5

104 39

66 52

179 98

188 (8 )

1) Refer to note note 12 for further information.

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Note 9 Tax

Specification of income tax:

USD 1,000

Income tax payable 37 23

Change in deferred tax (53) 10

Total income tax expense (+)/income (-) (15) 33

Specification of tax effects of temporary differences:

2013 2012

Intangible assets (1,332) 0

Other temporary differences 644 14

Tax losses carried forward 5,270 3,824

Total basis for deferred tax 4,582 3,838

Deferred tax asset not recognised 1) (5,201) (3,824)

Net deferred tax asset asset (+)/ liability(-) recognised (619) 14

Of this:

Presented as deferred tax asset 36 14

Presented as deferred tax liability (654) 0

(619) 14

Reconciliation of effective tax rate:

2013 2012

Profit before income tax (8,203) (5,715)

Expected income tax assessed at the tax rate for the Parent company (28%) (2,297) (1,600)

Adjusted for tax effect of the following items:

Permanent differences (47) 12

Change in not recognised deferred tax asset/valuation allowance 1,377 1,678

Effect of different tax rate in subsidiary and currency effects 951 (58)

Total income tax expense (15) 33

Movements in defered tax

Carrying amount net deferred tax assets (+)/ liabilities(-) at 31 December 2012 14

Recognised as expense/income (-) in income statement 53

Recognised from business acuisition (655)

Effect from currency effects and other items (31)

Carrying amount net deferred tax assets (+)/ liabilities(-) at 31 December 2013 (619)

1) Capitalisation of deferred income tax assets is subject to strict requirements in respect of the ability to substantiate that sufficient

taxable profit will be available against which the unused tax losses can be utilised. Based on these requirements deferred tax asset

mainly related to Cxense AS has not been recognised.

The major part of tax losses carried forward relates to the Parent Company, and for this part it is no time limit related to when the

tax losses may be utilised.

2013 2012

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Note 10 Earnings per share

USD 1,000 2013 2012

Net income/(loss) for the year attributable to the

parent company (8,041) (5,564)

Weighted average number of shares outstanding

for basic earnings per share 13,305 9,763

Earnings per share

- Basic (0.60) (0.57)

- Diluted (1) (0.60) (0.57)

See note 16 for information about shares issued during the 2013

(1) The Company has 573 potential dilutive shares from share options

outstanding. Since the Group has a loss for the year, and since the the

potential shares do not have a dilutive effect, they are not included in the

Note 11 Intangible and fixed assets

USD 1,000 Goodwill

Intangible

assets

Office

machinery,

equipment etc. Total

Cost

Cost at 1 January 2011 2 111 113

- 34 34

Disposals - - -

Cost at 31 December 2012 2 145 147

65 65

Additions through business combinations 2) 3,807 5,614 191 9,612

Disposals - (3) (3)

Currency effects - - -

Cost at 31 Decmeber 2013 3,807 5,616 398 9,821

Additions 1)

Additions 1)

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Note 11 Intangible and fixed assets, continued

USD 1,000 Goodwill

Intangible

assets

Office

machinery,

equipment etc. Total

Depreciation and impairment

Accumulated at 1 January 2011 0 (40) (40)

Amortisation and depreciation for the year 0 (23) (23)

Impairment 0 0 0

Accumulated at 31 December 2012 0 (63) (63)

Amortisation and depreciation for the year - (187) (40) (227)

Impairment 0 0 0

Disposals 0 0 0

Accumulated at 31 December 2013 - (187) (103) (290)

Carrying amount at 31 Decmeber 2012 2 82 85

Carrying amount at 31 Decmeber 2013 3 807 5 429 295 9 531

Depreciation plan Linear

Estimated useful life (years) 3-5 years

1) Capitalisation of development expenses

2) Additions through Business Acquistions

The Group works on improving its technical platforms, however these activities are very integrated and

there is often no clear distinction between them, making it difficult to assess if the activities are

maintenance, research or development. It is assessed that in 2012 and 2013 these expenses does not

qualify for capitalisation. See note 2.1 for further information. The number of group employees related to

research and development grew from 21 to 39 through the year, a growth of 18. 11 of the 18 came with

the Emediate acqusisiton. The estimated average research and development employees during 2013 was

27 and the estimated OPEX related to their activity was USD 5.5 million.

Assets were purchased with the acquistion of the Emediate business. See note 3 for further information.

In the PPA valuation that estimates a valuation of USD 10.28 million (equal to the consideration) a

revenue growth rate of 7% until 2017 a terminal growth rate of 2.5% and a cost of capital is applied is

12.4%. I.e if future actual growth rates should fall below 7% the goodwill would be written down

accordingly.

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Note 12 Other financial assets

USD 1,000 2013 2012

Investment in associated companies (1) 0 0

Other long term receivables 20 12

Other long term financial assets 20 12

(1) Investment in associated companies

Summarized financial information regarding Matchad

USD 1,000 2013 2012

Total assets 227 430

Total liabilities (1 090) (422)

Net assets (863) 8

Group's share of net assets: 2

2013 2012

Total revenue 809 61

Total profit for the year (943) (1 061)

Group share of profit (10% in 2013 and 20% in 2012) (94) (212)

1) In the Group's income statement the loss recognised is limited to the carrying amount

of the investment. A loss of USD 77 thousand has been recognised from this investment

in 2013 (USD 52 thousand in 2012).

In 2012 Cxense purchased 20% of the shares in Matchad. The company is incorporated in

Sweden. In 2013 Cxense has invested additional USD 77 thousands, and sold 10%. The

remaining 10% share is fully impaired as at 31 December 2013. Cxense has an off-balance

sheet commitment to contribute with capitalization of new Matchad in 2014 of up to USD

244 thousands .

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Note 13 Trade receivables

USD 1,000 2013 2012

Trade receivables 3,300 1,903

Allowance for doubtful debts (300) (30)

Total trade receivables 3,000 1,873

Trade receivables are non-interest bearing and are generally on 30-day terms.

As at 31 December, the ageing analysis of trade receivables is as follows:

USD 1,000

Total

Neither past

due nor

impaired

<30

days 31-90 days >90 days

31 Dec 2013 3,300 1,981 931 246 143

31 Dec 2012 1,903 734 475 421 274

Movements in allowance for doubtful debt:

USD 1,000 2013 2012

Balance at the beginning of the year 30 7

Impairment losses recognized on receivables 300 0

Amounts written off during the year as uncollectible (30) 23

Amounts recovered during the year 0 0

Impairment losses reversed 0 0

Balance at the end of the year 300 30

Past due but not impaired

Note 14 Other short-term assets

USD 1,000 2013 2012

Accrued income 6 64

Prepayments 141 48

Receivable on authorities and government grants 276 509

Other short-term receivables 1,448 143

Other short term assets 1,870 764

*Other short-term receivables includes the Emediate purchase price Escrow amount of USD 1.3 million

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Note 15 Cash and cash equivalents

USD 1,000 2013 2012

Bank deposits 8,843 10,210

Cash and cash equivalents 8,843 10,210

Restricted cash included in the above:

Withholding tax in relation to employee benefits 182 31

All cash and cash equivalents are bank deposits.

Note 16 Share capital and shareholder information

Number of

shares

Share capital

NOK

Share capital

USD

Balance at 1 January 2012 9,018 9,018,000 1,505

Issued during the year 3,612 3,612,000 764

Balance at 31 December 2012 12,630 12,630,000 2,269

Issued during the year 3,982 3,982,000 444

Balance as at 31 December 2013 16,612 16,612,000 2,713

Share Option Program

The Board of Directors has been authorized to issue 1040 shares as part of the share based payment program. As at 31

December, 2013 the Board of Directors had allocated 573 share options as part of the share based-payment program, of

which 0 had been exercised.

Nominal value per share at 31 December 2013 is Norwegian Krone (NOK) 1 000. Cxense AS has one class of shares

with equal rights for all shares.

As at 31.12.2013 Cxense had 573 oustanding share options, issued according to the Share Option Program established

in September 2012.

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Note 16 Share capital and shareholder information (continued)

Shareholders at 31 December 2013:

Shareholder Number of shares % Share

cX Vest Ltd 2,489 15.0 %

Polaris Media ASA 2,190 13.2 %

ASAH AS 1,982 11.9 %

Simpsons Financial Ltd 819 4.9 %

MP Pension PK 600 3.6 %

Storebrand 533 3.2 %

Follo Eiendom AS 495 3.0 %

GBBT AS 409 2.5 %

Home Capital AS 400 2.4 %

Hiroshi Mikitani 400 2.4 %

Stein H. Danielsen 377 2.3 %

Aleksander Øhrn 365 2.2 %

Viola AS 358 2.2 %

North Murray AS 350 2.1 %

M&L Pritchard Holding Trust 327 2.0 %

Portia AS 311 1.9 %

Cressida AS 235 1.4 %

Torbjørn Kanestrøm 192 1.2 %

AU79 Group AS 180 1.1 %

Finn Arne Gangstad 172 1.0 %

JLO Invest AS 165 1.0 %

Others 3,263 19.6 %

Total 16,612 100.0 %

Number of shares owned directly or indirectly by Executives and Board of directors at 31 December 2013:

Name Number of shares % of total shares

Number of share

options

John Markus Lervik 1,982 11.9 % 0

Otto Neubert 9 0.1 % 0

Pal Petersen 108 0.7 % 100

Raman Bhatnagar 40 0.2 % 50

Stein H. Danielsen 377 2.3 % 0

Jørgen M. Loeng 165 1.0 % 100

Aleksander Øhrn 365 2.2 % 0

Mikal Rohde 455 2.7 % 0

John T. Sviland 409 2.5 % 0

Morten Opstad 25 0.2 % 0

Stig Eide Sivertsen 85 0.5 % 0

Total 4,020 24.2 % 250

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Note 17 Other short-term liabilities

USD 1,000 2013 2012

Public duties payables 331 202

Prepayments from customers 170 480

Accrued expenses 1,056 327

Salary-related provisions 805 376

Other current liabilities 1,433 150

Total other short-term liabilities 3,794 1,536

*Other current liabilities includes the Emediate purchase price Escrow amount of USD 1.3 million

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Note 18 Financial instruments

(a) Categories of financial instruments

USD 1,000 Category 2013 2012

Financial assets:

Trade receivables Loans and receivables 3,000 1,873

Other receivables 1)

Loans and receivables 1,743 664

Cash and cash equivalents Loans and receivables 8,843 10,210

Total financial assets 13,587 12,748

Financial liabilities:

Trade creditors Measured at amortised cost 1,933 1,651

Other current liabilities 2)

Measured at amortised cost 2,237 526

Total financial liabilities 4,171 2,177

1) Prepaid expenses and accruals are excluded since they are not defined as financial instruments.

(b) Fair value of financial instruments

(c) Financial risk

Credit risk:

2) Accruals for incurred costs and prepayments are excluded since they are not defined as financial

instruments.

The carrying amount of all of the Groups financial assets and liabilities is approximately equal to fair value since these

instruments have a short term to maturity, and thus the time value is not material.

The most significant financial risks which affect the Group are listed below. The management performs a continuous

evaluation of these risks and determines policies related to how these risks are to be handled within the Group.

Carrying amounts of financial assets presented above represents the maximum credit exposure. The Group is mainly

exposed to credit risk related to trade receivables and cash and cash equivalents.

Trade receivables: The Group does not have spesific procedures for assessing credit risks for its customers before

transactions are entered into. However, most of the transactions are of limited amounts and the Group does not have

significant credit risk associated with a single counterparty or several counterparties that can be considered a group.

During 2011 and 2012 the Group has not suffered significant credit-related losses, and furthermore the Group has not

noticed significant increases in delayed customer payments.

See note 13 for information about the ageing analysis of trade receivables.

Cash and cash equivalents : The counterparties for the Group's cash deposits are large banks that are assessed to be

solid. It is therefore assumed that there is no material credit risk associated with these deposits.

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Note 18 Financial instruments (continued)

Liquidity risk:

Foreign exchange rate risk:

Profit and loss Balance sheet Profit and loss Balance sheet

NOK 0.170 0.163 0.172 0.180

AUD 0.968 0.887 1.036 1.038

JPY 0.010 0.010 0.012 0.013

DKK 0.178 0.185 n/a n/a

SEK 0.153 0.154 n/a n/a

EUR 1.328 1.377 1.285 1.319

(d) Capital management

The primary focus of the Group's capital management is to ensure that it maintains a healthy equity ratio in order to support its

business and maximise shareholders value. The group manages its capital structure and makes adjustment to it, in ligth of changes in

economic conditions. To maintain or adjust the capital structure, the Group may pay dividends to shareholders, purchase treasury

shares, issue new shares or sell assets to reduce debt. Potential listing on a stock exchange is part of this assessment. The Group

monitors its capital structure using a equity ratio, which is total equity divided by total assets. As at 31 December 2013 the equity

ratio was 72% (75% as at 31 December 2012).

Sensitivity analysis 31 December 2013:

If the USD and EUR had strenghtened 10% against the functional currency of the respective entities at 31

december 2013, the Group's profit would have been USD 179 thousands lower before tax.

Sensitivity analysis 31 December 2012:

If the USD and EUR had strenghtened 10% against the NOK at 31 december 2012, the Group's profit would have

been USD 47 thousands lower before tax.

For currency conversion in this report the following currency rates have been applied for 1 USD:

20122013

Regarding Market risks, the the Group is mainly exposed to foreign exchange rate risk. Entities included in this Consolidated

financial statement have various functional currencies (NOK, USD, AUD, JPY ,DKK,SEK and EUR). For the purpose of the

disclosure provided below, currency risk arise from transactions denominated and balances in currencies other than the the

respective functional currencies.

At 31 December 2013 and 2012 the Group is exposed to exchange rate risk mainly due to trade receivables and payables in USD

and EUR in the Parent Company and Emediate.

Liquidity risk is the risk of being unable to pay financial liabilities as they fall due. The Groups' approach to managing liquidity risk

is to ensure that it will always have sufficient liquidity to meet its financial liabilities as they fall due, under normal as well as

extraordinary circumstances, without incurring unacceptable losses or risking damage to the Group’s reputation.

The Group’s financial liabilities are mainly trade payables, and are all short term which fall due within 0 - 6 months. Due to current

large cash positions, there is very limited liquidity risk as at 31 December.

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Note 19 Related party disclosure

USD 1,000

Purchase of services from Description of services 2013 2012

Advokatfirma Ræder (1) Legal services 299 118

Theoline AS (2) Consulting services 45 9

(1) The Chairman of the Board in Cxense AS is a partner in Advokatfirma Ræder.

(2) Stig Eide Sivertsen, Board member, is the owner of Theoline AS

USD 1,000

Balances with related parties Balance type 2013 2012

Advokatfirma Ræder Other Short Term Liabilties 239 102

Theoline AS Trade payables 0 9

Remuneration to management


USD 1,000

Position Salary

Pension

contribution

Share

based

payment

Other

remuneration Total 2013

John Markus Lervik (CEO) 121 3 0 1 125

Jørgen M. Loeng (CFO) 158 4 39 1 202

Otto Neubert (COO) 1) 28 2 0 0 30

Pal Petersen (CCO) 150 4 39 1 194

Raman Bhatnagar (EVP, Corp Development) 1) 38 1 6 0 45

Aleksander Øhrn (CTO) 123 3 0 0 127

Stein H. Danielsen (Chief Architect) 123 3 0 0 127

Mikal Rode (EVP, Business Dev. & PCAN) 123 3 0 1 127

Jon T. Sviland (EVP Business Development) 133 4 0 1 137

Total 997 27 85 4 1 114

1) Commenced 1 November 2013.

Remuneration to board of directors in the parent company:

Balances and transactions between the Company and its subsidiaries, which are related parties to the

Company, have been eliminated on consolidation and are not disclosed in this note. The group does not

have other transactions with related parties, except for remuneration to management as disclosed below:

The annual board remuneration amounted to USD 13,000 for each board member not employed by the Company. No

board remuneration was payable to board members who were also employed by the Company. Payment was based on

service period in the manner that payment was made for the period up until the 2013 annual general meeting. Board

members who were elected during the service period received a proportionate remuneration based on the actual

service period. The Chairman of the Board received an additional annual amount of USD 4,000 for serving in this

capacity.

*) John Markus Lervik served as CEO until 21 March 2014 when Raman Bhatnagar was appointed group CEO by the

Board of Directors.

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Note 19 Related party disclosure, continued


USD 1,000

Position Salary

Pension

contribution

Share

based

payment

Other

remuneration

John Marcus Lervik (CEO) 122 5 0 0

Jørgen M. Loeng (CFO) 1) 84 3 17 0

Aleksander Øhrn (CTO) 122 5 0 1

Stein H. Danielsen (Chief Architect) 122 5 0 0

Mikal Rode (EVP, Corp Development) 122 5 0 1

Jon T. Sviland (EVP,Business Development) 122 5 0 1

Total 694 26 17 31) Commenced 1. July 2012.

Severance payment:

There are no agreements regarding severance payments.

Remuneration to board of directors in the parent company:

The board of directors has not received any remuneration for their position at the board.

Total 2012

127

104

127

127

127

127

740

Note 20 Subsidiaries

Name of subsidiary

Place of

incorporation

Portion of ownership

and voting power

Cxense Ltd. Cxense SaaS Australia 100%

Cxense Co., Ltd. Cxense SaaS Japan 100%

Cxense, Inc. Cxense SaaS USA 100%

Cxense Inc. NV Holdings Cxense SaaS USA 100%

Emediate Aps Cxense SaaS Copenhagen 100%

Emseas Teknik AB (Emediate Sweden) Cxense SaaS Sweden 100%

Emediate Norway NUF Cxense SaaS Norway 100%

Premium Audience Network, s.l.u. PCAN Spain 56%

Principal activity

according to segment

On 1st July 2013, PPN Schweiz AG a wholly owned subsidiary was sold to Tamedia AG. See Note 4 for details.

On 1st November 2013 100% of shares in Emediate Aps and its subsidiaries were purchased.

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Note 21 Leases

The Group has no finance leases.

USD 2013 2012

Lease office premises 366 248

Total lease costs 366 248

The future minimum rents related to non-cancellable leases fall due as follows:

USD 2013 2012

Within 1 year 478 170

1 to 5 years 36 54

After 5 years 0 -

Total 514 224

The Group has entered into operating leases for office facilities. The lease costs consist of ordinary lease payments and include:

Note 22 Contingent liabilities

Note 23 Events after the reporting period

Since 31 December, 2013 and until the date of these financial statements, the Board has allocated 90

share options so that the total number of allocated shares were 663.

The Group has not been involved in any legal or financial disputes in 2013 or 2012, where an adverse

outcome is considered more likely than remote.

Between 31 December 2013 and the presentation of this report, no other event has occurred which

substantially impact on the result for 2013 or the value of Cxense's assets and liabilities.

On March 21, the Company’s CEO John Markus Lervik assumed a new position in the organisation

with the title «Founder», and Raman Bhatnagar was appointed as the new CEO.

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Profit and loss statements Cxense AS

Numbers in NOK

Note 2013 2012

Sales revenue 13 847 238 5 658 022

Other operating income 9 470 306 7 033 819

Total operating income 1, 9 23 317 544 12 691 841

Cost of sales 9 32 214 025 28 178 301

Staff costs 2, 3, 15 24 793 335 10 485 068

Other operating expenses 4 14 324 444 3 545 640

Total operating expenses 71 331 805 42 209 008

Result of operations -48 014 260 -29 517 167

Interest income from group entities 10 39 699 24 351

Other interest income 935 406 282 470

Other financial income 1 292 964 208 916

Total financial income 2 268 069 515 737

Write-down of financial fixed assets 86 800 323 925

Other Interest expenses 42 3 411

Other financial expenses 1 017 775 228 112

Total financial expenses 1 104 617 555 448

Net financial items 1 163 452 -39 711

Operating result before tax -46 850 808 -29 556 878

Operating result after tax -46 850 808 -29 556 878

Results of the year -46 850 808 -29 556 878

Transfers

Transfers to/from reserves 14 -45 684 056 -29 246 449

Transfers to/from other equity 14 -1 166 752 -310 429

Total transfers and allocations -46 850 808 -29 556 878

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Balance sheet Cxense AS

Numbers in NOK

Note 2013 2012

ASSETS

Fixed assets

Financial fixed assets

Investments in in shares 9 64 624 422 1 794 509

Loans to associates and joint ventures 10 2 095 625 475 851

Other receivables 0 600

Total financial fixed assets 66 720 047 2 270 960

Total fixed assets 66 720 047 2 270 960

Current assets

Receivables

Trade debtors 7, 10 5 725 686 4 625 376

Other receivables 9 417 544 2 096 379

Group receivables 10 213 148 3 007 692

Total receivables 15 356 378 9 729 447

Bank deposits, cash in hand, etc 8 47 170 270 53 057 026

Total bank deposits, cash in hand, etc 47 170 270 53 057 026

Total current assets 62 526 648 62 786 473

Total assets 129 246 695 65 057 433

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Numbers in NOK

Note 2013 2012

EQUITYANDLIABILITIES

Equity

Paid-incapital

Sharecapital(16612sharesofNOK1000,00) 11,12,13 16,612,000 12,630,000

Ownshares 14 -15,000 0

Sharepremiumreserve 14 89,311,873 47,289,775

Totalpaid-incapital 105,908,873 59,919,775

Retainedearnings

Lossesfrompreviousyears 14 0 -3,514,546

Totalretainedearnings 0 -3,514,546

Totalequity 105,908,874 56,405,229

Liabilities

Currentliabilities

Tradecreditors 6,268,134 2,825,607

Publicdutiespayable 1,917,378 1,127,059

Othershorttermliabilities 15,152,309 4,699,538

Totalcurrentliabilities 23,337,821 8,652,204

Totalliabilities 23,337,821 8,652,204

Totalequityandliabilities 129,246,695 65,057,433

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Cash flow statement Cxense AS

Numbers in NOK

2 013 2 012

Cash flow from operating activities

Profit / loss (-) before income tax -46 850 808 -29 556 878

Loss from investment in associates 426 237 0

Depreciation of financial assets 86 800 323 925

Share based payments 1 166 752 310 429

Change in trade receivables -2 393 185 -4 148 659

Change in trade payables 3 381 608 2 727 839

Change in other accrual and non-current items 6 818 568 1 504 597

Currency translation effects -367 478 15 948

Net cash flow from / used in (-) operating activities -37 731 506 -28 822 799

Cash flow from investing activities

Proceeds from sale of shares 595 763 0

Investment in associated companies -63 938 713 -1 409 419

Net cash flow from / used in (-) investing activities -63 342 950 -1 409 419

Cash flow from financing activities

Net proceeds from share issue 95 187 700 74 547 950

Net cash flow from / used in (-) financing activities 95 187 700 74 547 950

Net increase / decrease (-) in cash and cash equivalents -5 886 756 44 315 732

Cash and cash equivalents at the beginning of the period 53 057 026 8 741 294

Cash and cash equivalents at the end of the period 47 170 270 53 057 026

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Notes to the annual financial statements Cxense AS

Accounting Principles The financial statements have been prepared in accordance with the Norwegian Accounting Act and generally acceptet accounting principles in Norway. All amounts are in NOK Revenue recognition Revenues from the sale of goods are recognised in the income statement once delivery has taken place. Revenues from the sale of services are recognised once delivery has taken place.. Balance sheet classification Currant assets and short term liabilities consists of items linked to the inventory cycle. For current assets except trade debitors are included items receivale and payables due within one year after transaction day. Other balance sheet items are classified as fixed assets/long term liabilities. Current assets are valued at the lower of cost and fair value. Short term liabilities are recognized at nominal value at date of establishment. Assets are valued at cost less depreciation and impairment losses. Long term liabilities are recognized at nominal value at date of establishment Accounts receivable and other receivables Accounts receivable and other current receivables are recorded in the balance sheet at nominal value less provisions for doubtful accounts. Provisions for doubtful accounts are based on an induvidual assessment of ghe different receivables. For the remaining receivables, a general provision is estimated based on expected loss. Fixed assets Fixed assets are capitalized and depreciated over the asset’s estimated life if the estimated life is expected to be more than 3 years and the asset’s cost exceeds NOK 15 000. Direct maintenance of assets are expensed as incurred as operating cost, while additions and improvements are added to the cost of asset to be depreciated as the asset itself. Income tax The tax expense consists of the tax payable and changes til deferred tax. Deferred tax is calculated as 28 percent of temporary differences and the tax effect of tax losses carried forward. Taxable and deductible temponary differences which reverses or can revers in same period are offset and the tax impact is calculated on a net basis.

Foreign currencies Assets and liabilities in foreign currenxies are valued at the exchange rate on the balance sheet date.

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Note 1 – Operating income

Specification of operating income 2013 2012

Sales revenues 13 847 238 5 658 022 Rentals 0 12 500 License income 5 524 799 2 906 930 Royalty income 3 945 507 4 114 389

Total operating income 23 317 544 12 691 841

Note 2 – Payroll expenses, number of employees, remunerations etc.

Payroll expenses 2013 2012

Salaries/wages 19 596 404 8 372 126

Share based payment 1 166 752 286 504

Social security fees 2 749 104 1 397 382

Pension costs 451 385 245 947

Other remuneration 829 690 183 109

Total 24 793 335 10 485 068

The number of employees in the accounting year has been 28.

Share based payments The company has in 2012 established a share-based payment programme for executives and senior employees in the company. The exercise price of the share options is equal to the marked price og the Cxense AS share on the date of grant. The share options vest over a four-year period, if the employee still is employeed by the company. The fair value of the share options is estimated at the grant date using the Black-Scholes option pricing modell, taking into account the terms and conditions upon which the share options were granted.

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Option

series Number Grant date Expiry date

Exercise

price

Fair value per

option at grant

date

Grant 1: August 2012 157 24.08.2012 24.08.2016 18 000 9 570

Grant 2: December 2012 164 09.12.2012 09.12.2016 22 500 11 963

Grant 3: April 2013 49 22.04.2013 22.04.2017 23 000 12 228

Grant 4: August 2013 40 26.08.2013 26.08.2017 23 000 12 228

Grant 5: October 2013 124 14.10.2013 14.10.2017 23 000 12 228

Grant 6: December 2013 39 09.12.2013 09.12.2017 25 000 13 292

None of the options granted have been forfeited during the year, thus total numbers of outstanding

options at year end is 573. The weighted average fair value of options granted during the year was NOK

11 496.

Other inputs to the fair value measurement:

Grant 1-6

Option life

4 years

Expected volatility 70 %

Risk free interest rate 1,60 %

Expected dividends 0

Note 3 – Remuneration to executives

Managing

director

BoD

Salaries 735 869 0

Pension costs 19 550 0

Other remuneration 4 000 145 600

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Note 4 – Expensed audit fee

Statutory audit for 2013 are expensed to NOK 228,225. Other assistance are expensed to NOK 108

650.

Note 5 – Taxes

Note 6 – Calculation of deferred tax/deferred tax benefit

Deferred Tax/deferred tax benefit, in the balance sheet is allocated on the basis of differences between

accounting and tax values according to the Norwegian FASB Interpretation No. for treasure. Temporary

taxable and deductible differences that can be equalized are netted.

Temporary differences related to: 01.01.2013 31.12.2013 Change

Currant assets (166 860) (121 348) (45 512)

Currant liabilities (40 397) (239 785) 199 388

Tax losses carried forward (65 288 158) (112 550 494) 47 262 336

Net differences (65 495 415) (112 911 627) 47 416 212

Deductible differences that can not be equalized 65 495 415 112 911 627 (47 416 212)

Total temprary differences 0 0 0

Deferred tax assets 31.12.2013 based on 27%

(28% for 2012)

0 0 0

Based on the objective of care, deferred tax benefits of NOK 30 486 139 are not reflected in the balance

at 31.12. 2013.

Basis for income tax expense, changes in deferred tax and tax payable

2013

Result before taxes (46 850 808)

+/- Permanent differences (564 804)

+/- Change in temporary differences 153 276

Taxable income 0

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Note 7 – Trade debtors

Trade debtors are recorded in the balance sheet at nominal value less expected losses on debt.

A loss of NOK 223 370 in trade debtors has been recognized in 2013.

Spesification trade debtors 2013 2012

Trade debtors nominal value 5 996 488 4 792 236

Bad debt provision (270 802) (166 860)

Trade debtors in the balance sheet 5 725 686 4 625 376

Note 8 – Restricted bank deposits

Included in bank deposits is account for withheld employee taxes amounting NOK 1 115 232. Withheld

employee taxes amounts to NOK 1 112 652.

Note 9 – Investments in subsidiaries, associated companies and joint ventures

Investements in subsidiaries at 31.12.2013

Company Location Ownership/

voting rights Booked value Equity

31.12.2013 Result 2013

cXense Co. Ltd Japan 100% 709 015 917 398 162 702 cXense Ltd. cX Inc. NA holding

Australia USA

100% 100%

0 29 979

1 668 151 289 535

(181 404) 196 935

Emediate ApS Denmark 100% 63 465 113 6 572 245 143 003 Emseas Teknik AB Sweden 100% (* 0 8 321 370 1 115 538 Premium Audinece Network S.L.

Spain 56% 420 314 (4 002 758) (2 027 496)

*) Emseas Teknik AB and Emediate Norway NUF are 100% owned subsidiaries of Emediate ApS.

In 2013 100% owned subsidiary PPN Schweitz AG was sold with a loss of NOK 39 438, presented as a financial cost. At the sale of PPN NOK 2 776 220 was remission of debt. This is presented as other operating expenses in the profit and loss statements.

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Intercompany transcation between subsidiaries 2013:

Specification of intercomapny income Amount Internal gains

Royalty income cXense Co. Ltd 3 945 507 0

License income cXense Inc. NA holding 4 062 414 0

Sales revenues PAN Spain 1 157 442 0

Specification of intercompany costs Amount Internal gains

Services bought from cXense Ltd. 9 138 269 0

Services bought from cXense Inc. NA holding 11 922 317 0

Services bought from cXense Co. Ltd 5 466 472 0

Note 10 – Group receivables

Receivables subsidiaries 2013 2012

cXense Ltd 0 317 768 PPN Schweitz AG (ref. note 9) 0 2 689 924 Premium Audience Network S.L. 2 480 935 475 851 cXense Co. Ltd 213 148 0 cXense Inc. NA Holding 2 671 871 0

Total group receivables 5 365 953 3 483 543

Intercompany interest income 2013 2012

PPN Schweitz AG 0 9 889 Premium Audience Network Spain 39 699 14 462

Total interest income from group companies 39 699 24 351

Note 11 – Share capital

The share capital of NOK 16 612 000 consists of 16 612 shares, with a nominal value of NOK 1 000 each. The company has one class of shares.

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Note 12 – Shareholders information

The company has 108 shareholders. A list of (20) major shareholders:

Note 13 – Shareholdings of seniors

Shareholdings of seniors and members of the board, directely or indirectly owned.

Name Position Numbers of shares

John Markus Lervik Chief Executive Officer and board member 1 982

Stein Hardy Danielsen Chief Architect and board member 377

Jørgen Marius Loeng*) Chief Financial Officer 165

Aleksander Øhrn Chief Technology Officer 365

Mikal Rohde Executive Vicepresident and board member 495

John T. Sviland Executive Vice President 409

Morten Opstad Chairman 25

Stig Eide Sivertsen Board member 85

Raman Bhatnagar*) Executive Vice President 40

Pål Petersen*) Chief Commercial Officer 108

*) John Markus Lervik served as CEO until 21 March 2014 when Raman Bhatnagar was appointed group CEO by the Board of Directors.

Shareholder Number of shares Owner share, % CXVEST LIMITED 2 489 14,98

POLARIS MEDIA ASA 2 190 13,18 ASAH AS 1 982 11,93

SIMPSON FINANCIAL LT 819 4,93 MP PENSJON PK 600 3,61

STOREBRAND VEKST 533 3,21 FOLLO EIENDOM AS 495 2,98

GBBT AS 409 2,46 HOME CAPITAL AS 400 2,41

MIKITANI HIROSHI 400 2,41 STEIN HARDY DANIELSEN 377 2,27

ALEKSANDER ØHRN 365 2,20 VIOLA AS 358 2,16

NORTH MURRAY AS 350 2,11 M&L PRITCHARD HOLDING 327 1,97

PORTIA AS 311 1,87 CRESSIDA AS 235 1,41

TORBJØRN KANESTRØM 192 1,16 AU79 GROUP AS 180 1,08

FINN ARNE GANGSTAD 172 1,04 OTHERS 3 428 20,64

Total 16 612 100,00%

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*) Jørgen Marius Loeng, Raman Bhatnagar and Pål Petersen are assigned respectively 100-, 50- and

100 shares options in the share-based option program.

Note 14 – Shareholders’ equity

Specification of Equity Share capital Own shares

Other paid-

in equity

Other

equity

Uncovered

losses Total

Equity 01.01.2013 12 630 000 0 47 289 775 0 (3 514 546) 56 405 229

Share based payments 0 0 0 1 166 752 0 1 166 752

Increase share capital /

other 3 982 000 (15 000) 95 094 000 0 0 99 061 000

Issue costs 0 0 (3 873 300) 0 0 (3 873 300)

The year's result 0 0 (45 684 056) (1 166 752) 0 (46 850 808)

Transfer of uncovered

losses 0 0 (3 514 546) 0 3 514 546

Equity 31.12.2013 16 612 000 (15 000) 89 311 873 0 0 105 908 873

Note 15 – Pension schemes The company’s pension schemes meet the requrements of the law on compulsory occupational pension.

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Responsibility statement

We confirm to the best of our knowledge that: the consolidated financial statements for 2013 have been

prepared in accordance with IAS as adopted by the EU, as well as additional information requirements in

accordance with the Norwegian Accounting Act, and that the financial statements for the parent company

for 2013 have been prepared in accordance with the Norwegian Accounting Act and generally accepted

accounting practice in Norway, and that the information presented in the financial statements gives a true

and fair view of the Company’s and the Group’s assets, liabilities, financial position and results for the

period viewed in their entirety, and that the Board of Directors’ report gives a true and fair view of the

development, performance and financial position of the Company and the Group, and includes a description

of the material risks that the Board of Directors, at the time of this report, deem might have a significant

impact on the financial performance of the Group.

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CSR, working environment, discrimination and external environment

Cxense has adopted a policy for sustainability and corporate social responsibility (“CSR”). The

principles in the policy cover the areas labour rights, anti-corruption, the environment and human

rights.

All work in the Group related to sustainability and CSR (together “the CSR work”) is based on the

CSR Policy.

Cxense want to make a positive contribution to society, in line with the general perception of

fairness and reasonableness. As a company or individuals will we not take actions, or offer

products and services, which would risk involvement in unethical behaviour, violation of human

or labour rights, corruption and environmental damage.

The Company complies with Section 3-3c of the Norwegian Accounting Act in respect of corporate

social responsibility adopted by Norwegian public limited companies listed on the Oslo Stock

exchange.

We define and follow up on our goals, analyse deviations and implement actions to achieve

continuous improvements for our customers, the environment, ourselves and our business

partners.

March 25, 2014

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Auditors report

OFFICE LOCATIONS

North America Latin America Japan Europe Asia Pacific

New York, NY

Cxense, Inc. 1180 Avenue of the Americas

8th Floor Rockefeller Centre NY 10036 USA

Buenos Aires, Argentina

Victoria Ocampo 360 Piso 3 Puerto Madero Ciudad de Buenos Aires Argentina

Tokyo, Japan

Cxense Co., Ltd. SU Building 204 3-1 Uguisudani-cho, Shibuya-ku Tokyo, 150-0032, Japan

Oslo, Norway (Corporate Headquarters)

Cxense AS Henrik Ibsens gate 100 P.O. Box 2920 Solli NO-0230 Oslo, Norway

Melbourne, Australia

Cxense Australia Pty Ltd Level 2, 84 William Street Melbourne, 3000 Australia

San Francisco CAxxxxx

Cxense, Inc. 20 N.San Mateo Drive Suite 3 San Mateo, CA 94001 USA Miami, FL

Cxense Latin America Suite 232, 4801 South University Drive Davie, FL 33328 USA

Rio de Janeiro, Brazil

Praia Botafogo, 300 - 5º andar - Botafogo

London, UK

Cxense UK 5 Regent St. Charles House, 5th Floor United Kingdom Copenhagen, Denmark

Emediate ApS Emdrupvej 28B 2100 Copenhagen Denmark Stockholm Sweden,

Emediate Sweden Drottninggatan 67 111 36 Stockholm Sweden

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