BSQUARE Corporation

Company Name: BSQUARE Corporation
Stock Market: NSDAQ (BSQR)
Industry Sector: Services-Business Services, NEC
Market Capitalisation: $29.4 million (as of November 14, 2008)
Yearly Revenue: $59.3 million (as of 2007)
Operating Income: $2.3 million (as of 2007)
Net Income: $2.8 million (as of 2007)
Total Assets: $24.8 million (as of December 2007)

Key People: Donald B. Bibeault (Chairman of the Board), Brian T. Crowley (President and Chief Executive Officer, Director), Carey E. Butler (Vice President, Professional Engineering Services), Rajesh Khera (Vice President, Products), Scott C. Mahan (Vice President, Finance; Chief Financial Officer; Secretary and Treasurer), Larry C. Stapleton (Vice President, North American Sales)

Headquarters Address: 110 110th Avenue NE, Suite 200 Bellevue, Washington 98004
Number of Employees: 175 (as of December 31, 2007)
Website Address: www.bsquare.com

Company Overview

BSQUARE Corporation (“BSQUARE”) was founded in 1994. Since its inception, the company has been offering engineering and software services to the smart device market. Its customers consist of original equipment manufacturers (OEMs), enterprises, silicon vendors, original design manufacturers (ODMs), and peripheral vendors that create, market, and deliver smart devices. The company’s engineering and software services that are provided to its customers are utilised and installed throughout the various phases of its customers’ device life cycle. This includes design, development, customisation, quality assurance, and the deployment of devices.

The growing demand for connectivity between consumer users and business is increasing due to the cost effectiveness and accessibility for end-users. The personal computer has been the conventional means of electronic connectivity among partners, suppliers, employees and customers. The breakthrough of smart devices has led to its rapid adoption by businesses as a new class of powerful technology.

Smart devices are very attractive to consumers and businesses because these devices are cheaper than laptop and desktop computers. These devices have adaptable configurations, including weight, size and shape. Smart devices are capable of supporting a wide range of user interfaces and customised applications. Typically, smart devices are compatible with existing business information systems.

In 2007, the international operations of BSQUARE outside of North America included operations in Tokyo, Japan, and Taipei, Taiwan. The company’s OEM Distribution Agreement with Microsoft restricts its resale of Microsoft Embedded operating systems to Mexico and North America. In the last quarter of 2007, BSQUARE re-established a direct sales force in Tokyo, Japan. The company intends to rebuild its capability to sell software products and services in Japan.

Current Financial Overview

On December 18, 2007, BSQUARE acquired certain assets of NEC Corporation of America for $250,000. Included with this acquisition is the right to distribute Adobe Flash licenses to ODMs and OEMs, as well as other smart device manufacturers worldwide. The company will support customers who are currently using Adobe Flash technology on different operating systems such as Symbian or Linux.

In 2007, BSQUARE’s total revenues increased by 19%, or $9 million, to $59.4 million compared to $49.8 million in 2006. Total revenues consist of the sales of engineering and software services to smart device manufacturers. Software revenue consists of sales from the company’s proprietary software products, such as software development kits, royalties from software products, software licenses, and smart device reference designs. Moreover, sales from third-party software are also included in the software revenue. Engineering service revenue consists of software and hardware development activities, customer training fees, and support contracts.