A p p t i x a n n u a l r e p o r t 2 0 0 4

F l o w o f t e c h n o l o g y

C o n t e n t s

Letter to Shareholders

Amir Hudda biography

Market update

Directors’ Report 2004

Annual accounts

Consolidated income statements

Consolidated balance sheets

Consolidated statements of cash flow

Notes to consolidated financial statements

Auditor’s statement

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F l o w o f t e c h n o l o g y

" D e m o n s t ra te s t h e b o n d b e t we e nA p p t i x a n d i t s c u s to m e r s , c re a t i n g a d i g i t a l n e t wo r k . "

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L e t t e r t o S h a r e h o l d e r s

Our partners continued to leverage the Apptix technology to generate increasedtraction in the market from both new and repeat customers, resulting in compounding increases in Monthly Recurring Revenue quarter on quarter – thevery core of the On-Demand business model. Despite the volatility of the Apptixstock, we increased revenues and improved gross margins in line with companyobjectives; however, as we continued to invest heavily in technology developmentand increased sales and marketing activities, the bottom line continued to show aloss. We enhanced our technology both through internal development and viaacquisition, to further leverage TECOS® to support our partners and customersand to better promote adoption of the On-demand software model.

We closed 2004 with a marked increase in year on year recurring revenue throughApptix’s partners and we reaffirm the goal of reaching profitability during 2005.The fundamental steps Apptix undertook in 2004 were all focused on creating along-term, profitable and flexible business which is well positioned within theOn-demand marketplace.

The next steps are to maintain technical excellence as well as to take a leadershipand visionary position within the fast emerging On-demand market. Our focus ondeveloping and supporting incremental applications supported by TECOS® isessential. It has been proven that TECOS® can support large numbers ofMicrosoft Exchange end users and we continue to look to extend this support toother Microsoft applications as well as other emerging and established applicati-ons in the near future. We are excited about the opportunities that exist withinthe wireless and mobility segments among others and will continue to work toestablish a strong foothold in these rapidly emerging markets. We believe thatApptix is well positioned to take a leadership position in these market segments.

In 2004 we focused on creating a more streamlined sales process with an overalllower cost of sale for our partners through a focus on customer self sign-up.Significant benefits can be seen for our partners and their customers by reducingthe cost of sale and improving the experience of acquiring services through selfsign-up. We continue to believe that such focus will result in increased sales andfurther differentiation of our core offerings in the market place.

In 2004, we also saw considerable return on the investment with key partnerssuch as Bell Canada, Microsoft and Hewlett-Packard (HP) among others. Focus onthese key partners helped to align their needs as well as to deliver increased revenues with future potential based on multiple application suites.

We also believe that the future growth in On-demand is becoming mainstream inthe global market. As an early entrant to this market, Apptix has worked withothers to educate the market, our partners and customers about the benefits toSMBs. The wave of support is continuing to grow. Increasing sales are indicationsthat the On-demand market is being widely adopted and that a strong revenueopportunity exists for those that have focused on the benefits of the On-demandsoftware model.

We continue to be grateful to the Apptix employees, customers, partners and shareholders for their long-term support and commitment. The year ahead promises to see Apptix continue to develop and reach profitability. The investments and support throughout the past several years by all those invol-ved is greatly appreciated. We look to this year as one of maximizing the returnsand continued progress as a leading company in the On-demand marketplace.

Chairman of the BoardPaul Brennan

Apptix continued to develop throughout 2004 with another year of strong progress towards being recognized as

a global leader in the On-demand marketplace. During the year, we made two strategic acquisitions of assets of

US-based companies (eOutlook and ASP-One) to enhance our technology and to improve customer acquisition

within the Small to Medium Business (SMB) segment.

4

Mr. Hudda is the founder & Chairman of Brickstream

Corporation. He started Brickstream in 2000 to provide brick

and mortar businesses the ability to capture and analyze cus-

tomer activity in a physical environment. Despite the scarcity

of capital for early stage companies following the dot-com

bust, Mr. Hudda was successful in raising almost $4.5M in

convertible and promissory notes. He also acquired patented

video-analysis technology from NCR and made that the core

platform for building Brickstream’s applications. Brickstream

was officially launched in early 2002 and through the success

of closing several early deals with Top 25 Banks and Retailers,

he closed a $6.2M Series A round with Columbia Capital and

Mohr Davidow Ventures in February 2003. More recently, in

July 2004, he closed a $9M Series B round with RBC Ventures

leading the deal. Mr. Hudda has recently consolidated all

operations in Atlanta and has hired a local CEO.

Prior to starting Brickstream, Mr. Hudda served as the

founder, CEO and Chairman of Entevo Corporation from its

inception in 1994 until its acquisition by Bindview

Corporation in January 2000. He also founded Entevo’s

subsidiary, Entevo (I) Private Limited, located in Pune, India.

During its early years, Entevo provided development services

to other companies. In early 1997, it transitioned into beco-

ming a products company and Mr. Hudda led the company

through an extremely successful corporate launch campaign

in June 1998, which established Entevo as a leader in Directory

Management for Microsoft and Novell platforms. To finance

the rapid growth of the company, Mr. Hudda raised $25

million in venture financing over 3 rounds from some of the

largest and most recognized Venture Capital firms such as

New Enterprise Associates (NEA), Oak Investment Partners,

FBR Technology Venture Partners, Novak Biddle Venture

Partners, SAP Ventures, Boulder Ventures and Mellon

Ventures. After growing the company to over 150 employees

in the US and internationally, Mr. Hudda sold Entevo to

Bindview for $125 million in January 2000.

Mr. Hudda worked for S1 Corporation (formerly known as

SecureWare, Inc) from 1989 to 1994. While at S1, he helped

design and develop some of the most advanced security

software used by the Department of Defense.

Mr. Hudda graduated with an MS in Computer Science

from Georgia Tech in 1989. He also has a BS in Computer

Engineering from PICT, University of Poona, India.

Mr. Hudda is the recently appointed Chief Executive Officer, joining Apptix in May 2005.

A m i r H u d d a b i o g r a p h y

CEOAmir Hudda

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M a r k e t u p d a t e

On-demand, also known as software as a service, is rapidly changing the way cus-

tomers buy and software providers sell software through enabling reduced costs

and more efficient business models. The market has proven that On-demand is

now in demand and demand will grow dramatically in the next few years.

“There is no doubt that software as a service has become an undeniable force

within the software industry that is leaving many to wonder what the future has

in store”, says Erin Traudt, an analyst at research firm IDC.

According to IDC worldwide software as a service spending is expected to reach

$10.7 billion by 2009, a compound annual growth rate of 21% over IDC's 2004-

2009 forecast period.

The success of On-demand services is customer driven, benefiting from a vast

decrease in total cost of ownership and the elimination of the hidden costs of

traditional software management. Customers simply consume applications like a

utility via the On-demand model.

License fees usually are just the tip of the iceberg, while the cost of maintenance,

IT personnel, hardware, customization and implementation exceeds the software

investments. On-demand gives the customer access to the latest software in just

a few clicks, and a simple pay-as-you-go model.

“Recent studies show that a majority of SMBs expect to increase spending on

On-demand services and that these companies see On-demand growing and

becoming the preferred or mainstream way to deliver IT services”, says Paul

Brennan, Chairman of Apptix.

Apptix is leading the shift to On-demand computing with its TECOS® software

that integrates application management, user management, provisioning, and

critical operational processes into a flexible management framework.

Apptix reseller partners have been enabled with turnkey solutions that include

all the elements needed for a successful outsourced application offering. Key

reseller relationships such as HP and Bell Canada are driving the demand for

On-demand in SMB.

Based on research by Summit Strategies, HP is expected to be one of the top three

channels worldwide for On-demand solutions to such small and medium-sized

businesses.

“We are seeing a number of initiatives leveraging TECOS®. A very exciting service

is the coming HP Hosted Microsoft Exchange E-mail Solution, targeting SMB

customers with fewer than 100 users. When combined with our other HP sales

efforts, Apptix is now strongly positioned to cooperate with HP across all key

market segments”, Mr. Brennan adds.

The market has successfully “crossed the chasm”, and customers have largely

made the transition from early adopters to early majority (pragmatists) and are

ready to take advantage of additional applications provided On-demand.

“On-demand” describes software delivered as a service via the Internet or a private network. Rather than

make large investments in software, hardware and expertise a customer would pay a small up front charge,

and then a monthly or annual subscription fee based on usage, number of users or customers.

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F l o w o f g r o w t h

" R e co g n i ze s t h e p o we r o f

n a t u ra l fo rce s m o v i n g to s o l ve

to d ay ' s b u s i n e s s c h a l l e n ge s . "

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D i r e c t o r s ’ R e p o r t 2 0 0 4

Apptix delivers its solutions directly to customers and

through a reseller network of service providers, telcos,

system integrators and global information technology

companies worldwide. Apptix’s leading service auto-

mation platform called TECOS®, the core of Apptix’s

delivery model, is a proprietary platform for automation,

standardization and self-provisioning of net-delivered

services, enabling high-quality delivery to large volumes

of end-users.

During 2004, Apptix made significant investments in

enhancing its ability to reach the SMB market by

automating the purchasing and provisioning processes

online. The acquisitions of the ASP-One, Inc. and Cygnet

Technologies, LLC (eOutlook) assets played an important

role in accelerating this development and establishing

Apptix as one of the largest distributors of Exchange and

SharePoint in the On-demand market.

Operations ReviewIn 2004, Apptix diversified the sales model to include direct

web-based sales through the ASP-One and eOutlook cus-

tomer portals. Throughout the year considerable effort was

applied to make the partner channels more effective in

their sales processes. Apptix has invested in deepening key

partner relationships, including HP and Bell Canada. There

has also been focus on expanding the geographic reach of

partners through Digex and Savvis.

January: During January 2004, Apptix signed a contract

to enable the first HP Value-Added Reseller (VAR) to resell

the Apptix messaging solution to its business customers.

In addition, Apptix established a partner agreement with

Savvis to market the Apptix enabled solutions to its

customers worldwide. As part of the agreement, Savvis

also became a customer of the solution by outsourcing

the management of its 1,100 internal users to Apptix.

January also brought the closure of a 2,000 user

enterprise customer through Verio.

March: During March 2004, Apptix signed an agreement

with Bell Canada to expand the relationship into joint

product development leveraging TECOS® and included a

$2.1M revenue commitment. Also in March Apptix signed

a new development and marketing agreement with

Microsoft to jointly create a next-generation self-signup

solution to drive further global adoption of Microsoft

Windows SharePoint Services.

Apptix continues to develop a reputation as one of the world's leading and most experienced companies within the

net-delivered application market. Founded in 1997, Apptix was previously a division of TeleComputing and became an

independent company in April of 2002. The company’s headquarters are in Asker, Norway, while the operations are

headquartered in Herndon, Virginia. Apptix is publicly traded on the Oslo Stock Exchange in Norway (OSE: APP).

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May: In May 2004, Apptix expanded the relationship with

Savvis to enable a Microsoft Exchange 2003 On-demand

offering in the United Kingdom providing Savvis the ability to

market and sell the offering to its customers throughout

Europe. May also brought the closure of a large enterprise

customer with 2,200 users in the United Kingdom through

Digex and the completion of TECOS® testing at the Microsoft

Partner Solutions Center. Based on the testing results

TECOS® demonstrated superior performance and scalability,

scaling up to five million end-users, demonstrating that

TECOS can easily meet the needs of service providers and

large enterprise customers.

June: Apptix launched the On-demand Solutions Program to

expand its research and development efforts and accelerate

the rollout of new third-party applications and solutions

integrated with TECOS®.

July: In July 2004, Apptix acquired the assets of Cygnet

Technologies, LLC, the operator of eOutlook.com, a Microsoft

Exchange focused self-signup web site. This asset purchase

was focused on acquiring technology designed to fully

automate the service delivery chain to the end-customer.

September: During September 2004, Apptix acquired the

assets of ASP-One, Inc., including all channel relationships

and a strategic partnership with Accenture. ASP-One was

strategically acquired for its industry leading web-based sales

and self-signup technology which, when combined with

TECOS®, will dramatically lower the cost of sales for its

service provider partners, enabling them to reach more

customers more quickly and accelerate recurring revenue

growth. Also in September Apptix signed a contract to

enable CompuCom Systems, another HP VAR to resell the

Apptix messaging solution to its business customers.

October: At the end of October, Apptix announced that it

had achieved an organic increase in booked seats over

those booked in Q2 of more than 100%. In addition to SMB

customers, these bookings included four enterprise custo-

mer contracts through three of Apptix’s partners totaling

5,400 users of Exchange. This Q3 performance exemplified

Apptix’s increasing success at targeting large enterprises

in 2004.

Apptix currently has more than ten channel partners with

increasing international reach. Together, these channel

partners employ thousands of salespeople and reach

hundreds of thousands of business customers.

During 2004, Apptix has continued to enhance its leading

delivery platform, TECOS®, through focused development

efforts and the initial integration of the ASP-One and

eOutlook technologies. In the coming year Apptix will

release TECOS® 5.0 which will fuse the powerful manage-

ment framework of TECOS® 4.0 with the industry leading

web-based sales and self-signup technology of ASP-One

and the customer interface of eOutlook. In 2005 Apptix

will continue to develop the Apptix On-Demand Solutions

Program and roll out multiple third-party

solutions integrated with TECOS®.

During 2004, the Company focused on execution of its

operational model with its partners. Important milestones

were reached in Apptix operations, implementation,

software development, and sales.

Throughout the year Apptix exceeded its Service Level

Agreements with its partners and end users. Operations

have been stable and implementation projects have been

carried out according to plan. Apptix has continued to

invest in the organization and feels its capacity will allow

for future revenue growth without major additional

investments.

At the end of 2004, Apptix was comprised of four legal

companies: Apptix ASA, Apptix Holding AS, Apptix Inc.,

and Apptix Acquisition Subsidiary, Inc. The operational

activities are mainly performed in the United States.

Financial developmentIn 2004, Apptix grew revenues significantly and improved

D i r e c t o r s ’ R e p o r t 2 0 0 4

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an objective to give the shareholders a competitive return on

their investment, primarily through increased value of the

company’s shares.

The company’s objectives are defined in the Articles. The

Board defines the strategy and specific targets with input

from management.

There is only one class of shares in the company and all shares

are freely transferable without any company-imposed restric-

tions. All shareholders have the right to vote through proxies

on shareholder meetings. The company strives to provide

accurate and sufficiently detailed information each quarter.

Quarterly results are presented in open meetings announced

through the Oslo Stock Exchange. The company has internal

guidelines covering market communication through OSE

releases. All financial information is available on Apptix’s

homepage (www.apptix.com).

The company has a high equity ratio and sufficient financial

liquidity. All Board members are elected based on

competence, experience and personal background relevant for

the company’s business. All Board members are outside

Directors. None of the Board members represent special

interests among the shareholders, suppliers, partners or

customers. The Board receives written reports from the CEO

on a monthly basis. Board meetings are held at regular

intervals with 10-12 meeting per year. No sub-committees

have been established.

gross margins. Consolidated revenues for the company

increased 79% from $3.12 million in 2003 to $5.58 million

for the financial year 2004. Annual recurring revenues

increased by 102% to $ 4.03 million, compared to $ 1.99

million in 2003. In the fourth quarter of 2004 revenue was

$1.74 million compared to $1.30 million in the third quarter

of 2004, an increase of 34%. By the end of 2004, Apptix

had a cash reserve of $3.13 million and an equity ratio of

64%. In 2004, the Company executed one equity

placement for total net proceeds of NOK 30.97 million.

Market conditions In 2004, the market acceptance for On-demand applicati-

ons continued to grow, showing particularly strong gains

in the SMB segment. Apptix benefited from the developing

awareness and willingness to purchase On-demand

applications. Significant revenue opportunities exist for

companies who are able to provide a platform for delive-

ring third-party applications as well as those who develop

the applications that can be delivered On-demand.

Throughout 2004, large players like Microsoft, HP and IBM

have continued to drive market demand for net-delivered

applications. Apptix, through its TECOS® platform and its

strategic partnerships with Microsoft, HP and Bell Canada

is ideally positioned to leverage this market opportunity.

Board of Directors Scott Thomson joined the Board of Apptix ASA in

September 2004. Mr. Thomson is a Vice President of Bell

Canada Enterprises (BCE), the parent company of Bell

Canada, Canada’s largest telecommunications provider

and an Apptix reseller partner. Bjorge Gretland stepped

down from the Board in September 2004.

Organization, working environment and equal opportunities Apptix has a stimulating and positive working environ-

ment with a highly qualified and motivated staff. No acci-

dents have occurred during 2004. Employment decisions at

Apptix are based on merit, qualification and abilities.

Apptix is an equal opportunity employer and does not

unlawfully discriminate based on race, religion, color, sex,

age, national origin, citizenship, marital status, disability,

veteran’s status, sexual orientation (in applicable jurisdic-

tion) or any other characteristic protected by law. This

policy applies to all decisions regarding terms, conditions,

and privileges of employment. The Company’s operations

do not pollute the environment.

Corporate GovernanceThe Board of Apptix is dedicated to treat all shareholders

and the investor market as a whole, equally and to provide

accurate and relevant information on a regular basis. It is

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Apptix has the same auditor for all legal entities. The auditor

participates in the Board meeting where the year-end results

are resolved. The auditor’s fee is resolved in the shareholder

meeting and specified in the relevant note to the financial

accounts.

Financial riskMarket risk – The Apptix Group is exposed to exchange rate risk

as a substantial part of the Group’s activity is in foreign

currency.

Credit risk – Credit risk is assessed as low, as the Group has

not experienced significant losses on receivables in the past.

Total credit risk exposure per 31.12.2004 is $741 thousand for

the Group. This is a reduction from 2003 when the exposure

was $942 thousand for the Group. The above figures do not

include inter-company receivables. The Group has not entered

into set-off agreements or other derivate agreements to

reduce the credit risk.

Liquidity risk – The Company is in an ongoing process of

ensuring that the Company has sufficient cash resources to

maintain its operations until the Company reaches cash flow

positive. The Board is fully committed to ensure that the

Company’s financial situation is satisfactory.

Future prospectsApptix’s TECOS® platform is recognized by service providers

as a key ingredient of launching successful On-demand

services. Based on Apptix’s current position in the market, its

strong growth in the second half of 2004 and the acceleration

of the market for net-delivered applications as a whole, the

Board sees a strong potential going forward.

Leveraging its core assets - TECOS® and its strong channel

partner relationships, Apptix looks forward to strong revenue

growth and cash flow break even in 2005.

According to the Norwegian Accounting Act, the Board

confirms that the requirements for going concern are present,

and that the accounts are presented under this assumption.

Financial forecasts for 2005 the Group’s equity and liquidity

position, as well as other planned initiatives provide the basis

for this assessment.

Transfer of fundsThe result of the holding company, Apptix ASA, was a net loss

of $6.37 million. The Board recommends that the net loss be

transferred from Other Equity.

D i r e c t o r s ’ R e p o r t 2 0 0 4

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a n n u a l a c c o u n t s

c o n s o l i d a t e d i n c o m e s t a t e m e n t s

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Apptix Group Apptix ASA(Amounts in NOK 1,000) (Amounts in USD 1,000) (Amounts in NOK 1,000)Year ended December 31 Year ended December 31 Year ended December 31

Note 2004 2003 2002 2004 2003 2002 2004 2003 2002OPERATING REVENUEASP Services (Recurring Revenue) 27 140 14 111 8 040 4 026 1 993 1 007 - - - Other Revenue 10 486 8 000 4 505 1 554 1 130 564 489 250 200 Operating Revenue 37 626 22 111 12 545 5 580 3 123 1 571 489 250 200

OPERATING EXPENSESDirect costs of Operating Revenue 10 764 7 359 7 769 1 596 1 039 973 - - - Salaries 4 36 364 27 395 46 104 5 393 3 869 5 774 939 1 106 4 814 Other operational and administrative costs 24 747 20 249 26 775 3 670 2 861 3 354 8 924 6 863 8 702 Depreciation and amortization 5,6 8 789 11 315 18 231 1 190 1 598 2 283 3 755 3 100 1 835 Write off of Unused Office Space - - 3 191 - - 400 - - - Write Down of Fixed Assets - - 10 198 113 - 1 277 - - - Total operating expenses 80 664 66 318 112 268 11 962 9 367 14 061 13 618 11 069 15 351

Operating loss (43 038) (44 207) (99 723) (6 382) (6 244) (12 490) (13 129) (10 819) (15 151)

FINANCIAL INCOME AND EXPENSESIncome/loss(-) from investment in subsidiaries 8 - - - - - (29 873) (35 358) (85 556)Interest, net 3 79 528 782 11 75 98 43 2 461 1 762 Foreign exchange income (loss), net 3 - 563 (4 964) - 79 (622) - 562 (5 090)Other financial income (loss), net 3 - 2 (130) - - (16) - 40 - Net financial income (expenses) 79 1 093 (4 312) 11 154 (540) (29 830) (32 295) (88 884)

Loss before taxes (42 959) (43 114) (104 035) (6 371) (6 090) (13 030) (42 959) (43 114) (104 035)

TAXESIncome tax benefit 9 - - - - - - - - -

Net loss (42 959) (43 114) (104 035) (6 371) (6 090) (13 030) (42 959) (43 114) (104 035)

Loss per shareBasic and diluted loss per share from continuing operations (0,86) (0,93) (2,77) (0,13) (0,13) (0,35) (0,86) (0,93) (2,77)Basic and diluted loss per share (0,86) (0,93) (2,77) (0,13) (0,13) (0,35) (0,86) (0,93) (2,77)Weighted average common shares outstanding 49 981 46 489 37 505 49 981 46 489 37 505 49 981 46 489 37 505

c o n s o l i d a t e d b a l a n c e s h e e t s

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c o n s o l i d a t e d b a l a n c e s h e e t s

Apptix Group Apptix ASA(Amounts in NOK 1,000) (Amounts in USD 1,000) (Amounts in NOK 1,000)Year ended December 31 Year ended December 31

Note 2004 2003 2004 2003 2004 2003ASSETSNon-current assetsIntangible assetsGoodwill 6 27 901 - 4 610 - - -Software and licenses 6 8 347 7 086 1 379 1 056 7 817 6 539 Total intangible assets 36 248 7 086 5 989 1 056 7 817 6 539

Property and equipmentComputer equipment 5,7 3 030 1 850 501 275 - - Furniture and fixtures 5 414 944 68 141 - - Leasehold improvements 5 106 935 18 139 - - Total property and equipment 3 550 3 729 587 555 - -

Financial non-current assetsReceivable from subsidiaries - - - - - 78 614 33 770 Investment in subsidiaries 8 - - - - (35 576) (371)Total financial non-current assets - - - - 43 038 33 399

Total non-current assets 39 798 10 815 6 576 1 611 50 855 39 938

Current assetsAccounts receivable 4 483 6 324 741 942 - - Other current assets 433 34 72 5 106 10 Prepaid expenses 390 374 64 56 73 69 Cash and cash equivalents 18 955 31 332 3 132 4 669 1 805 3 171 Total current assets 24 261 38 064 4 009 5 672 1 984 3 250

TOTAL ASSETS 64 059 48 879 10 585 7 283 52 839 43 188

SHAREHOLDERS' EQUITY AND LIABILITIESShareholders' equityPaid-in capitalCommon stock 11 3 476 3 223 574 480 3 476 3 223 Paid-in premium reserve 11 37 940 38 918 6 269 5 799 37 940 38 918 Other paid-in-capital 2 9 307 - 1 538 - 9 307 - Total paid-in capital 50 723 42 141 8 381 6 279 50 723 42 141

Long term debtOther long term debt 7 2 681 - 443 - - - Total long term debt 2 681 - 443 - - -

Current liabilitiesTrade accounts payable 5 439 2 803 899 418 1 117 34 Other current liabilities 5 216 3 935 862 586 999 1 013 Total current liabilities 10 655 6 738 1 761 1 004 2 116 1 047

TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES 64 059 48 879 10 585 7 283 52 839 43 188

December 31, 2004March 31, 2005

Paul Brennan Alex Hawkinson Dean ZuzicChairman of the Board CEO Board member

Scott Thomson Michael S. MathewsBoard member Board member

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c o n s o l i d a t e d s t a t e m e n t s o f c a s h f l o w

Apptix Group Apptix ASA(Amounts in NOK 1,000) (Amounts in USD 1,000) (Amounts in NOK 1,000)Year ended December 31 Year ended December 31

Note 2004 2003 2004 2003 2004 2003

Cash flows from operating activitiesLoss before tax (42 959) (43 114) (6 371) (6 090) (42 959) (43 114)Depreciation and amortization 8 789 11 315 1 303 1 598 3 755 3 100 Loss from investment in subsidiaries - - - - 29 873 35 358 Change in accounts receivable 3 712 (2 043) 477 (289) - - Change in trade accounts payable 1 063 339 248 48 1 083 (167)Change in other assets and liabilities 594 2 518 464 356 (115) 850 Cash flows used in operating activities (28 801) (30 985) (3 879) (4 377) (8 363) (3 973)

Cash flows from investing activitiesPurchases of intangible assets (5 495) (4 899) (936) (692) (5 033) (4 503)Purchases of property and equipment (1 813) (419) (300) (59) - - Sales of property and equipment - - - - - - Payments from other investment - - - - - - Cash flows used in investing activities (7 308) (5 318) (1 236) (751) (5 033) (4 503)

Cash flows from financing activitiesCash Paid for ASP-One (10 994) - (1 622) - - - Intercompany Receivables - - (23 640) (21 370)Investment in Subsidiaries - - - - - (29 849)Payments on other long term debt - (1 947) - (275) - - Proceeds from share offerings 35 670 32 547 5 262 4 712 35 670 32 547 Cash flows provided by financing activities 24 676 30 600 3 640 4 437 12 030 (18 672)

Effect of exchange rates on cash and cash equivalents (944) (825) (62) (82) - -

Net increase in cash and cash equivalents (12 377) (6 528) (1 537) (773) (1 366) (27 148)Cash and cash equivalents at beginning of period 31 332 37 860 4 669 5 442 3 171 30 319 Cash and cash equivalents at end of period 18 955 31 332 3 132 4 669 1 805 3 171

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n o t e s t o c o n s o l i d a t e d f i n a n c i a l s t a t e m e n t s

Note 1 - Summary of significant accounting policies

The financial statement of Apptix ASA is prepared according to theNorwegian Accounting Act of 1998 and Norwegian Generally AcceptedAccounting Principles.

ConsolidationThe Consolidated Financial Statements include Apptix ASA (the parent company) and all subsidiaries in which Apptix ASA directly or indirectly owns more than 50% of the voting capital. The accounts of all of the subsidiaries are prepared according to a uniform set of accounting principles similar to those applied by Apptix ASA.

All significant intercompany balances and transactions have been eliminated in the consolidation.

Acquisitions are accounted for by eliminating the cost price of the shares inthe parent company against equity in the subsidiary at the time of acquisi-tion. The cost of the acquisition has been allocated to the assets acquiredand the liabilities assumed according to their estimated fair market valuesat the acquisition date. The amount allocated to goodwill represents theexcess of the price paid over the fair value of the assets realized and the liabilities assumed. Goodwill is amortized on a straight-line basis over threeto five years.

Investment in subsidiariesInvestment in subsidiaries is accounted for in accordance with the equitymethod in the financial statement of the parent company (Apptix ASA). The companies located outside of Norway use their local currency as theirfunctional currency (primarily the US dollar). The assets and liabilities aretranslated into NOK using the rate of exchange as of the balance sheet date.For the consolidated income statement, an average exchange rate is used.Translation gains and losses are charged directly to equity. Transactions inforeign currencies are translated by using the exchange rate at the transaction date.

Revenue recognitionRevenue from ASP Services is recognized as the services are delivered. The sale of goods is recognized as revenue at the time of delivery. Revenue from consulting services is recognized when the services are performed.

General valuation rules for classification of assets and liabilities Current assets and liabilities include balances typically due within one year.All other balances are classified as non-current assets and other long-termdebt.

Current assets are valued at the lower of cost or net realizable value. Short-term debt is stated at the historical nominal value.

Fixed assets are valued at cost, but written down to realizable value if thedecline in value is expected to be permanent. Long-term debt is disclosed atthe historical nominal value

Receivables Trade accounts receivable and other debtors are stated at face value reducedby a provision for anticipated losses. The provision is made on the basis ofindividual evaluations of each customer. In addition, an unspecified provi-sion is made for any losses anticipated for the remainder of the balances.

Monetary items in foreign currenciesMonetary items denominated in foreign currencies are translated at theexchange rate applicable on the balance sheet date.

Property and equipmentProperty and equipment is stated at cost less accumulated depreciation.Depreciation is computed for owned assets using the straight-line methodover estimated useful lives of the assets.

Costs in connection with research and development are charged to incomeas they are incurred, with the exception of software development, which is capitalized to the extent that specific criteria for capitalization are met. The software is depreciated using the straight-line method over the useful life of the asset.

Uncertain liabilitiesUncertain liabilities are recorded if it is more likely than not that they will besettled. The best estimate is used for calculating the settlement value.

LeasingLeases are classified as financial or operational according to a specificassessment of the individual contract. Operating leases are expensed on astraight-line basis over the term of the lease contract. Finance leases arecapitalized at the inception of the lease at the fair value of the leased pro-perty, or if lower, at the present value of the minimum lease payments.Capitalized leased assets are depreciated using the straight-line methodover the estimated useful life of the asset. Total lease payments except estimated interest are recorded as long-term debt at the inception of thelease. The liability is reduced by the lease payments less the estimated interest expense.

Stock optionsThe Company utilizes the intrinsic value method for recognizing compensation expense relating to its employee stock-based compensationplans. As long as the exercise price of employee stock options equals orexceeds the estimated fair value of the underlying stock on the date ofgrant, generally no compensation expense is recognized. The Company discloses pro forma information regarding fair value of the options.

Income taxesThe tax expense in the income statement includes taxes payable on the ordinary result for the period as well as the change in deferred tax. Deferredtax is calculated with a nominal tax rate on the temporary differences between the recorded values and tax values, as well as on any tax loss carry-forwards at the balance sheet date. Any temporary differences increasing or reducing taxes that will or may reverse in the same period, are netted. The net deferred tax benefit is recorded as an asset if it is regarded as likely that the Group will be able to realize the benefit throughfuture earnings or realistic tax efficient planning.

Cash flow statementThe cash flow statement is prepared in accordance with the indirect method.Included in cash and cash equivalents are bank deposits and cash on hand.Cash and cash equivalents are carried at the market value on the balancesheet date.

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N o t e 3 - C o m b i n a t i o n o f i t e m sYear ended December 31,

Apptix Group Apptix ASA(Amounts in NOK 1,000 ) 2004 2003 2002 2004 2003 2002Interest on bank deposits 161 528 2 048 43 2 461 1 762 Interest expenses (82) - (1 266) - - - Interest net 79 528 782 43 2 461 1 762

Foreign exchange income - 563 - - 562 - Foreign exchange loss - - (4 964) - - (5 090)Foreign exchange income (loss) net - 563 (4 964) - 562 (5 090)

Other financial income - 179 43 - 61 - Other financial expenses - (177) (173) - (21) - Other financial income - 2 (130) - 40 -

N o t e 4 - C o m p e n s a t i o n

Salaries Apptix group Apptix ASA(Amounts in NOK 1,000, except employees) 2004 2003 2002 2004 2003 2002Salaries 26 987 23 029 37 150 823 820 4 758 Stock-based compensation - - - - - - Social security cost on employee stock options 116 164 - 116 164 - Social security tax 2 562 1 818 2 923 - 122 56 Other compensations 6 699 2 384 6 031 - - - Total salaries 36 364 27 395 46 104 939 1 106 4 814

Average number of employees 54 37 50 4 4 4

CEO and Board Members Board Options Average(Amounts in NOK 1,000, except share data) Salaries compensation granted 2004 Exercise PriceAlex Hawkinson 1 430 - Paul Brennan (Chairman) - 169 300 000 17,20 Bjorge Gretland (Board Member) - 200 10 000 16,90 Michael S. Mathews (Board Member) - 150 10 000 16,90 Scott Thomson (Board Member) - 50 - -Dean Zuzic (Board Member) - 100 50 000 16,90 Viktor Sandland (Board Member) - 50 - -

1 430 719 370 000 17,14

N o t e 2 - A c q u i s i t i o n s

On July 1, 2004, Apptix ASA purchased the assets of eOutlook, Inc. for$225,000 USD (payable in Apptix ASA shares). On September 13, 2004, ApptixASA purchased the assets of ASP-One, Inc. The purchase price of the assetswas $4,350,000 USD ($1,500,000 in cash and 1 174 988 number of shares inApptix ASA). The goodwill for both transactions was calculated by taking thepurchase price less the identifiable assets. The goodwill related to the ASP-One and the eOutlook acquisitions is shown in Footnote 6.

The ASP-One transaction included a performance incentive based on salesthresholds being met by Henri Ganancia (sole shareholder of ASP-One, Inc.).By meeting certain thresholds, Mr. Ganancia is to be paid an additionalamount in either shares of Apptix ASA or cash, which is determined solely byApptix ASA. This is included in the calculation of goodwill based upon thecompany s best estimate of the outcome. Proforma information related theacquisitions are included in foot note 13.

Paul Brennan has in addition received NOK 674,350 under a consultancy agre-ement approved by the shareholders meeting on September 10, 2004. Inaddition, Paul Brennan will be paid a flat fee of 1.75% of the company valuein the event the company is sold or if the company is listed on NASDAQ (oron another recognized international stock exchange).

Alex Hawkinson resigned on January 26, 2005. As per his severance agree-ment which was entered into on January 26, 2005, he will receive 9 months

base salary paid out in accordance with the company’s normal pay practicebeginning 7 days after the start date of a new CEO or May 1, 2005, whicheveroccurs first.

Auditor fees:Ordinary audit fees for 2004 were NOK 136,826 for Apptix ASA, and NOK410,478 for the subsidiaries. Fees for other services were NOK 360,673 forApptix ASA and NOK 18,240 for the subsidiaries.

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Note 5 - Property and equipmentComputer Furniture Leasehold

(Amounts in NOK 1,000, except share data) equipment and fixtures improvements TotalCost -December 31, 2003 30 136 2 057 3 171 35 364 Cost - ASP-One September 13, 2004 1 480 305 1 785 Additions 1 813 - - 1 813 Disposals - (687) - (687)Translation adjustment (2 960) (203) (312) (3 475)Cost December 31, 2004 30 469 1 472 2 859 34 800 Accumulated Depreciation 28 286 1 113 2 236 31 635 Acc. Depreciation disposals - (430) (430)Translation adjustment (2 999) (165) (304) (3 468)Acc. depreciation and write-down December 31, 2004 27 439 1 058 2 753 31 250 Balance December 31, 2004 3 030 414 106 3 550

Current depreciation 2 152 540 821 3 513

Useful life 3 years 7 years 5 yearsDepreciation plan Straight-line Straight-line Straight-line

Leasehold improvements are depreciated over the lesser of the estimated useful life of the improvement or the remainder of the lease term.

N o t e 6 - I n t a n g i b l e a s s e t sApptix Group Apptix Group ASA Software

(Amounts in NOK 1,000) Goodwill Software & Licenses and LicensesCost - 13 845 11 329 Cost - ASP-One September 13, 2004 - 52 - Additions 28 790 5 495 5 033 Disposals - - - Translation adjustment - (247) - Cost December 31, 2004 28 790 19 145 16 362 Accumulated Depreciation - 6 759 4 790 Acc. Depreciation disposals - - - Translation adjustment (102) (246) - Acc. depreciation and write-down December 31, 2004 889 10 798 8 545 Balance December 31, 2004 27 901 8 347 7 817

Current depreciation 991 4 285 3 755

Software and Licenses are amortized on a straight-line basis over two to five year periods. Goodwill has been amortized on a straight-line basis over tenyears. This is the Company’s best estimate of the life of the assets. For more information on Goodwill, please see footnote 2.

N o te 7 - L e a s e s a n d m o r t g a ge s

The Company has funded their investments in computer equipment, office and datacenter space, machinery and office equipment through lease agreements. Future minimum annual capital and operating lease commitments at December 31, 2004 are as follows:

Operating Finance(Amounts in NOK 1,000) Lease LeasePayable in 2005 1 675 1 192 Payable in 2006 2 887 1 257 Payable in 2007 2 977 512 Thereafter 7 849 - Total minimum lease payments 15 388 2 961

Interest 280 Long-Term Debt 2 681

Capitalized Leases 134

NOK 3,674,133 of bank deposits is restricted as security for future lease commitments. In addition, the capitalized lease is included in the computer equipment balance in Footnote 5.

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N o t e 8 - S h a r e s i n s u b s i d i a r y c o m p a n i e s

Shares in Subsidiary CompaniesTime of Incorporation/ Offices Percentage of shares Percentage of

Companies acquisition location owned by Apptix ASA voting sharesApptix Holding AS 2001 Asker 100 % 100 %Apptix Inc.* 1999 Virginia 100 % 100 %Apptix Acquisition Subsidiary, Inc.* 2004 Illinois 100 % 100 %

Apptix has incorporated all the companies mentioned above.

The investment in subsidiaries is accounted for as shown below:Apptix Switzerland SA Apptix Holding AS *) Total

Investment in subsidiary 31.12.2001 288 60 652 60 940 Apptix ASA part of net loss for 2002 (150) (85 406) (85 556)Equity method adjustment - (1 088) (1 088)Funding - 42 999 42 999 Translation adjustment - (11 319) (11 319)Adjustment 13 (13) - Investment in subsidiary 31.12.2002 151 5 825 5 976 Investment (151) 30 000 29 849 Apptix ASA part of net loss for 2003 - (35 358) (35 358)Translation adjustment - (838) (838)Investment in subsidiary 31.12.2003 (151) (371) (371) Apptix ASA part of net loss for 2004 - (29 873) (29 873) Translation adjustment - (5 332) (5 332) Investment in subsidiary 31.12.2004 - (35 576) (35 576)

*) Apptix Acquistion Subsidiary Inc. is a subsidiary of Apptix Inc., and is accounted for in accordance with the equity method in Apptix Inc. Apptix Inc. is a subsidiary of Apptix Holding AS, and is accounted for in accordance with the equity method in Apptix Holding AS.

Apptix Switzerland SA was dissolved early in 2003.

N o t e 9 - I n c o m e t a x

The Norwegian Company is taxed at the statutory tax rate of 28 %, and the US Company is taxed at the statutory tax rate of 37.6 %.

Reconciliation between the income tax benefit at the statutory rate and the consolidated effective income tax benefit are as follows:

Specification of the basis for deferred tax assetDeferred tax advantage 2004 2003 2002 ChangeTax loss carryforward Norway 213 472 199 252 187 591 14 220 Tax loss carryforward United states 388 478 385 139 366 675 3 339 Current assets 479 513 2 168 (34)Non-current assets 26 036 37 480 29 553 (11 444)Current liabilities 568 1 263 4 874 (695)Long term debt - - - - Total basis of deferred tax advantage 629 033 623 647 590 861 5 386

Deferred taxCurrent assets - - - - Non-current assets 2 455 2 189 2 269 266 Total basis of deferred tax 2 455 2 189 2 269 266

Net deferred tax advantage 626 578 621 458 588 592 5 120

Deferred tax asset based on nominal tax rate Norway 62 898 58 559 202 451 4 339 Deferred tax asset based on nominal tax rate US 151 251 155 155 - Valuation allowance (214 149) (213 714) (202 451) (435)Deferred tax asset in the balance sheet - - - -

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N o t e 1 0 - E m p l o y e e o p t i o n s

The Company has a Stock Option Plan, which is administered by the Company’s Board of Directors. The Plan provides for the granting of options to purchase shares of Common Stock to eligible employees. The option grants vest over 2 to 4 years and the option term does not exceed 8 years.

A summary of the Company’s stock option activity, and related information for the year ended December 31 follows:

2004 2003 2002Shares Weighted- average Shares Weighted- average Shares Weighted- average

exercise price exercise price exercise priceOutstanding at beginning of period 4 694 518 8,29 5 083 737 10,03 5 037 230 14,36 Granted 1 408 406 17,90 1 298 450 6,55 3 613 125 4,01 Exercised (855 231) (15,04) (785 844) (4,28) - - Forfeited/expired (562 028) (11,59) (901 825) 26,53 (3 566 618) (4,38)Outstanding at end of period 4 685 665 11,50 4 694 518 8,29 5 083 737 10,03 Exercisable at end of period 2 863 877 12,30 1 985 012 11,91 2 116 127 13,54

The following table summarizes information about stock options at December 31, 2004:

Outstanding stock options Exercisable stock optionsEmployee and directors stock options Shares Weighted average Weighted Shares Weighted

remaining average average contractual life exercise price exercise price

NOK 0 - 5 2 030 045 2,91 4,20 1 224 455 4,19 NOK 6 - 10 441 275 2,91 8,31 230 675 7,74 NOK 11 - 30 2 185 745 3,08 18,25 1 380 147 19,34 NOK 31 - 80 28 600 3,26 62,04 28 600 62,04 Total 4 685 665 2,99 11,50 2 863 877 12,30

If we expensed stock options in 2004 using the Fair Value Method, the total expense for the period would have been NOK 5,571,349.

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Common stock Paid in Other paid- Total (Amounts in NOK 1,000) premium reserve in capital equityShareholders' equity December 31, 2001 1 827 63 065 31 914 96 806 Private Placement May 1 083 64 840 - 65 923 Net loss 2002 - (72 121) (31 914) (104 035)Expenses covered by TeleComputing - 6 715 - 6 715 Translation adjustment - (11 863) - (11 863)Shareholders' equity December 31, 2002 2 910 50 636 - 53 546 Carnegie Placement 27 1 743 - 1 770 Private Placement May 233 27 179 - 27 412 Options Exercised 53 3 312 - 3 365 Net loss 2003 - (43 114) - (43 114)Translation adjustment - (838) - (838)Shareholders' equity December 31, 2003 3 223 38 918 - 42 141 Private Placement August 148 30 967 - 31 115 Eoutlook Purchase 7 1 549 - 1 556 ASP-One Purchase 41 10 300 9 307 19 648 Options Exercised 57 4 498 - 4 555 Net loss 2004 - (42 959) - (42 959)Translation adjustment - (5 333) - (5 333)Shareholders' equity December 31, 2004 3 476 37 940 9 307 50 723

Equity changes for Apptix ASA (Amounts in NOK 1,000):Common stock Paid in Other paid- Total

(Amounts in NOK 1,000) premium reserve in capital equityShareholders' equity December 31, 2001 1 827 63 065 32 250 97 142 Equity placement 1 083 64 840 - 65 923 Net loss - (71 785) (32 250) (104 035)Expenses covered by TeleComputing - 6 715 - 6 715 Ellimination equity method - (1 088) - (1 088)Translation adjustment - (11 111) - (11 111)Shareholders' equity December 31, 2002 2 910 50 636 - 53 546 Carnegie Placement 27 1 743 - 1 770 Private Placement May 233 27 179 - 27 412 Options Exercised 53 3 312 - 3 365 Net loss - (43 114) - (43 114)Translation adjustment - (838) - (838)Shareholders' equity December 31, 2003 3 223 38 918 - 42 141 Private Placement August 148 30 967 - 31 115 Eoutlook Purchase 7 1 549 - 1 556 ASP-One Purchase 41 10 300 9 307 19 648 Options Exercised 57 4 498 - 4 555 Net loss 2004 - (42 959) - (42 959)Translation adjustment - (5 333) - (5 333)Shareholders' equity December 31, 2004 3 476 37 940 9 307 50 723

N o t e 1 1 - C o n s o l i d a t e d s h a r e h o l d e r s e q u i t y

In 2004, the Company executed one equity placement for total net proceedsof NOK 31,115,469. In addition, current and former employees exercised options for total net proceeds of NOK 4,555,273.

In 2003, the Company executed one equity placement for total net proceedsof NOK 27,412,000. In addition, Carnegie exercised options for total net proceeds of NOK 1,770,000, and current and former employees exercisedoption for total net proceeds of NOK 3,364,980.

In 2002, the Company executed three equity placements for total net proceeds of NOK 65,923,000.

In connection with private placement announced on August 20 2004,

HBK is entitled to warrant-coverage through a synthetic option equaling 733,576 shares (the `Option Shares`) at a price per share equal at NOK 20.29(the `Strike`). The option may be exercised at any time within a period ofthree years from 19 August 2004. Upon the exercise of the option, Apptixshall either (at Apptix`s sole discretion) (A) issue the Option Shares to HBK against payment of a price per share equal to Strike, or (B) pay to HBK an amount in cash equal to (i) the average volume weighted traded price forshares in Apptix the last five trading days prior to the date of the exercisenotice (ii) less the Strike, (iii) multiplied by the number of Option Shares. If Apptix decides to settle the consideration in cash, the consideration shallbe capped at the total subscription price in the initial share issue (MNOK 33.5) less the par value of the shares issued.Equity changes for Apptix group (Amounts in NOK 1,000):

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Note 12 - Shareholder structure

The Company has only one class of shares, which has a par value of NOK 0.0666. Each share has one vote. There are no trade limitations on the Company’sshares. The shares are registered in the Norwegian Registry of Securities. Total outstanding and issued shares at year-end 2004 were 52,189,936.

Number of Percentage of Name Shares shares ownedSWEDBANK CLIENTS ACCOUNT 3 270 455 6,27 %BANK OF NEW YORK, BR BNY GCM CLIENT ACCS 2 800 000 5,37 %SWEDBANK S/A ACH 2 709 480 5,19 %BROWN BROTHERS HARRI S/A CLOSE INTL 2 705 734 5,18 %PLENTEOUS CORP C/O EXCELLEN ADVISOR 2 700 000 5,17 %SIS SEGAINTERSETTLE 2 214 698 4,24 %CITIGROUP GLOBAL MAR HOUSE SAFEKEEP 1 937 000 3,71 %ORKLA ASA 1 608 000 3,08 %LYGREN ATLE 1 324 331 2,54 %ACH SECURITIES SA 1 250 000 2,40 %NATEXIS BANQUES POPU S/A GLOBAL REIMS 1 106 000 2,12 %BANK OF NEW YORK, BR S/A HBK MASTER FUND 1 016 500 1,95 %POLLEX AS 1 000 000 1,92 %STATOILS PENSJONSKAS V/ STATOIL KAPITALFO 969 900 1,86 %CARNEGIE INVESTMENT 897 000 1,72 %BANK OF NEW YORK - INTER MARITIME BANK 865 900 1,66 %BULLS TANKREDERI A/S 850 000 1,63 %CHRISTENSEN CHRISTIAN FREDRIK OG V/CHRISTIAN FREDRIK 845 000 1,62 %SCANDINAVIAN FASHION 692 000 1,33 %ANGLO IRISH BANK 634 900 1,22 %Total 20 largest shareholders 31 396 898 60,16 %

Other shareholders 20 793 038 39,84 %

Total shares outstanding 52 189 936 100,00 %

Shares and options owned by Board of Directors and CEO as per December 31, 2004Average

Name Shares Options excercise priceAlex Hawkinson CEO 30 000 1 196 172 4,32 Paul Brennan Chairman - 300 000 17,20 Dean Zuzic Board member 50 000 50 000 16,90 Michael S. Mathews Board member 230 408 70 000 4,41 Scott Thomson Board member - - - Total 310 408 1 616 172

N o t e 1 5 - T r a n s l a t i o n

This Consolidated Financial Statement is a translated version of the Norwegian official board approved financial statement, and is prepared for informationpurposes only. The Consolidated Financial Statement presented in USD has been translated in to USD using the average exchange rate on the P&L and the rateof exchange as of the balance sheet date on assets and liabilities.

Average exchange rate Year end exchange rateExchange rate used 6.7435 6.052

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Apptix ASA and ASP-OneProforma Statements of Operations 12 months ended 12 months ended

2004 2003 Revenue 46 902 33 212 Cost of sales 12 622 9 886 Gross profit 34 280 23 325 Operating expenses 77 062 68 113 Operating loss (42 782) (44 788)Other income/(expense) (407) (1 187)Net Loss (43 189) (45 974)Loss per Share (0,86) (0,99)Weighted average common shares outstanding 49 981 46 489

N o t e 1 3 – A p p t i x A S A a n d A S P - O n e P r o f o r m a F i n a n c i a l s

The acquisition of ASP-One by Apptix was effective for accounting purposesfrom September 13th, 2004. The acquisition of ASP-One has been treated asan acquisition transaction, and the result of ASP-One was included in theprofit and loss account from the date of acquisition. Acquired assets anddebt is booked with real value with a calculated goodwill of NOK 29 million.The proforma financial statements for 2004 and 2003 shows the effect of the

acquisition of ASP-One for the whole year based on the financial statementsof Apptix and ASP-One for the same periods included amortization of goodwill.

The proforma numbers have been prepared based on the same accountingprinciples as the financial statement.

N o t e 1 4 - I m p l e m e n t a t i o n o f I F R S

The European Union has adopted regulations that require all listed compa-nies in the European Union to implement International Financial ReportingStandards (IFRS) for all consolidated financial statements, no later than 1January 2005. As a consequence of the European Economic Area Agreement,these regulations will also apply to Norwegian listed companies.

Apptix will apply IFRS for the first-time in the interim financial statement thefirst quarter of 2005. Comparable figures for 2004 according to IFRS will beincluded.

The effects that will apply to Apptix are described below.

Stock based compensationIFRS requires that options and subscriptions rights granted to employeeshave to be recognized at fair value at the date of grant. Apptix is currentlyusing the intrinsic value accounting method. It is expected that a change in method will lead to an increase in costs for Apptix.

Development of intangible assetsAccording to IFRS, all costs related to development have to be capitalized aslong as they are expected to give the Company a future economic advantage,while costs related to research and maintenance should be charged toexpense as they are incurred. Apptix’s accounting method is to charge allcosts in connection with research and development to expense as they areincurred, with the exception of software development. The changes are notexpected to be considerable for Apptix.

Accumulated exchange differencesExchange differences from the conversion of a foreign subsidiary and to theimplementation date of IFRS can be viewed as a permanent component ofequity. As a consequence, it is not required that these exchange differencesare presented as part of profit/loss if disposal of a foreign subsidiary is con-sidered. There is no effect on equity in the opening balance of Apptix as aresult of this requirement.

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