Geosentric Oyj Operating Report Financial

GEOSENTRIC OYJ

OPERATING REPORT FINANCIAL STATEMENTS ANNUAL REPORT 2010

OPERATING REPORT AND FINANCIAL STATEMENTS 2010

CHAPTER Page

OPERATING REPORT 1

FINANCIAL STATEMENTS FOR YEAR 2010

Group Income Statement (IFRS) 22

Group Statement of Financial Position (IFRS) 23

Group Cashflow Statement (IFRS) 24

Group Statement of Changes in Shareholders´ Equity (IFRS) 25

Notes to the Group Financial Statements (IFRS) 26

Parent Company Result Report (FAS) 55

Parent Company Balance Sheet (FAS) 56

Parent Company Cashflow Statement (FAS) 57

Notes to the Parent Company Financial Statements (FAS) 58

Date and Signatures 63

List of Used Accounting Books 64 1

OPERATING REPORT FOR FINANCIAL YEAR 2010

Summary of key figures Operational overview Material events in the year 2010 Material events after the end of the financial year Review of the financial position and the financial results Outlook Assessment of significant operational risks Review of R&D-activities Investments and financing Personnel and organization Environmental issues Board of Directors and auditors Group structure Board authorization Structural arrangements and changes in amounts of shares Capital loans Company shares and shareholders Shareholding of the Board members and Managing Director Related party transactions Board proposal regarding the handling of the result

SUMMARY OF KEY FIGURES

Key figures summarizing the Group’s financial position and financial results (teuros if not indicated otherwise):

In period 4Q/2010 2010 4Q/2009 2009

Net sales 39 54 0 4 Operating result -1752 - 9536 -3358 -13916 Basic earnings per share (eur) -0.00 -0.01 -0.00 -0.02

At the end of period

Total assets 1420 8893 Shareholders´ equity -15024 -2236 Total liabilities 16444 11129

OPERATIONAL OVERVIEW

technologies. Its intellectual property is delivered as software and services in products which include the GyPSii product platform (“GyPSii”).

The business model for the GyPSii platform services and applications is via embedded licensing of IPR in terms of software technology and branded trademarks, and downstream revenue generation from services which generate advertising and subscription revenue. Thus during the reporting period 2010 the Group continued its focus on securing partnerships with the major distribution partners to integrate product on to their new devices and services and to broaden the range of GyPSii supported devices. Major marketing and launch plans during 2010 by the distribution partners, and by GyPSii itself, have driven significant volumes of GyPSii users, which have had a positive impact on revenues from GyPSii during 2010.

The total net sales of the Group from continuing operations of the GyPSii services in 2010 were 54 teuros, a significant increase on total net sales from continuing operation in 2009 of 4 teuros. The Group disposed of its TWIG handset business at the end of the financial year as more fully described below so all of these revenues from continuing operations derive from the GyPSii business and represent revenues from advertising delivered to the increasing numbers of GyPSii users and IPR licensing.

Total operating expenses from continuing operations were significantly lower in the reporting year compared to the prior year, going to 9590 teuros, from 13920 teuros in 2009, a 31% decrease. This was mainly driven by the Group consolidating its development, business development and marketing efforts in China while decreasing personnel and related costs in the rest of world. See further details below.

As a result, the total result before taxes from continuing operations was -11387 teuros in 2010, versus -14156 teuros in the prior year, a 20% decrease. Earnings per share from continuing operations for the reporting period were -0.01 euros per share.

The Group realized an overall loss from its discontinued operations (its TWIG business) in 2010 of 1987 teuros (2009: loss of 1622 teuros). This is comprised of an operating loss of 1743 teuros in 2010 (2009: loss of 1622 teuros) plus a net loss on disposal of the assets and liabilities of the TWIG business of 244 teuros.

Strategy update

The Company adopted a new strategy in 2007 to fully leverage the acquisition of GeoSolutions B.V. which is the owner of the GyPSii platform and IP for mobile social networking and geo-mobility. This strategy positioned the Group to exploit the fast growing global markets of Internet enabled mobile phones needing location based services.

According to the strategy the Group targets the mass-market consumer space through a multi-tiered go-to-market distribution strategy for social networks including internet portals, mobile OEM’s and mobile

networks and Operators. This go-to-market strategy will build a scaled network of customers, distributors, licensees and alliances to propagate the Group business. Consequently, the Group has focused on business partnerships, product development and marketing. The main achievements in implementing the strategy since 2007 have been as follows:

• building the global service infrastructure; • broadening the range of GyPSii supported devices, which is an essential element in Group’s strategy and introducing OEx; • several important distribution partnerships with world’s leading mobile manufacturers and mobile operators: Samsung, LG, Lenovo, Huawei, Garmin, China Mobile, China Telecom, China Unicom, Genasys and Intel relationships • worldwide recognition by receiving multiple industry awards; • exponential growth rate in number of GyPSii users and page views

The above mentioned achievements are indicative of the adoption of the GyPSii overall platform and have created a solid basis for achieving a critical mass of users for GyPSii and also for future revenue generation.

The Group is now moving to a new phase in executing its strategy as the GyPSii business is moving from intensive product partnership development/product and infrastructure development/market penetration phase to the monetization phase. The target is to expand the GyPSii user base and strengthen the Group’s solvency by focusing the product portfolio and improving performance and profitability. Actions adopted have included following:

• critical assessment of the Company’s cost structure and commencing necessary measures; • harmonizing, rationalizing and simplifying Group’s operations; • focusing the product portfolio; • consolidating marketing efforts to penetrate emerging markets

In moving to the next phase in executing the strategy and the business plan, the Group is focusing its resources very locally, especially in China, where the Group has already achieved a significant level of user adoption. It is also focusing on revenue generation by monetizing its IP with multiple sources of revenue (advertising and subscription). The strategy will include partnering locally where the Group feels that this can significantly enhance both user adoption and revenue generation.

MATERIAL EVENTS IN THE YEAR 2010

During the year 2010, the Group has continued its efforts to broaden the range of GyPSii supported devices, which is an essential element in Group’s business plan. As GyPSii’s revenue model is based on income from embedded and upstream licensing of IPR, subscription fees and advertising, broadening the range of supported devices, entering into agreements with major distribution partners and introduction of OEx has

created a solid basis for achieving a critical mass of users for GyPSii and also for future revenue generation.

The highlights of the year were:

In February 2010, at Mobile World Congress (MWC) in Barcelona Spain the Company announced the following new applications and partnerships:

Tweetsii – GyPSii announced Tweetsii, a new Twitter application to connect people with places and networks by growing the Twitter experience and grounding it in the real world with multimedia and geo- location to support a free exchange of content and ideas.

OpenDeveloper – GyPSii announced a plan to open their API to the developer community with OpenDeveloper, a premier source of next generation technologies to connect people; create, share and search content; and monetize applications with contextual advertising. OpenDeveloper seeks to accelerate innovation in the mobile and social media ecosystem by arming developers with powerful technologies to create sticky apps.

China Telecom - GyPSii was selected to be the branded China Telecom solution “le tu”, (Happy Trails in English) powered by GyPSii for the 2010 Shanghai Expo with China Telecom Shanghai Telecom.

Genasys - GyPSii was selected to be the exclusive LBS social media partner in Telefonica’s application portfolio in Latin America. This deployment has been delayed pending further contract discussions.

China Ad Partners – GyPSii announced several important on-line and mobile advertising and coupon distribution partners in China.

Working with Shanghai coupon provider Kubang, GyPSii connected users with coupons for nearby restaurants that the user views alongside user- created content on the GyPSii network. If the user searched “food” for example they received a coupon for a nearby restaurant. This not only added value to the user experience but also drove transaction and referrals for the restaurant on GyPSii.

GyPSii also partnered with leading Chinese mobile advertising network MADhouse to help deliver inventory for major global and regional brands. GyPSii has other deals in place with Admob, search engine company Baidu, and CHANet, the leading mobile marketing affiliate network in China.

In addition, GyPSii continued to expand its extensive index of Points of Interest for GyPSii users to search and explore. Content relationships with 5757577 and Gudumani that connected GyPSii users with new restaurants and dining POIs: Avantouch for theatre information: and City8 for travel POI. This additional content enhanced the GyPSii user experience, providing more information and greater choice for members to access and use on their mobile device.

The top industry group for Mobility and the Internet awarded GyPSii as the 2010 Most Innovative Location Based Service at the 7th annual 2010

Wireless Communication Conference in Beijing. The organizers of the conference include the major mobile carriers in China (China Mobile, China Telecom, and China Unicom) and a host of other Internet companies such as Sina, Baidu, QQ/Tencent, Kaixin.

Garmin and GyPSii elected to renew their existing contract into a 3rd year. The extension of the contract allows Garmin to continue to leverage GyPSii’s API into Garmin’s mobile phone and connected PND product lines.

Shanghai Media Group’s(SMG) ChannelYoung and the Company entered into a framework agreement in May 2010 to distribute a ChannelYoung branded client app for iPhone and Android. The app was built using the Company’s Open Experience API Platform, and utilized its patent pending “check-in” features, among others. With the agreement, SMG provided 15,000 partner businesses to be accessed by the new app, including their address, contact information, and offerings. This information is now a part of the GyPSii platform data set, enabling users to search, check-in, and receive offers and coupons from the partners. Further, ChannelYoung provided marketing outreach programs and promotions through Direct Marketing, Online Marketing, and TV spots during Enjoy Young's daily food channel as part of the framework agreement.

Other significant events in 2010 included:

In June 2010 the Company secured additional funding from its lead investor by way of a €6m secured convertible loan note issued by its wholly owned Dutch subsidiary, GeoSolutions Holdings NV (”GHNV”). The first tranche of €2.5m of this loan note was drawn down in June 2010 with a second tranche of €2.5m drawn down in September 2010. The final €1m tranche was drawn down in December 2010. As part of this financing round the final conversion and other terms of the €7.5m 2009 loan note issued by GHNV were agreed to and approved at the Company’s Annual General Meeting on June 30, 2010.The terms of financing are presented below in section ”Financing and structural arrangements”.

Further, at the Company’s AGM on June 30, 2010 the meeting approved the 2009 audited financial statements of the Group and agreed to re-elect the auditors, Ernst & Young, to set the auditors’ remuneration and the compensation of the Board’s non-executive directors as disclosed in the market bulletin at the time. In addition the terms of the financing round as described above were approved and approval was given for the Board to explore the possibilities of the Group divesting its mobile handset business.

The AGM decided the number of the Board members to be seven and re- elected the six then current directors: Hans van der Velde, Dan Harple (CEO), Mike Vucekovich, Gary Bellot, Andy van Dam, Winston Guillory, and elected Michael Po to the Board as a new member. The Board elected Hans van der Velde as the Non-Executive Chairman of the Board. The meeting fee for each Board and committee meeting was decided to be 1,500 Euros for at maximum eight meetings per year.

The AGM re-elected Ernst & Young as the auditor of the Company with Erkka Talvinko (CPA) as the auditor in charge.

The AGM authorized the Board to decide upon increase in share capital and the issuance of new shares as well as special rights entitling to shares, against or without payment, such that the maximum amount of increase is 4,000,000 Euros and the maximum number of new shares is 850,000,000.

The AGM amended the Company’s Articles of Association according to the Board’s proposal such that the notice to the General Meeting shall be published in accordance with the amended provisions of the Finnish Companies Act.

The AGM approved the Board’s proposal that the Board been given discretionary approval to seek a potential disposal of the Company’s mobile handset business.

Raymond Kalley resigned from the Board on 9th June, 2010. During Q2 Robin Halliday, CFO, announced his resignation from the service of the Company but has agreed to continue as Interim CFO on a contractor basis.

On 9th July the Company announced that it was commencing a consultation procedure with its Finnish workforce with a view to downsizing its workforce in line with diminishing TWIG product sales. The Company announced the outcome of this consultation procedure on 20th September, which was to make 24 employees redundant and to make 11 employees subject to a forced leave procedure.

The Company has also continued implementing its business plan and the required cost reductions to meet the conditions of the additional financing approved by the Annual General Meeting on June 30, 2010. Cost reductions were implemented as headcount reductions in all areas of the business as well as consolidation of engineering resources from higher cost regions of the world into China.

In September 2010 it was announced that Dan Harple had resigned as CEO to be replaced with immediate effect by Winston Guillory. In November it was announced that Dan Harple had resigned as a member of the Board to focus full time on his professional activities with Shamrock Ventures B.V. and that at the same time the management services agreement made between the GeoSentric group and Shamrock Ventures had ended.

TWIG business

The business of the Company’s TWIG unit declined further over the year as the TWIG Discovery Pro GSM/GPRS/GPS handset (for the safety and security market) and the TWIG Locator tracking device (for the asset and vehicle tracking market) reached the end of their product lives. The TWIG business has been loss making and cash flow negative for at least the last 18 months and the investment required to improve its performance would be substantial. The Company concluded that this potential investment is not the best use of its resources and that the

TWIG business is better off outside of the GeoSentric group in the hands of its specialist management team.

The Company reviewed a number of alternatives to get the best available deal terms. Due to the niche positioning of the TWIG business, interest from external purchasers was limited. The Company therefore negotiated the divestiture of the TWIG business with the current TWIG management team, and, in January 2011, concluded an agreement on the terms and conditions of the purchase. The actual purchaser is a newly established company, Twig Com Oy, majority held by the MBO team (“Twig Com”).

The parties agreed that the purchase price is a nominal EUR 1.00. However, as a part of the consideration and an integral part of the transaction, Twig Com assumes all liabilities and obligations with regards to the transferring business, including in relation to its employees and assets. Together with the liabilities that Twig Com assumes, the book value of the transaction for GeoSentric is approximately 0.3M€, being the net book value of transferred assets and liabilities. The following are the main terms of the agreement:

• The purchase transaction is for a nominal consideration of EUR 1.00, is effective as of 31 December 2010 and comprises of all TWIG mobile handset related inventories, fixed assets, manufacturing rights, trademarks, agreements and employees • The net book value of the TWIG inventory being transferred is approximately EUR 225,000 • All relevant GeoSentric IPR’s and third party IPR’s are licensed royalty free in perpetuity to Twig Com to enable continued production and support of the TWIG products • Twig Com has assumed all GeoSentric’s liabilities, obligations and other responsibilities related to the TWIG mobile handset business including all product warranty responsibilities • 14 TWIG employees are transferring their employment from GeoSentric to Twig Com including the MBO leadership team of Jukka Nieminen, Tomi Raita and Jouko Laine • Twig Com has assumed all TWIG trade payables and receivables as of 31 December 2010 and has taken over the TWIG factory and office lease

The TWIG divestiture will have significant impact on the Company’s financial performance in the short term as the TWIG business has been the main revenue generating business of the Company. As a result, although GyPSii revenue is expected to grow significantly in 2011 compared to 2010, overall revenue for 2011 will be significantly lower than in the previous year. However, the cash flow effect of the TWIG disposal is estimated to be approximately €1m positive for the 2011.

In pursuance of the signing of the business purchase agreement Mr. Tomi Raita resigned from the position of the Company’s Managing Director, and the Board of Directors has nominated board member Winston Guillory as GeoSentric’s new Managing Director.

Legal Proceedings

The Company does not have any pending or threatening legal proceedings which the Company would consider to have material impact on the Company’s financial position or profitability.

MATERIAL EVENTS AFTER THE END OF THE FINANCIAL YEAR

In January 2011, the Company agreed with its lead investor to extend the current financing structure with an additional financing of a maximum aggregate amount of 1.8M€ for the primary purpose of financing and supporting its GyPSii operations in China. The additional financing was raised in two tranches both received in January 2011 through the Company’s wholly owned Dutch subsidiary GeoSolutions Holdings N.V. on the same terms as agreed and approved by the Annual General Meeting held on June 30, 2010. The Company has already before placed the shares and assets of the Company and GeoSolutions Holdings N.V. and its subsidiaries as a first ranking security to the financing, which security will cover also this additional financing.

In connection with the additional financing the Board of Directors of the Company has also, by virtue of the authorization granted by the Annual General Meeting, decided to issue at maximum 144,000,000 special rights to the lead investor, entitling them alternatively to convert their loan notes in GeoSolutions Holdings N.V. directly into the shares of GeoSentric, as agreed in the loan terms for the original 6M€ financing in June 2010.

In February 2011 Andy Van Dam resigned from the Board of Directors for personal reasons.

In April 2011 the Board received a proposal for short-term financing from Company’s lead investor (“Proposal”). The Proposal sets the terms and conditions on which the lead investor is willing to commit to further funding for the business of the Group. According to the Proposal the lead investor would convert its existing preferred convertible notes (“Notes”) issued by GeoSolutions Holdings N.V. (“GHNV”) into the shares of GHNV, leaving the Company as a minority shareholder in the GHNV with approximately a 21% shareholding. The conversion of Notes would be followed by further capitalization of GHNV in a form of rights offering (“GHNV Offering”), which could lead into further dilution of Company’s ownership in GHNV down to a 7% level if the Company did not participate in the GHNV Offering to its pro-rata share, corresponding to an investment of approximately 1M€. To raise the required funds to participate in the GHNV Offering the Company needs to arrange a share issue (“GSOY Offering”).

Under the Proposal the lead investor has also undertaken to provide the Group with further short term financing of 0.6M€ in a form of new Notes issued by GHNV, which financing the Company has now raised. Pursuant to the Proposal, this financing was directed €250k to GHNV and its subsidiaries providing this sub-group with financing through to the end of April and €350k to the Company giving the Company runway through Q2 2011 and time to arrange the GSOY Offering to raise funds for participating in the GHNV Offering and guaranteeing the sufficient liquidity of the Company in the medium term. The Company estimates that to achieve the above goal it should raise in the GSOY Offering

approximately 1.8M€. In case of a successful GSOY Offering the Company would still hold a substantial share of approximately 21% of GHNV, which holds all the GyPSii business assets, and would retain the ability to enjoy the future upside potential of the business. As the Company has recently announced to the markets, the GyPSii business is now starting to show some positive development in China, especially through co-operation with Sina. The Company’s own operations would be reduced to a minimum and its sole business would be holding the GHNV shares.

On the other hand, if the GSOY Offering was unsuccessful and the required funds were not raised, the lead investor has undertaken to provide GHNV sufficient funding through the GHNV Offering, itself subscribing part of the Company’s prorata entitlement, and offering the rest to other potential investors. According to the Proposal, in this case, GHNV would give the Company a secured loan, supported by the lead investor, securing the minimum capital requirements of the Company until approximately mid 2012 and the Company would be left holding approximately 7% of GHNV shares. Any further funding of the Company would then be subject to support from the Company’s shareholders.

The Board of the Company has discussed the Proposal in depth with the lead investor to secure the best possible terms for the Company’s shareholders and other stakeholders and acknowledges that it is the only proposal for funding that the Company has received. The Board has also assessed the proposal and concluded that it represents a better alternative for the shareholders of the Company compared to putting the Company into liquidation. Therefore, the Board of Directors approved the Proposal and raised the first part of the funding, i.e. 0.6M€ in accordance with the terms of the Proposal. The Board has decided to call an Extraordinary General Meeting to convene on May 12, 2011 a and proposes to the Extraordinary General Meeting to confirm the approval of the Proposal by the Board of Directors except as regards to above mentioned 0.6M€ financing raised already prior to Extraordinary General Meeting. A summary of the key terms of the Proposal is attached to the published on Company’s website.

REVIEW OF THE FINANCIAL POSITION AND THE FINANCIAL RESULTS

The Company has during the period retained solidity and liquidity.

Key figures summarizing the Group’s financial position and financial results from continuing operations (teuros if not indicated otherwise):

In period 2010 2009 Net sales 54 4 Operating result -9536 -13916 At the end of period

Total assets 1420 8893 Shareholders´ equity -15024 -2236 Total liabilities 16444 11129 Cash 892 5939

Sufficient liquidity

The Company has, during the reporting period, retained sufficient liquidity.

The Company has in April 2011 received a funding proposal from its lead investor (see note 33 below) which provides for the short term funding of the Group. The funding proposal would result in the parent company losing control of its subsidiaries with its own operations being reduced to that of a shell holding company. The proposal provides time and funding for the parent company to participate in a subsequent funding round of its current immediate subsidiary, GeoSolutions Holdings NV, in which case it could retain approximately a 21% stake in the subsidiaries. If the Company is not able to raise additional funds from its shareholders and participate in this subsidiary funding round, the parent company’s stake would be reduced to approximately 7%. In this case the funding proposal provides for an intercompany loan to be made available from the current subsidiary company to the parent company to fund its reduced operations through to approximately mid 2012. After that it would need to look to its shareholders for further funding. The funding proposal has been approved by the Company’s Board and has been referred to an EGM on May 12, 2011 for shareholder confirmation of this approval. If the shareholders do not confirm their approval and no alternative and acceptable funding proposals are forthcoming, it is likely that the Company could be declared insolvent.

OUTLOOK

Market Outlook

There are over 4 billion mobile phone units in the market and over 1 billion new phones shipped every year. Internet Access, camera, location capabilities, and 3rd party application support has become standard on most devices.

GyPSii’s applications are supported on the 7 major mobile platforms and allow the Group to address not only the fast growing smartphone market (lead by iPhone and Android) but also the feature phone market, which by industry polls in 2009 represents substantial percentage of the mobile phones in the world today.

With the widespread adoption of mobile internet and the ability to provide location/GPS information in real-time, the market has created new revenue opportunities around delivering location aware mobile advertising, promotional offers and couponing to consumers. GyPSii’s expertise, technologies, and partnerships have positioned them to exploit this market opportunity on a very broad scale.

Business Development Outlook

The Groups’ business outlook and identified revenue during 2011 is based on expanding its current level of business subscription, advertising sales and IPR licensing.

The main focus of business development and the primary element for the business model and revenue generation is rapid growth of the GyPSii

membership base that utilizes GyPSii’s two main products in China, “Tuding” and “Weilingdi”. This growth is being achieved almost exclusively in China by existing and developing partnerships with Mobile Operators (MO), Original Equipment Manufacturers (OEM), Original Device Manufacturers (ODM), Personal Navigation Device Manufacturers (PND) and leading mobile and Internet commerce companies as well as direct marketing campaigns by GyPSii. GyPSii membership has grown significantly during 2010 and has climbed to a total subscriber base of almost 3,000,000 registered users with a substantial and growing base of recurring monetizeable users. This membership base has begun to produce advertising revenues and the Company is targeting to grow these revenues during 2011 and beyond.

A second element of GyPSii’s growing revenue base began with the development of its Open APIs (OeX) at the beginning of 2010. The Group has furthered business development opportunities with strategic service providers to deliver OeX into non-emerging markets. This approach allows GyPSii to reduce the risk and overhead associated with business development efforts in non-target markets while assessing geographies that may prove to be long-term opportunistic for the Company. Outside of China, GyPSii is developing partnerships for use of its LBS and SNS software platform “OEX”. During 2010 a major agreement was signed licensing OEX to a major PND provider in the United States. This agreement provides for monthly recurring revenue based on total usage. GyPSii will attempt to develop further partnerships for the licensing of OEX in 2011.

Finally, during 2010, the Company consolidated its efforts into developing the Chinese market. Efforts in prior years to penetrate the markets in the United States and Europe proved too costly for the Company to sustain compared to the operating cash available. Therefore, during 2010, the Company began consolidating operating, development, business development and marketing resources into China with significant staff reductions elsewhere in the world. This has resulted in a significant reduction in monthly operating costs within the Group At the same time the Company began to focus its products and services

almost entirely in China. This decision has resulted in significant increases in member acquisition and usage of the GyPSii products within China. This member growth led directly to the growth of page views and hence the generation of advertising revenues. This significant growth during 2010 establishes the ability to further grow the monetization of page views with advertising in 2011.

ASSESSMENT OF SIGNIFICANT OPERATIONAL RISKS

The global financial crisis and current global recession have had and may continue to have a negative impact also on the business of the Group. As announced previously, the Company expected to see positive development in GyPSii generated revenues starting from the last quarter of 2009. Continued financing negotiations and, especially during the year 2009, the global financing crisis have shifted the revenue expectations of GyPSii, yet revenues have started to be generated in 2010 and the Company expects to see further positive development in GyPSii generated revenues during 2011. The Company is also exploring additional business development opportunities including partnering arrangements with local media partners, which could lead to accelerated user adoption.

There is no certainty of the success regarding the implementation and realisation of the business plan. According to the business strategy, the Group is pursuing entrance also to new business segments with competitive situations new to it, or which may be only in the early market phase. Unless the Group is able to successfully respond to these developments it may significantly impair the Group´s operating results.

A key driver of the business model is sufficient and sufficiently rapid growth of users of the services, and the speed of adoption of mobile, UGC and location based advertising of which the Group has no certainty. Advertising budgets have been reduced by major brands and advertisers in certain areas and this could have an adverse affect on the adoption of mobile and location based advertising in 2011 and beyond.

The most significant risk relating to the business plan is the sustained growth of members. As the Company’s business model is driven by the acquisition and retention of new members, possible delays in funds available to the Company to drive marketing efforts of their new products to the markets and therefore the acquisition of new members, may have an adverse effect on the development of the Company’s business by decelerating the distribution and subscriber-adoption rate of the Company’s products and services.

Since 1997, the Company has not paid dividends. In the future, the re- payments of capital and other preferred loans will restrict the possibility to distribute dividends. The total amount of loans as at 31 December 2010 was 23613 teuros at nominal value. Regarding future dividend payments, there is also uncertainty about the ability of the Company to accrue distributable capital. According to the financial statements of the Company, there was no distributable capital in the latest balance sheet of the Company.

The Group´s business plan has been prepared by assuming that the Group´s result and cashflow will improve significantly. The Group’s financing plan also assumes additional external financing to be received, which financing has not yet been agreed to. Should the result and cashflow essentially fail to meet the planned figures, or the new financing be delayed, or the amount of financing turn out to be insufficient to meet the Group’s capital needs, this might force the Company to introduce further significant cost cutting measures, which could also have a material effect on the execution on the Company’s current business plan in the short term, and also cause an insolvency risk.

There are significant financial risks related to the Company’s business, competition and industry and it is possible that investors may lose all or a part of their invested capital.

GeoHolding B.V., and investor groups led by Horizon Group and Schroders & Co Limited have influence on GeoSentric, each of them separately. The Company trusts that the regulation and information obligation binding public companies, supported by the compliance with the corporate governance recommendations, together with the continuous external auditing activity maintained by a skilled and reputable auditing firm suffice to pre-empt a misuse of control power.

REVIEW OF R&D-ACTIVITIES

The volume of the Group’s R&D activities during the reporting period was significant due to the on-going R&D-programs by means of which the Group intends to significantly expand its business over the next few years. No capitalizations were made.

The Group maintains R&D units primarily in Warwick, RI (USA) and Shanghai (China).

Additionally, GyPSii server facilities are maintained in the US and China at present, with continued upgrades planned in the future.

The development of R&D costs from continuing operations in years 2008- 2010 was the following:

Year R&D costs of which % of sales teuros capitalized teuros 2009 7756 0 0 2010 4671 0 0

INVESTMENTS AND FINANCING

Gross investments in financial period were 40 teuros. In year 2009 gross investments were 208 teuros and in year 2008 they were 119 teuros.

PERSONNEL AND ORGANIZATION

The number of employed personnel at GeoSentric in 2010 averaged 120, of which 35, at most, were affected by alternate forced leaves. The alternate forced leave program, agreed to in autumn 2010 to apply for the time being continues also in 2011. The average number of personnel in year 2009 was 120 and in year 2008 it was 94.

The members of the management team of the Company are: Winston Guillory (CEO) Michael Po (COO, Senior Vice President, Engineering), Rich Pizzarro (Senior Vice President & CTO), Bruce Hathaway (Senior Vice President, Finance, Controller and Corporate Secretary), Robin Halliday (CFO), Jeff Lin (Managing Director, Asia Pacific), Jay Cahill (Vice President, Strategic Accounts) and Sam Critchley (Vice President, Products).

ENVIRONMENTAL ISSUES

The Company changed into a no-lead manufacturing process according to so called ROHS-directive during summer 2006. The Company pays for its products a statutory recycling fee and has organized the recycling of disposed materials contractually through Jalopinta Ky. Altogether, the Company’s operations cause no significant environmental impact.

BOARD OF DIRECTORS AND AUDITORS

According to the Company’s articles of association the Board of Directors consists of not less than three (3) but no more than nine (9) ordinary members. The term of the members of the Board of Directors begins at the end of the Annual General Meeting of shareholders and expires at the end of the next Annual General Meeting of the shareholders following the election.

The Board consists of Hans van der Velde (Chairman), Gary Bellot, Michael Vucekovich, Winston Guillory and Michael Po. Raymond Kalley resigned from the Board on 9th June, 2010. In September 2010 it was announced that Dan Harple had resigned as CEO to be replaced with immediate effect by Winston Guillory. In November it was announced that Dan Harple had resigned as a member of the Board. After the reporting period, in February 2011 Andy Van Dam resigned from the Board of Directors for personal reasons.

GeoSentric Oyj has established committees to enhance the preparation of matters falling within the competence of the Board. The -committees are 1) Audit and Finance Committee; 2) Corporate Governance and Nominations Committee; 3) Compensation Committee; and 4) Strategic Options Committee.

In financial year 2010, the audit firm Ernst & Young Oy continued to serve as the ordinary auditor of the Company, with Mr. Erkka Talvinko, CPA, as the responsible auditor. Audit firm PricewaterhouseCoopers continued as the deputy auditor of the Company.

GROUP STRUCTURE

In addition to the parent company, GeoSentric Oyj, the Group comprises of 100 % owned subsidiaries, GyPSii (Shanghai) Co. Ltd, GeoSolutions B.V., GyPSii Inc., GeoSolutions Holdings N.V. (formerly Benefon Solutions B.V.) and GeoSentric (UK) Ltd. (formerly Benefon (UK) Ltd). All GeoSentric’s subsidiaries are held under its Dutch subsidiary, GeoSolutions Holding N.V. (formerly Benefon Solutions B.V).

GeoSentric (UK) Ltd., GyPSii (Shanghai) Co., Ltd., GeoSolutions B.V. and GyPSii Inc. are primarily engaged with the GyPSii business. GyPSii (Shanghai) Co., Ltd. has a primary focus for market development in Asia. Further, product quality assurance, testing, and multi-lingual review are assisted by the Shanghai team. GeoSentric Oyj is the group parent company and during the reporting period was engaged in the TWIG- products and provides R&D services to the GyPSii-products and services. GeoSolutions Holdings N.V. is a semi dormant holding company.

BOARD AUTHORIZATION

The Annual General Meeting convened on June 30, 2010 authorized the Board to increase the share capital by maximum of 4,000,000 euros and share amount by maximum of 850,000,000 new shares, option rights or special rights. The authorization is valid for two (2) years from the date of the Annual General Meeting. At the same time all the other authorizations were terminated.

At the end of the reporting period the remaining amount of Board’s authorization was 4,000,000 euros and 807,902,000 shares corresponding to 87.37 % of the currently registered share amount and 27.65 % shares after all shares and instruments entitled to shares, effecting a corresponding immediate dilution to existing shareholdings (including current authorization).

STRUCTURAL ARRANGEMENTS AND CHANGES IN AMOUNTS OF SHARES

Financing round 2009: The subscription period of the 2009 loan note for raising a maximum amount of 25000 teuros through Company’s Dutch subsidiary GeoSolutions Holdings N.V. (“GHNV”), which originally was to end on March 31, 2010, was extended in March 2010 until the end of the year 2010. The Group received and drew down an investment commitment of 7500 teuros during the year 2009. The terms of the 2009 note were later amended by the Annual General Meeting held on June 30, 2010 as described below.

The loan note is fully transferrable and entitles to subscribe shares in GHNV or the investors may, at their discretion convert their notes into GeoSentric shares. The note will expire in five years. As a precondition for the investment the Company has agreed to pay an industry standard placement fee of 6%, payable in equal portions in cash and in shares, to Raymond Kalley who assisted with the fund raising. The note accrues interest at the rate of 5% p.a. which, it has been agreed, shall be deferred until redemption or conversion. The detailed terms of the financing have been disclosed and can be found in the call to the Annual General Meeting released on June 9th 2010.

Financing round 2010: The new 2010 loan note has the same terms as the 2009 note except that the note accrues interest at the rate of 12% p.a. and is for a maximum amount of 6000 teuros of which 2500 teuros has been drawn on June 30, 2010 and a further 2500 teuros has been drawn on September 1, 2010. The remaining 1000 teuros was drawn in December 2010. As a precondition for the investment the Company has agreed to pay an industry standard placement fee of 5%, all payable in shares to be issued without charge, to Raymond Kalley who assisted with the fund raising. The fee was paid in September 2010 when the Board issued in total of 23,750,000 new shares of the Company to Raymond Kalley without charge.

The Board and AGM have approved the terms for additional financing of 6000 teuros to be adopted by issuing preferred convertible notes of Company’s wholly owned Dutch subsidiary GeoSolutions Holdings N.V. At the same the AGM decided to issue 948,750,000 special subscription rights to the holders of the notes, entitling them to alternatively subscribe for the shares of the Company, and approved certain changes to the terms of Company’s Convertible Bond Loan 2008-B.

Financing round 2011 In January 2011, the Company agreed with its lead investor to extend the current financing structure with an additional financing of a maximum aggregate amount of 1.8M€ for the primary purpose of financing and supporting its GyPSii operations in China. The additional financing was raised in two tranches both received in January 2011 through the Company’s wholly owned Dutch subsidiary GeoSolutions Holdings N.V. on the same terms as agreed and approved by the Annual General Meeting held on June 30, 2010. The Company has already before placed the shares and assets of the Company and GeoSolutions Holdings N.V. and its subsidiaries as a first ranking security to the financing, which security will cover also this additional financing.

During the financial year the Company’s share capital was increased by 4,800 euros and share amount by 480,000 new shares by virtue of Share subscription in Option Plan 2004A. The increase in share capital and shares were registered into the Finnish Trade Register on November 26, 2010. The share amount was increased with a total amount of 23,750,000 new shares registered into the Finnish Trade Register on October 29, 2010. The free share issue directed to Raymond Kalley as a placement fee was based on the decision by the Board of Directors on September 3, 2010.

As a conclusion the amount of registered securities of the Company changed over the reporting year as follows:

Number of registered shares on 1.1.2010 897,926,354

New shares issued in directed share issue 23,750,000 New shares issued in securities conversions 480,000 Number of registered shares on 31.12.2009 922,156,354

Loan Amount /EUR Entitled shares Mature Date 2004A 112,762.57 0 31.12.2008 2008B 10,000,000 94,339,622 25.8.2013 2009 7,500,000 468,750,000 31.3.2015 2010 6,000,000 480,000,000 31.3.2015

CAPITAL LOANS

The Company did not raise any new capital loans in 2010.

The loan decided on February 26, 2004 and remaining 112,762.57 euros has been matured and entitles no longer new shares of the Company. Until now, no payments have been made of the Loan. The loan will accrue a fixed annual interest of 4 % also paid on mentioned date of June 30 of each year providing that the requirements set in the Companies´ Act regarding interest payments on equity loans are met. Until now, no interest has been paid on the loan.

COMPANY SHARES AND SHAREHOLDERS

The shares of GeoSentric Oyj are listed on the NASDAQ OMX Helsinki (NASDAQ OMX: GEO1V) and issued in the book entry system held by Euroclear Finland, address PL 1110, FIN-00101 Helsinki, Finland. The ISIN-code of the share is FI 0009004204. The Company’s shares have been on the surveillance list since February 11, 2003.

The Company and its subsidiaries do not have any Company´s shares owned by or administered on behalf of the Company.

The Company’s registered share capital on December 31, 2010, was 8,955,761.65 euros, consisting of 922,156,354 shares. The number of outstanding shares in the beginning of the financial year 2010 was 897,926,354.

As of 31.12.2010 according to share register of the Euroclear Finland shareholders who hold their shares under a name of a nominee own a total amount of 778,119,748 shares corresponding 84.38 % of the Company’s registered shares and votes

Shareholder Shares Vote and share % Nordea Pankki Suomi Oyj 507,450,954 55.02 % (custodian shares) Skandinaviska Enskilda 248,339,478 26.93 % Banken (custodian shares) Svenska Handelsbanken AB 17,706,101 1.92 % (custodian shares) TOTAL 773,496,533 83.87 %

According to flagging the notices received by the Company during the reporting year, the thresholds of the following shareholders are:

Shareholder Shares Convertible securities Luben Limited 91,162,652 MMA Investments Limited 16,930,861 Nobolles Investments 43,123,442 Limited Schroder Investment 109,294,444 1,043,089,622 Management Limited (on behalf of its clients) ANSA Mc AL Limited 93,377,779 202,847,456 PNG Sustainable 141,037,751 Development Fund Limited Mr and Mrs Bramall 138,812,498 Tiberio Limited and 341,945,338 Laytons Trustees Company Limited Other clients 15,916,665 218,446,579 TOTAL 260,511,399 1,043,089,622

According to the Flagging notice received in 2009 GeoHolding and its beneficial shareholder, Dan Harple, owns aggregate amount of 251,171,068 shares and 43,418,055 option rights.

The number of fully diluted shares as of 31.12.2010 was as follows:

Registered listed shares 922,156,354 Registered rights entitling to shares 1,189,258,095 - Board authorization 807,902,000 TOTAL 2,919,316,449

The Company’s all issued instruments including authorization entitled to shares together correspond to - approximately 68.41 % of the share amount after all instruments entitled to shares issued by the Company and board authorization, effecting a corresponding direct dilution to existing holdings.

SHAREHOLDINGS OF THE BOARD MEMBERS AND MANAGING DIRECTOR

The share holdings and potential holdings by virtue of instruments entitling to share subscriptions of the Board members and managing director, including the holdings by controlled corporations, are as follows:

Person Direct shares Securities Total entitling to securities shares

Bellot, Gary 323,571 7,000,000 7,213,571 - - - - Guillory, - 7,000,000 7,000,000 Winston Po, Michael - 3,000,000 3,000,000 - - - - Van Dam, Andries - 7,205,000 7,205,000 Van der Velde, 1,190,476 7,000,000 8,190,476 Johannes Vucekovich, 91,397 7,000,000 7,091,397 Michael -

RELATED PARTY TRANSACTIONS

As a part of the terms relating to the investors investment to the Note, previous financing round arranged in August-September 2007 and simultaneously agreed restructuring of Company’s ownership, the Board approved an incentive carve-out agreement entered into with key senior managers who are holders in GeoHolding B.V. for a successfully completed exit transaction. The incentive carve-out is based on the valuation of the Company in pre-defined exit events, requiring shareholders’ approval to take place, and may not exceed 10 percent of the valuation. The agreement shall be valid until July 31, 2017.

Based on the assistance provided in connection with the convertible loans raised in 2009 and 2010, Raymond Kalley was issued without charge 23,750,000 shares as part of an agreed placement fee.

As more fully described in the section “Material events in the year 2010”, effective December 31, 2010, the Company sold its TWIG mobile handset business, to a newly established company, Twig Com Oy, majority held by the former managers of that business including Tomi Raita and Jukka Nieminen.

BOARD PROPOSAL REGARDING THE HANDLING OF THE RESULT

The Board proposes to the general meeting that no dividend is distributed and that the loss for the period is booked to the prior years´ result account.

NOTICE

In the Notes to the Financial Statements there is more detailed and additional information about the Company’s operations in the financial year 2010.

According to Finnish Securities Market Act, Chapter 2, Section 10 c, GeoSentric Oyj has published the annual summary of the stock exchange releases and announcements published during the year 2009. The summary is available at: www.geosentric.com.

The Company has prepared a separate Corporate Governance Statement according to the recommendation 51 of the Finnish Corporate Governance Code issued by the Securities Market Association. The statement is presented as a separate report from the Operating Review by the Board of Directors and is available at: www.geosentric.com.

In Salo April 29, 2011

______

Hans van der Velde Gary Bellot Chairman of the Board Member of the Board

______

Michael Po Winston Guillory Member of the Board Member of the Board Managing Director

______

Michael Vucekovich Member of the Board

22. GROUP STATEMENT OF COMPREHENSIVE INCOME

1000 EUR Note 1.1.-31.12.2010 1.1.-31.12.2009

Continuing operations Net sales 3 54 4

Cost of goods sold 6 0 0

Gross margin 54 4

Other operating income 0 0

General & Administrative expenses 6 2673 3004 Research & Development expenses 6 4671 7756 Sales & Marketing expenses 6 2246 3160

Operating result -9536 -13916

Financial income 11 78 74 Financial expenses 12 -1783 -723

Result before taxes -11241 -14565

Income taxes 13 -146 409

Result for the period from continuing operations -11387 -14156

Discontinued operations Result for the period from discontinued operations 4 -1987 -1622

Result for the period -13374 -15778

Translation difference -13 11

Comprehensive income -13387 -15767

Earnings per share, eur: Basic earnings per share, continuing operations 14 -0,01 -0,02 Basic earnings per share, discontinued operations 14 -0,00 -0,00

Diluted earnings per share have not been computed because dilution effect would improve the key figure. 23. GROUP STATEMENT OF FINANCIAL POSITION

1000 EUR Note 31.12.2010 31.12.2009

ASSETS

Non-current assets Property, plant and equipment 15 82 240 Goodwill 16 216 216 Other intangible assets 16 1 510 Other financial assets 17 5 66 Deferred tax assets 18 0 0 304 1032 Current assets Inventories 19 0 1216 Trade receivables and other receivables 20 224 696 Prepaid expenses 0 10 Cash and cash equivalents 21 892 5939 1116 7861

Total assets 1420 8893

EQUITY AND LIABILITIES

Shareholders´equity Share capital 22 8956 8951 Share premium account 22 13631 13631 Translation difference 122 135 Invested distributable equity account 22 30912 30603 Retained earnings -68645 -55556

Total shareholders´ equity -15024 -2236

Non-current liabilities Deferred tax liabilities 18 0 128 Interest-bearing debt 25 13112 7061 13112 7189 Current liabilities Trade payables and other payables 26 3219 2634 Provisions 24 0 37 Interest bearing debt 25 113 1269 3332 3940

Total liabilities 16444 11129

Total shareholders´ equity and liabilities 1420 8893 24. GROUP CASH FLOW STATEMENT

1000 EUR Note 1.1.-31.12.2010 1.1.-31.12.2009

Cash flow from operations Result for the period -13374 -15778 Adjustments 28 1505 3991 Changes in working capital: Change of trade and other receivables 482 1946 Change of inventories 761 -295 Change of trade and other liabilities 548 632 Paid interests -630 -930 Received interest payments 18 145

Cash flow from operations, net -10690 -10289

Cash flow from investments, net 46 -208

Cash flow from financing Proceeds from issue of share capital 67 0 Transaction expenses of share issues -3 -68 Transaction expenses of loans -467 -750 Proceeds from long term borrowings, equity 0 2591 Proceeds from long term borrowings, liability 6000 4909

Net cash flow from financing 5597 6682

Change in cash -5047 -3815

Cash on January 1 5939 9754 Cash on December 31 21 892 5939 25. GROUP STATEMENT OF CHANGES IN SHAREHOLDERS´ EQUITY

Inv. distrib. Share Translation Share prem equity Accrued capital difference account account result Total (1000eur) (1000eur) (1000eur) (1000eur) (1000eur) (1000eur)

Shareholders´ equity 31.12.2008 8951 124 13631 28039 -40692 10053

Items booked directly into shareholders´ equity 0 11 0 0 0 11 Result for the period 0 0 0 0 -15778 -15778 Comprehensive income 0 11 0 0 -15778 -15767 Share issue expenses 0 0 0 -68 0 -68 Booked expense of stock options to key personnel and partners 0 0 0 0 914 914 Equity portions of liabilities 0 0 0 2632 0 2632 Shareholders´ equity 31.12.2009 8951 135 13631 30603 -55556 -2236

Items booked directly into shareholders´ equity 0 -13 0 0 0 -13 Result for the period 0 0 0 0 -13374 -13374 Comprehensive income 0 -13 0 0 -13374 -13387 Share issue, cash 5 0 0 62 0 67 Share issue expenses 0 0 0 -3 0 -3 Booked expense of stock options to key personnel and partners 0 0 0 0 285 285 Equity portions of liabilities 0 0 0 250 0 250 Shareholders´ equity 31.12.2010 8956 122 13631 30912 -68645 -15024 26. NOTES TO THE GROUP FINANCIAL STATEMENTS

1 Base information of the company 2 Accounting principles for the financial statements 3 Segment information 4 Discontinued operations 5 Acquisitions 6 Costs by category 7 Other operating costs 8 Depreciations and value adjustments/write-downs 9 Total expense of employees 10 Research and development expenses 11 Financial income 12 Financial expences 13 Income taxes 14 Earnings per share 15 Tangible assets 16 Intangible assets 17 Other financing assets 18 Tax receivables and liabilities 19 Inventories 20 Trade receivables and other receivables 21 Cash assets 22 Shareholders´ equity 23 Option rights 24 Provisions 25 Financial liabilities 26 Other debts 27 Management of financing risks 28 Adjustment of operational casflows 29 Collateral commitments and contingencies 30 Related party transactions 31 Balance sheet items including management considerations and assesments 32 Events after the end of the period 33 Impairment testing and going concern 34 Five years statistics 35 Distribution of share holdings and information about shareholders 27. 1. BASE INFORMATION OF THE COMPANY

GeoSentric is a developer and provider of solutions, products and technologies for location based services and LBS-enabled social networks. It develops a leading geo-integration platform for mobile devices, personal navigation devices, web browsers, and other internet-connected devices, which provides applications and bundled ODM/OEM solutions for consumer and B2B markets, built on the convergence of location based services, social networking, search, mobile & Web 2.0 technologies. Its intellectual property is delivered as software and services in products which include the GyPSii product platform ("GyPSii"). The company has deep expertise and technology IP in User Generated Content Management, Location Based Services, Open Social Networking, Ad-Targeting and Integration, for Social Media markets and users on mobile phones, the web, personal navigation and internet connected devices. Based in Salo, Finland, and Amsterdam, The Netherlands, GeoSentric operates offices in North America, Europe and Asia Pacific. GeoSentric is listed in NASDAQ OMX Helsinki Ltd (NASDAQ OMX: GEO1V). The parent company of the group is GeoSentric Oyj (formerly Benefon Oyj). The registered domicile is Salo, Finland, with street address Meriniitynkatu 11, 24100 Salo, Finland, and mail address PL 84, FIN-24101 Salo, Finland. A copy of the group financial statements is available at the internet address www.geosentric.com or at the company head office at address Meriniitynkatu 11, FIN-24100 Salo, Finland. The Board has approved these group financial statements for public distribution on April 29, 2011. According Finnish Companies Act, the shareholders has possibility to accept or reject the financial statements, even the General Meeting is after financial statements is released. General Meeting has also possibility to make desicion about changing financial statements.

2. ACCOUNTING PRINCIPLES FOR THE FINANCIAL STATEMENTS

Accounting principles: The group financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS"), applying the IAS and IFRS standards and the SIC and IFRIC interpretations valid on 31.12.2010 and as approved by the EU. The notes to the group financial statements fulfil also the requirements in the Finnish legislation concerning accounting practices and companies

The group financial statements have been prepared on the basis of original purchase costs except financial assets and liabilities, except sellable financial assets or financial assets and liabilities expensed at fair value. Payments with shares have been booked at fair value on their provision date. Numeric information is presented in thousands of euros.

Since 1.1.2010 the group has applied the following new standards and interpretations: Reformed IFRS 3, Business combinations. Changes affect the goodwill amount of recognised acquisition and profit effect items. According to the rules of change-over to IFRS, business combinations which are already carried out will be not corrected. Changed IAS 27, Consolidated financial statements and separate financial statements. May have impact on the recognition of possible changes in subsidiaries ownership´s. Change to IAS 39, Financial instruments: recognition and measurement to hedged items acceptable items. The group has no hedged items as defined. IFRIC 17, Non cash dispensation to ownerships. Concerning dispensation of dividends. No effect on the group. IFRIC 18, Asset transfers from customers. No effect on the group. Changes for "Improvements to IFRS". Small changes relate to 12 different standards but they have no significant effects on the financial statements. Changes to IFRS 2, Share-based payments - Share-based businesses paid in cash in group. Concerning non cash paid share-based payments. No effect on the group financial statements. 28. Preparation of financial statements according to IFRS standards requires the management to make certain valuations and considerations in the application of the preparation principles. Management evaluations have affected eg. the amounts of assets, liabilities and expenses in the reporting period. Evaluations are based on the best view of the management at the time of evaluation and but it is possible that the realised figures may deviate from the estimates used in the financial statements.

The group financial statements have been prepared on the going concern principle. The going concern principle is based on the business and financing plan approved by the Board, and on assesment about the sufficiency of cash. The biggest risks relate to actual timing of new product market launches and their reception in the market. The risks could impair the financing position of the Company and may endanger the continuity of its operations.

Accounting principles: 2.1. Consolidation The consolidated financial statements include the parent company and all subsidiaries in which over 50% of the subsidiary`s voting rights are controlled directly or indirectly by the parent company. Subsidiaries are fully consolidated from the date on which control is transferred to the group and are no longer consolidated when that control ceases. The group uses the purchase method of accounting for the acquisition of subsidiaries. Intercompany transactions, balances and unrealized gains on transactions between group companies are eliminated.

2.2. Foreign currency transactions: The consolidated financial statements are presented in euros, which is the company`s functional and presentation currency. Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Receivables and liabilities in foreign currencies are translated into euros at the exchange rates prevailing at the balance sheet date.

2.3. Tangible assets: Tangible assets are valued at the original acquisition cost less accrued depreciation and devaluations. Asset items are amortized with even write-offs over the economic utility period which for machines and furniture has been 5 years. Residual value of the asset items and their economic utility period are checked at the every financial statement date and adjusted as needed. Sales profits and losses incurred with decomissioning and sale of asset items are included either in other income or in other expenses of operations.

2.4. Public subsidies The public subsidies which are directed to expences, are booked to Other operating income, and subsidies which are directed to investment, are netted against investment.

2.5. Intangible assets Goodwill represents the part of the acquisition cost that exceeds the share of the net assets acquired in the acquired unit at fair value at the time of acquisition. Goodwill is not amortised, but it is tested annually for impairment and carried at cost, less accumulated impairment losses. Impairment losses on goodwill are not reversed.

Intellectual Property Rights (IPR) are booked at their original purchase cost and are amortised in evenly over 3 years. They are tested annually for eventual value impairment and are carried at original purchase cost less amortisation and value impairments. The purchase expense of software is booked as intangible assets if they will generate future economic benefit. Capitalized software is amortized using the straight-line method over its useful life which has been estimated at 5 years. Other intangible assets are amortized using the straight-line method over 10 years. 29. Research costs are expensed. Research expenses are capitalized in the balance sheet as intangible asset items when the product is technically feasible, it can be exploited commercially and it is expected to generate future economic benefits. Amortisation of any capitalised items commences at the time it is launched to market. Asset items that are not yet ready to be deployed are reviewed regularly with regard to possible signs of decreased value. De-valuation may also be revoked in case the sales outlook of a product improves. The economic utility period for capitalized product development expenses is 1-3 years, within which they are booked as expense using the straight line method.

2.6. Inventories: Inventories are valued at acquisition cost or a lower net realizable value. The acquisition cost is based on FIFO-principle. The acquisition cost of finished and work-in-process consists of raw materials, cost of direct labour and other direct costs and of a proportion of fixed manufacturing costs determined at normal factory load. Net realization value is the estimated sales price received in normal business situation less the costs of completion and selling expenses. Components assessed to be used for manufacturing of end-products are valued at acquisition cost. The value of components exceeding the estimated manufacturing need are booked as cost.

2.7. Trade receivables Trade receivables are originally booked at nominal value and are subsequently adjusted for credit loss outlook. Credit loss adjustment is booked when it is likely that the receivable will not produce payment according to original terms. The amount of credit loss adjustment is booked as the difference between the book value of the receivable and the lesser present value of the cash accruable from the receivable.

2.8. Rental agreements: The company has no notable financing leasing agreements. Other rental agreements may be terminated with 1-12 month notice. Rent payments based on other rental agreements are expensed.

2.9. Impairments: The group evaluates continuously whether there are indications that the value of some asset items have been decreased. With any such indication, the potentially available cash generation from such items is estimated. However, the potentially available cash generation is always in any case estimated for goodwill, intangible assets with economic non-limited influence time and non-finished intangible asset items. The accruable amount of cash equals the fair value of an asset item less the expenses of its sale, or the use value higher than that. The use value means estimated accruable future net cash flows, discounted to present moment, of the said asset item or cashflow producing unit. An impairment loss is booked in the profit and loss account immediately when the book value of an asset item is greater than the accruable cash value of it. An impairment loss from the business value is revoked in case that a change has occurred in assesments used for determining the cash accruable from an asset item. An impairment loss revoke, however, cannot be more than the amount of the book value of the asset item before booking of the de-valuation loss.

2.10. Employee benefits: Pension arrangements are expensed as they are paid. In the group, there are option programs as part of incentive programs. Option rights are assessed at fair value on the date of grant and such fair value is booked in the result report as cost in the period of earning the right. The group updates the assumption of the final amount of option rights on every book closing date. Changes in the assumed amounts are booked in the profit and loss account. 30. 2.11. Provisions: A provision is booked in the balance sheet in case, as the result of some prior event, some legal or factual liability has been incurred for the group, realization of the liability is probable and the amount of the liability can be estimated reliably. A product warranty provision is booked when a product under such warranty is sold. The amount of a warranty provision is based on empirical estimate of realization of warranty expenses.

2.12. Income taxes: Tax expense in the profit and loss account consists of the taxable income in the period and of deferred tax. Deferred taxes are computed from the temporary difference between book value and and taxation value. Deferred tax receivables and liabilities are offset by taxation authority. Deferred tax receivable due to losses are booked at the amount up to which it is likely that in the future there will be accrued taxable income against which the interim difference may be exploited.

2.13. Revenue recognition: Sales of deliverables are booked as income when the significant risks and benefits related to ownership have been transferred to the buyer and the group does not have the products in possession. The group has no long term contracts but partial booking of income is applied when needed. Sale of services and advertising is booked as income in linear fashion over the contract or delivery period or a period during which the sales right has been created.

2.14. Discontinued operations Result of discontinued operations is presented as own item in income statement.

2.15. Financial instruments: The group classifies financial instruments within scope of IAS 39 in the following categories: loans and receivables, available-for-sale financial assets and loans and borrowings. The group determines the classification of its financial assets at initial recognition and the classification depends on the purpose for which the financial instruments were acquired.

Financial instruments are recognized initially at the settlement date at fair value plus directly attributable transaction costs. The subsequent measurement of financial instruments depends on their classification. Financial assets are derecognized when the rights to receive cash flows from the investments have expired or have been transferred and the group has transferred substantially all risks and rewards of ownership. Financial liabilities are derecognized when the obligation under the liability is discharged or cancelled or expires. The group´s financial instruments includes cash, trade and other receivables and loans and borrowings. The group does not use derivative instruments. The carrying value of loans and receivables and loans and borrowings does note materially differ from the fair value.

Loans and receivables: Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in the current assets, except for maturities greater than 12 months after the balance sheet date, which are classified as non-current assets. Loans and receivables are subsequently measured at amortized cost using the effective interest rate method. Gains and losses are recognized in the consolidated income statement when the loans and receivables are derecognized or impaired, as well as through the amortization process. 31. Available-for-sale financial assets: Available-for-sale assets are non derivative financial assets that are designated as available-for-sale or are not classified in any of the other categories. After initial measurement, available-for-sale financial assets are measured at fair value with unrealized gains or losses recognized directly in equity until the investment is derecognized, at which time the cumulative gain or loss recorded directly in equity is recognized in the income statement, or determined to be impaired, at which time the cumulative loss recorded in equity is recognized in the income statement. Unlisted equity securities for which fair value cannot be measured reliably, are recognized at cost less impairment.

Loans and borrowings: Loans and borrowings are included in non-current liabilities, except for items with maturity less than 12 months after the balance sheet date. After initial recognition, interest bearing loans and borrowings are subsequently measured at amortized cost using the effective interest rate method. Gains and losses are recognized in the income statement when the liabilities are derecognized as well as through the amortization process. At the balance sheet date the group has issued convertible loans which have been divided into the components of debt and equity as required by IAS 32. The deviation is based on the actual and contractual terms of the loans as well as managements judgments.

Impairment of financial assets: The group assesses whether there is objective evidence that a financial asset or group of financial assets is impaired at each balance sheet date.

2.16. Preparation principles needing management consideration and related uncertainty factors: In preparing the financial statements, the group needs to make assesments and assumptions about the future, which may deviate from the actual outcome. In addition, the group has to use consideration when applying the financial statements preparation principles. The estimates are based on the best view of the management at the moment of book closing. Eventual changes in assesments and assumptions are booked in the period of adjustment. The most significant items in the group requiring management consideration are payments in shares, impairments, determination of loans and equity components and R&D capitalisations. These are presented in notes 8, 10, 23, 25, 31 and 32.

2.17. New standards and interpretations: IASB has published new standards and interpretations and changes in existing standards, application of which is mandatory on 1.1.2011 or thereafter, and which the group has not adopted earlier voluntarily. The group will adopt the following standards (and their amendments) and interpretations from 1.1.2011 onwards: Change to IAS 32, Financial instruments: presentation method - Classification of Rights Issues. Change concerns booking of options, subscription rights or other rights regarding shares made in other currency than issuer´s functional currency. IFRIC 19, Liquidation of financial debt with equity terms instruments. Interpretation make clearer booking in case that issues to creditor equity terms instruments to liquidate financial debt. Changes to interpretation IFRIC 14, Payments in advance based minimum funding demand. The group has not this kind of payments. Reformed IAS 24, Information regarding related party in financial statements. The group is specofying definition of related party. IFRS 9, Financial instruments (in force 1.1.2013 or in beginning account period after it). Valuation methods simplifies and classification changes. Numbers from previous period need not correct if standard takes to use before 1.1.2012 beginning account period. Standard is not yet accepted to apply in EU. Improvements to IFRSs -changes. Small changes without material effect to financial statement. 32. 3. SEGMENT INFORMATION

The group has only one distinct segment, location based services and devices utilising them. Its share of net sales has been 100% in the period and in the reference period.

Net sales of geographic areas is presented by customer location and non-current assets are presented by its location.

GEOGRAPHIC AREAS

1000 EUR 2010 2009

Net sales: Finland 269 231 Rest of Europe 1264 2210 Rest of world 318 50 Total 1851 2491 Discontinued operations -1797 -2487 Continuing operations 54 4

Non-current assets: Finland 226 346 The Netherlands 41 632 Rest of world 37 54 Total 304 1032

4. DISCONTINUED OPERATIONS

The group divested on December 2010 its Twig mobile handset business through MBO by oral agreement. The majority of business transferred to Twig Com Oy on December 31, 2010 and the parties signed a business purchase agreement on January 10, 2011. The result of business, result of divesting and share of cash flows are presented below:

1000 EUR 1.1.-31.12.2010 1.1.-31.12.2009 Result of Twig mobile handset business Net sales 1797 2487 Cost of goods sold -1823 -2141 Other operating income 4 2 General & Administrative expenses -425 -107 Research & Development expenses -366 -455 Sales & Marketing expenses -930 -1408 Income taxes of discontinued operations 0 0 Profit before/after taxes -1743 -1622

Result of divesting before/after taxes -244 0 Income taxes of divesting 0 0 Result for the period from discontinued operations -1987 -1622 General & Administrative expenses Cash flow of Twig mobile handset business Cash flow from operations -1031 201 Cash flow from investments 45 0 33. Effect of Twig mobile handset business divesting to financial position of group 31.12.2010

Fixed assets 24 Other intangible assets 1 Other financial assets 20 Inventories 223 Trade receivables and other receivables 192 Prepaid expenses 5 Trade payables and other payables -184 Provisions -37 Assets and liabilities total 244

Purchase price in cash 0

5. ACQUISITIONS

In the financial period there were no acquisitions.

6. COSTS BY CATEGORY

1000 EUR 2010 2009

Increase/decrease in inventories of finished products 375 -164 Impairment loss in inventories 455 484 Use of raw materials and consumables 571 1288 Total expense of direct employees 422 533 Cost of goods sold total 1823 2141 Discontinued operations -1823 -2141

Total expense of indirect employees 6993 8710 Redundancy provision 509 0 Depreciations 682 2172 Other operating expenses 3371 5008 Expenses by cost category, total 11555 15890 Discontinued operations -1965 -1970 Continuing operations 9590 13920

7. OTHER OPERATING COSTS

1000 EUR 2010 2009

Rental costs 479 474 Travel expenses 458 443 Market communications 469 451 R&D outsourcings 147 1097 External services 903 1884 Option costs 52 81 Other cost items 863 578 Total 3371 5008 Discontinued operations -422 -781 Continuing operations 2949 4227 34.

Compensation of the auditors 1000 euros: 2010 2009

Audit 49 75 Other services 27 7 Total 76 82

8. DEPRECIATIONS AND VALUE ADJUSTMENTS / WRITE-DOWNS

1000 EUR 2010 2009

Depreciations of tangible assets: Machinery and equipment 176 162 Depreciations of intangible assets: Other intangible assets 506 2010 Total of depreciations and devaluations 682 2172 Discontinued operations -32 -46 Continuing operations 650 2126

9. TOTAL EXPENSE OF EMPLOYEES

1000 EUR 2010 2009

Salaries 5611 5581 Pension costs - defined contribution plans 332 367 Invoiced salary costs, GeoSolutions 1001 1715 Granted stock options 234 833 Other social security costs 746 747 Total 7924 9243 Discontinued operations -1511 -1143 Continuing operations 6413 8100

Average number of personnel 116 120

Information about management benefits are presented in note 30 Related party transactions.

10. RESEARCH AND DEVELOPMENT EXPENSES

1000 EUR 2010 2009

Ordinary R&D expenses 4413 5737 Option costs 124 474 Depreciations of IPR 500 2000 Research and development costs expensed 5037 8211 35. 11. FINANCIAL INCOME

1000 EUR 2010 2009

Interest income 12 31 Dividend income 6 4 Other financing income 52 0 Currency exchange profits 8 39 Total 78 74

12. FINANCIAL EXPENSES

1000 EUR 2010 2009

Interest expense from liabilities valued at amortized cost 1782 707 Exchange rate losses 1 15 Other financing costs 0 1 Total 1783 723

13. INCOME TAXES

1000 EUR 2010 2009

Income tax from ordinary operations -274 -101 Change in booked tax liability 128 510 Income tax in P/L statement -146 409

Adjustment calculation between tax cost and computed tax with group tax base Result of continuing operations -11387 -14156 Result of discontinued operations -1987 -1622 Tax base 26 % 26 %

Tax from continuing operations with tax base of the group 2960 3680 Tax from discontinued operations with tax base of the group 517 422 From non-booked losses deductible in taxation -3636 -3121 From items non-deductible in taxation 12 -590 From items deductible in taxation 1 18 Total tax in the income statement -146 409

Effective tax rate 1,1 % 2,6 %

Deferred tax credit from accrued losses has not been booked because the Company is making losses. 36. 14. EARNINGS PER SHARE

2010 2009

Result of the period 1000 EUR -13374 -15778 Average weighted number of shares, 1000 pcs 903645 897651 Earnings per share, eur: Basic earnings per share, continuing operations -0,01 -0,02 Basic earnings per share, discontinued operations -0,00 -0,00

Earnings per share with adjustment for dilution has not been computed as the dilution would improve the key figure.

15. TANGIBLE ASSETS

1000 EUR 2010 2009

Machinery and equipment Acquisition cost per 1.1. 680 501 Additions 40 208 Subtractions -203 -29 Acquisition cost per 31.12. 517 680 Accrued depreciations per 1.1. -441 -308 Depreciations in the period -176 -162 Accrued depreciations of the subtractions 203 29 Accrued depreciations per 31.12. -435 -441 Book value per 1.1. 240 194 Book value per 31.12. 82 240

16. INTANGIBLE ASSETS

1000 EUR 2010 2009

Goodwill Purchase price 1.1. 216 216 Purchase price 31.12. 216 216 Book value 1.1. 216 216 Book value 31.12. 216 216

Other intangible assets Acquisition cost per 1.1. 6051 6062 Additions 00 Subtractions -6045 -11 Acquisition cost per 31.12. 6 6051 Accrued depreciations per 1.1. -5549 -3542 Depreciations in the period -506 -2010 Accrued depreciations of the subtractions 6045 11 Accrued depreciations per 31.12. -5 -5549 Book value per 1.1. 510 2520 Book value per 31.12. 1 510 37. 17. OTHER FINANCING ASSETS

1000 EUR 2010 2009

Pledged deposit 5 46 Telephone shares 0 19 Other shares 0 1 Total 566

18. TAX RECEIVABLES AND LIABILITIES Booked Booked in result in result 1000 EUR 1.1.2009 account 31.12.2009 account 31.12.2010

Tax receivables Confirmed losses 26452 0 27179 0 27759 Temporary difference 16 0 10 0 0 Total 26468 0 27189 0 27759 Net from accounted tax liability 0 0 0 0 0 Accounted net tax credit 26468 0 27189 0 27759

Tax credit in the balance sheet 0 0 0 0 0

Tax liabilities: From GeoSolutions acquisition 1530 0 1530 0 1530 From amortisation of acquisition purch. price -892 -510 -1402 -128 -1530 Temporary difference 0 0 0 0 0 Total 638 -510 128 -128 0 Net from accounted tax credit 0 0 0 0 0 Accounted net tax liability 638 -510 128 -128 0

Tax liability in the balance sheet 638 -510 128 -128 0

Loss Tax 26% Confirmed losses: (1000eur) (1000eur) Loss in fiscal year 2001 Finland Expires in 2011 7363 1914 Loss in fiscal year 2002 Finland Expires in 2012 9997 2599 Loss in fiscal year 2003 Finland Expires in 2013 20414 5308 Loss in fiscal year 2004 Finland Expires in 2014 3894 1012 Loss in fiscal year 2005 Finland Expires in 2015 3228 839 Loss in fiscal year 2006 Finland Expires in 2016 11457 2979 Loss in fiscal year 2007 Finland Expires in 2017 14427 3751 Loss in fiscal year 2007 Netherlands Expires in 2016 2565 654 Loss in fiscal year 2008 Finland Expires in 2018 887 231 Loss in fiscal year 2008 estim. Netherlands Expires in 2017 6865 1750 Loss in fiscal year 2008 China Expires in 2013 505 125 Loss in fiscal year 2009 Finland Expires in 2019 4255 1106 Loss in fiscal year 2009 estim. Netherlands Expires in 2018 8749 2231 Loss in fiscal year 2009 China Expires in 2014 795 199 Loss in fiscal year 2010 estim. Finland Expires in 2020 4820 1253 Loss in fiscal year 2010 estim. Netherlands Expires in 2019 5685 1450 Loss in fiscal year 2010 estim. China Expires in 2015 1427 357 Total 107333 27759 38. 19. INVENTORIES

1000 EUR 2010 2009

Raw materials and consumables 0 346 Finished products 0 870 Total 0 1216

Excess component inventory cost was booked 455 teuros in 2010 (484 teuros in 2009).

20. TRADE RECEIVABLES AND OTHER RECEIVABLES

1000 EUR 2010 2009

Trade receivables 10 225 Deferred receivables 27 267 Other receivabels 187 204 Total 224 696

Impairment losses of trade receivables were booked 1 teur in 2010 (30 teuros in 2009).

21. CASH ASSETS

1000 EUR 2010 2009

Cash at hand and in the banks 892 5882 Pledged bank accounts 0 57 Total 892 5939

22. SHAREHOLDERS´ EQUITY Invested Number of Share Sh prem distribut. shares capital account equity acc Total (1000) (1000eur) (1000eur) (1000eur) (1000eur)

31.12.2008 895096 8951 13631 28039 50621 Share issue free 5.2.2009 2830 0 Costs of share issues -68 -68 Equity components separated from liabilities 2632 2632 31.12.2009 897926 8951 13631 30603 53185

Share issue free 4.10.2010 23750 0 Share issue, cash 26.11.2010 480 5 62 67 Costs of share issues -3 -3 Equity components separated from liabilities 250 250 31.12.2010 922156 8956 13631 30912 53499

According to the Company´s articles of association registered there is no maximum for the shares and there is only one category of shares at the Company. Also the clause about maximum amount of share capital has been removed. The shares carry no nominal value. All outstanding shares are fully paid. 39. 23. OPTION RIGHTS

The Company carries twenty on-going stock option programs. In all of these, one option right entitles to subcribe for one new share of the Company.

Option program 2004A: The extraordinary general meeting on 26.2.2004 decided in connection of arrangements related to the reorganisation about issuance of option rights. The number of option rights was finally set at 39,597,988 and share subscription price at 0.14 euros per share. Number of granted option rights was 35,500,000. Share subscription period with the options expired on June 15, 2010 when in total of 480,000 shares were subscribed. A total of 3,580,000 option rights have been used for share subscription. The rest 32,220,000 of the granted option rights have permanently expired.

Conditional option program 2005A: The EGM decided on 5.9.2005 to issue a maximum of 1.500.000 option rights to the Managing Director of the Company Mr. Tomi Raita. The option rights are divided into A, B and C class options, with the amount of options in each class being a maximum of 500.000. For each option class there are separate conditions the fulfilment of which entitles the reception and exercise of options of that option class. For all option classes, the set conditions were removed by EGM. Share subscription price with all option rights is a fixed 0,10 euros. The extraordinary general meeting of 1.2.2007 decided to amend the option terms such that all conditions limiting the exercise of option rights were removed and they may be exercised within the share subscription period. The share subscription period have begun for all options. Subscription period for all options will expire on 31.12.2012.

Option programs 2006A and 2006B: The Board based on authorisation by the annual general meeting of 24.5.2006 decided to issue a total of 4,425,000 option rights to Luben Limited as a compensation for the no-interest loans of a total of 2,950 teuros to the Company. The share subscription period of the option rights have begun and it will end on 31.12.2012. The share subscription price is 0.10 euros per share.

Option program 2007-1: The Board decided on 27.4.2007 by virtue of authorisation by annual general meeting on 16.4.2007 to issue a maximum of 9,778,500 option rights to key persons of GeoSolutions. Option rights are divided into nine categories. Subscription period for option rights began with the registration of the issuance decision at the trade register and all the option rights were subscribed. Share subscription price for all option rights is 0.14 euros per share. Share subscription period with the options have begun between 27.4.2007 and 7.4.2009, depending on the option category and will end between 27.4.2012 and 7.4.2014. Extraordinary general meeting on 10.9.2007 decided to amend share subscription price to 0.045 euros. Of the option rights 256,250 pcs have become null and void.

Option program 2007-2: The Board decided on 7.5.2007 by virtue of authorisation by annual general meeting on 16.4.2007 to issue 666,667 option rights to Killarney Partners in relation to directed share issue. Option rights have been subscribed for. Share subscription price is 0.15 euros. Share subscription period have begun and will end on 31.5.2011.

Option program 2007-3: The Board decided on 21.5.2007 by virtue of authorisation by annual general meeting on 16.4.2007 to issue a maximum of 3,375,000 option rights to Tradewind Investment and Biggles Ltd in relation to directed share issue. Option rights have been subscribed for. Share subscription price is 0.15 euros. Share subscription period have begun and will end on 30.6.2011. 40. Option program 2007-6: The Board decided on 19.10.2007 by virtue of authorisation by extraordinary general meeting on 10.9.2007 to issue 35,305,555 option rights and 102,171,068 special rights to GeoHolding in relation to financing arrangements in the autumn. Option rights were subscribed for with accepted financing agreement. Share subscription price with option rights is 0.045 euros per share and with special rights 1 euro per 100.000 shares. Share subscription period have begun and will end on 2.1.2013. Special rights were converted into shares on 12.5.2008.

Option program 2007-7: The Board decided on 19.11.2007 by virtue of authorisation by extraordinary general meeting on 10.9.2007 to issue a maximum of 3,367,500 option rights to certain key persons of the Company. Option rights have been subscribed. The Board decided on 20.11.2008 to extend the share subscription period until 19.11.2011. Share subscription price is 0.07 euros. Of the subscribed option rights 1,042,500 pcs have returned and shall be nullified.

Option program 2008-1: The Board decided on 15.2.2008 by virtue of authorisation by extraordinary general meeting on 10.9.2007 to issue a maximum of 4,451,632 option rights to certain key persons of the Company. Option rights have been subscribed. The Board decided on 20.11.2008 to extend the share subscription period until 19.2.2012. Share subscription price is 0.06 euros. Of the subscribed option rights 549,132 pcs have returned and shall be nullified.

Option program 2008-2: The Board decided on 18.4.2008 by virtue of authorisation by extraordinary general meeting on 10.9.2007 to issue a maximum of 577,000 option rights to certain key persons of the Company. Subscription period of the option rights began on 18.4.2008 and will end on 31.12.2012. Share subscription period with A-class options begins on 18.4.2010 and with B-class options on 18.4.2011. With both, share subscription period ends on 31.12.2012. The Board decided on 20.11.2008 to advance the share subscription period to begin on 18.7.2008. Share subscription price is 0,06 euros. Option rights have returned 477,000 pcs, which are available for further allocation by Board.

Option program 2008-3: The Board decided on 16.5.2008 by virtue of authorisation by extraordinary general meeting on 10.9.2007 to issue a maximum of 24,500,000 option rights to the members of the Board of the Company. Every Board member is entitled to subscribe for a maximum of 3.500.000 option rights. Option rights were granted as part of the incentive program approved by the annual general meeting of 16.5.2008. Option rights have been subscribed for. Share subscription period with Class C1 options begins on 1.7.2008, with class C2 options on 1.10.2008, with class C3 options on 1.1.2009 and with class C4 options on 1.4.2009. With all options, share subscription period ends on 31.12.2012. Share subscription price is 0.045 euros.

Option program 2008-4: The Board decided on 15.8.2008 by virtue of authorisation by extraordinary general meeting on 10.9.2007 to issue a maximum of 2,877,000 option rights to certain key persons of the Company. Option rights have been divided into D and E series and further into 16 sub-categories. Share subscription period has been staged by sub-category such that the options shall vest on quarterly basis. The share subscription period begins no earlier than 15.12.2008 but no later than 15.12.2012 and ends with all options o 15.12.2013. Share subscription price is 0,06 euros. Option rights have returned 2,807,000 pcs, which are available for further allocation by Board. 41. Option program 2008-5: The Board decided on 20.11.2008 by virtue of authorisation by extraordinary general meeting on 10.9.2007 to adopt new option plan and to issue a maximum of 9,505,000 option rights to key persons of the Group. Option subscription period has ended and total of 9,479,500 pcs were subscribed. Option rights are divided into 5 separate series as decided by the Board. The options in each series shall vest on quarterly basis during four year period. Share subscription period begins no earlier than 1.1.2009 but no later than on 1.1.2010. The share subscription period for each option series ends after six (6) years from the first vesting date, however on 1.1.2016 at the latest. The share subscription price for each series is determined to equal the trade volume weighted average share price of the Company share (GEO1V) in Nasdaq OMX during the 30 days period preceding the first vesting quarter of the respective series. Option rights have returned 462,500 pcs, so outstanding 9,017,000 pcs. Series Amount Share subscription price (€) Series 2009Q1: 5300000 0,0346 € Series 2009Q2: 52000 0,0305 € Series 2009Q3: 2100000 0,0403 € Series 2009Q4: 65000 0,0471 € Series 2010Q1: 1500000 0,0432 €

Option program 2008-6: The Board decided on 20.11.2008 by virtue of authorisation by extraordinary general meeting on 10.9.2007 to issue a maximum of 495,000 option rights to certain key persons of the Company. Subscription period of the option rights has ended and all subscribed. Option rights are divided in one series. The options shall vest on quarterly basis during four year period and are divided in to 16 sub-categories. Share subscription period begins on 1.1.2009 and ends on 1.1.2015. The share subscription price is determined to equal the trade volume weighted average share price of the Company share (GEO1V) in Nasdaq OMX during 30 days period preceding the first vesting quarter of the series i.e. on December 2008 (0,0346 €).

Option program 2009-1: The Board decided in its meeting on May 14, 2009 to adopt Option Plan 2009-1 and issue a total amount of 3,000,000 option rights by virtue of the authorization granted by the EGM on September 10, 2007. The options are directed to the Board´s advisors without charge as decided by the Board. The options may be subscribed into corresponding amount of new shares during the share subscription period ending on December 31, 2012 with a share subscription price of 0.045 euros per share. Option rights have been subscribed when issued.

Option program 2009-2: The Board decided in its meeting on May 15, 2009 to adopt Option Plan 2009-2 and issue a total amount of 24,500,000 option rights to the members of the Board of Directors without charge by virtue of the authorization granted by the AGM on May 15, 2009. The options may be subscribed into corresponding amount of new shares during the share subscription period ending on December 31, 2013 with a share subscription price of 0.045 euros per share. Option rights have been subscribed when issued.

Option program 2009-3: The Board decided in its meeting on August 13, 2009 to adopt Option Plan 2009-3 and issue a total amount of 1,500,000 option rights to the secretary of the Board of Directors without charge under the same terms and conditions as Option Plan 2009-2 directed to the Board members. The options may be subscribed into corresponding amount of new shares during the share subscription period ending on December 31, 2013 with a share subscription price of 0.045 euros per share. Option rights have been subscribed when issued.

Option program 2009-4: The Board decided in its meeting on November 13, 2009 to adopt Option Plan 2009-4 and issue a total amount of 3,500,000 option rights to the financial advisor without charge. The options may be subscribed into corresponding amount of new shares during the share subscription period ending on February 17, 2015 with a share subscription price of 0.0475 euros per share. 42. Option programs 2010-1and 2010-2: The Board decided in its meeting on September 3, 2010 to adopt Option Plans 2010-1 and 2010-2 and issue a total maximum amount of 15,848,000 new option rights to the employees and key engineering recources of the group without charge. The options are issued on standard terms used by the company in its option plans. Each option right entitles its holder to subscribe for one new share at subscription price of 0.03 euros that equals to volumeweighted average price of company´s share on stock exchange during September 2010. The options will vest on quarterly basis and the share subscription period on all options ends on October 1, 2016.

Special right: The Board decided to issue 23.750.000 shares without price to Raymond Kalley as part of the agreed placement fee of drawn loans. The shares have been registered in trade register on 4.10.2010.

The base information of the option programs is presented by program in the below schedule. Option Class Shares Share Share Subscript Shares program total subscript subscript price per option pcs period period euroa/ begins ends share 2005A A-C 1.500.000 begun 31.12.2012 0,100 1:1 2006A 2.175.000 begun 31.12.2012 0,100 1:1 2006B 2.250.000 begun 31.12.2012 0,100 1:1 2007-1 A 5.125.000 begun 27.4.2012 0,045 1:1 2007-1 B1 549.659 begun 26.7.2012 0,045 1:1 2007-1 B2 549.659 begun 24.10.2012 0,045 1:1 2007-1 B3 549.658 begun 22.1.2013 0,045 1:1 2007-1 B4 549.658 begun 22.4.2013 0,045 1:1 2007-1 B5 549.654 begun 19.7.2013 0,045 1:1 2007-1 B6 549.654 begun 9.10.2013 0,045 1:1 2007-1 B7 549.654 begun 8.1.2014 0,045 1:1 2007-1 B8 549.654 begun 7.4.2014 0,045 1:1 2007-2 666.667 begun 31.5.2011 0,150 1:1 2007-3 3.375.000 begun 30.6.2011 0,150 1:1 2007-6 35.305.555 begun 2.1.2013 0,045 1:1 2007-7 2.325.000 begun 19.11.2011 0,070 1:1 2008-1 3.902.500 begun 19.2.2012 0,060 1:1 2008-2 A 550.000 begun 31.12.2012 0,060 1:1 2008-2 B 27.000 18.4.2011 31.12.2012 0,060 1:1 2008-3 C1-C4 24.500.000 begun 31.12.2012 0,045 1:1 2008-4 D 377.000 begun 15.12.2013 0,060 1:1 2008-4 E 2.500.000 15.12.2012 15.12.2013 0,060 1:1 2008-5 1.685.995 begun 1.1.2015 0,03556 1:1 2008-5 2.369.872 begun 1.1.2015 0,03748 1:1 2008-5 2.369.872 2011 1.1.2015 0,03748 1:1 2008-5 2.369.876 2012 1.1.2015 0,03748 1:1 2008-5 683.885 2013 1.1.2015 0,04221 1:1 2008-6 247.500 begun 1.1.2015 0,03459 1:1 2008-6 123.750 2011 1.1.2015 0,03459 1:1 2008-6 123.750 2012 1.1.2015 0,03459 1:1 2009-1 3.000.000 begun 31.12.2012 0,045 1:1 2009-2 24.500.000 begun 31.12.2013 0,045 1:1 2009-3 1.500.000 begun 31.12.2013 0,045 1:1 2009-4 3.500.000 begun 17.2.2015 0,0475 1:1 2010-1 8.210.000 begun 1.10.2016 0,030 1:1 2010-2 7.638.000 begun 1.10.2016 0,030 1:1 Total 147.298.472 43. Number of shares subscribed with options and their average weighted subscription price:

Shares Act. Price/ 1000 pcs weighted average Outstanding in the beginning of 1.1.2009 129.227 0,076 EUR Granted in the period 36.771 0,044 EUR Lost in the period 4.522 0,060 EUR Realised in the period 0 - Become due in the period 0 - Outstanding at the end of period 31.12.2009 161.476 0,069 EUR Granted in the period 15.848 0,030 EUR Lost in the period 1.072 0,053 EUR Realised in the period 480 0,140 EUR Become due in the period 32.220 0,140 EUR Outstanding at the end of period 31.12.2010 143.552 0,049 EUR

Useable for share subscription 31.12.2009 161.476 0,069 EUR Useable for share subscription 31.12.2010 143.552 0,049 EUR

At the end of period 31.12.2010 the weighted remaining validity time of outstanding options was 2,8 years and the fluctuation range of the exercise price 0.03€ - 0.15€.

Used methods and assumtions for determining the fair value of options. The fair value of personnel options on grant date according to IFRS 2 has been determined with Black & Scholes -model. The expected volatility used in valuation is based on the realised volatility in the 12 month period preceding the grant date. The fair value of the 5.000.000 options (OCOL) granted by the general meeting of 24.5.2006 has been determined according to the fair value of the counter service. The costs of the option rights related to loans have been booked as financing costs.

The weighted assumptions used in valuation are as follows: 2010 2009 Share subscription price 0,03 euros 0,04 euros Share market price 0,03 euros 0,04 euros Expected volatility 81 % 86 % No-risk interest yield 1,6 % 2,1 % Expected validity time of options 6,1 years 3,8 years Dividend yield 0,0 % 0,0 % Weighted fair value of granted options on date of grant 0,02 euros 0,03 euros Weighted average share price on the day of exercise regarding options exercised in the period 0,02 euros -

1000 EUR 2010 2009

Cost of options booked in the period according to IFRS 2. Consideration is given as options. The counter-item of costs bookings is income statement is shareholders´equity. Key persons 160 276 Board 74 557 Other interest groups 52 81 Total 286 914 44. 24. PROVISIONS

1000 EUR 2010 2009

Warranty provision 1.1. 37 62 Increase in warranty provision 62 99 Used warranty provision -99 -124 Warranty provision 31.12. 0 37

25. FINANCIAL LIABILITIES Nominal 1000 EUR loan value 2010 2009 2010 Non-current: Loan 2008 10000 2392 2605 Loan 2009 7500 4853 4456 Loan 2010 6000 5867 0 Non-current total 13112 7061

Current: Cbl 2004A 113 113 113 Loan 2008 0 1156 Current total 113 1269

Convertible bond loan 2004A: This loan with a nominal principal of 1130 teuros was raised on year 2004 and was converted during the conversion period before 31.12.2008 in all 1017 teuros. The remaining amount of loan is 113 teuros. The interest is 4%. No interest was paid. The loan capital, interest and other benefit may be paid in case of dismantling or bankruptcy of company only with priority after the other creditors. The principal may be returned otherwise only providing that a full coverage for the bound equity and other non-distributable items in the confirmed financial statements for the latest expired financial year is retained. Interest or other benefits may be paid only in case the paid amount may be used for profit distribution in the confirmed balance sheet for latest expired financial period.

Financing round 2008: The subscription period of the loan note for raising a maximum amount of 16,000 teuros ended on May 15, 2009 and the total amount of subscription was 10,000 teuros. The maximum amount of new shares to be subscribed by virtue of the subscribed note is 94,339,622. As a result of the note the Company´s share capital may increase by a maximum of 943 teuros. The annual interest of the loan is 12.5 %, paid twice a year, however interest of period 1.7.-31.12.2009 was paid in January 2010. The loan will end on August 25, 2013. Effective it was agreed that interest payments are suspended and all interest will accrue and roll up until maturity.

Financing round 2009: The subscription period of the loan note for raising a maximum amount of 25,000 teuros was originally to end on March 31, 2010, but has been extended until the end of the year 2010. The group has received and withdrawn the investment commitment of 7,500 teuros during the year 2009. The loan note was raised by the subsidiary GeoSolutions Holdings N.V. (GHNV"). The loan note entitles to subscribe shares of GHNV. The amount of shares will in all events be less than half of GHNV´s outstanding shares and share capital. Alternatively the investors have the option to convert their notes into GeoSentric´s shares corresponding the same proportional amount of fully diluted shares as the investor otherwise would have received of GHNV´s shares. The note will expire in five years. As a precondition for the investment the Company has agreed to pay an industry standard placement fee of up to 6% of the amount raised. The note accrues interest at the rate of 5% p.a. Which shall be deferred until redemption of conversion. 45. The conversion rate shall be calculated based on the lower of the market capitalisation of GeoSentric at March 31, 2010, the market capitalisation at the date of conversion and the valuation implied by an external financing round or bid, all discounted by 50%. In the event that the notes have not been redeemed or converted by the maturity date or in the event of insolvency, a further 15% discount shall be applied to the conversion rate. The note is secured by a pledge over the share capital of GeoSentric and GHNV and over other assets of the group.

Financing round 2010: The 2010 loan note has the same terms as the 2009 note except that the note accrues interest at the rate of 12% p.a. and is for a maximum amount of 6,000 teuros of which 2,500 teuros has been drawn on June 30, 2010 and 2,500 teuros on September 1, 2010 and 1,000 teuros on November 10, 2010.

The above convertible loans has been divided in the financial statements into equity and debt as required by IAS 32. The deviation is based on careful evaluation of the actual and contractual terms of the convertible loan as well as judgments made by the management of the group.

The part of the convertible loan presented as debt consist of the discounted present value of the future interest payments not avoidable to the group regardless of the conversion. The remaining interest and main part of the convertible loan is presented as equity, as the management of the group considers using the conversion right as hightly probable. The part of the loan presented as debt will be amortized during the contractual maturity of the loan.

The discount interest rate used in valuation of the debt part of the convertible loan is based on the interest rate the group could expect to negotiate for a corresponding loan from third parties. The interest rate used consist of risk free interest rate and of a group specific risk premium. Risk premium estimated by management is 5 %. Effective loan interests range from 16,2 to 28,3 %.

As of 31.12.2010 the contractual maturity of interest bearing liabilities was as follows: Interest bearing debt, less than 1 year 113 teuros Interest bearing debt, 1-5 years 13112 teuros

The fair value of financial assets or liabilities does not materially differ from the carrying value.

26. OTHER DEBTS

1000 EUR 2010 2009

Purchase debt 289 683 Accrued liabilities 2833 1737 Other liabilties 97 214 Total 3219 2634

27. MANAGEMENT OF FINANCING RISKS

Currency risk: Purchases and sales are primarily made in euro. The group hedges against the currency risk by balancing the sales and purchases in foreign currencies. In the balance sheet, foreign currencies are included only in sales receivables and purschasing liabilities.

Interest risk: The group is exposed to interest rate risk mainly through its interest bearing debt. At the balance sheet date interest bearing debt consist of debt components of convertible loans with fixed interest rate and equity loans with fixed interest rate and normal equity loan limitations for interest payment. 46. Credit risk: The credit risk is mainly controlled by setting strict payment terms and the group policy is to limit the term at shortest practical. Trade receivable situation is checked always before new deliveries. Customers considered to carry a material risk are served only against payment or letter of credit.

28. ADJUSTMENT OF OPERATIONAL CASHFLOWS

1000 EUR 2010 2009

Depreciations 682 2172 Devaluations 455 484 Unrealized exchange rate differences 0 -40 Interest costs 1783 726 Interest income -78 -74 Stock options to personnel and marketing 286 914 Other adjustments -1623 -191 Total 1505 3991

29. COLLATERAL COMMITMENTS AND CONTINGENCIES

1000 EUR 2010 2009

Contingent liability 0 0

Collateral for own liabilities: Pledged non-current financial assets 5 5 Pledged current financial assets 0 57

30. RELATED PARTY TRANSACTIONS

The parent and subsidiary company relations in the group were as follows: Parent company GeoSentric Oyj. Subsidiaries with parent company ownership and voting rights of 100 % are GeoSolutions Holdings N.V., and its through (100%) subsidiaries GeoSolutions B.V., GeoSentric (UK) Ltd., GyPSii (Shanghai) Co Ltd. and GyPSii Inc..

1000 EUR 2010 2009

Employee benefits of the management: Salaries and bonuses 2070 2954 Pension payments 53 56 Other costs 865 836 Cost of granted option rights to management and other key persons 234 833 Total 3222 4679

The Annual General Meeting on June 30, 2010 elected the following persons to the Board: Hans van der Velde, Daniel Harple, Michael Vucekovich, Gary Bellot, Andy van Dam, Winston Guillory and Mike Po. The Board meeting elected Hans van der Velde as Chairman. Daniel Harple resigned from the Board on November 9, 2010. The top team comprised Winston Guillory, Michael Po, Rich Pizzaro, Bruce Hathaway, Robin Halliday, Shane Lennon, Jack Early, Jeff Lin, Sam Critchley, Gavin Nicol, Jay Cahill, Jukka Nieminen and Adrian Anderson. The Managing Director has been Tomi Raita. 47. Board members were paid a fee of 1500 euros per meeting, or a total of 40.5 teuros for year 2010. In addition, the Board received the option programs 2008-3 and 2009-2, of which a cost of 74 teuros was booked for year 2010. In 2010, Managing Director Tomi Raita was paid salary and fees totalling 229 teuros, in addition to which cost of 17 teuros was booked of option program 2008-5.

Shamrock Ventures B.V., in which Daniel Harple is a principal, was paid for work outside of his Board duties, broken down as follows; pursuant to a five year management services contract, between Shamrock Ventures B.V., and GeoSolutions, B.V., a wholly-owned subsidiary of GeoSentric. Shamrock Ventures B.V., was paid in 2010: 9 teuros as reimbursement for helth insurance, 53 teuros for travel expense incurred on behalf of GeoSentric, 56 teuros as expatriate services pursuant to Mr. Harple's Dutch residency, 89 teuros as compensation for office lease expense incurred on behalf of GeoSentric, 45 teuros as compensation for professional and advisory services incurred on behalf of GeoSentric, 23 teuros as compensation for office supplies and phone expenses incurred on behalf of GeoSentric, 304 teuros in compensation for management services to GeoSentric. In addition, from option program 2009-2, Mr. Harple received 3,500,000 option rights in 2009 of which have resulted in a total charge to the Company of 80 teuros of whish a cost 11 teuros was booked in 2010; from option program 2008-3, Mr. Harple received 3,500,000 option rights in 2008 which have resulted in a total charge to the Company of 152 teuros of whish a cost 0 teuros was booked in 2010. In addition, pursuant to the original GeoSolutions acquistion, from option program 2007-1, Mr. Harple received 4,612,500 option rights in 2007 which resulted in a total charge to the Company of 460 teuros which was all booked in 2007.

Other related party transactions: On basis of significant influence (shareholding), GeoHolding B.V. is a related party to the Company. In addition, firms in which Board members have shareholdings or other influence are related parties. Such firms are Shamrock Ventures BV, Thousand Lake Investments, Horizon Group, Tottenham Investment Limited, Campbell Investment Group, Cercle Ltd and Ning-Po Ltd.

Carve out agreement: As a part of the terms relating to the investment in year 2008, financing round arranged in August-September 2007 and the simultaneously agreed restructuring of Company´s ownership, the Board has approved an incentive carve-out agreement entered into with key senior managers who are holders in GeoHolding B.V. for a succesfully completed exit transaction. The incentive carve-out is based on the valuation of the Company in pre-defined exit events, requiring shareholders´approval to take place, and may not exceed 10 percent of the valuation. The agreement shall be valid until July 31, 2017.

Based on the assistance provided in connection with the convertible loans raised in 2009 and 2010, Raymond Kalley was issued without charge 23,750,000 shares as part of an agreed placement fee.

As more fully described in the Operating Report, effective December 31, 2010, the Company sold its TWIG mobile handset business, to a newly established company, Twig Com Oy, majority held by the former managers of that business including Tomi Raita and Jukka Nieminen. The purchase price was a nominal EUR 1.00. However, as a part of the consideration and an integral part of the transaction, Twig Com assumed all liabilities and obligations with regards to the transferring business, including in relation to its employees and assets. Together with the liabilities that Twig Com assumed, the book value loss of the transaction for GeoSentric was 244 teuros, being the net book value of transferred assets and liabilities. The following are the main terms of the agreement: * The purchase transaction was for a nominal consideration of EUR 1.00, was effective as of 31 December 2010 and comprised of all TWIG mobile handset related inventories, fixed assets, manufacturing rights, trademarks, agreements and employees. * The net book value of the TWIG inventory transferred was 223 teuros. * All relevant GeoSentric IPR´s and third party IPR´s are licensed royalty free in perpetuity to Twig Com to enable continued production and support of the TWIG products. 48. * Twig Com has assumed all GeoSentric´s liabilities, obligations and other responsibilities related to the TWIG mobile handset business including all product warranty responsibilities. * 14 TWIG employees transferred their employment from GeoSentric to Twig Com including the MBO leadership team of Jukka Nieminen, Tomi Raita and Jouko Laine. * Twig Com has assumed all TWIG trade payables and receivables as of 31 December 2010 and has taken over the TWIG factory and office lease.

1000 EUR 2010 2009

Summary of costs booked on basis of close circle transactions: Fringe benefits of the management (see preceding page) 3222 4679 Management agreement, option costs (Octagon) 0 27 Total 3222 4706

31. BALANCE SHEET ITEMS WITH SIGNIFICANT RISK

1000 EUR 2010 2009

Inventories 0 1216 Advance payments, inventories 0 10 Trade receivables 10 225 Total 10 1451

In the above asset items, there is included a significant risk depending on the reception of the products in the market and on their future sales. Testing for impairment of goodwill and IPR has been presented in note 32.

32. EVENTS AFTER THE END OF THE PERIOD

In January 2011, the Company agreed with its lead investor to extend the current financing structure with an additional financing of a maximum aggregate amount of 1.8M€ for the primary purpose of financing and supporting its GyPSii operations in China. The additional financing was raised in two tranches both received in January 2011 through the Company´s wholly owned Dutch subsidiary GeoSolutions Holdings N.V. ("GHNV") on the same terms as agreed and approved by the Annual General Meeting held on June 30, 2010. The Company has already before placed the shares and assets of the Company and GeoSolutions Holdings N.V. and its subsidiaries as a first ranking security to the financing, which security will cover also this additional financing.

In April 2011 the Board received a proposal for short-term financing from Company`s lead investor ("Proposal"). The Proposal sets the terms and conditions on which the lead investor is willing to commit to further funding for the business of the Group. According to the Proposal the lead investor would convert its existing preferred convertible notes ("Notes") issued by GeoSolutions Holdings N.V. ("GHNV") into the shares of GHNV, leaving the Company as a minority shareholder in the GHNV with approximately a 21% shareholding. The conversion of Notes would be followed by further capitalization of GHNV in a form of rights offering ("GHNV Offering"), which could lead into further dilution of Company`s ownership in GHNV down to a 7% level if the Company did not participate in the GHNV Offering to its pro-rata share, corresponding to an investment of approximately 1M€. To raise the required funds to participate in the GHNV Offering the Company neets to arrange a share issue ("GSOY Offering"). 49. Under the Proposal the lead investor has also undertaken to provide the Group with further short term financing of 0.6 M€ in a form of new Notes issued by GHNV, which financing the Company has now raised. Pursuant to the Proposal, this financing was directed €250k to GHNV and its subsidiaries providing this sub-group with financing through to the end of April and €350k to the Company giving the Company runway through Q2 2011 and time to arrange the GSOY Offering to raise funds for participating in the GHNV Offering and guaranteeing the sufficient liquidity of the Company in the medium term. The Company estimates that to achieve above goal it should raise in the GSOY Offering approximately 1.8M€. In case of a successful GSOY Offering the Company would still hold a substantial share of approximately 21% of GHNV, which holds all the GyPSii business assets, and would retain the ability to enjoy the future upside potential of the business. As the company has recently announced to the markets, the GyPSii business is now starting to show some positive development in China, especially through co-operation with Sina. The Company`s own operations would be reduced to a minimum and its sole business would be holding the GHNV shares.

On the other hand, if the GSOY Offering was unsuccessful and the required funds were not raised, the lead investor has undertaken to provide GHNV sufficient funding through the GHNV Offering, itself subscribing part of the Company`s prorata entitlement, and offering the rest to other potential investors. According to the Proposal, in this case, GHNV would give the Company a secured loan, supported by the lead investor, securing the minimum capital requirements of the Company until approximately mid 2012 and the Company would be left holding approximately 7% of GHNV shares. Any further funding of the Company would then be subject to support from the Company´s shareholders.

The Board of the Company has discussed the Proposal in depth with the lead investor to secure the best possible terms for the Company´s shareholders and other stakeholders and acknowledges that it is the only proposal for funding that the Company has received. The Board has also assessed the proposal and concluded that it represent a better alternative for the shareholders of the Company compared to putting the Company into liquidation. Therefore, the Board of Directors approved the Proposal and raised the first part of the funding, i.e. 0.6M€ in accordance with the terms of the Proposal. The Board proposes to the Extraordinary General Meeting which has been called for May 12, 2011 to confirm the approval of the Proposal by the Board of Directors except as regards to above mentioned 0.6M€ financing raised already prior to Extraordinary General Meeting. A summary of the key terms of the Proposal is attached to the Board´s proposal and published on Company´s website.

If the Proposal is confirmed at the EGM and the parent company loses control of its current subsidiaries, its role will be reduced to that of a shell holding company. In the separate stand alone parent company accounts included within this report, the parent´s investment in subsidiaries has been written down to reflect a 21% stake in the subsidiaries based upon the pre new financing valuation implified by the lead investor in its Proposal.

In April 2011 the Company announced the additional financing of 0.6M€ implemented via GeoSolutions Holdings N.V. in a form of preferred convertible notes (“Notes”) by extending the current financing structure. According to the terms of the Notes the lead investor may convert the Notes either in the shares of GeoSolutions Holdings N.V. or in the shares of the Company. The maximum amount of new company shares to be subscribed by virtue of the Notes, including financing raised prior this year, is 240.000.000 representing approximately 25.96 % of the registered share amount and 10.20 % of all the outstanding securities.

33. IMPAIRMENT TESTING AND GOING CONCERN

Base on the likely outcome of the Proposal noted above, the Group has tested its tangible fixed assets and goodwill based on a net realisable value approach. The carrying value tested comprised of tangible fixed assets 82 t€ and goodwill and other intangibles of 217 t€, totalling 299 t€. The test showed no impairment of the tested assets. 50. As noted above the Company has received a funding proposal from its lead investor (see note 32) which provides for the short term funding of the Group. The funding proposal would result in the parent company losing control of its subsidiaries with its own operations being reduced to that of a shell holding company. The proposal provides time and funding for the parent company to participate in a subsequent funding round of its current subsidiaries in which case it could retain appriximately 21% stake in the subsidiaries. If it is not able to raise additional funds from its shareholders and participate in this subsidiary funding round, the parent company´s stake would be reduced to approximately 7%. In this case the funding proposal provides for an intercompany loan to be made available from the current subsidiary company to the parent company to fund its reduced operations through to approximately mid 2012. After that it would need to look to its shareholders for further funding. The funding proposal has been approved by the Company´s Board and has been referred to an EGM on May 12, 2011 for shareholder confirmation of this approval. If the shareholders do not confirm their approval and no alternative and acceptable funding proposal are forthcoming, it is likely that the Company could be declared insolvent.

The management forecast used is based on the 2011 business plan, the planned revenue models and identified revenue sources and availability of external financing if the revenue from operations is inadequate to meet the working capital needs. The business model and main sources of revenue are expected to come via business subscription, advertising sales and IPR licensing.

The primary element for the business model and revenue generation is rapid growth of the GyPSii membership base that utilizes GyPSii´s two main products in China, "Tuding" and "Weilingdi". This growth is being achieved almost exclusively in China by existing and developing partnerships with Mobile Operators (MO), Original Equipment Manufacturers (OEM), Original Device Manufacturers (ODM), Personal Navigation Device Manufacturers (PND) and leading mobile and Internet commerce companies as well as direct marketing campaigns by GyPSii. Growth of the GyPSii membership has grown significantly during 2010 and has climbed to a total subscriber base of almost 3,000,000 registered users with a substantial and growing base of recurring monetizeable users. This membership base has begun to produce advertising revenues and the Company is tarketing to grow these revenues during 2011 and beyond.

A second element of GyPSii´s growing revenue base began with the development of its Open APIs (OeX) at the beginning of 2010. The Group has furthered business development opportunities with strategic service providers to deliver OeX into non-emerging markets. This approach allows GyPSii to reduce the risk and overhead associated with business development efforts in non-target markets while assessing geographies that may provide to be long-term opportunistic for the Company. Outside of China, GyPSii is developing partnerships for use of its LBS and SNS software platform "OEX". During 2010 a major agreement was signed licensing OEX to a major PND provider in the United States. This agreement provides for monthly recurring revenue based on total usage. GyPSii will attempt to develop further partnerships for the licensing of OEX in 2011.

The third element of the GyPSii revenue strategy in 2011 was established by the launch of its new service offering that focuses on providing for Small and Medium Businesses (SMB) with location- based services and platforms. The "GyPSii CRM Platform" provides SMB´s with a toolset for creting, managing and delivering promotional incentives to their customer base at a much lower distribution cost. The self-service platform gives business ownners the ability to create customized coupon campaigns and discount programs for consumers that are delivered directly to their mobile devices. Using its location-based technology the GyPSii CRM Platform can assist businesses in converting these consumers to loyal customers by incentivizing them at the Point of Sale (POS) with relevant discounts and rewards. Additionally, the GyPSii CRM Platform collects, analyzes and produces detailed reports on customer interactions at the point of sale, granting businesses a new level of insign into marketing and promotional spending that they have never had before. The GyPSii CRM service "lingdi" was launched in China at the end of 2010. During 2011 this service will be available for use by Small and Medium Businesses for a monthly recurring subscription fee. 51. Finally, during 2010, the Company has consolidated its efforts into developing the Chinese market. Efforts in prior years to penetrate the markets in the United States and Europe proved too costly for the Company to sustain compared to the operating cash available. Therefore, during 2010, the Company began consolidating operating, development, business development and marketing recources into China with significant staff reductions elsewhere in the world. This has resulted in a significant reduction in monthly operating costs. At the same time the Company began to focus its target market for its products and services almost entirely in China. This decision has resulted in significant increases in member acquisition and usage of the GyPSii products within China. This membership growth led directly to the growth of page views and hence the generation of advertising revenues. This significant growth during 2010 establishes the ability to further grow the monetization of page views with advertising in 2011.

The most significant risk relating to the business plan is the sustained growth of members and the availability of adequate finance to sustain the business through to profitability. As the Company´s business model is driven by the acquisition and retention of new members, possible delays in funds available to the Company to drive marketing efforts of their new products to the markets and therefore the acquisition of new members, may have an adverse effect on the development of the Company’s business by decelerating the distribution and subscriber-adoption rate of the Company´s products and services. 52. 34. FIVE YEAR STATISTICS

2010 2009 2008 2007 2006 IFRS IFRS IFRS IFRS IFRS

Net sales 1851 2491 4374 4435 6959 Export share of net sales % 85,5 90,7 91,3 83,4 82,5

Operating result, 1000 EUR -11523 -15538 -11919 -18726 -11543 Share of net sales % -622,5 -623,8 -272,5 -422,2 -165,9

Result before taxes, 1000 EUR -13228 -16187 -11865 -19010 -11560 Share of net sales % -714,6 -649,8 -271,3 -428,6 -166,1

ROE % - -403,7 -99,8 -160,9 -285,8

ROI % -544,3 -154,1 -85,7 -135,9 -142,9

Solidity % -1058,0 -25,4 60,8 74,8 61,1

Gross investments, 1000 EUR 40 208 119 6283 4393 Share of net sales % 2,2 8,4 2,7 141,7 63,1

R&D expenses, 1000 EUR 4360 5854 3507 3933 5510 Share of net sales % 235,5 235,0 80,2 88,7 79,2

Average personnel 116 120 94 83 82

EPS, EUR -0,01 -0,02 -0,01 -0,06 -0,05

Equity per share, EUR -0,02 -0,00 0,01 0,02 0,04

Dividend per share, EUR 0,00 0,00 0,00 0,00 0,00

P/E neg. neg. neg. neg. neg.

Share price 31.12., EUR 0,01 0,04 0,03 0,04 0,22 Period´s low, EUR 0,01 0,02 0,02 0,04 0,18 Period´s high, EUR 0,05 0,06 0,09 0,27 0,41 Period´s average, EUR 0,03 0,04 0,05 0,12 0,27

Market cap 31.12., milj. EUR 9,2 35,9 26,9 21,0 58,0

Share turnover 1000 pcs 80578 89185 103489 115746 119794 Share turnover % 8,9 9,9 13,3 35,3 56,1

Weighted average number of shares in period, 1000 pcs 903645 897651 779047 327772 213490

Number of shares 31.12. 1000 pcs S-share/share 922156 897926 895096 524583 263416 K-share 0 0 0 0 0 Total 922156 897926 895096 524583 263416 53. COMPUTING FORMULAS OF KEY FIGURES

ROE % 100 x Result of period Equity + minority share (average)

ROI % 100 x Operating result Total of balance sheet - non-interest debt (average)

Solidity % 100 x Equity + minority share Total of balance sheet - received advance payments

EPS, EUR Result of period Weighted average number of shares

Equity/share, EUR Equity Number of shares

P/E Share price 31.12. EPS

35. DISTRIBUTION OF SHARE HOLDINGS AND INFORMATION ABOUT SHAREHOLDERS

Stock distribution by sector: According to share register on 31.12.2010 % share % votes capital Financing and insurance companies (mostly custodian shares) 84,3 84,3 Households 13,9 13,9 Companies 1,6 1,6 On special accounts and common accounts 0,1 0,1 Others 0,1 0,1 Total 100,0 100,0

Distribution by holding amount: According to share register on 31.12.2010

Shares Number of % of Nr of shares % of pcs sharehold sharehold 1000 pcs shares 1-100 865 12,3 66 0,0 101-1000 1925 27,4 1051 0,1 1001-10000 2514 35,8 11764 1,3 10001- 1722 24,5 908453 98,5 7026 100,0 921334 99,9 On common accounts and special accounts 822 0,1 Total in book entry system 922156 100,0 54. Biggest shareholders: According to share register on 31.12.2010 % share % of votes capital Vilen Arto 0,7 0,7 Halyard Oy 0,4 0,4 Uutela Keijo 0,3 0,3 Nieminen Jorma U. 0,2 0,2 Kokkonen Kari 0,2 0,2 Kuusisto Pertti 0,2 0,2 Savolainen Kari 0,2 0,2 Raimo Seppälä Holding Oy 0,1 0,1 Finnvera Oyj 0,1 0,1 Kiiveri Erkki 0,1 0,1 Custodian account shares 84,4 84,4 Others 13,1 13,1 Total 100,0 100,0

The Board members and the MD held or controlled on 31.12.2010 a total of 1,6 million shares, representing 1,7 % of all shares and votes. 55. PARENT COMPANY FINANCIAL STATEMENTS (FAS)

PARENT COMPANY RESULT REPORT

1000 EUR Note 1.1.-31.12.2010 1.1.-31.12.2009

Net sales 1 1797 2487

Inventory change of finished products and work-in-process -830 171 Other operating income 2 4 2

Material and services Material and consumables Purchases in period 406 1416 Change of inventories 4 162 352 External services 3 -571 4 -1772

Cost of personnel 3 -2130 -2040

Depreciations and value adjustments Depreciations according to plan 4 35 52 Value adjustments 4 20458 -20493 0 -52

Other operating expense 5 -1962 -2304

Operating result -24185 -3508

Financing income 6 226 592 Financing costs 6 -1251 -1267

Result before one-off items -25210 -4183

Result before appropriations and taxes -25210 -4183

Result in the period -25210 -4183 56. PARENT COMPANY BALANCE SHEET

1000 EUR Note 31.12.2010 31.12.2009

ASSETS NON-CURRENT ASSETS Intangible assets Intangible rights 7 1 9 Tangible assets Machinery and equipment 8 4 55 Investments Shares in the group companies 9 452 20910 Other receivables 9 5 46 Other investments 9 0 457 20 20976

CURRENT ASSETS Inventories Material and consumables 0 346 Finished products 0 869 Advance payments 0 0 10 1225 Current receivables Trade receivables 0 225 Receivables from group companies 437 3241 Other receivables 40 20 Accrued income / prepaid expense 27 504 17 3503 Cash at hand and in the banks 165 260 1131 26028 LIABILITIES SHAREHOLDERS´ EQUITY Share capital 10 8956 8951 Share premium fund 10 14233 14233 Invested distributable equity fund 10 25056 24994 Retained earnings 10 -34082 -29899 Result of the period 10 -25210 -11047 -4183 14096

OBLIGATORY PROVISIONS Other obligatory provisions 11 0 37

LIABILITIES Non-current liabilities Convertible loan 10000 10000 Current liabilities Convertible loan 113 113 Procurement liabilities 174 329 Liabilities to group companies 176 0 Advance payments 0 101 Other current liabilities 53 75 Accruals and deferred income / accrued expe 12 1662 2178 1277 1895 1131 26028 57. PARENT COMPANY CASHFLOW STATEMENT

1000 EUR 1.1.-31.12.2010 1.1.-31.12.2009

Operating cashflow Result before one-off items -25210 -4183 Adjustments: Depreciations according to plan 35 52 Value adjustments 20458 0 Devaluations of inventories 455 484 Un-realized exchange rate profits and losses 0 -40 Financing income and costs 1025 675 Other adjustments -622 42 Changes in working capital Changes in trade and other receivables 2999 -639 Changes in inventories 770 524 Changes in trade and other liabilities 246 -155 Paid interests -630 -930 Received interest payments 226 620

Net operating cashflow -248 -3550

Net investment cashflow 86 -5600

Financing cashflows Payments of share issues 67 0 Convertible loans 0 0

Net financing cashflow 67 0

Change of cash -95 -9150

Cash in the beginning of period 260 9410 Cash at the end of period 165 260 58. NOTES TO PARENT COMPANY FINANCIAL STATEMENTS

ACCOUNTING PRINCIPLES FOR THE FINANCIAL STATEMENTS OF THE PARENT COMPANY

The financial statements of the parent company have been prepared according to the Finnish Accounting Standards.

Tangible assets: Acquisition expenses comprise immediate expenses. Acquisition expense includes items the acquisition expenses of which have not yet been expensed as amortization according to plan. Amortizations according to plan have been made with straight-line method based on the useful life of the asset items.

Inventories: Inventories are valued with fifo-principle at purchase cost or at re-purchase cost, if lower, or at probable sales price. Purchase cost of inventories includes variable costs.

Items in foreign currency: Receivables and liabilities in foreign currencies have been converted into euros at exchange rate of the day published by the European Central Bank.

R&D-costs: R&D-costs are capitalized on parts fulfilling the pre-requisites stipulated in the resolution 1066/2008 of the Ministry of Employment and the Economy. However, costs are capitalized only to the extent allowed by the IFRS-standards.

Obligatory provisions: In the financial statements, as obligatory provisions are booked projected future warranty costs incurred by repair or replacement of delivered products within the warranty period. Provision is determined on basis of historical experience about the level of the warranty costs.

Accounted tax credit: Accounted tax credit has not been booked in the balance sheet. On basis of confirmed losses from prior periods and from this period the Company is entitled to a tax credit of approximately 20,992,000 euros.

1. NET SALES BY MARKET AREA

1000 EUR 2010 2009

Finland 269 231 Rest of Europe 1264 2210 Rest of world 264 46 Total 1797 2487

2. OTHER OPERATING INCOME

1000 EUR 2010 2009

Profits from tangible asset sales 4 2 59. 3. COST OF PERSONNEL

1000 EUR 2010 2009

Salaries 2231 2214 Pensions, defined contribution plans 332 367 Other personnel social security costs 63 74 Intra-group invoicing -496 -615 Total 2130 2040

Average number of personnel 42 53

MANAGEMENT SALARIES AND BONUSES

1000 EUR 2010 2009

CEO and Board members 269 321

4. DEPRECIATIONS AND VALUE ADJUSTMENTS

Depreciation according to plan has been recorded on straight-line basis over the estimated useful life. The length of useful economic life in depreciation calculations for capitalised R&D expenses is 1-3 years, 5 years for intangible assets, 10 years for other long term expenditures and 5 years for machines and furniture.

1000 EUR 2010 2009

Depreciation according to plan Intangible rights 6 10 Other long term expenditures 0 1 Machines and furniture 29 41 Total 35 52

Devaluations of current assets: Materials and consumables 455 484 Value adjustments of non-current assets: Shares in the group companies 20458 0

5. OTHER OPERATING COSTS

1000 EUR 2010 2009

Rental costs 132 131 Travel costs 75 81 R&D outsourcings 34 55 External services 1331 1702 Other cost items 390 335 Total 1962 2304 60.

Compensation of the auditors 1000 euros: 2010 2009

Audit 28 40 Other services 27 6 Total 55 46

6. FINANCING INCOME AND COSTS

1000 EUR 2010 2009

Dividend yields 6 4 Interest income 1 31 Intra-group interest income 159 518 Exchange rate gains 8 39 Other financing income 52 0 Financing income total 226 592

Interest costs 1250 1251 Exchange rate losses 1 15 Other financing costs 0 1 Financing costs total 1251 1267

7. INTANGIBLE ASSETS

1000 EUR 2010 2009

Intangible rights Acquisition cost 1.1. 51 54 Additions 00 Subtractions -45 -3 Acquisition cost 31.12. 6 51 Accrued depreciations 1.1. -42 -35 Depreciations in period -6 -10 Accrued depreciations of subtractions 44 3 Accrued depreciations 31.12. -5 -42 Book valus 1.1. 9 19 Book value 31.12. 1 9 61. 8. TANGIBLE ASSETS

1000 EUR 2010 2009

Machines and furniture Acquisition cost 1.1. 211 240 Additions 00 Subtractions -203 -29 Acquisition cost 31.12. 8 211 Accrued depreciations 1.1. -155 -143 Depreciations in period -29 -41 Accrued depreciations of subtractions 179 29 Accrued depreciations 31.12. -4 -155 Book valus 1.1. 55 97 Book value 31.12. 4 55

9. INVESTMENTS

1000 EUR 2010 2009

GeoSolutions Holdings N.V., Netherlands, shareholding 100% 452 20910 Pledged deposit 5 46 Telephone shares 0 19 Other shares 0 1 Total 457 20976

On the basis of the Proposal received (see Operational Report, Events after the end of the financial year) the investment in subsidiary has been written down to reflect an approximate 21% retained stake in the subsidiary based upon the pre new financing valuation implied by the lead investor in its Proposal.

10. SHAREHOLDERS´ EQUITY

Inv. distrib. Acrrued Share Share prem equity profits capital account fund (1000eur) (1000eur) (1000eur) (1000eur)

Equity 31.12.2008 8951 14233 24994 -29899

Result of period -4183 Equity 31.12.2009 8951 14233 24994 -34082

Share issue 26.11.2010 5 62 Result of period -25210 Equity 31.12.2010 8956 14233 25056 -59292

Main terms of the convertible equity bond loans: Capital, interest and other benefits can only be paid, in dissolution or bankruptcy of the Company, with prority after all other loans. Capital can only be redeemed if there is full coverage on non-distributable income, according to the financial statements confirmed from the latest fiscal year, on share capital and all other non-distributable income. Any interest and/or any other benefit may only be distributed to the loan holders provided that payable amount does not exceed the amount of profit freely distributable to shareholders, according to the latest balance sheet. 62. Distributable assets 31.12.

1000 EUR 2010 2009

Result from prior periods -34082 -29899 Result of period -25210 -4183 Invested distributable equity fund 25056 24994 Interest of convertible loans and capital loans -30 -26 Distributable assets 31.12. -34266 -9114

11. OBLIGATORY PROVISIONS

1000 EUR 2010 2009

Warranty provision 0 37

12. ACCRUED EXPENSES

1000 EUR 2010 2009

Holiday salary reservation 325 323 Social expanses 64 83 Loan interests 1250 630 Other 23 241 Total 1662 1277

13. COLLATERAL COMMITMENTS AND CONTINGENCIES

1000 EUR 2010 2009

Collateral provided for own liabilities: Pledged non-current financing assets 5 5 Pledged current financing assets 0 57 Total 562

Other liabilities 30 26 63. BOARD PROPOSAL TO THE GENERAL MEETING FOR MEASURES REGARDING THE LOSS OF THE PERIOD

The Company has no distributable assets. The result of the period of the parent company is -25,210,364.67 euros (FAS).

The Board proposes to the General Meeting that no dividend is distributed and that loss for the period is booked on the account of Retained earnings.

In Salo, April 29, 2011

Hans van der Velde Gary Bellot Chairman of the Board Member of the Board

Michael Vucekovich Winston Guillory Member of the Board Member of the Board

Michael Po Member of the Board

The Auditor´s Note

Our auditor´s report has been issued today.

In Helsinki, April 29, 2011

Ernst & Young Oy Authorized Public Accountant Firm

Erkka Talvinko Authorized Public Accountant 64. USED BOOKS

Daily book. ADP printouts Main book ADP printouts Cash book ADP printouts Sales register ADP printouts Procurement register ADP printouts Inventory books ADP printouts Salary books ADP printouts

VERIFICATIONS

10 Domestic purchase invoices 11 Foreign purchase invoices 12 Domestic purchase invoices/inventory 15 Domestic payments 16 Foreign payments 20 Domestic sales invoices 21 Domestic rebate invoices 22 Foreign sales invoices 23 Foreign rebate invoices 24 Memo invoices 29 Payments 30 Bank receipts 35 Receipts of Moscow office 40 Hand cash receipts 45 Financing events 50 Memo receipts 90 Management accounting receipts 91 Accounting bookings, management accounting 92 Sales appropriations, management accounting 93 Material costs, management accounting

Accounting material is stored as paper copies.