BSQR Weiss

BSQUARE CORPBSQRNASDAQ:

May 17, 2015

BUY HOLD SELL

HOLDHOLDHOLDHOLDHOLDRATING SINCE 09/05/2014

A+ A A- B+ B B- C+ C C- D+ D D- E+ E E- F

Annual Dividend RateNA

Annual Dividend YieldNA

Beta1.95

Market Capitalization$48.3 Million

52-Week Range$2.82-$5.00

Price as of 5/14/2015$4.09

Sector: Technology Sub-Industry: Application Software Source: S&P

This report is for information purposes only and should not be considered a solicitation to buy or sell any security. Neither TheStreet Ratings nor any other party guarantees its accuracyor makes warranties regarding results from its usage. Redistribution is prohibited without the express written consent of TheStreet Ratings. Copyright(c) 2006-2015. All rights reserved.

PAGE 1Report Date: May 17, 2015

BSQR BUSINESS DESCRIPTIONBSQUARE Corporation provides software solutions

and related engineering services to companies that

develop connected systems in North America, Asia,

and Europe.

STOCK PERFORMANCE (%)

3 Mo. 1 Yr. 3 Yr (Ann)

Price Change -9.72 27.01 15.86

GROWTH (%)

Last Qtr 12 Mo. 3 Yr CAGR

Revenues -0.91 4.13 -0.32

Net Income 6,169.56 144.60 91.88

EPS NA 144.68 83.71

RETURN ON EQUITY (%)

BSQR Ind Avg S&P 500

Q4 2014 8.20 13.98 14.20

Q4 2013 -21.30 16.61 14.48

Q4 2012 3.15 9.77 13.11

P/E COMPARISON

19.48

BSQR

35.94

Ind Avg

20.73

S&P 500

EPS ANALYSIS ($)

2014

Q4

0.12

Q3

0.06

Q2

0.06

Q1

-0.0

3

2013

Q4

0.00

Q3

-0.3

2

Q2

-0.0

7

Q1

-0.0

8

2012

Q4

0.06

Q3

0.05

Q2

-0.0

2

Q1

-0.0

2

NA = not available NM = not meaningful

1 Compustat fiscal year convention is used for all fundamentaldata items.

Weekly Price: (US$) SMA (50) SMA (100) 2 Years1 Year

2013 2014 2015

2.50

2.75

3.00

3.25

3.50

3.75

4.00

4.25

4.50

4.75

5.00

Rating History

HOLD HOLD SELL HOLD

0

250

500

750Volume in Thousands

COMPUSTAT for Price and Volume, TheStreet Ratings, Inc. for Rating History

RECOMMENDATIONWe rate BSQUARE CORP (BSQR) a HOLD. The primary factors that have impacted our rating are mixed - some

indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a

positive or negative performance for this stock relative to most other stocks. The company's strengths can

be seen in multiple areas, such as its solid stock price performance, compelling growth in net income and

largely solid financial position with reasonable debt levels by most measures. However, as a counter to these

strengths, we find that the company's profit margins have been poor overall.

HIGHLIGHTSThis stock has managed to rise its share value by 27.01% over the past twelve months. Regarding the stock's

future course, our hold rating indicates that we do not recommend additional investment in this stock despite

its gains in the past year.

BSQUARE CORP has shown improvement in its earnings for its most recently reported quarter when

compared with the same quarter a year earlier. The company has demonstrated a pattern of positive

earnings per share growth over the past two years. During the past fiscal year, BSQUARE CORP turned its

bottom line around by earning $0.21 versus -$0.47 in the prior year.

Regardless of the drop in revenue, the company managed to outperform against the industry average of 1.5%.

Since the same quarter one year prior, revenues slightly dropped by 0.9%. The declining revenue has not hurt

the company's bottom line, with increasing earnings per share.

The company's current return on equity greatly increased when compared to its ROE from the same quarter

one year prior. This is a signal of significant strength within the corporation. When compared to other

companies in the Software industry and the overall market, BSQUARE CORP's return on equity is below that

of both the industry average and the S&P 500.

The gross profit margin for BSQUARE CORP is rather low; currently it is at 19.18%. Regardless of BSQR's low

profit margin, it has managed to increase from the same period last year. Despite the mixed results of the

gross profit margin, BSQR's net profit margin of 5.45% is significantly lower than the industry average.


May 17, 2015

Sector: Technology Application Software Source: S&P

Annual Dividend Rate

NAAnnual Dividend Yield

NABeta

1.95Market Capitalization

$48.3 Million52-Week Range

$2.82-$5.00Price as of 5/14/2015

$4.09



PEER GROUP ANALYSIS

REVENUE GROWTH AND EBITDA MARGIN*

EBITDA Margin (TTM)

Rev

enue

Gro

wth

(TTM

)

-30%

40%

500%-4000%

FAVORABLE

UNFAVORABLE

VRNGVRNGVRNGVRNGVRNG

NTWKNTWKNTWKNTWKNTWK

MNDOMNDOMNDOMNDOMNDO

ASURASURASURASURASUR

COVRCOVRCOVRCOVRCOVR

GVPGVPGVPGVPGVP

CPAHCPAHCPAHCPAHCPAHBSQRBSQRBSQRBSQRBSQR

Companies with higher EBITDA margins and

revenue growth rates are outperforming companies

with lower EBITDA margins and revenue growth

rates. Companies for this scatter plot have a market

capitalization between $23.7 Million and $62.7

Million. Companies with NA or NM values do not

appear.

*EBITDA Earnings Before Interest, Taxes, Depreciation andAmortization.

REVENUE GROWTH AND EARNINGS YIELD

Earnings Yield (TTM)

Rev

enue

Gro

wth

(TTM

)

-30%

40%

20%-180%

FAVORABLE

UNFAVORABLE

VRNGVRNGVRNGVRNGVRNG

NTWKNTWKNTWKNTWKNTWK

TISATISATISATISATISA

SMSISMSISMSISMSISMSI

ENVIENVIENVIENVIENVI

MNDOMNDOMNDOMNDOMNDO

ASURASURASURASURASUR

COVRCOVRCOVRCOVRCOVR

GVPGVPGVPGVPGVP

CPAHCPAHCPAHCPAHCPAHBSQRBSQRBSQRBSQRBSQR

Companies that exhibit both a high earnings yield

and high revenue growth are generally more

attractive than companies with low revenue growth

and low earnings yield. Companies for this scatter

plot have revenue growth rates between -20.3% and

35.4%. Companies with NA or NM values do not

appear.

INDUSTRY ANALYSISThe US software industry is characterized by growth, innovation and technological advancements. The

business remains knowledge intensive and market structure is influenced by ownership of intellectual

property. Technology and product innovation shape business models in a rapidly changing environment. The

industry can be divided into three main categories: systems software, programming software, and application

software.

The industry landscape has seen radical change in recent years due to the growth of mass markets for

packaged software. Software development has witnessed rapid evolution over the past few decades with

projects increasing in size and complexity as the available computer hardware has dramatically improved in

both processing speed and storage size.

The number of patents being issued across the industry has recently surged. Ownership of intellectual

property is a key driver of growth and the patent system plays a vital role in the development of the industry.

However, piracy remains a pressing issue as copyright infringement and illegal reproduction and transfer of

licensed software is widespread.

The software industry is not immune to the global economy. The return to positive slow growth will positively

impact all industries and enhance new investments, which could bolster demand for services and add to

sales growth in the upcoming quarters. The need to lower costs has triggered global capabilities to evolve in

China and India. India, for instance, has emerged as the number two software talent pool worldwide,

capturing more than a quarter of the global outsourcing market. The industry is currently positioned favorably

going forward.

PEER GROUP: Software

Recent Market Price/ Net Sales Net Income

Ticker Price ($)Company Name Cap ($M) Earnings TTM ($M) TTM ($M)

BSQR 4.09BSQUARE CORP 48 19.48 95.92 2.35

VRNG 0.67VRINGO INC 63 NM 1.33 -105.54

NTWK 5.95NETSOL TECHNOLOGIES INC 61 NM 41.49 -11.84

TISA 3.21TOP IMAGE SYSTEMS LTD 57 NM 35.86 -5.48

SMSI 1.20SMITH MICRO SOFTWARE INC 56 NM 39.06 -6.64

ENVI 1.77ENVIVIO INC 49 NM 41.56 -15.61

MNDO 2.38MIND CTI LTD 46 8.21 25.02 5.48

ASUR 5.59ASURE SOFTWARE INC 34 NM 27.21 -0.26

COVR 1.05COVER-ALL TECHNOLOGIES INC 28 52.50 20.48 0.37

GVP 1.39GSE SYSTEMS INC 25 NM 37.93 -6.74

CPAH 0.56COUNTERPATH CORP 24 NM 12.57 -3.39

The peer group comparison is based on Major Application Software companies of comparable size.


May 17, 2015




NABeta



$2.82-$5.00Price as of 5/14/2015

$4.09



COMPANY DESCRIPTIONBSQUARE Corporation provides software solutions and

related engineering services to companies that develop

connected systems in North America, Asia, and Europe.

Its proprietary software products include HTML5

rendering engine that is based on the open-source

WebKit platform and facilitates device makers to create

applications and user interfaces for their devices;

TestQuest 10, a software testing automation tool, which

offers test solutions for testing smart connected

systems; DataV, a data solution that includes software

products, applications, and services that turn raw device

data into actionable data; and MobileV, which provides a

common platform for original equipment manufacturers

to build multiple device form factors. The company also

offers third-party software products on stand-alone or

with its own proprietary software and engineering

service offerings. In addition, it provides engineering

services, such as architectural and system design;

software design and development; platform development

systems integration; application, middleware, and

multimedia software development; quality assurance and

testing; device solution strategy consulting; technical

support; implementation; and test automation

engineering and consulting services. The company

markets and sells its products to original equipment

manufacturers, original design manufacturers, and

corporate enterprises, as well as silicon vendors and

peripheral vendors. BSQUARE Corporation was founded

in 1994 and is headquartered in Bellevue, Washington.

BSQUARE CORP

110 110th Avenue, NE, Suite 300

Bellevue, WA 98004

USA

Phone: 425-519-5900

http://www.bsquare.com

STOCK-AT-A-GLANCEBelow is a summary of the major fundamental and technical factors we consider when determining our

overall recommendation of BSQR shares. It is provided in order to give you a deeper understanding of our

rating methodology as well as to paint a more complete picture of a stock's strengths and weaknesses. It is

important to note, however, that these factors only tell part of the story. To gain an even more comprehensive

understanding of our stance on the stock, these factors must be assessed in combination with the stocks

valuation. Please refer to our Valuation section on page 5 for further information.

FACTOR SCORE

Growth out of 5 stars3.0Measures the growth of both the company's income statement and

cash flow. On this factor, BSQR has a growth score better than 50% of

the stocks we rate.

weak strong

Total Return out of 5 stars3.0Measures the historical price movement of the stock. The stock

performance of this company has beaten 50% of the companies we

cover.

weak strong

Efficiency out of 5 stars2.0Measures the strength and historic growth of a company's return on

invested capital. The company has generated more income per dollar of

capital than 30% of the companies we review.

weak strong

Price volatility out of 5 stars4.5Measures the volatility of the company's stock price historically. The

stock is less volatile than 80% of the stocks we monitor.

weak strong

Solvency out of 5 stars1.5Measures the solvency of the company based on several ratios. The

company is more solvent than 20% of the companies we analyze.

weak strong

Income out of 5 stars0.5Measures dividend yield and payouts to shareholders. This company

pays no dividends.

weak strong

THESTREET RATINGS RESEARCH METHODOLOGY

TheStreet Ratings' stock model projects a stock's total return potential over a 12-month period including both

price appreciation and dividends. Our Buy, Hold or Sell ratings designate how we expect these stocks to

perform against a general benchmark of the equities market and interest rates. While our model is

quantitative, it utilizes both subjective and objective elements. For instance, subjective elements include

expected equities market returns, future interest rates, implied industry outlook and forecasted company

earnings. Objective elements include volatility of past operating revenues, financial strength, and company

cash flows.

Our model gauges the relationship between risk and reward in several ways, including: the pricing drawdown

as compared to potential profit volatility, i.e.how much one is willing to risk in order to earn profits; the level of

acceptable volatility for highly performing stocks; the current valuation as compared to projected earnings

growth; and the financial strength of the underlying company as compared to its stock's valuation as

compared to projected earnings growth; and the financial strength of the underlying company as compared

to its stock's performance. These and many more derived observations are then combined, ranked, weighted,

and scenario-tested to create a more complete analysis. The result is a systematic and disciplined method of

selecting stocks.


May 17, 2015




NABeta



$2.82-$5.00Price as of 5/14/2015

$4.09



Consensus EPS Estimates ($)IBES consensus estimates are provided by Thomson Financial

NA

NA

NA

NA

NA

NA

INCOME STATEMENT

Q4 FY14 Q4 FY13

Net Sales ($mil) 25.60 25.83

EBITDA ($mil) 1.48 0.66

EBIT ($mil) 1.33 0.54

Net Income ($mil) 1.40 -0.02

BALANCE SHEET

Q4 FY14 Q4 FY13

Cash & Equiv. ($mil) 26.39 20.81

Total Assets ($mil) 47.24 44.65

Total Debt ($mil) 0.00 0.00

Equity ($mil) 28.58 24.67

PROFITABILITY

Q4 FY14 Q4 FY13

Gross Profit Margin 19.18% 18.56%

EBITDA Margin 5.77% 2.53%

Operating Margin 5.21% 2.09%

Sales Turnover 2.03 2.06

Return on Assets 4.96% -11.77%

Return on Equity 8.20% -21.30%

DEBT

Q4 FY14 Q4 FY13

Current Ratio 2.39 2.03

Debt/Capital 0.00 0.00

Interest Expense 0.00 0.00

Interest Coverage NA NA

SHARE DATA

Q4 FY14 Q4 FY13

Shares outstanding (mil) 12 11

Div / share 0.00 0.00

EPS 0.12 0.00

Book value / share 2.43 2.18

Institutional Own % NA NA

Avg Daily Volume 32,822 74,018

2 Sum of quarterly figures may not match annual estimates due touse of median consensus estimates.

FINANCIAL ANALYSISBSQUARE CORP's gross profit margin for the fourth quarter of its fiscal year 2014 is essentially unchanged

when compared to the same period a year ago. Even though sales decreased, the net income has increased.

BSQUARE CORP is extremely liquid. Currently, the Quick Ratio is 2.35 which clearly shows the ability to cover

any short-term cash needs. The company managed to increase its liquidity from the same period a year ago,

despite already having strong liquidity to begin with. This would indicate improved cash flow.

During the same period, stockholders' equity ("net worth") has increased by 15.83% from the same quarter last

year. Overall, the key liquidity measurements indicate that the company is very unlikely to face financial

difficulties in the near future.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the

next 12-months. To learn more visit www.TheStreetRatings.com.


May 17, 2015




NABeta



$2.82-$5.00Price as of 5/14/2015

$4.09



RATINGS HISTORYOur rating for BSQUARE CORP has not changed

since 9/5/2014. As of 5/14/2015, the stock was

trading at a price of $4.09 which is 18.2% below its

52-week high of $5.00 and 45.0% above its 52-week

low of $2.82.

2 Year Chart

2013 2014

$3.00

$4.00

$5.00

HO

LD: $

4.01

SE

LL: $

3.44

HO

LD: $

3.55

HO

LD: $

2.76

MOST RECENT RATINGS CHANGES

Date Price Action From To

9/5/14 $4.01 Upgrade Sell Hold

6/9/14 $3.44 Downgrade Hold Sell

3/7/14 $3.55 Upgrade Sell Hold

2/18/14 $3.39 Downgrade Hold Sell

5/14/13 $2.76 No Change Hold Hold

Price reflects the closing price as of the date listed, if available

RATINGS DEFINITIONS &DISTRIBUTION OF THESTREET RATINGS

(as of 5/14/2015)

46.59% Buy - We believe that this stock has theopportunity to appreciate and produce a total return of

more than 10% over the next 12 months.

29.90% Hold - We do not believe this stock offersconclusive evidence to warrant the purchase or sale of

shares at this time and that its likelihood of positive total

return is roughly in balance with the risk of loss.

23.52% Sell - We believe that this stock is likely todecline by more than 10% over the next 12 months, with

the risk involved too great to compensate for any

possible returns.

TheStreet Ratings14 Wall Street, 15th FloorNew York, NY 10005www.thestreet.comResearch Contact: 212-321-5381

Sales Contact: 866-321-8726

VALUATIONHOLD. The current P/E ratio indicates a significant discount compared to an average of 35.94 for the

Software industry and a value on par with the S&P 500 average of 20.73. To use another comparison, its

price-to-book ratio of 1.68 indicates a discount versus the S&P 500 average of 2.86 and a significant discount

versus the industry average of 6.14. The price-to-sales ratio is well below both the S&P 500 average and the

industry average, indicating a discount. Upon assessment of these and other key valuation criteria, BSQUARE

CORP proves to trade at a discount to investment alternatives within the industry.

1 2 3 4 5Price/Earningspremium discount

BSQR 19.48 Peers 35.94

Discount. A lower P/E ratio than its peers can

signify a less expensive stock or lower growth

expectations.

BSQR is trading at a significant discount to its

peers.

1 2 3 4 5Price/CashFlowpremium discount


Discount. The P/CF ratio, a stocks price divided by

the company's cash flow from operations, is useful

for comparing companies with different capital

requirements or financing structures.


peers.

1 2 3 4 5Price/Projected Earningspremium discount

BSQR NA Peers 39.36

Neutral. A lower price-to-projected earnings ratio

than its peers can signify a less expensive stock or

lower future growth potential.

Ratio not available.

1 2 3 4 5Price to Earnings/Growthpremium discount

BSQR NA Peers 1.20

Neutral. The PEG ratio is the stocks P/E divided by

the consensus estimate of long-term earnings

growth. Faster growth can justify higher price

multiples.

Ratio not available.

1 2 3 4 5Price/Bookpremium discount


Discount. A lower price-to-book ratio makes a

stock more attractive to investors seeking stocks

with lower market values per dollar of equity on the

balance sheet.


peers.

1 2 3 4 5Earnings Growthlower higher

BSQR 144.68 Peers 155.31

Average. Elevated earnings growth rates can lead

to capital appreciation and justify higher

price-to-earnings ratios.

BSQR is expected to keep pace with its peers on

the basis of earnings growth.

1 2 3 4 5Price/Salespremium discount


Discount. In the absence of P/E and P/B multiples,

the price-to-sales ratio can display the value

investors are placing on each dollar of sales.


industry on this measurement.

1 2 3 4 5Sales Growthlower higher


Lower. A sales growth rate that trails the industry

implies that a company is losing market share.

BSQR significantly trails its peers on the basis of

sales growth

DISCLAIMER:

The opinions and information contained herein have been obtained or derived from sources believed to be reliable, but

TheStreet Ratings cannot guarantee its accuracy and completeness, and that of the opinions based thereon. Data is provided

via the COMPUSTAT Xpressfeed product from Standard &Poor's, a division of The McGraw-Hill Companies, Inc., as well as

other third-party data providers.

TheStreet Ratings is a division of TheStreet, Inc., which is a publisher. This research report contains opinions and is provided

for informational purposes only. You should not rely solely upon the research herein for purposes of transacting securities or

other investments, and you are encouraged to conduct your own research and due diligence, and to seek the advice of a

qualified securities professional, before you make any investment. None of the information contained in this report constitutes,

or is intended to constitute a recommendation by TheStreet Ratings of any particular security or trading strategy or a

determination by TheStreet Ratings that any security or trading strategy is suitable for any specific person. To the extent any of

the information contained herein may be deemed to be investment advice, such information is impersonal and not tailored to the

investment needs of any specific person. Your use of this report is governed by TheStreet, Inc.'s Terms of Use found at

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BSQR Weiss