2020

Annual Report

Bsquare Corporation

1415 Western Avenue, Suite 700 Seattle, WA 98104 425.519.5900 www.bsquare.com

April 28, 2021

Dear Shareholder:

I hope that you and your family and friends made it through 2020 with your health and good spirits intact. For all of the tumult of 2020, it reminded us how important connection is in our life. Whether in our personal or business community, connection is essential to our well-being.

Let me start then by saying how grateful I am for the connections we have at Bsquare. We are fortunate to have such a diverse and collaborative set of customers. I have no doubt that the lessons we have learned together addressing their challenges will be a valuable source of future mutual success. We also have strong technology partners that provide new capabilities and opportunities for building our business. And finally, we have a dedicated team of entrepreneurs whose rebuilding efforts in 2020 make me proud to be associated with Bsquare.

Despite the COVID-19 pandemic, 2020 was one of Bsquare's strongest financial years in recent memory. Operating losses improved sharply; 2020 net loss was $1.9 million, a $7.3 million improvement over a net loss of $9.2 million in 2019. Our cash and cash equivalents increased by $2.4 million during 2020. Access to a PPP loan provided $1.6 million and the business generated $800,000 in cash. Year-over-year cash improvement is something not seen in recent Bsquare history.

A number of factors contributed to the improvements we saw in 2020. We started the year with an expense structure that was appropriate for the business and we maintained our emphasis on fiscal responsibility. We recognized the changing business conditions

1415 Western Avenue, Suite 700

www.bsquare.com

Seattle, WA 98101

created by the COVID-19 pandemic and took immediate action to avoid what in prior years could have been an existential crisis for the business. As result, today we have a platform we can build on in 2021.

2020 was also a year marked by significant social unrest throughout the United States. In response, we formed an Anti-Racism Task Force (ARTF) with the goal of addressing systemic racism in the corporate environment by taking direct action in our communities in the US and UK. Not only do we believe diversity makes us stronger, we are certain that racism, overt and systemic, hurts us all. With the help of our ARTF, we are building these beliefs into our regular business rhythm.

I would also like to call your attention to a few of the important changes we made for 2021 that I believe better align director and executive compensation with shareholder value. We implemented a "floor price" for calculating director stock-based compensation. We met with several investors last year that expressed concern about the ongoing dilution created by the prior structure of director compensation. The directors agreed and adjusted their compensation policy. We also adopted a more entrepreneurial approach to executive compensation that eliminates annual cash bonuses and replaces them with Performance Stock Unit awards. This aligns executive compensation with value creation for shareholders while freeing our cash for investment in the business.

Turning to matters for consideration at the upcoming annual shareholder meeting, there are a two items that I believe bear mention. First is the approval of the 2021 Equity Compensation Plan. Our current stock option plan will expire prior to our 2022 shareholder meeting so we're asking for your approval now. The board and I agree that equity compensation creates a strong alignment with shareholders and we ask for you to vote to approve the proposed plan.

We are also asking you to approve our revised Articles of Incorporation. The revisions are the last phase of efforts we began last year to modernize our bylaws and articles to

1415 Western Avenue, Suite 700

www.bsquare.com

Seattle, WA 98101

allow us to operate more efficiently in today's more virtual world, while also reflecting common governance practices for companies our size.

In closing, I would like to thank you for your confidence in Bsquare. I can assure you that all of our efforts will be instilled with integrity, innovation, collaboration, fiscal responsibility, and entrepreneurship. We bring these values to bear with our customers and partners to build value for our shareholders. I look forward to working with the board of directors and Bsquare's leadership team to continue the exciting work building our reputation as a knowledgeable and service-oriented technology partner.

Warm regards,

Ralph C Derrickson

President and Chief Executive Officer

1415 Western Avenue, Suite 700

www.bsquare.com

Seattle, WA 98101

This is an excerpt of the original content. To continue reading it, access the original document here.

Attachments

  • Original document
  • Permalink

Disclaimer

BSQUARE Corporation published this content on 14 June 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 14 June 2021 19:11:04 UTC.