Report By the Board of Directors

Significant Events during the Reporting Period

A total of 1,392,269 new shares were subscribed between December 5, 2013 and December 1, 2014 by virtue of the stock option rights 2008A, 2008B and 2008C. The share subscription price, EUR 568,991.65 was recorded in the Company´s invested non-restricted equity fund. -After the registration of the new shares, the number of shares in Elektrobit Corporation totaled 131,493,144.

On April 30, 2014 EB started personnel negotiations to adjust its cost structure for the weakened order book for R&D services in the next few months. The negotiations were concluded on May 15, and the company decided to temporarily lay off at the maximum of 90 persons in the Wireless Business Segment. With these temporary dismissals EB targeted cost savings of approximately EUR 0.8 million, which materialized mainly during the third quarter of the year.

EB signed EUR 10.0 million credit facility agreement with Nordea Bank Finland Plc and EUR 10.0 million credit facility agreement with Pohjola Bank Plc on July 2, 2014. These agreements, intended for general financing purposes, are valid until June 30, 2017 and include conventional covenants that are, among others, related to equity ratio, transfer and pledge of the assets. These credit facility agreements replaced EUR 20.0 million credit facilities from Nordea Bank Suomi Plc, which were valid until 30.6.2014.

In September Parrot S.A., a supplier of GmbH, a jointly owned company of EB and AUDI, has withdrawn the legal proceeding taken against GmbH in the Tribunal de Commerce de Paris (Commercial Court Paris) in April 2014. In the claim Parrot S.A. requested to collect damages in the amount of approximately EUR 18.4 million for loss of profit and reputational damage. According to GmbH´s initial legal analysis as announced in EB´s stock exchange release on April 4, 2014, the claim was without merit both in terms of the grounds and the amount of the claim.

After the reporting period EB received information that Parrot filed a request for arbitration against at the International Court of Arbitration of the International Chamber of Commerce seeking remuneration and/or damages currently in an amount of approximately EUR 9.4 million in connection with an automotive supply contract. Based on´ initial legal analysis the claim is without merit both in terms of the grounds and the amount of the claim. Based on the current analysis, the arbitral proceedings will not cause any financial obligation to or to EB that would affect EB´s profit outlook and financial position. It is possible that, based on later information, this view may need to be reconsidered. At worst, Parrot´s claim could have significant negative impact on´ and EB´s profit, cash flow and financial position.

December 17, 2014 EB concluded the personnel negotiations (started on November 6, 2014) in order to rationalize its operations in Wireless Business Segment in Finland by laying off up to a maximum of 19 employees in its offices in Kajaani and Tampere. As an alternative a few employees were offered new positions in Oulu. This caused non-recurring costs of EUR 0.4 million that weakened the result of the last quarter of 2014. With these actions EB will achieve annual cost savings of approximately EUR 1 million, from the beginning of 2015 onwards.