Financial Report 2016, Interim Report 1st quarter

CEO Letter
Dear fellow shareholder,

For my first quarterly report as CEO, I am pleased to report that the Mavshack has taken significant steps forward this 2016.

Notably, we have met our subscription targets for the first quarter of 2016 and observed a stable and substantial growth trend as we continue to expand our presence in the Middle East. In this regard, we managed to exceed our internal sales target and increased our sales in the Middle East threefold when compared to our last quarter (Q4-2015). Moving forward into the second quarter, especially with the expansion of our service in Bahrain and Kuwait, and eventually expected within the year, Saudi Arabia, our positive sales growth is expected to continue.

In addition to working on our subscription campaigns, I have focused seeking and negotiating better licensing deals for our library with the goal of securing first-rate content at lower monthly recurring costs. For this purpose Mavshack's resources and efforts were used to secure an exciting line up of new content at a more cost efficient licensing arrangement where the goal this year is to supplement the same with other premium content ideally featuring current news programs and up-to-date TV series. With this new content in our revitalized library, Mavshack was able to conclude its previous licensing arrangements Viva Communications, Inc. It is noted that the Viva licensing agreement made business sense in 2011 when it was signed but the same is no longer true in 2016 when the content licensing model has since evolved to a more licensee friendly revenue sharing arrangement. With the termination of the Viva agreement, Mavshack was able to re-design the licensing structure based on a success driven revenue sharing model which now contributes to a healthier financial position for our operations and at the same time allows the content providers to capitalize on their content when subscriptions grows.

Supplementary to our efforts towards cutting down cost while offering better programming and service, we have also revisited our technical solutions for the digital distribution. Based on our learnings from our offering of the movie Felix Manalo, technical refinements in our current backend processes can be set in place which will allow us to cut our operational expenses in that area by almost half.

For this purpose, we have now initiated steps towards implementing technical refinements which is foreseen to be accomplished in the next two quarters. Additionally, our technical developments from showcasing the Felix Manalo movie has also laid the ground work for Mavshack's offline viewing. For our operations in the Southeast Asia, Ambientmedia continues with its notable performance in securing multi-media projects in the region where the noteworthy list of clientele include international financial institutions, publicly listed companies, regional entertainment channels, local advertising agencies and events companies. Ambientmedia has also been very active in the assisting Mavshack to negotiate better licensing deals and coordinating content delivery for our library.

Finally I would like to thank you for your continued support and reassure you of my full commitment to unceasingly work hard to secure a good future for Mavshack and its shareholders.

Rainier David,
CEO, Mavshack

Next report
Interim Report 2 for the financial year 2016 will be published on August 26th 2016.

The full report is attached.

Stockholm May 4, 2016

Mavshack AB (publ)
Board of Directors