A Global Leader in Voice Technology Solutions Bringing Android, Wi-Fi and VoIP Together August 2016 Apivio Systems Inc. (TSX: APV.V) www.apivio.com
DISCLAIMER THIS PRESENTATION HAS BEEN PREPARED BY APIVIO SYSTEMS INC. (THE “COMPANY”) SOLELY AS AN INTRODUCTION TO THE COMPANY AND ITS TECHNOLOGY. This Presentation is the sole responsibility of the Company. Information contained herein does not purport to be complete and is subject to certain qualifications and assumptions and should not be relied upon for the purposes of making an investment in the securities or entering into any transaction. The information and opinions contained in the Presentation are provided as at the date of this Presentation and are subject to change without notice and, in furnishing the Presentation, the Company does not undertake or agree to any obligation to provide recipients with access to any additional information or to update or correct the Presentation. No stock exchange, securities commission or similar regulatory authority has passed on the merits of any securities referred to in the Presentation, nor has it passed on or reviewed the Presentation. The Company is developing a new and unproven technology. It is subject to a large number of very significant challenges including the risk that no viable product will ever be developed and even if one is developed there is the risk that no market will exist for it. The Company is competing against companies with much greater resources and the Company’s continued existence is dependent on its ability to secure additional financing. The Presentation may contain “forward looking information” within the meaning of applicable Canadian Securities legislation concerning, among other things, the size of the market for potential applications of the Company’s technology and the timing of further technical development of the Company’s projects. There can be no assurance that the plans, intentions or expectations upon which these forward looking statements and information are based will occur. “Forward looking statements” and “forward looking information” are subject to a variety of risks, uncertainties and assumptions, including those discussed in the annual Management Discussion and Analysis and under “Risk Factors” in the Company’s public filings at www.sedar.com. Some of the factors which could affect future results and could cause results to differ materially from those expressed in the forward looking statements and information contained herein include: Risk of technological non-feasibility, obsolescence and inadequate economics, dependence on key personnel and key relationships with the Company’s technology licensor. Forward-looking statements and information are based on the beliefs, estimates and opinions of management at the date the statements are made and are subject to change without notice. The Company does not undertake to update forward-looking statements or information if management believes estimates or opinions or other circumstances should change. The Company also cautions potential investors that investments in new technology are inherently risky. www.apivio.com 2
Our Vision on the Evolution of the Office Phone Office phones will become “smart” as exemplified by cell phones. In the future, all enterprise phones will be smart desk phones. www.apivio.com 3
NEC RELATIONSHIP EXPANDS APIVIO HORIZONS Entrenched platform for high-margin, recurring revenue Android apps MONET SERIES UT880 Collaborating with NEC to develop Highlighting Apivio as an more apps Innovative Company www.apivio.com 4
31% MONET SERIES UT880: 15% Others SOLD THROUGH NEC NEC is the 3rd largest enterprise telephony 12% vendor globally 10% Market Share Distribution of Enterprise Telephony 3% Vendors Globally 6% NEC sells more than 1.5 million phones 4% annually 4% 6% 4% 5% * Mitel acquired Aastra in November, 2013 * Nokia is undergoing an acquisition of Alcatel-Lucent www.apivio.com 5
Multiple Vertical Industry & Customizations with One Device Security Personnel CRM Integration Video Conferencing Receptionist Hotel Room Dialer www.apivio.com 6
UT880 apps are a priority UT880s displayed at the Annual NEC Advantage Resellers Conference www.apivio.com 7
Dexter Series Phones: Stable, Growing & Defensible Business More than 5.5 million Barrier to entry due to 25%+ CAGR over last phones sold software customization three years IP Phone Unit Sales 1,200,00 000 900,000 00 600,000 00 1,072,164 300,000 00 700,402 799,978 519,509 924,213 501,066 0 2011 2012 2013 2014 2015 H12016 www.apivio.com 8
Mobility for the Office Desk Phone True e cordles dless freedom dom New communication nications option ions Anywhere Wi-Fi is available Messaging and SMS. Not limited by charging station range 2 lines for multiple phone numbers Truly uly travel el-fri friendly endly Remotely Re tely provisio ision-able ble Use at home, office, airports, hotels Configurable by the CLive cloud Charge with USB cable, stand optional Switch between on-prem and external settings Elimi liminating ting all l permane nent t cablin ling Rich h featu ture res No installation of phone jacks Call transfer to internal and external phones No wired ethernet ports Paging and speakerphone More than 130k sold in Korea www.apivio.com 9
CLive Introduces New Cloud Services THAT ENHANCE HARDWARE DEVICES Enhan anced ced Appli licati cations Interf erface ce Custom tomizati ization Self-Tro roubles eshooting ting Data ta Collectio ection & Analy alysi sis VoIP VoIP network Device Manage agemen ent www.apivio.com 10
Flexible Plans for Hardware and Services Traditional up-front or subsidized hardware pricing Option 1: Option 2: HW + CLive Hard rdwa ware re only One-time Subsidized Hardwa ware can be • Hardware price purchase price purcha chase sed d up-fr front ont or with subsidy sidy and Monthly hardware No No 24-mont 24 onth h payment nts. s. payment CLive service ices are • Yes CLive services No offe fered d on a monthly ly basis is, and are Monthly CLive requi uired red in hardwa ware re No Yes subsidy bsidy plan. n. service fee App store revenue App store revenues nues • Yes Yes share shared red with provider ider. . www.apivio.com 11
Demonstrated Revenue & Adjusted EBITDA Growth Annual Revenue & Adjusted EBITDA $70,000 $59,990 $60,000 in '000s Canadian Dollars $46,553 $50,000 $40,000 $35,039 $29,467 $26,457 $30,000 $20,000 $10,000 $2,120 $1,420 $408 $408 $0 $(66) $(5,466) -$10,000 2012 2012 2013 2013 2014 2014 2015 2015 H1 2016 2016 Annual Revenue Adjusted EBITDA www.apivio.com 12
Adjusted EBITDA: Positive for Last Nine Quarters Quarterly Adjusted EBITDA $1,200 $1,000 Posi siti tive Adjus usted d EBITDA TDA for Las ast t Nine Quar arter ters $800 in '000s Canadian Dollars $600 $400 $200 $0 ($200) ($400) Q1 13 Q2 13 Q3 13 Q4 13 Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15 Q3 15 Q4 15 Q1 16 Q2 16 www.apivio.com 13
Stronger Balance Sheet Quarterly Debt, Cash & Net Cash Position $10,000 Good cash position after 9 quarters of positive Adjusted EBITDA $8,000 $6,000 $4,000 in '000s Canadian Dollars $2,000 $0 -$2,000 -$4,000 -$6,000 -$8,000 Debt is flat despite increase in sales -$10,000 Q3 13 Q4 13 Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15 Q3 15 Q4 15 Q1 16 Q2 16 Cash Debt Net Cash Good cash position after 9 quarters of positive Adjusted EBITDA & financing in March 2015. Debt is flat despite increase in sales. www.apivio.com 14
Stronger Balance Sheet Working Capital $8,000 Significant improvement in net working capital over the last two years $6,000 in '000s Canadian Dollars $4,000 $2,000 $0 ($2,000) ($4,000) Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15 Q3 15 Q4 15 Q1 16 Q2 16 www.apivio.com 15
Stronger Balance Sheet Debt-to-Equity Ratio Current Ratio 12.0 1.70 10.9 1.57 9.7 10.0 1.50 1.36 1.50 1.48 1.26 8.0 1.30 1.32 6.0 1.10 0.92 1.01 4.0 0.90 3.1 2.9 2.7 2.6 2.5 2.3 2.0 0.70 0.0 0.50 Q3 14 Q4 14 Q1 15 Q2 15 Q3 15 Q4 15 Q1 16 Q2 16 Q3 14 Q4 14 Q1 15 Q2 15 Q3 15 Q4 15 Q1 16 Q2 16 Better balance sheet ratios due to prudent cash management, increased sales and improved margin www.apivio.com 16
Superior Results from Korean Subsidiary The Korean Subsidiary (“MK”) sells to Korean Tier-1 telephone carriers Moimstone Korea (000’s CAD) 2014 2015 Revenue 46,415 59,694 Korean business producing revenue and EBITDA 1,643 2,814 EBITDA growth Head Office Management 671 622 Fees Add back R&D for North American High barrier to entry due to customization 1,003 2,111 Products done for Korean customers Adjusted EBITDA 3,316 5,548 Adjusted EBITDA % 7.1% 9.3% MK funds R&D of new products for Korean and North American markets www.apivio.com 17
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