A global Leader in Voice Technology Solutions that Brings Android, Wi-Fi & VoIP Together May 2016 Apivio Systems Inc. (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: Others 15% SOLD THROUGH NEC NEC is the 3rd largest enterprise telephony 12% vendor globally 10% Market Share Distribution of Enterprise Telephony 3% Vendors Globally NEC sells more than 6% 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
ANDROID APPS: RECURRING REVENUE BUSINESS www.apivio.com 6
UT880 apps are a priority Some UT880s displayed at NEC Advantage Resellers Conference this week www.apivio.com 7
The cordless phone re-invented and differentiated True cordless freedom New communications options Anywhere Wi-Fi is available Messaging and SMS. Not limited by charging station range 2 lines for multiple phone numbers Truly travel-friendly Remotely provisionable Use at home, office, airports, hotels Configurable by the CLive cloud Charge with USB cable, stand optional Switch between on-prem and external settings Eliminating all permanent cabling Rich features No installation of phone jacks Call transfer to internal and external phones No wired ethernet ports Paging and speakerphone www.apivio.com 8
Dexter Series Phones: Stable, Growing & Defensible Business More than 5 million Barrier to entry due to 25%+ CAGR over last phones sold software customization three years IP Phone Unit Sales 1,200,000 900,000 600,000 1,072,164 799,978 519,509 700,402 924,213 300,000 0 2011 2012 2013 2014 2015 www.apivio.com 9
05 North American Business Plan 04 For OEM/ODM Market 03 Promote Vertical Apps as the hook 02 to sell Hardware 01 Offer the largest library of Apps for Disruptive technology Android Enterprise phones Offer technical know how for their unique SiPs Develop an Eco System: App Store, User Groups, etc. State of the Art Android Desk Phones www.apivio.com 10
05 North American Business Plan 04 for Independent Dealers: Standard SiP 03 Generate long term monthly 02 revenue 01 Potentially Sell Hardware at Cost Reduce Cost to Dealer Provide Service as an Option State of the Art Cloud for Auto Provisioning, trouble shooting, Updates, etc. Innovative IP Phones (Android, Wi-Fi, etc.) www.apivio.com 11
Demonstrated Revenue & EBITDA Growth Annual Revenue & EBITDA 29% growth in last year $70,000 $59,990 in '000s Canadian Dollars $60,000 $46,553 $50,000 $40,000 $35,039 $29,467 49% growth in $30,000 last year $20,000 $10,000 $2,120 $1,420 $0 $(66) $(5,466) -$10,000 2012 2013 2014 2015 Annual Revenue EBITDA www.apivio.com 12
Improved Profitability Gross Profit & Margin $10.539 Million Gross Profit in 2015 $12,000 20% 18% 18% $10,000 15% in '000s Canadian Dollars 15% $8,000 10% $6,000 10% $4,000 5% $2,000 $0 0% Gross Profit Gross Profit (%) www.apivio.com 13
EBITDA: Positive for Last Seven Quarters Quarterly EBITDA $1,200 $1,000 Positive EBITDA for Last Seven Quarters $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 www.apivio.com 14
Stronger Balance Sheet Quarterly Debt, Cash & Net Cash Position $10,000 Stronger cash position after 7 quarters of positive 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 Cash Debt Net Cash Stronger cash position after 7 quarters of positive EBITDA & financing in March 2015 Debt is flat despite increase in sales. www.apivio.com 15
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) ($4,000) Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15 Q3 15 Q4 15 www.apivio.com 16
Stronger Balance Sheet Debt-to-Equity Ratio Current Ratio 12 1.7 10.86 10 1.5 9.74 1.36 1.5 1.26 8 1.3 1.32 6 1.1 0.92 1.01 4 0.9 2.73 2.86 2.51 3.13 2 0.7 0 0.5 Q3 14 Q4 14 Q1 15 Q2 15 Q3 15 Q4 15 Q3 14 Q4 14 Q1 15 Q2 15 Q3 15 Q4 15 Better debt to equity and current ratios due to better financial results www.apivio.com 17
Superior Results from Korean Subsidiary The Korean Subsidiary (“MK”) sells to Korean Tier-1 telephone carriers Moimstone Korea (000’s) 2014 2015 Revenue 46,415 59,694 Korean business producing YoY revenue EBITDA 1,643 2,814 and EBITDA growth Head Office 671 622 Management Fees Add back R&D for North High barrier to entry due to customization 1,003 2,111 American Products done for Korean customers Adjusted EBITDA 3,316 5,548 Adjusted EBITDA % 7.1% 9.3% MK funds R&D on new products for Korean and North American markets www.apivio.com 18
Investment Highlights (amounts in C$ millions, except per share) C$M except for EPS 2015 2014 2013 Market Capitalization Revenue $60 $46.6 $35 Share Price (May 2, 2016) $0.34 Adj. EBITDA $2.1 $1.4 ($0.1) Basic Shares Outstanding 52.8 Cash $5.5 $1.8 $3.0 Market Capitalization $18.0 Debt $6.8 $7.5 $6.7 Debt (as on Dec 31, 2015) ($6.8) EPS $0.02 $0.00 ($0.06) Cash $5.5 Options proceeds $0 APV stock valuation … Korean legacy business alone ~4x EV/EBITDA Enterprise Value $19.3 Entire company ~0.4x EV/Sales 80 Employees in Canada and South Korea Ticker: TSXV:APV Rob Bakshi CEO David Pais CFO 52 Week Hi/Low C$0.28/C$0.65 2015 Revenue/Employee $750K Insiders Own 21% www.apivio.com 19
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