A Global Leader in Voice Technology Solutions Bringing Android, Wi-Fi and VoIP Together Investor Presentation Apivio Systems Inc. (TSX: APV.V) November 2016 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
Disrupting Enterprise Communications Beyond Voice Beyond Mobility VoIP Beyond Devices ne networ ork www.apivio.com 3
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 4
NEC RELATIONSHIP EXPANDS APIVIO’S 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 5
VALIDATED FOR USE WITH BROADSOFT PARTNERS A leader in the rapidly-growing cloud- based unified communications space Over 12 million lines and 600+ service providers across 80 countries MONET SERIES UT880s A significant new sales channel for Market opportunity expanded Apivio starting with the UT880s to include BroadSoft’s customers www.apivio.com 6
31% MONET SERIE RIES UT880 880: 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 www.apivio.com 7
Multiple Vertical Industry & Customizations with One Device Security Personnel CRM Integration Video Conferencing Receptionist Hotel Room Dialer www.apivio.com 8
UT88 880 apps are a priority UT880s displayed a at the An Annual NE NEC Ad Advantage R Resellers C Conference www.apivio.com 9
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, 0,000 00 900, 00,00 000 600, 00,00 000 72,164 164 300, 00,00 000 00,402 799,978 519,509 924,213 765,458 1,072, 799, 519, 700, 924, 765, 0 20 2011 11 20 2012 12 20 2013 13 2014 20 14 2015 20 15 YTD TD ‘ ‘16 www.apivio.com 10
Mobility for the Office Desk Phone True e cordles ess f freedom New c com ommun unications ns opt options ns Anywhere Wi-Fi is available Messaging and SMS. Not limited by charging station range 2 lines for multiple phone numbers Tru ruly tra ravel-frien endly Remote tely ly p provis isio ion-ab able Use at home, office, airports, hotels Configurable by the CLive cloud Charge with USB cable, stand optional Switch between on-prem and external settings Elim limin inatin ting all l permanent t cablin ling Rich features es No installation of phone jacks Call transfer to internal and external phones No wired ethernet ports Paging and speakerphone More than 150k sold in Korea www.apivio.com 11
CLive Introduces New Cloud Services THAT ENHANCE HARDWARE DEVICES Enha nhanc nced A Appl pplications Interface C Customization Self Se lf-Troubleshooting Data Co Colle llection & & Analysis is VoIP networ ne ork Device M Management www.apivio.com 12
Demonstrated Revenue & Adjusted EBITDA Growth Annual and YTD Revenue & Adjusted EBITDA in '000s Canadian Dollars 2012 2012 2013 2013 2014 2014 2015 2015 www.apivio.com 13
Adjusted EBITDA: Positive for Last Ten Quarters Quarterly Adjusted EBITDA Pos ositive Adj djusted EBITDA for or Last Ten n Qua Quarters in '000s Canadian Dollars www.apivio.com 14
Stronger Balance Sheet Quarterly Debt, Cash & Net Cash Position Good cash position after 10 quarters of positive Adjusted EBITDA in '000s Canadian Dollars Debt is flat despite increase in sales Good cash position after 10 quarters of positive Adjusted EBITDA & financing in March 2015. Debt is flat despite increase in sales. www.apivio.com 15
Stronger Balance Sheet Working Capital Significant improvement in net working capital over the last two years in '000s Canadian Dollars www.apivio.com 16
Stronger Balance Sheet Better balance sheet ratios due to prudent cash management, increased sales and improved margin www.apivio.com 17
Superior Results from Korean Subsidiary The Korean Subsidiary (“MK”) sells to Korean Tier-1 telephone carriers Moimstone Kor orea (000 000’s CAD AD) 2014 2015 Rev even enue 46,415 59,694 Korean business producing revenue and EBITDA DA 1,643 2,814 EBITDA growth Head Office Ma Management 671 622 Fees ees Add ba Add back R&D for No 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 A % 7.1% 9.3% MK funds R&D of new products for Korean and North American markets www.apivio.com 18
Investment Highlights (amounts in C$ millions, except per share) C$M M ex excep ept f for E EPS PS YTD ‘16 ‘16 20 2015 15 20 2014 14 Mar Market Cap apital alization Revenue $41 $41 $60 $60 $46. $46.6 Share Pr Price ( (Nove vember 14, 14, 20 2016) 16) $0.2 $0 .25 Adj. E EBITD TDA $1. $1.0 $2.1 $2.1 $1.4 $1.4 Basic Sha Share res O Out utstandi ding g 52.8 52.8 Cash ( (as at e end o of period) $6.8 $6.8 $5.5 $5.5 $1.8 $1.8 Market C Capit italiz lizatio ion $13.2 $13.2 Debt (as a at e end o of period) $7.5 $7.5 $6.8 $6.8 $7.5 $7.5 Debt ( (as on September 3 30, 2 2016) ($7.5) $7.5) EPS EPS $0.00 00 $0.02 02 $0.00 00 Cash ( (as on September 3 30, 2 2016) $6.8 $6.8 APV V stoc ock valua uation on Options p proceeds $0 $0 Korean s subsidiary ~4x EV/EB ~4x EV EBITDA Enterp rpri rise V Value ue $13.9 $13.90 Entire c company ~0 ~0.3x 3x EV EV/Sales 80 Em Empl ploy oyees in n Cana nada da and nd Sout South h Kor orea Tic icker: : TSXV:A :APV 2015 R 20 15 Reve venue/Employee $750 $750K 52 Week eek H Hi/Low C$0.24/ 24/C$0 C$0.48 .48 Insider o ownership 21% 21% www.apivio.com 19
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