0 0 1 NTS-TSXV; NTSFF-OTCQX Market Capitalization In Canadian - - PowerPoint PPT Presentation

1 Capital Structure

NTS-TSXV; NTSFF-OTCQX

Market Capitalization

In Canadian dollars

Shares Price(2) Market Cap Basic Shares Outstanding 68,959,002 $0.58 $39,996,221 Options @ $1.10(1) (exp. 2.8 years) 3,935,000 Restricted Share Units(1) 464,126 Fully Diluted 73,358,128 $0.58 $42,547,714 Cash & Short-term Investments(1) $10.1M Debt(1) $0.00

• Management and Directors

with significant ownership

• Significantly invested in intellectual

property in over 25 countries

Note (1) as at Mar. 31, 2019 Note (2) as at Apr. 30, 2019

2

$2 Billion Market Opportunity

Investment Highlights

Initially targeting the multi-billion dollar banknote and tax stamp markets $10.1M cash, no debt, no warrants

Strong Balance Sheet

Completed our 8th consecutive quarter of positive adjusted EBITDA

Positive Adjusted EBITDA

Development contracts with several top 10 issuers (awarded $30M contract)

Central Bank Validation

Scalable high-margin, recurring revenue that can drive positive operating leverage

Attractive Business Model

Strong patent portfolio in both technology and processes all wrapped in trade secrets

Innovative Technology

All amounts expressed in Canadian dollars

3 Disclaimer

THIS PRESENTATION HAS BEEN PREPARED BY NANOTECH SECURITY CORP. (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

• ther 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.

4 Our Mission

Ink Evolved to Light

A printed colour image was the best security feature because no

• ne had the technology to copy it.

5 What We Do

Nanotech places a moving picture which uses light to authenticate and validate the intangible value of physical goods.

6 What’s the last security feature you remember seeing?

7 Our Market Opportunity

Memorable Forgettable Easily Copied Uncopiable

Packaging Holograms Colour Printing Lens technology Colour-shifting Inks & Threads

Legacy technologies are either beautiful and easily copied… … or harder to copy and absolutely forgettable. KolourOptik

8 Our Markets

25 50 75 100 $100 Note Tax Stamp Celebrex Birkin bag Chanel Hand Cream S&P 500

Estimated Cost as a % of Value

Banknotes Documents Pharmaceuticals Luxury Goods Cosmetics Assumptions - A $100 banknote costs about 14 cents to make. Tax stamps cost a penny or two. Celebrex brand value estimated by taking the spread against its generic. Birkin bag compared against a high quality counterfeit. Chanel hand cream estimated. S&P 500 price vs. book.

We play in an industry where protecting intangible assets is paramount

Two thirds of the market cap of the S&P 500 (or over $14 trillion) is in intangible assets.

9 Banknote Opportunity

Issuing Authorities (Central Banks) Notes (Printed) Revenue Opportunity* (Per Security Feature) Top Tier 10 Issuing Authorities 121 Billion $151 Million Others 48 Issuing Authorities 54 Billion $67 Million Total: 58 Issuing Authorities 175 Billion $218 Million

* Based on US$1.25 per 1,000 banknotes

(1) Federal Reserve System Seal (2) Microprinting (3) Raised Printing (4) Paper (5) Color (6) Portrait and Vignette (7) Symbol of Freedom (8) Treasury Seal (9) Serial Numbers (10) Serial Year (st) Security Thread (w) Watermark (cs) Colour-shifting Ink

10 Banknote Market Strategy

Multi-billion Dollar Companies Invest in Intellectual Property for Banknotes

Estimated Revenue ~$700 Million Estimated Revenue ~$559 Million Estimated Revenue ~$2.2 Billion Estimated Revenue ~$1.6 Billion Estimated Revenue ~$3.5 Billion Estimated Revenue ~$2.3 Billion

11 Banknote Case Study

Initially announced a $30 Million development contract in March 2017 The contract is with one of the top ten central banks The development contract is to design security features for their next series of banknotes When completed is expected to result in recurring annual revenues The development work is progressing well The country is in late stages of designing their new series Opportunity for more than one NTS feature per banknote

$30 Million Development Contract Status

12 Documents Case Study

UEFA used KolourOptik to authenticate over 5 mm tickets during the UEFA Euro 2016. Authentication through motion

Grey image changes to full colour image. Cannot be replicated using legacy technologies.

Exactly matches the iconography of the event

The image is Super Victor, the UEFA mascot, who is easily

• identifiable. The colours & proportions match exactly.

Mass produced

The ticket printer produced these security features using a shim we provided.

Grey image changes to full colour

KolourOptik-Commercial

13 2019 Product Launches

Transforming from a Technology to a Product Company

Technology

PRODUCT

Demand Scalability

KolourOptik Commercial Product Launch KolourOptik Banknote Product Launch

#1 #2

Creating reliable and timely manufacturing solutions for KolourOptik products:

• Previously we relied on large partners that were prohibitively

expensive or took several months for delivery, making selling to commercial customers difficult.

• With these strategies we can sell directly to commercial customers

and deliver a complete security label to showcase customers’ brand identity.

14 Current Banknote Products

Colour Shift Optical Thin Film

Shown as a windowed thread

Haiti Papua New Guinea Kenya Morocco

Threads in circulation:

Denmark Philippines Taiwan Kazakhstan Indonesia

KolourOptik M2

15 New Commercial Products

Introducing…

LiveLogoTM

Employs Nanotech’s image switch technology to create a unique and compelling three-image story. It creates an immediate visual impact, capturing and holding the customer’s attention as they tilt the feature to experience multiple image transitions. The image designs are customizable and can include items such as a customer’s logo, tagline, or product.

Dynamic PortraitTM

Displays images far beyond conventional print resolution and allows for text and other design elements to be added for additional brand impact and authentication. This product is ideal for customers to showcase an image of their celebrity spokesperson or even a high-fidelity image of their product.

16 Management Team

Troy Bullock Chief Executive Officer Igi LeRoux Chief Business Development Officer Clint Landrock Chief Technology Officer Joe Vosburgh Vice President, Marketing Monika Russell Chief Financial Officer Ron Ridley Vice President, Operations Brian Donnelly Vice President, Sales

17

Patent portfolio in both Technology and Processes all wrapped in trade secrets, major granted patent countries:

• Canada
• United States
• Europe
• Australia
• China
• Indonesia

Significant Investment in Intellectual Property

18 Locations in Canada

Nanotech West, Corporate & OVD: Burnaby, British Columbia NTS Equipment Housed at 4D LABS State-of-the-art Nano Equipment $65 mm Secure Facility Canadian Gov’t National Lab Nanotech East, Production & OTF: Thurso, Quebec High Security Production Facility Optical Thin Film R&D and Production Facility

Burnaby Thurso

19

Create a direct salesforce

2019 Goals

• Create a salesforce to accelerate the sales process and

focus on diversifying customer base, demonstrating differentiation through commercial sales

• Contract development activities
• Expand and enhance our banknote product line

Banknote market

• New line of products featuring KolourOptik technology

targeted directly at the commercial market

• Secure a reliable and timely manufacturing solution for

commercial size quantities of KolourOptik labels

Commercial markets

• Incorporating a security feature into a banknote will lead

to longer-term recurring, predictable revenue

• Diversification into commercial markets is also expected

to stabilize revenues and earnings

• In the short-term, while management builds out the sales

strategy and product offering, the Company’s financial performance may be highly variable

Financial outlook

20 The Growth of Nanotech

Note 1 All amounts expressed in Canadian dollars Note 2 Adjusted EBITDA is a non-IFRS measure as describe in the Non-IFRS Financial Measures section of the Company’s MD&A

2014 2015 2016 2017 2018

Adjusted EBITA Revenue $(4,000,000.00) $(2,000,000.00) $- $2,000,000.00 $4,000,000.00 $6,000,000.00 $8,000,000.00 $10,000,000.00

Nanotech Growth Since 2014

Adjusted EBITA Revenue

21

$- $2,000,000 $4,000,000 $6,000,000 $8,000,000 $10,000,000 2017 2018

Revenue

$- $2,000,000 $4,000,000 $6,000,000 $8,000,000 2017 2018

Gross profit

$- $500,000 $1,000,000 $1,500,000 $2,000,000 2017 2018

Adjusted EBITDA (2)

$- $2,000,000 $4,000,000 $6,000,000 $8,000,000 $10,000,000 $12,000,000 2017 2018

Net cash position

Year Ended September 30, 2018

1.2M 1.9M 10.8M 9.6M 7.3M 9.2M 5.9M 7.1M

Note 1 All amounts expressed in Canadian dollars Note 2 Adjusted EBITDA is a non-IFRS measure as describe in the Non-IFRS Financial Measures section of the Company’s MD&A

22

$1,500,000 $1,600,000 $1,700,000 $1,800,000 $1,900,000 $2,000,000 Q2-2018 Q2-2019

Revenue

$1,000,000 $1,100,000 $1,200,000 $1,300,000 $1,400,000 Q2-2018 Q2-2019

Gross profit

$- $50,000 $100,000 $150,000 Q2-2018 Q2-2019

Adjusted EBITDA (2)

$8,000,000 $8,500,000 $9,000,000 $9,500,000 $10,000,000 $10,500,000 Q4-2018 Q2-2019

Net cash position

Q2 2019

133K 45K 9.6M 10.1M 1.9M 1.86M 1.4M 1.3M

Note 1 All amounts expressed in Canadian dollars Note 2 Adjusted EBITDA is a non-IFRS measure as describe in the Non-IFRS Financial Measures section of the Company’s MD&A

23 Contact Us

Troy Bullock Chief Executive Officer Nanotech Security 604.678.5778 tbullock@nanosecurity.ca Sean Peasgood Investor Relations Sophic Capital 647.699.9845 sean@sophiccapital.com