A global Leader in Voice Technology Solutions that Brings Android, - - PowerPoint PPT Presentation

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A global Leader in Voice Technology Solutions that Brings Android, - - PowerPoint PPT Presentation

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


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A global Leader in Voice Technology Solutions that Brings Android, Wi-Fi & VoIP Together

May 2016 Apivio Systems Inc. (APV.V)

www.apivio.com

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www.apivio.com

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.

DISCLAIMER

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www.apivio.com

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.

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NEC RELATIONSHIP EXPANDS APIVIO HORIZONS

MONET SERIES UT880

Highlighting Apivio as an Innovative Company Entrenched platform for high-margin, recurring revenue Android apps Collaborating with NEC to develop more apps

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MONET SERIES UT880: SOLD THROUGH NEC 31%

Others

Market Share Distribution

  • f Enterprise Telephony

Vendors Globally

15% 10% 6% 6% 5% 4% 4% 4% 3% 12%

* Nokia is undergoing an acquisition of Alcatel-Lucent * Mitel acquired Aastra in November, 2013

NEC sells more than 1.5 million phones annually NEC is the 3rd largest enterprise telephony vendor globally

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ANDROID APPS: RECURRING REVENUE BUSINESS

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www.apivio.com Some UT880s displayed at NEC Advantage Resellers Conference this week UT880 apps are a priority

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The cordless phone re-invented and differentiated

New communications options

Messaging and SMS. 2 lines for multiple phone numbers

Remotely provisionable

Configurable by the CLive cloud Switch between on-prem and external settings

Rich features

Call transfer to internal and external phones Paging and speakerphone

True cordless freedom

Anywhere Wi-Fi is available Not limited by charging station range

Truly travel-friendly

Use at home, office, airports, hotels Charge with USB cable, stand optional

Eliminating all permanent cabling

No installation of phone jacks No wired ethernet ports

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Dexter Series Phones: Stable, Growing & Defensible Business

More than 5 million phones sold Barrier to entry due to software customization 25%+ CAGR over last three years

IP Phone Unit Sales

519,509 700,402 799,978 924,213 1,072,164 2015 2014 2013 2012 2011 1,200,000 900,000 600,000 300,000

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www.apivio.com Promote Vertical Apps as the hook to sell Hardware

Disruptive technology North American Business Plan For OEM/ODM Market

01 03 05 04 02

Offer the largest library of Apps for 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

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www.apivio.com Generate long term monthly revenue

Reduce Cost to Dealer North American Business Plan for Independent Dealers: Standard SiP

01 03 05 04 02

Potentially Sell Hardware at Cost Provide Service as an Option State of the Art Cloud for Auto Provisioning, trouble shooting, Updates, etc. Innovative IP Phones (Android, Wi-Fi, etc.)

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Demonstrated Revenue & EBITDA Growth

$29,467 $35,039 $46,553 $59,990 $(5,466) $(66) $1,420 $2,120

  • $10,000

$0 $10,000 $20,000 $30,000 $40,000 $50,000 $60,000 $70,000 Annual Revenue EBITDA

Annual Revenue & EBITDA

2012 2013 2014 2015

49% growth in last year 29% growth in last year

in '000s Canadian Dollars

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Improved Profitability

10% 15% 18% 18% 0% 5% 10% 15% 20% $0 $2,000 $4,000 $6,000 $8,000 $10,000 $12,000 Gross Profit Gross Profit (%)

Gross Profit & Margin

$10.539 Million

Gross Profit in 2015

in '000s Canadian Dollars

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EBITDA: Positive for Last Seven Quarters

($400) ($200) $0 $200 $400 $600 $800 $1,000 $1,200 Q1 13 Q2 13 Q3 13 Q4 13 Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15 Q3 15 Q4 15

in '000s Canadian Dollars

Quarterly EBITDA

Positive EBITDA for Last Seven Quarters

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Stronger Balance Sheet

  • $10,000
  • $8,000
  • $6,000
  • $4,000
  • $2,000

$0 $2,000 $4,000 $6,000 $8,000 $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.

Quarterly Debt, Cash & Net Cash Position

Stronger cash position after 7 quarters of positive EBITDA

Debt is flat despite increase in sales in '000s Canadian Dollars

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Stronger Balance Sheet

($4,000) ($2,000) $0 $2,000 $4,000 $6,000 $8,000 Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15 Q3 15 Q4 15

in '000s Canadian Dollars

Working Capital

Significant improvement in net working capital over the last two years

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Stronger Balance Sheet

10.86 9.74 3.13 2.73 2.86 2.51 2 4 6 8 10 12 Q3 14 Q4 14 Q1 15 Q2 15 Q3 15 Q4 15

Debt-to-Equity Ratio

Better debt to equity and current ratios due to better financial results

0.92 1.01 1.26 1.32 1.36 1.5 0.5 0.7 0.9 1.1 1.3 1.5 1.7 Q3 14 Q4 14 Q1 15 Q2 15 Q3 15 Q4 15

Current Ratio

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Superior Results from Korean Subsidiary

Moimstone Korea (000’s) 2014 2015 Revenue 46,415 59,694 EBITDA 1,643 2,814 Add back Head Office Management Fees 671 622 R&D for North American Products 1,003 2,111 Adjusted EBITDA 3,316 5,548 Adjusted EBITDA % 7.1% 9.3%

The Korean Subsidiary (“MK”) sells to Korean Tier-1 telephone carriers Korean business producing YoY revenue and EBITDA growth High barrier to entry due to customization done for Korean customers MK funds R&D on new products for Korean and North American markets

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Investment Highlights

Market Capitalization

Share Price (May 2, 2016) $0.34 Basic Shares Outstanding 52.8 Market Capitalization $18.0 Debt (as on Dec 31, 2015) ($6.8) Cash $5.5 Options proceeds $0 Enterprise Value $19.3

(amounts in C$ millions, except per share)

80 Employees in Canada and South Korea

Rob Bakshi CEO David Pais CFO 2015 Revenue/Employee $750K

C$M except for EPS 2015 2014 2013

Revenue $60 $46.6 $35

  • Adj. EBITDA

$2.1 $1.4 ($0.1) Cash $5.5 $1.8 $3.0 Debt $6.8 $7.5 $6.7 EPS $0.02 $0.00 ($0.06)

APV stock valuation…

Korean legacy business alone ~4x EV/EBITDA Entire company ~0.4x EV/Sales

Ticker: TSXV:APV

52 Week Hi/Low C$0.28/C$0.65 Insiders Own 21%

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Experienced Management Team

ROB BAKSHI

  • Serial technology entrepreneur that has

built and sold businesses

  • Founder and former CEO of Silent Witness

Enterprises

DAVID PAIS

  • CFO at 3 successful companies over the last

eleven years.

  • Most recently, CFO of a BC based

manufacturing company that was sold to a Boston based NYSE listed US Public company for $60M

  • Senior Vice President at Ernst & Young

Corporate Finance, specializing in M&A and financing

  • J. Y. AHN

President & CEO CFO CEO, Moimstone Korea

  • 8 years at Moimstone Korea, initially as

head of Sales promoted to COO and then to CEO, Korea

  • Experience working in Sales, Management

and Logistics in several tech companies in Korea

  • Electrical Engineer from Hanyang

University, International Business Professional course from Kotra

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Experienced Management Team

  • S. H. SHIN
  • 19 years at leading electronics companies

including Dasan Networks, Dain Telecom, nSYSTech and Hanwha working on Switching systems, Semiconductors, VoIP & Wi-Fi and DSL solutions

  • 5 years of experience at Moimstone.
  • Bachelors Degree in Electronics and Computer

Engineering from Korea University

  • J. S. KANG
  • 20 years of experience with finance and

accounting at Dansung Electron, Vodus and Kolon International

  • 7 years running the Moimstone Korea Finance

department

  • Passed the US CPA Examination, degree in

Business Administration from Konkuk University

CHANG IL AN

CTO, Moimstone Korea CFO, Moimstone Korea Executive Director - Sales

  • 7 years of experience managing major sales

accounts and International Sales for Moimstone Korea

  • Headed Sales and Sales Engineering

positions in Wareplus Co. and Wellink Co.

  • Degree in Information and Communications

from Dong Seoul College

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CATALYSTS FOR GROWTH

Global NEC deployment High margin, recurring app revenue will improve business model and earnings profile Extend channel to include non- NEC dealers, service providers and phone companies

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In Conclusion

Disrupting the VoIP phone market with a smart Android deskphone Global exclusive partnership with NEC Korean business generated $55M in revenue in ‘15, EBITDA positive and funds R&D for new products Low Valuation: ~4x EV/EBITDA of Korean biz or 0.4x revenue Named as Top 10 VoIP solution provider by Enterprise Telephony Magazine and on the Branham 300 list of Canada’s top 25 ICT companies 2016 TSX Venture 50 Company

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QUESTIONS?

Rob Bakshi, CEO

T: 604-761-2100 rbakshi@apivio.com

www.apivio.com

David Pais, CFO

T: 604-340-9866 dpais@apivio.com

Sean Peasgood, IR

T: 416-565-2805 sean@sophiccapital.com