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BEYO BEYOND MEASU EASURE Company Company Overvi Overview ew A C C U R A C Y S P E E D August 2018 Q U A L I T Y P A R T N E R S H I P Fo Forwa rward rd Looki king Sta tate teme ments ts This Presentation contains forward-looking


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SLIDE 1

BEYO BEYOND MEASU EASURE

A C C U R A C Y S P E E D Q U A L I T Y P A R T N E R S H I P

Company Company Overvi Overview ew

August 2018

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SLIDE 2

Fo Forwa rward rd Looki king Sta tate teme ments ts

This Presentation contains forward-looking statements within the meaning of applicable Canadian securities legislation. Such forward-looking statements concern the business and anticipated financial performance of the Company and include, without limitation, statements with respect to the Company’s objectives, goals, liquidity, sources of capital, expectations of sales and ownership and continued development of its technologies and products. These forward-looking statements are based on certain factors and assumptions, including, without limitation, the Company’s ability to successfully complete new purchase orders along the timelines expected; continued and future demand for the Company’s products; continued sales to the Company’s major customers; the continued financial health of the semiconductor industry; and the Company’s ability to continue and further enhance revenue diversification and open new market opportunities. Forward-looking statements are subject to a variety of known and unknown risks, uncertainties and other factors which could cause actual events or results to differ from those expressed or implied by the forward-looking statements, including, without limitation: additional measures and controls may not be implemented as expected or along the timelines anticipated; uncertainties relating to the market for the Company’s products and maintaining a stable level of orders; fluctuations in revenue as a result of volatility in the markets and product mix; risks relating to the Company’s present reliance on its major customers for the majority of its sales; risks relating to the Company’s reliance on the financial health of the semiconductor industry; risks relating to the development of competing technologies and the possibility of increased competition; the effect of slow growth in the United States, the Company’s principal market, as well as other economies and other economic trends and conditions in the markets that the Company and its customers serve; risks associated with technical difficulties or delays in product introductions, improvements, implementation; uncertainties in product pricing or other initiatives of the Company and its competitors; uncertainties in factors that may result in a reduction in capital expenditures and/or delayed buying decisions affecting demand for the Company’s products; risks relating to currency fluctuations, particularly between the Canadian and United States dollars; and risks in pursuing additional development projects to support existing customers or pursue other business opportunities. The foregoing assumptions, risks and uncertainties are not exhaustive of the items that may affect our forward-looking statements. Should underlying assumptions prove to be incorrect or one or more of these risks and uncertainties materialize, actual results may vary materially from those described in the forward-looking statements. The Company’s forward-looking statements are based on beliefs, expectations and opinions of management on the date the statements are made. For the reasons set forth above, persons should not place undue reliance on forward-looking statements. The Company undertakes no obligation to update or revise any forward-looking statements included herein if these beliefs, estimates and opinions or other circumstances should change, except as otherwise required by applicable law. 8/22/2018 1

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About About Photon Photon Contr

  • ntrol
  • l

2 8/22/2018

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SLIDE 4

We provi vide fiber optic c proce cess ss monitoring syst systems s to incr crease se the va value and co competitive veness ss of our cu cust stomers’ s’ Wafer Fabrica cation Equipment (“WFE”) by y enabling end use sers s (ch chip make kers) s) to improve ve yi yield, uptime, and profitability

Q2 Q2 2018 YT YTD 2018 Reve venue (C$ millions) s) $15 $28 YoY Reve venue Growth 64% 37% Gross ss Margin 57% 57% EBI EBITDA A Margin 35% 35% Cash sh on 6/30/2018 $41 million (No Debt) Reve venue Guidance ce: Q3 Q3 2018 $10 to to $12 million FY FY 2018 Exce xceeding ove verall indust stry y growth

Photon Photon Contr

  • ntrol
  • l

$8.8 $8.8 $8.8 $8.8 $11.0 $11.0 $11.9 $11.9 $12.6 $12.6 $18.2 $18.2 $24.7 $24.7 $19.5 $19.5

$ $- $ $5.0 $ $10.0 $ $15.0 $ $20.0 $ $25.0 $ $30.0

Q3 Q3 2016 2016 Q4 Q4 2016 2016 Q1 Q1 2017 2017 Q2 Q2 2017 2017 Q3 Q3 2017 2017 Q4 Q4 2017 2017 Q1 Q1 2018 2018 Q2 Q2 2018 2018

Ord Order Ba r Backlo cklog (CAD) $ (CAD) $ in in millio millions

122% 122% IN INCREASE

3 8/22/2018

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SLIDE 5

Our Our target target customers customers are are WFE WFE suppl suppliers ers in n the the semi semiconductor conductor and and other

  • ther

sol solid-state state industri ndustries es Our ur products products are are depl deployed

  • yed in

n the the harshest harshest envi environments ronments where where the the most most preci precise se measurements measurements are are requi required red to to produce produce the the end end customers customers most most advanced advanced and and val valuabl uable e products products Our Our sol soluti utions

  • ns become

become “desi “designed gned in” n” to to our

  • ur partners’

partners’ products, products, produci producing ng stabl stable e growi growing ng revenue revenue streams streams wi with th 7-10 10 year year life fe cycl cycles es

Ta Targ rget Ma Mark rkets

4 8/22/2018

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SLIDE 6

Ma Mark rket and Te Tech chnology y Dr Drive vers

5 8/22/2018

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SLIDE 7

Gl Global

  • bal Sem

Semiconductor conductor Mar arket ket

Broadening & diversifying into all elements of the economy

Autos: s: $30B (9%)1 Robotics cs $10B (30%) Io IoT $30B (15%) Phones: s: $85B (4%) Serve vers: s: $15B (6%) VR VR/AR AR: $10B B (15%) Medica cal: $5B (11%)

1 Labeling convention: “Market segment”: IC Revenue in 2020 (CAGR 2016-2020)

6 8/22/2018

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SLIDE 8

Te Tech chnology y Tre Trends s Dri Drive ve Ou Our r Gro Growth wth

7 8/22/2018

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SLIDE 9

Semi Semiconductors conductors are are made made in n fabs, fabs, where where Photon Photon Contr

  • ntrol
  • l

sensors sensors are are used used in n several several process process steps. steps.

Photon Photon Contr

  • ntrol
  • l in

n Sem Semiconductor conductor Fa Fabs

8 8/22/2018

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SLIDE 10

Ser Servi ving ng the the Lar Largest gest WFE E OEM OEMs s in n Etch Etch

Lam Research 47.2% Tokyo Electron 26.3% Applied Materials 18.5% Hitachi 3.7% Others 4.2% Lithography $8.5 Deposition $12.3 Dry Etch $10.8 Other clean&removal $5.2

Thermal & doping $2.7 Inspection & Met.

$5.5 Automation $2.5

Global WFE Market by Process (2017) (Billions of USD) Dry Etch Equipment Market share (2017)

Source: Gartner, Market Share: Semiconductor Wafer Fab Equipment, Worldwide, 2017

9 8/22/2018

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SLIDE 11

Wa Wafer F r Fab E Equipme ment S Segme ments - Etc Etch Eq Equipment t Sh Share Su Surges in Er Era of f 3D NAN AND and and sub ub-20nm 20nm Logi Logic

Source: SEMI/SEAJ, SEMI EMDS

Device Total Etch Steps Logic 40nm 35 Logic 28nm 50 Logic 10nm >110 Logic 7nm >140

Source: SEMI ISS, G Yin AMEC, Jan 2017

Etch ch sp spend 3D NAND Etch ch sp spend 2D NAND > 3x

x

Sources:

  • Tokyo Electron (Corp IR, May 2017)
  • Lam Research (Investor Meeting, Mar 2018)

Etch ch Li Litho ho CV CVD

10 8/22/2018

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SLIDE 12

Pr Produc

  • ducts

ts and and Di Differe rentiators rs

11 8/22/2018

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Improving Yield by Improving Wafer Temperature Uniformity

The performance of an individual chip is very sensitive to the local wafer temperature. More sensors enable better temperature control & uniformity which produce higher yield

Photon’ Photon’s s Tem emper peratur ature e Sensor Sensor System System

12 8/22/2018

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Com Competitive P petitive Positioning

  • sitioning

Photon C Control h has t s the h highest st a accu ccuracy a cy and st stability i y in t the h harsh shest st e envi vironments Photon C Control i is t s the l leader i in f fiber o

  • ptic t

c temperature se senso sors i s in W Wafer F Fabrica cation Eq Equipment (WFE) E) Compared t to co competitors, s, P Photon C Control

  • ffers:

s:

  • Most accurate and stable products in the market
  • 20+ years of expertise in materials, optics, & signal

processing

  • Custom in-house development & rapid prototyping
  • Integrated engineering, manufacture, & service

(“under one roof”)

Compared t to o

  • ther t

tech chnologies, s, o

  • ur a

approach ch

  • ffers:

s:

  • Best accuracy and long-term stability
  • Immunity to harsh environments (e.g., RF, microwave)
  • Longest life and lowest maintenance costs

13 8/22/2018

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SLIDE 15

Ma Mark rket Size and Gr Growth th Str Strate tegy

14 8/22/2018

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Ou Our S r Semi miconducto tor Op r Opportu rtunity ty L Landscape

15 8/22/2018

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SLIDE 17
  • Total semi fiber optic sensor

market outpaces WFE markets (5 year CAGRs 37% vs 2.3%1)

  • More sensors enable the tighter

process control required for more advanced devices

To Tota tal Addre ressa ssable Ma Marke rket Fi Fiber r Op Opti tic c Senso sors rs in Semi mi

1 Gartner, 2018

16 8/22/2018

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SLIDE 18
  • Strategy is focused on the

development of innovative new products (share and margins)

  • Many of these products are

under internal development now

  • M&A may also play a role in

revenue growth

Str Strategy ategy for for Doubl

  • ubling

ng Revenue evenue by by 2020 2020

17 8/22/2018

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SLIDE 19

Gr Grow

  • wth

th and and Investm Investment ent Str Strategy ategy

Organi ganic c gr grow

  • wth
  • Growth

Growth in n exi existi sting ng semi semi verti vertical cal

  • Expand

Expand into nto new new semi semi verti vertical cals s (e.g., (e.g., deposi depositi tion,

  • n, CMP)

CMP)

  • Expand

Expand into nto adj adjacent acent markets markets

Inor norgani ganic c gr grow

  • wth
  • M&A

M&A Opportuni Opportuniti ties es whi which ch accel accelerate erate our

  • ur ti

time me to to revenue revenue for for new new products products

Oth Other

  • Investi

Investing ng cash cash from from operati

  • perations
  • ns in

n innovati nnovative ve new new products products

  • Pl

Plan an to to have have 40% 40% of

  • f revenue

revenue in n 2020 2020 generated generated from from products products introduced ntroduced from from today today forward forward

  • Investi

Investing ng cash cash in n our

  • ur stock

stock to to dri drive ve sharehol shareholder der val value ue

  • We

We wi will mai maintai ntain n fi fiscal scal di disci scipl pline ne whi while e executi executing ng our

  • ur growth

growth strategy strategy

18 8/22/2018

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SLIDE 20

Fi Financi cial Pr Profile

  • file

19 8/22/2018

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SLIDE 21

Re Reve venue – 5 5 Year Year CAGR AGR = = 33% 33%

10 20 30 40 50 60 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2012 2013 2014 2015 2016 2017 2018

Trailing T Twelve ve M Months R s Reve venue C CAD$ M M

20 8/22/2018

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SLIDE 22

Etch ch W WFE > > S Semi W WFE

  • Multi-patterning
  • 3D NAND
  • Atomic scale manufacturing
  • Extremely harsh environment
  • Growth in Etch WFE is highest

for the most advanced products PHO r reve venue > > E Etch ch W WFE

  • Our Sensors provide greatest

advantages for the most advanced products

  • Photon Control’s advantages

have made it the market and technology leader in this space

PH PHO Revenue Grew Fa Faster than the Market We We Serve

21 8/22/2018

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SLIDE 23

Str Strong

  • ng Revenue

evenue & & EBIT EBITDA A Gr Grow

  • wth

th

CA CAD$ D$ M

$17.3 $17.3 $21.0 $21.0 $27.6 $27.6 $32.2 $32.2 $43.8 $43.8 $51.5 $51.5 $4.4 $4.4 $6.0 $6.0 $10.5 $10.5 $10.5 $10.5 $14.3 $14.3 $16.7 $16.7

25.3% 25.3% 28.5% 28.5% 38.2% 38.2% 32.7% 32.7% 32.6% 32.6% 32.5% 32.5% 2013 2014 2015 2016 2017 TTM

Revenue EBITDA EBITDA Margin

22 8/22/2018

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SLIDE 24

Str Strong

  • ng Cash

ash Flow

  • w

CA CAD$ D$ M

$1.8 $1.8 $8.2 $8.2 $12.3 $12.3 $7.6 $7.6 $8.4 $8.4 $12.8 $12.8 $6.1 $6.1 $14.1 $14.1 $26.2 $26.2 $32.5 $32.5 $34.3 $34.3 $40.1 $40.1 2013 2014 2015 2016 2017 TTM

Cash from Operations Cash

23 8/22/2018

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SLIDE 25

Pri Price ce Hi History/Share story/Share Data Data

TSX E Exch xchange: P PHO

Closing Price (@ 8/21/18) $2. 2.21 21 # Shares (Basic) 11 111mm 1mm # Shares(Fully diluted) 115mm 115mm 52-Week High $2. $2.60 60 52-Week low $1. $1.33 33 Market Cap $2 $244 44mm mm Cash (@ 6/30/18) $41 41mm mm Debt (@ 6/30/18) Ni Nil

Analyst yst Cove verage:

Echelon Wealth Partners GMP Securities Paradigm Capital

Aug

24 8/22/2018

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SLIDE 26

Ke Key Ta Takeaways

  • Cri

ritica cal syst systems su ms supplier t r to t the l larg rgest st cu cust stome mers i rs in o

  • ur

r sp space ce

  • Leader i

r in a a l larg rge, g gro rowing ma marke rket w with a a ri rich ch n new p pro roduct ct funnel o

  • fferi

ring $ $12 - $15mm i mm in re reve venue p per ye r year a r at f full ru run ra rate w when f fully d y deploye yed

  • En

Envi viable f financi cial me metri rics cs

  • Genera

rating si significa cant ca cash sh t to i inve vest st i in t the b busi siness, ss, b buy y back sh ck share res a s and o

  • pport

rtunist stica cally p y pursu rsue a acq cquisi sitions

25 8/22/2018

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SLIDE 27

CO COMPANY NY CO CONT NTACT CT: Scott Edmonds President, CEO and Director Photon Control Inc. IN INVESTOR OR RELATION IONS: IR@photon-control.com