Apivio Announces Second Quarter Financial Results

VANCOUVER, BC --(Marketwired - August 15, 2016) - Apivio Systems Inc. ("Apivio" or the "Company") (TSX VENTURE: APV) reports its results of operations for the second quarter ended June 30, 2016. All amounts are in Canadian dollars unless otherwise specified. For the full condensed consolidated interim financial statements and management discussion & analysis for the second quarter ended June 30, 2016, please visit SEDAR at www.sedar.com.

Second Quarter Highlights:

• Sales decreased 12% to CAD $13,327,746 compared to Q2 2015. There were no sales of the UT880 compared to $1,360,984 in Q2 2015. This is because additional work is being done to improve the ecosystem for these phones in the enterprise environment. In addition, sales in South Korea were flat compared to Q2 2015 because our major telephone service provider customers ran fewer sales promotional activities compared to the previous year;
• Gross margins were 17.6% compared to 17.7% in Q2 2015. Margins improved compared to 16.2% in Q1 2016 due to favourable Korean Won to USD exchange rates and product mix;
• Adjusted EBITDA of $338,762 was lower compared to $598,080 in Q2 2015;
• Net income of $75,831 compared to $321,062 in Q2 2015. Adjusted EBITDA and Net Income were both lower due to lower revenue; and
• Earnings per share of $0.00 compared to $0.01 in Q2 2015.

Half Year Highlights:

• Sales for the six months ended June 30, 2015 decreased 1% to CAD $26,456,987 compared to the same period in 2015, in part because of lower sales promotional activity by our major customers in South Korea. In addition, there were no sales of the Android deskphone in North America since our customer was adding more functionality and features to the ecosystem around the phone;
• Gross margins decreased to 16.9% compared to 18.3% in H1 2015, primarily due to adverse effect of Korean Won to US Dollar exchange rates in H1 2016 compared to the same period in 2015;
• Adjusted EBITDA of $407,775 was lower compared to $687,042 in H1 2015;
• Net loss of ($126,167) compared to net income of $127,786 in H1 2015. Adjusted EBITDA and Net Income were both lower as a result of lower sales and lower gross margins; and
• Loss per share of ($0.00) compared to $0.00 in H1 2015.

Second Quarter Operating Highlights:

• Deepened ties with NEC Corporation to advance the development of the Android platform for global markets;
  
• Walter Andri joined the board of directors adding telecom industry expertise to the board;
• Rahul Aggarwal joined the board of directors rounding out board strength with technical and strategic experience in the telecommunications industry; and
• The Company was chosen as a 2016 Branham 300 top technology company in Canada.

"During the second quarter we saw a slowdown in the South Korean economy and fewer promotional activities from our customers. However, our revenue for the six months ended June 30, 2016 was flat compared to the previous year when our customers launched several sales promotions," stated Rob Bakshi, President and CEO of Apivio Systems, Inc. "Our telephone service provider customers periodically launch special promotions on their services bundled with our products. These promotions are often launched on short notice, and Apivio has very limited influence on the timing and scale of those promotional strategies. This quarter, our customers launched fewer promotions, which translated into flat sales of phones for us. We also had no new sales of our Android deskphones to NEC since they were working on improving the backend ecosystem for the phone."

Bakshi added, "On the positive side, during Q2 we were pleased to deepen our partnership with NEC Corporation to now include its parent company, NEC Japan. Our LOI with NEC Japan further validates Apivio's technology vision and expertise, and we are continuing our discussions with NEC Japan to sell our Android platform globally. We believe our relationship with NEC Japan has the potential to greatly expand the addressable market opportunity for Apivio's products and technologies. We had a very good performance in South Korea despite lower promotional activity from our customers. We have now had positive Adjusted EBITDA for nine consecutive quarters. In addition, we have been working on several product initiatives and I look forward to announcing these developments as they become ready."

About Apivio Systems Inc.

Apivio Systems Inc. ("Apivio" or the "Company") (TSX VENTURE: APV) is a Canadian technology company principally engaged in the design, development, marketing, and sale of communications equipment and software. It has a wholly-owned Korean subsidiary with a history of supplying VoIP telephone equipment and other products to major Korean and international telecommunications carriers. For more information regarding Apivio, please refer to its respective public filings available at www.sedar.com.

This press release has been prepared by Apivio Systems Inc. Neither the TSX Venture Exchange nor its Regulation Service Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Forward-Looking Statements

Statements contained in this news release that are not historical facts are "forward-looking information" or "forward-looking statements" (collectively, "Forward-Looking Information") within the meaning of applicable Canadian securities legislation. Forward Looking Information includes, but is not limited to, disclosure regarding possible events, anticipated revenue, conditions or financial performance that is based on assumptions about future economic conditions and courses of action. In certain cases, Forward-Looking Information can be identified by the use of words and phrases such as "plans", "expects" or "does not expect", "is expected", budget", "scheduled", "suggest", "optimize", "estimates", "forecasts", "intends", "anticipates", "potential" or "does not anticipate", believes", "anomalous" or variations of such words and phrases or statements that certain actions, events or results "may", "could", "would", "might" or "will be taken", "occur" or "be achieved". Forward-Looking Information involves known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the Forward-Looking Information. Although Apivio has attempted to identify important factors that could affect Apivio and may cause actual actions, events or results to differ materially from those described in Forward-Looking Information, there may be other factors that cause actions, events or results not to be as anticipated, estimated or intended. There can be no assurance that Forward-Looking Information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on Forward-Looking Information. Except as required by law, Apivio does not assume any obligation to release publicly any revisions to Forward -Looking Information contained in this news release to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.