Delivering faster broadband, further Annual General...

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Annual General MeetingOctober 2017

Delivering faster broadband, further…

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Forward looking statements

This presentation and the associated slides and discussion contain forward-looking statements regarding Genesis Technical Systems Corp. (Genesis), our corporate plans, future financial condition, future results of operations, future business plans and strategies. All such forward looking statements are based on our management’s assumptions and beliefs in light of information available to them at this time. These forward-looking statements are, by their very nature, subject to significant risks and uncertainties and actual results, performance or achievements may be materially different from those expressed in the forward looking statements. Factors that may cause actual results, performance or achievements to differ from expectations include, but are not limited to, ability to access sufficient capital from internal and external sources, regulatory changes, future levels of industry product supply, demand and pricing, customer adoption levels, wars and acts of terrorism, technical risks related to product design, development and production, acts of competitors and other changes to business conditions. Genesis undertakes no obligation to revise any such forward looking statements to reflect any changes in Genesis’ expectations with regard thereto or any change in circumstances or events after the date hereof.

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Agenda

Copyright © 2017 Genesis Technical Systems Corp. All rights reserved

Welcome Ian MacKenzie, Chairman

Reflections Ian MacKenzie, Chairman

The last 12 months Peter Khoury, Chief Executive & General Counsel

Technology update Stephen Cooke, Founder & CTO

Sales update Steve East, Senior Vice President, Sales

Bell Canada/MTS consultation Stephen Cooke, Founder & CTO

Commercial operations Peter Khoury, Chief Executive & General Counsel

The next 12 months Peter Khoury, Chief Executive & General Counsel

Financial update Peter Khoury, Chief Executive & General Counsel

Funding update Ian MacKenzie, Chairman

Exit opportunities The Board

Customer video Kenny Roberts, CTO, NextGenAccess

Q&A All

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GETTING READY FOR COMMERCIALISATION

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Reflections


Delays in BT MCT (SIN 498) certification due to chip issues which have now been resolved

Impact• Delayed commercialisation & mBond orders• Presented interoperability challenges, that

have now been resolved

Opportunity• Genesis now has a more robust product• BT MCT is seen as the gold standard globally• More confidence in commercial product resilience• DSL Rings backhaul architecture validation

Consolidation of carrier marketImpact• Field trial delays due to carriers’ focus on

mergers and acquisitions

Opportunity• Resulted in a larger Genesis footprint• Increased scope for deployment opportunities across

new carrier acquisitionsPiecemeal fundingImpact• Larger investments predicated on revenue,

orders and field trial completion • Imminent orders and field trials have resulted in

a number of larger investors undecided

Opportunity• Less dilution of shares• Allows Genesis to increase share price once

milestones achieved

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Company Highlights• Target revenue of over CAD $4.8 million for fiscal year ending April 30, 2018• Strong Sales Pipeline• Experienced Management Team, 100+ years of telecom expertise• Extensive Patent Portfolio

– 27 granted, 50+ filed/pending• Excellent competitive advantages

– Limited competition – Strong barriers to entry– Outstanding growth potential – Early exit potential

• Market, telecom service providers and governments aligning to bring ultra-fast broadband to underserved areas with high demand for Genesis solutions

• Genesis led consortium comprising top tier 1 & 2 global telecom carriers • Global manufacturing capability• Target exit value of over CAD $2.4 billion in just over 5 years


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The Business Opportunity

Residential BroadbandGlobal broadband subscriptions recently passed the 714 million milestone and, given that 43% of these are pure copper subscriptions and 21% are hybrid fibre/copper subscriptions, the total market size, in terms of number of connections, is 454 million.(2)

Small Cell / Next gen Wi-Fi

Enterprise BroadbandIncreasing demand to improve connectivity in emerging markets where average broadband speeds are low, but where numbers of registered businesses is high, where there was a well established copper network and where there were no plans to deliver fibre. (1)

Rural BroadbandWith small cells for 4G and 5G, mobile operators can offload traffic as much as 80% during peak times. By 2016, 48% of mobile data traffic will be offloaded. Small cell equipment market is also expected to exceed $4 billion in 2020. (3) Next generation Wi-fi enables community W-Fi supporting VoIP and IoT.

The challenge with rural is that DSL bandwidths are potentially non-existent over long distances, and that fibre installation costs are not viable for Telcos because rural areas, are by their nature, areas with low population density.

Source: (1) Analysys Mason, Dec 2014, ((2) PointTopic April 2015, 3) ABI Research, Nov 2014


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AchievementsPeter Khoury, Chief Executive & General Counsel

The last 12 months

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Achievements• Closed first orders• Commercially ready DSL Rings product• Approved suppliers to CenturyLink, Windstream and Cincinnati Bell• Achieved much traction with Bell Canada and British Telecom• Achieved Underwriters Lab, Anatel & MCT/SIN 498 mBond

certifications• Commercially ready mBond product• mBond quotes to customers totalling CAD $3 million• Joined and contributing to the Broadband Forum and Telecom Infra

Project (Facebook led)• Secured CAD $2.52 million in current round• Established manufacturing presence in the UK, Philippines, Taiwan,

US, Mexico and Brazil • Established vendor financing capability through Pericles (New York)• US company established• Moved UK office to single building to facilitate team collaboration• Increased share price


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Stephen Cooke, Founder & CTOTechnology update

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DSL Rings Product Components

Convergence Node board and electronics

Convergence NodeOuter case

Home Access NodeElectronics and outer case

3 Home Access Nodes on a Test Rig

Mounted Home Access Node

Pictures not to scale

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DSL Rings ‘Radial’ deploymentTypical UK network


25 pairBundle to CO

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DSL Rings ‘Daisy-Chain’ deploymentTypical North American rural network


25 pairBundle to CO

Pedestal Awith CN Pedestal B Pedestal C

7 Homes 3 Homes 1 Home

25 pair pedestalto pedestal bundle


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mBond T1 upgrade scenarios


Currently up to 1 Mb/s per customer

T1 mBond upgrade up to 20 Mb/s per customer

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mBond working with DSL Rings over long reach distances


DSL Rings upgrade up from 1 Mb/s to 60 Mb/s at each customer over 4 km

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Standards and Certifications


Telcos require independent 3rd parties to verify equipment prior to deployment to ensure:• It meets industry standards• It will not conflict with existing network deployments• It is safe to use• That any interferences are within the appropriate level of tolerance

mBond• Completed certification in:

• Brazil (ANATEL) • Europe (CE certification)• UK (MCT)• US (FCC and UL)

• No further certifications required for target markets

DSL Rings• UL will certify DSL Rings for lab and

field trials in US & UK markets• Complete certification will be completed

ahead of commercial deployment

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Patent Update27 Patents awarded


* Awaiting Europe patent allowance to extend to other EU countries ** Patent Cooperation Treaty spans 152 countries

Patent Family Patent Status

Shared DSL Network & Deployment Method 8 awarded, 3 filed, 5 pending*

Remote Powering of DSL ADMs 2 awarded

Dynamic Asymmetric Rings 10 awarded, 9 pending*

Bonded Interconnection of Local Networks 4 awarded, 2 filed, 5 pending*

Synchronization of Communication Equipment 3 awarded, 3 filed, 11 pending*

Systems & Methods for Connecting & Disconnecting to a Ring Network or Linear Network

4 filed, 5 pending*

Small Cell Backhaul 4 filed, 5 pending*

Near End Crosstalk (NEXT) Cancellation PCT filed**

27 Patents awarded

18Copyright © 2017 Genesis Technical Systems Corp. All rights reserved

Recent Product Enhancements

Netronome • Reduced system cost per installation• Increased scalability• Increased bandwidth

NEXT Cancellation • Increased ring bandwidth & stability

TR-101 Functionality • Industry standards compliant• Easier network installation

Network Management System • Genesis-wide product management• Interface into Carrier’s OSS/BSS

Environmentally Hardened Hardware • Can deploy in outside plant

OpenFlow/Software Defined Networks • Next generation network management

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Steve East, VP Global SalesSales Update

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Closed order for shipment


Service provider

Ultimate Customer

Solution Configuration

mBond order

# units

Scheduled deliveries

to April 2018

RevenueCAD$

NGA/SSE Enterprise link New build 100 100 184,000

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Customer Traction


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Government Funding for Improving Broadband AccessCountry Funding CAD $ TargetsUSA • 10 carriers accepted >$1.8 Billion

Connect American Phase II annual support for rural broadband to >3.6 million homes, in 2010

• the E-rate Program has funded $6.8 Billion for connectivity to and within schools and libraries

100 million homes to have affordable access to > 100 Mb/s (download) and > 50 Mb/s (upload) by 2020

Canada $750 million over next 5 years for under serviced areas

Speeds of 50 Mb/s download/10 Mb/s upload for fixed broadband services by 2021

UK • Up to $967 million• $5 billion ERDF (European Regional

Development Fund)

Universal Service Obligation through regulation to give every home and business in the UK the right to request a high speed connection of at least 10 Megabits per second (Mb/s). 99% coverage by 2020.

Brazil $4.82 billion Government has approved an additional R$15.1 billion for National Broadband Plan


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mBond Revenue Forecast


Carrier Opportunity Details Country mBond forecast to April 18 (CAD $)

mBond forecast to April 19 (CAD $)

NextGenAcces UK 400,000 1,000,000

Kenton Replace legacy E1 circuits UK 92,000 500,000

KeyMile BT re-use for rural & business backhaul UK 0 160,000

Windstream T1 Upgrade USA 500,000 1,100,000

Bell Canada /MTS Canada 0 1,600,000

Sercomtel Enterprise Brazil 0 160,000

Oi Brazil 0 750,000

Total value CAD $ 992,000 5,270,000

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DSL Rings Trial Schedule


Carrier Trial Status Location

CenturyLink Shipping Nov 2017, commencing Nov 2017 US

Windstream Scheduled Jan 2018 US

Cincinnati Bell Awaiting new date* US

BT To be scheduled Q1 2018 UK

Bell Canada/MTS To be scheduled Canada

*Cincinnati Bell requested to delay trial to accommodate their acquisition of Hawaii Telcom

Carriers in LatAm have requested DSL Rings testing, Genesis awaits letter of interest from Oi, Sercomtel and Algar before investment

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DSL Rings Revenue Forecast


Carrier Opportunity Details (# homes potential for DSL Rings) Country DSL Rings forecast

to April 18 (CAD $)DSL Rings forecast

18+ (CAD $)

AT&T 23 million homes USA 0 52,000,000

Windstream 1.8 million homes USA 564,200 78,000,000

CenturyLink 1.2 million homes USA 45,500 37,050,000

Cincinnati Bell 57 thousand homes USA 0 10,140,000

Bell Canada/MTS 700 thousand homes Canada 546,000 91,000,000

Oi 400 thousand homes Brazil 0 91,000,000

BT 650 thousand homes UK 0 91,000,000

Total value CAD $ 1,155,700 450,190,000

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Market Expansion Opportunities

Small Cell and Next Gen WiFi• Small Cells sales forecast to triple by 2022, growing to more than USD$4.5 Billion• Small Cells hampered by extremely expensive back-haul, current charges, agreed with multiple Carriers, at $75,000

and only $5K is the radio!• Next gen WiFi (HaLow) predicted to outpace small cell growth

Ultra Rural• Future DSL Rings development will address the challenging Ultra Rural home broadband market• Homes in Ultra Rural locations are often >5 km from the pedestal with a density of <5 homes/km2

• Deploying high speed broadband to these homes is more cost prohibitive than for the suburban and rural market segment

• Genesis has designed an Ultra Rural DSL Rings solution to meet the needs of these customers• CenturyLink Windstream, Frontier and Fairpoint have all expressed interest. They have circa 5 million Ultra Rural

customers between them• Genesis is working with the American Rural Broadband Association (NTCA) to determine how to best serve this

market segment

NOTE 1 Both of these markets are massive opportunities for Genesis. Carriers are extremely interested in the solutions Genesis is in a position to develop and deliver. NOTE 2 that whilst the development costs are included in Genesis financial forecasts the revenues are not.


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Advantages of DSL Rings over other technologies• As Genesis works closely with carriers to develop deployment plans for their live networks,

customers want to see how DSL Rings compares to their existing technologies, as well as alternatives they may be considering. Genesis has found that, compared to:– Remote mini-DSLAMs: DSL Rings had significant advantages to the point where the

customer stopped using the mini DSLAMs– DSL Line Amplifiers: DSL Rings provided greater available bandwidth/home,

repeatability, consistency, scale, and fewer deployment obstacles. • Genesis has also determined that there are opportunities to partner with line amp

suppliers to further increase DSL Rings & mBond sales reach & increase bandwidth available

– Wireless: Utilised primarily by carriers with ‘spare’ spectrum, issues relating to line of sight and reliability make DSL Rings the optimal solution


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Technology Comparison

0 5000 10000 15000

G.fast

VDSL2

VDSL2 Vectoring

DSL Rings/mBond (12 pairs)

Distance (feet)

0

5,000

10,000

15,000

20,000

25,000

30,000

G.fast VDSL2 Vectoring VDSL2 DSL Rings/mBond

Equipment (CAD $) Fiber & DSLAM Deployment (CAD $)

Maximum reach delivering 100 Mb/s (combined) Deployment Costs – 3 miles reach

Genesis Key Differentiators• Delivering fast broadband further• Better performance over distance• Lower deployment costs• Lower total cost of ownership (TCO)• Quicker ROI for carriers• Enables carriers to reach an untapped market• Satisfies government funding to carriers for rural

deployment (CAF II, BDUK)


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Carrier Business Case

Copyright © 2017 Genesis Technical Systems Corp. All rights reserved. Commercial in Confidence.

Economics Broadband Services ($) CAFII Funding ($)DSL Rings ROI (months)

With CAFII Funding

Without CAFII Funding

Return on Investment (ROI) Internet incremental ARPU @ $39.99/month + TV Packages (Dish?)

Standard Speed 15/25: $39.99+ TV Packages

Underserved areas 25 Mb/s, ‘matched funding’ could deliver $630/2 = $315/home

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15(much less if

additional packages are

included)

Legacy ADSL2+ vs. DSL Rings solution in long reach application (target 18,000ft) Total cost*

($) Bandwidth (Mb/s) Cost/home* ($) CAFII Funding10/1

CAFII Funding25/4 TV (30Mb/s+)

ADSL2+, 2-port bond 0 <5 Mb/s 0 No No No

ADSL2+, + amp 2,400 <10 Mb/s 300 Yes No No

DSL Rings 8 homes** 5,040 36 Mb/s+ 630 Yes Yes Yes

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Stephen Cooke, Founder & CTOBell Canada/MTS Consultation

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Actual DSL Rings Example Sites


A

B

CD

CO

KEYCO = Central OfficeA,B,C,D = Convergence Node locations

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Convergence Node Site A


• Distance from Central Office to Convergence Node ~6070’ / 1850m• Current ADSL subscriber data rate ~7 Mb/s• 11 homes / potential subscribers for ring from 3 pedestals• DSL Rings bond backhaul ~198Mb/s over 11 pairs• Estimated ring bandwidths

– Shortest Convergence Node – Home Access Node: ~50’ >85Mb/s– Longest Convergence Node – Home Access Node: ~360’ ~80Mb/s

CO

Service 10 Mb/s 25 Mb/s 50 Mb/s 100 Mb/s

Existing ADSL

ADSL2+ direct

VDSL2 direct

DSL Rings CN A

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25 pairBundle to CO






Convergence Node Site AExample Ring Layout

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CN Site APhysical Pair Usage


12 pairbond toDSLAM{

Power pairs

25 p

air b

undl

e to

CO




{


Spare Pairs {Available pairs Available pairs

Newly utilised pairs

SparePairs to CO

Availablepairs

POTS Usedpairs

CN Powerpairs

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Peter Khoury, Chief Executive & General CounselCommercial Operations

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Genesis Manufacturing Capability

• Using world class specialist contract manufacturers – Fully compliant to national and international quality standards– Providing complete turnkey solutions– A global presence with low cost manufacturing options

• Collaborating with third party suppliers– Making the most of previous experience – Identify potential issues and providing solutions– Enabling network opportunities within the business

• Advances – Alignment of common components within product sets to gain economy by scale– Using forecast data to streamline the manufacturing cycle

• Future steps– Cost reduction – taking advantage of new technology and design consolidation– Further explore the potential of in territory manufacture – Levering the supply chain towards lean manufacturing and supply techniques

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Genesis Systems Engineering & Customer Support• Customer Support

– Update of Customer Support Portal to allow support of remote customers– Review of new tools to provide remote online training and technical assistance– Production of ‘Train the Trainer’ material to scale support in partner organisations– Ticketing system enhanced to allow fuller functionality

• Systems Engineering– BT MCT certification secured for mBond– Genesis Cable Farm relocated to new offices and reconfigured for more flexible use– Specialist testing done for UK and US customers on mBond and DSL Rings– Interoperability testing done against several manufacturer’s equipment– Pretesting of customer test plans prior to live tests

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Partners


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UK OPERATION – MEET THE TEAM

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Challenges & achievementsPeter Khoury, Chief Executive & General Counsel

The next 12 months

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The Next 12 Months• Successfully complete DSL Rings field trials• Focus on revenue generation

• Exploit mBond revenue opportunities• Deploy DSL Rings into the field

• Secure working capital financing• Meet financial targets• Identify and work towards liquidity event• See increased value of Genesis reflected in its

share price


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Peter Khoury, Chief Executive & General CounselFinancial Update

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Revenue Forecast


Year End is 30 AprForecast

2017-2018Forecast

2018-2019Forecast

2019-2020Forecast

2020-2021Forecast

2021-2022Income StatementSales CAD 4,786,676 28,654,305 116,410,370 449,160,896 1,108,326,831

DSL Rings (# homes) 3,410 24,620 104,216 407,972 1,010,582mBond P2MP (# premises) 185 510 2,116 8,203 20,235mBond P2P (#units) 80 120 514 2,020 5,010

Value '000DSL Rings 3,103 21,435 87,284 337,816 836,505mBond P2MP 396 1,038 3,934 14,668 33,386mBond P2P 331 450 1,910 6,844 16,771Maintenance & Support 574 3,439 13,969 53,899 132,999Installation & Training 383 2,292 9,313 35,933 88,666

Total 4,787 28,654 116,410 449,160 1,108,327

0

100000

200000

300000

400000

500000

600000

700000

800000

900000

DSL Rings

mBond P2MP

mBond P2P

Maintenance & Support

Installation & Trainging

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Income Statement


Yr End is 30 AprForecast

2017-2018Forecast

2018-2019Forecast

2019-2020Forecast

2020-2021Forecast

2021-2022Income Statement CAD$Sales 4,786,676 28,654,305 116,410,370 449,160,896 1,108,326,831Cost of Sales 2659499 14116177 56693193 220079462 544773967Gross Margin 2,127,177 14,538,128 59,717,177 229,081,433 563,552,865

44.4% 50.7% 51.3% 51% 50.8%Overheads CAD$Engineering 1,233,408 1,862,530 7,566,674 29,195,458 71,981,111Bus. Development 571,746 2,100,313 5,876,185 22,458,045 81,782,979CTO Office 337,522 344,935 582,052 2,245,804 5,541,634Marketing 214,053 376,372 493,221 548,144 630,007Operations/IT 637,077 2,722,159 11,058,985 42,670,285 105,291,049Finance/HR/Canada 443280 854503 3486377 13467614 33260036Exec Office 653,288 1,285,493 3,537,447 11,872,649 28,351,797Total 4,090,374 9,546,305 32,600,941 122,457,999 326,838,613

EBITDA -1,963,197 4,991,823 27,116,236 106,623,434 236,714,252-41% 17.4% 23.3% 23.7% 21.4%

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Ian MacKenzie, ChairmanFunding Update

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Funding Update• To-date Genesis has raised CDN $20.4 million of equity and

debt. There are 143.8 million shares issued and out.

• In the past 12 months Genesis has raised CAD $2.52 million through sale of shares at $0.25 per share and convertible debentures.

• Your investments have led to:• First mBond sales• Preparing for commercial launch of DSL Rings• DSL Rings field trial into CenturyLink• mBond certification in multiple markets (UK, US & Brazil)• All marketing, sales and operational activity that has

supported the completion of these and other milestonesCopyright © 2017 Genesis Technical Systems Corp. All rights reserved

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Phased Funding Approach• Genesis is currently completing a CAD $4 million raise

through sale of shares at $0.25 to fund the company through to DSL Rings field trials

• Looking to raise CAD $1.48 million to complete the current round by late October or early November

• Having secured first orders and with further orders imminent, Genesis will raise a further CAD $3 million at a higher share price to fund volume sales.


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Exit Strategy

Genesis has forecast 200% year-on-year growth with annual revenues of CAD $1.1 billion, withan EBITDA of CAD $236 million, within 5 years.Based on these projections Genesis conservatively estimates an exit value of CAD $2.4 billion,based on a multiple of 10 times EBITDA for financial year end 2021/2022.

The Genesis exit strategy is targeted via three key potential liquidity events:– IPO or RTO; alternate market listings or primary exchange, possibly a Canadian Stock

Exchange, AIM, US Stock Exchange– Trade sale purchase or joint venture with Telco equipment vendor, e.g., Nokia, Ericsson,

Calix, or Adtran– Strategic buyer, e.g. a global telecommunications partner, possibly a consortium member,

either as a strategic partner or a carrier that wishes to ensure DSL Rings is evolved to meet their very specific network needs


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KENNY ROBERTS – CTO, NEXTGENACCESS

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Any questions?

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