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TIO Networks America’s Leading Multi-Channel Bill Payment Network November 2015 1
TIO NetworksAmerica’s Leading Multi-Channel Bill Payment Network
November 2015
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Corporate Overview
Leading Multi-Channel Billing and Receivables ManagementProcessor in North America Processing over $6B/year
TIO Networks Corp. (TSVX-TNC)
1. Over 3 Million Unique End-User Customers per month (~8M/yr)
2. Serving the “Cash-Preferred”, Underbanked User Community
3. 98%+ Residual/Recurring Revenue
4. Recently announced 3rd acquisition in 2 years (Softgate Systems Inc.)
which will increase TIO’s Revenue to $100M+ and EBITDA to $10M+
5. ~55M Transactions Processed Annually (79M post acquisition)
6. Significant portfolio amongst the largest wireless and utility
companies in North America
7. Over 70k location endpoints in the US for bill payments at retail
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“New TIO” Facts and Figures
Truly national provider of bill pay andFinancial services for underbanked
Quarterly Revenue (Based on fiscal Q3 2015, TIO’s fiscal year ends July 31) $13.6MGross Margin % 45%Annualized Gross margin (based on fiscal Q3, 2015) $26M/yrAdjusted EBITDA (based on fiscal Q3, 2015) 1M# of over the counter locations 68,000# of Self Service Kiosks serviced 2,000# of Devices owned by TIO 1,000# of TIO consumer accounts (incl CS) (As at Apr 30, 2015) ~1.03M# of billers supported by TIO 9,200# of "expedited" or "same day" billers 700
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Multi-Channel Payment Servicesfor the underserved
Over 1k Self Serve Kiosks In Service, 3000+ money order systems 68k+ POS locations (7k where TIO’s software is used as front end) 24 Mobile web and Native Mobile Programs
Retail Kiosk Retail Point of Sale Web & Mobile
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Consistent Multi-Year Growth
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Gross Profits Scaling andMargins Improving
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Highest level of R&Dinvestment ever @ $1.1M perquarter (fully expensed)
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Biller Retail Network/Payment System
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Fortune 1000 Clients
1. TRANSACTION FEES
2. RECURRING MAINTENANCE REVENUE
3. ONE TIME REVENUE SOURCES
GLOBAL EXPRESS adds the followingstrengths to TIO’s business:
• Expanded Biller Catalog
• Expanded Location base in theSouth Eastern US, adding 3,000 newlocations
• Strong/experienced team in SilverSpring, MD
ACQUIRED GLOBAL EXPRESSIN JANUARY 2014
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Largest non-bank, payment card powered multi-purpose bill payment site on the web,allows any card not present (CNP) cardholder to pay any bill safely and easily.
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More than $250M processed each year Approx. 758K unique members ChargeSmart has built a unique risk management system that significantly suppress
chargebacks in CNP environment. One-stop shop with wide variety of billers and frictionless checkout Easily create and manage recurring payments
Acquired Chargesmart.comfrom VeriFone in August 2014
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Strategically Accretive Acquisition – new TIO will create apowerhouse in the US non-bank bill payment andreceivables processing marketplace generating>CAD$100M top line revenue and >CAD$10M EBITDA:
a) Add USD$37 million in incremental revenue and USD$5 millionin incremental EBITDA to TIO’s business
b) MSB licenses in 46 states and D.C. (4 states do not require MSBlicenses) allows us to leverage its licenses to operate in 50states and D.C.
c) Independent customer acquisition via its >4,000 direct agentlocation network i.e. no dependency on biller relationship
d) Softgate operates PayXchange, state of the art proprietary POSsoftware platform for the bill payment marketplace
e) Deep bill payments and agent management expertise
The acquisition is expected to close later this year subject tosatisfying applicable regulatory approvals and satisfaction ofcustomary closing conditions.
TIO to Acquire Softgate Systems
The Evolution of the TIO NetworksNational Footprint
OR
WA
NV
AZ
UT CO
ID
WY
MT ND
SD
NE
KS
OKNM
MN
IA
MO
WI
IL INOH
VAWV
KY
AR
LAMS AL
NC
SC
FL
MIAK
HIPR
TIO NETWORKS SOFTGATETIO NETWORKS ENHANCED TIO + GE /SGSJOINT COVERAGE
TN
GA
PA
NY
VTNH
MACT
NJ
ME
TX
CA
GLOBAL EXPRESSw/ Regional Coverage National Coverage
How we make money
Revenue Model&
Growth Levers
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1. TRANSACTION FEES
2. RECURRING MAINTENANCE REVENUE
3. ONE TIME REVENUE SOURCES
Convenience Fees Paid by Customers:
Transaction fees Paid by Billers:
Fixed Monthly Fees paid by Billers + MOservice revenue:
Mainly for licenses of Software or Hardware:
6036
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Revenue Model
* Based on Q4.2014 Financial Result
How we generate income
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How does TIO grow
TIO Growth Levers
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Who we focus on
Demographic&
market focus
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“LMI” = Low to Moderate Income
Large Group (one out of every fourAmerican with GDP ~ $1 Trillion)
Very specific needs ( i.e.:loans/credit, payments, transfers,prepaid etc.)
An Underserved demographic(most innovators are focused ontraditionally banked customer)
TIO has been serving this group forover a decade and understandstrends & behavior
Why?
Demographic Focus
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Approximately 35 million U.S.households – 68 million adults arefinancially underserved
Source: 2013 FDIC National Survey of Unbanked andUnderbanked Households – Oct 2014
Underserved: allconsumerswithin group byethnicity
54% Black46% Hispanic42% American Indians20% White20% Asian
Unbanked9.6 MM,
7.7%
Underbanked24.8 MM,
20%
Banked/unknownstatus
89.3 MM, 72.3%
SKEWS YOUNG and increasing!10.5 million U.S. Millennialshousehold
NOT ALL LOW INCOME = 22% of$50-75k in HH income; 14% ofincome >$75k
FLUID = moves in and out of finsvcs
Underserved/Underbanked –Big & Diverse
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Source: CFSI/Core Innovation Capital, 2013 Financially Underserved Market Size Dec 2014
Underbanked market worth> $103B in US alone in 2013
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Underserved MarketRevenue Growth
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The TIO Cloud
Powers TIO Ecosystem…First Platform to Connect Kiosks,
POS, Web, Mobile!
Core Technology Asset = Cloud-based Billing and Payment Processing
Support For Expedited Payments Is Key Differentiator Compared to Peers
PCI Certified to Payment Card Industry Data Security Standard
Two Datacenters: Vancouver, BC and Denver, CO
Open Architecture Design and API For Ready Connectivity To Any Channel
Patented Defensively With One Issued Patent And 4 Pending Process Patents
Will Ultimately Leverage TIO Wallet To SupportSophisticated Financial Products
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Capital Structure
Price (C$)
TNC – TSX.VSymbol
$1.69Share Price
$99.7 MM CAD($142 M
with Softgate)Market Capitalization
59 MM (84MWith Softgate)
Shares Outstanding
30%Insider Ownership
**Based on Oct 26, 2015 Market price22
Key Catalysts
The following are key catalysts for investors to track with TIO:
Complete Softgate Systems Acquisition
Drive incremental Organic growth from existing large enterprise customers
Consolidate platform and other services across acquired subjects to drive
EBITDA Expansion
Continued focus on opportunistic and complementary acquisitions
Continue to ramp up wallet enrolment and value added services driving
incremental monetization
Devaluation of Canadian Dollar – Drives incremental profitability
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