Mr. Rob Bakshi reports

APIVIO ANNOUNCES THIRD QUARTER FINANCIAL RESULTS

Apivio Systems Inc. today released its results of operations for the third quarter ended Sept. 30, 2016. All amounts are in thousands of dollars, unless otherwise specified. For the full condensed consolidated interim financial statements, and management's discussion and analysis, for the third quarter ended Sept. 30, 2016, please visit SEDAR.

Third quarter highlights:

• Sales decreased 12 per cent to $14,818, compared with $16,867 in the third quarter of 2015; sales were lower due to several of the company's largest telecom customers in Korea reducing their sales promotional activities, which resulted in lower sales of the company's IP (Internet protocol) phones; weakness in the South Korean economy, as well as the relative maturation of the enterprise VoIP (voice-over-IP) telephony industry, also contributed to the decline in growth; Apivio continues to be the market share leader of VoIP phones in the small business VoIP telephony sector in South Korea, having sold nearly six million VoIP phones in that market since inception in 2003;
• Gross margins were 18.5 per cent, compared with 17.4 per cent in the third quarter of 2015; margins improved compared with 17.6 per cent in the second quarter of 2016 due to favourable Korean-won-to-U.S.-dollar exchange rates and product mix;
• Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) decreased to $578, compared with $801 in the third quarter of 2015;
• Net income of $284, compared with $516 in the third quarter of 2015; net income was lower in the third quarter of 2016 due, in part, to the impact of the hedging program that was implemented at the end of the first quarter of 2016 in response to fluctuations in the U.S. dollar and Korean won rates; the company had a loss from hedging of $331 since the Korean won strengthened in the third quarter of 2016; in the absence of the hedging loss, net income for the third quarter of 2016 would have been higher than the comparable quarter in 2015; the amount of the hedging loss is reflected in net finance costs on the income statement;
• Earnings per share of one cent, compared with one cent in the third quarter of 2015.

Nine months ended highlights:

• Sales for the nine months ended Sept. 30, 2016, decreased 5 per cent to $41,275, compared with $43,632 in the same period in 2015, in part because of lower sales promotional activity by the company's major customers in South Korea; in addition, there were no sales of the Android desk phone in North America since the company's customer was: (1) adding more functionalities and features to the ecosystem around the phone, and (2) awaiting guidance from its parent company on expanding the company's partnership into a global opportunity;
• Gross margins decreased slightly to 17.5 per cent, compared with 17.9 per cent, primarily due to the adverse effect of Korean-won-to-U.S.-dollar exchange rates for the nine months ended 2016 compared with the same period in 2015;
• Adjusted EBITDA of $986, compared with $1,489 for the nine months ended 2015;
• Net income of $157, compared with net income of $644 for the nine months ended 2015; adjusted EBITDA and net income were both lower as a result of lower sales and lower gross margins;
• Net income per share of nil, compared with one cent in the nine months ended 2015.

                             FINANCIAL RESULTS
   (in thousands of dollars, except percentages and earnings per share)

                                   Three months ended      Nine months ended   
                                             Sept. 30,              Sept. 30,     
                                     2016        2015       2016        2015 

Total revenues                     $14,818    $16,867    $41,275     $43,632 
Gross profit margin                  18.5%      17.4%      17.5%       17.9%
Net income                            $284       $516       $157        $644 
Basic and diluted weighted                                                  
average                                                                    
Net income per share               0.01 (1)     $0.01         $-       $0.01 
Total assets                       $20,411    $20,457    $20,411     $20,457 
                                                                            
(2) Actual third quarter 2016 earnings per share of 0.53 cent are rounded to
one cent.

Operating highlights:

• The company announced the launch of its new Liberty L2 Wi-Fi handset in the North American market with an initial order from TeleDynamics, a leading distributor in the United States.
• The company presented at the second annual StableView Asset Management TECH16 conference.
• Subsequent to the quarter, the company announced its Monet Series UT880 Android desktop phone completed interoperability testing with BroadSoft's SIP (session initiation protocol) call control platform.
• Subsequent to the quarter, the company announced its L2 Wi-Fi handset completed interoperability testing with BroadSoft's SIP call control platform.
• Subsequent to the quarter, the company announced that it will be presenting its Android and Wi-Fi phones at the BroadSoft Connections 2016: Let's Change the Game conference held from Nov. 13 to Nov. 15, 2016, in San Antonio.

"During the third quarter of the year, we saw a slowdown in the sales from our South Korean telecom customers due to fewer sales promotional activities undertaken compared to the previous two years," said Rob Bakshi, chief executive officer of Apivio Systems. "However, we maintain strong relationships with the largest telecom providers in the country as a trusted, respected and innovative supplier that is well positioned for future growth in that market. In addition to our efforts in the South Korean market, we continue to make constructive steps towards reaching a definitive agreement with NEC Japan to market and sell Apivio's technology globally."

Continues Mr. Bakshi: "Lastly, earlier in the quarter, we announced that TeleDynamics will distribute the company's market-leading Wi-Fi, Android and other VoIP devices in the United States, having made an initial purchase order for 2,000 of Apivio's Liberty L2 Wi-Fi phones. We continue to work on new distribution agreements that will provide us with additional channels to sell our suite of phones."

About Apivio Systems

Apivio Systems 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.

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