Carasent

Earnings Release • Feb 28, 2017

Apptix Reports Fourth Quarter and Year to Date 2016 Results

Oslo, Norway – February 28, 2017 – Apptix ASA® (OSE: APP), announced its unaudited financial results for the three and twelve months ended December 31, 2016.

Interim Management Report

Sale of Apptix, Inc. to Fusion Telecommunications International Inc. ("Fusion")

• On November 14, 2016, Fusion acquired US-based subsidiary for USD 28.0 million in cash and equity paid at closing less net debt obligations, transaction fees and expenses
• Post transaction, Apptix ASA owns 2,997,926 shares
• o Shares owned are subject to trading restrictions for 12 months (post transaction)
• December EGM held to approve a share distribution of NOK 1.65 per share
• o Distributions made in December 2016

Overview of the fourth quarter 2016 financial results (as compared to prior year):

• Revenues of USD 3.1 million vs. USD 6.4 million
• o Decrease due to sale of US-based operations in November 2016
• Net income of USD 11.7 million vs. net loss of USD 367 thousand
• o Q4-16 results include gain on sale of US-based operations of USD 13.0 million

Overview of the 2016 financial results (as compared to prior year):

• Revenues of USD 22.4 million vs. USD 34.4 million
• o Comparative decrease due to sale of US-based operations in November 2016
• Net income of USD 12.5 million vs. net income of USD 6.9 million
• o 2016 results include gain on sale of US-based operations of USD 13.0 million

Highlights

Since August of 2014, the key focus of the business was to create shareholder value through either organic or inorganic growth initiatives. This process included streamlining the operating business in 2014 and 2015 to free up cash flow to invest into cloud based managed service opportunities, the successful completion of the September 2015 public cloud customer base sale to GoDaddy and culminated with the November 14, 2016 sale of Apptix, Inc. to Fusion.

Apptix ASA now owns 2,997,926 shares of Fusion common stock. These shares are subject to certain US securities trading restrictions until November 2017. Apptix ASA intends to retain the ownership of the stock until the trading restrictions have expired.

"We are pleased with the progress that we made for the shareholders in 2015 and 2016. We believe the two strategic transactions and resulting shareholder distributions are positive outcomes for both the operating business and the shareholders. Now, as a major shareholder of Fusion, we also have an opportunity to benefit again in the future. Furthermore, with these two

transactions completed, the Board of Apptix ASA will also be evaluating and considering strategic options for the Company moving forward," commented Johan Lindqvist, Chairman of Apptix ASA.

Financial Results – Fourth Quarter and Year to Date 2016

The following financial commentary is based on the Company's financial statements for the periods presented excluding the one-time charges recorded during the third quarter of 2015 and fourth quarter of 2016. For more information related to the 2015 one-time charges, please see the Company's 2015 Annual Report and the table below. The one-time items related to 2016 result from the sale of Apptix, Inc. in November 2016 to Fusion. The operating results for the fourth quarter 2016 and year ended December 31, 2016 include the operating results of Apptix, Inc. through November 14, 2016; the date acquired by Fusion.

(Amounts in USD)		Q4-16			Q4-15				YTD 2016			YTD 2015
						Incl. One-Time One-Time Excl. One-Time Incl. One-Time One-Time Excl. One-Time					Incl. One-Time One-Time Excl. One-Time Incl. One-Time One-Time Excl. One-Time
Revenues	Adj	Adj	Adj	Adj	Adj	Adj	Q3-16	Adj	Adj	Adj	Adj	Adj	Adj
Subscription Services	2,998	-	2,998	6,058	-		6,058 6,100	21,535	-	21,535	22,721	-	22,721
Professional Services	148	-	148	332	-		332 199	879	-	879	1,486	-	1,486
Total Continuing	3,146	-	3,146	6,390	-		6,390 6,299	22,414	-	22,414	24,207	-	24,207
Subscription Services	-	-	-	-	-	-	-	-	-	-	10,209	-	10,209
Professional Services	-	-	-	-	-	-	-	-	-	-	-	-	-
Total Non Continuing	-	-	-	-	-	-	-	-	-	-	10,209	-	10,209
Subscription Services	2,998	-	2,998	6,058	-		6,058 6,100	21,535	-	21,535	32,929	-	32,929
Professional Services	148	-	148	332	-		332 199	879	-	879	1,486	-	1,486
Total Revenues	3,146	-	3,146	6,390	-		6,390 6,299	22,414	-	22,414	34,416	-	34,416
Cost of Sales	1,138	-	1,138	2,015	-		2,015 2,291	8,227	-	8,227	10,299	-	10,299
Gross Margin	2,008	-	2,008	4,375	-		4,375 4,008	14,187	-	14,187	24,117	-	24,117
Operating Exp. & Admin. Costs	3,029	1,463	1,566	4,130	-		4,130 3,166	12,892	1,463	11,429	23,385	2,500	20,885
Goodwill Impairment	-	-	-	-	-	-	-	-		-	6,000	6,000	-
Asset Impairment	-	-	-	-	-	-	-	-		-	4,000	4,000	-
Depreciation and Amortization	351	180	171	364	-		364 350	1,477	180	1,297	2,687	-	2,687
Total Operating Expenses	3,380	1,643	1,737	4,494	-		4,494 3,516	14,369	1,643	12,726		36,072 12,500	23,572
Operating Income (Loss)		(1,372) (1,643)	271	(119)	-		(119) 492	(182)	(1,643)	1,461		(11,955) (12,500)	545
Financial Income and Expenses
Interest Expense	(158)	-	(158)	(248)			(248) (168)	(751)	-	(751)	(1,071)		(1,071)
Foreign Exchange Gain (Loss)	-	-	-	-		-	91	-	-	-	-		-
Other Income and Expense		12,801 13,104	(303)	-	-	-	-	12,952	13,104	(152)		19,878 19,878	-
Total Financial Income (Expenses)		12,643 13,104	(461)	(248)	-	(248)	(77)	12,201	13,104	(903)		18,807 19,878	(1,071)
Income Before Taxes		11,271 11,461	(190)	(367)	-		(367) 415	12,019	11,461	558	6,852	7,378	(526)
Income Tax Expense (Benefit)	(473)	(473)	-	-	-	-	-	(473)	(473)	-	-	-	-
Net Income for the Period		11,744 11,934	(190)	(367)	-		(367) 415	12,492	11,934	558	6,852	7,378	(526)
EBITDA for the Period		(1,021) (1,463)	442	245	-		245 842	1,295	(1,463)	2,758		732 (2,500)	3,232

Summary of one-time charges/adjustments:

Q4-16

Operating expenses – includes USD 1.4 million of severance obligations and transaction related compensation.

Depreciation – includes USD 180 thousand of accelerated depreciation charges related to sale of Apptix, Inc.

Other income & expense – includes gain on sale of Apptix, Inc. of USD 13.0 million and USD 76 thousand of other income items.

Income taxes – includes USD 473 thousand of Apptix, Inc. tax refunds.

2015

Operating expenses - includes USD 2.5 million of restructuring charges related to facility consolidations, restructuring and leases & licenses.

Goodwill and asset impairment – includes USD 10.0 million in goodwill and fixed asset impairments related to the Company's sale of its public cloud customer base in September 2015. Other income & expense – includes gain on sale of public cloud customer base of USD 20.2 million and USD 300 thousand of other income items.

Revenues totaled USD 3.1 million for the three months ended December 31, 2016, down 51% from fourth quarter of 2015 revenues levels of USD 6.4 million and down 50% from third quarter 2016 levels. The decline in revenues for both periods was due to the sale of Apptix, Inc. which occurred on November 14, 2016.

Full year 2016 revenues totaled USD 22.4 million compared to USD 34.4 million for the same period in 2015. The 35% decline in revenues was due to the combination of the sale of Apptix, Inc. in November 2016 and the sale of the Apptix, Inc. public cloud customer base to GoDaddy in September 2015. Revenues from the public cloud customers were included in the consolidated revenues through September of 2015.

Operating expenses (including depreciation and amortization) totaled USD 1.7 million during the fourth quarter of 2016, compared to USD 4.5 million during the fourth quarter of 2015 and USD 3.5 million in the third quarter of 2016. The significant decreases for both periods were the result of the sale of Apptix, Inc. on November 14, 2016 and the inclusion of only 45 days of operating expenses for Apptix, Inc. during the fourth quarter of 2016.

Full year 2016 operating expenses (including depreciation and amortization) totaled USD 12.7 million during 2016, compared to USD 23.6 million during the fourth quarter of 2015. The 46% decrease in operating expenses for 2016 related to the inclusion of only 45 days of fourth quarter operating results during the fourth quarter of 2016 and the savings realized in 2016 from the 2015 restructuring initiatives.

EBIT for the fourth quarter 2016 was USD 271 thousand, compared to a loss of USD 119 thousand in the fourth quarter of 2015 and EBIT of USD 492 thousand during the third quarter of 2016. EBIT for the twelve months ended December 31, 2016 totaled USD 1.5 million as compared to EBIT of USD 545 thousand during the same period in 2015. Again, the combination of November 2016 sale of Apptix, Inc. and the cost savings from the 2015 restructuring initiative were the drivers for the EBIT variances.

Net Loss totaled USD 190 thousand for the fourth quarter of 2016 as compared to a Net Loss of USD 367 thousand in the fourth quarter of 2015 and Net Income of USD 415 thousand during the third quarter of 2016. For the twelve months ended December 31, 2016, the Company recorded Net Income of USD 558 thousand as compared to a Net Loss of USD 526 thousand during the same period in 2015. The income related variances follow the aforementioned EBIT variances.

Cash used by operating activities, including the impact of changes in currency rates and the effects of the sale of Apptix, Inc, totaled USD 3.0 million during the fourth quarter of 2016 compared to cash used of USD 2.6 million during the fourth quarter of 2015 and USD 1.5 million of cash generated during the third quarter of 2016. For the full year 2016, cash used by operating activities, including the impact of changes in currency rates and the effects of the sale of Apptix, Inc. totaled USD 4.1 million, compared to USD 3.2 million of cash used during the comparable period of 2015.

Equipment purchases, net of financings under equipment leases, during the fourth quarter of 2016 were USD 53 thousand compared to USD 65 thousand in the fourth quarter of 2015 and USD 39 thousand during the third quarter of 2016. Equipment purchases, net of financings under equipment leases, during 2016 were USD 183 thousand compared to USD 403 thousand during the same period in 2015.

Net cash used to satisfy debt and capital lease obligations was USD 6.6 million in the fourth quarter of 2016, as compared to USD 877 thousand in the fourth quarter 2015 and USD 761 thousand during the third quarter of 2016. Net cash used to satisfy debt and capital lease obligations totaled USD 9.1 million during 2016 as compared to USD 3.6 million during the same period in 2015. As required by the sale of Apptix, Inc. in November 2016, all funded indebtedness of Apptix, Inc. was satisfied in November 2016 impacting both the fourth quarter 2016 and full year 2016 cash from investing activities.

The Company also distributed USD 15.5 million to its shareholders in December 2016 while distributing USD 10.1 million in December 2015.

The Company closed the fourth quarter of 2016 with USD 1.3 million in cash.

Apptix ASA Interim Consolidated Income Statement

	Three Months Ended
	December 31, 2016	December 31, 2015
(Amounts in USD 1,000)	IFRS	IFRS
Operating Revenues
Recurring Revenues (subscription revenues)	2,998	6,058
Other Revenues (professional services)	148	332
Total Operating Revenues	3,146	6,390
Total Cost of Sales	1,138	2,015
Gross Profit	2,008	4,375
Operating Expenses
Employee Compensation and Benefits	2,301	2,308
Other Operational and Administrative Costs	728	1,822
Goodwill impairment charge	-	-
Fixed Asset Impairment Charge	-	-
Depreciation and Amortization	351	364
Total Operating Expenses	3,380	4,494
Operating Income	(1,372)	(119)
Other Expense
Interest, net	(158)	(248)
Foreign Exchange Income / (Loss), net	-	-
Other Income and Expense Financial Expense	12,801	-
Total Other Expense	12,643	(248)
Income Before Income Taxes	11,271	(367)
Income Tax Expense	472	-
Net Income for the Period	11,743	(367)
Earnings Per Share: Basic	0.14	(0.00)
Diluted	0.14	(0.00)
Weighted Average Common Shares Outstanding	81,430	81,430

Interim Consolidated Income Statement Apptix ASA

		Twelve Months Ended
		December 31, 2016	December 31, 2015
(Amounts in USD 1,000)		IFRS	IFRS
Operating Revenues
Recurring Revenues (subscription revenues)		21,535	32,929
Other Revenues (professional services)		879	1,487
Total Operating Revenues		22,414	34,416
Total Cost of Sales		8,227	10,299
Gross Profit		14,187	24,117
Operating Expenses
Employee Compensation and Benefits		8,441	14,401
Other Operational and Administrative Costs		4,449	8,984
Goodwill Impairment Charge		-	6,000
Fixed Asset Impairment Charge		-	4,000
Depreciation and Amortization		1,477	2,687
Total Operating Expenses		14,368	36,072
Operating Income		(181)	(11,955)
Other Expense
Interest, net		(751)	(1,071)
Foreign Exchange Income / (Loss), net		151	-
Other Financial Expense		12,801	20,166
Total Other Expense		12,201	19,095
Income Before Income Taxes		12,020	7,140
Income Tax Expense		472	(288)
Net Income for the Period		12,492	6,852
Earnings Per Share:	Basic	0.15	0.08
	Diluted	0.15	0.08
Weighted Average Common Shares Outstanding		81,430	81,430

Apptix ASA Interim Consolidated Statement of Comprehensive Income

	Three Months Ended
(Amounts in USD 1,000)	December 31, 2016 IFRS	December 31, 2015 IFRS
Income for the Period	11,743	(367)
Exchange Rate Differences on Translation of Foreign Operations	503	315
Items that may be Reclassified Subsequently to Income Statement	503	315
Items that will not be Reclassified to Income Statement	-	-
Total Other Comprehensive Income for the Period	503	315
Total Comprehensive Income (Loss) for the Period	12,246	(52)
Attributed to Equity Holders of Parent	12,246	(52)

	TwelveMonths Ended
(Amounts in USD 1,000)	December 31, 2016 IFRS	December 31, 2015 IFRS
Income for the Period	12,492	6,852
Exchange Rate Differences on Translation of Foreign Operations	513	358
Items that may be Reclassified Subsequently to Income Statement	513	358
Items that will not be Reclassified to Income Statement	-	-
Total Other Comprehensive Income / (Loss) for the Period	513	358
Total Comprehensive Income for the Period	13,005	7,210
Attributed to Equity Holders of Parent	13,005	7,210

Interim Consolidated Statement of Financial Position Apptix ASA

	December - 31	December - 31
	2016	2015
(Amounts in USD 1,000)	IFRS	IFRS
ASSETS
Non-Current Assets
Intangible Assets	-	10,130
Total Intangible Assets, net	-	10,130
Property, Plant and Equipment, net	-	4,038
Investment in Fusion Telecommunications Int'l Inc.	4,497	-
Total Non-Current Assets	4,497	14,168
Current Assets
Accounts Receivable	-	2,013
Other Current Assets	-	151
Prepaid Expenses	10	619
Cash and Cash Equivalents	1,308	7,800
Total Current Assets	1,318	10,583
TOTAL ASSETS	5,815	24,751
LIABILITIES AND SHAREHOLDERS EQUITY
Equity Attributed to Equity Holders of the Parent
Common Stock	4,666	4,666
Paid-in Premium Reserve	47,852	63,319
Other Paid-in Capital	6,204	6,198
Retained Earnings	(53,048)	(66,053)
Total Shareholders Equity	5,674	8,130
Long-Term Debt
Other Long-Term Debt	-	5,852
Total Long-Term Debt	-	5,852
Current Liabilities
Trade Accounts Payable	59	1,913
Interest Bearing Short-Term Debt	-	3,247
Other Current Liabilities	82	5,609
Total Current Liabilities	141	10,769
TOTAL LIABILITIES AND EQUITY	5,815	24,751

Interim Consolidated Cash Flow Statement Apptix ASA

	Twelve Months Ended December 31,
	2016	2015
(Amounts in USD 1,000)	IFRS	IFRS
Cash Flows from Operating Activities
Earnings Before Taxes	12,020	7,140
Stock Based Compensation Expense	6	23
Depreciation and Amortization	1,477	2,687
Goodwill Impairment	-	6,000
Fixed Asset Impairment	-	4,000
Gain on Sale of Subsidiary	(13,028)	(20,166)
Change in Accounts Receivable	2,013	(25)
Change in Trade Accounts Payable	(1,854)	387
Change in Other Assets and Liabilities	(5,263)	(3,636)
Net Cash Flows Provided by Operating Activities	(4,629)	(3,590)
Cash Flows from Investing Activities
Purchases of Intangibles and Property and Equipment	(183)	(403)
Sale of Subsidiary	22,373	-
Sale of Customer Base	-	22,500
Cash Flows Used in Investing Activities	22,190	22,097
Cash Flows from Financing Activities
Payments on Capital Lease and Debt Obligations, net	(9,099)	(3,554)
Distribution of Paid in Captial	(15,467)	(10,118)
Cash Flows Used in Financing Activities	(24,566)	(13,672)
Effect of Exchange Rates on Cash and Cash Equivalents	513	357
Net Change in Cash and Cash Equivalents	(6,492)	5,192
Cash and Cash Equivalents at Beginning of Period	7,800	2,608
Cash and Cash Equivalents at End of Period	1,308	7,800

Apptix ASA Interim Consolidated Statement of Changes in Equity

		Attributed to Equity Holders of the Parent
Equity December 31, 2015	4,666	63,319	6,198	3,927	(69,980)	8,130
Net Income for the Period	-	-	-	-	126	126
Other Comprehensive Income	-	-	-	-	7	7
Total Comprehensive Income	-	-	-	-	133	133
Distribution of Paid in Capital		-				-
Equity Element of Expensed Options	-	-	3	-	-	3
Equity March 31, 2016	4,666	63,319	6,201	3,927	(69,847)	8,266
Net Income for the Period	-	-	-	-	207	207
Other Comprehensive Income	-	-	-	-	1	1
Total Comprehensive Income	-	-	-	-	208	208
Distribution of Paid in Capital	-	-	-	-		-
Equity Element of Expensed Options	-	-	2	-	-	2
Equity June 30, 2016	4,666	63,319	6,202	3,927	(69,639)	8,475
Net Income for the Period	-	-	-	-	415	415
Other Comprehensive Income	-	-	-	-	2	2
Total Comprehensive Income	-	-	-	-	417	417
Distribution of Paid in Capital		-	-	-	-	-
Equity Element of Expensed Options	-	-	2	-	-	2
Equity September 30, 2016	4,666	63,319	6,204	3,927	(69,221)	8,894
Net Income for the Period	-	-	-	-	11,743	11,743
Other Comprehensive Income	-	-	-	-	503	503
Total Comprehensive Income	-	-	-	-	12,246	12,246
Distribution of Paid in Capital		(15,467)	-	-	-	(15,467)
Equity Element of Expensed Options	-	-	-	-	-	-
Equity December 31, 2016	4,666	47,852	6,204	3,927	(56,975)	5,674

For further information about Apptix ASA:

Johan Lindqvist (Chairman)

johan.lindqvist@windchange.se +46 733 55 09 35

Christopher E. Mack (President & COO)

chris.mack@ApptixASAHoldings.com +1 703 801 7150