Highcon Systems Ltd. — Investor Presentation 2021

Aug 22, 2021

H1 2021 Results Investor Presentation

August, 2021

HIGHCON CONFIDENTIAL

Agenda

HIGHCON – FOR FIRST TIME VISITORS ORGANIZATION RECENT

INSTALLATIONS

FINANCIALS

AGILE PRODUCTION

The Highcon Vision

To serve the world by making paperboard packaging and display more agile, sustainable and impactful

The Market Gap Moving From Analogue To Digital

Highcon At A Glance

Cumulative revenue >\$65m

2020 revenue \$8.4m 1H2021 revenue \$6.5m

Cutting Edge, fully operative digital technology Backed by >60 global patents

~65 installations Several multi-site customers

Huge Market In Early Transformation

Robust IP

1mm – 3mm flutes 1mm – 4mm flutes 200 – 600 µ SHORT RUNS MEDIUM TO LONGER RUNS Highcon Beam 2C Highcon Beam 2C Nonstop Highcon Euclid 5C 2250 B1 CORRUGATED FOLDING CARTON 4000 SPH B1 Robust Solution Portfolio – ASP FROM \$600K - \$2.2M Highcon Euclid 5S 2750 SPH B2 Highcon Euclid 5 2250 SPH B1 / 2750 B2 Highcon Beam 2 5000 SPH B1 200µ – 2mm flutes

5 Mega Market Trends Driving The Need For A Disruptive Finishing Solution

1. E-COMMERCE BOOM 2. SUSTAINABILITY 3. MANUFACTURING

• High speed manufacturing and rightsizing of packages – key in the next-day-delivery era

• New Emerging Web-To-Pack businesses

• Supply chain efficiency

• Major companies commit to sustainable packaging

EFFICIENCIES

• Minimize inventory and working capital
• Automation / Industry 4.0
• Local manufacturing preference

5 Mega Market Trends Driving The Need For A Disruptive Finishing Solution

4. DESIGN CREATIVITY 5. DIGITAL PRINTING

• ⚫ Brand Owners increasing attention to consumer delight / Experience – standout, easy to open, dual-purpose
• ⚫ Customization
• ⚫ Shorter lifetime of designs (~6 months)

• ⚫ \$20bn+ Digital printing industry for packaging (1)
• ⚫ Major players massively invest in digitalization of the packaging industry e.g. HP, EFI, Koenig Bauer/Durst, Barberan, Brother…

STRONG ORGANIZATION

Highcon Management

Shlomo Nimrodi CEO

Many years leading multiple global companies including as CFO & COO of Indigo

Michal Levi CFO Orbotech, NaanDanJain, Negevtech, PWC

Simon Lewis VP Marketing

HP Indigo, many years in analog to digital transformations

Dvir Harmelech CTO, Head of R&D Indigo, Applied Materials, NegevTEch, Landa

Tal Harmon VP R&D Special Projects

15 years in R&D and management roles in Scitex and HP Scitex

Jens Henrik Osmundsen VP Sales & GM EMEA & APAC

30 years in the print industry – Indigo/HP

Michael Ciaramella VP Sales & GM Americas

27 years in the print industry – Microsoft, HP, Scitex, Kodak, Agfa

Shmuel Haham VP Operations & Customer Support

Operations management roles at Indigo, EMC, Comverse, MRV, Attenti

Shirley Shmuel Head of HR

HR roles at Highcon, Lvision, Lsports, Intel, Orbotech

Highcon Board of Directors

Management roles in Scitex, ECI also senior partner in Venture Capital Funds (Giza, Poalim Ventures)

Financial consultant to Itamar Medical Ltd., director of AudioCodes Ltd., MIND CTI Ltd., OPC Energy Ltd.,Sapir Corp Ltd and Ratio Oil Explorations

Sigal Kalmanson Cusnir

Chief Executive Officer and Co-Founder of Starget Pharma Ltd.

CUSTOMER PERFORMANCE

# of Jobs Growth YTD

HIGHCON CONFIDENTIAL

# of Jobs Growth Year over Year

All Installed Base

HIGHCON CONFIDENTIAL

# of Sheets Growth YTD

# of Sheets Growth Year over Year

All Installed Base

HIGHCON CONFIDENTIAL

Current Installed Base – World MAP

Customer A – Beam2 FC – 6 locations in the US

Second machine in 12 months

Volume Ramp Up Jobs Length Mix

HIGHCON CONFIDENTIAL

Customer B – Beam 2 - UK

Volume Ramp Up Jobs Length Mix

Display

THIMM Pack'n'Display Linney

Customer C – Euclid5C Purchased Three Systems in 6 months - ~\$4M

Jobs Volume Jobs length distribution

HIGHCON CONFIDENTIAL

Customers – H1

Highcon Operator @ Boxes Inc

Aperture boxes @ Delga Group

Highcon Team @ SuperCorrExpo August 2021

HIGHCON CONFIDENTIAL

Customized inserts @ Boxes Inc

Fireside Chats

"We are pretty loyal actually. So if you have a look here, it's a big Heidelberg house. It's a big HP house. You know hopefully it'll be a big Highcon house."

Charles Linney, W&J Linney

"Had we known how well it would all come together and how quickly, I think we would have made this decision at least a year ago. So the main learning is I wish we had made the decision a year earlier."

Richard Brown, The BoxMaker

"The post-sale service & support we've had from Highcon is phenomenal. I don't think we've ever experienced that anywhere else with any other investment"

Ian Conetta, Delga Group

More quotes

"4-5 months in, Highcon is definitely a game changer. We're even running a larger average order size than we originally anticipated.

Richard Brown, The BoxMaker

"It allows us to deliver on time, on quality and on cost"

Charles Linney, W&J Linney

"First & foremost the Highcon offers a reduction in waste, removes the need for mass production allowing customers to have shorter stock to hold… any machine that gives flexibility, versatility in a manufacturing environment has to have an impact on sustainability. (Sustainability) isn't just a trend any more"

Ian Conetta & Rob Austin, Delga Group

2021 CUSTOMER SURVEY

NPS

Net Promoter Score

Net Promoter Score, or NPS, measures customer experience and predicts business growth. This proven metric transformed the business world and now provides the core measurement for customer experience management programs around the world

How likely is it that you would recommend [brand] to a friend or colleague?

Net Promoter Score Highcon NPS Result

H1 2021 FINANCIAL HIGHLIGHTS

Revenues H1 2021 Compared to 2020/ 2019

Last 12 months Ended June 21 - \$13.6M

H1 2021 Compared to H1 2020 - Increase of 420%

Profit & Loss Statement - NON-GAAP

NON-GAAP – Excluding ESOP Expenses - \$2.6M H1 21 compared to \$0.1M H1 20

	6 months ended June 2021	6 months ended June 2020
	USD' 000
Revenues	6,451	1,239
Gross Profit (loss)	553	-705
% Margin	8.6%	-56.9%
Operating Expenses:	8,156	6,287
Operating Loss	7,603	6,992
Net Loss	8,831	8,042

Profit & Loss Statement - IFRS

	6 months ended June 2021	6 months ended June 2020
	USD' 000
Revenues	6,451	1,239
Gross Profit (loss)	553	-713
% Margin	8.6%	-57.5%
Operating Expenses:	10,738	6,363
Operating Loss	10,185	7,076
Net Loss	11,413	8,126

Balance Sheet - Highlights

Cash & Short Deposits Inventory Current Liabilities

•June 21: \$32.3M

•June 20: \$1.6M

• June 21: \$6.4M

• June 20: \$8.2M

• June 21: \$9M June 20: \$12.9M

Long Term Liabilities

• June 21: \$4.1M June 20: \$7.2M

Balance Sheet - Assets

• Year-end Dec 2020 cash reflects the IPO proceeds.
• CAPEX increased by \$1.5M, following an inventory allocation to R&D.
• Inventory - Reflects \$3.4M Raw materials; FG \$1.5M; WIP \$1.5M

	6/30/21	12/31/20	6/30/20
	USD'000	USD'000	USD'000
	Reviewed	Audited	Reviewed
CURRENTASSETS
Cash and equivalents	24,549	47,535	1,604
Short deposit term	7,669	-	-
Receivable Account	1,360	1,053	854
Other Receivable	1,333	1,097	1,044
inventory	6,443	8,223	11,833
	41,354	57,908	15,335
NONCURRENTASSETS
Restricted cash	184	664	720
and Property equipment, net	3,170	1,613	1,586
receivables Long-term	-	82	-
of Right use assets	516	722	1,010
deposit Long-term	90	79	76
	3,960	3,160	3,392
TOTAL ASSETS	45,314	61,068	18,727

45,314 61,068 18,727

Balance Sheet - Liabilities

• Overall reduction due to:
• Payments to suppliers
• Repayment of long-term loan - \$4M
• Share Capital – Decrease from \$41M to \$32M; Stock based compensation increase of \$2.6M and decrease due to net loss (GAAP) \$11.3M.

	6/30/21	12/31/20	6/30/20
	USD'000	USD'000	USD'000
	Reviewed	Audited	Reviewed
CURRENT LIABILITIES
Trade payables	2,982	4,653	5,368
Short-term benefitsto employees	1,348	1,454	1,155
Other payables& accrued expenses	2,544	2,978	1,872
Short-term loans& of maturities Long-term Loans current	1,454	2,955	1,883
-liability Short IIA term	194	214	156
Deferred (Corona loans) Short-term Grant	153	154	268
of lease liability Current maturities	341	473	501
	9,015	12,881	11,203
NONCURRENT LIABILITIES
Loans Long term	643	3,641	3,945
-liability IIA Long-term	2,650	2,526	2,346
Other liabilities non current	-	82	-
Deferred (Corona loans) Grant Long-term	441	518	499
convertible loan	-	-	3,901
Liability Lease Long-term	369	396	660
Convertible item	-	-	142
Accrued severance pay	-	-	24
	4,103	7,163	11,517
	13,118	20,044	22,720
SHAREHOLDERS' (Deficit) EQUITY	32,196	41,024	(3 ,993)

Questions & Answers