Highcon Systems Ltd. — Investor Presentation 2021

Apr 6, 2021

Highcon 2020 Investors Presentation

April, 2021

Disclaimer

This presentation (the "Presentation") is for informational purposes only and does not constitute or form any part of any offer or solicitation to buy or subscribe for securities of Highcon Systems Ltd. (the "Company") and should not be regarded as a recommendation or an opinion on such matters.

The information included in this Presentation is not comprehensive and does not include all the information with respect to the Company and its business required for any decision concerning an investment in the Company's securities.

This Presentation includes forecasts, estimates, assessments, expectations and other information, intent or belief pertaining to future events and/or matters, which constitute "forward-looking statements" as defined in the Securities Law 5728-1968, which is based on current expectations, projections and assumptions about future events. Actual results may differ materially due to variety of factors, some of which the Company has no control over and cannot be reasonably foreseen at this date, including, but not limited to: dependency on third parties engaged by or who contracts the Company and its services, change in the overall economy; the duration and severity of the COVID-19 (coronavirus) pandemic and its impact on the Company and on local and global economy and the Company's ability to manage and develop its business. Such information may not materialize, in whole or in part, or may materialize in a manner significantly different to that forecast. Therefore, actual future results, performances or achievements of the Company may differ materially from what is or may be expressed or implied in this Presentation. Certain information and factual statements (including markets or trends) contained herein are based on or derived from publicly available documents or independent thirdparty sources the accuracy of such information and the assumptions on which such information is based have not been independently verified.

The past performance information contained herein is not indicative of future results and there can be no assurance that the Company will achieve comparable results or that the Company will be able to implement its investment strategy or achieve any investment objective.

Today's Presenters

Shlomo Nimrodi CEO

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

Eitan Varon CFO

26 years in the print industry. Scitex, Printar, VIM

WHO WE ARE & WHAT WE STAND FOR

The Highcon Vision

Delivering Agile Digital Converting for Sustainable paperboard packaging & display that enables limitless design creativity

The Market Gap Moving From Analogue To Digital

Commercial & Carton Packaging Corrugated & Folding Carton Digital Printing \$600B \$450B \$104B \$7B Digital Finishing Equipment Opportunity 17.4% Digital value penetration 14% CAGR growth Mega trends are moving the industry to Digital Finishing Huge Market In Early Transformation

Sources: Smithers Pira, Karstedt Partners LLC.

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

5 Mega Market Trends

Driving The Need For A Disruptive Finishing Solution

l \$20bn+ Digital printing industry for packaging (1)

l Major players massively invest in digitalization of the packaging industry e.g. HP, EFI, Koenig Bauer/Durst, Barberan, Brother…

BUSINESS HIGHLIGHTS

Business Highlights

• We did what we said we would do in 2020 after adjusting for COVID-19
• H2/2020 was significantly better than H1/2020 and H2/2019
• 2021 started with a strong backlog in comparison to 2020
• Focus is on customers that can generate high volumes
• Markets are opening up in the US, but Europe is still fighting the pandemic

Business Highlights (contd.)

• Expanding sales and service organizations in Europe & US
• Expanding into Latin America selectively
• Focus on improved customer experience
  • significant upgrades to all customers by end of 21
• Expanding collaboration with ecosystem partners
• Building customer ambassadors
• Management and Board

STRONG ORGANIZATION

Highcon Management

Shlomo Nimrodi CEO

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

Eitan Varon CFO

26 years in the print industry – Scitex

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

15

Highcon Board of Directors

Alon Bar-Shany Chairman

former General Manager of HP Indigo

Fiona Darmon

General Partner with Jerusalem Venture Partners (JVP)

Benny Landa

Founder & CEO, Landa Corporation

Adina Shorr

Director in Stratasys and Resonai. Former CEO of Scodix

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.

16

RECENT INSTALLATIONS

Customer A – Multiple Locations – Beam 2 - USA

Purchased 1st machine 12 months earlier – Euclid 5C

Customer B – Beam2 - UK

Customer C – Euclid 5C - Corrugated – Web-To-Pack – Multiple Locations USA – 2nd Euclid 5C in Q2/2020

Customer D – Euclid III – UK

Customer E – Beam 2C - Corrugated USA – Web-To-Pack – Multiple Locations

Customer F – Beam 2 – Eastern Europe

Replacing Plastic Insert With Board Sustainable solutions

OTHER DEVELOPMENTS

Building Relationships with Key Industry Players

Demonstrating Our Commitment To The Customer Base

• 5th Generation Consumables:
  • Increased application range
  • Improved quality
  • Reduced setup time
• Unified software across platforms:
  • Protecting the customers' investments by full fleet upgrade
  • Efficient R&D investment to build volume and lower our service costs
• New pricing model:
  • "Bundling" service and consumables

2020 FINANCIAL HIGHLIGHTS

Revenues In Millions USD

- 80% increase versus 1H2019

• ~490% increase versus 1H2020 • Met revised plan objectives for 2020

Operating Losses In Millions USD

(10.00)

(8.00)

(6.00)

(4.00)

(2.00)

-

Operating Losses

Operating Losses

(*) \$4M option expenses in 2H2020 and 2020

Net Losses In Millions USD

• \$79.8M onetime financial expenses due to the convertible loan in 2020 versus \$0.7M in 2019

Profit & Loss Statement In US\$,000

	GAAP			Non GAAP
	2019	2020	Change	2019	2020	Change
Total Revenue	9,737	8,360	(1,377)	9,737	8,360	(1,377)
Gross Profit	961	943	(18)	961	943	(18)
Operating Loss	13,743	16,951	3,209	13,665	12,882	(783)
Financial expenses (Income) Net	2,330	79,381	77,051	1,649	-377	(2,026)
Net Loss	16,073	96,332	80,259	15,314	12,505	(2,809)
	GAAP			Non GAAP
	H2 2019H2 2020		Change	H2 2019H2 2020		Change
Total Revenue	3,936	7,121	3,185	3,936	7,121	3,185
Gross Profit	116	1,656	1,540	116	1,656	1,540
Operating Loss	8,123	9,629	1,506	8,067	5,560	(2,507)
Financial expenses (Income) Net	924	78,577	77,653	243	(1,118)	(1,361)
Net Loss	9,047	88,206	79,159	8,310	4,442	(3,868)

Balance Sheet In US\$,000

Backlog For Revenue In 2021 In Millions USD

• 300% increase
• \$1.2M rent to buy Euclid III systems
• \$4.0M Beam2 & 3xEuclid5C
• Solid pipeline is being built
• Expanding the sales organization
• Expanding to new sales territories

Questions & Answers