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PARPRO Investor Presentation 2016

Jun 22, 2016

52437_rns_2016-06-22_2c8259b1-fcc0-4736-a663-ebdf815555ad.pdf

Investor Presentation

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Partners in Production and Design

PARPRO Corp

Laihwang LO Chief Financial Officer June/23/2016

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June 16 1 | Footer

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Welcome to WELCOME TO PARPRO

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2 | June 23

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Safe Harbor Statement
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The documents presented on (or directly accessible from) this page may contain forward-looking statements. These statements relate to future events or PARPRO’s future financial performance. Any statements that are not statements of historical fact (including without limitation statements to the effect that the Company or its management "believes", "expects", "anticipates", "plans" (and similar expressions) should be considered forward looking statements. There are a number of important factors that could cause PARPRO’s actual results to differ materially from those indicated by the forward looking statements. PARPRO disclaims any obligation to update any forward looking statement.

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Agenda
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PARPRO Overview Our Credentials The Market Opportunity Our Strategic Plan Financials

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Introducing PARPRO
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At A Glance

• Taiwan • California (2) • Nevada • Mexico

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Partners in Production and Design

A full service embedded design & manufacturing company with emphasis on ODM Solutions.

4916:TW US Headquarters – Carlsbad, CA

Employees 700+ Worldwide Founded 2001 Revenue Continue to growth

Gaming Aerospace/Defense Communications Industrial Medical Transportation

In business since 2001, specializing in contract manufacturing and the design and manufacturing of processor based embedded solutions to serve OEMs in a variety of vertical markets.

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Company History
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Major Milestones

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PARPRO is now an established ODM company with a solid Strategy/structure and strong vertical focus on Aerospace & Defense, Gaming, and Medical

Organic Growth

Track record of acquiring and growing complementary businesses

Acquisition Cal Quality Electronics, CA (PTI) 2017

Acquisition

JumpGen Systems, CA (PES)

Acquisition

EMT West, Nevada (PNV)

Founded

Acquisition

AP PARPRO Inc, Mexico (PMX)

IPO Offering Taiwan Stock Exchange (TW: 4916)

PARPRO Corp

Previously known as Pilot Electronics Corp

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Company Nomenclature
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By Location

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PARPRO EMEA
PARPRO Nevada
Sales Office (UK)
Henderson, Nevada ( PEMEA )
( PNV )
Formerly EMT West
PARPRO Technologies
Santa Ana, California
( PTI )
Formerly Cal Quality Electronics
PARPRO Taiwan
PARPRO Technologies
Taipei, Taiwan
Design Center
Carlsbad, California ( PTW )
( PTI ) Formerly JumpGen Systems Formerly Pilot Electronics
PARPRO Mexico
Tijuana, Mexico Formerly AP PARPRO
( PMX )
June 23
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Strong & Experienced Management Team
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As at April 1[st] , 2016

Executive Management

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Johnny Liao Chairman

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Thomas Sparrvik Chief Executive Officer

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Laihwang Lo Chief Finance Officer

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Business Units Leaders

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Mike Orozco PARPRO Nevada

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Sunil Kumar Michael Burdick Jorge Richardson Ken Yen PARPRO Technologies PARPRO Technologies PARPRO Mexico PARPRO Taiwan Design Center

Current senior executives in place have significant experience. Their stories/resumes speak for themselves.

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Integration – Work Streams
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Leading
GLOBAL ODM COMPANY
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One Company - Design, Development, Production

  • SALES & MARKETING GLOBAL SUPPLY CHAIN PROGRAM MGMT IT/HR/ OPERATIONS ENGINEERING

  • QUALITY/CERTS

  • Sales Organization • Operations Organization • PM Organization • IT Organization CRM • Materials • •

IT/HR/ ACCOUNTING REPORTING

  • Sales Organization

  • CRM

  • Engineering Services

  • • IP Ownership

  • Accounting Organization

  • • ERP/MRP

  • Rep Strategy

  • Purchasing

  • Sales Opportunities

    • How to Sell/upsell • Reporting in Taiwan Engineering? • Audits
  • Logistics

  • Rebrand/New Story

  • Quality Organization

  • • Certifications

  • Future Sales Org 2017

  • Eng. Core Competence Defined

  • Gaps in S&M

  • Intercompany Business

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PERFORMANCE- AND VALUES-BASED CULTURE OF EXCELLENCE Investor Relations Story

Full Service Design & Manufacturing Services

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Flight
Control
Medical
Devices
Networking
Mission Critical
Systems Vehicle Tracking
Secure
Smart
Communications
Weapons
Gaming & Inflight
Infotainment Entertainment
Telecom &
Data Center
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Our Specialties
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MANUFACTURING

ENGINEERING

Embedded Design & Engineering

Gaming/ Industrial/Medical/ Transportation

Telecommunications & Data Storage

Aerospace/ Defense

  - System Design
  • Data Center Switch, Appliances

  • Cable/Wire Harnesses

  • Gaming kiosks, vending machines, player tracking

  • Schematic Capture and PCB Design

  • Electromechanical Assemblies

  • Storage Array Controllers

    • Mechanical Design
  • Deep Packet Inspection, Load Balancing

  • Chassis/Enclosures

  • Industrial Automation

  • Firmware Design

  • Integration

  • Smart Devices

  • Control Systems

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  • Medical Embedded Systems

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  • Transportation Systems

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LOW VOLUME,
HIGHER MIX
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MID VOLUME, MID MIX

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HIGHER COMPLEXITY
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11

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Investment Highlights
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Well Known Incumbent into Large, Growing and Attractive Markets

Strong Relationships with Diverse Client Base

Comprehensive Breadth of Capabilities and Services Significant Growth Opportunities

Attractive Cash Flow Growth Outlook

Experienced Management Team

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Competitive Differentiators
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The PARPRO Difference

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FLEXIBLE US BASED EMS GLOBAL SUPPLY CERTIFICATIONS/
EXPERTISE OF ALL OR ONE
BUSINESS MODEL ENGINEERING USA / ASIA CHAIN STANDARDS
- ODM Solution Provider
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Flexible Business Model

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Expertise of all or one - services tailored to suit customers requirements.

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US Based Engineering

US-based and 100% owned Engineering & Design / Integrated Mixed Technologies

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EMS – USA & Asian

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Making our manufacturing offering competitive at virtually any volume and any sourcing strategy

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Global Supply Chain

Low cost country or regional supply chain with North America based engineering and global integration, production, distribution and fulfillment

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Certifications

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Quality Aerospace
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Aerospace
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Medical
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Military

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Aerospace
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Growth Opportunities
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Favorable Trends in Our Core Markets

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Aerospace & Defense

  • Connectivity

  • Trust & Security

  • Unmanned Vehicles & Robotics

  • Product Longevity – long term availability

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Communications

  • Content Delivery Networks

  • Internet of Things/Big Data

  • SDN/NFV – Cable & Telecom service providvers, ISVs, Cloud, and CDN Service Providers

  • HA Cloud Data Centers

  • New support and remote equipment access services

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Gaming

  • Player Tracking: Player experience – game to player

  • Mobile Gaming

  • Cloud Infrastructure: online gaming, big data management, video surveillance

  • Intelligent Vending Machines: remove inventory management, customer focus and target marketing

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Medical

  • Increasing investment in diagnostic technology & software

  • Digital Healthcare

  • Patient Diagnosis Imaging / Clinical Care

  • Digital Hospital: digital patient records, remote healthcare, patient flow

  • Home Health

  • Rural Healthcare – Emerging markets

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Industrial/Transportation

  • Control – Inform – Interact

  • Electrical vehicles

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Growth Opportunities
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End Market

Market Dynamics

2013-18 CAGR

  • Aging population with extended average life years

  • • Increasing demand for personalized and prevention medical

  • Medical s practices 7.1% • Advancement in medical technologies • Increasing demand for reliability and complexity of electronic components in defense weapon systems

  • Defense •• Next generation defense technologies Increasing regional conflicts 6.4% • According to Boeing and Airbus, the long term growth in global commercial aerospace is expected, supported by double-digit growth since 2009

  • Aerospace • Emerge of New type of commercial travel, e.g. budget airlines, which create new demand of mid and short range aircrafts 6.4% • Economic growth in emerging economies, e.g. Asia, China, Africa • Continuing recovery in global economies • Emerge of major capital investments in the US after 2008

  • Industrial • Generation migration in economic growth, e.g. IOT, industry 4.0 6.3%

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(1) 2013 – 2018F Projected Industry CAGR; Source: NVR, 2014

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Key Customer
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Military

Customer: General Micro Systems Application: Rugged computing systems

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EMS services (PCBA and System build) 2015 Revenue $1.4M, 2016 Estimate $6M, 2017 Forecast $8M Current bookings $1.6M

PCBA build and integration of system build Large new order expected in late 2016 $5M Labor Center: PTI (Engineering request) Certifications Required: ITAR

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Key Customer
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Aerospace: Flight Control Systems Customer: Rogerson Kratos Application: Integrated flight control displays

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EMS Services; (PCBA, Cables) Largest program is the Bell 429 helicopter Labor Center: PTI, PMX, PTI-DC

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Key Customer
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Aerospace: In-flight Entertainment

Customer: Lumexis Application: Passenger Entertainment

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EMS services (PCBA, system build) Integration of seatback display systems Labor center: PTI, PTW

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Key Customer
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Industrial: Law Enforcement

Customer: Taser Application: Smart Electronic Weapons

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EMS services (PCBA) Body Cam business is growing – potential opportunity Labor center: PTI, PTW

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Key Customer
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Gaming

Customer: Aristocrat Application: Casino Products Program: ARC & Gaming Controller

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Contract Manufacturing Supporting North and South American Markets Design, CM, Harnesses, Board Labor centers: PNV, PTW Global Markets

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Key Customer
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Gaming

Customer: Scientific Games Inc (Bally’s Technologies, WMS) Application: Casino Products Program: Gaming Controller & CM Contract Manufacturing Electromechanical/Metal MPU Controller Systems CM, Boards, Systems Labor centers: PNV, PTW Global Markets

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Key Customer
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Medical

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Customer: Johnson & Johnson ASP Application: Surgical Instrument Sterilization

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EMS services (PCBA, system build) PCBA and subassembly builds for medical chamber Long-term customer, over 24 year relationship Labor center: PTI

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NEW Customer Opportunity
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Transportation

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Customer: Faraday Future Application: Electric Vehicle

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EMS Services; (PCBA and Test) Beta and NPI builds to begin July 2016 Production ramp begins 2017

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Benefit of Benefit – our Story
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One Stop Shop

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Our in-house manufacturing and ODM services provides time-savings and cost optimization by minimizing margin stacks throughout the value chain

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Engineering &
Design Center
Cable
House
Metal
House
Asian SMT
& Contract
Regional SMT
& CM with Manufacturing
Certifications
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Next Steps
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How to strategically keep revenue continuing to growth?

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* Based on existing biz plan projects
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$100M
$90M
$75M
$63M
$XXM
ORGANIC GROWTH
Organic growth 15-20% pa growth
2015 2016 2017 2018 2019 ???
B
?
M&A
A
$150M
+$45M (A)
+$20M (B)
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Capacity Potential
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Existing Facilities

Organic Growth Potential to over $200M without adding any new management/ infrastructure and only minor investments

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PARPRO Entity Nomenclature Employee Size Potential with
minor investment
160 $ 80M
PARPRO Technologies Inc
PTI
13 $20M
PARPRO Embedded Systems
PARPRO Nevada PNV 90 $35-40M
PARPRO Mexico PMX 240 $30M
PARPRO Taiwan PTW 150 $50M
653 $220M
PARPRO – An ODM Company
June 16
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Next 12-24 Months
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Expecting minimum growth >20% (organic growth) Expand footprint/customer base in rest of USA & Europe Cross pollination of customers and horizontal selling

M&A Activity Europe – 6-24 months out? Integration & Synergy of Functions Expansion of talent pool globally

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Financial Performance
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2015 vs 1Q2016

vs 1Q2016
NTD in Thousands
2015 1Q2016
OPERATING REVENUE
Operating Revenue 1,457,914
375,847
Operating Costs (1,262,606) (306,099)
GROSS PROFIT 195,308
69,748
OPERATING EXPENSES
Selling and Marketing Expenses (32,350) (7,459)
General and Administrative Expenses (135,852) (32,460)
Research and Development Expenses (39,007) (9,683)
Total Operating Expenses (207,209) (49,602)
PROFIT (LOSS) FROM OPERATIONS (11,901) 20,146
NON-OPERATING INCOME AND EXPENSES
Total of Non-Operating Income and Expenses (3,327) 4,847
PROFIT (LOSS) BEFORE INCOME TAX FROM CONTINUING OPERATIONS (15,228) 24,993
INCOME TAX EXPENSE (BENEFIT) (11,377) (2,358)
NET PROFIT (LOSS) (26,605) 22,635

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Financial Performance
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2015 vs 2016

GROWTH OF SALES REVENUE

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2015 2016
Jan 129,866 101,546
Feb 105,115 107,818
Mar 143,889 159,044
Apr 107,269 205,689
May 90,508 242,193
242,193
205,689
159,044
143,889
129,866
105,115 107,269 101,546 107,818
90,508
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NTD in Thousands

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Financial Performance
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2016 First Half - YOY

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YOY TOTAL Revenue Growth
2016 35,000
+40%
2015 22,000
Organic Growth M&A Growth
2016
[ 值 ] 5,000 8,000
+40% Revenue +60%
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Total growth was 60% from 2015 to 2016 YOY. Of that 60%, 40% is pure organic growth with the other 60% via M&A activity

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Financial Performance
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2016 Revenue Split Highly Diverse Vertical Split & Geographical Presence

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Taiwan, 20 Medical, 20
Gaming, 35
By Location By market
Communications/
Data Storage, 10
Mexico, 20 USA, 60
Defense/
Aerospace/
Industrial, 35
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90-95% of all customers are in NA, with some in Europe

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Thank You
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PARPRO TEAM

The strength of the team is in each individual member… the strength of each member is in the team.

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