2018 YearEnd Results - XSellerator DMS

2018 Year End Results Investor Presentation

April 29, 2019

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TSX Venture: QIS

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FORWARD LOOKING INFORMATION DISCLAIMERThis presentation document contains certain forward-looking information and statements within the meaning of applicable securities laws. All statements in this presentation, other than statements of historical fact, which address events or developments concerning Quorum Information Technologies Inc. ("Quorum" or the “Corporation”) that Quorum expects to occur are "forward-looking information and statements". The use of any of the words "expect", "anticipate", "continue", "estimate", "objective", "ongoing", "may", "will", "project", "should", "potential", "could", "scheduled", "believe", "plans", "intends", "might" and similar expressions are intended to identify forward-looking information or statements. In particular, but without limiting the foregoing, this document may contain forward-looking information and statements pertaining to the following business plan of Quorum including its plans for targeting new Original Equipment Manufacturer (“OEM”) Integration, new dealership roof top sales, and increasing Automotive Group Partnerships; the timing for completion and cost of OEM Integration; estimates of return on assets and EBITDA; potential merger and acquisition (“M&A”) opportunities; the timing of adoption of new accounting standards and the potential impact of new accounting standards on the Corporation’s financial statement; the effect of acquisitions on the Corporation including the effect of the Autovance, DealerMine and Oasis acquisitions; the effect of the BDC Capital facility; various industry activity forecasts; growth opportunities including those in the United States; anticipated requirements by OEM manufactures relating to integrations and certifications; and other expectations, beliefs, plans, goals, objectives, assumptions, information and statements about possible future events, conditions, results of operations or performance. Various assumptions were used in drawing the conclusions or making the forecasts and projections contained in the forward-looking statements throughout this presentation. The forward-looking information and statements contained in this presentation reflect several material factors, expectations and assumptions including, without limitation: (i) capital expenditures by dealers; (ii) market availability of current and future dealership rooftops; (iii) schedules and timing of certain projects and Quorum's strategy for growth; (iv) Quorum's future operating and financial results; and (v) treatment under governmental regulatory regimes and tax and other laws. The forward-looking information and statements included in this presentation are not guarantees of future performance and should not be unduly relied upon. Forward-looking statements are based on current expectations, estimates and projections that involve a number of risks and uncertainties, which could cause actual results to differ materially from those anticipated and described in the forward-looking information and statements. Such information and statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking information or statements including, without limitation: (i) volatility in exchange rates for the Canadian dollar relative to the US dollar; (ii) liabilities and risks inherent in the software services industry; (iii) competition for, among other things, capital and skilled personnel; (iv) changes in general economic, market and business conditions in Canada and the United States; and (v) actions by governmental or regulatory authorities including changes in income tax laws or changes in tax laws. Quorum cautions that the foregoing list of assumptions, risks and uncertainties is not exhaustive. The forward-looking information and statements contained in this document speak only as of the date of this document, and Quorum assumes no obligation to update or revise them to reflect news events or circumstances, except as may be required pursuant to applicable laws. Any financial outlook or future oriented financial information in this document, as defined by applicable securities legislation, has been approved by management of Quorum. Such financial outlook or future oriented financial information is provided for the purpose of providing information about management's current expectations and plans relating to the future. Readers are cautioned that reliance on such information may not be appropriate for other purposes.

UNITED STATES

This presentation does not constitute an offer to sell, or a solicitation of an offer to buy, securities in the United States or any other jurisdiction. Any such offer to sell or solicitation of

an offer to buy the securities described herein or during the presentation will be made only pursuant to subscription documentation between Quorum and prospective purchasers.

Any such offering will be made in the United States in reliance upon an exemption from registration under the United States Securities Act of 1933, as amended (the "U.S. Securities

Act"), for an offer and sale of securities that does not involve a public offering, and the offer and sale of the securities will be conditioned on the receipt of representations, warranties

and agreements of prospective purchasers to establish that exemption. Any securities described in this document have not been, and will not be, registered under the U.S. Securities

Act and may not be offered or sold in the United States except in transactions exempt from, or not subject to, registration under the U.S. Securities Act and applicable

U.S. state securities laws. Accordingly the securities may not be resold, pledged, hypothecated or otherwise disposed of or transferred except in accordance with the

registration requirements of the U.S. Securities Act and any applicable state securities laws or pursuant to an applicable exemption from such registration requirements

of the U.S. Securities Act and any applicable state securities laws. THE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE UNITED STATES SECURITIES

AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION OR ANY STATE

SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS COMMUNICATION. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

QUORUM INFORMATION TECHNOLOGIES INC.April 29, 2019

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INVESTMENT SUMMARY

April 29, 2019 QUORUM INFORMATION TECHNOLOGIES INC.

Doubled customer base in

2018 through strategic

acquisition from 419 at end of

2017 to 942 at end of 2018.

Higher margin, predictable SaaS revenue

stream was 77% of 2018 revenue.

Plan is to continue to evaluate

possible future acquisition

opportunities.

Gross margin was 49% of 2018

revenue with a number of go forward

opportunities for Gross Margin and

EBITDA expansion.

Technology leadership with a $2.7

million product development

investment in 2018.

Strong ownership dynamic - 50%+ of

company is owned by customers (dealers),

management, and board members.

50%$2.7 million

x2

77%SaaS based Recurring Revenue Model - SaaS

monthly revenue run rate at December

2018 was $1,630K, or a yearly run rate of

$19.6 Million.

Continued OEM integration and Total

Addressable Market (TAM) Expansion

in USA and Canada.

SaaS ARRPU Growth from Division Cross-

Selling and New Product introduction.

Quorum’s vision is to build a single, integrated, end-to-end business process solution for North American automotive

dealerships that covers all of their business-critical processes.

To deliver on this vision, Quorum has initiated a build, resell and acquire strategy.

KEY METRICS:

2018 SaaS ARRPU $1,212

DIVISIONS, CUSTOMERS and TAM

QUORUM INFORMATION TECHNOLOGIES INC. 4April 29, 2019

OASIS

214

A Dealership Management System

(DMS) that automates, integrates and

streamlines key processes across

departments in a dealership, and

emphasises revenue generation and

customer satisfaction.

A sales and service Customer

Relationship Management (CRM)

system and set of Business

Development Centre (BDC) services

that drives revenue into the critical

sales and service departments in a

dealership.

A sales desking system that increases

sales department gross margins and

improves customer satisfaction for

dealerships.

A full showroom system for both

franchised and independent

dealerships and a comprehensive

operating system that includes

accounting for the independent

market.

Installed

Customers

Total Available

Market (TAM)

286

77

66

356

61

1341

4927

2867

19505

3010

7800+

Crossover

Customers

103

15

118

For Franchised Rooftops

(Quorum OEM Integration Complete)



Independent Rooftops

Quorum

Divisions

Total Unique Customers end of 2018: 942

QUORUM INFORMATION TECHNOLOGIES INC. 5

ACQUISITION LOGIC AND STRATEGY

Consolidate Software Solutions in Canada. Integrate into Quorum DMS. Scale into USA.

• Based on a review of 30 of Quorum’s customers, those dealerships spend approximately $7,000 per month on additional 3rd party software. These 3rd party companies have no or limited integration.

• Dealerships have disparate (non-integrated) systems and we believe that dealerships will pay a similar amount to what they pay today for an integrated solution.

• We believe the Canadian market in particular is quite fragmented with point solutions that, if acquired by Quorum, would be both accretive and strategic as they will increase dealer stickiness and build on recurring revenues.

• Autovance and DealerMine are two examples of this, but we believe there are other similar opportunities out there.

• We would generally be looking for point solutions that can be integrated and then sold into our existing customer base.

• All solutions should also be scalable to the US market.

April 29, 2019

April 29, 2019 QUORUM INFORMATION TECHNOLOGIES INC. 6

ACQUISITION HISTORY

OASIS

Acquisition Date September 1, 2017 October 31, 2018 January 2, 2019

Consideration Paid

Cash $ 875,000 $ 9,625,000 $ 485,000

Equity (QIS Common Shares)

Powerband Global Inc. (4,956,897 shares at $0.58/share) $ 2,875,000

Robert Quirion (2,586,207 shares at $0.58/share) $ 1,500,000

Scott Savage (78,125 shares at $0.64/share) $ 50,000

Keith Gubler (78,125 shares at $0.64 /share) $ 50,000

Earn-Out (Over Two Years) $ 600,000

Rick Johnston (540,000 RSU at $0.68/share) $ 367,200

Total Consideration Paid $ 1,242,200 $ 14,000,000 $ 1,185,000

TTM Revenue at September 30, 2017

SaaS Revenue $ 392,000

Total Revenue $ 392,000

TTM Revenue at September 30, 2018

SaaS Revenue $ 583,000 $ 6,960,000 $ 1,136,000

Service Revenue $ 4,791,000

One-Time Revenue $ 613,000 $ 35,000

Total Revenue $ 583,000 $ 12,364,000 $ 1,171,000


INCOME STATEMENT

* These figures indicate pro-forma performance of Quorum had results for the trailing twelve month period to December 2017 and December 2018 for DealerMine and Oasis been included.

** SaaS Revenue was previously referred to as Support Revenue

*** Services Revenue was previously referred to as Add-on Revenue

**** One Time Revenue includes new installations revenue and transitions revenue.

***** EBITDA is earnings before interest, taxes, depreciation, amortization, stock-based compensation and foreign exchange.

****** Adjusted Cash Income is calculated using EBITDA and deducting capitalized salaries and overhead, and adding back financing, acquisition transaction and restructuring costs.

ACTUAL Year Ended

December 31, 2018

PRO-FORMA Year Ended

December 31, 2018*

PRO-FORMA Year Ended

December 31, 2017*

Total % of Rev Total Growth % % of Rev Total % of Rev

Revenue

SaaS Revenue** $ 12,737 77% $ 19,793 13% 70% $ 17,564 70%

Services Revenue*** $ 2,000 12% $ 5,959 4% 21% $ 5,740 23%

One Time Revenue**** $ 1,704 11% $ 2,437 33% 9% $ 1,835 7%

Total Revenue $ 16,441 100% $ 28,189 12% 100% $ 25,139 100%

GM % GM % GM %

COGS SaaS - Direct Cost $ 2,412 81% $ 5,047 75% $ 4,078 77%

COGS SaaS - Direct Labour $ 2,023 $ 3,326 $ 3,149

COGS SaaS - Total $ 4,435 65% $ 8,373 58% $ 7,227 59%

COGS Services $ 1,708 15% $ 5,243 12% $ 5,317 7%

COGS One Time $ 2,276 (34)% $ 2,605 (7)% $ 2,178 (19)%

COGS $ 8,419 $ 16,221 58% $ 14,722

Gross Margin $ 8,022 49% $ 11,968 42% $ 10,417 41%

Operating Costs % of Rev % of Rev % of Rev

Sales Expenses $ 1,964 12% $ 2,881 10% $ 2,436 10%

G&A $ 4,139 25% $ 5,933 21% $ 4,913 20%

EBITDA***** $ 1,919 12% $ 3,154 11% $ 3,068 12%

Development Costs Capitalized $ (2,150) $ (2,817) $ (2,045)

M&A Costs $ 113 $ 113 $ 30

Adjusted Cash Income****** $ (118) $ 450 1.6% $ 1,053 4%

Customer Metrics

Customer Count - SaaS 876 942 872

ARRPU - SaaS $1,212 $1,751 $1,679


Q4 2018 and 2018 RESULTS HIGHLIGHTSOn October 31, 2018 Quorum completed the transformative acquisition of DealerMine,

significantly increasing Quorum’s scale (two months of DealerMine’s results are included

below).

Q4 2018 and 2018 Results Highlights are:

Revenue:

• Highest revenue quarter in Q4 2018 and the highest revenue year in FY2018 in Company

history.

• Gross revenue increased by 84% to $5,930K in Q4 2018 from 3,214K in Q4 2017.

SaaS Revenue:

• Increased to $4,330K in Q4 2018 compared to $2,705K in Q4 2017.

• Run rate at December 2018 was $1,630K – or $19,560K per year

• SaaS revenue was 72% of total revenue in Q4 2018 and 77% of total revenue in 2018.

• At the end of 2018, Quorum had 876 customers, compared to 419 customers at the end of

2017.

• SaaS revenue gross margin for the year was 81% before labour and 65% including labour.

EBITDA:

• Q4 2018 EBITDA was the highest in Company history at $778K and $1,919K in 2018.

Adjusted Cash Income:

• Q4 2018 Adjusted cash income was $289K.


OEMS & DEALER GROUP CASE STUDIESABC DEALER GROUP (7 rooftops)

Quorum Opportunity:

Double ARRPU from Rooftops using XSELLERATORTM DMS • 5 rooftops are XSELLERATORTM DMS Certified OEMs; 2 are not (yet)

• Each rooftop purchases XSELLERATOR DMS at an average ARRPU

of $3,165/month.

• Each rooftop also purchases:

• XSELLERATOR Vehicle Inspection Process (VIP); Sales CRM

and Communicator.

• Autovance Desk; DealerMine Service CRM.

• Plus third party solutions: QLeads, Tire Storage Solutions

and Warranty Finder.

• Each rooftop’s combined average ARRPU is $6,300/month. The

above strategy could double XSELLERATOR ARRPU with customers.

• Note that each rooftop also purchases another $4000/month

for DealerMine BDC (Call Centre Services).

• Plan is to also pilot in 2019 Autovance Menu, XSELLERATOR Lead

Generator and XSELLERATOR Power BI for another $1150/month.

XYZ DEALER GROUPDealer Opportunity: More integrated system at ½ price• Currently installing DealerMine Service CRM and BDC Services.

• Piloting Autovance Desk.

• With XSELLERATOR DMS the group could eliminate three competing

products and get a more integrated system at less than ½ what

they pay today.

• Dealership

Management Solution

(DMS)

• Communicator

• Vehicle Inspection

Process (VIP)

• Sales Customer

Relationship

Management (CRM)

• Service Customer

Relationship

Management

(CRM)

• Sales Customer

Relationship

Management

(CRM)

• Desking Solutions

• Menuing Solutions

(available in 2019)


OPPORTUNITIES for GROWTH

•Canadian and US expansion (steady growth)

•Continue to leverage Tricor opportunity

•ARRPU growth

REVENUE GROWTH OPPORTUNITITES

•Canadian focus (high growth)

•Cross-selling Service CRM into Quorum

•US expansion (high growth) and strategically helps Quorum with US plan

•Cross-selling into Quorum

•Transition franchised stores to Quorum

•Prepare to grow into Independent dealership market

GROSS MARGIN EXPANSION OPPORTUNITIES

• Optimize DMS business

• Finalize US expansion costs

• Expand in XS DMS –high gross margin

• BDC Optimization

• Reach cash flow break even and leverage SaaS model to continue adding high gross margin customers

• Consolidate costs

GOVERNMENT AGS CERTIFICATION

•Leverage Quorum’s Government AGS certification for other divisions

OEM AND THIRD PARTY CONTRACTS

•Consolidate across all divisions

CORPORATE

•Leverage across all divisions

MARKETING

•Streamline and consolidate across all divisions

EBITDA EXPANSION OPPORTUNITIES

OASIS

Quorum growth opportunities include:

growing each division, cross-selling products, and continuing to assess other strategic acquisitions.

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MARKET DATA (at April 25, 2019)

April 29, 2019 QUORUM INFORMATION TECHNOLOGIES INC.

Director & Management

Ownership

Dealership Ownership

(estimate)

Stock Exchange Stock Symbol

Shares Outstanding 52 Week Price Range

Closing Price

Market Capitalization

TSX Venture QIS

60,970,948 $39,631,116 $0.48 - $0.70

12%41%

$0.65

ANALYST

COVERAGE:

PI Financial

David Kwan

Beacon

Securities

Gabriel Leung


LEADERSHIP TEAM

Maury Marks, B.Mgt., CPA, CAPresident & Chief Executive Officer

Maury has been around automotive retailing literally all of his life. Growing up in rural Alberta, Canada, Maury worked in his family’s GM dealership. In 1988, Maury earned a Bachelor of Management (with Distinction) from the University of

Lethbridge in Alberta, Canada. In 1991, he received his Chartered Accountant’s designation after articling with Deloitte and Touche in Calgary. In 1992 he began his own practice of technology consulting for small businesses. It was during this time

that his family turned to him to find a new dealer management system for their dealership. Having thoroughly evaluated the market he concluded that the industry had largely stagnated and the idea for forming Quorum was conceived. Maury and his

partners founded Quorum in 1996. Since that time, Maury has focused the company on the development of its flagship XSELLERATOR DMS software.

Marilyn Bown, B.Com., CPA, CGAChief Financial Officer

Marilyn was appointed to Chief Financial Officer of Quorum in November 2011. She joined Quorum in 2008 as a corporate accountant and was promoted to Controller in 2010. Marilyn graduated from Memorial University of Newfoundland with a

Bachelor of Commerce degree. She obtained her Certified General Accountant designation after articling with Belanger Clarke Follett McGettigan, a Chartered Accounting firm located in St. John's, Newfoundland.

Mark Allen, B.Sc., M.B.A. Vice President Sales, Marketing & Services

Mark holds a BSBA degree with emphasis in information technology and finance and an MBA in Marketing - both attained with high honors. He has an extensive leadership background with large organizations such as General Motors and Electronic

Data Systems (EDS). Mark also has entrepreneurial experience as Founder, President and CEO of Playing Field Inc., an innovative start-up that established a new market model for application integration within automotive retail, as well as a

small business custom application development boutique. Mark is based in Quorum's Michigan office.


LEADERSHIP TEAM

Dan Ichelson, B.Sc., M.B.A.Vice President, Operations & Development

Dan received a Bachelor of Science (Zoology) in 1987 and a Master of Business Administration from the University of Calgary in 1992. Prior to joining Quorum in 1998, he was directly involved with the development and implementation of an in-house system for a nationally franchised organization. Dan spent his first few years with Quorum supporting and

implementing XSELLERATOR in GM dealerships. During that time he worked closely with the Development Group to analyze and define the business requirements for change requests and new product features. He was instrumental in

defining, building, and testing the application used to convert dealers’ legacy data for use in XSELLERATOR.

Rick JohnstonVice President, Autovance

In 2006, Rick joined Quorum as an Implementation Specialist, a role that saw him travel to more than 100 dealerships across North America. Three years later he moved into the position of Business Analyst which was where he found his

passion for designing industry changing products. In 2010, Rick started Autovance Technologies and managed Autovance in combination with his career at Quorum until September of 2013, when he decided to pursue his vision to build the next

generation of desking tools full-time. Rick began building the team at Autovance in late 2014 and by the summer of 2016, Autovance Desk, Canada’s most advanced web-based desking tool, was built. In 2017 Quorum acquired Autovance.

Robert (Bob) QuirionPresident, DealerMine

After almost 30 years in the Automotive Software industry, I am still excited to come to the office every day to continue innovating our product. I am a hands-on leader involved with every aspect of the business. I believe in taking care of our

customers no matter what! I am driven by helping our clients with the tools they need for their business, as well as to ensure that our support, product, people and services are first class and ready to serve. I may not get it right 100% of the

time, and when I don't, I am quick to make things right.


BOARD of DIRECTORS

Michael Podovilnikoff

Chairman of Board of Directors

Business Consultant

Maury Marks

Director

President & Chief Executive Officer, Quorum Information Technologies Inc.

Robert (Bob) Quirion

Director

President, DealerMine Inc.

Scot Eisenfelder

Director

CEO & Executive Chair, Affinity Inc.

Craig Nieboer

Director

Chief Financial Officer, Pipestone Energy Corp.

Joe Campbell

Director

President & Chief Executive Officer, TricorAutomotive Group Inc.

Jon Hook

Director

Senior Analyst, Voss Capital LLC

Appendix



PRODUCT SUITE – FRANCHISED DEALERS(an end-to-end integrated business solution)


BALANCE SHEET (and recent capitalization events)

At December 31,

2018

At December 31,

2017Change

Working Capital $2,623,343 $5,153,787 -49%

Current Ratio 1.9 4.9 -61%

Total Assets $36,767,346 $20,831,518 75%

Long-Term Debt

(unsecured with

Atlantic Canada

Opportunities

Agency)

$535,933 $380,901 41%

Bridge Loan* $7,502,466 $0

Deferred Income

Tax Liability$2,493,870 $204,379 1120%

Total Equity $23,190,606 $18,909,783 22%

RECENT CAPITALIZATION EVENTS:

October 31, 2018

DealerMine Acquisition – $9,625,000 cash portion

• $2,125,000 funded by cash on hand

• $7,500,000 funded by Bridge Loan

January 2, 2019

Oasis Acquisition - $485,000 cash portion

• $485,000 funded temporarily by cash on hand

February 22, 2019

• BDC Capital debt financing - $15 million facility

• Initial draw of $8,125,000 used to:

• Retire Bridge Loan of $7,500,000

• Replace $485,000 cash paid for Oasis

• Cover fees related to the transactions

• BDC Capital – No principal repayments

required for 6 years and cash interest rate of

7.7% per annum fixed for 6 years

Financing for future acquisitions will likely be a

combination of debt and equity financing.

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Maury Marks, B.Mgt., CPA, CAPresident and Chief Executive OfficerTelephone: (403) 777-0036Website: www.QuorumDMS.com Thank You

Documents

2018 YearEnd Results - XSellerator DMS