Global Capital Markets & Industry Outlook

CONFIDENTIAL

Global Capital Markets & Industry Outlook

December 15, 2015

CONFIDENTIAL

Rick Dalton, Partner (Silicon Valley) Co‐founder of Mooreland’s Silicon Valley operations; focused

on Industrial Technologies sectors Co‐Head Mooreland’s Robotics Coverage 20+ years in technology M&A with over 100 completed

transactions Prior to Mooreland, Co‐Head of SVB Alliant’s Enterprise

Systems Group and Head of Broadview’s Computer Infrastructure Group

Bryan Dow, Executive Director (Silicon Valley) Focused on Industrial Technologies sectors Lead Mooreland’s Drone Coverage 11+ years in technology M&A with over 50 completed

transactions Prior to Mooreland, Head of the ThinkEquity’s Clean Energy

and Industrial Technology Group and member of Needham & Company’s Tech Group

Mooreland Presenters

2

CONFIDENTIAL

Mooreland Overview

Technology FocusedIndustrial Technology | Digital Media and Internet

| Communications Technology | Enterprise Software

100% Partner OwnedFounded 2002One Global P&L

Global ReachServing North American, European and Asian

markets from offices in Silicon Valley, New York and London

Team of 4813 Nationalities

10 Languages Spoken

Ranked #1in Mid‐Market

Technology M&A28 deals completed in 2015

UnrivalledExperience1,000+

Deals Closed in Combined Careers

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CONFIDENTIAL

Focus on Key Technology Sectors

Energy EfficiencyEnergy Storage & Alternative

Energy

Emerging Technologies

Semiconductors & Components

Advanced Manufacturing

Supply Chain Services

Monitoring, Analytics & Controls

Energy AnalyticsPower & Energy Devices and Systems

Electronics& Materials Recycling

Optics &Photonics

Additive Manufacturing / 3D Printing

DesignServices Smart Sensors

Energy Management & Security

Solar & Wind Fuel Cells PCB & FlexAutomation Systems and Software

Advanced Manufacturing

Services

Control Systems & Software

Advanced Lighting

Distributed Generation Services

Energy Harvesting

MEMS &Semiconductors

Process Equipment & Analytical

InstrumentationEMS Industrial

Internet of ThingsTechno

logies, Solutions & Services

Growth

Markets

SmartMobility Drones

Advanced Robotics and Automation

Connected Factories & Offices

INDUSTRIAL TECHNOLOGIES& ELECTRONICS

ENTERPRISE SOFTWARE & SERVICES

COMMUNICATIONS TECHNOLOGIES DIGITAL MEDIA

Industrial Technologies & Electronics

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CONFIDENTIAL

Extensive Experience in Industrial Technology M&A

Deals led by senior bankers at previous firm

December 2009

has acquired

has been acquired by

July 2011


May 2010

a subsidiary of

has acquired

June 2010

has divested its consumer xenon flash business to

June 2010

a portfolio company of GGV Capital


January 2011

has secured $15.0 millionin Series E Funding

December 2010

has acquired

January 2011


April 2011


June 2011


February 2011


May 2009

has secured €12.5 millionin equity financing

July 2009 November 2008

has sold LFCC Technology to

October 2008

has acquired has been acquired by

January 2008


August 2008

has sold its Circuit Protection Business to

October 2008


January 2008 November 2007

has acquired


May 2012


March 2012June 2012

has been acquired by has been acquired by

September 2011

has divested its Spire Semiconductor Business

March 2012June 2012


June 2012


July 2012

has secured an undisclosed round of funding

December 2012

has acquired

March 2013


has divested its Semiconductor Systems

Business to

May 2013May 2013


August 2013


June 2013


July 2013


October 2013

Acquisition of majority interest and investment by


February 2014


April 2014


April 2014

and portfolio company

July 2014

has divested its Disc Publishing business to

May 2015

has merged with has secured growth equity investment from

October 2014


October 2014January 2015


February 2015


WIOT Technologies Oya holding company

backed by has acquired

March 2015


April 2015

a portfolio company of

June 2015


October 2015


has acquired

September 2015

5

Advanced Robotics and Automation

CONFIDENTIAL

The industrial segment will continue to represent the majority of near‐term revenue, however…

Technological advances are enabling new markets and applications

Increased start‐up activity with funding from VCs, strategic investors and government

Emergence of “out of segment buyers” (i.e. Teradyne, Google, Amazon) targeting very large new market opportunities

Robot is becoming a symbiotic partner to humans with the accelerating adoption of “Cobots” into integrated work environments

Emerging “Blue Ocean” market applications likely to be larger than legacy industrial market

The Robotics Industry Has Been Experiencing a “Renaissance” Enabling Technologies

Advanced Sensors and Detectors

Advanced Precision and Motion Control

Intelligent Navigation

Mapping SystemsConnectivity and Smart Device

Enabled

Data AnalyticsVision Technologies

Cooperative Ability with Humans

Advanced Processors and Microcontrollers

Predictive Motion Planning

Force Sensing

Speech Recognition

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CONFIDENTIAL

Robotics Markets are Evolving ‐ Emerging “Blue Ocean” OpportunitiesMarket Example Applications Example End Customers Major Players

• Industrial • Machine Tending • Pick‐and‐place • Packaging

• Process Application • Assembly • Assembly/Machine Tending• Product Testing

• Large enterprises: lighter payload apps that require precision and safety

• Small to medium size enterprises –mainly mfg. and material handling Collaborative /

/

• Cleaning• Smart Home Technology• Outdoor Maintenance • Video Collaboration

• Robotic Kiosks• Mapping / Navigation • Security / Safety

• Consumers• Schools• Retail

Consumer

• Precision Agriculture• Film / Photo / Video• Inspection / Monitoring

• Mapping / Surveying• Public Safety • First Response

• Consumers and Prosumers• Government / Defence / Safety• Surveillance organizations• Agriculture Drones

• Self‐Driving Cars• Underwater Vehicles

• Consumers and prosumers• Oil and gas companies•Mapping and navigation companies• Defence organizations

Other Autonomous

• Material transport• Logistics Management• Mfg line replenishment

• Security / Defense• Asset tracking

•Manufacturing operations•Warehouse and logistic operations• Defence & Public security

Mobile

/

• Surgical Procedures• Surgical Training• Telemedicine

• Caregiver Support• Bionics

• Hospital • Healthcare facilities

Med / Surg.

Auris Surgical Robotics

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CONFIDENTIAL

1017 17

30 29

44

7073*

0

10

20

30

40

50

60

70

80

2008 2009 2010 2011 2012 2013 2014 2015

(# of fun

ding

s)

Movement of Private Capital into the Sector has Accelerated

Sources: CapitalIQ, 451 Research, Press Releases, Internal Estimates2015 Funding volume and $amount estimated based on annualized data as of December 1, 2015

Private Placement in Robotics Since 2008 ‐ Present

2008 2009 2010 2011 2012 2013 2014 2015

Total Funding $42 $76 $85 $224 $198 $269 $447 $1,104*

# of Investments 10 17 17 30 29 44 70 73*

Robotics and Automation private placement fundings have risen significantly since 2014, in both volume and $ amount

The market has also witnessed an influx of strategic investors (i.e. Bosch, KUKA, Mitsui, GE, Flextronics, iRobot, ABB, Nike, Foxconn, Alibaba, QUALCOMM, SanDisk, Shanghai Electric, etc…)

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CONFIDENTIAL

Select Robotics Private Placements – Focus on New ApplicationsCompany Investors Category Date Amount Raised Total Raised

Summit Partners Oct‐2015 $46M $46M

BlueTree Capital; Eagle Ventures; Hercules; Pittsburgh Life Sciences Greenhouse; Slater Technology Sep‐2015 $25M $134M

SoftBank Capital, Shasta Ventures, O'Reilly AlphaTech Ventures Jun‐2015 $20M $23M

Andreessen Horowitz, First Round, GE Ventures, Kleiner Perkins Caufield & Byers Jun‐2015 Undisclosed $40M

ABB, Formation8, NIKE Jun‐2015 $15M ~$20M

Intel Capital Apr‐2015 $75M $135M

J.F. Shea, Mayfield, QUALCOMM, Atlantic Bridge, O'Reilly AlphaTech, True Ventures, Foundry Group; WestSummit, SanDisk Feb‐2015 $64M ~$100M

Accel Partners Feb‐2015 $65M $105M

Undisclosed Jan‐2015 Undisclosed ~$25M

CRV, RRE, Osage; Samsung Venture, Acer, KDDI, LG Uplus, Flybridge, Fairhaven, NetPosa, Formation8, Two Sigma, Field Management

Jan‐2015 $43M ~$50M

CRV, DFJ, Goldman Sachs, Highland Capital, Sigma Partners, Wellington, Bezos Expeditions, Two Sigma Ventures, GE Ventures Dec‐2014 $40M >$100M

iNovia Capital; RRE Ventures, GE Ventures Nov‐2014 $11M $12M

UAV

Gripper

UAV

UAV

Mobile

Consumer

Collaborative

Mobile

UAV

Mobile

Healthcare

UAV

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CONFIDENTIAL

8

14

12

21

19

22

2010 2011 2012 2013 2014 2015Annualized

Num

ber o

f Transactio

ns

Robotics M&A activity is growing but still relatively small

Historically acquisitions had focused on consolidation

However, buyers are starting to focus on emerging tech and next gen apps

“Out‐of‐segment” buyers increasing

Notable M&A Transactions

* Mooreland Estimate

Acquirer Target Category Date Transaction Size (EV)

EV/Rev.

Oct’15 $201m 3.6x

Jul’15 Conf. Conf.

May’15 $350m 9.2x

Apr’15 Conf. Conf.

Feb’15 Conf. Conf.

Sep’14 $390m 0.5x

Jul’14 $347m 1.5x

Mar’14 $20m Conf.

Apr’14 Conf. Conf.

Dec’13 Conf. Conf.

Sept’13 $1,142m 12.9x

Collaborative

Collaborative

Consolidation

Services

UAV

UAV

Consolidation

Healthcare/Surgical

UAV

Motion Control

Robotics and Automation M&A Activity (2010‐2015)

(1)

(2)

Notes:1. 2013 total transactions include 8 successive acquisitions by Google2. 2015 M&A activity annualized based on data as of December 1, 2015, of which 20 transactions have completed

Industrial and MobileIndustrial and Mobile

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CONFIDENTIAL

China is the world’s largest consumer of robotics

Market will continue to be a growth market as robotics penetration is still very low vs. more advanced markets

Government support and subsidies driving growth

Number of Chinese Robotics growing rapidly

Increasing M&A and funding interest

China is Now the World’s Largest Market for RobotsChina Robotics Market Dynamics Global Robot Stock – Significant Growth in China Expected

182

311

237

428

343292

0

100

200

300

400

500

China EU North America

2014 2017

Units in

‘000

s

Select Chinese Robotics and Automation Players

Public Private

Market Cap: $8.2BEV/LTM Rev.: 31.9EV/LTM EBITDA.: NM

Market Cap: $1.4BEV/LTM Rev.: 18.3xEV/LTM EBITDA.: NM

Market Cap: $1.2BEV/LTM Rev.: 2.0xEV/LTM EBITDA.: 7.4x

Market Cap: $1.2BEV/LTM Rev.: 4.8xEV/LTM EBITDA.: 80.2x (Drones)

(Drones)(Consumer)

(Consumer)(Industrial)

(Industrial and Consumer)

Source: International Federation of Robotics

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CONFIDENTIAL

‐20%

0%

20%

40%

60%

80%

100%

120%

140%

160%

Specialty Robotics and Automation Robotics MajorsHealthcare/Surgical Robotics NASDAQ

• Public valuation have retracted from last year’s high and is now trading below the Nasdaq

• Current public players will need to organically and/or inorganically develop solutions for new emerging markets and find growth

Robotics and Automation ‐ Equity Market Performance

Robotics (Last 3 Years) China Robotics (Last 3 Years)Google acq. 8 robotics cos

• Chinese public valuations have experienced significant correction following unprecedented run‐up in 2015

• Still very highly valued vs. all other markets

• Significant disparity with Western stock markets → arbitrage opportunity

‐200%

0%

200%

400%

600%

800%

1000%

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CONFIDENTIAL

Chinese Cross‐Border M&A – Steadily Rising in Recent Years

M&A Transactions (Chinese Buyers Acquiring N. American and Western European Targets)

103 9680 87

119

149

$0

$10,000

$20,000

$30,000

$40,000

$50,000

0

40

80

120

160

2010 2011 2012 2013 2014 2015

$, Millions

Select M&A Transactions

M&A Value, $ millionsNumber of M&A Transactions

WIOT Technologies

Shenzhen Bauzer

Digital, analog, and mixed‐signal integrated circuits (ICs)

Provides outpatient diagnostic and radiation therapy services

Contactless ticketing and RFID tag and label solutions

Performance‐based mobile advertising

Tunable radio frequency (“RF”) semiconductor products

Robotics, Automation, Mechatronics

Fabless semiconductor company

RF Power business

Number of transactions

Automotive sealing and anti‐vibration solutions

Aviation support, training, and management servicesRF Power

Source: S&P Capital IQ

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CONFIDENTIAL

Mooreland Taxonomy for Robotics and AutomationVe

rtical Platforms

Semicon

ductor

Defen

ce &

Security

Automotive

Consum

er

Specialty

Robo

t Platforms

Fixed Robotics Mobile Robotics Medical and

Surgical Robotics

Parts,

Compo

nents

& Accessorie

s

Modules & Parts (Grippers, Vacuum Pumps, Hands, Rotary Units, etc.)Components (Sensors, Actuators, etc.)

Controllers

System Integrators

Manufacturing Execution Systems

Supply Chain Management Software

ERP Software

Surgical

Wareh

ouse &

Inve

ntory Mgm

t.

Collaborative RoboticsDrone / UAV(1)

Solar

Electron

ics M

fg.

& Factory

Automation

Food

& Bev

erage

Mining &

Agric

ulture

Hea

lthcare & Life

Sciences

Logistics

Other Autonomous (Underwater,

Satellite, Self‐Driving Vehicles)

(1) UAV = Unmanned Aerial Vehicle

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CONFIDENTIAL

Robotics Market Landscape – Robots, Parts, Accessories & Components

Robo

t Platforms

Fixed Robotics Mobile Robotics UAV Collaborative

RoboticsMedical and

Surgical RoboticsOther

Autonomous

Parts, Com

pone

nts

& Accessorie

s

Controllers ComponentsModules and Parts

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CONFIDENTIAL

Robotics and Automation Landscape ‐ Vertical PlatformsAutomotive Consumer Defense and Security Electronics Mfg. / Factory Automation

Food and Beverage LogisticsHealthcare / Life Sciences Mining & Agriculture

Solar SurgicalSpecialty Warehouse / Inventory Mgmt.

Auris Surgical Robotics

17

CONFIDENTIAL

Commercial Drone Market Dynamics

CONFIDENTIAL

Commercial Drones ‐ New Opportunity Taking Flight

19

Multifaceted and complex connected vehicles built with sensors

that collect data and carry payloads for specific commercial

purposes

Basically another IoT node

FAA expects the number of drones flying in U.S. domestic

airspace to hit 30,000 by 2020

FAA also brings regulation, which is still shaping up

Enormous potential in key industries and applications

Key Applications

Precision Agriculture

Film / Photo / Video

Inspection / Monitoring

Mapping / Surveying

Public Safety / First Responders

Drones, Unmanned Aerial Vehicles (UAVs), & Unmanned Aircraft Systems (UASs)

CONFIDENTIAL

UAV – The Big Picture

20

UAVs continue as the most dynamic growth sector of the world aerospace industry

Development of UAVs for different applications, by different industries has led to a wide variety of airframes and capabilities

Key external drivers– Gov’t funding for military– ↑ sophis ca on and ↓ price of components

M&A trends– Expansion within verticals– Node in IoT– Internet to remote geographies

Financing trends– Inspection– Delivery/logistics– Cloud services

Source: Teal Group, 2014

UAV Classification

0 – 200 ft.Low‐speed, low altitude missions,

film and inspection

500 – Above ft.Manned aircraft; military grade

drones

200 – 400 ft.High‐speed transit

zone for sophisticated drones (e.g. delivery drones)

400 – 500 ft.No‐fly zone

CONFIDENTIAL

Commercial Drone Landscape

21

Software Only ServicesSystems & Software

CONFIDENTIAL

Drone Market Size

22

Over $6 billion /year spent on

military and commercial drones

Estimated to grow to $8.6 billion by

2019, representing a 6% CAGR

$0.7

$5.1

2014 2015 2016 2017 2018 2019

Commercial Drone Spending$, Billions

$6.4

$8.6

2014 2015 2016 2017 2018 2019

Total Military & Commercial Drone Spending$, Billions

Key Observations

Commercial estimated to grow to

$5.1 billion by 2019, representing a

51% CAGR

Commercial to grow from ~10% of

the market today to ~60% by 2019

CONFIDENTIAL

Drones Face Hurdles to Growth

23

‐ FAA Regulation ‐Speed of expansion relies heavily on federal rules

‐ Air Safety ‐Growing number of drones seen flying

dangerously close to commercial aircraft

‐ Civilian Privacy Concerns ‐17 states passed drone‐related privacy legislation

‐ New Legal & Insurance Implications ‐Heightened risk of property damage and liability

Challenges facing commercial drone industry

‐ Unproven Business Models ‐How will companies actually use drones to make

money?

Source: CBS Money Watch, August 2015

CONFIDENTIAL

M&A Trends & Financing Activity

CONFIDENTIAL

Drone M&A Deal Volume

25

Source: CapIQ data as of December 2015

M&A activity growing but still relatively small

Historically focused on military

Notable “out‐of‐segment” buyers such as Google and Facebook

Recent activity around flight control software and autopilot systems

Acquirer Target Category

CommercialCommercial

CommercialCommercial

Military

Military

Number of Transactions

Drone M&A Activity

3 25 6

4

9

14

2009 2010 2011 2012 2013 2014 2015 YTD

CONFIDENTIAL

Venture Community Heavily Engaged

26

Venture funding for UAV‐related startups rose to $192M in 2014; a 134% YoY increase from 2013

VCs have jumped into the commercial drone market in a big way in 2015

Many VCs more focused on software, not hardware

Main categories includes:

Inspection (e.g. mapping, precision agriculture, infrastructure, energy, mining), delivery/logistics, insurance and cloud services

Selected Venture‐Backed Companies2011‐ 2015 YTD

Companies $ Raised

DJI Technology $105M

3D Robotics $99M

Yuneec $60M

EHang (Ghost Drone) $52M

Skycatch $46M

Aeryon Labs $46M

Airware $45M

CyPhy Works $36M

Pulse Aerospace $21M

Precision Hawk $21M

Source: CapIQ, PrivCo, TechCrunch November 2014, CB Insights 2015

6 1326

38

72

$12 $36

$83

$192

$471

2011 2012 2013 2014 2015 YTDNumber of Investments Total Annual Investment in $M

Drone Funding Activity

CONFIDENTIAL

Concentrated Investments from Select VCs

27

While there have been a significant number of investments made by venture capital firms, only a select group of firms have made multiple investments in drones.

Venture Investors Investments

CONFIDENTIAL

FAA regulations to continue to roll out, but will take longer than expected– This brings uncertainty are can stifle innovation–Needed in order for commercial drones to be ubiquitous and safe

Strategic and VC private investments to continue to ramp– Significant uptick in strategic interest as strategies get worked out at the BU level–VCs are more cautious in hardware investments in this environment; into capital light models

At least one major IPO in 2016 as there are already “public ready” companies– Eventually will provide more choices for public investors– Increases buyer universe driving further M&A

Near‐term M&A to be driven by large technology conglomerates, niche consumer electronics players and mil/aero companies moving down market– They have been on the sidelines for too long; starting to enter–Outsiders, especially large cap players, bring further validation and clout to the industry

What We Expect From the Drone Market…

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CONFIDENTIAL 29

Rick Dalton Managing Director

950 Tower Lane, Suite 1950 Foster City, CA 94404 tel: +1 (650) 330‐3799 [email protected]

Mooreland Partners LLC is a member of FINRA / SIPC

Bryan G. Dow Executive Director

950 Tower Lane, Suite 1950 Foster City, CA 94404 tel: +1 (650) 330‐3788 [email protected]

Mooreland Partners LLC is a member of FINRA / SIPC

SILICON VALLEY950 Tower Lane, Suite 1950

Foster City, CA 94404Tel: +1 (650) 330‐3790

GREENWICH537 Steamboat Road, Suite 200

Greenwich, CT 06830Tel: +1 (203) 629‐4400

LONDON2‐4 King Street,

London SW1Y 6QLTel: +44 (0) 20 7484 1350

www.moorelandpartners.com