OTTAWA, ON -- Edgewater Wireless Systems Inc. (YFI; TSX.V) (OTCQB: KPIFF) the industry leader in Wi-Fi Spectrum Slicing technology for residential and commercial markets, today issued a letter to shareholders.

Dear fellow Shareholders,

Recently, there's been significant media coverage on the benefits of Multi-Channel Wi-Fi and our MCSR technology – particularly in the massive consumer (home) market – and we thought it would be good to add strategic and commercial context. We've been elevated to a very high profile by significant industry players, and it's continued to spill over to recent industry events. There is an enormous opportunity in front of us.

To recap, we have two distinct directions.

The first is in the Enterprise market, where we have validated our unique technology design with players like Kroger and Mediacom. The second, as the press coverage indicates, is the massive Consumer (home) market where we've made considerable progress with our alliance with CableLabs.

In the competitive $5.8 Billion Enterprise market1, we've made strides supplying Silicon solutions (chips & modules) or complete Access Points, and we've displaced established incumbent players in tier-one accounts. However, growth in the Enterprise space is capital intensive in building and scaling production and sales.

In the $12.9 Billion Consumer (home) market2, we made a significant step up with our CableLabs and TelCo relationships. Multi-channel residential applications, like the emerging Dual Channel Wi-Fi™ standard, are also a strong validation of our approach and is a great stepping stone to deliver many Wi-Fi channels supported by our MCSR. We are now ahead of numerous suppliers in North America and Worldwide with our differentiated offer. In the supply market, there are less than ten significant terminal equipment players – companies like Arris, Technicolor, Hitron, Cisco, Belkin, etc., who are supplied by an even smaller number of silicon (chip) vendors such as Qualcomm, Broadcom, Intel, and others. We're currently engaged with key decision-makers and continue to build strategic relationships with major vendors leveraging our industry relationships.

Given the massive volumes represented by Consumer terminal devices like gateways, smart TVs and set-top boxes and the strong legacy positions of the incumbent vendors, we are executing on our strategy in the residential market to secure licensing agreements for our Intellectual Property (IP) with the very large Silicon manufacturers and offering silicon solutions (chips) to Vendors / Manufacturers (OEMs), where required. Bids from TelCos individually can be 10 Million units per year. The market volume size for Residential CPE (DSL, Cable, and FTTP) in the USA alone is estimated to reach a staggering 49 Million units per year by 20223.

Securing licenses to use our patented Wi-Fi Spectrum Slicing approach is one of our milestones and — depending on negotiations and volumes – could mean earning a royalty for each device/module sold, an upfront fee for past R&D and annual support fees. Importantly, the business investment is relatively low compared with hardware-based production businesses as it is confined mainly to OPEX for sales, partner management, tech support, project management, and legal. Financially, multiples are much higher for IP based business with recurring revenues vs. production businesses.

Perfect storm:

More performance is urgently needed from Wi-Fi = Major Wi-Fi customers e.g., TelCos; industry standards bodies; and equipment/silicon vendors are all coming together in the realization that multi-channel, Wi-Fi Spectrum Slicing, is the way to go. Edgewater Wireless is at the forefront of Wi-Fi Spectrum Slicing technology. The prize is big and our time is now.

Thank you for your continued support,

Andrew Skafel
President and CEO
Edgewater Wireless Systems Inc.

Edgewater Wireless