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Independent Reviews for Venture Investors

FLY.V - In contention.

Flyht Aerospace Solution Ltd. (FLY.V) helps airlines improve safety and decrease operational costs through innovative products. FLY.V's coverage was initiated February 2017 with notes on September 2017, November 2017 March 2018, May 2018, and October 2018. Below is an update.

Oct. 24 -Forges Weather Alliance with Synoptic. Tropospheric Airborne Meteorological Data Reporting (TAMDAR™) weather observation sales and distribution agreement with Synoptic Data PBC (“Synoptic”). The non-guaranteed contract is valued at a minimum of USD$15 million, assuming the Company delivers an annually increasing number of weather-related soundings over the full term of the five (5) year contract.

Nov. 5 - Customer Selects FLYHTHealth™ Product to Monitor Engine Exceedances in Real-time. In conjunction with AFIRS, FLYHTHealth gives airlines system-critical insights for proactive aircraft maintenance. It represents a $1.1M (USD) contract over a five year contracted period.

Nov. 8 - Q3 2018 Earnings. Revenue of $3.1 million (-4%) YoY. Software as a Service (SaaS) of $1.1M, an increase of 15% over the third quarter of 2017. This is the first quarterly increase year-over-year since Q2 of 2017. AFIRS Hardware of $1.7 million, a decrease of 2% over the third quarter of 2017.

Revenue was recognized on 18 installation kits in Q3 2018 compared to 23 in the third quarter of 2017. Gross profit was 57% of revenue compared to 53% for the third quarter of 2017 Operating expenses totalled $2.6M in Q3 2018, an increase of 11% over Q3 2017, including: Net loss of $0.95M was an increase of $0.19M from the third quarter of 2017’s net loss of $0.075M.

Nov. 23 - Appoints Jeffrey Rex VP of Sales & Marketing. Rex takes over for David Perez who will leave FLYHT to pursue other opportunities. In addition to this reorganization, Steve Newell (VP Business Development) will also be leaving FLYHT to pursue other opportunities

Nov. 27 - Awarded Western Innovation Initiative (WINN) Loan of $2.76 Million. The loan is interest-free WINN repayable contribution by Western Economic Diversification Canada. The funding to support the design and development of an updated Automated Flight Reporting System (AFIRS™) product to leverage significant investment in existing aircraft certifications (STCs), UpTime Cloud™, and business intelligence applications enabling enhanced capabilities which will reduce operating costs and improve aviation safety.

Dec. 11 - Gains Contract for Additional 100 AirAsia Aircraft. As part of the acquisition of Panasonic Weather Solutions (PWS), FLY.V reached an agreement with AirAsia to increase its installation base by an additional 100 aircraft across multiple Airline Operations Control (AOC) centers. .

This extension of the original hardware and service agreement with AirAsia signed in October 2015 brings the total number of equipped aircraft to 190 installed in conjunction with the FlightLink aircraft tracking and flight deck communications system, and TAMDAR FLYHT acquired the FlightLink, AirMap and TAMDAR sensor product lines in October 2018 through its acquisition of the PWS assets.

Jan. 7 - Provides Fourth Quarter 2018 Update Aggregate US$21.1 M in new sales contracts, purchase orders and transition agreements during the fourth quarter of 2018, Previously unreported orders totaling US$1.1 million were received during the quarter, including: new Original Equipment Manufacturing (OEM) aircraft position along with an order for non-recurring engineering, An Automated Flight Information Reporting System (AFIRSTM) order from a previously established OEM Additional AFIRS orders from two existing Chinese airline customers.

Jan. 14 - Signs USD 0.74M deal expansion with Azur Aviation. To add additional capabilities to meet Future Air Navigation System (FANS) regulatory requirements. Expected to be delivered within the calendar year.

Jan. 21 - Appointment of Nina Jonsson to the company’s Board of Directors. Ms. Jonsson has a wealth of executive experience with over 25 years at three major international airlines – Air France-KLM, United Airlines and US Airways – and Bristow Group.

Feb. 26 - Announces U.S. Based Investor Relations Services Partner Liolios Group Inc. (“Liolios”) to assist with its investor relations activities in the United States. They will work alongside existing investor relations provider Adelaide Capital Markets Inc (Canada). Liolios will receive US$3,500 per month from FLYHT with an initial term of 12 months and thereafter on a month to month basis.

Mar. 17 - Financial Research Report KRC Insights on FLY.V: $3.40 price target.

Apr. 3 - Provides Q1 2019 Update and Schedules Q4 and Fiscal 2018 Conference Call. Thursday, April 11, 2019 at 7:00 a.m. MDT (9:00 a.m. EDT).

Q1 2019 Secured an aggregate US $2.47M in sales contracts and purchase orders. Reported Hardware and SaaS order backlog in excess of $61.9M.

Apr. 11 - Reports Fourth Quarter and Year End 2018 Results.

Q4 2018 Revenues and Other Income increased 71% to $5,8M. SaaS revenue of $2,26M, an increase of 97% from Q4 2017. Other Income of $1,86M associated with Bargain Purchase and Subsidy Recovery from Panasonic Weather Solutions (PWS). Operating expenses up by 37% YOY from the addition of PWS expenses to FLYHT’s operations. Net income was $217,954, compared to a net loss in Q4 2017 of $437,318.

FY 2018 Revenue and Other Income for the full year was $15M, SaaS revenue of $5.52M, a 28% YOY increase; and Licensing revenue of $1.48M, a 40% decrease compared to the comparable period last year. Operating expenses increased 12% year-over-year to $11.8M. Net loss for the year increased 8% to $1.96M from a net loss $1.83M in 2017. Cash of $2.40M at the end of 2018.

Apr. 15 - Receives US$1.8M purchase order for Iridium modems and license fees. The complete purchase order is scheduled to be shipped within 2019 for the two certified aircraft platform types achieved via this agreement.

Apr. 25 - Present at the ThinkEquity Conference on May 2, 2019

May. 3 - Present Q1 2019 Results at Annual and Special Meeting 2:00 pm MT (4:00 pm ET) on Thursday, May 9, 2019.

May 9 - Q1 2019 Earnings - Revenues and Other Income increased 101% to $6.6M vs. Q1 2018. SaaS revenue of $2.40M, an increase of 131% Hardware revenue of $2.37M, an increase of 52%; Other Income of $1.3M associated with Subsidy Recovery from Panasonic Avionics Corporation (PAC) Net income was $0.20M, compared to a net loss in Q1 2018 of $0.58M. Cash of $2.69M.

May 14 - Announces Issuance of Incentive Stock Options. Granted incentive stock options: 376,275 shares- at $1.50 per share.

May 21 - Present at the 20th Annual B. Riley FBR Investor Conference on May 23, 2019

As a reminder, the October 10, 2019 acquisition of Panasonic Weather Solutions (PWS) from Panasonic Aviation Corporations (PAC) involved a subsidy of USD$3.3 million from PAC. This is not the norm, Also, six week later, the appointment of Jeffrey Rex and the reported departure of both Mr. Perez and Newell were noted. Logical in terms of streamlining an organization but these are two roles replaced by one with two different lines of business.

Yet the announcement regarding AirAsia (increase its installation base by an additional 100 aircraft - to 190) did not have an impact on the stock price (due to its timing) but is significant. In essence, AirAsia doubled its commitment. Moreover, the January 7th 2019 Q1 Update seems to reinvigorate valuation. Similarly, the $1.8M purchase order for Iridium Modems and License fees was noteworthy.

The complete purchase order is scheduled to be shipped within 2019 for the two certified aircraft platform types achieved via this agreement and the value of the order slightly exceeds the total revenue gained from modem and license shipments to this customer for these platforms in 2018.

Overall, earning results for Q4 and Year End, as well as, Q1 were very positive. Both showed in an increase in revenue (Q4+YE: 71% - $5.8M, Q1: 101% -$6.1M) and positive net income (Q4+YE: $0.21M, Q1: $0.20M). However, the subsidies from PAC respectively accounted for $1.86M in Q4+YE, and $1.3M in Q1. As such, its evident that without these, FLY.V would have continued to report a loss. Next earning should be conclusive.

To what does one attribute the recent spike in the stock price? Media. This was initiated with the hiring of Lilios Group Inc., then the KRC Insight report which set an aggressive price target of $3.40. In addition, two conferences (Think Equity, B. Riley FBR), three articles (Aviation Week, MRO Network, Aviation Today) and five mention of the FLY.V story on BNN Bloomberg.

While the publicity was due, it has been unprecedented and led to a high of $1.90 which is now reverting. A close look at Level II suggests that there is a precarious set up on the bid. There certainly appears to be an imbalance.

For now, valuation seems to be in contention.

DISCLAIMER: The work included in this article is based on current events, technical charts, and the author’s opinions. It may contain errors, and you shouldn’t make any investment decision based solely on what you read here. This publication contains forward-looking statements, including but not limited to comments regarding predictions and projections. Forward-looking statements address future events and conditions and therefore involve inherent risks and uncertainties. Actual results may differ materially from those currently anticipated in such statements. The content of rally is provided for informational and entertainment purposes only and is not a recommendation to buy or sell any security. Always thoroughly do your own due diligence and talk to a licensed investment adviser prior to making any investment decisions - rally cannot take responsibility for your investment decisions.


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