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Independent Reviews for Venture Investors

FLY.V - Upward.


Flyht Aerospace Solution Ltd. (FLY.V) provides airlines with Actionable Intelligence to transform operational insight into immediate, quantifiable action, delivering industry leading solutions to improve aviation safety, efficiency, and profitability. This unique capability is driven by FLYHT’s patented aircraft certified hardware products including AFIRS™, a satcom aircraft interface device which enables real-time streaming of flight information, cockpit voice and black box data streaming and TAMDAR™, which aggregates and streams airborne weather data in real-time.


Previous coverage issued on February 2017, September 2017, November 2017, March 2018, May 2018, October 2018, June 2019. March 2020, October 2020, June 2021 and March 2022.


News Releases


Mar. 16 - Partner with Swoop to Reduce Emissions: By eliminating non-essential Auxiliary Power Unit (APU) usage. FLYHT real-time APU monitoring and notification program allows an airline to reduce its APU run times by providing timely, targeted and actionable notifications, thereby reducing CO2 emissions and providing cost savings.


The APU consumes approximately 250lbs of fuel per hour under normal operation.


Mar. 22 - Completes Acquisition of CrossConsense: This acquisition is expected to accelerate FLYHT’s strategic roadmap to build out a maintenance capability, and increase its presence in the European and Middle East markets.


I am very excited that we have become a part of the FLYHT family. We share the vision of making aviation data and resulting insights available to our customers. This relationship means that we can now bridge the gap between MRO and flight ops data, which is a real multiplier when it comes to possible functionalities". - Axel Christ, CrossConsense.


Apr. 7 - Reports Fourth Quarter and Full Year 2021 Results


May 3 - Report First Quarter Results:


May 3 - Partner with MBS Electronic Systems to Prototype Secure Wireless Avionics Software:


MBS Electronic Systems GmbH (“MBS”), a provider of secure data loading solutions that enable compliant avionics software maintenance and safer flight operations. The two companies have collaborated to develop a secure wireless avionics software and onboard data loading solution enabling customers to comply with new security requirements.


FLYHT and MBS will showcase the new solution at the annual Aviation Maintenance Conference in Memphis on May 10-12, 2022 with the intent to solidify a financial arrangement following the Memphis event.


May 4 - Receives US$5.65 million Purchase Order from a Long-Time OEM Partner: for Iridium modems and license fees. Under the terms of the existing agreement, the OEM customer will be licensing FLYHT’s technology and delivering the AFIRS 228S system to their European airframer customer for three certified aircraft platform types.


The products are scheduled for delivery throughout the remainder of 2022.


May 4 - Announce the Issuance of Incentives Stock Options: An aggregate of 518,715 common shares (0.74 cents) to employees, officers and directors vesting 1/3 on each of May 4, 2023, 2024 and 2025, and will expire on May 4, 2026.


May 31 - AFIRS Edge A320 Platform to Launch on Coral Jet: Coral Jet has placed an initial order to become the launch customer for the AFIRS Edge™. The Edge will be added to Coral Jet’s existing AFIRS™ satcom products.


The AFIRS Edge is an aircraft interface device (“AID”), pushing aircraft data to EFB applications, providing airlines with Wireless Quick Access (WQAR) capabilities, all while serving as a gateway on the aircraft for critical real-time information and onboard data storage. The Edge also serves as a data port for the Actionable Intelligence services such as fuel management, aircraft health monitoring and real-time engine data reporting. This contract is valued at approximately $100,000 USD over the five-year contract term, with potential for increase as Coral Jet’s fleet grows.


June 7 - Announces Completion of AFIRS Installation on Initial China Express ARJ-21 Aircraft: Ordered by China Express Airlines Co. Ltd., China’s first private regional airline. All tests have been completed and the aircraft is planned to enter commercial service today. As communicated in September 2020, China Express will take delivery of 20 ARJ21 aircraft, with an expected commitment up to 100 aircraft to be delivered over the next several years.


The ARJ21 is the newest Chinese developed and built aircraft.


June 30 - Announces Issuance of Incentive Stock Options: An aggregate of 300,000 common shares. The stock options are exercisable at a price of $0.64 per share. The options will vest immediately and will expire June 30, 2023.


Aug. 10 - Announces 2022 Second Quarter Financial Results:


Aug. 11 - Bolsters Commercial Leadership Team: Scott Chambers named VP Sales and Marketing and Murray Skelton named VP Business Development. Derek Taylor will transition from VP Sales and Marketing to VP Strategic Opportunities. In keeping with previous practice, FLYHT has granted incentive options for an aggregate of 40,000 common shares, The stock options are exercisable at a price of $0.82 per share. These options will vest 1/3 on each of August 10, 2023, 2024 and 2025, and expire August 10, 2026.


Aug. 30 - Announces IATA Strategic Partnership: Joined IATA’s Aviation Cyber Security Strategic Partnerships program. As an IATA Strategic Partner, FLYHT will be at the forefront of industry initiatives to ensure the highly effective mitigation of cyber security risks. This includes contributing to the development of industry standards, influencing the cyber security regulatory environment for aviation, and collaborating with other aviation leaders.


Aug. 31 - Engages Corporate Development Resource: Retained Satichi Consulting Inc. for corporate development and capital markets communications services. Satichi will be responsible for, among other matters, developing and executing a comprehensive and strategically aligned investor relations program focused on: (i) raising awareness in the financial community across Canada and enhancing visibility of the Company; (ii) coordinating investor roadshows in the United States in tandem with FNK IR LLC; and (iii) assisting in the preparation of corporate materials.


Under the terms of the agreement, Satichi will receive CAD$5,000 per month from FLYHT with an initial term of 12 months and thereafter on a month-to-month basis. Either party may terminate the agreement by providing 60 days written notice. Subject to TSX approval, under this agreement, Satichi will be granted 120,000 stock options at an exercise price per share equal to the Company’s market price of the shares on the date of issuance and subject to the pricing rules of the TSX Venture Exchange in relation to options. The options will be subject to the vesting of 30,000 per quarter over the calendar year and shall be exercisable until August 10, 2026.


Nov. 9 - Reports Third Quarter 2022 Results: ,


The AFIRSTM Edge is on the verge of being a qualified product which should set the stage for large scale commercialization in 2023. We are in the final stages of lab testing before the device gets in the air for additional testing at altitude, and development on the A320 and B737 Supplemental Type Certificates (STC’s) is well underway. We are currently working on multiple large-scale requests for proposals (RFPs) for several major industry players. With the only device coming to market capable of 3G/4G/5G transmission as 3G sunsets across the globe, we believe we are in a strong position to pursue a meaningful share of the 25,000 aircraft that require these data services. This opportunity would be transformational for us.” Flyth Interim CEO.


Summary


Milestones

Three significant milestones were achieved. May 2022, a $5.65M purchase order from a long time OEM partner was received. The OEM will be licensing FLY technologies and products (Iridium modems and licenses fees) via AFIRS 228S for which deliveries were expected in FY2022. In addition, the new AFIRS Edge A320 platform is to launch on Coral Jet. June 2022, the completion of AFIRS installation on China Express ARJ-21 Aircraft was also disclosed.


The purchase orders from the OEM builds on previous frequent orders and speaks to the demand for FLY.V's products.


Partnerships

Three material partnerships were reported. First with Swoop Airlines with the aim of reducing emission via FLY real-time APU Monitoring (March 2022). Then with MBS Electronic Systems to prototype a secure wireless avionic software (May 2022). Finally, the company joined IATA’s Cyber Security Strategic Partnerships program (August 2022)


Note that FLY.V had disclosed a partnership with SITA which is also listed as a IATA's strategic partner.


Appointments

Scott Chambers named VP Sales and Marketing and Murray Skelton named VP Business Development. Derek Taylor will transition from VP Sales and Marketing to VP Strategic Opportunities. (Aug 2022)


Satichi Consulting (Corporate Development Resources): CAD$5,000 per month from FLYHT with an initial term of 12 months and thereafter on a month-to-month basis. Either party may terminate the agreement by providing 60 days written notice. Subject to TSX approval, under this agreement, Satichi will be granted 120,000 stock options


Earnings

After three reported quarters, YTD 2022 revenues are back at YTD 2019 levels

Covid-19 continues to impact the industry; Capacity and other metrics are still lower than FY 2019. In this context, YTD 2022 revenue approaching YTD 2019 is significant. It speaks to the transformation which has been taken place.


Also the reported sustained backlog at $26M in Q3 2022 suggests continued demand.


Stock Options and Warrants

Two rounds of stock options were reported in this last nine months: i) 518,715 at $0.74 cents (May 2022) and ii) 300,000 at $0.64 cents (June 2022). Note that the company has no outstanding warrants at this time.


In short

FLY.V has initiated a turnaround which is now directly reflected in its earnings. Repeat engagements with OEM Partners and Airlines along with strategic acquisitions (i.e. CrossConsence) and partnerships (SITA, MBS, AWS) seems to be growth drivers. As per November 2022's investor presentation FLY claims more than 100 customers with a 95% retention rate. As such, the recent new leadership appointments in Marketing, Business Development, and Strategic Opportunities should potentially drive additional revenue, strategic alliances and innovations going forward.


Three Analyst reports were issued in the last nine months. February 2022, KRC insight maintained a $2.50 price target assuming a revenue forecast of $27M (FY2022) and $38M (FY2023). This was updated (August 2022) to a $2.70 price target based on "a higher target SaaS multiple of 6.5x in the sum-of-the-parts valuation analysis due to higher conviction in FLYHT's ability to execute". September 2022, Oak Ridge Financial initiated coverage with a $2.40 price target forecasting $24M in revenue FY 2022, $34.1M in FY2023 which is inline with KRC Research.


Analyst's revenue forecast for FY2022 are not likely to materialize given that year end is fast approaching. However, November 2022 investor presentation states: "working on closing our largest weather order (30 aircraft)". In addition, incremental OEM orders, the launch of the AFIRS Edge™, the further integration of CrossConsence with the current product suites, new partnership and/or strategic acquisition could be catalyst for FY2023.


In the past six weeks FLY.V has been trading between Pivot ($0.87 cents) and S1 ($0.78 cents) and is looking to break S1 ($96 cents) which is slightly under the 52 week high of $0.98 cents. Hence, the trend appears to be upward.



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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