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FLY.V - Holding up.

October 23, 2018

 

Flyht Aerospace Solution Ltd. (FLY.V) helps airlines improve safety and decrease operational costs through innovative products. FLY.V streams data from an aircraft via satellite to the airline's flight operations center. FLY.V's coverage was initiated February 2017 with multiple notes on September 2017, November 2017 March 2018, and May 2018

 

May 30 - Receipt of the Canadian Patent for real-time data streaming technology, FLYHTStreamTM.

 

June 7 - Announces Five-Year Contract Renewal for Software as a Service (SaaS): $1.43M USD. Includes the uses the Automated Flight Information Reporting System (AFIRS) and associated UpTime capabilities to monitor and manage its aircraft on remote flights. Operator will expand with the new SaaS agreement to include engine trending, air frame and engine exceedances.

 

June 27 - Announces Proposed Debt Financing up to $2 Million.  Debenture will be convertible at $1.30 with Warrant (0.38) exercisable at $1.45.

 

July 3 - Provides Second Quarter 2018 Update.  New sales contracts and purchase orders of $4.45M during the second quarter of 2018.


July 16 - Customer Extends FLYHT Contract - $3.1M for 5 years. Airline operates in Australasia and uses AFIRS and UpTime.

 

July 24 - Announces Closing of Debt Financing of $2 Million. Aggregate gross proceeds of $1.95M - FLY.V contribution is $0.075M (4%).

 

Aug. 8 - Reports Second Quarter 2018 Results Revenue of $3,1M ( 3% decline). Software as a Service (SaaS) (a 7% decline) from Q2 2017, AFIRS Hardware of $0.85M (a 15% increase) from Q2 2017. Licensing of $1,12M (a decrease of 15%) YoY. R & D expenses were $0.70M (76% higher than Q2 2017). Net loss of $0.64M. The balance of $0.80M in customer deposits.

 

Sept. 4 - Distress Flight-data Streaming Capabilities Validated on Boeing ecoDemonstrator.  Testing reveals good potential for solutions to meet the Global Aeronautical Distress and Safety System mandate. In conjunction with partners Boeing and Embraer, FLYHT presented the results of the tests to the Airlines Electronic Engineering Committee (AEEC) Global Aircraft Tracking (GAT) Working Group meeting in Kelowna, Canada.

 

Sept. 13 - With Spectralux Avionics Integrate Systems Creating New Enhanced FANS over Iridium Offering for Airlines. AFIRS™ 228S (Automated Flight Information Reporting System) component has been integrated with Spectralux’s Envoy FANS Data Link Unit.

 

The systems offer a streamlined upgrade option for airlines to obtain a cost-effective FANS over Iridium solution—a requirement for flying over the world’s oceanic regions. This functionality allows flight crew to select the appropriate communications protocol, depending on specific airspace requirements and be compliant with European and North Atlantic FANS mandates. FANS-compliance date is 2020.

 

Oct. 2 - Q3 Update: USD$5.M in new sales contracts and purchase orders during the third quarter of 2018. At quarter-end, the sales order backlog for AFIRS kits and UpTime voice and SaaS was approximately $25 million dollars.

 

In addition, FLYHT received a Federal Aviation Administration (FAA) Supplemental Type Certificate (STC) for the Company’s AFIRS 228 system on the Airbus A319/320/321 family of aircraft from a contracted American certification supplier in the third quarter of this year.

 

FLYHT’s library of STCs for AFIRS products now exceeds 90 certificates, believed by management to be the largest in the world. This is significant because these certificates authorize FLYHT to install AFIRS products on an estimated 95% of commercial air transport aircraft worldwide.

 

Oct. 10 - Acquires Panasonic Weather Solutions Assets. The technology and intellectual property for the FlightLink™ Iridium Satellite Data Unit and Tropospheric Airborne Meteorological Data Reporting (TAMDAR™) sensor from Panasonic Aviation Corporation (PAC).

 

In addition, to keep the asset acquisition cash-flow neutral to FLYHT during this period, PAC will pay FLYHT a subsidy of USD$3.3 million. What makes TAMDAR unique is that it captures temperature, pressure, winds aloft, icing, turbulence and relative humidity, bundles the data with GPS (Global Positioning System) data and transmits the information, in real-time, over satellite networks.

 

Oct. 15 - Signs Jambojet for Long Range Communications (0.65M) over 5 years. AFIRS to replace HF radio and provide aircraft health monitoring FLYHTLog, FLYHTASD, FLYHTHealth, FLYHT’s UpTime

 

 

In the last six months, FLY.V has reported increasing levels of sales from $3.1M in Q2 to $5.M to date in Q3 2018. In addition to receiving a Canadian Patent, the company also advanced relationships with Boeing and Embraer (ecoDemonstrator program),  Spectralux (Enhanced FANS) and Panasonic Avionics (via acquisition of Panasonic Weather Solutions(PWS)). Moreover, FLY.V closed a $2M debt financing and even reported some insider purchases.


Of note, the stock experienced a strong sell off which culminated to a new 52 week low ($1.01), after disappointing Q2 earnings. However, FLY.V pulled back drastically prior the update of the ecoDemonstrator program. Since then, consolidated around the $1.30.  

 

Again, the lowered warrant conversion (from $2.50 to $1.60 - Apr. 2) and options grants ($1.55 - May 8), the terms of the $2M debt financing ($1.30) continue to be headwinds for the stock price. Recent commitments from both AirBus (Skywise) and Boeing (AnalytX) are also factors here. 

 

However, the ecoDemonstrator update and PWS acquisition are definitely key events for the period.

 

In the Sept 4 release regarding the ecoDemonstrator update, the following was mentioned: This is the first time the data from an aircraft’s Flight Data Recorder (FDR) has been streamed over a satellite network for the duration of a flight, thereby validating the Black-Box-in-the-Cloud use case. Additional first-time milestones included cockpit audio steaming, and the concurrent transmission of historical FDR and cockpit audio data and real-time data and audio. 

 

Moreover, the Oct. 10 deal where PAC will pay FLYHT a subsidy of USD$3.3 million for aquiring PWS, is beneficial for both companies. In addition to being a non-dilutive, the key transaction wins for FLY.V are a) a new revenue channel (weather services) and b) access to Air Asia which is expected to generate 50% of a total $20M incremental backlog by the end of the transition period (April 1, 2020). More details can be heard here
 

Hence, in the face of numerous headwinds - FLY.V is holding up.

 

 

 

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.

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