Mr. Kent Jacobs reports

FLYHT REPORTS FIRST QUARTER 2023 RESULTS

Flyht Aerospace Solutions Ltd. today released its financial results for the first quarter ended March 31, 2023 (Q1 2023).

Management commentary

"We start 2023 in a strong position," said Kent Jacobs, president and interim chief executive officer. "Flyht's strategic transformation into a provider of actionable intelligence (AI) over the past three years is enabling us to offer the aviation industry the tools and solutions increasingly demanded as the industry undergoes its own transformation. Our pipeline of potential business continues to increase and currently stands at the highest level in company history. In addition to a tailwind from the ongoing recovery of global passenger traffic, there is sustained demand for our legacy flagship products anchored by AFIRS 228 and surging interest in our new and innovative solutions built around our AFIRS Edge technology and SaaS solutions."

Continued Mr. Jacobs: "We achieved milestones on both fronts in the quarter as well as our weather business. Transport Canada awarded us a supplemental type certificate (STC) to install the AFIRS 228 on Boeing 737 MAX-8 aircraft, one of the world's most popular aircraft types, enabling airlines to now request that their new aircraft come off the factory line with Iridium satcom provisions which accommodate the AFIRS 228. We also received DO-160 environmental testing certification for the AFIRS Edge which means our 5G enabled device is ready for installation on commercial aircraft as we simultaneously work toward obtaining STCs for the product on multiple aircraft platforms. Finally, in weather, which is fast becoming another driver of potential growth for Flyht, we are in active negotiations with the UKMet for an initial order to install our WVSS-II water vapor sensor system on aircraft for Aircraft Based Observations (ABOs) in Europe, and believe that there are many other governmental agencies and commercial entities that would benefit from our environmental solutions."

Continued Mr. Jacobs: "Financially, we delivered expected results in Q1 2023 especially considering we just completed two of the strongest quarters in years in the back half of 2022. SaaS revenue increased by 44 per cent, and overall revenue growth would have been positive when adjusting for last year's large licensing orders. Our gross margins remain robust at 57.3 per cent, and I am particularly pleased that our cash balance increased by $564,000 to $3.2-million as we collected on the large OEM order that we fulfilled last year."

Operating results

Revenue decreased by 5 per cent to $4,757,230 in Q1 2023 compared with Q1 2022, driven by growth in SaaS and technical services offset by decreases in hardware and licensing.

SaaS revenue increased by 44 per cent to $2,413,200 in Q1 2023 due to the post-pandemic recovery of the company's customer base and contribution of CrossConsense. Technical services revenue increased by 407 per cent to $563,848 with contributions from CrossConsense services offsetting a decrease of 57 per cent from traditional services. Licensing revenue decreased by 99 per cent due to decreases in the number of modems and associated licence fees ordered for delivery as compared with the first quarter of 2022. Revenue in this category can be expected to vary quarter to quarter. Hardware revenue decreased by 16 per cent to $1,771,445, as a total of 32 installation kits were shipped in Q1 2023 compared with 34 in Q1 2022.

Gross margin was 57.3 per cent of revenue in Q1 2023 compared with 54.7 per cent in Q1 2022. The increase in gross margin was due primarily to changes in the mix of revenue sources during the quarter.

Operating expenses increased by 9.8 per cent from Q1 2022, driven by a 27.5-per-cent increase in distribution expenses and a 21.2-per-cent increase in research and development and certification engineering expenses, offset by a 19.0-per-cent decrease in administrative expenses. The increases were largely driven by the addition of personnel and expenses associated with the March, 2022, acquisition of CrossConsense.

EBITDA (earnings before interest, taxes, depreciation and amortization) loss totalled $1,343,914 in Q1 2023 compared with an EBITDA loss of $937,630 in Q1 2022, due to higher operating expenses in Q1 2023 as compared with Q1 2022 with an increase in sales and marketing costs together with Edge development costs.

Net loss was $1,657,114 in Q1 2023 compared with a net loss of $1,284,347 in Q1 2022.

Balance sheet and liquidity

Cash and short-term investments were $3,211,944 at March 31, 2023, compared with $2,647,650 at Dec. 31, 2022.

Trade and other receivables decreased by 36 per cent to $3,258,347 compared with YE 2022 as the company collected on the large OEM (original equipment manufacturer) order received in 2022. Trade payables and accrued liabilities decreased by 9 per cent to $2,487,551 compared with YE 2022.

Conference call information

Flyht will discuss its first quarter 2023 financial results at its annual general meeting to be held virtually via webinar at 2 p.m. MT (4 p.m. ET) on Thursday, May 11, 2023. The webinar will include a brief presentation followed by a question-and-answer session. Questions can be e-mailed in advance to investors@Flyht.com.

The meeting will also be accessible by phone. The listen-only toll-free number is 1-800-319-4610 in Canada and the U.S. and 1-604-638-5340 outside of Canada and the U.S.

An archive of the conference call will be posted on the investor relations section of Flyht's website as soon as it is available from the conference call provider.

Additional information

Flyht's Q1 2023 report, which contains more detailed information including the chief executive officer's letter to shareholders, management discussion and analysis, and financial statements, can be accessed on the company's website. The MD&A and financial statements have also been filed with SEDAR and will be accessible there.

About Flyht Aerospace Solutions Ltd.

Flyht provides airlines with actionable intelligence to transform operational insight into immediate, quantifiable action, and delivers industry-leading solutions to improve aviation safety, efficiency and profitability. This unique capability is driven by a suite of patented aircraft-certified hardware products. These include AFIRS, an aircraft satcom/interface device, that enables cockpit voice communications, real-time aircraft state analysis and the transmission of aircraft data while in flight. The AFIRS Edge is a state-of-the-art 5G wireless quick access recorder (WQAR), aircraft interface device (AID), and aircraft condition and monitoring system (ACMS). The Edge can be interfaced with Flyht's Tamdar probe or the Flyht-WVSS-II relative humidity sensor to deliver airborne weather and humidity data in real time.

CrossConsense, Flyht's wholly owned subsidiary, offers highly skilled services to the commercial aviation industry and provides preventative maintenance solutions. These include aircraft fleet view, a native application that gives a real-time view of airline fleet status; AviationDW, a managed data warehouse for enhanced business intelligence; and ACSIS, a visualization and predictive maintenance alerting tool.

Flyht is headquartered in Calgary, Canada, and is an AS9100 quality registered company. CrossConsense, located in Frankfurt, Germany, is an ISO9001-certified operation.

We seek Safe Harbor.