Mr. Kent Jacobs reports

Flyht REPORTS FOURTH QUARTER AND FULL YEAR 2023 RESULTS

Flyht Aerospace Solutions Ltd. has released financial results for the fourth quarter and full year ended Dec. 31, 2023.

Management commentary

"Flyht finished 2023 with performance in line with our expectations. We reported over $20-million in revenue for the full year driven by record [software-as-a-service] revenue of nearly $10.7-million, a 31-per-cent increase compared to 2022. This included an all-time quarterly high of over $2.8-million in SaaS revenue for the fourth quarter of 2023. As expected, we did not report positive [earnings before interest, taxes, depreciation and amortization] in 2023 due to a large high-margin [original equipment manufacturer] licensing order that did not repeat this year, but also because we are reinvesting our positive cash flow to fund [research and development] and commercialization of our emerging 5G solutions and weather businesses," said Kent Jacobs, president and interim chief executive officer of Flyht.

Continued Mr. Jacobs: "We continue to make significant progress on our two main strategic growth initiatives, 5G aviation solutions and weather. Less than two months after being issued the supplemental type certificate for the AFIRS Edge on Airbus A320 aircraft, the flange version Edge is now being installed on our first customer's fleet, where we will operate WQAR functions through the 5G network. We are under way with efforts to familiarize this STC into other jurisdictions, starting with the [United States] and Europe. We are also on track to deploy the Flyht-WVSS-II sensor, Edge, and Certus-100 satcom solution with a North American airline as part of NOAA's FY 2023 budget. As expected, NOAA was allocated FY 2024 budget to purchase additional Flyht-WVSS-II, Edge and satcom systems."

Concluded Mr. Jacobs: "As we enter 2024, we have a higher cash and investments balance at Dec. 31, 2023, as compared to the ending cash balance at [third quarter] 2023, reflecting our disciplined allocation of resources. We are focused on the multiple opportunities for growth across our 5G solutions and weather businesses. We expect 2024 to be a milestone year as we commercialize these business opportunities."

Fourth quarter 2023 results

Revenue decreased by 41 per cent to $4,244,787 in Q4 2023 compared with Q4 2022. Excluding licensing, revenue would have increased by 0.2 per cent during the quarter.

SaaS revenue increased by 24 per cent to $2,801,661, driven by the recovery of the company's customer base, as well as growth in weather-related software services. Licensing revenue decreased by 99 per cent to $25,649 due to a large 2022 order from a long-term OEM customer that was not replicated in fourth quarter 2023.

Hardware revenue decreased by 73 per cent to $327,941, with a total of four installation kits shipped in Q4 2023 compared with 16 kits shipped in Q4 2022. Technical service revenue increased by 47 per cent to $1,089,536 as a result of data migration work delivered and an increase in customer requests for certification services.

Gross margin was 59.1 per cent of revenue in Q4 2023 compared with 67.1 per cent in Q4 2022. The decrease in gross margin was due primarily to changes in the mix of revenue sources during the quarter.

Operating expenses increased by 1.2 per cent from Q4 2022, driven by a 24-per-cent increase in research and development and certification engineering expenses, specifically an increase in contract labour. This was offset by a 15-per-cent decrease in administration expenses and an 8-per-cent decrease in distribution expenses.

EBITDA loss totalled $1,226,783 in Q4 2023 compared with positive EBITDA of $1,170,183 in Q4 2022.

Net loss was $1,494,795 in Q4 2023 compared with net income of $718,689 in Q4 2022.

Full-year 2023 results

Revenue decreased by 16 per cent to $20,144,579 in 2023 compared with 2022. Excluding licensing, revenue would have increased by 23 per cent compared with 2022.

SaaS revenue increased by 31 per cent to $10,693,098, driven by an increase in customers' flights and flight hours, as well as growth in weather-related software services. Licensing revenue decreased by 78 per cent to $1,962,223 due to a large 2022 order from a long-term OEM customer that was not replicated in 2023.

Hardware revenue decreased by 9 per cent to $4,372,464, with a total of 69 installation kits shipped in 2023 matching the 69 installation kits shipped in 2022. Technical service revenue increased by 69 per cent to $3,215,794 as a result of data migration work delivered and an increase in customer requests for certification services. CrossConsense revenues were also a significant factor in this year-to-date increase.

Gross margin was 58.7 per cent of revenue in 2023 compared with 63.7 per cent in 2022. The decrease in gross margin was due primarily to changes in the mix of revenue sources during the year.

Operating expenses decreased by 2 per cent from 2022, driven by a 20-per-cent decrease in administrative expenses offset by a 9-per-cent increase in distribution expenses, and a 5-per-cent increase in research and development and certification engineering expenses.

EBITDA loss totalled $2,833,517 in 2023 compared with positive EBITDA of $251,453 in 2022.

Net loss was $4,049,371 in 2023 compared with a net loss of $1,003,033 in 2022.

Balance sheet and liquidity

Cash and equivalents plus GICs totalled $2,042,203 at Dec. 31, 2023, compared with $2,647,650 at Dec. 31, 2022. When compared with third quarter 2023 balances of $1,939,959, the cash position increased by $102,244 quarter over quarter.

Trade and other receivables decreased by 44 per cent to $2,896,200 compared with year-end 2022, and trade payables and accrued liabilities increased by 13 per cent to $3,097,494 compared with YE 2022.

During the quarter, Western Economic Diversification Canada granted Flyht an amendment to the contribution agreements for the two government loans that are in the repayment phase. The amendment reduces payments required from April, 2024, to March, 2025, with the resulting difference of $750,204 added to the scheduled monthly payments remaining on the loans from April, 2025, to October, 2028. There were no costs, nor other changes to terms associated with this favourable amendment.

Conference call information

Flyht will host a conference call to discuss the financial results for the fourth quarter and full-year 2023 on Thursday, April 25, 2024, at 7:30 a.m. MT (9:30 a.m. ET). The conference call will include prepared remarks followed by a question-and-answer session with Flyht's Mr. Jacobs and chief financial officer Alana Forbes. To listen to the conference call by phone within Canada and the United States, the toll-free number is 1-800-319-4610. Outside of Canada and the U.S., dial 1-604-638-5340.

Management will accept questions by telephone and e-mail. Individuals wishing to ask a question during the call can do so by pressing star one. Questions can be e-mailed in advance or during the conference call to investors@flyht.com. An archive of the conference call will be posted in the investor communications section of Flyht's website following the meeting.

Additional information

Flyht's Q4 2023 report, which contains more detailed information, including the CEO's letter to shareholders, management's discussion and analysis, and financial statements, can be viewed on the company's website. The MD&A and financial statements have also been filed with SEDAR+ and will be accessible at SEDAR+.

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, AFIRS. Solutions include an aircraft satcom/interface device that enables cockpit voice communications, the transmission of aircraft data both inflight through satellite and postflight through 5G, real-time aircraft state and fleet status analysis, and preventative maintenance solutions. Flyht's hardware products can also be interfaced with Flyht's proprietary relative humidity sensors to deliver airborne weather and humidity data in real time.

Flyht is headquartered in Calgary, Canada, and is an AS9100 quality registered company.

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