Alex Ruus on FLYHT: “This Will Become, Over Time, a Global Standard for the Industry.”

FLY:TSXV

Arrow Capital Management portfolio manager Alex Ruus was very upbeat in response to a question regarding FLYHT Aerospace during yesterday’s appearance on BNN’s Market Call Tonight. FLYHT was selected as a “Top Pick” on an earlier episode of the show.

Here are some key points Mr. Ruus made about FLYHT during the segment.

  • “FLYHT is an ‘Internet of Things’ company for the aircraft industry.”
  • “They provide critical data streaming from planes to the ground.”
  • “I would argue that they are the leaders in that segment. They’ve done a deal with Airbus. I would argue that this will become, over time, a global standard for the industry.”
  • “After three or four years of struggling from a stock perspective. The stock has recently perked up and we think that that is just the start of great things to come.”
  • “Things are progressing there, we think there’ll be good news this year and we think the stock will go significantly higher.”

Please click here to watch the full segment.

LGC Capital’s Blue Sky Just Got a Little Brighter

In addition to holding a variety of interests in Cuba based businesses, LGC has substantial ownership in two energy exploration companies, one of which has issued a news release under the banner headline of 50% Upgrade to Exploration Potential in Melbana’s Cuba Acreage.

LGC has a 13.76% interest in Australian listed Melbana Energy (MAY), which announced results of a new assessment of the oil and gas exploration potential of the conventional onshore play known as Block 9.  

In its news release, Melbana included this first bullet point to catch the reader’s attention: Exploration potential of Block 9 upgraded by more than 50% to ~12 billion barrels of Oil-in-Place with Prospective Resources of 612 million barrels (unrisked Best Estimate, 100% basis)”.

Admittedly, high potential plays of this size take a considerable amount of time and money to develop. However, Melbana is looking to finalize well proposals by the end of this quarter and possibly be drilling within a year or so. The first target area is called Alameda.

The Alameda Prospect (formerly I Lead) is currently the highest ranked exploration target in Block 9 PSC. Alameda is a large structure located in the western part of Block 9 and is in a similar structural position to the Varadero field, the largest oil field in Cuba, approximately 35km away. Alameda has an estimated chance of discovery of 32% and recoverable volumes ranging from 3 – 214 million barrels, with a best estimate of 65 million barrels recoverable.”

Block 9 is certainly not virgin territory as it is surrounded by prolific producing areas.

Covering 2,380km2 onshore the north coast of Cuba, is in a proven hydrocarbon system with multiple producing fields within close proximity, including and the Majaguillar and San Anton fields immediately adjacent to Block 9 and the multi-billion barrel Varadero oil field. Block 9 contains the Motembo field, the first oil field discovered in Cuba.”

The bonus for LGC is that not only is it the single biggest shareholder in Melbana, but owns 15.4% of Petro Australis (private).

Melbana is prequalified as an onshore and shallow water operator in Cuba and was awarded a 100% interest in the Block 9 PSC on 3rd September 2015. Melbana has secured a 100% interest in Block 9, subject to a conditional 40% back-in option to be exercised no later than September 2017 held by Petro Australis Limited.

To read the detailed Melbana news release, click here.
To view Melbana’s corporate presentation, click here.

The TRAKOPOLIS Operational Update – A Bit More Colour

In the company’s update that was issued on Wednesday (February 1st), there were several positive developments noted that nudged our curiosity and prompted a conversation with management. Most certainly, this is not “inside” information, but it does provide somewhat more dimension as to the progress being made at TRAKOPOLIS.

The news release stated that four new salespeople had joined the team, two in Canada and one each in Texas and Pennsylvania. When it comes to Canada, one is in Ottawa and the other is in Atlantic Canada with the principle responsibility of supporting the company’s partnership with Bell Mobility and the new “Electronic Log Book” offering. Management is providing additional resources to this sales push because of its belief in the size of the prize. The release stated that this is the “first phase” of its growth expansion as it is adding more boots on the ground to its existing sales team.

On the U.S. side, the people now located in Texas and Pennsylvania are there to add weight to the launch of an offering that sees Honeywell’s new Wi-Fi enabled gas detector incorporating TRAKOPOLIS’ software technologies. Even as written in the recent report from Canaccord that placed TRAKOPOLIS on the firm’s Watch List, “the addressable market for this type of offering in North America alone could be 150 thousand units”. It’s very understandable why TRAK management is “enthused” in context of the market opportunity and the partnering with Honeywell that has the potential to greatly accelerate growth in the company’s recurring revenue stream.

The news release also stated that 1036 new devices (subscribers) were added through December and January representing 51 customers. Remembering that in the last corporate presentation TRAK had a subscriber base numbering eleven thousand, a nine percent increase to that base over the course of two months, especially as it was the holiday season, at least deserves an “attaboy.” Of the 51 customers mentioned, 25 were new names representing different verticals such as energy, mining, transportation, etc.

Management says that revenue will be recognized as hardware is shipped, installed and activated, which is ongoing.  

As we were about to end the phone conversation, management adeptly reminded us that this growth came on the heels of all the work required to complete the public listing in November, the four new salespeople were in training and not yet selling and the new product offerings played no role in the recent wins.

The first big target for TRAK is reaching 25 thousand subscribers and 500 customers, which management forecasts puts the company on a $10+ million annualized run rate.

To view news release, please click here.

TRAKOPOLIS Elevated to Canaccord’s Watch List

In what is clearly a blossoming sector, Doug Taylor, Canaccord Genuity’s Director of Technology and Aerospace Research, makes the case for TRAKOPOLIS’s positioning within the “sizeable sandbox” that is the “intersection of telematics and IoT (Internet of Things).”

Mr. Taylor writes that TRAKOPOLIS has positioned itself well in that, “A key differentiator is the hardware-agnostic and carrier-agnostic nature of its business while many competitors’ solutions are built on often inflexible proprietary hardware. Trakopolis prides itself on the flexibility of its platform and the ease with which new applications can be produced and new hardware endpoints integrated. Its API means new devices can be added to the platform quickly.”

In addition to aligning itself with large entities such as Microsoft, Telus and Bell, Mr. Taylor addresses the company’s strategic partnership with Honeywell where its wireless gas monitoring devices are married with TRAKOPOLIS’s solutions. The product offering officially launches in this quarter with management estimating the North American addressable market alone could be 150 thousand units.

Recurring revenues are what speak to future growth and valuations. On this point, 70% of TRAKOPOLIS’s revenues are of a recurring nature.

To read the full report, click here.

TRAKOPOLIS Well Received at Canada’s Cantech Conference

On January 17th and 18th, senior members of TRAKOPOLIS’ management team participated in the Cantech Investment Conference. Held at the Metro Toronto Convention Centre, it is considered Canada’s biggest technology conference.

Brent Moore, CEO of TRAKOPOLIS had this to say about the conference. “We considered it to be a big success, we spoke to a lot of interested individuals, including fund managers, investors and analysts. We had constant interactions and we conducted many demonstrations of our technology.”

At the conference, Mr. Moore delivered a presentation to approximately 70 people. Below is the presentation material.

To learn more about the 2017 Cantech Investment Conference, please click here

Bob McWhirter Talks FLYHT On BNN

Strength In Share Price Comes From Optimism Around Chinese Opportunity

On Friday (January 6) afternoon, long time FLYHT follower and proponent Bob McWhirter, Portfolio Manager at Selective Asset Management fielded a caller’s question while appearing on Canada’s Business News Network (BNN). The caller was enthusiastic with his question, stating, “I’ve been sitting on it for six months and it’s finally starting to pop.”

Mr. McWhirter provided a quick overview of the technology and its functionality. In regards to the recent strength in the stock price, he sights optimism around FLYHT’s opportunity in China and how Chinese airlines are embracing the company’s technology.

To view the clip from BNN, please click here.

Technical Analyst Keith Richards Discusses FLYHT On BNN – Is FLYHT Primed For A Break Out?

Over the holidays (December 30, 2016), Keith Richards, technical analyst and portfolio manager at ValueTrend Wealth Management of Worldsource Securities, discussed FLYHT on Business News Network’s (BNN’s) Market Call Tonight. He fielded a question on FLYHT Aerospace and here’s the key takeaway.

“FLYHT Aerospace was in a downtrend and has most definitely begun quite a nice little base there. So what you’re looking for with this stock is you want to see a breakout past the base. It’s very difficult to gain on these charts, it’s a little hard to see. It looks to me to be in the mid-to high 20’s; if the stock broke out to that area, then you probably have some significant upside ahead of you. Right now it is in the base and that is a healthy development, a base is a good thing.”

To view the clip on BNN click here.

Fortune Magazine Features FLYHT Aerospace

This morning (December 8th) Fortune.com, the online version of Fortune Magazine, featured a commentary by FLYHT board member and former Chairman of the U.S. National Transportation Safety Board, Mark Rosenker.

fly_161208pic1In the commentary, Mr. Rosenker declares “The technology is available.” He was referring to FLYHT Aerospace’s Automated Flight Information and Reporting System (AFIRS™) and its ability to stream recorder data from the flight data recorder (FDR) of an aircraft while in flight.

In the article he states, “This (AFIRS) offers the value of not only providing the actual location of the aircraft, but also an understanding of how it is – its real-time status. Data can be streamed as a result of a “trigger” that might occur during a flight incident. Or, data could simply be streamed throughout the flight for routine flight status information.”

In conclusion he declares, “We have the technology to make airline travel even safer – and we need to use it.”

To read the full article, please click here.

Alex Ruus on BNN: We Argue It (FLYHT) Should Be Trading Substantially Higher

Arrow Capital Portfolio Manager, Alex Ruus, was more than positive in his response to a caller who asked about FLYHT Aerospace during last night’s (December 5th) appearance on Canada’s Business News Network (BNN). This was his response:

We like it very much and good timing. I actually sat down and had dinner with the CEO of FLYHT last week. Things are just going great. The business continues to develop. The Chinese business has been a particularly bright area in the last year and is growing strongly; looks to potentially even accelerate some more next year. Meanwhile, they continue to work with a number of global OEMs on doing business. They are on the production lines at Airbus and up on Bombardier, and we think that there are opportunities in other areas.

Meanwhile, there is increasing pressure for increased regulation in terms of flight following. At some point in the next two to three years, you could see something happen that accelerates adoption of a lot of their solutions. This is like an internet of things type company. People never talk about it that way. But it really fits into that increasing data off of industrial machinery, which in this case is airplanes. Again really critical information, which helps them fine tune the operation of the plane, prevents accidents and if there is an accident give you immediate information to know what’s happening.

We think at some point this thing is really going to take off, it has been a frustrating stock. It kind of flat lined over the last year, despite becoming profitable in the summer, it’s likely going to finish the year profitable and growing at almost 50% a year rate. So, we are scratching our head a little bit as to why the stock is trading at the 20 cent area, we argue it should be trading substantially higher.   

To watch the segment, please click here.

FLYHT Receives $2.35 Million Interest-Free Government Loan

Wednesday (November 9th) was a good news day for FLYHT as management discussed its second consecutive profitable quarter with shareholders only to be followed that afternoon by a presentation where  the company  received a $2.35 million interest-free loan from the Western Innovation (WINN) Initiative.

The WINN funding will be used to “support plans for technology development in the air and ground components of FLYHT’s satellite/aircraft communications systems” up to December 2018. The loan is to  re-paid between January 2020 and December 2024.

This is most welcome news as investors are waiting to see how the company addresses  $3.2 million in convertible debenture coming due on December 23, 2016. The conversion price of the debentures is $0.25 per share. The WINN funds provide the company with considerable breathing room as this loan meets much of the future capital required for ongoing projects.

CEO Tom  Schmutz has publicly stated that the company is on track to grow a minimum of 30% this year independent from the IP sale made in the second quarter. Next year’s organic growth is expected to be in the same range before new larger opportunities, that management believes it will secure.  The last financial report showed that the company has over $3.8 million in cash and $1.5 million in receivables.

Even though the company has been showing growth and executing on its business plan the stock has continued to trade in a very narrow range of $0.18 to $0.22 since the summer of 2015.

To read the news release on the WINN interest-free loan to FLYHT, please click here.

FLYHT Aerospace Notches Two Profitable Back To Back Quarters – Growth Continuing

FLY:TSX-V

On the heels of very positive third quarter (September 30th) results, CEO Tom Schmutz and CFO Nola Heale hosted FLYHT’s quarterly conference call, which was noted to be the first money making quarter based on what the company calls “traditional” revenue. In the second quarter, the company sold Intellectual Property for $2.5 million USD which drove it to profitability.

fly161109chart  Here are some key points from Mr. Schmutz during the conference call.

  • “Total revenue for the quarter was $4.1 million, our largest revenue quarter ever from traditional revenue sources and 61% larger than Q3 of last year. More importantly, the third quarter was our second consecutive positive income quarter in a row, the first back to back, money-making quarters in the company’s history!”
  • “Through September, FLYHT has posted a $1.6 million-dollar year to date profit.”
  • “As a company, we are growing our top line, especially through our operations in China and OEM sales, while we are controlling costs through initiatives in our “Achieve Excellence” high-level strategic plan.”
  • “The (Chinese) launch customer that is currently using our real-time data services is also a reference customer for other operators which allows FLYHT to demonstrate the capabilities of our system to these other Chinese operators.”
  • “We also recently announced a contract for $4.26 million USD for AFIRS hardware to an information technology company that serves aviation operators in China…we are hopeful we will conclude a follow-on service contract for these real-time data services relatively soon.”
  • “FLYHT now has signed 19 Chinese Airline Operators and has signed seven new contracts for hardware and one new contract for services during 2016.”
  • “We are working other regions of the world with the same vigor to augment these sales in China and we hope to be able to discuss these prospects soon as well.”
  • “FLYHT’s other growth area is the OEM license fees which show up in our Parts Sales revenue. We added $1.6 million in parts during Q3 2016 which brings this revenue component to $3.7 million through September. This is already more than we achieved last year (which was $2.9 million) and is growing faster than we had anticipated.”
  • “The voice and data services component of revenue is growing and is approximately 10% higher than this time in 2015. There have been challenges growing this element due to economic challenges around the world, but we continue to see expansion.”
  • “AFIRS sales revenue through September is 71% ahead of last year at the end of September… We are building a significant backlog of AFIRS sales which is allowing FLYHT more opportunities to ship and install product.”
  • “Our revenue from traditional sources year to date is $10.2 million, or just shy of all of 2015 at $10.5 million. This does not include the license fee of $3.3 million we received in 2Q.”

An archive of the full conference call is available below or on FLYHT’s website by clicking here.


FLYHT Featured In Calgary Economic Development Marketing Campaign

FLYHT was recently selected by Calgary Economic Development as one of a handful of companies to promote its national “Be Part of the Energy” marketing campaign.

The Canada-wide campaign launches this weekend and runs through late November. There will be full print and social media advertising associated with the campaign, which focuses on non-oil and gas or “countercyclical business opportunities in Calgary.”  

Specifically, look for a “teaser” on FLYHT in today’s (October 14th)  Globe and Mail and the National Post and again in the Globe and Mail on Friday, November 4th.

To see the feature on FLYHT please click here

TMX Group Interviews LGC Capital Co-Chairman Mazen Haddad

QBA:TSX-V

The TMX Group very recently posted an interview with Mazen Haddad, Co-Chairman of LGC Capital in which he provides a compelling business case overview for the multi-strategy Cuban focused investment company.

Here are some key highlights from the interview.

  • “We see a lot of potential in Cuba. It will allow investors a chance to get exposure to Cuba because there isn’t really another place to go for that type of exposure.”
  • “The major growth opportunities are driven by the warming of relations between the U.S. and Cuba. The U.S. consumer and tourists coming to the island are driving a lot of new growth opportunities in Cuba.”
  • “Our investors have a lot to look forward to in the next year, year and a half. There’s going to be a lot of events for sports, and it’ll be exposure to multi-national events in Cuba on sports. We already announced the October 7 friendly between the U.S.A and Cuba, in a few months there will probably be a baseball game as well and go on and on from there. The other opportunity that we are very excited about is developing the coffee crop with Cuba Mountain Coffee and Nespresso. Nespresso has expressed a deep interest in progressing with Cuba Mountain Coffee, specifically to supply the North American market.”

To view the full interview, see below or click here.

An Interview with Argex CEO, Mazen Alnaimi – Why He Invested $1.2 Million

“A significant amount of work is done and I think a lot more will become apparent in the next 30-60 days.”

“We’ve pretty much seen every up and down” is the way The Howard Group thinks about Argex Titanium since we first invested five years ago and formally began working with the company in early 2012. It should have been one of the darlings on the TSX Exchange. It had all the potential to become a blue sky dream story, but reality dealt investors a harsh hand.

We have experienced the good times, such as when the company announced a key relationship in 2012 with PPG Industries, through the meltdown that occurred in 2015, after the previous management team failed to secure funding for a full scale production facility. The company was on life support and the prognosis was grim.

Following a great deal of behind the scenes work lead by Board member, Mazen Haddad, and with the timely help of some key individuals and relationships, the patient opened its eyes in 2016. While the full extent of the recovery remains to be seen, the company has survived a near death experience.

The team that brought Argex back to life are of the opinion that yes, not only will there be a full recovery, but the patient will be “better than new.”

We know that shareholders (we and many of our relationships) have multiple questions. In a detailed 30 minute interview, Grant Howard, President of the Howard Group recently spoke with Mazen Alnaimi, Argex’s new CEO and Chairman of the Board.

Below we have provided the key topics and some excerpts:

  • Details on Mr. Alnaimi’s background: “I started many chemical companies one of which is Chemanol, which I started about 20 years ago as a small investment of one and a half million dollars and have it grown it to a seven hundred million dollar public company.” Click here for more bio details.
  • Due diligence leading up to personal investment of $1.2 million: “I actually dedicated six months evaluating Argex and its technology and I was trying to figure out exactly what went wrong. The conclusion was there was enough merit in the company and its technology to invest.”
  • Perception of the technology: “The fundamentals associated with the technology are solid and the mistakes that were done before are correctable and having been there, done that, I felt that there is a risk, yes, but the risk can be mitigated and that coupled with the fact that I have a very solid team working with me and they worked with me before the past fifteen years that we felt very confident that we can tackle anything that comes our way from the technical point of view and the implementation point of view.”
  • Improvements in the technology: “First of all, we have looked at what has been done before at the lab scale and the pilot plant scale and we have changed a few parameters of the process and that has yielded significant result improvements. We have also applied proper engineering practices and we were able to reduce, by harnessing the energy and converting the energy within the process to improve on the on the cost efficiency and advantage.”
    “But  based on the improvements we have done at the lab scale and the product we are getting now, I feel very confident that we will be able to produce what is required by PPG and other world class paint manufacturers would require.”
  • His financial modelling of the process: “Slight variation but our numbers confirm what the previous management has suggested. But our approach to reach there is different from what they had envisioned… And even better.”
  • Status of Relationship with PPG and HELM: “PPG is very much at the table with us. We’re in constant communication with them, and they are very keen on our technology and having us a part of their supply chain. As far as HELM, we have certain agreements in place with HELM. And they’re an international offtaker and they are part of multiple sources where we can offtake our product to many international companies.”
  • Performance warrants and the milestones management must achieve to earn them:First of all, for restarting the company, a certain percentage to be given at that time and restarting the lab activities and achieving the requirement for the company to function as a legal entity meeting its obligation. The second milestone would be to achieve the product consistency at the lab scale and get the gross product approved by prospective buyers and the third one would be to complete the basic engineering package. The fourth one would be to complete the detailed engineering feed package.”
  • Timeframe to achieve the milestones: “My expectation is that within the next 45 days we should get  the consistency on the product and we should start the basic engineering package by  the end of the year  and we should start working on the feed package in the second quarter of 2017 and we should complete the other thing by the third quarter of 2017, ready to build the plant.”
  • Mr. Alnaimi’s perspective on the issues of getting financed in the past: “We put those milestones and we make it very transparent to the market….what we are trying to achieve now. We’re going to achieve it. So we will not jump two  steps forward and  go back one step. It’s that we have to make sure that consistency is made at the lab scale and the pilot plant and is also approved by our buyers.”
  • Rationale for initially building a 25,000 tonne / year plant: We wanted to derisk the engineering developmental process. I think 25,000 tonnes is a lot less riskier than going immediately to a 50,000 tonnes. So eventually we will reach 50, 75 and 100,000 tonnes based on building parallel trains based on the success of the first 25,000 tonnes plant. ”
  • Response to question on possibility of consolidation of shares: “We don’t see any reason for consolidation at this stage … We have done some financial modeling on that and I think when we look at the net present value of the stock right now based on the future earnings, there is a sizable appreciation if it all goes well.”
  • Mr. Alnaimi on the dream of disrupting the Titanium Dioxide industry:Definitely, definitely, otherwise I wouldn’t have invested in it. I think you’re looking at an industry that is valued around anywhere from 15-18 billion dollars per year. You’re looking at a technology that has been no significant advantage – no significant improvement has been done for the past 30-40 years. The cost is very high and the market needs a new player with a greener technology and I have to be careful when I say greener technology, and also a more cost advantageous structure. And that’s what Argex is promising to deliver. And I think Argex is not looking purely at building a 25,000 tonnes plant or a 50,000 tonnes plant or a 100,000 tonnes plant. We’re looking at expanding the technology to other areas of the world, geographical areas of the world. ”
  • In closing: “I would like to assure you again that we have achieved- there was significant achievements in the last couple of months since we took over. We took over about the middle of July and I’d have to say that we are almost 2/3 complete with our technology and we have significant achievement of us satisfying the TSX and getting clearance and approval to continue listing on the TSX exchange. We were able to reduce our payables by 70%, we have reorganized, done our cash flows, budgets, resolved issues with our mining properties and we are now completed a corporate teaser that will go to investors. So a significant amount of work has been done and completed in 60 days and that even astonishes me myself because I didn’t believe that we would be advancing at that stage, at that fast pace and you know we are happy to be able to do what we have been able to do and I think a lot more will become apparent in the next 30-60 days.”

To listen to the full interview, see below or click here.