flyht corporate presentation may 2013

FLYHT Aerospace Solutions Ltd. TSX.V: FLY

MAY 2013

TSX.V: FLY -2 - -FLY – May. v1

Disclaimer Forward Looking Statements

This discussion includes certain statements that may be deemed “forward-looking statements” that are subject to risks and uncertainty. All statements, other than statements of historical facts included in this discussion, including, without limitation, those regarding the Company’s financial position, business strategy, projected costs, future plans, projected revenues, objectives of management for future operations, the Company’s ability to meet any repayment obligations, the use of non-GAAP financial measures, trends in the airline industry, the global financial outlook, expanding markets, research and development of next generation products and any government assistance in financing such developments, foreign exchange rate outlooks, new revenue streams and sales projections, cost increases as related to marketing, research and development (including AFIRS 228), administration expenses, and litigation matters, may be or include forward-looking statements. Although the Company believes the expectations expressed in such forward-looking statements are based on a number of reasonable assumptions regarding the Canadian, U.S., and global economic environments, local and foreign government policies/regulations and actions and assumptions made based upon discussions to date with the Company’s customers and advisers, such statements are not guarantees of future performance and actual results or developments may differ materially from those in the forward-looking statements. Factors that could cause actual results to differ materially from those in the forward-looking statements include production rates, timing for product deliveries and installations, Canadian, U.S., and foreign government activities, volatility of the aviation market for the Company’s products and services, factors that result in significant and prolonged disruption of air travel worldwide, U.S. military activity, market prices, foreign exchange rates, continued availability of capital and financing and general economic, market, or business conditions in the aviation industry, worldwide political stability or any effect those may have on our customer base. Investors are cautioned that any such statements are not guarantees of future performance and that actual results or developments may differ materially from those projected in the forward-looking statements.

Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, there can be no assurance that such expectations will prove to have been correct. The Company cannot assure investors that actual results will be consistent with any forward-looking statements; accordingly, readers should not place undue reliance on forward-looking statements. The forward-looking statements contained herein are current only as of the date of this document. The Company disclaims any intentions or obligation to update or revise any forward-looking statements or comments as a result of any new information, future event or otherwise, unless such disclosure is required by law.

www.flyht.com


AFIRS Technology

“A six pound heavy-weight that will drive a cultural change on how an airline

operates and manages its data.”

Works on any

aircraft

Continuous

monitoring

Safety and

economic benefit

Enhances all

existing

technologies

Global coverage Expanding menu

of applications

Offers real-time

data transmission

Satellite based

Iridium Network


The AFIRS UpTime Solution


FLYHT Products AFIRS

• Regulatory certification for installation on 31 widely used aircraft types

• AFIRS 220 on March 9, 2012 crossed over the 1,000,000 flight hour mark

• AFIRS 228B in the field and generating revenue

• AFIRS 228S undergoing certification in 2013 for safety services use

UpTime

• Introduced in 2004

• Converts small data packets into valuable information

• Allows aircraft operators to manage and monitor operations

• AFIRS gathers, stores, analyzes and transmits data

• UpTime is a client-web interface that delivers information in real-time

• Reports to aircraft operators via e-mail, browser or integrated to systems


Value Add Products

FLYHTStreamTM

• An emergency data streaming mode

• Can be manually activated by the flight crew, ground support or automatically

triggered by predefined emergency parameters

• FLYHTStream sends critical data such as global position, equipment status and black

box information to ground-based operations

• Patent pending service uses the Iridium satellite network

Flight Data Management (FDM)

• SMS Dashboard

FLYHT Fuel Management System

• Automatically identify fuel consumption trends


Investor Consideration

• Unparalleled, proprietary, patent pending real-time data streaming technologies

• Commercial today with significant and growing base of customers

• Recognized global leader airline industry with quick payback

• Saving customers money, time and driving efficiencies

• Scales to large multi-aircraft contracts

• Proven recurring revenue model with multi-year contracts

• Absolute customer satisfaction to date


Accomplishments

• L-3 Communications selling AFIRS to Airbus for factory installs

• NetJets Europe rolling out on Hawker Fleet

•Industry leading companies

•Technology patents and patents pending

•U.S., Europe, China, Canada, Brazil, India & Turkey

• Market and business drivers accelerating opportunities to scale quickly

• Crossed major barriers to entry in aviation industry including regulatory,

technological and customer testing and acceptance

• Strong relationships with regulators in Canada, US, Europe, China, Nigeria

and with airframe builders such as Bombardier, Embraer, AVIC and COMAC

• 2013 will be the front end of an extended growth cycle


Industry Changes

• Future Air Navigation System (FANS) in the US

• Controller Pilot Data Link Commands (CPDLC) in Europe

• Evolution of IPad to the Cockpit

• Iridium Certification for Safety Services Messages


Capital Market Profile

FLYHT provides proprietary technological products and services designed to reduce costs and improve

efficiencies in the airline industry. The Company has patented and commercialized three products and

associated services currently marketed to airlines, manufacturers and maintenance organizations around

the world.

FLYHT Aerospace Solutions Ltd.

200W, 1144 – 29th Avenue NE

Calgary, Alberta, Canada T2E 7P1

Telephone: 1-403-250-9956

Facsimile: 1-403-291-9717

Email: [email protected]

• Regulatory Filings: SEDAR

• Incorporated: September 17th 1998

• Transfer agent: Valiant Trust Company - 1-866-313-1872 or [email protected]

• Auditors: KPMG

FLYHT’s headquarters are located in Calgary, AB, Canada and has been since inception in 1998. The

Calgary office has 42 of the 47 employees; we have representation in China, the Middle East, South

America, Africa, United States and Europe. The Company has been publicly traded on the Toronto Venture

Exchange since March 2003, as AMA and since May 2012 under FLY

mailto:[email protected]

http://sedar.com/DisplayProfile.do?lang=EN&issuerType=03&issuerNo=00016486

mailto:[email protected]


Capital Market Profile……cont’d

Share Structure – At March 31, 2013 ** Management, Directors and Officers

Shares Outstanding 140.4 million

Diluted 177.8 million

Institutional Ownership % Approx. 40.0%

Insider Holdings** 5.0%

2012 2011 2010

Revenue $6.5 $5.5 $4.7

Customer deposits & unearned revenue $3.5 $2.9 $3.4

R&D Expenditures $2.4 $3.3 $5.8

Loss (before R&D) $2.5 $3.2 $3.2

Net Loss $4.9 $6.5 $9.0

Disputed AP $1.8 $1.8 $0.0

Financial Results Snapshot– ($millions)

at May 28, 2013

Share Price $0.185

Market Capitalization $28 million

52 week low $0.135 high $0.24


Key Q1 Metrics

• Revenue $1.7mm up from $1.1 in ‘12

• Loss below $1mm from $2.2mm in ‘12

• Unearned and Customer deposits flat

• Recurring actually strong with all factors considered

• Gross Profit 66.6% up from 54.8% in ‘12


Competitive Analysis

• No other product offers breadth of AFIRS

• Satcom only included Aircell, Skytrac, Latitude

• ACARS over Iridium include ICG and Avionica

• FLYHTStream has no competitor

• Real time FOQA has no installed competitors

• EFB connections have no installed competitors

• AFIRS is certified for all of the above

• Patents exist on the technology

• Patent Pending on the use of multiple modems with one antenna

• Patent Pending on FLYHTStream

• Proven cost savings

• OEM installs help the buying decision


Market Drivers

• Need for better communications acknowledged in FANS and CPDLC

• BEA report on AF447 disaster and recommendations leads to mandates

• Pilots want IPads not luggage

• NetJets evaluations show savings of $100,000 per plane per year

• Airlines save money with better and more timely information

• reduce turn around time

• reduce fuel consumption

• have the right people in the right place at the right time

• reduce repair costs by having better information to make decisions


• Obtained over 30 Supplemental Type Certificates (STC)

• Required for installation on each aircraft type

• Additional STCs are pending or in progress

• A decade of developing industry relationships

• Went through strenuous due diligence processes by customers, partners and regulators

• Regulatory environment is a natural barrier to entry

• FLYHT holds patents on its technologies

Massive Barriers To Entry

•Canada •China

•United States •India

•Europe •Turkey

•Brazil


Business Model

Certify and

Sell Kits

Build

Applications

Recurring

Revenue

• AFIRS™ 220

• AFIRS™ 228B

• AFIRS™ 228S

• Fuel management

• Engine trending

• Cockpit data

• Exceedence reporting

• Bill for hourly flight

usage per month

• Monthly charges for

applications

Hardware Software Usage


Recurring Revenue Model

• Sell AFIRS with necessary engineering package to install and activate

• $35 to $60 thousand per aircraft for retrofit

• $6 thousand per factory install at Airbus

• Provide various functions on usage basis

• Operational features to provide cost savings for customer

• Voice and data connectivity to the cockpit for safety

• Average 2012 revenue $1,438 per month per aircraft

• Recurring revenue gross margin 80%


Avionics Investment vs. Recurring Revenue

• R&D investment creates significant recurring revenue opportunities

• Hardware asset life of 10-30 years creates large, long term recurring revenue streams

• AFIRS 220

• $1.2 mm investment

• $15 mm hardware revenue

• $75 to $100 mm in recurring revenue at 80% margin.

-$1,000

$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

$7,000

R&D Exp Recurring Rev Hardware Rev


M2M


Turning Data into Information


Using Information to Monitor


Company Making Opportunities

• Airbus factory and fleet installs

• China with Satcom mandate

• C130 upgrade programs

• Business aviation evolution


2010 Fleet

Size

Retired Over

Next 20 Years

New Over Next

20 Years

Forecast Fleet in

2030

19,410 13,380 33,500 39,530

* Not including C130, Turboprop, and Non Tier One production

OEM Opportunities

Commercial Aircraft

2010 Fleet

Size

Retired Over Next

20 Years

New Over Next

20 Years

Forecast Fleet in

2030

14,700 7,800 24,000 30,900

Business Aircraft


China Opportunity

• China has mandated satellite communications for all aircraft

• Benefits of FLYHT - Iridium relationship now recognized and approved

• Inmarsat is the alternative satellite system, but Iridium is more reliable and

economical

• Inmarsat has 3 fixed, high-altitude satellites

• Iridium has 66 low Earth orbiting satellites with pole to pole coverage

• Iridium satellites are physically closer to earth, requiring less power to

communicate with aircraft

• Exclusive distribution agreement with SkyBlue Technologies (Gov’t owned)

• Orders are slowly building

• Large potential is realistic but forecasting and timing are difficult


C130 Up Grades

• 5,300 on the planet in service

• Major overhaul centers

• CMC in Montreal

• IAccess in California

• Snow Aviation in Cincinnati

• Installed 26 for RSAF


Business Aircraft Strategy

• NetJets is a Berkshire Hathaway company

• Largest global fractional operator

• Total global fleet – 650+ business jets

• Conducted 2 Year in Service Trial

• Initial Contract (Europe) – 30 Hawker Beechcraft

• $600k up front

• $6 million 5 year contract

• $2k/month/aircraft once installed

• Contract represents less than 5% of total global fleet

• OEM’s being approached as NetJets refreshes it’s fleet


Management Objectives for 2013

• Become cash flow positive in 2013

• Land major Airbus operator for fleet retrofit by first half 2013

• Begin shipping from Airbus factory by late 2013

• Priority is to drive a substantially higher valuation through accelerated

revenue growth and profitability

• Build on our strategic relationships to accelerate growth

• Protect our markets by providing superior technology and service


Officers/Senior Management Bill Tempany, President & CEO

Mr. Tempany has more than 35 years of senior management experience in hi-tech companies and more than 15 years’

experience in the public markets. He has been CEO of FLYHT since March 2003 and added President to his title

January 1, 2012. He was founder, President and CEO of Fintech Services Ltd., President and founder of QByte

Services Ltd. (now owned by IBM), and a consultant in the international oil and gas industry to companies such as Ziff

Energy Group and Petrobras.

Thomas French, CGA, Vice President Finance and CFO

Mr. French is a Certified General Accountant with more than 30 years of experience. He has worked in global aviation

and is experienced in dealing with a number of multinational companies. Most recently, Mr. French was the CFO for

Eagle Copters Ltd., a privately held aircraft and parts manufacturing, sales, leasing, and heavy overhaul organization.

Derek Graham, Chief Operating Officer

Mr. Graham has more than 10 years of combined aeronautical satellite product development and management

experience, Derek brings extensive depth and leadership to the FLYHT Team. Derek has previously worked at a major

avionics manufacturer for 10 years in product line Management and development responsible for a line of successful

aviation Iridium and Inmarsat communications products

Michael Fang, Vice President China Operations

Mr. Fang is an Avionics Engineer with more than 15 years of work experience in the Chinese aerospace industry. He

has worked with both the Chinese Airlines and Chinese government regulators. He holds an MBA from the Haskayne

School of Business at the University of Calgary.

.


Officers/Senior Management……cont’d

Matt Bradley, Vice President Business Development

Mr. Bradley has more than two decades of experience in military and civilian aviation. He worked with Skyservice

Airlines for the last 10 years as a Captain and Check Pilot. With Skyservice, he worked extensively in the area of fuel

management, implementing a satellite communication and fuel efficiency initiative that saved the airline over 3% of the

annual fuel budget.

Jeff Brunner, P.Eng., Vice President Operations

Mr. Brunner is a professional engineer with over 18 years of experience in the aviation industry. After receiving avionics

engineering and aircraft maintenance training from Southern Alberta Institute of Technology, Mr. Brunner worked in

aircraft maintenance before completing a bachelor’s degree in mechanical engineering from the University of Calgary.

He joined FLYHT in 2005, initially serving as head of the Company’s engineering department, where he led the initiative

to have FLYHT certified by Transport Canada as a Design Approval Organization (DAO). Mr. Brunner is also a

Transport Canada delegate under FLYHT’s DAO.

Kent Jacobs, Technical Director, Advanced Applications

Mr. Jacobs is a professional pilot with a computer science degree who was the first employee of FLYHT. He is the

founding developer of the AFIRSTM system. What started out as a box that fit in a coat closet, the AFIRS system is now

the size of a loaf of bread, is installed on aircraft and is the center of FLYHT’s business. Kent is also the lead developer

of the Fuel and FLYHTStreamTM systems.


Board of Directors

Bill Tempany- President and CEO, Audit Committee

Mr. Tempany has more than 35 years of senior management experience in hi-tech companies and more than 15 years experience

in the public markets. He has been CEO of FLYHT since March 2003. He was founder, President, and CEO of Fintech Services

Ltd. (now Sylogist Ltd.), President and founder of QByte Services Ltd., and a consultant in the international oil and gas industry to

companies such as Ziff Energy Group and Petrobras.

Mike Brown – Compensation Committee, Governance Committee

Mr. Brown is a lawyer with the firm of Geselbracht Brown and practices in the areas of Business Law, Real Estate Law, Wills &

Estates and Civil Litigation. Mr. Brown is currently Chair of the Board of Governors of Vancouver Island University (V.I.U.) and was

a strong leader in the logistical and legal challenges of the transition of V.I.U. from a university college to full university status.

During that process he was instrumental in the creation and implementation of a governance process for the new V.I.U. Within his

community he has also been actively involved with the United Way, the Nanaimo Dragon Boat Festival Society, Crime Stoppers,

the Nanaimo Rotary Club and the Nanaimo Chamber of Commerce. Mr. Brown is a graduate of the Faculty of Law at the

University of Ottawa. He has served on the FLYHT board of directors since March 2003.

Richard Hayden

Mr. Hayden, an engineer by training (BS, Norwich University; MS, Purdue University), has led the development and successful

transition of new monitoring and diagnostic technologies and products in the aviation field for 25 years. As founder and CEO of

Technology Integration Inc., he provided vision and collaborated with end users, OEMs, and industry partners to optimize product

capabilities and suitability, as well as building staff and partners who created two innovative products that are now industry

standards. Mr. Hayden was with Meggitt, a U.K.-based supplier of aviation products from 2002 until June 2008. He joined the

FLYHT board in July 2008.


Board of Directors……cont’d

Jack Olcott – Compensation Committee

Mr. Olcott was educated as an aeronautical engineer (BSE & MSE, Princeton University; MBA, Rutgers University) and has a

certificate in leadership training from the Kennedy School of Government of Harvard University. Mr. Olcott began his career in

business aviation and was involved with creating a flight research laboratory at the Indian Institute of Technology/Kanpur. He also

obtained and managed flight mechanics contracts issued by NASA and private industry. In the early 1970′s Mr. Olcott began a

career in aviation journalism where he was Editor and Publisher of Business & Commercial Aviation magazine and a Vice

President of McGraw-Hill’s Aviation Week Group. Mr. Olcott joined the National Business Aviation Association as President in

1992 and held that position until 2003. He is currently President of General Aviation Company. He joined the board of directors of

FLYHT in May 2008.

Paul Takalo – Audit Committee, Governance Committee

Mr. Takalo is a Chartered Accountant who was employed with Grant Thornton from 1985 to 2005 and spent the last five years of

his time there as Audit Partner. From July to November 2005 Mr. Takalo provided consulting service. Since November 2005 he

has held the position of Vice President, Finance with Standen’s Limited. Mr. Takalo has been on the FLYHT board of directors

since May 2008.

Doug Marlin – Chairman, Audit Committee, Compensation Committee

Mr. Marlin has been President of Marlin Ventures Inc., a Canadian-based consulting firm, since January 1997. He is a Director of

Zed.i Solutions Inc. as well as a Director for JDA Software Group Inc. Mr. Marlin was previously President of JDA Software Ltd.

from 1981 to 1996. He has served on the FLYHT board of directors since March 2003.

Jacques Kavafian – Compensation Committee

Mr. Kavafian is the President of AeroFinance International Inc., based in Richmond Hill, ON. He is well known to the investment,

aviation and travel communities with more than 26 years of experience as an analyst on Bay Street, covering companies in the

airline, aerospace and leisure industries. He was Vice-President and Analyst with Research Capital from August 2004 to October

2009. Mr. Kavafian joined the FLYHT board of directors in December 2010.