Thank you for standing by. This is the conference operator. Welcome to the FLYHT Aerospace Solutions Fourth Quarter and Year End 2022 Results Conference Call. As a reminder, all participants are in listen-only mode and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. [Operator Instructions] I would now like to turn the conference over to Matt Chesler, Investor Relations. Please go ahead, Matt.

Thank you for joining our fourth quarter and full year 2022 earnings call. On the call with me today are, Kent Jacobs, President and Interim CEO of FLYHT and Alana Forbes, FLYHT’s Chief Financial Officer. On our website Flyht.com, we’ve posted a press release covering the information we’ll review today, as well as a webcast of today’s conference call. An archived version of the call will be posted on the Investor Relations section of our website as soon as it is available from the conference call provider. Before we start, I’d like to remind everyone to read the forward-looking statements and non-GAAP financial and other information that we have included in our 2022 annual report. Certain of the statements made today may constitute forward-looking statements and these statements are our present expectations. Relevant factors that could cause actual results to differ materially are listed in our earnings materials and in our SEDAR filings including our annual report, which should be filed today – which is already filed. During the course of today’s call, we will also discuss certain non-GAAP financial measures. You can find the reconciliation of these to the nearest comparable GAAP measures in the 2022 annual report. With that, I would now like to turn the call over to Kent.

Thank you, Matt. Good morning, everyone and thank you for joining us today. My name is Kent Jacobs and late in 2022, I was appointed to the expanded role of President and Interim CEO of FLYHT. Bill Tempany, our CEO passed away unexpectedly on December 20th of last year. It is with both a heavy heart and an unwavering commitment to his vision and legacy that I speak to you on this regular earnings call. Bill is deeply missed by everyone at FLYHT and by me as a colleague, a mentor and a friend. When Bill returned to FLYHT as our CEO in 2020, he set the tone for our software-focused vision and formed the team that successfully continues his work today. I am proud to lead that team. But this is no ordinary time for FLYHT. 2022 was a year of exciting accomplishments and opportunities. As I consider my 20 years at FLYHT, I have never been more optimistic about our current state and future opportunities. With the strong execution of our strategy, we delivered record revenue of nearly $24 million, representing a doubling of our 2021 revenues, while also generating positive EBITDA in the second half of 2022 and on a full-year basis. The continued recovery of the airline industry coupled with FLYHTs approach has place us in a strong position to benefit from the ongoing robust demand for our legacy products and surging interest for our new and innovative solutions. FLYHT’s vision to become a global force for providing innovative aviation and environmental solution for our customers is coming to fruitions. We're on the verge of obtaining the initial supplemental type certificates of our new innovation, the AFIRS Edge, the 5G enabled AFIRS Edge utilizes cellular, Iridium Certus and Wi-Fi capabilities to provide powerful situation awareness by delivering data in real time. Its lightweight form and versatility bridge the end-to-end digital divide makes narrow body connectivity a reality. Our STC rollout strategy is to first address the Airbus A320 and Boeing 737 fleets around the world. By focusing on these narrow body fleets, we are targeting roughly 70% of the commercial aircraft worldwide. We envision an addressable market of approximately 25,000 aircrafts with the Edge poised to become the dominant avionics of choice for Wireless Quick Access Recorders and Aircraft Interface Device functions, thereby enabling operations in finite airspace and in a progressively carbon free environment. Building upon the AFIRS Edge infrastructure weather and environmental services are becoming an increasingly important component of our SaaS operating model. As presented in FLYHTs recent testimony to the Subcommittee on Environment of the United States House of Representatives Committee on science, space and technology, FLYHT’s WVSS-II water vapour sensor system installed on an aircraft with an AFIRS Edge is a critical component of weather Aircraft Based Observations for meteorologists and airlines. Weather is constantly changes, making real- time ABOs a prime source of recurring revenue in support of weather forecasting models and aviation operations. As part of the global focus on environmental impacts of aviation, researchers have projected that clouds formed from contrails that’s contrail cirrus clouds are responsible for approximately half of aviation's climate effects, making contrail detection and avoidance programs a priority. The FLYHT-WVSS-II sensor provides accurate water vapour detection thus providing valuable data and services regarding aircraft induced cloudiness and contrail avoidance. Initially, these services are expected to support the research community and governments, with airline and military operational applications to follow. Validation of FLYHT's environmental strategy was received last year, as the United Kingdom's Meteorological Office announced their intent to purchase FLYHT's WVSS-II water vapour sensor system. While the AFIRS Edge is our new flagship offering, demand for the complementary AFIRS 228 Satcom remains at an all time high. In 2022, FLYHT landed and fulfilled our single largest licensing order, totaling more than $7 million. The success of the Airbus’ A220/A320/A330 aircraft means we fully expect additional orders to continue from our licensing agreement with L3 Harris. Additionally, with its proven track record, the AFIRS 228 has allowed us to maintain our base of loyal customers. Over the years we have developed a library of more than 100 STCs which we continue to expand in concert with new airliner development including the Airbus NEO and Boeing Max fleets. In addition to AFIRS 228 and the AFIRS Edge both supporting all our products and services, we have also developed standalone SaaS offerings as part of our recurring revenue strategy. The recent introduction of ClearPort, our aircraft turn management tool, represents FLYHT's latest standalone SaaS product. As we expand into Artificial Intelligence and Machine Learning models, and further develop our Data Warehouse capabilities, we look forward to reaching our full SaaS revenue potential. As in any year, 2022 is all about the people who make it happen. As we moved forward from development to market introduction, we brought on board four new members with a combined 75 plus years of skill and experience in the aviation industry. These team members bring with them a sterling track record of success and an elite professional network thereby enhancing FLYHT's reputation and improving our time to market. Our innovative technologies and vision were paramount in attracting such talent to our organization. Their impact has been immediately felt and will be reflected in future results. I’d also like to highlight key changes to our Board of Directors which we announced this morning. I am privileged to announce that Captain Mary McMillan, a current independent director on the Board has been named as non-executive Chairman of the Board. Captain MacMillan succeeds Nina Johnson, who's ceding the role of Chair due to external commitments. Based in Virginia, Mary is a true pioneer of women in aviation with decades of leadership experience that major companies such as Inmarsat. Her knowledge of airlines, aircraft products and aviation safety makes her a key part of the FLYHT family in helping steer us to solutions that are attractive to airlines and related service providers. She is currently President of Cashel Aviation, a consulting company dedicated to the development and implementation of aviation safety and environmental strategies. Captain, Mary - Captain McMillan began flying in 1982 and has over 12,000 hours flight time under her belts. I also want to extend my heartfelt gratitude to longtime board member Jack Wilcox who has stepped down after 15 years of service. Through periods of rapid growth and challenges such as COVID-19, his deep understanding of business aviation and steady guidance to Bill Tempany and more recently to me have helped to build FLYHT into the leader that it is today. Thank you, Jack. As we accelerate out of COVID-19 and honor Bill’s legacy we remain steadfast in our execution of FLYHT’s vision. I would like to thank our dedicated staff for their hard work and perseverance. Our loyal shareholders for your continued support and our customers for allowing us to continue to provide service and value. I'd now like to turn the call over to Alan for a review of our financial performance.

Thank you Kent. I will begin by reviewing fourth quarter and full year 2022 results and then we’ll discuss key operating metrics and highlight the tremendous operating leverage our company enjoyed this past quarter as revenues grew much faster year-over-year than expenses. Looking at Q4, we achieved record high revenue of $7.2 million, representing 186% increase over the $2.5 million reported in Q4 of 2021. All of our operating segments contributed to this growth, SaaS revenues increased 50% year-over-year to $2.3 million, which was in part due to the addition of CrossConsense, SaaS revenue. Hardware revenues doubled to $1.2 million from $591,000 reported in Q4 of 2021. We shipped 16 kits in Q4 of 2022 compared to nine in Q4 of 2021. Licensing Revenue increased 751% to $3 million compared to just $356,000 reported for Q4 2021 due to increases in the number of modems and associated licensees ordered for delivery in comparative period as we delivered on the largest licensing order we've received to-date that order was valued at over $7 million and was received in Q2 of 2022. As of December 2022, we have completed all shipments for this order. Technical Services in Q4 increased over 800% to $740,000 as a result of the addition of CrossConsense services to this revenue category. In terms of profitability, we reported another strong quarter of margins with Q4 gross margin of 67% increasing 1,700 basis points year-over-year compared to 49.5% percent reported for the same period in 2021. The increase in licensing, our highest margin revenue line drove the margin expansion again this quarter. Operating expenses increased 24% to $3.9 million, as 2021’s fourth quarter did not include CrossConsense. With revenue scaling, faster than OpEx, we therefore reported an operating profit of $900,000 in 2022 fourth quarter compared to a loss of $1.9 million reported in Q4 of 2021. EBITDA was $1.2 million, compared to a loss of $1.7 million reported in the same period of 2021, which was an increase of $2.9 million. Likewise, net income was positive in Q4 of 2022 at 700,000, compared to a loss in the prior year of - or in prior year's fourth quarter of $2.4 million, which was an improvement of $3.2 million. I would now like to turn our attention to full year 2022 results. For the full year, we achieved record revenues with a 111% increase year-over-year to $23.9 million, compared to $11.3 million reported for 202. Growth again came from all of our operating segments. SaaS revenues increased 36% year-over-year to just over $8 million, compared to $6 million reported in 2021. The CrossConsense acquisition closed at the end of quarter one in 2022. So its SaaS revenues contributed to our consolidated results for a little more than three quarters of 2022, which has provided a boost to our SaaS revenue. Hardware revenue increased 39% percent year-over-year to $4.7 million, as compared to $3.4 million reported in 2021. This was a result of a total of 69 installation kits being shipped in 2022, versus 54 in 2021. Licensing revenue jumped by 487% for a total of just over $9.1 million compared to $1.6 million in 2021 due to the previously mentioned delivery of our record licensing order. Technical Services revenue increased almost 400% year-over-year to $1.9 million from $380,000 as a result of the addition of CrossConsense services to this revenue category. In terms of profitability, full year 2022 gross margin was 63.7%, an increase of over 650 basis points, compared to 57.2% reported for 2021. Operating expenses increased by 33% to $15.6 million in 2022, compared to 11.7 reported for 2021. The largest contributors to this increase were the addition of CrossConsense personnel and associated expenses, multiple 2022 sales hires as Kent mentioned to support our growth initiatives, and increased associated costs to support hardware products and certification processes and development of new SaaS solutions to support our customers in their post-pandemic recovery efforts. 2022’s EBITDA was a positive $250,000, compared to a loss of $4.5 million in 2021, which was an improvement of $4.8 million. 2022’s net loss was $1 million compared to a loss of $5.9 million in the prior year, also an improvement of $4.8 million. Looking at the balance sheet, we generated $900,000 in cash from operations in Q4 ending the year with $2.6 million in cash and equivalents compared to $1.8 million reported in Q3 2022. Our receivables balance at year end showed some impacts from our Q4 deliveries which should come in, in the early part of 2023 and which has contributed to healthy cash generation in our first quarter. You’ll also noticed increases on the balance sheet in the goodwill intangible assets and contract liabilities categories, all of which relate to the CrossConsense acquisition in March of 2022. And finally, it’s worth noting that revenue from all of major geographic regions increased year-over-year with the exception of China, the Middle East and Africa. As the recovery of the airline industry in those regions had lagged the western world, our mix of revenues shifted to 51% from the US and Mexico in early 2022, compared to 39% in the same period last year. The large licensing order delivered in the second half of 2022 accounted for most of the year-over-year increase in US revenues. We expect over the coming years, Edge platform sales will drive increased hardware sales and with the recovery ongoing in China, the Middle East, and Africa, that SaaS revenue will likewise show continued growth. A second phase of SaaS growth should occur as the install base of Edge platforms increases and customers recognize the tremendous value our software solutions provide to their operations. Looking ahead, we expect continued growth in our business driven by the ongoing recovery of the global aviation industry, as well as the execution of our strategy. Last week, the International Air Transport Association, IATA, announced continued strong growth in air travel. February 2023 revenue passenger kilometers or RPKs rose 66% compared to February 2022 and now stands at 85% of pre-pandemic levels measured as opposed to February 2019. Domestic travel rose 25% year-over-year representing 97% of pre-pandemic levels and international traffic rose 90% year-over-year representing 78% of pre-pandemic levels. According to IATA, despite uncertain economic signals, demand for air travel continues to be strong across the globe and in particular in the Asia Pacific region. At FLYHT, our backlog which includes contracted business of $25 million at the end of Q4 2022 gives us good visibility on revenue over the coming quarters. Additionally, our pipeline, which includes uncontracted opportunities for newer offerings such as the Edge, sits at more than $70 million and is the most robust we ever experienced. As we obtain STCs on our Edge platforms, we expect our type of opportunity will continue to grow over the course of time. And with all of that said, we’ll answer the questions that have come in by email to investors@flyht.com. We have quite a list. Kent, now that the modem order is delivered, should we expect to see licensing revenues go back to the level they were running at before?

We expect continued licensing revenues at our agreement in our cooperation with all three here, we don’t expect it go away. We supply that product to support the Airbus family of aircraft, the most successful line of aircraft on the planet. We expect it to continue and we expect it to grow.

Might there be additional modem orders that would result in this list in licensing revenues again?

Kind of the same question. Yes, we are expecting continued growth there.

In terms of the STCs can you talk about the sequences of approvals with Canada first and which airframes would that cover? Will it go something like Airbus model – Airbus model 1, 2, 3? And then the same for Boeing models or is it more of a blanket?

Yes, it’s an interesting question and different companies that build avionics and get STCs before they can put those products on the planes approached it. There is a challenge of getting STC in different ways. FLYHT is taking the approach for the Edge of completing the A320 and the 737 at the highest, at the most modern level of airliner that we can. So for the 737, we are completing it on the MAX model as quickly as possible. That will cover that on the lower model such as the 737 NGs and the 737 classics. We can then take those STCs and familiarize them into other jurisdictions such as the U.S. and the FAA and to Europe. So, we’ve got a very structured strategy for dealing with the STC process. It's a challenge. We had the same challenge with the AFIRS 220. We had the same challenge with the AFIRS 228 and now with the Edge. It's just a matter of getting through the paperwork and getting the government agencies that support us and get those initial in position. Alana Forbes What is the process to get the Canada STCs approved in US and Europe and how long does that takes?

It's a process called familiarization. So there are bilateral agreements between groups like or agencies, like Transport Canada and the FAA, Transport Canada, India. And once we have a complete STC in a jurisdiction like Canada, we can familiarize that package, familiarize that STC into those other jurisdictions. We would gather up all the documentation to once the STC is complete in Canada, we gather all the documentation, all the test results, everything that went into the approval and Transport Canada will submit that on our behalf in to the FAA. It then becomes an exercise between Transport Canada and the FAA. We don't play a large role in it. We support any kind of additional questions that we come along, but it's primarily been a government agency to government agency. We don't have any control over the time that that takes. Right now, the FAA is running quite slow, much more than they were before COVID. In Europe, it’s much, much better. So, as we get to, STC's done in Canada, we will familiarize them with other jurisdictions as quickly as possible. There's a there's a bit of an element there where we don't control the time.

New aircraft today, are they rolling off the line with the AFIRS 228 SATCOM product?

Well, if it's a, if it's an Airbus, A320 family or A330 aircraft is a very, very good chance of rolling off line with an AFIRS 228 SATCOM product provided through the L3Harris agreement. That is our only line fit opportunity right now and engagement that we have. But it could – that line of aircraft on the planet. That's the one I would want. The most successful aircraft. So that, yes, that's the line that’s rolling off of the AFIRS 228 SATCOM.

And a follow-on, who else is offering the competitive option to the 228?

Well, from a SATCOM standpoint, there are - there is competition in the - in that space. The Collins Rockwell, the Avionica, they have competing SATCOM products, not only with iridium but also with satellite networks like Inmarsat. But that's not new. FLYHT has been in that - competing in that space for 10, 15 years. So nothing new there. We do very well in that space.

In terms of the Edge product, can a customer – no, we answered that one. Do the contracts for the SaaS offerings have price escalation options for installation over the term?

Yes.

Those escalations clauses are in all of our contracts. Over the long term, do you expect to launch additional software and data applications that would ride on top of the Edge SaaS platform that would result in additional SaaS revenue opportunity?

We have. That is kind of, that is exactly the model that we are taking. That’s the approach we are taking. The Edge is the platform that provides the access to the data on the aircraft. We have the most efficient way to get that data off the aircraft and then we have the ability to analyze to do what we will do with that information, that data turn it into knowledge, turn it into actionable intelligence. That is the only vision that Bill brought to the company 2.5 years ago. That is what we are focusing on.

Will the Edge STCs be received in Q2?

The answer is yes. We have, we have provisions on the A320. We're expecting provisions on the 737 Max very, very soon. That will allow us to then do those initial installs and turn those into activation STCs. I just want to clarify something. Sorry, I’d read that wrong. I got that second 2023 in Q2, we still expect to have the provisions in Q2. Absolutely.

Okay. Have there been any pre-sales at the Edge ahead of receiving STC?

Not yet. Can I just make that, just kind of – sorry. We don’t have any pre-sales. We are in active discussions with several airlines about this right now. Look, there is a challenge and there is an additional – there are additional steps in the airline as we go through the first airline to put the product on their aircraft and to provide the flight test and the ground test. And that’s the place that we are at right now. The products become much easier to sell, much more attractive to an airline the moment those STCs are available. We have experience with the 220 on this with the AFIRS 220, with the AFIRS 228, and now with the Edge. So same thing. We are just going through those initial phases with them.

Great. Has there been any sales of the partnership product with MBS? Will it work with AFIRS as well as the Edge?

The partnership with MBS is on the data loading, the airborne data loading functions. There has been no sales yet. We are in discussions with the only one airline regarding that capability right now and that partnership with MBS and FLYHT. Will it work with the AFIRS as well as the Edge? That data loading functionality works with the Edge only. It doesn’t work with the AFIRS 228. So, it’s an AFIR that – MBS combine tools.

Can it be set that FLYHT’s actionable intelligence software is presently producing SaaS?

Absolutely. There are when Bill – when Bill made the decision and brought the vision that we were going to focus on SaaS and actionable intelligence, we tweaked and we completed some of the programs on the AFIRS 228 platform that allow us to provide actionable intelligence and we are doing that right now for several of our customers. The new product such as ClearPort, they are rolling out now dealt to be adding to that SaaS opportunity.

Great. What are the expectations for AFIRS L3Harris Airbus Licensing in 2023?

It's a little bit tricky to answer that. That revenue is very lumpy. Those orders come in, in big chunks and then we can go, up to one or two quarters where we don't have - we don't have any additional sales or additional licensing revenue there. It is the A320 line of aircraft and we absolutely expect more orders to be coming in. It’s a popular airplane, most aircraft that are coming off the line are taking the SATCOM product, widely successful product.

Have there been pre-sales at the WQA version - we answered that one. Okay. Where does the sale of the WVSS2 sensor to the UK MET stand?

We are in contract negotiations, right now, like today. Yes.

Can you provide updates for the activity with the ECPC formally Environment Canada and with suites?

So, yes, we're continuing to provide ECPC with MDAR data from our aircraft - We expect that relationship to continue and grow as we add new aircraft and as we bring the WVSS to online.

Okay. Those are all the questions that we received in advance. Ashia, I'd like to turn the call back to you now and we'd be pleased to take questions from callers.

[Operator Instructions] The first question comes from Jaeson Schmidt from Lake Street. Please go ahead.

Hey guys. Thanks for taking my questions. I know you guys don't provide guidance. But just curious if you could comment on what you're seeing from an order pattern standpoint year-to-date here?

We see an increasing - the pattern is increasing. That’s some - it’s something that we monitor and yeah, it's the recovery. The recovery in the industry is demonstrating that.

Okay. And curious if you could provide color on what your expectations are for - from a supply chain standpoint? Are you expecting any significant friction or headwinds there?

No, that that has been something that we have been constantly monitoring over the - throughout COVID and into the following years. Right now, we're very confident that we're in a very good – thanks for our supply chain. It’s something that we are actively working continuously in the organization making sure that we're not caught off guard.

I would also say, we did take extra time to redesign several portions of the Edge to account for anticipated supply chain issues. So, we increased, we spent a lot of time and effort in increasing the resilience of that product in particular. And the supply chain for the other product lines are pretty stable.

Okay. That's helpful. And then, just the last one from me and I'll jump back into queue. Gross margin was obviously strong in Q4. I assumed partly that was due to mix. But how should we think about gross margin trending here in 2023?

I think it'll all depend on if we are able to receive further licensing orders through 2023. The gross margin so at that first line is in the 80 percentile range. And so, it really increases our gross margin when we have a significant portion of our revenue derived from licensing. SaaS revenues are increasing. We - the bigger they are, the more lift we get off of our fixed costs in that category. And we're seeing around 60% for that category. Hardware is a bit more challenging. We do take lower gross margins just to get the real estate on the aircraft. So that we can SaaS pipe and start providing data services to our customers. Hardware revenues are carrying about 30% gross margins at this time.

Okay. Appreciate the color. Thanks a lot guys.

Thanks Jaeson. Thank you.

The next question comes from Dick Ryan from Oak Ridge Financial. Please go ahead.

Thank you and congratulations on the strong finish to ‘22 guys. To say Kent, when you look at the - and there was a lot of commentary on STC, but I guess I just want to go back to the 228 STC on the MAX. You've got a launch customer there. With the Airbus side, you've got the relationship with L3, that pulls that through. Do you need an L3 version on Boeing to help pull that through or will that be more direct between just you and Boeing and the airlines?

Look, having a relationship with Boeing similar to the one that we have with Airbus would be, would be great. But you mentioned the 228 and the MAX. It's not - we're not going to get that relationship with the 228 on the Boeing’s fleet, if that's what you're asking. That is - that opportunity for the line fit SATCOM is over on the Boeing product. The 228 MAX STC that we just received was to take provisions on a MAX craft and install the SATCOM system directly into those provisions. I am not sure if that... yeah. Okay.

Yeah that's clarifying. Okay. What you have – you launched a couple board openings. What’s the process and where do you stand to fill some board seats. Are you going to leave it at the current configuration?

A week from now, there is an information circular that we will address that. Any concerns about the board, it'll all be covered in that. The board is - the board is going to remain extremely strong and it’s potentially stronger.

Okay.

But that will come up. Yeah, you – certainty get a week from today.

Okay. You've had some strong industry hires to from Teledyne to push the 5G as that it gets through the certification process, can you just kind of acquire, subjectively talk about, you've had these guys on board for six months, what are you seeing now that six months after their hires, what kind of progress are you seeing? Touch points with airlines, whether that’s domestic or international, can you just kind of give us a sense of the progress you're seeing there?

Yeah, it's great point. So the - and I did talk about the addition of the sales team there. It's been a great - it's been a great experience for FLYHT. The first thing that's really obvious about that is that the UK MET program is moving ahead so quickly and so actively. It's really - that that is directly related to the input from that that new team that towards FLYHT. The other part really, really obvious to me about the - about the way that team is influencing us is that the qualitative – that has to be a little bit careful with the word. But the quality of the airline, the importance, the value of the airlines that are coming to the table now that we are dealing with has changed significantly. FLYHT is - we've had a long history of working with great companies. But we're moving into a different tier with the airlines, with the people that we have on board today. We responding to RFPs. We are funding directly to airlines that we wouldn't directly dealing with before. That's a testament to the people that we brought on board.

Great. Thank you.

Your next question comes from Bruce Krugel [Ph]. Private investor. Please go ahead.

Hi Kent, Alana. Just a couple of follow-up questions, specifically on the weather. So, I put my research I understand now that you own probably the weather devices for aircraft. Now you've got the UK MET contract, which you've commented on. You have the opportunity to go down to the United States and present in the Congress. Are you seeing any traction on the weather front outside of UK MET?

Yeah. Absolutely. And the experience working UK MET, thanks, that’s good. The experience of working UK MET has showed us that it is the government agencies that are the primary user of that initial set of data that we collect. So, with the relative humidity centers at FLYHT homes and we have the TAM to our product and we have the WVSS, we turn those aircraft-based on observations and think something that is completely different in the industry. We add relative humidity. The most important value that is not inherently collected off an aircraft. So our ABOs are that much better than anybody else who's putting them out there. UK MET was the first government - well, UK MET and Noah are the two and Environment Canada are the three government agencies that have started taking that data and have been taking it for years. And that's opened up all the other MET agencies around the world, whether it's in Australia, whether it's in China, whether it's in Germany, the parts of Southeast Asia, all of those MET agencies are now paying attention to what FLYHT is able to do and how we're able to produce the best ABOs with relative humidity.

Okay. Just another question on the Edge STC's. If when you get your - the Edge STC's, would you expect to have clients to sign immediately, struck relatively immediately or would these clients have to then go out and test the product first before they commit themselves to the Edge device?

Well, from the perspective of testing the product in their aircraft if the STC is available then no, the Airlines have absolute confidence in the product functioning and working the way that it would be intend to do. That is the - that the idea - part of the idea behind having to obtain the STC's. So that that's what makes that second airline customer that much easier to get than the first one who have to go through the process of doing all the testing with FLYHT and then doing the certification. We expect those sales to come much quicker once we have the STC's in place. It's - yeah. That's where we expected to be much, much quicker, much easier. That's why we're targeting the 320s and the 37s.

And then my final question, any update on China and the Chinese domestically-produced aircraft?

No. Yeah. So the two aircraft ARJ21 and the C919 aircraft, we’re actively installing on the ARJ21 through a long time customer, China Express. We're continuing as they expand their fleet. We are installing on every ARJ that they bring in. The C919, it’s still going through some developments. It's a slightly delayed program, probably not a surprise. But as that aircraft continues to be developed and go through the certification process, we're right there - right there ready to be installed on it. It's a little out of our control right now as we wait for them to complete that product.

Product being there, right. Yeah, right. Thanks man. Thanks a lot.

Thanks, Bruce.

The next question comes from Kris Tuttle from IPO Candy. Please go ahead.

Good morning. You've answered pretty much all my questions. So thank you very much for taking this one. I was just curious now that, I mean, you're growing very rapidly and you did have the jump in receivables, which sounds like it's coming down. But it just prompted my question, do you guys have – do you feel like you're set up with enough liquidity for your working capital needs as we go through and will it be a bigger year for you, 2023 and beyond.

We do. We generated cash in Q4. Some of those receivables have been collected through the first part of 2023. We've had healthy cash generation in the first quarter. We've really done a lot of work throughout the pandemic and particularly, lately, even into Q1 in adjusting our cost base, just to make sure that we can sustain ourselves with the cash balances and receivable balances that we do have coming in. We're pretty comfy. We're definitely keeping our eye on it. I'm always concerned about cash, of course, but what we're doing well. We don't anticipate a working capital need.

Okay, terrific. Thanks very much.

The next question comes from Marc Berger from MKD Associates. Please go ahead.

Good morning guys, Great quarter. Great year. Just spanned up the question that Bruce had with regard to China and the airlines there, is the 919, the airline that has about 1,200 orders in backlog?

I don't know for sure. I don't believe that it had 12 - did you say 1200?

Yeah. Yeah, yeah.

But the numbers that we get out of – that you can imagine that there are - there's a little bit secret up there. We don't always get, FLYHT is not privy to that information of the direct number of orders. It's going to be a very successful aircraft. The Chinese government will make sure of that. And it will be sold a lot in China and that part of the world.

And will we be on each one of those? Is that that a done deal?

That is not a done deal. Like FLYHT is working with - We are working on the process to be at the SATCOM or a SATCOM provider for them. But no, there's no formal decision there.

Okay. And AirAsia, how is the business starting to ramp up there?

AirAsia is continuing to accelerate out of the pandemic. We had a lot of our products that was parked and was not generating revenue. We are seeing those numbers pick up.

We are - they were down to about 6% at the low and right now, they're up back to about 60% operational of the aircraft that are installed with our product. So, we're seeing some, some really good recovery in - with AirAsia.

Okay. So that should show up in the first quarter of ‘23.

Marc, we don't give guidance. Nice try, though.

All right. Also, with regard to the 5G and all these telecom companies switching to it, what kind of timetable do you expect that airlines are going to have to make that switch to a 5G product one way or another?

Yeah, we see the airlines in that mode right now. So the airlines when they make a decision to swap a product, like we believe that they're going to be doing, they don't make that decision and then, two weeks later start swapping it out on their aircraft. This is a - it's a fairly lengthy exercise The airlines are looking one, two, even three years out if they have to coordinate their fleet in through maintenance opportunities, to get to swap product out. And I'll temper that just a tiny bit, the quick replacement of the existing 2G, 3G product that we anticipate doing that large addressable market is a much, much easier swap. It's not a full inflation. We would be using the provisions that were already on the aircraft. But it's - yeah, it'll be happening. The airlines are making the decisions now and we're seeing that in the discussions that we're having with them. It's active with many airlines and our sales team right now.

So, this there, what 20,000, 25,000 opportunities out there, it would mean what over three or four year period of time that they have to swap that out?

Yeah. That that that's correct, because as that the networks go down around the world as the older cellular networks go down around the world and airlines choose not to replace with – or to not to keep going with a wireless QAR functionality, when 5G is the only option they need to be looking to a product, like, the one like the Edge that FLYHT has and we expect that - those towers are being retired now around the world, it's happening at different rates around the planet and it's not going to go back. So it's just a matter of time before the 5G is the dominant technology for cellular providers around the world.

And would you be able to meet that demand based on what we have in place infrastructure already?

It's something that we consider and the answer is yes. We're making sure that of the capability that we have as we move forward. Yeah, absolutely. We are, we're planning for that.

Great. Thanks. No more questions. Thank you.

Thanks Marc.

The next question comes from George Melas from MKH Management. Please go ahead. George Melas-Kyriazi: Thank you. Hi, Kent. Hi, Alana. Congratulations on a great year. I have a follow up regarding the question of the Edge. You are providing a 5G sort of replacement upgrade to an existing product, primarily the Teledyne product. Are they currently – so should from the point of view of the airline, what are the options that they have now? I mean I did, the Edge is not available right now, what are the opportunities what, what are the options they have now and maybe what are the options that they will have a year or two from now?

Well, the options they have now is that to ride out whatever product they have on the aircraft right now as long as they can. So as long as there are, as long as they are capable towers, that can handle things like the Teledyne product, they'll continue to work. But some of those Teledyne products are so old, but they're going back to 2G, 3G technology. So when airline would need to make a decision and to plan for the retirement of those networks and the fact that their avionics in that regard would not work after those powers are down, absolute networks are down, they always have the opportunity to manually retrieve the data. We know that this is not going to happen. We know that airlines are not going to go backwards, but if we're talking about all the options that they have now, that that is something that they could consider. Looking out one, two, three years, airlines will definitely have the option – will definitely have the option of the Edge. Right now, we still don't see any competition in the space. We don't know of anything that's coming along and being developed in the 5G space, that the way that we are. So, I'm going to say that, taking into account the development cycle, how long it takes to bring a product to the - through development, through testing, get the STC done. The good news is that other companies would have to go through the same process that we are. I can imagine that for the next few years we are – we’re the product, we are the option. George Melas-Kyriazi: Okay. If it means that if the Teledyne sort of try to upgrade from 2G and 3G to 5g, do they have to go through the same STC certification process that you do now, given that is their product?

Yeah, it’s a fair question. I don't know for sure because I don't know that the inner workings of the Teledyne product. I do know that the Teledyne product I believe – I know that the Teledyne product is 20 years old. It's very old and I don't believe that they - I think it would be a big challenge for them. And I don't know that it possible to incorporate a 5G radio into that platform - into the existing Teledyne product. They were able to do it with the LTE. They were able to upgrade that product with the LTE radio. I don't think it's an option for the 5G. George Melas-Kyriazi: Okay, great. So it means that right now the airlines really, if they want to upgrade their products, I mean, until we get the STC's, they have no real options, right?

Yeah, there is no product out there that is where we don't see any competition. We don't - in a 5G, that's correct. We don't see a 5G enabled wireless QAR when we talk to airlines, we're not compared to other products out there. We're the ones. So, yeah, that is correct. George Melas-Kyriazi: Okay, great. And then, just a question of the licensing, you expect that to grow, I mean, as the A320 family keeps growing and production still keeps increasing. Do you see 2020 - but I guess it's not terribly smooth, right? You have big orders that come from time to time. It seems like Airbus is actually sort of inventorying some units, just to facilitate their supply chain. Would that be - is that how you would see that?

Yeah, that's accurate. And we expect our future licensing revenues to be mainly tied to the production line at Airbus of the A220, A320. A330 line. George Melas-Kyriazi: Okay, yes. And overall that just keeps growing. Yeah.

They're certainly doing well. George Melas-Kyriazi: Yeah. Good to partner with them. Okay, great. Thank you very much.

Thanks, George.

This concludes the question-and-answer session. I would like to turn the conference back over to Mr. Kent Jacobs for any closing remarks.

Thank you. So, thank you everyone, for joining us on the call. 2022 was that - it was a great year for FLYHT. It was a tough year with Bill and it was a tough year for the company in that regard for me. But it was a very successful year in the end and that set us up very well for 2023. Look forward to keeping you updated on our progress. We appreciate your time and interest this morning and we appreciate you continuing to follow FLYHT. Thank you for your time.

This concludes today's conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.