Subject: FLYHT Financial Research Report Update

Dear Shareholders and Interested Parties;

KRC Insights has updated the financial report prepared in March of this year with details from our 1Q 2019 financial results. The initial report provided a great deal of background and color on the FLYHT business. This report fine-tunes financial projections for FLYHT Aerospace Solutions Ltd. given our recent financial release.

The original and updated reports can be found at the following link:

Best regards –
Thomas R. Schmutz CEO, FLYHT

Subject: FLYHT Financial Research Report

Dear Shareholders and Interested Parties; FLYHT decided this year to engage KRC Insights to prepare some financial reports on FLYHT Aerospace Solutions Ltd. Mr. Krugel is familiar with FLYHT and is a shareholder. He has been following FLYHT closely and had expressed a desire to help FLYHT bridge the understanding gap that may exist between FLYHT’s operations and the understanding of those operations in the capital markets. Mr. Krugel is an active participant in the Canadian small cap market with over 22 years’ experience formerly both as an Equity Research Analyst and an Equity Salesperson at Canadian institutional brokerages. This background allows him to provide a unique perspective to his consulting clients by merging his in-depth experience in the capital markets with his love of macro-economic trends and valuation knowledge. As your CEO, I have been earnestly working since my arrival to regain analyst coverage through the many financial institutions that we periodically visit in order to provide updates on the exciting activities at FLYHT. However, the two raises which we have done since my arrival (Equity Raise in April 2016 and a Convertible Debenture in October 2018) were done privately, since we were able to attract the necessary capital in a more cost-effective way. In today’s microcap environment, this unfortunately seems to have prevented analyst coverage reengagement, thus far. After consideration, we decided that engaging Mr. Krugel would be a useful way to help communicate what we see as a very exciting future in a way the capital markets may better understand. Our business is not simple, and commercial aerospace is a bit esoteric. We hope that this report helps to bridge any comprehension divides which may exist in the mind of some potential investors and institutions. We expect that Mr. Krugel may update the report after new financial results are published. There is quite a bit of information in the report, which I believe helps to frame the actions the Board and management of FLYHT have been taking in order to grow the business and create value.

The report can be found at the following link:

Best regards – Thomas R. Schmutz CEO, FLYHT

Subject: Sunny with a 100% Chance of Batteries—A Call to Action on the Environment.

Dear Shareholders and Interested Parties; You probably know that every day Environment Canada launches weather balloons into the upper atmosphere to gather vital weather data. But did you know that each weather balloon is equipped with a radiosonde, a package of electronics, sensors and batteries weighing about 100g? This radiosonde collects information on the weather conditions as the balloon ascends. After the data is transmitted, the balloons burst and these components are dropped far and wide and are almost never recovered. Environment Canada says that the data is critical, but that the cost to recover the radiosondes hardware is too high.


According to the CBC’s December 5th report, 62 balloons a day are released from 30 locations across Canada to collect critical weather data. This means 22,630 drops per year of batteries (some radiosondes require two toxic lithium-ion, others required six alkaline), sensors and packaging are littering our remote forests and rivers. You can read the CBC report here:

There is an ALTERNATIVE to all this electronic waste
FLYHTWeather™ features the TAMDAR™ (Tropospheric Airborne Meteorological Data Reporting) Weather Sensor. TAMDAR, currently installed on 200 commercial aircraft, measures and collects temperature, pressure, humidity, icing, winds aloft, and turbulence. It bundles this data with GPS data and transmits it in real-time over satellite networks, to be used to update weather models. This collection is like the information collected from worldwide weather balloons but is reported in real-time and without the e-waste.

The picture to the right shows the external installation of TAMDAR on an AirAsia aircraft.

Here’s how FLYHT can help reduce this e-waste
With an average 500,000* aircraft take-offs and landings per month at the 91 Canadian airports with NAV CANADA air traffic control towers, installing TAMDAR on even a fraction of those aircraft fleets could increase the number of weather observations relayed to Environment Canada exponentially. It’s easy to see that the reduction in e-waste could be substantial—the need to retrieve such waste would be eliminated, and the resulting data more frequent and accurate.

The cost to install these solutions and deliver the data is a fraction of the cost of the $17-million-per-year cost of the Upper Air Observation Program.

Want to see Environment Canada reduce this e-waste?
They are considering alternatives, so here’s what you can do.

We urge you to:

    1. Contact your own Member of Parliament
    2. Contact Catherine McKenna, Minister of Environment and Climate Change of Canada:
    3. Contact Environment Canada:

And tell them about FLYHTWeather and TAMDAR. Should you have any questions, please don’t hesitate to contact us. Sincerely, Thomas R. Schmutz CEO FLYHT *

Subject: FLYHT’s Boeing ecoDemonstrator Program Update

Dear Shareholders and Interested Parties;

FLYHT announced its participation in the Boeing ecoDemonstrator Program on August 10, 2017 in this press release. This letter is intended to provide more information about FLYHT’s participation in this trial and what we intend to demonstrate.

The Boeing ecoDemonstrator Program plays a key role in the Boeing’s environmental strategy by using flight testing to accelerate new technologies that can reduce emissions and noise, improve airlines’ gate-to-gate efficiency and help meet other environmental goals. In 2018 for six weeks, Boeing and FedEx Express will work together to flight-test more than 30 technologies aboard a FedEx Express-owned 777 Freighter. The two companies are committed to improving the safety and reducing the environmental impact of their products and in advancing technology that will improve performance

FLYHT is one of the collaborators on the program and is excited to be able to work with a very distinguished list of companies. FLYHT has delivered our Automated Flight Information and Reporting System (AFIRSTM) 228S system and kit to Boeing for installation on the FedEx B777 this month. The aircraft was delivered back to Boeing from FedEx in mid-January for this installation. Among other activities, the aircraft livery will be updated with decals outlining the program and the partners involved in the program. An image of the aircraft without the partner decals is shown below.

The program will evaluate over 30 technologies including evaluations in advanced manufacturing and materials, digital aviation, along with cabin, electrical, technology, flight control and flight science enhancements; new propulsion and fuel technologies and enhancements to test technologies and factory processes. Also, being tested are new flight deck changes and avionics. FLYHT’s technology falls into this last category where we will demonstrate state of the art aircraft tracking, locating and data recovery technologies using our AFIRS and UpTimeTM Cloud technologies.  We are excited to be the only company chosen to demonstrate these technology capabilities for the program.

Regulatory changes that were causing Boeing and other airframers and operators to look at FLYHT’s technology were discussed in a two part letter last year which is published on FLYHT’s website and is copied here (Part 1Part 2).

The context diagram for FLYHT’s portion of the program is shown in the diagram below.


The FLYHT AFIRS product is connected to the same data sources that the aircraft’s flight data recorders (FDR) and cockpit voice recorders (CVR) receive their data from. The AFIRS 228S product transmits essential parameters from the FDR over the Iridium low earth orbit constellation to UpTime Cloud via the Iridium satellite gateway. Our customers, in this case Boeing, will securely log into UpTime Cloud over the internet to bring up the UpTime user interface which now includes a real-time animation of the aircraft and flight deck instruments which are driven by the real-time data delivered from AFIRS.

A close-up of the situational awareness display is shown below which we have developed in partnership with Flight Data Services, a strategic partner. At the top is a flight profile which shows elevation versus time and key flight phase elements. The aircraft flight path is simulated below that with real-time location updates delivered from AFIRS over the satellite network. Below the aircraft attitude simulation are various aircraft instruments that simulate active flight deck based on the flight data that is being delivered in real time to UpTime Cloud. Operators will appreciate the situational awareness enhancement that this type of ground-based interface depicting an active flight can present, particularly when there is a problem encountered during the flight.

FLYHT has been busy adding this feature to our product along with other capabilities to make the demonstration an excellent indicator of the value proposition of FLYHT’s intellectual property. Another enhancement we have created is the ability to also stream larger amounts of data over an Inmarsat SwiftBroadband Safety (SB-S) network. Inmarsat SB-S network is a geosynchronous satellite network that offers significantly larger bandwidth than the current Iridium network. (FLYHT has announced a trial with Inmarsat in addition to Boeing using the SB-S network which will be discussed in a different CEO letter).  FLYHT can send significantly more data over this network, including cockpit audio. FLYHT has acquired a digital cockpit area microphone from another strategic partner, L-3 Technologies, which delivers digital cockpit audio samples from the cockpit via an aviation standard digital bus. The result is that FLYHT can stream the cockpit audio as part of the situational awareness display, further enhancing the real-time informational aspects of the system and creating a virtual flight deck in the Aircraft Operations Center!

FLYHT is very excited to demonstrate the future of situational awareness and timely access to flight data through this program. Upcoming key dates include the installation in mid-February, customer training on FLYHT systems in late February, and the flight test beginning in early March to be completed in late April.

Following the completion of flight testing, FLYHT will be working with Boeing to present the data that is collected through this portion of the trial to two different industry working groups to create proposals to standardize systems for autonomous distress tracking and timely access to flight data. FLYHT is very proud to be working with Boeing and FedEx on this program and we are optimistic that our intellectual property and capabilities in this area will lead to outstanding growth opportunities as we exploit our unique position in the industry.

Best regards –

Thomas R. Schmutz

Subject: A Message from Tom Schmutz, CEO, FLYHT Aerospace Solutions

Dear Shareholders and Interested Parties;

As you are aware, FLYHT has just announced a 10 for 1 stock consolidation, which will be effective on July 17th.

I would like to use this opportunity to explain the reasoning for this decision and why it is important for moving FLYHT from a “penny stock” to a company that will be properly assessed on its fundamental performance and the accompanying attractiveness to institutional investors. In short, we are unlocking value, which I will address in much more detail below.

As a business, we see growing market acceptance for FLYHT’s solution through unannounced trials of our products and a rapidly growing sales contract backlog, which I recently revealed exceeds $25 million.  We are also pursuing opportunities to grow the software as a service (SAAS) component of our revenue by taking steps we think can more quickly capture Automated Flight Information Reporting System (AFIRSTM) systems that are installed on aircraft, but not currently providing recurring data services. These services are subscription based and save operators money, streamline their operations and proactively enhance safety.

A great deal of our attention during my time at FLYHT has been dedicated to helping take this Company, which had a great idea and make it an effective and viable business, while preparing it for future growth and expansion. During that time, we have eliminated the debenture debt overhang and cleaned up the balance sheet. We have captured new, government sponsored, no interest debt and commercial lines of credit from top tier banking institutions at good rates. We have retooled internally; added expertise and established processes, which produce key performance indicators that we use in our business decision making. Through this process, we have significantly increased our revenues, controlled costs and have built up a significant backlog of contracted sales for both hardware and recurring data services, which will help us with our goal of delivering growing future revenues.

Recently, I have had the pleasure of meeting with several current and prospective shareholders in major financial centres across Canada and the United States. During those meetings, I received very complimentary feedback on the improved financial performance of the Company, which includes our first ever EBITDA* positive year and four consecutive positive earning quarters.

I also received clear and consistent guidance that the Company should consolidate its stock. It is widely believed that with the shift from a research & development company to a growing and profitable company, we would benefit from a consolidation.  FLYHT is transforming into a fundamentally valued growth company as opposed to a speculatively valued company, and we wish to avoid negative perceptions as something that is “flipped for pennies” rather than being treated as a longer-term investment. The Board of Directors of FLYHT agreed with this sentiment and this was the catalyst to seek shareholder approval for the stock consolidation at the May 2017, Annual General Meeting.

As part of the investigation into the impact a share consolidation could have on FLYHT, management engaged a top tier Canadian bank to conduct research on the topic. This bank reviewed the last five years of consolidations on the TSX and TSX-V, excluding resource companies, between January 2012 and February 2017. There were 187 share consolidations during this period, which represented approximately 7% of all TSX and TSX-V listed companies. The average market cap of those companies that did consolidate was approximately $41 million at the time of consolidation, while their average market cap is now approximately $57 million. Furthermore, the average increase in market cap between the time of share consolidation and today is approximately 799%.

The reality is that a share consolidation does not affect the actual value of a company; however, there are positive structural considerations for both retail and institutional shareholders and investment dealers, especially in Canada.

Consolidation can improve the willingness of a dealer to underwrite an equity financing because the investment dealer margins are reduced. Also, attractiveness to retail investors can be improved due to improved retail margins and more accessible bank loans. Finally, attractiveness to institutional investors can be improved by overcoming minimum share price constraints. Our banking partner determined, based on the study above, that at the $2.00 price level, public companies begin to overcome structural constraints that exist in the Canadian market, and at the $5.00 price level virtually all structural constraints are eliminated. So, while share price appreciation could be a potential benefit of a share consolidation, the key benefits for FLYHT are financing flexibility and a potentially broader shareholder base. This is not to say that FLYHT is seeking financing now. However, financing would be considered in connection with any potential merger or acquisition of a complimentary business and we want to be prepared.

I know this is an emotional issue for many investors. I am personally very bullish on FLYHT and believe this is a necessary step to revive the FLYHT story, which might have lost some luster with the long runway that some investors have been travelling. We are implementing this consolidation following an operational turnaround, positive cash flow and profitability. We feel that this step can unlock value in FLYHT and lead to increased liquidity due to heightened positive attention it may generate among institutional investors.

I hope this letter helps to provide some of the thoughts that have gone into this decision by the Board of Directors. As a shareholder myself, I am excited with the prospect that this activity, followed by additional positive execution within FLYHT, will ultimately lead to increased shareholder value.

Best regards –

Thomas R. Schmutz

*  EBITDA: defined as earnings before interest, income tax, depreciation and amortization (a non-GAAP financial measure).

Subject: Aircraft Tracking, Space Based ADS-B, and Timely Access to Flight Recorder Data, Part 2

Dear Shareholders and Interested Parties;

This is part 2 of a letter published on April 26, 2017. Part 1 of this letter discussed International Civil Aviation Organization (ICAO) regulatory activities, air traffic control surveillance, aircraft tracking solutions and the value that FLYHT’s Automated Flight Information Reporting System (AFIRSTM) provides aircraft operators.

This part of the letter will explore Amendment 40: Timely Access to Flight Recorder Information. This ICAO performance-based requirement specifies that by 2021 new aircraft type designs make the flight recorder data available in a timely manner.

Performance-based rules prescribe a result and do not dictate an implementation method, allowing industry to achieve the rule in the most efficient means possible, on a case by case basis.

The intent of this Timely Access to Flight Recorder Information is to resolve the problems recently encountered. The Air France AF447 disaster occurred in 2009 when this flight entered a high-altitude stall and crashed into the ocean at the mid-Atlantic Ridge; killing all on board. The search for the aircraft and recovery of its cockpit voice recorders and flight data recorders, together known as “black boxes”, took approximately two years. Malaysian Airlines flight MH370 went missing in 2014 and investigators do not know what became of the aircraft and its 239 people. It is paramount for accident investigators to get the black boxes as soon as possible because they are the primary data source. Without the data from the recorders, the accident investigators have difficulty piecing together the facts of the incidents.

So, industry is faced with this prescriptive requirement – how do we get the accident investigators started immediately, without necessarily securing the black boxes themselves?

There are thought to be two primary implementation options to begin investigating the cockpit voice and flight data immediately following an incident. The first, and from FLYHT’s perspective the superior solution, is to stream the recorder data from the aircraft while it is in flight. The second, more challenging solution, is to fit aircraft with deployable recorders; recorders which eject while the aircraft is in flight or as it is crashing. It is likely that both approaches will be pursued by industry.

The deployable recorder is intellectually intriguing, but is wrought with challenges. Having the full content of the recorder (25 hours of flight data and 2 hours of cockpit voice) shortly after the accident is very desirable. However, the system can deploy at the wrong time over populated areas and could strike flight surfaces at certain aircraft attitudes, compounding the challenges the aircraft is facing. If the incident occurs in mountainous or difficult to access terrain, the deployable does no good and may in fact make recovery more difficult. Practically, to install the device, a part of the exterior skin of the aircraft must be redesigned and replaced because the typical design approach is to form an airfoil to “fly” the recorder away from the aircraft. The deployable recorder floats in water, has a GPS receiver and a satellite communication transmitter to broadcast its location so it can be retrieved. This system is very expensive, particularly for retrofit solutions. The safety and practical aspects of the deployable recorder make it an awkward solution for the problem, particularly in this “always connected” age we live in.  It is old thinking; an old concept of operations.

Streaming data from an aircraft offers the value of not only knowing where your aircraft is, but also knowing what is going on in the aircraft, always. Whether the streamed data is a result of a “trigger,” (an event that turns on the streaming of data when it is recognized something is wrong) or if data is simply streamed throughout flight, having immediate access to this data on a specific, secure server is the ideal scenario for accident investigators to being their evaluation of what has happened.

Concerns have been raised regarding the security of the streamed data either during transmission or storage; as well as concerns over access, privacy and cost. These concerns are reasonable, but solutions exist. Securing the transport of digital information is actively studied and current networking technology continues to be refined and improved to protect commercial and privacy interests. Securing data during storage is also a very active area of investment and development. Access rules can be defaulted to be the same as those currently employed for flight data recorders (FDR) and cockpit voice recorders (CVR) when installed on aircraft. The FDR data is routinely downloaded after flights occur and is broadly used in Flight Operations Quality Assurance (FOQA) and other activities. CVR data can be triggered so it only streams in response to an event. Alternatively, the erase button in the cockpit could mark segments to erase post-flight if there are no incidents during flight, as is the case currently with the CVR. Costs for satellite airtime continue to drop and become more feasible over time as more satellites are launched, compressions schemes improve, and transmission prioritization controls are implemented.

Streaming data to augment the on-board FDR and CVR is an important next step to satisfy Amendment 40: Timely Access to Flight Recorder Information requirement. FLYHT Aerospace Solutions has offered commercialized data streaming through our FLYHTStreamTM application for several years. Our system currently uses the Iridium constellation which offers global coverage, but limited bandwidth. Other satellite solutions, such as Inmarsat’s SwiftBroadband offer much larger pipes to send more data, faster if required. Iridium is launching “Next,” higher bandwidth, replacement low earth orbit satellites to provide alternatives to Inmarsat. Other Satcom technologies exist as well. FLYHT is forging partnerships and investigating different ways to enhance the industry leading technology that we currently offer to provide solutions to meet both Autonomous Distress Tracking and Timely Access to Flight Recorder Information requirements in a system that saves operators money, streamlines operations and proactively enhances safety.

Best regards –

Thomas R. Schmutz

Subject: Aircraft Tracking, Space Based ADS-B, and Timely Access to Flight Recorder Data, Part 1

Dear Shareholders and Interested Parties;

In May of 2016, in the Third Edition of 2016 CEO Letters, I discussed the status of aircraft tracking regulations. In summary, the International Civil Aviation Organization (ICAO) council adopted new amendments to Annex 6 (Operation of Aircraft) that will take effect between now and 2021.

The flight tracking requirements are attracting product entrants into the aviation technology space and Aireon’s space-based ADS-B is probably being the most discussed. Is this technology disruptive and problematic for FLYHT? I believe not. Flight tracking certainly is a value proposition for the FLYHT solution, but it is not the central value proposition. The Automated Flight Information Reporting System’s (AFIRSTM) core value proposition is real-time data streaming to reduce airline operating costs, streamline airline operations and proactively enhance safety, preventing accidents and potentially saving lives. Aireon and other competing tracking solutions essentially do none of these functions.

Let’s look at what Aireon offers through their marketing partners and how it works. A short history is required to understand the current offering.

Air Traffic Management depends upon Communications, Navigation and Surveillance (CNS).  Reconnaissance, or the understanding of an aircraft location, altitude, speed and direction is a critical activity for air traffic control. Historically, the surveillance activity was performed with primary radar, or bouncing a radio signal off flying objects, receiving the reflection and determining aircraft azimuth, altitude and speed. Technology improvements gave way to secondary radar, where a radar interrogation stimulates an aircraft installed transponder to broadcast its location, altitude, direction and speed. This enhancement dramatically increased the range of aircraft radar. About ten years ago, Automatic Dependent Surveillance Broadcast (ADS-B) began being deployed as a replacement for secondary radar in many locations under the FAA’s Next Generation Air Traffic Control System (NextGen) and European Sky ATM Research (SESAR) Programme. Infrastructure was planned, for example, the FAA created contracts for the installation of 600 ground stations to receive ADS-B signals and required that aircraft operating in US airspace be equipped with ADS-B transponders by year 2020.

The ADS-B transponders on board aircraft provide a reconnaissance function for air traffic control and provide situational awareness items such as location, speed, heading, etc. ADS-B transponders replace secondary radar for tracking aircraft. Equipped aircraft report their Global Positioning System (GPS) position on a dedicated 1090 MHz frequency and terrestrial receivers and other aircraft listen to this ADS-B “out” signal on their ADS-B “In” channel. The deployed terrestrial receivers route the received data to air traffic control (ATC) who uses the information to route traffic while aircraft use the ADS-B-in data to form a situational awareness picture of their surroundings.

Two companies have put together plans to collect surveillance information from space, or space based ADS-B. Aireon is a joint venture between Iridium and four Air Navigation Service Providers (ANSP). Also, Globalstar has a partnership with ADS-B Technologies of Alaska. Both Iridium and Globalstar use low earth orbiting satellites (LEO) that, if equipped with ADS-B receivers, can listen and report the surveillance signals broadcast by aircraft transponders in their receiving area.

The first ten of 66 Iridium NEXT satellites have been launched with an Aireon payload which is a space based ADS-B receiver. It will listen to the 1090 MHz frequency and report aircraft transmissions which will contain position information. So, if an aircraft is equipped with ADS-B, the service provided by the Aireon data will provide information “where” the aircraft is; provided you pay for the service that Aireon and their partners will provide. However, the service will not provide awareness about what is happening onboard the aircraft or the aircraft’s operational state.  This service will not indicate “how” the aircraft is; it’s operational state and whether the aircraft’s systems are operating within normal parameters. The service will also not explain “what” is happening onboard the aircraft; is the aircraft flying within normal parameters, e.g. speed, roll, pitch, yawl, etc.? ADS-B is not a communication channel that can be modified or altered to send the rich information to benefit flight operations and maintenance that FLYHT’s AFIRS can send. AFIRS can provide real-time data from specific systems on board the aircraft, Aireon cannot since the ADS-B system implements an ATC reconnaissance function with a very specific and limited intended function.

There are many different tracking technologies that will allow compliance to certain aspects of the ICAO mandates, whether it is Aircraft Communications Addressing and Reporting System (ACARS), or ADS-B, or space based ADS-B, or ADS-C – a Future Air Navigation Systems (FANS) surveillance function that will report aircraft location to operation centers. There are also technologies, like FLYHT’s, that can be installed and provide tracking in addition to or in lieu of these other technologies. However, none of these other technologies satisfy both the Autonomous Distress Tracking (ADT) requirements as well as the Timely access to Flight Data requirements, like FLYHT’s AFIRS. There are no other solutions with the extensive list of AFIR’s Supplemental Type Certificates which effectively serve as a barrier to entry. They don’t provide rich exceedance reports for aircraft systems and engines. They don’t allow real-time remote diagnostics to be performed on an aircraft while it is flying to understand a problem and avoid an accident. None of these technologies allow a ground operator, a pilot or an autonomous trigger to begin streaming the contents of the flight data recorder. They simply do not provide a complete picture of situational awareness like FLYHT’s technology does.

This last function, black box streaming, will figure very large in FLYHT’s future and in the solution of Amendment 40, Timely Access to Flight Data Recorder Information requirements. This will be the subject of part two of this letter, which will be published soon.

Best regards –

Thomas R. Schmutz