C-Com Satellite Systems Inc. (CMI) Earnings Call Transcript & Summary

Hello, and welcome to virtual investor conferences. On behalf of OTC Markets, we're very pleased you have joined us for our Small Cap Growth Conference. Our next presentation of the day is from C-COM Satellite Systems. Please note, you may submit questions for the presenter in the box to the left of the slides. You can also view your company's availability for a one-on-one meeting by clicking Book a Meeting in the top tool bar. At this point, I'm very pleased to welcome Dr. Leslie Klein, Founder, Chief Executive Officer and President of C-COM Satellite Systems, which trades on the OTCQB Venture Market under the symbol CYSNF and on the TSXV under the symbol CMI. Welcome back, Leslie.

Thank you for having me, Greg, and thank you for the opportunity, and good morning to everyone who is listening. I'm happy to give you a presentation on my company. I will go through the customary C-COM disclaimer, legal notice. And as an intro, C-COM is an Ottawa, Canada-based technology company that has been in business 29 years. It's going to be 30 years this year. And the company is one of the world-leading providers of communication on the POS, a satellite communication company that delivers high-speed Internet over satellite into vehicles that will make it a communication on the move company. And we are developing an electronically steered antenna that will make it possible. The company is also developing electronically -- electronic components called the Beamformer Integrated Circuits that are used in the manufacture of electronically steered antennas. We have about 26 employees. And as Greg mentioned, we are listed on the Toronto Venture Exchange and the Ottawa -- sorry, on the New York OTCQB under the symbol CYSNF and in Toronto under the symbol CMI. The -- just go to the next slide. The company over its period of operation has delivered over 11,000 antenna systems and in about 106 countries. We operate through resellers. So we don't sell directly to anyone. Our resellers, which are in the 106-plus countries around the world, are the ones who are buying our product, installing it, supporting it, maintaining it. And we deal directly with them. The company has developed 42 different antenna models. It works with 10 different modem manufacturers using 35 different modem models, satellite modem models. We have developed over 12 antenna sizes from 60 centimeters to all the way up to 2.4 meters. The different formats are Driveaways, Flyaways, Manpacks. We also are going to be introducing a LEO-Tracker antenna this year and Fixed Motorized. And I will expand on all of these in further slides. The antennas support different bands of frequency bands, satellite frequency bands, Ka, Ku, Q band, C band and X band. The company has over $23 million of working capital, including about $16 million in cash as of August of last year and has no debt. The company went public in 2001, and it has never raised any cash. We also have paid out over $25 million in dividends over the last 10 years. We stopped the dividend payments last year because we want to keep the cash that we have in finishing antennas that we should be releasing this year. There are vertical markets that we are addressing, pretty much all the typical markets other than consumer markets. We are not in the consumer market. We are strictly in the commercial market, and they include governments, military, emergency response, disaster recovery, oil and gas, telecom, schools, mining and other vertical markets that need satellite communication, where no other communication is possible. The products that we sell are, as we mentioned, in 106 countries. And this is a map that shows you basically the distribution of some of our products over the years. For example, you can see that New Zealand is packed with our antennas from top to bottom because every disaster management -- sorry, every disaster type company, like fire and the government vehicles that require assistance during disasters, is equipped with one of our antennas. The products, as I mentioned, are sold through resellers all over the world, and they operate it from places like Siberia in the North and Alaska in the U.S., all the way down to the Sahara deserts. So they have been designed and manufactured very reliably. Some of them have been in operation for the last 15 years without any fail, which makes them very, very reliable. And most companies, oil and gas companies, for example, keep buying them for their exploration purposes because they're extremely reliable, and they use them on a very frequent basis. The products that we manufacture are essentially, as I mentioned, could be categorized as Driveaways, Flyaways and fixed mobile antennas. The Driveaways sit on top of a vehicle, and they fold down, and a press of a button, they unfold. And within a couple of minutes, they find the satellite. The Flyaways are transportable in transportable cases, and they can be put together without any tools within a few minutes. And the antennas itself allow a very rapid deployment by a single individual within 10 minutes or so. We also have developed Manpacks, which can be carried by a soldier, for example, on their backpack as a backpack and can be deployed within minutes anywhere in the world, and they will connect automatically to the satellite. So the operator or the user of this antenna doesn't have to know anything really about the product or the satellite as long as he can push a button, and the antenna will do the rest. It will find -- locate the satellite and deliver Internet communication instantly within a few seconds. For example, the Manpack can find a satellite and connect. The new LEO-Tracker that we have -- that I mentioned that we are developing and will be available this year, allows a LEO constellation service and Ku and Ka-band to track a LEO satellite, specifically store and forward type of a satellite that is operating in LEO and moving constantly. This antenna will automatically track the moving satellite. The fixed mobile antennas are essentially VSATs, which are able to sit in a permanent location, but are able to track also an inclined orbit satellite or a geostationary satellite, operate with a geostationary satellite. And they are mainly used in environments where you have very remote locations and you don't want somebody to go out there in case the antenna moves out of position. It can be automatically repositioned, either by itself or remotely connected and somebody can go out there and push a button, and the antenna will automatically reposition itself and finds the satellite. The heart of the system is the controller. It's probably one of the most advanced in the world. It has 7 different ways of finding the satellite, and they operate -- all of them operate in the same -- on the same application. They are just different sizes. The vehicle mounts are rack-mounted, and the Flyaways and the Manpacks are mounted on the unit itself and are capable of finding the satellite within minutes. In the case of Manpack, sometimes within seconds. And they are integrated with a number of different modems such as Hughes, iDirect, Newtec, Gilat, Viasat, Comtech and can be very easily converted to operate with any modem within a couple of weeks, and we have done this with up to 35 different modems that are out in the marketplace. So it makes it very easy for an operator to just select the type of modem that they're using, and the system will automatically do the work and find the satellite and connect it through the modem. Here is an example of some of the antennas. So this is a 74-centimeter antenna that can be easily switched from a Eutelsat configuration, for example, to a Hughes or a Viasat configuration. So the only difference would be the feed that you can see here that would change and would become a different service capable antenna. So the software in the controller, the controller itself and all of the antenna parts other than the feed would remain the same. So it's very easy for somebody who owns the antenna to -- and changes service providers or operators to reposition it by just changing the feed itself. The -- so here's another example similarly to what I just described using a 98-centimeter antenna, and it will show -- it shows you how it changes from a Eutelsat, Viasat or Yahclick or a Hughes system, same antenna, different service. This is a new generation antenna that's used for satellite news gathering. It's a very high precision antenna with a cowling that allows it to look very aerodynamic. It's used very heavily for satellite news gathering around the world, and it's just another one of our antennas. It's a 1.2-meter antenna, and it has been very successfully deployed in many television stations and other news gathering applications that require this type of a precision antenna. Similar to the one previously shown, this is a Flyaway 1.2-meter antenna. It has a reflector that comes apart. So the reflector is sliced in 2. It fits into 3 cases, relatively easily transportable and can be again reconfigured from a G, for example, which is a Ka-band to a Gilat type of a service to a V, which is a Viasat type of a service. And it's also Eutelsat approved. And again, it has been sold in many parts of the world for easily transportable -- easily transportability. It can be put together without any tools. You don't need to know much about it. It's really -- it's like a LEGO. You put it together without any tools and you can connect it within 10 or 15 minutes, you are up and running and you have high-speed Internet connection anywhere in the world. Our latest and very successful product is the Manpack. We have sold many hundreds of them. Our largest customer is SoftBank in Japan, who bought it for disaster management. This is a 1-pack solution, easily transportable by one person, under 25 kilos. It can -- it comes apart within minutes and can be put together within minutes without any tools and will find a satellite in about 30 seconds. The antenna has been very successfully also sold to a number of military customers around the world. Although it's not Mil-Spec, it's not designed for military specifications, it is so robust and so well designed that a number of militaries, including the U.S. military has purchased these products for use. And we are -- we have different models of this antenna. Some of them are going from 60 centimeter all the way to 1.3 meter. It supports a number of bands, like Ku, Ka and X. And it has been a very successful product for us, and we keep selling quite a number of them to commercial and military customers around the world. Here is a picture of a military-painted Manpack. It's not really Mil-Spec, but the customer bought it for military specific -- for military use, has requested that we paint it green. And so this is what it looks like. The LEO-Tracker that I mentioned is a 1-meter antenna. It's a 7-piece carbon fiber reflector, uses the same controller as the Manpack is using. It can be set up in less than 15 minutes. It has captive fasteners, so it can be put together without any tools. And it can track a LEO and MEO network connectivity. With 2 antennas, you can seamlessly track. For store and forward, you can use one antenna. It will track and deliver high-speed connectivity from a LEO or a MEO constellation. We have also developed for Hughes adjustable mobility mount for their electronically steered Ku-band antenna, which is using OneWeb, Eutelsat OneWeb service. And we have been selling these to those customers who use the Eutelsat/Hughes service, the OneWeb service, and they need mobility. So these allow the antenna to be mounted on a vehicle and transported. Similarly, we have developed for them cases. These are mobility cases for their OneWeb transportable solutions. These are Full Duplex and Half Duplex antennas that Hughes manufactures for Eutelsat OneWeb service. And these transportable cases allow these antennas to operate immediately upon dropping it on the ground, opening it up, and you can access the OneWeb service. This is something that we worked with Hughes to develop, and these antennas are utilized on the OneWeb service. The antennas are manufactured by Hughes, and they connect to the Eutelsat-operated OneWeb LEO constellation. The C-COM Manpack is shown here, just to give you an example of how it is operated in a remote area. Here, for example, it's in the Rocky Mountains, deployed for a commercial use for shooting a commercial up in the mountains and delivering the results of the video results back to a studio for editing. So it can be deployed very rapidly, very remotely using a battery type of service available for power that will deliver high-speed broadband connectivity to the customer. So just an example of how a Manpack is used in a commercial environment. And here are different examples. This is the SoftBank Manpack deployed during the Japan Typhoon 19, where all of the cell towers for SoftBank were destroyed. We have delivered over 200 of these antennas, different sizes, including the Manpack for them to be used as a cell tower -- cellular backhaul cell tower replacement. And here are some other vertical market examples such as oil and gas around the world from the U.S. to Australia to Libya. These antennas have been very heavily utilized for oil and gas exploration, and they are still quite often purchased for this type of activity. News gathering, as I mentioned before, we have television stations around the world that are using the antenna. We have emergency response vertical markets that are used again around the world. Some of them are with fire departments. Others are with cellular backhaul companies, cellular companies. And some of them are with police forces, et cetera. TeleHealth is another vertical market. We have mobile ambulances in New Zealand, and breast cancer screening units in New Zealand, and also a surgical unit in Loma Linda University in the U.S. that are, again, equipped with our antenna that allows them to move and deliver high-speed broadband services anywhere in the world where they are just at the press of a button. The vehicle actually moves once the antenna has been installed, and then, it -- when the vehicle stops, you push a button and the service can commence immediately with the satellite operator that the company has selected. Military is another vertical market, and we are getting more and more inquiries from them. We have delivered a number of systems, both to the U.S. military, to the Vietnamese military, to Indonesian military, to the Bangladesh military. And so these are systems that have been deployed. Although they are not Mil-Spec, they are very robust and they are very reliable, and they have been purchased by militaries around the world. Telecom is another vertical market for cellular backhaul. We have these antennas from the U.K. to Fiji to Taiwan and China and many other places, where they are used to provide cellular backhaul. Mobile offices, we have some systems in South Africa, for example, delivering pension checks to customers. We sold over 130 antennas to the government of South Africa. We also have sold about 35 systems to Argentina for printing passports remotely. These are vehicles equipped with passport printing capabilities, and our antennas deliver connectivity to the Government of Argentina, for example, that confirms that the passports are printable and provides these services in remote areas of Argentina so that customers don't have to come to the government, the government goes to them. So these are a number of these similar type of applications available using our products. Mobile banking is another interesting application. These are ATM machines that are essentially delivering connectivity around the world. Rather than having to go to an ATM machine that's fixed, these vehicles deliver mobile connectivity. In South Africa, for example, they refill cell phones. So you can go into this vehicle that doesn't have any cash in it, but you can put your phone in it, and it will refill the phone from your bank account with cash, and then, you can pay with your cell phone. And these vehicles move around the country and provide these type of services. We have them in Africa, quite a number of them in Europe. We have them in Hawaii and also in Malaysia. The next large potential business for C-COM is, of course, the electronically steered antenna that we are developing. As you know, the worldwide satellite business is about a $330 billion market and the Flat Panel Satellite Antennas will represent about a $4 billion opportunity. A large number of constellations are up, and many more are going up. Bezos has just announced a new constellation called TeraWave with 5,280 antennas and Musk is planning to have 30,000 or more LEO antenna -- sorry, satellites. Musk is planning to have over 30,000 micro sats in the LEO orbit. And so we believe that this will be the next very large. We know that SpaceX is active. Amazon is active. OneWeb, Telesat, Viasat and many others are building constellations, and we believe that our antennas that we have developed, electronically steered antennas will be playing a big part in this opportunity. So C-COM has developed a low-cost phased array antenna that is modular. So you can put these little 16-element squares together to build a larger 1,024 element. And this is an antenna, an electronically steered antenna that delivers mobility and will be able to track a low earth orbit or a medium earth orbit or a GEO satellite and deliver a high-speed Ka-band connectivity. So the antenna itself can scan electronically 360 degrees. It's conformal. It's meant to fit various shapes and surfaces. And you can see how small it is in somebody's hand. By combining these elements, you can build a large -- as large an antenna as you need and deliver connectivity with it. So these slides just show the flat panel market expansion capability. And based on the research of how large they will become, they will be growing at 14.1% from 2024 to 2031. And as you can see, the antenna itself here showing the modules, how the elements are combined and how it produces a 1,000-element antenna itself that can sit on top of a vehicle or an aircraft or a train and deliver high-speed broadband, tracking either a LEO, MEO or a GEO satellite. So here is just an example of a legacy antenna, it's a parabolic antenna compared to the ESA antenna. You can see the difference. It's a mechanical device compared to an electronic device. Size, weight, all of that will make a big difference between the 2. And of course, a mechanical antenna like this will not be able to track a LEO or a MEO satellite. So an electronically steered antenna is required for a LEO or a MEO constellation. And we believe that this will be the future of the antenna business, and this is why we have spent millions of dollars in the last 7 or 8 years to develop this technology. So these are the 3 products that we will be introducing this year. These are different sizes of antennas, electronic antennas. And the largest one, which is a 4,000-element antenna will be a multi-orbit antenna. It will cover GEO, LEO, MEO satellites. So it will be able to be utilized from any constellation that is up there. The 2,000-element is used for MEO, LEO. And the 1,000-element is used for the LEO constellation only. So the flat panel market penetration rate is shown in here. We see the government and the military are going to be the largest users of these antennas. And most of it will be used for mobility, and it's expected to generate over $4 billion of revenue for the manufacturers of these antennas by 2033. So here are the emerging LEO constellations. I can just show the -- show you, for example, a picture of how the -- of how these are distributed around the world and in large numbers, how they cover the world. And here's a picture of the Telesat Lightspeed constellation, for which our antennas are -- we are testing our antennas on the Telesat service, both GEO and LEO. And we are going to be using them, obviously, on Telesat as well as on many other LEO, MEO and GEO constellations. This is how the antenna looks like on a vehicle. So you can see it's fairly small and it's capable of tracking a LEO or a MEO satellite while the vehicle is moving and while the satellite is moving. This is a picture of what it would look like on a train and a picture of what it would look like on a plane. You could have multiple antennas on a plane also for more bandwidth. And basically, this is the end of my electronically steered antenna presentation, but I would like to also show you briefly the Beamformer development, which is the heart of the electronic antenna. These are the chips that actually make the beam form for the antenna. And we have developed this technology and -- with the help of the University of Waterloo, and we will be introducing it in Barcelona next month at a trade show. We expect that this business will also generate incremental revenue for C-COM. It will dramatically reduce the cost of our electronically steered antennas because the chips that we are presently using are off the shelf, and we expect that this design, the Beamformer design that we have developed will dramatically reduce the cost, improve the performance of the antenna and will also allow many customers to use it for IoT type applications. So we'll be selling it to others, not necessarily for antenna deployment use, but for IoT applications using Ka-band LEO services. So just to show you what it looks like, it's a significant research and engineering development and the size of a CAD 1 coin or CAD 2 coin that will make it possible for this chip to create antennas, electronically steered antennas or be used, as I mentioned, for IoT applications. An electronically steered antenna will use over 1,000, 1,500 up to 4,000 -- sorry, 2,000 chips. So this could be a very large volume business for the antenna business, but it can also be very useful, as I mentioned, for many other applications that will be utilizing LEO/MEO services that are coming up around the world. Just to show you what it looks like as a test board, which we will be selling this year to customers interested in trying to find out how to utilize this technology for what they are developing. And this is the end of my presentation. I'll be happy to talk to anybody or respond to any questions that you may have. Please let me know if I can be of assistance, and thank you very much for your attention.

I have some questions here actually. I will be happy to answer them. Given the -- let me just see how do I get back here. question. I have some questions here actually. I'll be happy to answer them. Given the -- let me just see how do I get back here. Yes, question. Is there an attempt to make the old tech military grade? Will the new tech be military grade? Can it be used with drones or subsea? Yes, there is -- we are going to make sure that the antenna will meet military specifications, but we will also work with companies, integrators, who are interested in taking the electronically steered antenna and packaging it for both aircraft, drones or other type of applications. It definitely has a military flavor to it. It can be relatively easy to make it work in military applications. And we expect that we will be working with a number of integrators who will be able to do that. Subsea, I don't think the antenna would work under the ocean. It's a different type of technology that is required for it. This is -- this antenna will require a line of sight. So you will need to find -- it will be only able to be utilized where it will see the satellite. Tailored collaborator -- sorry, there's another question here from -- sounds like a great business strategy. My name is [ Eric Mitchell ]. I would like to set up a meeting with you. I'll be happy to do that, [ Eric ]. You can -- I will be in touch with you after the presentation and be happy to discuss the technology with you in more detail. There's another question here, proliferated warfighter trend, how we are ensuring your system meets security, interoperability and multi-orbit requirements that defense customers now expect? The antenna is designed to receive information from the modem and from the satellite. So the security and interoperability is in the modem. So as long as the modem itself is secure and it has crypto capability -- encryption capability, the antenna will do whatever the modem asks it to do. So the encryption is all happening in the modem, not in the antenna. And multi-orbit requirement is already there for the larger antenna. It will operate in -- with different services, LEO, MEO, GEO. So we have that. And obviously, it can be easily designed to work with or meet military spec. And of course, it can be used in military environments. Next question, is there any idea as to when you can expect meaningful revenues of the -- for the Ka-band ESA? We expect the antennas to be released this year. Hopefully, the first batch that is being manufactured now will be on the market as a test product to be sent out to LEO, GEO and MEO operators to test and certify. And we expect that revenues should happen from the antenna next year. From the Beamformer, we expect revenues this year because we'll be selling some of the test boards that are required for the companies interested in the chips to test the capability of the chips. So again, next year would be a good year for us to expect revenues from both the Beamformer and the electronically steered antenna, but we will see what happens this year once these are rolling out and being tested by customers. You recently received the U.S. patent for your Ka-band phased array antenna for package technology. How does that patent particularly strengthen your competitive moat or pricing power? The technology is essentially just -- the patent is just to protect the technology that is used in the design and development of the electronically steered antenna. So we don't believe that it has a competitive or a pricing power, but you never know who may want to look at this patent and see if they can utilize it for something that they may want to develop and not compete with us based on what we have implemented. So our patent is really just to protect the technology that you have developed. And of course, it has a tremendous value because it could be utilized for other type of applications. Can you move from final stages of satellite testing to commercial orders? Is that quarters or years discussion? We are presently manufacturing the antennas, as I mentioned, and we will move definitely from the initial batch of antennas manufactured this year to a larger batch next year. So the manufacturing is in progress, and we don't foresee any issues with large commercial orders based on our ability to predict or forecast availability of components that we need for these large orders. But based on the fact that we've been in this business 29 years, we know the manufacturing process. We have building -- we have been building large numbers of antennas over the years for customers. And so we know the process, and we know what it takes to ramp up to build a large number of antennas. What are one of the key data points you think investors should watch in 2026 to judge whether your ESA and defense strategies are working? What they should be watching for is our releases -- news releases of the success of testing with different operators and certifications with different operators. That would give you an idea that the acceptance of the product is there, the performance is there and our ability to deliver and -- the antennas to those customers who are looking for them. So I would say that in 2026, you should watch for our progress with the rollout of the initial batch of the antennas as well as the rollout of the Beamformer Integrated Circuit and the feedback from testing of these products and their certification. 10,000 Hughes-made ESA terminals are expected to be deployed on Eutelsat OneWeb. What penetration rate those terminals using your mounts would make this material revenue stream? What penetration rate of those terminals? Well, the 10,000 Hughes terminals are using OneWeb Ku-band services. We are in a Ka-band service. So we hope that we will be also able to sell 10,000 ESA terminals to LEO, MEO operators around the world. But what type of penetration rate our terminals compared to others will present to the market remains to be seen. Beyond Hughes, are there similar accessory mount opportunities you are pursuing with other flat panel terminal market -- makers? No, we are not pursuing any other terminal manufacturers at the moment and with flat panel terminal manufacturers at the moment. These, of course, will be applied to our ESA antennas also. We will develop these transportable cases and other type of accessories for our own terminals. The next question is, the flat panel market antenna shows 14.1% CAGR through 2030, but you're still testing prototypes. Who are you partnering with for commercialization? And what prevents larger players from beating you to the market? The market for Ka-band terminals -- flat panel terminals is pretty nil at the moment. There is very few companies that have released and delivered quantities of Ka-band. Ku-band, yes, but not Ka-band. So also the LEO constellations that are up there, the SpaceX is Ku, and only Amazon is Ka and Telesat will be Ka. So there's not really that many Ka constellations up there that we can access, but we can access the GEO constellations that are Ka. And there's a lot of interest in a flat panel antenna operating on a GEO instead of a LEO. And so our antenna will work very well on a GEO constellation as well. And we expect competition to be there and the best product will -- with the best performance will obviously get a larger share of the market. We are also, therefore, developing the Beamformer chip that will make our antennas better performing than others and will deliver hopefully a lower cost than others. I think these are all the questions that I have received. Anybody who would like to talk to me or send me an e-mail, I'd be happy to respond back and discuss further with them. And also, if you want to do a one-on-one, I'll be happy to do that.