FLYHT has already experienced its two highest quarterly sales achievements in 2015. Q3 sales of C$2.52m rebounded sharply from a disappointing Q2 (C$1.60m) to almost match the record Q1 revenue (C$2.57m). Nine months' sales of C$6.69m were thus up 43% on the prior year. The flagship Automated Flight Information Reporting System (AFIRS) products experienced relatively flat sales in Q315, but the unrecognised revenue element increased significantly, with substantial Q4 shipments of kits expected. Software add-ins such as FLYHTStream, which automatically transmits aircraft black box data by satellite in an emergency situation without having to recover the units themselves, provide growing sources of highmargin recurring revenues of voice and data service contracts. These are driven by the installed base and the value of functionality supplied. As there is limited attrition of the installed base, these should rise at an increasing rate as larger contracts are procured and executed. The recurring revenues generate higher growth margins, which should improve the sustainability of profits and cash flows.

A priority has been to cover the debenture redemptions in 2016, and this now appears to have been largely addressed. Adjustment in December of the conversion terms and pricing of the debentures and warrants has led to some subscription to the latter raising c C$0.2m of cash. The C$3.1m convertible debenture could fully convert in Dec 2016 at the reduced price of C$0.25. While trading cash flow may turn positive in 2016, it is unlikely to be sufficient to cover the C$2.3m required to redeem the fixed debenture at the end of June. However, a technology licence payment of C$3.5m (US$2.5m) is to be received in Q116.

With returns negative, cash outflows and an equity deficit, the stock has been burdened by the financial issues. As these improve, so should the ratings.