Scan through Elsight’s Remarkable June Quarter Performance

Summary

  • Elsight achieved a significant milestone by productively completing over 15 extensive POCs trials in numerous verticals such as drones, robotics, rural communication, telemedicine, remote paramedic and many more.
  • ELS expects to be well-positioned to capture Halo’s extensive sales in the US, Europe, and other markets post securing additional certifications such as FCC in the USA, CE Mark for EU, certification by numerous US carriers and number of privacy certifications.
  • ELS received first material purchase orders for fitting its leading transportation solution in an entire fleet of armoured vehicles for one of the leading cash-in-transit companies operating globally. This deal would further enable ELS to become a leader in the secure transportation industry while expanding its market reach.
  • Subsequent to an A$2.880 million placement and aggressive cost-cutting measures, ELS is well-positioned to acknowledge significant economic challenges, while modifying few strategic moves to take advantage of new and noteworthy opportunities specifically in the rural, remote healthcare and working environment.

July 2020 seems to be ending on a good note for Elsight Limited (ASX:ELS), a cutting-Edge connectivity solutions developer enlarging visual reach, as two landmark announcements boosted investor confidence significantly.

On 30 July 2020, Elsight received its initial Halo order worth US$1.6 million from Kinetx Prime, LLC, a company that leverages innovative design and fabrication approaches to bridge the digital divide, and deliver direct-to-consumer telehealth systems using advanced connectivity in remote communities in America.

On the same day, the company also unveiled its impressive achievements and business activities made through the June quarter. Both the updates caught investors’ attention, and the stock rallied up by 63.33% on 30 July 2020, closing day’s trade at A$0.490.

With this backdrop, let us deep dive into Elsight and the key activities undertaken by the company during the June quarter:

Founded in 2009, Elsight Limited provides innovative hybrid video and data transport services to Public Security, Banks, Law Enforcement, Government Offices, Autonomous bodies, Fleet Management, facilities management, healthcare, broadcasting, and Military Force.

Elsight addresses the data transmitting issues and hindered communication faced by emergency medical services (EMS) and first responders or manned or unmanned vehicles running on land, water or air and operating in challenging, remote, non-line-of-sight and multipath environments.

The company offers products that ensure secured, reliable, real time data transmission over multiple links enabling continuous communication within teams operating on field.

Kalkine Image (Data Source: ELS’s ASX announcement and Annual Report)

Elisight follows a well-defined commercialization strategy that includes using world-class technology, securing industrial certifications, strengthening manufacturing capabilities, bolstering sales and marketing activities along with a focus on securing purchase orders leading to worldwide distribution of products

On that note, below are the key activities undertaken by the company during the June quarter

Completion of 15 extensive POCs

June quarter kicked off with numerous Proof-of-Concept (POC) trials for ELS’s flagship product, Halo which was either on hold or paused owing to pandemic induced activity and travel restrictions across the world.

The Company achieved a significant milestone by completing over 15 extensive POCs and more than 2,000 flight hours on various platforms in numerous nations, including but not restricted to the US, Singapore, and others.

Notably, several POCs and customer engagements became possible after following several precautions; the Company took every opportunity to advance projects in the field.

Furthermore, with exceptional opportunities for Halo stemming from numerous verticals, ELS has explicitly emphasised its trials on various verticals concerning drone operations, telemedicine and rural communication.

Verticals providing opportunities to Flagship Product, HALO

Kalkine Image (Data Source: ELS’s ASX announcement)

In the Drone vertical, ELS has focussed primarily on securing the necessary regulatory approvals in the US and other nations, as well as on advancing existing POCs and commencing new POCs.

Significant efforts for securing key certificates

ELS took advantage of the business slowdown triggered by pandemic to aggressively make substantial efforts for obtaining a large set of key certifications such as full FCC, FCC SDoC, CE, US carriers’ certifications, and privatisation certifications including CCPA, HIPPA, GDPR which are required by the medical community. Importantly, few have already concluded, and others are still under the process.

Following the obtaining of certifications, ELS would be well-positioned to lock extensive sales deals for brand new Halo platform in the US, Europe, and other markets in the Far East.

Notably, the positive impact of these certifications already started to show its anticipated impact to boost securing of larger deals in the US market starting in mid-July 2020 and onward.

During the June quarter, ELS worked closely with Alrena Technologies (France) and have adapted its Medicase (telemedicine) solution to work seamlessly with the new version of Halo. Both Companies are now wrapping up alternative supply chain arrangements to fulfil prevailing demand.

Based on extensive field testing and customer feedback, ELS’s flagship product, Halo, has undergone a rapid advancing process with numerous hardware and software upgrades in the quarter.

Kalkine Image (Data Source: ELS website)

Entry into the US market

The Company is focusing on expanding across the US market by undertaking a distribution agreement with a US-based IT service company, Agile Defense Inc as well as working continuously towards securing the US FCC certification.

Kalkine Image (Data Source: ELS’s ASX announcement)

Reseller Agreement with US-based Agile Defense to accelerate US sales

On 3 April 2020, Elsight signed a reseller agreement with a US-based leading IT services company, Agile Defense Inc primarily to harness Agile Defense’s extensive network in augmenting the commercialisation of Halo and ushering Elsight’s remote connectivity solutions to the US.

The initial term of the agreement is one year and would be automatically renewed for another year unless terminated by one of the parties, subject to the agreement.

Agile Defense’s industry-wide eminence as a premier defence firm with an expansive network of government contacts and its unique ability to expedite ELS’s sales through that deep network, demonstrates a strategically invaluable partnership for Elsight

Subsequent to the announcement, Agile Defense would be spearheading ELS’s sales and marketing efforts in the US while emphasising explicitly on stimulating the potential that exists within the American public sector, particularly in the US Defense sector.

Continued Work towards obtaining the US FCC certification

The Company has continued to work towards securing the US FCC certification, which is required to be part of drone solutions in various settings. Importantly, these certifications were received after the reporting period for the quarter ending June 2020.

Onboarding of new cash-in-transit client during the pandemic

In June 2020, Elsight inked an agreement with one of the leading cash-in-transit companies globally. This deal was locked with a perspective of fitting their entire fleet of armoured vehicles with Elsight’s leading transportation solution.

Notably, the first material purchase orders were received during the June quarter.

Kalkine Image (Data Source: Company’s announcement)

Moreover, this agreement portrays further market validation for Elsight’s leading logistical transportation solutions.

Elsight’s transportation solution product offering is suitable to companies who strive to optimise and boost the layers of security shielding their vehicles as well as safeguarding their contents.

Focus on being more cost-effective in the June Quarter

Halo is a brand-new platform that went through the critical stages of Development, trials and proof-of-concept (POC) as well as a large regiment of certification in order to prepare it for large deals in various geographies and verticals. Owing to the pandemic induced economic challenges and issues concerning the ability to pursue and complete POC’s and undertake international sales operations, ELS had commenced a thorough review of all expenses. Cost-cutting measures were implemented across the organisation while ensuring that the longer-term prospects or operations of the business were not hindered; key people were retained, and funds preserved to anchor on the execution of its core commercialisation strategy for 2020.

Following aggressive cost-cutting measures, reduction in salaries and other cost reduction efforts by the Company, ELS’ operating costs noted a decrease of 44% to US$721 thousand as compared to the budgeted cost of US$1,273 thousand for the quarter ended 30 June 2020. Also, the June quarter cost represented a decline of 21% in comparison with the actual cost of US$912,000 in Q1 2020.

Stock performance

On 3 August 2020, ELS closed the day’s trade at A$0.540, an increase of 14.894% from previous close. Market capitalisation of ELS was noted at A$50.3 million, with ~107.02 million shares outstanding.

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