Mobilicom Limited (NasdaqCM: MOB) may be a smallcap in size, but they are certainly making some big-time deals. In fact, MOB has provided investors plenty to be excited about during September and so far in October. That includes announcing it will showcase its end-to-end cybersecurity solutions to procurement specialists at the Association of the United States Army's Annual Meeting & Exposition in Washington D.C. on October 9-11, 2023, being awarded a new grant of approximately $250,000 from Space Florida, Florida's Aerospace, Finance and Development Authority, earning an initial purchase order for two of its products from one of the largest defense contractors in Europe, and securing a design win and initial $150,000 purchase order with an innovative drone designer and manufacturer that serves commercial and defense customers in the U.S. and abroad.
And that's just accounting for the past two months. Before that, MOB announced design win sales into three new geographic markets, including receiving add-on orders for its innovative small-drone security technology and a commercial scale purchase order for 120 of its SkyHopper Pro datalink systems from Teledyne-FLIR (NYSE: TDY), one of the world's largest manufacturers of small-sized drones and robotics. Even that list of accomplishments isn't exhaustive. They've done plenty more since the start of the year to grow bigger faster from tangible deals that justify its over 47% YTD increase in its share price. (*share price from 01/01/23 – 10/09/23, 10:55 AM EST, $0.97 - $1.43, Yahoo! Finance, 10:54 AM EST)
Still, despite that gain and appearing better positioned than ever to extend its deal-making winning streak, MOB shares are off their 52-week high of $3.33. but that disconnect may not last much longer. MOB stock has shown its ability to decouple from smallcap market weakness, a likely result of investors rotating into low-priced companies that appear undervalued and, as importantly, mitigated downside risk.
Showcasing Its ICE Cybersecurity Suite In October
Mobilicom checks those two boxes. And it's no accident that they do. MOB is pioneering and benefiting from its first-mover advantage to provide cybersecurity solutions to the small-drone and antonymous vehicle markets. Leveraging the inherent strength of that position, MOB may be targeting more than millions in revenues; billions could be in play, especially from being one of the first companies to introduce cybersecurity solutions optimized for small-sized drones and robotics, its ICE Cybersecurity Suite. That's not overzealous speculation. It's warranted knowing that MOB can grow quickly from more than being first-to-market; its ICE Cybersecurity platform provides measurable competitive advantages in a thin competitive landscape.
And those differences continue to get highlighted. This week, MOB will showcase its end-to-end solutions to procurement specialists from the U.S. Army and defense contractors at the Association of the United States Army's (AUSA) Annual Meeting & Exposition in Washington, D.C., on October 9-11, 2023. That's happening with its strategic collaborator in the U.S. market, Mistral, a prime contractor for the U.S. Department of Defense. Introductions from the event could lead to considerable new business, especially with Mistral integrating Mobilicom's solutions into contract bids for its installed base of U.S. defense industry customers and partners. A follow-up announcement about that event could add value to an already compelling value proposition, noting that MOB will uniquely showcase field-proven,military-grade cybersecurity solutions for ground, avionic, and maritime unmanned drone and robotics platforms operating in the most stringent environments. That distinction is attracting plenty of attention.
Value-Adding Awards And Contracts
Better still, it's contributing to MOB's growth. Last month, the company announced it was awarded a new grant of roughly $250,000 from Space Florida, Florida's Aerospace, Finance and Development Authority, which serves as a contract renewal for an additional year. During that term, Mobilicom is focused on developing a Multi-Link (MLU) communications system that incorporates three concurrent transmitting transceivers (SDR/Cellular/Satellite) for auto redundancy to address U.S. civil drone regulations. This MLU will extend Mobilicom's 'beyond visual-line-of-sight' datalink functionality to include the use of satellite connections for redundancy, enabling the operation of unmanned systems in areas with limited or zero cellular network coverage. The added grant supports MOB's growth intentions and underscores the value that Mobilicom brings to a rapidly growing drone industry.
Differences are its advantages. A significant one is that MOB's SkyHopper Datalinks support line-of-sight and cellular network-based 'beyond-line-of-sight' communication. They intend to improve it by integrating satellite connectivity to create additional redundancy to serve client needs for long-range drone delivery and inspection operations with an 'always-connected-anywhere' capability. Space Florida is just one high-profile client.
In September, MOB announced receiving an initial purchase order from one of the largest defense contractors in Europe to integrate its Mobile Ground Control Station and MCU Mesh networking into a paired, networked ground vehicle and drone system. More simply stated, MOB technology enables remote control of a drone, typically housed inside a ground vehicle but can also be moved outside by an operator who commands the drone. The key differentiator from other marketed remote control platforms is that the mesh networking capability can be expanded to support multiple drones in a swarm operation, whereby numerous drones can independently make decisions based on shared data via Mobilicom's secured Mesh Networking.
This deal, like its others, can lead to many more. Keep in mind that NATO countries continue to increase their defense budgets in response to the Ukraine-Russia conflict, where drones have proven to be a battlefield game-changer. Their success is leading to a significant increase in demand, which bodes potentially well for MOB as an established leader in providing field-proven, cybersecure technologies.
Design Wins Lead To Current And Potential Purchase Orders
That trend is in place. Last month, MOB announced it secured a design win and an initial $150,000 purchase order from an innovative drone designer and manufacturer that serves commercial and defense customers in the U.S. and globally. The order includes Mobile Ground Control Stations and the SkyHopper Pro V datalinks. The company said its systems will be integrated into high payload long-range drones set for intensive commercial demo efforts with leading defense and commercial end users across the U.S. Moreover, this design win and contract expedites Mobilicom's expansion in the U.S. market, particularly its defense sector.
In the case of military drone use, MOB is timely to its opportunities. Headlines relating to the Ukraine-Russia conflict underscore the importance of drone warfare capability and, more so, embedding cybersecurity assets into small-sized drone fleets. Forbes reported in 2022 that Russia's electronic warfare troops rendered 90% of Ukraine's drones inoperative. Losses are staggering. An article in the New York Post in May 2023 reported that Ukraine is losing 10,000 drones per month due to Russian electronic warfare. While the stats on the Russian side may be less forthcoming, it's more likely than not that they are also losing considerable numbers of drones through the same cyber breaches. Thus, it's essential to understand that physical weaponry isn't the only threat to small-drone assets, as cyber infiltration is also inflicting substantial damage to mission-critical systems.
Remember that small-drone losses aren't limited to just the battlefield. Similar vulnerabilities exist for drones operating in the commercial space, affecting delivery applications, utility/oil/gas inspections, the mining & process industry, and even first responders. That's led to corporate users such as Amazon (NASDAQ: AMZN), Walmart (NYSE: WMT), and Exxon (NYSE: XOM) to invest heavily in small-drone security to safeguard their fleet operations.
These small-size drones, also called mini or small drones, typically weigh up to 250 pounds and operate within distances ranging from 1 to 15 kilometers (1 to 10 miles). While small compared to drones used for long-distance missions, don't under-appreciate their contributions. These roughly $50,000 assets carry essential payloads, including cameras, parcels, and light military equipment. Because of their compactness, lightness, low power consumption, and affordability, businesses and defense forces utilize these small drone assets more frequently, leveraging their abilities to provide the optimal balance between price, size, and performance.
Growing Global Drone Demand Is Excellent News For Mobilicom
In other words, drones are starting to impact everyday life far more than the average person realizes. That puts Mobilicom in a sweet spot of opportunity. And it can maximize that position by being best-in-class, something MOB can claim. That's supported by MOB earning innovation awards, grants, certifications, and standards recognition by the U.S., Japan, and the E.U. They have achieved additional recognition from AUVSI, the Association for Unmanned Vehicle Systems International, leading to introductions to U.S. Congress members advocating for drone cybersecurity.
And increasing business from the U.S. isn't MOB's only value driver. In May, Mobilicom technology was chosen by the UAE Government to protect E.V.s for Homeland Security and defense. Also in May, MOB joined the U.S. cybersecurity industry standard as a contributor and entered a strategic partnership with a prime contractor for the DOD. MOB launched Cybersecure SDR in June to expand its marketing reach into the mid-sized drone market. In July, the company announced its commercial scale order from Teledyne-FLIR for a drone fleet sold to the US DOD. Then, in August, the company announced further global market traction by earning design wins and new client business in Korea, Brazil, and Canada.
In Korea, a drone manufacturer ordered Mobilicom's MCU Maxi Controller PRO, a mobile, handheld Ground Control Station, for integration into its drones. In Brazil, a client manufacturing robotics and un-crewed ground vehicles ordered Mobilicom's SkyHopper Datalinks for its small-sized robotics solutions. The same was requested by a Canadian drone services provider in the oil, gas, and mining industries, who plan to utilize the technology to distribute real-time sensor feed from drones to on-the-ground users.
Those deals are a part of the 48 design wins as of June 30, 2023. Considering that each design win often leads to new clients signed and additional revenues scored, MOB's revenue trajectory should significantly steepen in the coming quarters. Additionally, with its client book including at least eight Tier-1 customers, deals made can be particularly lucrative given the deep pockets that come with them.
The Capital On Hand To Accelerate Growth
As important, MOB has the capital to serve its expected near and long-term growth strategy. The company secured $13 million in funding last year, and considering its monthly cash burn is reportedly less than $500,000, it should provide a considerable cash runway to serve its mission well into 2025. In fact, with no debt and a strong business pipeline, that capital raise positions MOB ideally to facilitate new sales and continue global expansion. And MOB is already advancing that mission through a client list that, among others, includes Airbus S.E., Elbit Systems (NasdaqGS: ESLT), Censys, and several other prominent global players.
Others may be added sooner than later, especially with its technology seamlessly added to existing drones and un-crewed vehicles. Attracting interest from Lockheed Martin (NYSE: LMT) and Tesla (NASDAQ: TSLA), the latter keeping no secret of its plans to utilize autonomous vehicle technology in its next generation of vehicles, would not be surprising.
While all the above translates into significant intrinsic and inherent value, there's more supporting the MOB investment proposition, including its low share count, which is reportedly only 4.82 million on October 6. While that's small relative to most smallcaps in growth mode, MOB's trading float is even tighter, with only 547.36 thousand shares able to change hands. Thus, as a company shifting its growth pace from hyper to warp, and considering the number of contracts made, awards won, and design wins earned, the investment proposition presented by MOB shares at current prices is more than attractive; it's actionable. Based on its bullish trend, perhaps sooner rather than later.
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