The rally in Mobilicom Limited (NasdaqCM: MOB) stock continues to strengthen, evidenced by its over 43% gain since last week and 88% increase YTD. While impressive by all measures, the better news for MOB and its investors is that those gains could be the precursor to more. In fact, shares traded as high as $2.16 on Tuesday on massive volume while the company was introducing itself to procurement specialists at the Association of the United States Army’s Annual Meeting & Exposition in Washington, D.C., on October 9-11, 2023. With no other news on the wires, MOB may be impressing its audience. (* YTD share price from 01/01/23 – 10/11/23, 10:56 PM EST, $0.97 – $1.86, Yahoo! Finance, 10:54 AM EST)
That wouldn’t be surprising. At past events, MOB walked away with significant new interest, leading to design wins and revenue-generating contracts. But that’s not the only thing potential investors are factoring into the value proposition. Other value drivers in play at MOB include maximizing its recent grant of approximately $250,000 from Space Florida, Florida’s Aerospace, Finance and Development Authority, earning its initial purchase order for two of its innovative cybersecurity products from one of the largest defense contractors in Europe, and the value related to a design win and initial $150,000 purchase order with a leading drone designer and manufacturer that serves commercial and defense customers in the U.S. and abroad.
That’s just accounting for the past two months.
SkyHopper Pro Wins Major Client Interest
Before that, MOB announced sales resulting from design wins in three new geographic markets. That includes 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. While that’s plenty to support the recent share price run, that list of accomplishments isn’t exhaustive. Adding to that list, MOB has completed significant operational groundwork and established several tier-one business relationships since the start of 2023 that do more than justify the bullish thesis; it’s enough to fuel a rally to re-claim its 52-week high of $3.33, 79% higher than current levels.
Considering that MOB is better positioned today than when it scored that high, reaching that mark could come sooner. It would be no coincidence. MOB is pioneering and, more importantly, benefiting from its first-mover advantage to provide cybersecurity solutions to the small-drone and antonymous vehicle markets. With that position, MOB could target more than millions in revenues; billions could be in play from being one of the first companies to introduce cybersecurity solutions optimized for small drones and robotics, its ICE Cybersecurity Suite. Earning billions is not overly ambitious speculation. It’s warranted knowing that MOB can capitalize on its first-to-market advantage with its ICE Cybersecurity platform that provides measurable competitive benefits in a currently thin competitive landscape.
Those distinctions continue to be highlighted. This week, MOB showcased 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. At the event, 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.
Mobilicom Is Scoring Significant Wins And Contracts
More importantly, it’s leading to more awards and design wins. 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 Mobilicom’s value 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 Typically Generate Purchase Orders
There’s more to appreciate. 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 quick 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. And that threat and loss of arsenal now extends into a new war in Israel. Thousands more drones will likely be lost in combat through munitions fire, and cyber breaches. But here’s the thing to remember- 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.
Demand Is Increasing At Record Pace
In other words, drones 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.
Increasing deal count with 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.
A Bullish Proposition Is Supported
There’s more good news. MOB has the capital to serve its expected near and long-term growth strategy after securing $13 million in funding last year. 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, a mission in progress through a client list that, among others, includes Airbus S.E., Elbit Systems (NasdaqGS: ESLT), Censys, and several other prominent global players.
News that others are added may be forthcoming once the show in Florida concludes. 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. In fact, from the way MOB stock is acting, it’s expected.
If that expectation is met, MOB shares could increase substantially. Not only from factoring additional revenues but also from MOB having only 4.82 million shares O/S on October 6. While that’s small relative to most smallcaps, MOB’s trading float is even tighter, with only 547.36 thousand shares available to change hands. Thus, MOB checks all the right boxes for those wanting value appreciation in sector-leading companies. Act quickly; based on recent trading, this window of opportunity is closing.
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