Q4 2025 Baylin Technologies Inc Earnings Call

March 26, 2026

Operator: Good afternoon, ladies and gentlemen, and welcome to the Baylin Technologies full year and Q4 2025 financial results conference call. At this time, all lines are in listen-only mode. Following the presentation, we will conduct a question and answer session. If at any time during this call you require immediate assistance, please press star zero for the operator. This call is being recorded on Thursday, 26 March 2026. I'll now turn the call over to Kelly Miles, Director of Marketing and Investor Relations of Baylin Technologies. Please go ahead.

Operator: Good afternoon, ladies and gentlemen, and welcome to the Baylin Technologies Full Year and Q4 2025 Financial Results Conference call. At this time, all lines are in listen-only mode. Following the presentation, we will conduct a question and answer session. If at any time during this call you require immediate assistance, please press star zero for the operator. This call is being recorded on Thursday, 26 March 2026. I'll now turn the call over to Kelly Miles, Director of Marketing and Investor Relations of Baylin Technologies. Please go ahead.

Good afternoon, ladies and gentlemen, and welcome to the Bel and technology is a full year and fourth quarter 2025 financial results Conference call.

At this time all lines are in listen only mode.

Following the presentation, we will conduct a question and answer session.

If at any time during this call you require immediate assistance. Please press star zero for the operator.

This call is being recorded on Thursday March 26th 2026.

I'll now turn the call over to Kelly miles director of marketing and Investor Relations of Bailing technologies. Please go ahead.

Kelly Myles: Thank you. Hello and welcome, everyone. Thank you for joining the call this afternoon to review our full year and Q4 2025 financial results. On the call today from Baylin are Leighton Carroll, Chief Executive Officer, and Cliff Gary, Chief Financial Officer. We will be available for questions at the end of the presentation. Before we begin, let me make it clear that our comments today may include forward-looking statements and information and answers to questions that could imply future expectations about the prospects and financial performance of the business for 2025 and beyond, and could include the use of non-IFRS measures. These statements are subject to risks, uncertainties, and assumptions. Accordingly, actual performance could differ materially from statements made or information provided today, so you should not place undue reliance on them. We also do not intend to update forward-looking statements or information except as required by law.

Thank you Hello, and welcome everyone. Thank you for joining the call. This afternoon to review, our full year and fourth quarter 2025 financial results on the call today from Balan or latent Carroll, Chief Executive Officer, and Chris Gary Chief Financial Officer, we will be available for questions at the end of the presentation.

Yeah.

Before we begin let me make it clear that our comments today may include forward looking statements and information and answers to questions that could imply future expectations about the prospects and financial performance of the business for 2025 and beyond and could include the use of non I F. R. S measures.

These statements are subject to risks uncertainties and assumptions accordingly, actual performance could differ materially from statements made or information provided today. So you should not place undue reliance on them. We also do not intend to update forward looking statements or information, except as required by law.

Kelly Myles: I ask that you read our legal disclaimers and explanation of the use of non-IFRS measures and refer you to the risks and assumptions outlined in our public disclosures, in particular the sections entitled Forward-Looking Statements and Risk Factors in our annual information form for the year ended December 31, 2025, and our other filings which are available on SEDAR+. Our full year and Q4 2025 results were released after market close yesterday. The press release, financial statements, MD&A and annual information form are available on SEDAR+ as well as our website at baylintech.com. I would now like to turn the call over to Leighton.

I ask that you read our legal disclaimers and explanation of the use of non I F. R. S measures and refer you to the risks and assumptions outlined in our public disclosures in particular the sections entitled forward looking statements and risk factors in our annual information form for the year ended December 31 20.

25, and our other filings which are available on SEDAR plus.

Our full year and Q4 'twenty twenty-five results were released after market close yesterday, the press release financial statements and DNA and annual information form.

Are available on SEDAR, plus as well as our website at valent check Dot com.

I'd now like to turn the call over to Leighton.

Leighton Carroll: Thank you, Kelly. 2025 was a year where disciplined execution really mattered. While revenue declined due to order pushouts in our custom antenna group, formerly called Embedded, and we certainly saw softer demand in our Satcom business lines. Our team delivered strong results in the areas within our control, namely product mix, gross margin enhancement, and operational efficiency. As highlighted in our release, we saw improved margin performance across the business, driven in large part by the continued strength of our wireless infrastructure business, which exceeded expectations in Q4 and certainly through the year. Actually, to put a finer point on it, our wireless infrastructure business grew 40% in 2024 in a very challenging wireless infrastructure capital spend environment, and it backed it up with another 32.5% gross growth last year with solid margins.

Thank you Kelly.

25 was a year, where discipline execution really matters a lot.

While revenue declined due to order push outs in our customer and our group, formerly called them better and we certainly saw a softer demand in our satcom business lives. Our team delivered strong results in the areas within our control, namely product mix gross margin enhancement and operational efficiency.

Delighted in our release, we saw improved margin performance across the business driven in large part by the continued strength of our wireless infrastructure business.

Which exceeded expectations in the fourth quarter and certainly through the year.

Actually to put a finer point on it what you grew in 2020 for a wireless infrastructure business grew 40% very challenging.

Wireless infrastructure capital spending.

In fact, it up with another 32.5% coarse.

Growth last year with solid margins.

Leighton Carroll: We navigated the complex macro environment that included ongoing tariff uncertainty. April of last year was insane. Shifting customer purchasing behavior in inflationary pressures, and then obviously unprecedented geopolitical issues. Despite these conditions, we kept a clear focus on the bottom line, resilience, and delivering results. Our adjusted EBITDA grew year over year by nearly 13% and gross margins expanded meaningfully. We also continued to manage our balance sheet prudently, ending the year with lower debt and improved working capital efficiency. As we look to 2026, we remain confident in the underlying strength of our wireless infrastructure platform, encouraged by early signs of recovery in the custom antenna group.

We navigated the complex macro environment.

That included ongoing tariff uncertainty equal with last year, it was insane shifting customer purchasing behavior.

Inflationary pressures and then obviously.

Unprecedented geopolitical issues. Despite these conditions, we kept a clear focus on the bottom line.

Williams.

Delivering results that them.

Our adjusted EBITDA grew year over year.

13% gross margins expanded meaningfully.

We also continue to manage our balance sheet prudently.

For the year with lower debt and improved working capital efficiency.

As we looked at 2026, we remain confident in the underlying strength of our wireless infrastructure platform first.

First by early signs of recovery in.

The document Center group.

Leighton Carroll: We're realistic about the near-term challenges of our Satcom unit, particularly as we have focused more on defense and defense spending, which I'm gonna share some news in a bit about some of the progress we've made there. Our strategic priority remains unchanged, building a leaner, more efficient, more cash generative business while continuing to innovate in the areas where we hold clear competitive advantage. With that in context, I'll now hand it over to Cliff to walk you through our Q4 and full year financial results in more detail.

We're realistic about the near term challenges of our Satcom unit.

Particularly as we focus more on defense and defense spending, which I'm going to share some news and a bit about some of the progress we've made there.

Our strategic priority remains unchanged building, a leaner more efficient more cash generative business, while continuing to innovate in areas, where we hold a clear competitive advantage.

With that context, I'll now hand, it over to close to walk you through our fourth quarter and full year financial results in more detail.

Cliff Gary: Thank you, Leighton. Let me now walk through our financial performance for Q4 of 2025. Revenue for the quarter was CAD 18.2 million, down from CAD 20.8 million in Q4 of 2024, reflecting lower sales volume in the Embedded Antenna and Satcom business lines. Gross profit increased to CAD 8.4 million, up half a million CAD or 6.6% compared with last year. This improvement was driven primarily by stronger revenue and favorable margin contribution from Wireless Infrastructure. Gross margin for the quarter was 46.1%, an increase of 8.2 percentage points over the 37.9% reported in Q4 of 2024. This, as a result of a more profitable product mix in both Wireless Infrastructure and Embedded Antennas.

Thank you ladies.

Moving now to our financial performance for the fourth quarter of 2025.

Revenue for the quarter was $18 2 million down from 28 million in Q4 of 2024.

Lower sales volume and the embedded in China Satcom business lines.

Gross profit increased to $8 $4 million, a path a million dollars or six 6%.

Paid with last year.

Nick was driven primarily by stronger revenue and favorable margin contribution from wireless infrastructure.

Gross margin for the quarter was 46, 1% an increase of eight two percentage points over the 37, 9% reported in Q4 of 2024. This is a result of a more profitable product mix in both wireless infrastructure and embedded antennas.

Cliff Gary: Operational expenses were CAD 9.9 million compared to CAD 8.8 million reported in Q4 of 2024. The primary driver for the increase was CAD 1.8 million expensed for services related to the acquisition of Kaelus for due diligence. Adjusted EBITDA for the quarter was CAD 1.4 million compared with CAD 1.8 million in Q4 of last year. The prior year quarter benefited from a CAD 2 million reclassification from cash based to non-cash based compensation, which did not repeat this year. Cash outflow from operations of CAD 2.4 million was negatively affected by the lower sales volumes. Net loss for the quarter improved meaningfully to CAD 2.5 million, compared with a net loss of CAD 4.9 million in Q4 of 2024.

Operational expenses were $9 9 million compared to $8 8 million reported in Q4 of 2024.

The main driver for the increase being $1 $8 million exchanged for service as relates to the acquisition of Cayless due diligence.

Adjusted EBITDA for the quarter was $1 4 million compared with $1 8 million in Q4 of last year.

Prior year quarter benefited from a $2 million reclassification from cash based to non cash based compensation, which did not repeat this year.

Cash outflow from operations of $2 $4 million was negatively affected by the lower sales volumes.

Net loss for the quarter improved meaningfully to $2 $5 million compared with a net loss of $4 9 million in Q4 of 'twenty 'twenty four.

Cliff Gary: The prior year included a CAD 2.6 million impairment charge for the Satcom business line, which contributed to the improvement in year-over-year comparability. Overall, the quarter demonstrated the resilience of our operating model with continued margin strength driven by improving product mix and disciplined cost control. Turning now to the full year results. Total revenue for 2025 was CAD 76.3 million compared to CAD 83.6 million in 2024. The decline of 8.7% reflected softer demand in our embedded antenna and Satcom business lines, partially offset by strong year-over-year performance in wireless infrastructure. Gross profit for the year was CAD 34.1 million, essentially stable with the CAD 34.4 million reported last year. Revenue headwinds were largely offset by margin improvements in both wireless infrastructure and embedded antennas.

<unk> included a $2 $6 million impairment charge for the Satcom business line, which contributed to the improvement in year over year comparability.

Overall.

<unk> demonstrated the resilience of our operating model with continued margin strength, driven by improving product mix and disciplined cost control.

Turning now to the full year results.

Total revenue for 2025 was $76 $3 million compared to $83 6 million in 2024.

The decline of eight 7% protected softer demand in our embedded embedded antenna and satcom business lines, partially offset by strong year over year performance in wireless infrastructure.

Gross profit for the year was $34 $1 million essentially stable with the $34 4 million reported last year.

Revenue headwinds were largely offset by margin improvements in both wireless infrastructure and embedded antennas.

Cliff Gary: Gross margin improved to 44.7%, up from 41.1% in 2024, an increase of 3.6 percentage points. This reflects the successful ongoing shift towards higher value multi-beam small cell and other innovative antenna products, as well as improved margins in the embedded antenna business line. Operational expenses, including incremental M&A expenses of CAD 1.1 million for the Kaelus transaction, were CAD 35.2 million compared to CAD 36.3 million in 2024, a decrease of CAD 1.1 million, demonstrating continued cost diligence. Adjusted EBITDA for the year was CAD 6.1 million, an increase of CAD 0.7 million or 12.8% compared to fiscal 2024. This growth was primarily driven by higher gross profit in the wireless infrastructure and our continued focus on cost discipline.

Gross margin improved to 44, 7% up from 41, 1% in 2024.

An increase of three six percentage points. This reflects the successful ongoing shift towards higher value multi beam small cell and other innovative antenna products as well as improved margins in the embedded in our business line.

Operational expenses, including incremental M&A expenses of $1 $1 million for retailers transaction with $35 2 million compared to $36 $3 million between 'twenty for.

A decrease of one $1 million demonstrating continued cost diligence.

Adjusted EBITDA for the year was $6 $1 million an increase of.

Zero point $7 million or 12, 8% compared to fiscal 2024.

This growth was primarily driven by higher gross profit in the wireless infrastructure and our continued focus on cost discipline net.

Cliff Gary: Net loss for the year improved significantly to CAD 4.7 million compared with CAD 8.5 million last year, driven by lower operating expenses, the 2024 impairment charge, which did not repeat in 2025, and a favorable adjustment to the fair value of our convertible debentures. Cash inflow from operations of CAD 0.4 million compared to the 2024 figure of CAD 0.8 million. We ended the year with net debt of CAD 12.4 million, excluding the restricted subscription receipts received prior to year-end. That is a reduction of CAD 1.9 million, reflecting effective cash and working capital management. Finally, I'd like to note that we have disclosed in our financial statements material uncertainty relating to going concern as we're currently negotiating a new credit facility as part of the Kaelus acquisition, which has not closed yet.

Net loss for the year improved significantly to $4 7 million compared with $8 5 million last year.

Lower operating expenses in 2020 full impairment charge, which did not repeat in 2025 and a favorable adjustment to the fair value of that convertible debentures.

Cash inflow from operations of <unk> 4 million compared to the 2020 for figuring out in Europe was $8 million.

We ended the year with Nic data at $12 4 million, excluding the restricted subscription receipts received prior to year end.

That is a reduction of $1 $9 million, reflecting effective cash and working capital management.

Finally, I'd like to note that we have disclosed in our financial statements material uncertainty relating to gain come soon we currently negotiating a new credit facility as part of the cadence acquisition, which has not closed yet on that.

Cliff Gary: I'll now turn the call back over to Leighton Carroll.

And the call back over to David.

Leighton Carroll: Thank you, Cliff. I want to reiterate that 2025 was a year defined by execution and resilience against a really unprecedented background of geopolitical events and tensions. Even in the face of some revenue pressure, we maintained our focus on margin quality, cost discipline, and product line optimization. These efforts translated into meaningfully stronger margins, year-over-year growth in adjusted EBITDA, and substantial improvement in net loss, underscoring the effectiveness of our strategy and operating model. While the geopolitical situation remains uncertain, with ongoing tariff considerations, questions on inflation certainly tied to what's going on with oil and the war in the Middle East, and shifting customer purchasing behavior, we remain committed to managing what we can control, executing with discipline, optimizing our product mix, strengthening customer engagement, excuse me, and driving operational efficiency across all units.

Thank you Chris I wanted to reiterate that 2025 was a year defined by execution risk.

Yes.

Against that.

Really unprecedented.

Background.

Geopolitical events intentions, even in the face of some revenue pressure, we remain maintained our focus on margin quality cost discipline and product line optimization. These efforts translated into a meaningfully stronger margins year over year growth in adjusted EBITDA and substantial improvement in net loss underscoring the effectiveness.

Our strategy and operating.

While the geopolitical situation remains uncertain with ongoing tariff considerations.

Questions on inflation, certainly tied to what's going on with oil and award in the middle East and shifting customer customer purchasing behavior, we remain committed to managing what we can control executing with discipline optimizing our product mix strengthening customer engagement engagement squeezing and driving operational efficiency.

Cross all units.

Leighton Carroll: As a result of the pushouts in the custom antennas group, it's gonna take me a while to get that right, and softness that we saw in Satcom, particularly the backlog level as we entered the year, we are seeing Q1 is going to have its challenges. Looking ahead to the entire year, we expect continued strength in wireless infrastructures, supported by robust demand for multi-beam, small cell, and other innovative antenna solutions, with strong interest from global operators and major Canadian carriers. In fact, in Q1 we received orders, and this is actually in a 30-day period, from Deutsche Telekom, Orange S.A., SFR, and a Vodafone property. These are new customers for us and shows the progress we've been making penetrating into Europe, which was a greenfield market for infrastructure.

As a result of the push outs of embedded.

Sorry, the customer incentives group, that's going to take me a while.

Did I get that right.

And softness that we saw in satcom, particularly the backlog level as we entered the year. We are seeing Q1 is going to is going to have its challenges.

Looking ahead to the entire year, we expect continued strength in wireless infrastructures supported by robust robust demand for multifamily and small cell and other innovative antenna solutions with strong interest from global operators and major Canadian carriers back in Q1, we received orders. This is actually in the 30 day period for Deutsche.

Calm Orange group assets are and have voted for the property.

These are new customers for us and shows the progress we've been making penetrating into Europe, which was a greenfield market for infrastructure.

Leighton Carroll: We're also encouraged by the early demands and recovery in the embedded antenna arm as customers transition from Wi-Fi 6 to Wi-Fi 7. To that end, we've actually seen several customers in late Q4, and certainly in Q1, who had previously gone with what I will say is a cheaper alternative, either from one of our competitors or an in-house cheap alternative from an ODM device manufacturer, come back to us and ask us to retrofit on multiple programs because they know we don't sell cheap. We sell quality of RF within our custom antenna line. As a result of that, we see. It's actually interesting, the book of projects that we currently have underway is. It's been high before. It's literally the highest it's ever been, and that phenomenon is amplifying.

We're also encouraged by the early demands and recovery in the embedded in general is.

As customers transition from Wi Fi six Wi Fi.

To that end, we've actually seen several customers.

Late Q4, and certainly in Q1, who had previously gone with what I will say is a cheaper alternative either for one of our competitors or in house cheap alternatives from ODM device manufacturer come back to us and ask us to retrofits.

On multiple programs because they know we don't sell cheap we sell quality of RF within our custom.

It's in the line and as a result of that we'd see.

Actually interesting the book of projects that we currently have underway as it's been high before it's literally the highest its ever been.

That phenomena is with those clients.

Leighton Carroll: Also, interestingly enough, the FCC just came out with a proclamation that for obviously the US market being a critical market for us, they have put a ban on any future home networking routers being manufactured outside of the United States. To make sure I explain that is something that we will be working on. There are exemptions to that. It does not affect anything we are doing today. By the way, we don't just do home networking, we do enterprise networking, we do public safety, and several other products. At the end of the day, it does mean there will be some impact, likely two years out or more, for some of our customers, and we will work with them to find solutions. Given that a lot of our engineering is in the USA, we feel that we'll be able to manage that correctly.

Also interestingly enough. The FCC just came out with a proclamation that for obviously the U S market being a critical market for us they have put a ban on any future home networking routers being manufactured outside of the United States.

To make sure I explained that does that is something that we will be working on there are exemptions to that does not affect anything we are doing today by the way. We don't just do home networking, we do enterprise networking.

Do public safety.

And several other products, but at the end of the day. It does mean, there will be some impact likely two years out or more.

For some of our customers and we will work with them to find solutions given that a lot of our engineering is in the USA, we feel that we'll be able to manage that correctly.

Leighton Carroll: Finally, on Satcom, the market has been very challenged. I was literally just at a satellite conference in Washington, DC earlier this week, and the phenomena that we've seen, you know, certainly towards the tail end of last year and in Q1 of this year with lower order volumes and flow through, that is fairly universal in the portion of the satellite market that we serve. Now, part of our pivot, and this has been a while in coming, strategic shift, was to focus more on differentiation for high power and focus on defense spending. Why does that matter? First of all, defense spending has legs. Everyone can see it. There's a lot going on in the world right now. The downside of that is these defense programs tend to have long sales cycles and take longer to close.

Finally on Satcom.

The market has been very challenged I was literally just at a satellite conference in Washington, DC earlier this week.

And the phenomena that we've seen certainly it towards the tail end of last year and in Q1 of this year with lower order volumes and closer that is fairly universal.

Portion of the satellite market that we serve now part of our pivot and this has been a.

While incoming strategic shift was to focus more on differentiation for high power.

And focus on defense spending.

Why does that matter.

Of all defense spending has legs, everyone can see if there is a lot going on in the world right now.

<unk>.

The downside of that is these defense programs tend to have long sales cycles and take longer to close kind of the breaking news and we will have a press release coming out shortly.

Leighton Carroll: Kind of the breaking news. We will have a press release coming out shortly on this. We were just awarded $2 million in purchase orders from a US defense contractor for a US DoD application. That $2 million is the first order of a multi-phase program that has the potential to have value, not just past $10 million, but substantially higher than that over several phases. In fact, we have estimated that the second purchase order, which we would receive after delivery of the first units, will be double the size of the original purchase order. That is something that will set us up for the long term. I wish we could turn that into a revenue tomorrow. We have to do engineering work. We have to build product.

We were just awarded $2 million purchase orders from a U S defense contractor for a U S. D. R D application.

That $2 million is the first order of a multi phase program that has the potential to have value.

Not just past $10 million, but substantially higher than that over several phases.

We have estimated that the second purchase order, which we would receive after delivery of the first units.

We'll be double the size of the original purchase order.

That is something that will set us up for the long term I wish we could turn that into a revenue tomorrow. We have to do engineering work, we have to build product.

Leighton Carroll: It shows that by the focus on defense as a key component of our satellite strategy, coupled with what we're doing to reduce and improve the cost structure of that business, that should eventually be a much healthier business in the long term. With respect to the recent acquisition of Kaelus, I certainly had anticipated closing the transaction during Q1. Moreover, we've officially received the regulatory approval in the EU for foreign direct investment, sometimes called FDI. This was one of the things we were waiting on. Effectively, because Kaelus has a military/defense application in one of its product lines, we were required to get an EU approval. We have that.

But it shows that by the focus on defense as a key component of our satellite strategy.

With the with what we're doing to reduce.

Proves the cost structure of that business that should eventually be much healthier business in the long term.

With respect.

Back to the recent acquisition of Calix.

We had I certainly had anticipated closing the transaction during the first quarter. Moreover, we've officially received and this was one of the one of the things we were waiting on we officially received the regulatory approval in the EU for foreign direct investments, sometimes called the FBI effectively VITAS.

<unk> has a military sites defense application and one of its product lines. We were required to get any approval. We have that the challenge has been given the multi jurisdictional nature of the acquisition and the complexity of the agreements we find ourselves to continually continuing to negotiate the final.

Leighton Carroll: The challenge has been, given the multi-jurisdictional nature of the acquisition and the complexity of the agreement, we find ourselves continuing to negotiate the final issues with the principal investors from Kaelus. As such, we do not anticipate closing this quarter, but do anticipate bringing the acquisition to conclusion in the near future. In fact, we've made substantial progress over the past two weeks, and in my mind, there's a path forward to get this done in the near term. Key areas for us going forward include finalizing the status of the acquisition, working on Satcom's long-term profitability and cost reductions. We're continuing to grow our infrastructure and custom antenna business lines through product innovation and customer engagement.

Issues with the principal investors from chaos as such we do not anticipate closing this quarter, but do anticipate bridge the acquisition to conclusion.

In the near future.

We have made substantial progress over the past two weeks and there is a in.

In my mind, there's a path forward to get this done in the near term.

Key areas for us going forward to include finalizing the status of the acquisition.

Working on Satcom long term profitability and cost reductions.

We're continuing to grow our infrastructure infrastructure and customer incentive business lines through product innovation and customer engagement we.

Leighton Carroll: We will continue to build a lean, more efficient, and importantly, more cash generative business, ensuring we are well positioned to create sustainable long-term value for our shareholders, employees, and customers. The improvement in our operating metrics and a reduced net debt position reflect the strength of our team and the focus we have had on execution. Thank you for your continued support and interest in Baylin. We look forward to updating you on the progress throughout the year. That concludes our formal remarks. Operator, we'd be pleased to take questions.

We will continue to build a leaner more efficient.

And importantly, more cash generative business, ensuring we are well positioned to create sustainable long term value for shareholders employees and customers the improvement in our operating metrics.

Reduced net debt position reflects the strength of our team.

The focus we have had on execution. Thank you for your continued support and interest and Balan, we look forward to updating you on the progress throughout the year that concludes our formal remarks, operator, we'd be pleased to take questions.

Operator: Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press star one on your touch tone phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press star two. If you're using a speakerphone, please lift the handset before pressing any keys. One moment, please, for your first question. Your first question comes from Daniel Rosenberg of Paradigm Capital. Your line is already open.

Thank you.

Ladies and gentlemen, we will now begin the question and answer session.

Should you have a question. Please press star one on your Touchtone phone.

You'll hear a prompt that youre hand has been raised.

Should you wish to decline from the polling process. Please press star two.

If you are using a speaker phone please lift the handset before pressing any keys one moment. Please for your first question.

Okay.

Your first question comes from Daniel Rosenberg of.

Paragon capital your line is already open.

Daniel Rosenberg: Hi. Good afternoon, Leighton and Cliff. I was just curious around your comments around the embedded division and the FCC ruling. Like, is there clarity on kind of how that regulation will be implemented? Like, or are you still waiting to hear details about what those impacts might be on the business?

Hi, good afternoon maintenance cliff.

Was just curious.

Hi around the comments around the embedded.

The vision and the FCC ruling is there clarity out of kind of how that.

Yes.

How's that.

Regulation will be implemented.

Or are you still waiting to hear details about what those impacts might be on the business.

Leighton Carroll: No, I think it's a good question. There is not full clarity, but this affects companies like TP-Link, Netgear. We certainly, you know, I've said this in investor meetings before, if you have Google Fiber in your home, which a lot of people do in the United States, our antennas are in products that are the wireless enablement in your home. Same thing with AT&T. Anyone, you know, Charter Communications is another easy example. Anyone who sells wireless networking gear, whether their own branded gear or consumer gear, like, such as TP-Link, Linksys and Netgear do, the regulation states that all new gear will need to be manufactured in the United States unless there is an exemption.

No I think it's I think it's a good question.

There is not full clarity.

This effects.

Companies like TP link next year.

Certainly.

I've said this in Investor meetings before if you have Google fiber in your home, which a lot of people in the United States. Our incentives are in products that are the wireless enablement.

Same thing with AT&T anyone.

Charter Communications never Easy example.

Anyone who sells wireless networking gear, whether their own branded gear for consumer gear lines, such as T. P line links.

<unk> next year do.

The regulation states that all new gear.

We will need to be manufactured in the United States unless there is an exemption.

Leighton Carroll: Now, the way that works, and this is why I'm saying it's deferred, is everything we're doing today, everything that generates revenue today in the home networking segment of that, of our custom antenna business is already approved. There is no look back. Anything that is new programs that are going to come out, the requirement states that they need to be provided, they need to be manufactured in the US. As I talk to you today, based on what I see in the playing field, there is literally nothing that is currently manufactured in the US. What this likely means is the life cycle of our existing programs will be extended while the various organizations who I just mentioned are working either with their partners or directly to set up manufacturing in the United States should this regulation hold.

Now.

The way that works and this is why I'm, saying it's deferred.

Everything we're doing today everything that generates revenue today in the home networking segment of that of our custom antenna business.

He is already approved.

There is no look back.

Anything that is.

These new new programs that are going to come out.

The requirements states that they need to be provided they need to be manufactured in the U S. As I talk to you today.

Based on what I see in the plane. So there is literally nothing that is currently manufactured in the U S. What this likely means is the lifecycle of our existing programs.

We will be extended.

While the various organizations, who I just mentioned are working either with their partners or directly to setup manufacturing in the United States should this regulation.

Leighton Carroll: That's not necessarily a terrible thing for us, right? Number two, what is still unclear, is that there is an exemption process where you can effectively have something manufactured overseas, but it has to go through a different certification now, not just by the FCC, but effectively with the Department of Defense or the Department of Homeland Security. That process to get exemptions is completely unclear. I've seen commentary from folks like Linksys, Netgear, and TP-Link, and they are still trying to get clarity on this. There is a sense that if this is the quote, unquote, law of the land, it will be a level playing field that everyone needs to live with, and it will take time to get to that point where this type of manufacturing can be set up. Hopefully that's provided you the color.

That's not necessarily a terrible thing for us.

Number two what is still unclear.

Is that there is an exemption process, where you can you can effectively have something manufactured overseas, but it has to go through a different certification now not just by the FCC, but effectively with department of work for the department of Homeland Security.

That process to get exemptions is completely unclear.

I've seen.

Commentary from folks like Linksys, Netgear and Kiki Layne.

And they are still trying to get clarity on this but there is a sense that if this is the quote unquote law of the land.

<unk> will be a level playing field that everyone needs to live with and it will take time.

To get to that point, where this type of manufacturing can be set up.

Hopefully that provides you with color.

Daniel Rosenberg: Yeah, that helps. I'm just wondering, in your own supply chains, like, do you have flexibility? Obviously, these are long-term ideas, but to be able to move production, I'll be honest, without the clarity, it's hard to make decisions around this. Just trying to gauge if there is some flexibility in your supply chain, manufacturing process.

Yeah that helps and then I'm just wondering in your own supply chains like do you have flexibility. Obviously these are long term ideas, but.

To be able to move production.

Yes.

So without the clarity.

To make decisions around this.

Just trying to gauge if there is some flexibility in your supply chain Manny.

Manufacturing.

Leighton Carroll: Yeah. The short answer is yes, right? You know, we obviously do a lot of our manufacture for the custom antenna unit in China, as we do for our infrastructure unit. It's our own company-owned facility. You know, the reason we do is, you know, bluntly, the Chinese manufacturing supply chain system is world-class. Conversely, we do have customers today, particularly in the custom antenna line, depending on what it is, this tends to be driven more by public safety reasons in recent times, looking to move production even though it doesn't have an active component, which is generally the trigger for the US government to move manufacturing outside of China. We have already done so for several programs and are continuing to work on a couple of others where we can take those out of China.

The short answer is yes right.

Obviously do a lot of our manufacturer for the custom antenna unit in China.

As we do for infrastructure.

It's our own company owned facility.

And the reason, we do as well.

Bluntly, the Chinese manufacturing and supply chain system is world class.

Conversely, we do have customers today, particularly in the custom antenna line, depending on what it is it tends to be driven more by public safety in recent times looking to move production.

Even though it doesn't have an active component, which is generally the trigger wire for the U S government to move manufacturing outside of China, We have already done so.

For several programs and are continuing to work on a couple of others, where we can take those out of China.

Leighton Carroll: What is unclear is if we are, for example, Netgear is a customer, and two years from now they've set up or have worked to get some type of US-based manufacturing. In the end box, it's unclear if the antennas, which is a passive component, need to be manufactured in the US or if they can be manufactured in China and instead of being assembled into the bigger technology box that is a Netgear router or a Charter router, et cetera. Do those antennas have to be manufactured in the US or can they continue to be manufactured overseas? There is 100% a lack of clarity to that point. It's obviously something that we will need to assess over the next couple of years.

What is unclear.

As if we are for example, <unk> is a customer and two years from now they set up.

I've worked to get some type of U S based manufacturer in the in the box.

It's unclear.

<unk>, which is a passive component.

Need need to be.

Manufactured in the U S or if they can be manufactured in China, and instead of being assembled into the bigger technology box that is Nick your router charter routers et cetera.

Do those incentives have to be manufactured in the U S or can they continue to be manufactured overseas. There is 100% of lack of clarity to that point.

Obviously, it's something that we will need to assess over the next couple of years.

Daniel Rosenberg: Okay, understood. Appreciate that color. Secondly, just on the acquisition debt, understanding that you can't really say too much here, but just was curious, you know, the bottlenecks you're seeing, you know, are you speaking to multiple debt providers, or is that you're finalizing arrangements? Any context you could give here would be appreciated.

Okay understood appreciate that color.

Secondly, just on the.

Acquisition that understanding that you can't really say too much here, but just was curious.

The bottlenecks you're seeing.

Are you speaking to multiple debt providers or is it that you're finalizing arrangements of any context, you can give there would be appreciated.

Leighton Carroll: We are in the throes of finalizing a new debt structure with a Canadian lender to come in and support the acquisition. When I mean finalizing, we are into, I would say eleventh hour of turning red lines and having something ready for signature.

We are in the throes of spinal rising a new debt structure.

The Canadian lender.

To come in to support the acquisition.

I mean finalizing we are.

<unk>.

I would say 11th hour, turning red lines, and having something ready for signature.

Daniel Rosenberg: Okay. I take it that language of early Q2 really means early Q2 is the-

Daniel Rosenberg: Okay. I take it that language of early Q2 really means early Q2 is the ambition here. Okay.

Okay. So I take it that languages early Q2 are really means early early.

Q2 is the ambition here okay.

Leighton Carroll: Yeah

Daniel Rosenberg: Ambition here. Okay.

Leighton Carroll: The ambition is to get this done in April. Right? Look, part of this is also still negotiating with the owners of Chaos, the principal owners. You know, they, you know, this is, in many respects, their baby. They have a lot of pride in it. When you have a lender, there will almost always be stipulations tied to covenants. That happens on every loan, no matter who the lender is or the jurisdiction. That has caused us to take longer in finalizing the final puts and takes on the purchase agreement. We are continuing to work through that. We are late in the game and expect to have a conclusion one way or another within the first few weeks of April. Ideally, the sooner the better.

Ambition is to get this done.

Right.

And look part of this is also still negotiating with the.

With the owners of chaos the principal owners.

Yes.

This is in many respects their babies they have a lot of pride in it.

You have a lender there will almost always be stipulations tied to covenants that happens on every loan.

No matter.

Who the lender is or the jurisdiction.

And that has caused us to take longer in finalizing the puts and takes the final puts and takes on the purchase agreement.

We are continuing to work through that we are.

Late in the game.

And we expect to have a conclusion, one way or another.

Within the first few weeks of April.

Ideally.

The sooner the better.

Leighton Carroll: You know, I feel good about the direction we're going to bring this to closure. I appreciate that the subscription receipts have been there for a period of time, and I thank the people who invested with us and their patience waiting for this to transpire. You know, I also can't discount the multi-jurisdictional nature of this. There was a lot of legal work and accounting work to make sure everything's buttoned up. It's taken longer than we would like, but we're trying to bring this to resolution pretty quickly.

I feel good about the direction, we're going to bring this to closure I appreciate that the subscription receipts have been there for a period of time.

Thanks, Steve.

The people, who invested with us and their patients waiting for this transpire.

And I also can't discount the multi jurisdictional nature of this there was a lot of legal work and accounting work to make sure everything is buttoned up so it's taken longer than we would like but we're trying to bring this to resolution quickly.

Daniel Rosenberg: Okay. Lastly for me, I was curious about the Satcom business. It was a bit of a challenging year for that business, but the drivers of the performance there, was it competition? Was it a change in technology, a change in customer sets? Could you provide some?

Okay, and then lastly for me I was curious about the satcom business. So it was a bit of a challenging year for that business.

But the drivers of the performance there was it competition was it a change in technology.

Changing customer set could you provide some.

Leighton Carroll: Yes.

Daniel Rosenberg: Just so-

Yes, just so yes.

Leighton Carroll: Um-

Daniel Rosenberg: Go ahead. Yeah

Leighton Carroll: I think you know, the reality of it is, there are a lot of customers paused over as we went towards H2. We have certainly seen the change in geopolitics play a role. The irony is, and this is in part because we've started to focus so heavily on defense spending as a component of that sets the table for a pretty solid future. The challenge is the timeframes to get those purchase orders. It's maddening. Getting this US defense contractor purchase order in literally came in this week. A $2 million purchase order with the likelihood of the next one behind it being $4 million on a large multi-phase program. That's huge for us.

I think the.

The reality of it is is there a lot of customers pause.

As we went towards the back half of the year, we have certainly seen.

The change in geopolitics play a role.

The irony is and this is in part because we've started to focus so heavily on defense spending is a component of that.

That sets the table for a pretty solid future challenges as the timeframes to get those purchase orders it's Matt.

Getting this U S defense contractor purchase order in.

Literally came in this week.

$2 million purchase order with the likelihood that the next one behind it being $4 million.

On a large multi phase program.

That's huge for US we also and I think I've shared this with investors before were already expecting on us completely different USB application.

Leighton Carroll: We also, I think I've shared this with investors before, we're already specced in on a completely different US DoD application that is multi-phase. The expectation is we will start to see purchase orders for that program later this year as the US government continues to spend and enhance some of their defense capabilities. Then maybe the final point is our bid book in Satcom remains elevated, and the bid activity we are involved in remains significantly elevated around defense spending. It tells me that there's a storm here. You know, certainly the market changed with Starlink coming in and then Project Kuiper, which is out of Amazon, is coming online with their LEO satellites.

That is multi phase.

And the expectation is we will start to see purchase orders for that program.

Later this year.

As the U S government continues to spend.

Enhance some of the defense capabilities and then maybe the final point is.

Our bid book in Satcom remains elevated.

Bid activity, we are involved in remains significantly elevated around defense spending.

So it tells me that there is a storm here.

There was a lot driven certainly the market changed with Starlink coming in and then.

Project hyper, which is out of Amazon is coming online with their Leo satellites, obviously, you've got other people like one web and.

Leighton Carroll: Obviously, you've got other people like OneWeb and Telesat in our own country doing the LEO work, and that certainly disrupted certain parts of our historical markets if I look back to kind of the 2022 timeframe. By making this pivot and having this focus, while it's taken longer than I would necessarily like, we feel pretty confident that we are set up to be in a good position to get a pretty reasonable share of the opportunities on the playing field because a lot of folks in this industry have had similar struggles to us. At the risk of having hubris, when you've lived through a turnaround like we have, it sharpens you, it makes you much more cost-disciplined.

Tell sat in our own country.

Doing the real work and that certainly disrupted certain parts of our historical markets. If I, if I look back to.

Kind of a 2022 timeframe.

But by making this pivot in having this focus while it's taken longer than I would necessarily light.

We feel pretty confident that we are set up to be in a good position.

To get a pretty reasonable share of the opportunities on the playing field because a lot of folks.

In this industry have had similar struggles to us.

And.

At the risk of being having cube risks.

When you live through a turnaround like we have.

A sharp currency it makes you much more cost discipline.

Leighton Carroll: We have weathered a storm and feel that the strategy that we're implementing is the right one that will set us up for long-term success.

And we have weathered the storm.

Leighton Carroll: We have weathered a storm and feel that the strategy that we're implementing is the right one that will set us up for long-term success.

And skills that the strategy that we're implementing is the right one that will set us up for long term success.

Okay.

Daniel Rosenberg: Okay. Thanks for taking my questions. I'll pass the line.

Okay. Thanks for taking my questions I'll pass the line.

Leighton Carroll: Thank you, Daniel.

Thank you Dan.

Operator: There are no further questions at this time. I would hand over the call to Leighton Carroll for closing comments. Please go ahead.

There are no further questions at this time I would hand over the call to Leighton Carol for closing comments. Please go ahead.

Leighton Carroll: Yeah. Thank you. Folks, I wanna thank our employees for weathering a very crazy year. It's nice to see some successes. We're making progress on a lot of fronts. It's nice to deliver a better bottom line number. I would be happier if everything was moving up and to the right, but we're continuing to work at it, and we feel good about the strategy that we have. We are obviously also, and me personally, spend a lot of time focused on the acquisition and trying to get this over the finish line because I do feel in the long term, if we are able to get this closed, it is a transformative acquisition, and we'll set our company up to be really interesting in the long term to deliver even more value and drive shareholder value, most importantly.

Yes. Thank.

Thank you so.

Folks.

I want to thank our employees for weather.

Very crazy year.

It's nice to see some successes.

<unk>.

We're making progress on a lot of fronts, it's nice to deliver a better bottom line number.

We'd be happier if everything was moving up into the right.

But we're continuing to work at it and we feel good about the strategy that we announced.

We are obviously also in the personally spent a lot of time focused on the acquisition.

Trying to get this over the finish line because I do feel in the long term. If we are able to get this closed is a transformative acquisition, we will set our company to be up to be really interesting in the long term.

Deliver even more value and drive shareholder value and that's important.

Leighton Carroll: With that, thank you everybody for being here and I appreciate everyone's support as always. Thank you, guys.

With that thank you everybody for being here and <unk>.

Appreciate everyone's support as always thank you guys.

Operator: Ladies and gentlemen, this concludes today's conference call. Thank you for your participation, and you may now disconnect.

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation and you may now disconnect.

Yes.

Okay.

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