Subject: Update on Recent Developments for Cyberlux Corporation
Dear Shareholders,
First, I would like to express my gratitude to all the shareholders who have been on the journey with us during the 700+ days Cyberlux was striving to remove the Caveat Emptor (CE) designation. The removal of the CE warning and the regaining of Pink Current Information status is a significant, fundamental step towards Cyberlux’s realizing its full potential in the coming years.
Cyberlux will strive to operate in accordance with SEC guidance on disclosure of material events to ensure current and future transparency.
It has been an exciting period of growth and transformation for our company, and we appreciate your continued trust and support as we execute on our strategic initiatives. We are enthusiastically forging ahead.
Financial Performance Overview
Revenue Growth: Q3 2024 revenue increased to $5.3M from $419K in Q3 2023; Year-to-date (YTD) revenue increased to $63.1M from $568K last year. The DoD contract accounted for approximately $4M and $54 M of the revenue for the 3 and 9 month periods of 2024, respectively. Profitability: Q3 gross margin improved to 67.3%, and YTD net income was $21.7M in nine months ended September 30, 2024, compared to a loss of $17.8M for the comparative 2023 period. 2023 period reflected the shedding of our foreign subsidiaries (yielding an $11M loss) while 2024 focused on delivery under the DoD contract.
Balance Sheet Strengthening: Total assets increased to $56M at September 30, 2024 – driven by the accounts receivable arising from the DoD contract. Although the contract was “terminated for convenience” we are working with our partners on this contract to collect the balance due.
Our total liabilities remained relatively consistent at September 30, 2024 compared to December 31, 2023. Stockholders’ equity improved to $9.9M from a deficit of $13.8M at December 31, 2023.
Business Updates and Key Developments
We announced our new Global Integration Services (GIS) business unit – a key element in the expansion of our global Foreign Military Sales. We have also developed technical partnerships including our UAS division’ joint efforts with a leading Artificial Intelligence / Machine Learning (AI/ML) firm to incorporate its advanced visual-optical navigation capabilities into our UAS portfolio; and the Datron Military Communications (DMC) division’s work with a leading innovator in Low Probability of Intercept / Low Probability of Detection (LPI/LPD) communications to further strengthen our product portfolio, and are exploring additional strategic alliances.
Cyberlux has evolved the original K8 drones into newer aircraft configurations (our X Series), as the industry continues its rapid evolution. We have ongoing activity in Ukraine working to secure additional contracts across our Global Integration Services (GIS), Unmanned Aircraft Systems (UAS), and Datron Military Communications (DMC) business units. Additionally, the Cyberlux Business Development team has actively focused on the INDPACOM market (Taiwan).
We also expect to finalize a negotiated settlement of the Cyberlux K8 contract during Q4 2024, and conclude open litigation.
Product Development:
At the Special Operation Forces (SOF) Week tradeshow, we introduced our X Series drone advancements. We have also expanded the product line to include more model variations, and are developing more capabilities for the platforms including Electronic Warfare resilience, logistics delivery, capacity, range, operation time, and extreme weather tolerance.
Datron Military Communications (DMC) has successfully integrated its tactical communications products into a new, customer driven Battle Management System (BMS), enhancing operational efficiency and situational awareness and has implemented key improvements to our HF data line, ensuring more reliable and faster data transmission.
Market Opportunities and Strategic Vision
The Global Integration Services business unit is strategic for Cyberlux’s growth, seeking to deploy the best-in-class defense technology and products. We are now licensed to operate as a broker of U.S.-approved military asset to aid foreign allied governments. This allows GIS to conduct substantial integrated solution transactions involving large equipment (such as tanks and airplanes), as well as best-in-class integrated solutions on a global scale. An early success of the GIS business is our recently announced a $22.7 million contract through our Canadian partners to be the U.S. prime contractor providing aircraft landing systems for F-16 aircraft support.
Globally, GIS is also focused on comprehensive border security solutions, including product integration, global delivery, capability training, and field service support.
DMC has seen increased spending in tactical communications within its core Partner Nation export market, reflecting a growing recognition of the need for resilient and adaptable communication systems. There is continued growth in the High Frequency (HF) sector, as reliance on satellite communications is increasingly seen as unsustainable in near-peer conflicts, where contested environments can disrupt satellite links. Additionally, there is sustained demand for coalition communication platforms that ensure interoperability among allied forces. DMC remains focused on meeting these evolving requirements with innovative, mission-critical radio systems.
UAS Division Meeting Emerging Customer Demands
UAS has seen a significant shift into AI/ML driven autonomous flight this year. Customers also demand greater range, lighter weight/smaller form factor, platform interoperability, and BMS integration. These demands are driving the entire industry into smaller, cost-effective, lighter, more autonomous Group 1 aircraft that are easier for the frontline operator to deploy and utilize.
UAS – Commercial sees ever improving component efficiencies. The focus is to increase battery capacity (thereby increasing flight time and distance) requires a shift in technology implementation for all radio transmission technologies on the aircraft. Continual refinement of both materials and airframes are required to ensure ideal performance and flight characteristics.
Contracts, Revenue, and Pipeline
Our contract pipeline remains robust, with seven significant deals under negotiation or in development across the GIS, UAS and DMC divisions.
Looking Ahead
Cyberlux believes it is poised for continued growth across the core business units. Our goals include expanding our presence in foreign military sales, advancing our capabilities in unmanned systems, and strengthening our tactical communications and defense technologies.
We recognize the challenges ahead, particularly the increasing competition in the defense sector and potential regulatory changes. However, we believe that our commitment to innovation, operational efficiency, and customer-driven product development positions us to overcome these obstacles. We are actively working to mitigate risks by diversifying our portfolio and investing in scalable technologies that meet the evolving demands of modern defense.
We are excited about the journey ahead. Thank you for your continued trust and support as we work to build a stronger, more impactful Cyberlux.
Auditing and Financials
In line with our ongoing commitment to financial rigor and transparency, we have engaged EisnerAmper to support our financial auditing process.
Investor Call
We expect to have an investor call at some point next year in concert with our 2024 fiscal year report. This will provide a platform for direct engagement with our shareholders. We anticipate discussing recent developments, strategic initiatives, and answering questions regarding our goals. We will communicate the date and details of this call to shareholders once it is finalized.
Closing Remarks
To our valued shareholders, thank you for your trust and continued partnership with Cyberlux. Your unwavering support empowers us to push the boundaries of innovation and achieve new milestones.
Cyberlux’s success is a direct result of the collective efforts of our dedicated employees, strategic partners, and loyal shareholders. Together, we are building a company to lead in cutting-edge technology, support our customers’ critical needs, and create lasting value for all.
Thank you for being an essential part of our growth and success.
Sincerely,
Mark Schmidt
Mark Schmidt
Chief Executive Officer
Cyberlux Corporation
www.cyberlux.com
Key Attachments/Links for Shareholders
- Recent Financial Statements: https://www.otcmarkets.com/otcapi/company/financial-report/416678/content
- Company Overview: www.cyberlux.com
- OTC Profile: www.otcmarkets.com/stock/CYBL