Advice was received from Boeing on August 2 that their Technical Design Review (TDR) meeting has closed off all outstanding technical design issues.

So Boeing has finally accepted all the tests are completed. 6 weeks to FAA submission. Decision by early CY25? Previous estimates for initial revenue were around the $6-7 million mark for the Delta installations. Not quite there yet but getting close.

From an announcement in 8/2017 (yes this product has been decades in the making!)

Delta permitted to purchase CVM™ sensors, hardware and related peripheral equipment at a discount to the SMS global catalogue list prices paid by Delta competitors - Through the purchase of an initial threshold level of CVM™ equipment, Delta will earn the right to receive commissions on all SMS sales of CVM™ equipment, and technology license agreements, transacted with global airline operators. The approximate revenue value associated with these initial threshold sales of CVM™ equipment to Delta is expected to be in the vicinity of $US6-7 million

"It significantly increases the confidence with which we can continue our engagement with important potential customers -along with our currently contracted customer Delta Air Lines - for our Aft Pressure Bulkhead application and our confidence to pursue new applications, many of which we are already progressing."

"We have no reason to believe that these additional steps won't be completed successfully, but at the same time we cannot guarantee that they will, nor when they will"

“I look forward to providing further updates as the remaining milestones are met, as well as on the implications for our current budget and forecasts as we complete that assessment in the coming weeks."

Held in SM and RL

Positive update on the AEM business. SP has been on the increase in anticipation of the Boeing Technical Design Review which we have been told is scheduled for this Thursday August 1.

We have also confirmed a meeting with the Director of the Boeing Airframe Services team at their Seal Beach headquarters on August 9 at which stage we expect to be discussing the next, and final, steps towards submitting the Boeing draft service bulletin to the FAA for approval, as well as their priorities for other applications. 

SMS (“the Group”) recorded a maiden quarterly profit before tax of $0.51m for the quarter ended 30 June aided by the launch of the new MTP136D forest service radio product

The Group recorded EBITDA of $1.21m for the June quarter, an increase of 123% on the prior year. This can be attributed to the continued strong performance of the AEM Avionics and Contract manufacturing businesses

The Group recorded gross revenue for the quarter of $7.97m up 34% on the prior year. Both the AEM Avionics and Contract Manufacturing business segments continue to perform strongly, experiencing growth across all key metrics contributing to achieving this excellent result

SMS Group recorded a positive cashflow from operating activities of $1.01m for the year. 

Potential to expand CVM applications?

CVM's installation and installation training partner, TESTIA, presented a new co-authored paper titled: An Exploration of Leveraging CVM Sensors to Monitor Structures Across Various Industries - Part 1: Mining, Infrastructure and Marine. The paper was co-written by TESTIA's Aswin Haridas and Holger Speckmann, and AEM's Trevor Lynch-Staunton, and Dennis Roach. 

Everything pushed back again. Now CY25 for FAA approval of CVM for APB. All reliant on Boeing getting it done!

Updated CVM anticipated timeline

May 2024 – Circulation of draft copy of proposed new service bulletin to the four largest US carriers (South West, United, Delta, American) COMPLETED

June 2024 - Completion of Low-Stress Coord Sheet Test Requirements CONFIRMED

July 17 2024 –Cert Plan resubmitted to FAA (& send to EASA)

Aug 1 2024 - Boeing Structures Technical Design Review Meeting

Aug 15 2024 – FAA acceptance of Cert Plan (may get impacted by delayed submission -was Jul 31) Aug 30 2024 –Cert Plan Deliverables completed (was Jul 31)

Sep 3 2024 –CVM deliverables to routed to Boeing ODA for approval / recommend approval (was Aug 1)

TBD – Submit CVM deliverables to FAA (Service Bulletins & Compliance Report) (was Sep 30)

TBD – FAA Approval of Deliverables (was Dec 2)

TBD – SB Release with AMOC (was Dec 20)

We note that Boeing have declined to confirm expected dates for the last three steps, which we accept as preferable to continuing to revise and then delay these dates. 

 We are actively engaged with Delta, United, Southwest and American who are the largest potential customers for this application. We are also progressing two further potential applications 

Boeing have agreed to my request for a meeting in the coming weeks to align on our expectations for a conclusion, and a to discuss their next priorities for our technology. A date for that meeting has yet to be confirmed, but I expect it to be within the next three weeks..

SMN SP up 20% (off v.low base) after a positive update. CVM FAA approval still projected for end of 24 CY but the AEM business growing strongly. MC of $46M with forecast EBITDA of $3.4M and revenue of $28M before CVM sales and a 28% growth forecast for 2025. Confident of growth without further investment but hinting at much higher growth with further investment.

Structural Monitoring Systems forecasts maiden quarterly profit

Highlights:

Forecast FY2024 annual revenue of $28.38m, representing year on year growth of 27% building on revenue growth of 43% in FY2023.

Forecast FY2024 Group EBITDA of $3.38m v FY2023 Group LEBITDA of $0.27m Avionics with a figure of 28% revenue growth budgeted for in FY2025. 

Increased avionics sales expected to see the Group record a quarterly profit for the first time in the June quarter (before any audit adjustments).

Stronger than anticipated results bolstered by the strong performance of the Group’s Contract Manufacturing segment.

Forest Radio added as an approved Cooperator Agencies radio for USFS contracts for the States of Washington, Oregon, California, Colorado.

First Supplement Type Certificate (STC) for installation of the MTP136D on the AS350 helicopter type expected to be completed by the end of June 2024. CVMTM

Boeing confirms circulation of draft copy of proposed new service bulletin to the four largest US carriers.

Boeing undergoing evaluations of final testing completed in May, expected to be completed by the end of June.

Boeing expected to submit the final documentation for the proposed service bulletin to the FAA by Sep 30, 2024.

“We are confident we can grow the business profitably next year by as much as 20% (and by over 50% in five years) without further investment – and with conservative assumptions on CVMTM segment sales. “With further investment we believe we can generate significantly more growth (at least double the base case) over the five-year forecast period. "

Held in RL and SM

What a #@$tshow! Rick Deurloo (the only aerospace experienced board member) resigns after protesting the use of his name and signature by the board without his agreement.

He backs the EGM resolutions and slams the board in an open letter to shareholders copied to the ASX and Drake. Backs their board appointments.

Company goes in to a trading halt pending an announcement which is a purchase order from Delta (the airline that SMN have been working with all along) for 4 sensor sets with some undisclosed cash payment deemed not material. Touted as a milestone for the company and projecting Aft pressure bulkhead FAA approval in H1 23. Convenient pre EGM /AGM announcement to try and satisfy shareholders. This whole debacle has been one big sorry mess. I hope that Drake get over the line, clean house and the company can get some stability to make progress. More CR to come.

Disc: held in SM and RL both at a loss

SMS Group Update - Further Material Progress to Pivotal STC

Highlights:

 ~ SMS received the Statement of Conformity Certification from the FAA.

As part of the previously announced requirements to achieve STC approval, SMS has now received the Statement of Conformity Certification from the FAA after completing the CVM™ kit installation in Victorville, CA on a Delta B737-800 aircraft. This is a major milestone achieved on the well defined path toward the first STC approval. The next and final milestone is the submission of the combined laboratory test data from Sandia and Delta Engineering to the FAA. Although the FAA could request additional data from the laboratory reports, we are expecting these would have minimal impact to the overall certification timing.