Mobilicom Limited

Good afternoon, everyone. My name is Chris Donovan, Mobilicom's head of investor relations. Welcome to Mobilicom's first quarter 2026 earnings results conference call. Joining me today are Oren Elkayem, Mobilicom's founder and chief executive officer, and Liyad Gelfer, the company's director of finance. Earlier today, Mobilicom issued a press release announcing its financial results and business highlights for the three months ended March 31st, 2026. A copy of the release is available on the investor relations section of the company's website. Before we begin, I'd like to remind everyone that certain statements made during this conference call may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other securities laws. Forward-looking statements are based on management's current expectations beliefs, and assumptions that are subject to risks and uncertainties that could cause actual results to differ materially from those described in these statements. For a more detailed description of these risks and uncertainties, please refer to Mobile Accounts' filings with the U.S. Securities and Exchange Commission, including the risk factors section of the company's most recent annual report on Form 20F and the subsequent reports furnished on Form 6K. All forward-looking statements speak only as of the date of today's call. and Mobilicom undertakes no obligation to publicly update or advise any forward-looking statements, except as required by applicable law. Following management's prepared remarks, we will open the call for analyst questions. As for the agenda today, it will be a brief introduction to Mobilicom for those joining the story for the first time, our 2026 outlook and progress we've made against it in Q1, An update on programs of record, including progress under the new U.S. Army Lasso Program and our two new U.S. Tier 1 design wins. A cybersecurity regulatory momentum slide, as well as Q1 2026 financial highlights and our equity and CAS position. An update on our Q1 operational achievements will follow. And lastly, an analyst question and answer session with management. This webinar is being recorded and will be available available for replay on ir.mobilicom.com. With that, I would like to turn the call over to Oren Elkayem, Founder and Chief Executive Officer of Mobilicom. Oren, please go ahead.

Thank you, Chris, and good afternoon, everybody, and I would like to thank you for joining us on this call. For those of joining us for the first time, the next few slides will enable me to introduce and provide a concise overview of Mobilicom. If you would like a longer version, they are available on our investor website, obviously. And we will present briefly who we are, what we do, and how the company has strategically evolved to address a rapidly growing market and the cybersecurity opportunities around autonomous platform and unmanned systems. So let's immediately introduce Mobilicom at a glance. So, Mobilicom offers essential IP-based high-value cybersecurity software and hardware solutions. Those are subsystems within the drones robotics bought and used by drones robotics manufacturers to build their platforms. Those proprietary solutions are the ones that power, connect, secure and safeguard drones robotics. we can say that those are the heart and soul of the drones and robots. Mobilicom is actually at the convergence of three major trends. One is the drones, second is cybersecurity, and third is robotics autonomy, which position the company extremely well in the current evolution that we see in the defense as well as in the commercial market. If we would like to describe a little bit more about Mobilicom's offering and our visionary approach, we can see that Mobilicom has two core divisions. One is hardware solution. Those are hardened, resilient communication and data link system designed to operate in contentious environments. And the second is cybersecurity and software solutions. Those focus on electronic welfare assistance, cybersecurity protection for the drone platforms, and robotics. We can also see that Mobilicom hardware, which is hardened, holds significant key U.S. defense and regulatory validation, including the blue UAS framework select, We have the trusted cyber certification, the NDAA validation, the DD4094 equipment frequency allocation approval. And during this quarter, Mobilicom was also included in the FCC new trusted drone list. Collectively, all of those certifications and approvals strengthened Mobilicom's position with the U.S. Department of War market for drones and autonomous systems and being part of the supply chain for America and may help streamline the qualification and procurement process for OEMs and defense programs seeking trusted, compliant drone technology for American solutions. Our business model is very clear for those two, let's say, departments or offerings. On the hardware, we established a customer relationship through the hardware solution that you see on the left side, the families of the data link, the mesh networking, the ground control stations, which enable them the basic operational capabilities of drones or robotics. And those are generating about 50% to 60% gross margin for our business, which is very steep and complex. and high and it's based on the ip and knowledge and know-how that we have embedded inside those products then we have the expansion into higher value cyber security and software solution that can generate higher growth margin which is close to 90 percent with limited direct competition as we see today and that gives mobilicom evolution into a very lucrative licensing per unit business model. Since we already a hardware supplier for the drone manufacturers and the platforms, we can incorporate the cybersecurity and software solutions more efficiently without restarting a lengthy process with the platform and qualification or procurement with the same vendors we supply them the hardware, which makes our cross-sell opportunity easier and market expansion faster and getting into scalability in our business i would like to um with this slide remind everybody what we previously discussed on our 2025 annual earning update uh what we expect in 2026 going to be a year of growth for the u.s drone ecosystem And we believe we are extremely well positioned as one of the supply chain leaders for components for small-sized drone and loitering munition providers. In this slide is our forward-looking framework for 2026. The following slide will show how we progressed on the plan that we set for this year. So let me go, let me walk through the progress we have made against the 2026 outlook in Q1. On the harder side, which is describing the tier one customer pipeline, this is in addition to second and third tier customers. So we advise that on design win and R&D stages, our 2026 goal was three to four tier one partners at this stage. As for now, we have met the goal for the year with the four players, including the two leading US Tier 1 ISR drone platform for a cyber-secure Skyhopper and IS electronic warfare software in the period, which we announced recently. In the initial production, the goal for the year was to to be in three to four players, tier one players and customers in this phase. As for now, we have three, all originating from the 2025, continuing with us. These continue to generate initial follow-on orders, still within the low rate initial production scale. to support ongoing commercialization, activity, demos, and initial deployment with both existing and prospective customers. On the ramp-up stage, which is the goal was two for the year, we are with one currently. Our existing ramp-up customer is accelerating into mass production under the OPFL program of record deploying for the US Department of State. So the total tier one customer, we anticipate we have right now eight so far against the goal of eight to 10. With the year still in front of us, and we believe that we will continue to grow on that. On the software and cybersecurity side, the AI autonomy and OEM ecosystem the 2026 goal is for four to six oem partners across nvidia and qualcomm plus two ai autonomy software partners the status is ongoing progress we are continuing our engagement with the nvidia ecosystem and the partners that we have there for the hardware and the software that we published in 2025 and we are constantly working with qualcomm and qualcomm based on the AI edge platforms and working with multiple engagements to fulfill the goal for the year. Let's discuss some of the operational progress and financial progress. So on the operational side, production capacity, the status is ongoing progress as we planned. Our strategic long lead time item inventory is building up continuously and component pre-buying has been expanded above the initial plan as we see stronger than expected demand signals from our Tier 1 customers. The U.S. manufacturing, our status is ongoing progress as contract manufacturers are in selection process in the United States. With an onsite visit and final terms underway, I will come back to this in more details later in the call in dedicated slides. From the program of record expansion, the status is confirmed as this is the headline of the quarter. We received a 2.2 million purchase order in Q1 under the initial OPFL plan, OPFL program of record. And there is an additional, which is part of the ramp up that we are experiencing. And separately, our tier one customer in the United States has progressed under the additional program of record, which is the US Army LASSO program, which we'll cover both in the next slides. I would like to dedicate this slide on an update on the meaningful progress that was done and ongoing progressing with the programs of record. Let's spend a moment on the program of record picture because this is where the fundamental story of our U.S. defense business sits. First, during Q1, Our Tier 1 customers have progressed under the U.S. Army LASSO program, which is Low Altitude Striking and Strike Ordinance. This is a program of record of the Army. The progress was this is an initial deployment phase to equip infantry brigade combat teams with main portable precision strike capabilities. What does it mean for probably ask? So our cybersecurity, data link, and electronic warfare software solutions are embedded with is this customer platform. The loss of progress, therefore, bordered the US defense footprint of platforms in which mobile technology is embedded and could be deployed in masses. and add the new U.S. service branch, the U.S. Army, to customer base previously anchored by the Marine Corps. While we are thrilled by this inclusion, however, LASSO is currently in initial deployment phase, and we have no mobilicum orders associated with this program to date. We anticipate that that will change, but this is part of the progress that we see over those programs. What the loss of progress does tell us and the investors is that something powerful and structural, the program of record winners tend to win additional programs of record. That is what we said in the past and that we are witnessing that is happening today. That is the compounding dynamic of U.S. defense procurement and is now visibly playing out for the platform for which we are embedded in. And now onto the fundamental program, the U.S. Marine Corps, OPFL. Already we have close to thousands of systems already fielded in the recent years for testing, evaluations, and use. The production for mass deployment start has commenced in January, and the production is ramping up. All of Mobilicom's recent U.S. Tier 1 orders are related to this program. including the $2.2 million additional order we received in Q1. This program has a continued multi-year delivery cadence ahead of it. Usually, programs of record are at least for five years. Most are extended for 10 years. And then there is additional procurement for spare parts, maintenance, training, and so on. So you understand the volume and the value of such program for a company like Mobilicum. I would like to take a step back from the individual programs in these slides and provide you with a full picture of our position in the U.S. defense drones ecosystem, which that's essential if you compare Mobilicum to competition, newcomers, and other players in this market. So currently, we have five very important regulatory or compliance certifications. starting with the blue UAS framework, SELECT. SELECT means that they selected us and did the entire process by the Department of Innovation for the Department of War. The NDAA certification, which was validated by DOW testers and evaluators. It's not self-decoration. It was a thorough process for software and hardware. We have the trusted cyber testing that we have done under the standardization. The DD1494, and excuse me for the numerical description, this is electromagnetic registration within the Department of War Map, which is essential if you would like to catalog and include systems for mass deployment within the U.S. forces. And the new FCC Trusted Drone designation, which defines Mobilicom as a critical provider for the U.S. drones. And that's really important. I would like to say that products not on this list cannot participate in future US federal program. That's why it's a structural mode. Obviously, the programs of record deployment and the success today with those programs shows how our position regulatory-wise and being embedded across the Department of War certification and regulation is translated into business. And we intend to continue with that and expand that. The operational channels for print with the U.S. Our U.S. production capacity is being expanded. The dual US-Israel operation supporting us in our development, combat proven evaluation and then bringing solution to market. Establish US Department of War DLA partnership and sales channels are critical factors on the different recent shows seen us with those partners, which are critical partners getting into the US procurement for the Department of War. which together give us flexibility to deliver into both allied government and commercial drones market later on let's take a moment to discuss the recent announcement from i think a week ago uh from one of the shows where we announced uh the two new design wins uh with tier one platform base this slide discuss one of the most important commercial developments since the annual call that we had involved a few months ago we announced new design wings with two leading us tier one defense drone manufacturer platforms for isr which means intelligence surveillance and reconnaissance drone platforms So the first design win is with a well known American drone manufacturer for a group one, which is handheld size ISR intelligence surveillance drone platform, supporting military application that already own and have deployments with United States in scaling dramatically. Mobilicom Skyoper Data Link and the i-Cybersecurity software suite are being integrated to extend operational range, improve resiliency in contentious environments, and provide advanced electronic warfare resistance and secure communication capabilities beyond the platform current configuration. Integration activity has been progressing over the past several months. And we currently anticipate to complete the integration process during the next quarter that will allow the customer to progress and catalog and use our solution and start selling them to obviously Department of War and other customers worldwide. The second tier one Designing it with the major US defense and commercial aerospace conglomerate. This is for a group to slightly bigger backpack size. ISR drone intelligence of adolescent drone platform designed for long range mission longer payload capacity. mobility com develop a tailored skyropper configuration specifically for this platform with the customer. including customized interfaces mission specific integration requirements and so forth the combined skyoper and the ice electronic offer resistance solution is expected to enhance operational range strength resiliency and electronic offer resistant capability and support more advanced operational scenarios for the customers platform beyond what they have today The integration and testing activity for the second design win are progressing very well. We anticipate to complete the validation process over the coming months or two, enabling the customer to begin offering the enhanced platform to the end users. So, importantly, those two design wins represent two more seats at the U.S. Tier 1 table for Mobilicom. with both OEM-selecting Mobilicom's cyber-secure SkyOper DataLink and ICE electronic warfare software protection solutions. This reinforced the exact trajectory we said we were on, expanding presence across the trusted U.S. defense drone platform as ISR, an autonomous or loitering munition solution, and increasing military-grade cyber-secure communications. I think it's, again, a good opportunity to discuss the cybersecurity regulatory momentum and what it means for Mobilicom. On the cybersecurity side, we are seeing an urgent need to meet cybersecurity regulations. But I would like to mention that Mobilicom's strategy was not developed in response to current market trends. Mobilicom began investing in drones and autonomous system cybersecurity years ago. based on the belief that cybersecurity would eventually become a core requirement for scalable autonomous operation. The challenge was developing cybersecurity solutions specifically designed for small size drones or robots platform, where the size, the power consumption, the memory, the computing resources are highly constrained. Mobilicom developed a lightweight embedded cybersecurity solution optimized for this tactical edge environment, while also working alongside with U.S. defense and migration initiatives. Today, we are seeing the market evolve in the direction we anticipated. The U.S. defense cybersecurity frameworks that were published, including the CMNS standard, the Cyber Survivability Endorsement Standard, the CRMC initiative, the new one that was released in November last year, and the broader agenda by the Department of War called the Zero Trust Strategy are increasing cybersecurity requirements across the drone and autonomous platform programs. The industry is moving beyond the basic one-time static cyber test that they had in the past towards an active, always-on online cybersecurity protection embedded directly on the autonomy AI edge computing of those platforms. This aligns closely with Mobilicom OS3 cybersecurity software and the secure autonomy framework Mobilicom released which were specifically designed for this new generation of requirements. As cybersecurity is becoming increasingly integrated into program of record and future large-scale drone deployments, we believe Mobilicum is well positioned as an early provider of purposely built cybersecurity solution for autonomous systems, and specifically for small-sized loitering, drones, and autonomous systems. Over time, this also creates a highly attractive recurring software licensing per unit, opportunity for Mobilicom tied to deployed drone and robotics platforms. So now I would like to hand the call to Liad to walk through the Q1 2026 financial highlights as well as our equity and cash positions.

Thank you, Oren. So three months ended March 31st, 2026. The single number that frames the quarter is the 2.4 million in revenue visibility. Revenue visibility is what we cover recognized revenues plus concrete backlog at quarter end. It was up 50% year over year. That is the metric that best captures what actually happened in Q1. Let me unpack the numbers behind it. Revenue, we reported Q1 revenue of $548,000 against the $844,000 in Q1 2025. This difference is entirely driven by delivery timing rather than just market demand. Specifically, certain Q1 shipments were deferred into later quarters due to temporary procurement schedules as the customer transitioned to scale program of record production. The underlying demand remains intact. The revenue has simply shifted out in time. Order backlog was $1.8 million at March 31st against $737,000 at the same point a year ago, up approximately 151% above the same point last year. Backlog more than doubled, while reported revenue temporarily dipped. Post-order momentum since March 31st Door-to-Book has continued to grow with additional orders from our US Tier 1 customer under the OPFL program, plus follow-on orders from other global customers, all of them to be delivered within 2026. And as Oren just covered, two additional US Tier 1 designments. Cash position, 70.7 million as of March 31st. As we mentioned previously, zero debt, zero credit facility, zero convertible, clean balance sheet. During the quarter, we also terminated our aid at the market facility, a delivery decision made from a position of strength because we did not need it. That decision reflects the discipline we want to demonstrate to investors. We will only raise capital when it creates more value than it dilutes. Operating cash burn, approximately 528,000 per month in Q1. The increase is funding operation readiness and growth initiatives. The investment is targeted in three areas. Each ties directly to revenue we expect to recognize within the next 12 to 18 months. First one is solution integration work for the new US T1 manufacturers we are designing into, like these two new designers we published recently. Second one, proactive long-link item inventory buildup for production scale deliveries, including for those under the OPFL program of record and other orders to come. And the third and the last one, our US manufacturing strategy and US steam expansion. 70 plus 70 in cash combined with disciplined execution provides a runway toward positive cash flow as the order momentum continue to build through 2026. About our equity and cash position. These slides consolidate our equity structure and cash position as of March 31st, 2026. On the capital structure, Ordinary shares outstanding were $12.6 million as of March 31, 2026. Warrant outstanding are $2.6 million. The majority is struck at $5, which representing another additional $12.9 million of additional capital if exercised. Fully diluted chair was 15.2 million excluding employee ESOP and RSU grants, and 17.8 million including all dilutive components. One thing to say compared to 2025, while the total fully diluted chair did not change, we did see exercise of warrants in about 1.2 million, meaning it's continued with this opportunity for additional future warrants exercise as the share will continue to increase. About the balance sheet and cash management metrics, this has been covered and discussed in the previous slide, so I will not return on that. And now back to Warren.