Mynaric AG

Welcome, everyone, to Moneric's 2022 Analyst and Investor Day conference call and webcast. We released our 2021 Letter to Shareholders on Form 6-K, including preliminary fiscal year 2021 results. The letter is also available for download on the Investor Relations section of Moneric.com. Before we begin today's presentation, I must remind you that this presentation and oral statements regarding the subjects of this presentation are include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 as amended. All statements other than statements of historical or current facts contained in this presentation are forward-looking statements. These forward-looking statements involve known and unknown risks, uncertainties, and assumptions that are difficult to predict or are beyond our control, and actual results may differ materially from those expected or implied as forward-looking statements. The forward-looking statements included in this presentation are made only as of the date hereof. Neither we nor any other person undertake any obligation to update any forward-looking statement to reflect events or circumstances after the date of this presentation or otherwise. We have not yet completed preparation of our financial statement for the year ended December 31, 2021. The information presented herein is preliminary in nature and is subject to change. including as a result of any normal adjustments resulting from completion of procedures in relation to the financial statements for the financial year 2021. There could be no assurance that the final results for these periods will not differ from these preliminary results, and any such differences could be material. Financial results for the fiscal year 2021 will be included in the annual report on Form 20F to be filed with the Securities and Exchange Commission. With that out of the way, we have a great agenda for you today, including a deep dive into our vision and strategy, our ability to produce at scale, many customer success highlights, as well as a discussion of our preliminary 2021 financial results and our outlook for 2022. With that, let me turn it over to Bulent for his opening remarks. Bulent?

Thank you, Tom, for leading us in, and thank you, everyone, for joining our analyst and business update call. I'm Bulent Alsan. I'm the CEO of Mineric, and With me today, I will have some exciting speakers from the company. Amongst others, we will have Joachim Horvath, our CTO and founder of Minerik. We will have Tina Gator, who is our Chief Commercial Officer, and Stefan Bertolt Bülow, who is our Chief Financial Officer, and we will present in that order our presentation for today about what has happened and what we are looking forward to. Some of you may be new to Mineric. Some of you I'm sure we have met or at least talked to in the last couple of years. But for the people who may be new to the company, I would like to start with our vision and strategy and maybe talk a little bit about what really makes Mineric, what drives us, why we exist. If you could go to that slide. To talk about why Mineric exists today, we are all here in Mineric with the vision that we share for our company, which is to eliminate the barriers of connectivity. Under barriers of connectivity, we understand that we need to connect everyone and everything, and that is the vision that Mineric enables us. enables for everyone. And we do that with the purpose of ensuring secure and unrestricted flow of information for everyone. May it be for personal use, for governmental use, for military use, defense use. May it be for devices that need to be connected everywhere. We are in the age of industrial Internet of Things, regular Internet of Things. We are in the age of needing information everywhere we live, travel, or may exist. And we want to ensure that it can happen in the most secure and unrestricted way. And the technologies we develop in Miner really allow our customers to deploy systems that really get communication into every nook and cranny of the world. With that, what we want to do is close the digital divide that exists today between places that have communication and between places that do not, and people who have it and people who have not. Today, we live in a world where 4 billion people are still either unconnected or underconnected, and our technologies and our customers that deploy these technologies really move us towards that. Our markets are diverse. We've served both government, military purposes, as well as commercial, and we're going to talk about how that is developing over the next couple of slides. To look into the addressable market set that Minerix serves, as I have said, we have both a governmental and a military side of it and a commercial side to it. The commercial side comes from telecom services, and the government and the commercial side combined represent a $4 trillion-plus end market that we serve. Then you look into the segments that we enable within that market, which can be served by optical communication, by laser communication, and then look into what those segments actually spend in air and space communications equipment alone. Today, we have a total addressable market of $20 billion plus. That is in itself going towards the optical communication side. As optical communication penetrates that total addressable market, what we are seeing today and that's represented on the left side is that the early adopters of this technology are coming in government, and you're going to see that with the way our backlog has been building over the last year. It is coming from the government where Minert is capable and has been able to represent what the company can do in deploying early adopter systems and really winning contracts. From then on, we are seeing that the commercial players that exist in the world that are deploying either mega constellations or art observation constellations, broadband constellations, that they are betting on the same people that the government is also putting their seal of approval on. And after those markets, after the broadband markets, we're seeing a very diversified set of customers now forming that even go beyond just the air and space and ground station segment. And we're seeing even all other mobility devices looking into optical communications for their needs. Then unpacking maybe a little bit the space market and its growth in that and how these optical communication constellations are really representing for Minerik a very fast growing opportunity. We have to look into the way that satellites have been deployed until very recently and how that has changed in a very short amount of time. We may look back in just A little over two years ago, we see a picture of space where there were only 1,900 active satellites in orbit. A very short amount of that were active communication constellation satellites. In just two-fourth years, that number has increased to almost 5,000, a growth for the constellation side, I think, of more than 10x. And those constellation satellites have mostly come from broadband communications constellations, which are in itself the natural customer for optical communication technologies that need high bandwidth and secure communication between multiple different satellites. And this is just a tip of the iceberg. Then you look into the current filings in the ITU, FCC, and any other organization, you see a tremendous growth happening over the next decade. And we know that the communications constellations are going another 10x from here, and the projected About 100K or even more satellites are mostly our communication constellations. Again, with a large need for optical communications constellations. And this is what Minerik has been preparing itself to. And this is what we're going to talk about today. This is the start of the momentum that is building itself over these last year and also in 2022 that is getting Minerik the market to address. and the opportunities to place its products. I think one of the words you're going to hear today very often is momentum building and momentum. If you look into the history of Minark, we are a 12-year-old company that have been preparing technology, IP, and a company that can really deliver it for a time where we know that this technology was going to be needed. We knew that constellations were coming. We knew that optical communications is going to be the backbone of world's communication capabilities, especially when it's developed from aerospace, and we were getting ready for primetime. And what we will show you today is that that primetime has arrived. where we were just talking about singular customers until 2021. Since 2021, since the beginning of 2021, we have steadily have grown our backlog. What started with our Telesat DARPA involvement in the U.S. now has borne fruit, and over the last year and a few months, we have been able to sign prestigious customers such as the Space Development Agency, Spacelink, Capella Space, Northrop Grumman multiple times, DARPA multiple times, and the European Space Agency, building up a backlog both in commercial and in governmental applications, really showing the fact that optical communication, when it arrives, is coming in a very large wave. How has the company prepared itself for the sudden arrival of customers? What we have done is we have prepared a company that can do serial production in scale. When you think about the space industry, serial production has really not been a focus of it in the past. What that meant is for Minerik to be successful in addressing a market that needs tens of thousands, if not hundreds of thousands of terminals in the future per year, we need to start thinking new. That meant building new building facilities ahead of time for a market that will need products in mass manufacturers. That meant investing our assets into building the world's first dedicated serial production facility for laser communication. This facility just built outside of Munich was a facility we built up really quickly and now is ready for customers to come in, which they are coming in right now, and is ready to be built more than 2000 terminals a year to be able to meet that backlog with a certainty of execution. This facility is not just there to meet the backlog. It is also a way to show to our customers that Mineric is dedicated to support their mission with certainty, that we have made the investment, that we are ahead of the demand curve, and that we can deliver the products they need on time. And very often, it's the customer's visits that enter this production facility that convinces them of Mineric's strength and capabilities to deliver what they need. What it also meant is increasing our footprint where our main customers are, and that was, for us, the United States. Being a German company, having a large U.S. presence was very important to do the business development and the support that our customers need and be able to close the major contracts that we have been able to close. The company today has more than 35 people working in the U.S., And we have that started in Los was first only in Los Angeles as an office now also is represented since February 2021 in Washington, DC, there we do our government and government outreach and government support. We also have expanded the U.S. team quite significantly last year. That number that is more than 35 people used to be about 10 at the beginning of 2021. And we can see that we are really working on hiring top talent in the U.S. to make sure that we are matching the needs of our customer and the questions of our customer with that top talent and a top team that can support them from the U.S. What that U.S. location also gets us is participation in different events and making sure that we are in the talk at all times. And that ensures that we are part of the conversation. We can participate in things like standard setting, such as the one that the Space Development Agency is doing, to make sure that we are performing and seen as a key player, not just in Europe, also in the U.S. Another event from last year, which I think is a highlight, is our initial public offering from NASDAQ. We were already a publicly traded company in the German Stock Exchange, but knowing the familiarity with NASDAQ, uh, with, uh, with the space sector and the, uh, and the access to, um, access to capital that the, uh, that the U S markets offer. We have decided that being listed in NASDAQ is advantageous for, uh, minor, and we have as such decided to do an IPO in NASDAQ. And now we are at rule listed company that the, uh, tickers and, and they're lying minor. And we are quite excited about that to have done this on the end of last year with a gross proceeds of $75.9 million, which we are once again investing into our R&D, but mostly also into our production and scale-up capabilities as well as our business development team. Miner strategy from the start has always been very clear. We want to have serially produced terminals. We want mass production, not 1Z, 2Z things that do very few things in space that are scientific in nature. We want serially produced products in the hands of our customers that want to connect the world, and because of that, they need it in the thousands. This is a telecom play more than a space play or an aviation play. We focus on scalability throughout the product lifecycle, and we build capabilities before they are needed. For us, affordability is a very big target, and one we have been always able to achieve. We do that by the cost reduction as our core activity, starting from engineering, really focusing on the technology that allows a cost reduction that can be mass produced and that allows our customers that look beyond a few terminals into the thousands of terminals for their purposes to be able to afford our products. For us, reliability and simplicity is another thing. We are constantly iterating on our products always making it more compact, more reliable, more simpler to use. And we do that also as Joachim will talk in just a second about our technology. We do that with testing, testing and more testing, and then deploying out onto the field. And the last column that we build on is standardization. We work on our terminals. We work on our terminals as much as we build on standards that allow us to communicate. So any system out there, you see interoperability between terminals from multiple different operators as a key, and we enable that interoperability by being one of the main architects of standards that exist out there for optical communication terminals. And we also utilize maximum flexibility in our terminals By making our terminals very flexible, we ensure that our customers can do their use case regardless of what it is from our main commercial off-the-shelf product without us having to re-engineer anything. With that, I would like to close out our strategy and vision session, and I would like to hand the word over to our CTO, Joachim Horvath, who's going to do more of a deep dive into these columns that I've just talked. Thank you very much. Joachim?

Yeah, the market for free space optical communication is here now. The numbers will only increase. So that is why optical communication is being addressed by multiple companies today. But only Mineric has a scalable and mass-producible solution and the mass production capabilities to match it with, because we have put over a decade's worth of investment in research and development. You can see the shop floor with logistics, quality assurance, warehouse, electronics, integration facility. We have an area where we do the subsystems like fine steel mirror and coarse pointing assemblies. We have our optics production I'm going to talk about soon. And we have our final assembly in the middle with the acceptance test where we do that. The optical telescope for our terminal is the most important building block when it comes to cost efficiency because of the high quality we need because we couple into the fiber. So what did we do? So first we identified the right material. So we evaluated everything what was out there like glass and ceramics and concluded that metal optics out of aluminum is the best solution for this application. This is a cheap material that allows wavelength-independent high-quality operation over a large temperature range. It's isothermal because the holding structure is out of the same material, and it's fully demisable, which is very important for space, since after the lifetime, when the satellites come down, they need to be demisable. Second, we looked then after we have chosen the material for potential manufacturing partners, and there was no cost-efficient solution with the required capacity out there that would produce thousands of telescopes per year. That is why insourcing of the metal telescope production was key to the affordability and scalability effort and gives us, on top of that, a better handle on quality and reaction to market demands. The next important pillar for affordability is the electronics. Traditionally, in space, radiation-hardened electronics was used, and that is very expensive, and sometimes not the latest technologies available with the highest speed, what we need for our very high data rates. Therefore, we qualify commercial electronics for space. That is very important because not all electronics works in space, and quite some electronics fails, which is even batch or dye revision dependent. That is why we do a lot of tests. We start with total ionizing dose tests, where we look how the electronics work on the gamma rays. We do proton tests at quite high fluxes, up to 200 mega electron volts, to see if there are any destructive or non-destructive latch ups. Last but not least, heavy ion testing, where we can even deposit more energy into the electronic parts and see if there is any issues or if they break. And that makes the solution very, very cost efficient. But it's an effort to do, but we are committed to do so. Affordability. We are a mass production-oriented company. We are mass production oriented through iterations of technology and through economy of scale. And we have been able to already reduce the unit costs by 80% from going from Condor Mark 1 to Condor Mark 3 and now the serial production ready Condor Mark 3 terminal. Further mass production and vertical integration should bring it even to half of that. Reliability for our products is key. To have the highest reliability and also the capability to innovate on our products, we need to have subsystems and targeted testing and full system test. On the lower right hand, you see the optical metrology where we test every mirror and the final telescope. On top of that is our thermal vacuum chamber, how we simulate space and see that the terminals work out through the whole thermal range. Left to that is our Hexapod test platform with the Hawk aviation terminal, where we simulate base motion disturbance of aircraft and whatnot. Right below, we have vibration tables with our terminals on it, where we simulate rocket launches and rough aircraft rides. And, of course, also thermal chambers where we can see that the whole temperature range is okay with our products. For aviation wings, we go with our systems into the real scenario. We have different aircraft available. We have partners with L3 mission systems with the G520 aircraft that can go up to the stratosphere where we can test the whole range of our products. Whenever we improve something on the system, we go back and test and test. We always say we do not want to ship new products to customers if we have not done everything to or with or to the products that the customer might do with or to the products. For space, we have a very special piece of equipment where we can test the terminals like in space. This is called the link testbed. And we are a company that simulates space better than anybody else. So we can put the terminals in this testbed. They see the same microfibrations like on the satellites. They rotate. That simulates the orbit motion and the satellite maneuvers. And we have a sophisticated optical system that simulates the 8,000 to 35,000 kilometers. And that really guarantees that everything works in the target scenario. Let me now hand over to my colleague Tina. She will talk about customer success highlights. Tina, please.