3 April 2018
Operating losses, “significant liquidity challenges” and doubts about its ability to secure financing have left the future of UrtheCast in doubt, with management warning that the Vancouver-based Earth observation company may not be able to continue as a going concern.
Full-year accounts published today highlight a deteriorating cash position and “material uncertainties regarding the Company’s ability to secure adequate financing to fund its working capital deficiency and meet its commitments to lenders”.
On 31 March, cash on hand was less than C$7.5m – down from C$12m on 28 February and about C$25m at the end of September 2017. At 31 March, Urthecast had another C$16.6m in restricted cash. But, it warns, forecast cash flow from operations over the next 12 months “may not be sufficient to cover its commitments, obligations and operating costs”.
Ongoing efforts to secure financing for the planned UrtheDaily satellite constellation – and also meet ongoing operating costs and commitments to lenders – would make US$142m available. But, that financing is dependent on separate fund-raising to finance existing credit facilities. And, says UrtheCast: “There can be no assurance that any such financing will be completed.”
In a 29 December update, UrtheCast remained formally optimistic that financing would come through to sustain its plan to have the 5m resolution multispectral UrtheDaily constellation launched and operating in 2020. A separate project – a constellation called OptiSAR, consisting of 16 satellites in eight tandem pairs of one multispectral optical and one SAR spacecraft, flying in two orbital planes – was pushed back from 2020 to 2023 at the earliest in favour of a focus on generating revenue by developing single-satellite “SAR accelerator” missions for clients.
But 2017’s accounts reveal deeper concerns. Revenue was C$40.4m, compared to C$111.3m in 2016 – or just C$49.9m when excluding non-cash revenue of $61.4m related to cameras UrtheCast has mounted on the International Space Station. Revenue from Earth observation imagery – UrtheCast’s business today is based on the output of the Deimos-1 and -2 satellites of its Madrid-based Deimos Imaging subsidiary and distribution of products from the various PanGeo Alliance satellites – was just C$7.8m in 2017, down from C$15.2m in 2016 owing to “ongoing delay in securing a major contract award”.
For 2017, lower revenue led to a net loss of C$31.8m, versus C$29.3mi lost in 2016.
And, UrtheCast in the fourth quarter of 2017 took a C$8.7m impairment charge against the ISS cameras, taking their asset value to zero, “due to the significant uncertainty over whether the Company would be able to monetise the ISS Cameras, either through a sale or through alternate means”. The two cameras were mounted to the Russian segment of the ISS in 2014, and inspired a follow-up plan, agreed with Nanoracks, to install a still images and video camera, and SAR sensor, on the American segment. That project was subsequently cancelled, with UrtheCast opting to pursue its satellite constellation plans.
As announced on 9 March, founder Wade Larson steps down as chief executive to become a special advisor to the board of directors.