UrtheCast Reports Third Quarter 2015 Financial Results

MOU for US$175 million, Increased Revenue Visibility, Deimos Integration On-Track

VANCOUVER, Nov. 10, 2015 /CNW/ - UrtheCast Corp. (TSX:UR) ("UrtheCast" or the "Company"), a technology company that is developing a platform for democratizing Earth Observation, today announces financial results for the three and nine months ended on September 30, 2015. The Company reported revenues, excluding non-cash barter services, of $9.3 million and $17.5 million for the three and nine month periods ending September 30, 2015, respectively, compared to nil revenues for the same periods in 2014.  Our non-IFRS adjusted EBITDA, excluding share-based payments, was a loss of $4.3 million (2014 - $3.4 million) in the quarter and a loss of $5.1 million (2014 - $9.8 million) for the year to date. For the nine months ending September 30, 2015, our cash inflows from operations were $5.7 million as compared to a cash outflow of $7.7 million in the nine months ending September 30, 2014.

Recent highlights include:

UrtheCast Signs Memorandum of Understanding ("MOU") for the Constellation

The Company has advanced negotiations with an anchor tenant customer for the planned constellation of 16 Earth Observation optical and synthetic aperture radar ("SAR") satellites (the "Constellation") and has signed a non-binding MOU for US$175 million.  This MOU is with the Company's existing US$65 million engineering services and data customer.  A portion of the original US$65 million was for Gen 2 data sales, which under the terms of this MOU will be repurposed to assist in the funding of the Constellation.  Total signed MOUs for the Constellation now stand at US$370 million. Assuming these MOUs are converted to binding, definitive agreements, these customers will provide substantive funding for the Constellation.

High-Resolution Camera ("HRC") Begins Commercial Operations

The High Resolution Camera ("HRC") began commercial operations in this quarter.  We continue to improve both data quality and processing capacity as our engineering team works to achieve Full Operating Capability ("FOC").

Increased Revenue Visibility

The Company has firm backlog contracts for both data sales and engineering services of over $100 million, plus another $30 million in options.  In this quarter, we generated revenue from all four sensors, Deimos 1, Deimos 2, MRC and HRC. This points to UrtheCast growing rapidly as a new supplier into the Earth Observation industry, with a diversified data offering and a disruptive cost structure.

Deimos Imaging Integration On Track

The integration of the recently-acquired Deimos business continues according to plan.  Cross-selling of data products by the combined sales force is well underway.

Accelerating Constellation Plans (Moving Directly to Constellation)

The increasing momentum of the Constellation in response to customer interest that we have received  has prompted the Company to accelerate the Constellation's implementation timeline by redirecting the Gen-2 sensor development program currently underway to the Constellation. The company will no longer proceed with the installation of the sensors on the International Space Station ("ISS"). The company believes this will result in a faster, lower-cost, more capital efficient path to deploying the Constellation and becoming a diversified EO company with a world-class suite of sensors in space.  This decision will compliment our powerful ISS platform and is consistent with our ambitions to democratize access to EO imagery.  We are thankful for the key support we have and continue to receive from our ISS partners.

SELECTED FINANCIAL INFORMATION

The following table provides selected financial information of the Company, which was derived from, and should be read in conjunction with, the unaudited condensed interim consolidated financial statements for the three and nine months ended September 30, 2015.

RESULTS OF OPERATIONS


Three Months ended September 30,


Nine Months ended September 30,




2015



2014



2015



2014

Revenue    


$

15,018,688


$

-


$

23,251,797


$

-

Other operating income



411,970



-



4,476,538



-




15,430,658



-



27,728,335



-

Operating costs













Direct costs, selling, general and
administrative expenses



12,617,948



2,488,806



20,733,955



7,939,273

Research expenditures



5,215,196



872,039



10,317,073



1,847,658

Depreciation and amortization



5,838,470



51,748



6,003,265



131,040

Share-based payments



945,756



538,645



2,297,129



2,029,116




24,617,370



3,951,238



39,351,422



11,947,087

Operating loss



(9,186,712)



(3,951,238)



(11,623,087)



(11,947,087)

Acquisition costs



(2,295,760)



-



(5,325,575)



-

Net finance (costs) income



(146,912)



18,501



(275,608)



106,213

Foreign exchange loss



(235,519)



(13,638)



(66,279)



(43,865)

Loss before income taxes



(11,864,903)



(3,946,375)



(17,290,549)



(11,884,739)

Income tax expense



(82,708)



-



(82,708)



-

Net loss



(11,947,611)



(3,946,375)



(17,373,257)



(11,884,739)

Other comprehensive income (loss)



6,201,096



8,350



6,198,903



(7,610)

Comprehensive loss


$

(5,746,515)


$

(3,938,025)


$

(11,174,354)


$

(11,892,349)

Net loss per share – basic and diluted


$

(0.12)


$

(0.06)


$

(0.22)


$

(0.18)














EBITDA


$

(7,557,780)


$

(3,913,128)


$

(12,689,935)


$

(11,859,712)

EBITDA excluding share-based
payments expense



(6,612,024)



(3,374,483)



(10,392,806)



(9,830,596)

ADJUSTED EBITDA


$

(4,316,264)


$

(3,374,483)


$

(5,067,231)


$

(9,830,596)

This quarter's results were affected by two significant events, which are more fully described in the financial statements and accompanying MD&A.  First, the acquisition of Deimos was completed on July 15, 2015.  As a result, our consolidated quarterly reports include 75 days of Deimos results.  Second, with the declaration of Initial Operating Capability ("IOC") on the HRC, our Gen 1 cameras were deemed available for commercial operations during this fiscal quarter, which triggered the following accounting treatments that are new for this quarter:

  • We began recognizing certain non-cash revenues and costs in connection with our barter arrangement on the ISS. In the three and nine months ended September 30, 2015, we recorded $5.75 million of non-cash revenue for services provided to Energia. We also recorded this same amount of non-cash expenses in the quarter as an offset. This treatment will continue for the balance of the camera's expected lifetime aboard the ISS, which has been estimated to the end of 2021.

  • We began to depreciate our investment in the camera equipment and the associated ground segment infrastructure over their estimated remaining useful life, which is 6.5 years. For the quarter, this added approximately $1.63 million to our non-cash depreciation expenses.

  • Our ongoing maintenance and improvements of our ground segment infrastructure and services provided by our ISS partner are now being charged to Research and Development and Cost of Sales, respectively. Whereas in the previous quarter, these costs of approximately $2.5 million were capitalized to our Intangible Assets on the Balance Sheet, this amount is now charged to our Profit and Loss Statement. This was a change in our accounting treatment for these expenses and not a quarter-to-quarter increase in our cash costs for these categories.

"I am extremely pleased with the financial and operational results of this quarter," commented Scott Larson, UrtheCast's Chief Executive Officer. "We are making excellent progress on our Constellation plans, while at the same time increasing near-term revenue visibility.  The acquisition of Deimos has also been a significant catalyst to UrtheCast and we've appreciated welcoming the Deimos employees to the UrtheCast family."

The Company will host a conference call discuss these financial results today at 5:00 p.m. ET (2:00 p.m. PT).  This conference call will be available by calling toll-free at 866-696-5910, or by toll call at 416-695-7806. The participant pass code is 9667010.

About UrtheCast Corp.

UrtheCast Corp. is a Vancouver-based technology company that is developing the world's first Ultra HD video feed of Earth, streamed from space in full color. Working with prominent aerospace partners from across the globe, UrtheCast has built, launched, installed, and is now operating its Ultra HD video camera, HRC, or Iris, on the ISS alongside its Medium Resolution Camera ("MRC"). Both Iris and the MRC have reached IOC in 2015 and 2014, respectively. UrtheCast also owns and operates the Deimos-1 and Deimos-2 satellites through its Spanish subsidiary, operating as Deimos Imaging. Video and still image data captured by the cameras and the satellites are downlinked to ground stations across the planet and displayed on the UrtheCast web platform, or distributed directly to partners and customers. UrtheCast's cameras and satellites provide Ultra HD video and still imagery of Earth that allow for environmental monitoring, humanitarian relief, social events, agricultural monitoring, etc. Common shares of UrtheCast trade on the Toronto Stock Exchange as ticker 'UR'.

For more information visit UrtheCast's website at www.urthecast.com.

Non-IFRS Financial Measures

The Company prepares its financial statements in accordance with International Financial Reporting Standards ("IFRS"), as issued by the International Accounting Standards Board.  This release includes certain non-IFRS financial measures, such as non-IFRS revenues, EBITDA and adjusted EBITDA. The Company uses these non-IFRS financial measures as supplemental indicators of its operating performance and financial position. These measures do not have any standardized meanings prescribed by IFRS and therefore are unlikely to be comparable to the calculation of similar measures used by other companies, and should not be viewed as alternatives to measures of financial performance calculated in accordance with IFRS or considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS.  These non-IFRS financial measures should be read in conjunction with the Company's financial statements and accompanying MD&A.

Forward Looking Information

This release contains certain information which, as presented, constitutes "forward-looking information" within the meaning of applicable Canadian securities laws. Forward-looking information involves statements that relate to future events and often addresses expected future business and financial performance, containing words such as "anticipate",  "plan", "estimate" and "expect", statements that an action or event "may", "might", "could" or "will" be taken or occur, or other similar expressions and includes, but is not limited to, statements about the HRC reaching FOC, plans to stream video footage from the ISS, proposed image and video product offerings,  expected partners and customers, the launch of the web platform, plans to build, launch and operate the Constellation, and expected costs and revenues. Forward-looking statements and information are subject to various known and unknown risks and uncertainties, many of which are beyond the ability of UrtheCast to control or predict, and which may cause UrtheCast's actual results, performance or achievements to be materially different from those expressed or implied thereby, including, but not limited to, the cameras or Deimos Imaging satellites failing to operate as expected, unexpected changes in Russian or Canadian government policies, the Company being unable to convert the Constellation MOUs into binding definitive agreements, as well as those factors discussed in the Company's prospectus supplement dated June 24, 2015 to its short form base shelf prospectus and amended and restated short form base shelf prospectus dated May 15, 2015, as each such shelf was amended on June 19, 2015 (together, the "Prospectus")  which are available under UrtheCast's SEDAR profile at www.sedar.com. Forward-looking information is developed based on assumptions about such risks, uncertainties and other factors set out herein, in the Prospectus, and as otherwise disclosed from time to time on UrtheCast's SEDAR profile. UrtheCast undertakes no obligation to update forward-looking statements except as required by Canadian securities laws. Readers are cautioned against attributing undue certainty to forward-looking statements.

SOURCE UrtheCast Corp.

For further information: Scott Larson, CEO and Co-founder, (778) 331-7823

RELATED LINKS
www.urthecast.com

Custom Packages

Browse our custom packages or build your own to meet your unique communications needs.

Start today.

CNW Membership

Fill out a CNW membership form or contact us at 1 (877) 269-7890

Learn about CNW services

Request more information about CNW products and services or call us at 1 (877) 269-7890