UrtheCast Reports Fourth Quarter And 2013 Annual Financial Results
VANCOUVER, March 27, 2014 | UrtheCast Corp. (TSX:UR) (“UrtheCast” or the “Company”) is pleased to announce its financial results for the three and twelve months ending on December 31, 2013.
Recent highlights Include:
- The Company launched its cameras aboard the Progress 53P cargo ship from Kazakhstan’s Baikonur Cosmodrome. Travelling aboard a Soyuz rocket, our two cameras — the world’s first 1-metre class, high-resolution Earth video camera (“HRC”) and one medium-resolution imaging camera (“MRC”) — arrived at the International Space Station (ISS) on November 29.
- The Company successfully installed its two Earth imaging cameras on the Russian segment of the International Space Station on January 27, 2014 and commenced commissioning.
- UrtheCast completed a bought deal public offering of common shares of the Company. A total of 5,227,325 Common Shares were issued at a price of $2.20 per Common Share (the “Offering Price”), for aggregate gross proceeds of $11.5 million.
- UrtheCast obtained a comprehensive insurance policy from a leading space insurance broker for the launch, installation, commissioning, and business interruption of its two cameras aboard the International Space Station (“ISS”). This insurance coverage provides risk indemnity in the event that the rocket fails to achieve orbit, or in the event that the spacewalk results in damaged or lost cameras. This coverage also includes full protection if camera performance metrics are not achieved post installation. Insuring the first repairable and maintainable camera system in space presented a unique opportunity for UrtheCast’s brokers and the group of underwriters. Overall, the insurance coverage provided a few firsts for the insurance industry, including ISS failure coverage and coverage for the suitability of the Bi-axial Pointing Platform (“BPP”).
- UrtheCast successfully completed the initial functional testing of both the MRC and HRC, which included the capture and storage of data in our Data Handling Unit onboard the ISS and the downlinking of this data to the ground station in Moscow. Initial test imagery has been acquired from the MRC, which is being used to support the analysis and calibration of the camera. In addition, the Company continues to commission and calibrate the HRC’s precision pointing platform, which is required before test imagery can be acquired by the HRC.
- The Company signed six new data distributors for its high-resolution Earth video and imagery. These distributors are located in the Middle East and in Europe. These new distributor agreements have aggregate minimum revenue commitments of $5 million per annum, which distributors must meet in order to retain their respective licenses and territorial rights to UrtheCast’s imagery. Including these new distributors, our data distribution agreements total 16 distributors, representing minimum commitments of $26 million per annum.
- UrtheCast continued to build out its workforce, increasing its global employee total to 82. Central to the growth of the team in the last quarter was the addition of an operations team to begin the process of planning the collection of images that will be distributed to our intended customer base.
Results of Operations
Our operating expenditures increased significantly in 2013 when compared with the prior year, as additional employees were added to the workforce to support the development of the infrastructure required to prepare us for the launch of the MRC and HRC in late 2013 and the anticipated start of commercial revenues in the first half of 2014.
Total operating expenses in the fourth quarter were $4.9 million (2012: $1.7 million), of which $1.7 million (2012: $0.6 million) was attributable to non-cash share-based payments. For the twelve months ending December 31, 2013, the net loss was $19.2 million, or $12.0 million (2012: $7.6 million) net of the non-cash loss on the reverse takeover transaction in the second quarter. Our total expenses, net of share-based payments for the three and twelve months ending December 31, 2013, were $3.2 million (2012: $1.0 million) and $7.7 million (2012: $3.5 million) respectively.
UrtheCast had cash reserves of $21.8 million at December 31, 2013, compared to $1.5 million at December 31, 2012. As a result of the going public transaction and associated financings, we had working capital of approximately $23 million at December 31, 2013, compared to a working capital deficiency of approximately $6 million at December 31, 2012.
In the fourth quarter of 2013, we paid approximately $5 million for an insurance premium for launch and in-orbit business interruption coverage, of which approximately $2.2 million is included in cash flow from operations. The remaining $2.8 million was capitalized in property and equipment and is included in cash flow from investing activities.
Going into 2014, we had outstanding commitments of only $0.9 million for post-delivery support of our camera equipment and for other purchases of property and equipment. Therefore, we anticipate that our cash expenditures for property and equipment in 2014 will be substantially reduced as compared to the approximately $16.9 million spent in 2013. Assuming that we commence our initial operations in the second quarter of 2014, we expect that our cash used for operating activities will increase in 2014, as compared to the $10.5 million used in 2013. However, the reduction in cash required for property and equipment will be substantially greater than the expected increase in cash used for operations.
In 2011, the Company entered into a strategic relationship with Energia and Roscosmos to allow installation of our cameras aboard the ISS. This relationship has provided, and is expected to continue to provide, significant ‘in-kind’ contributions to the cost of the project, such as hardware integration, crew training, hardware delivery to the ISS, provision of a pointing platform, maintenance, extra vehicular spacewalks, power supply to the cameras and the locations on the ISS to mount the cameras. In return for these contributions to the project, Energia will receive certain rights to the imagery, for use by Russian Government agencies, over the life of the project. During the fourth quarter we capitalized an initial amount of $28.9 million into the carrying value of the camera equipment, representing the fair value of the services that we have received up to December 31, 2013 for the launch of the cameras and the initial installation onto the exterior of ISS. The accounting for this non-cash transaction is more fully described in the notes to our consolidated financial statements.
This arrangement has reduced, and is expected to continue to reduce, our need to raise additional capital to build, launch, and operate our cameras in space. This savings is in two forms, the first being the additional costs that we would have had to invest to build the hardware systems required to operate as a standalone satellite, including solar panels and downlink communication systems, saving dilution to our current shareholders. Secondly, the annual costs associated with the operation of the cameras, including the power required to operate the cameras, any required maintenance and the provision of the downlink communications network from the ISS to the ground systems network, will be borne by Energia. The overall effect of this arrangement has enabled us to launch two cameras into space at a fraction of the cost of building and launching independent satellites, which can range from $100 million to $500 million.
“UrtheCast achieved many significant milestones in 2013,” explains Scott Larson, UrtheCast’s Chief Executive Officer. “What was key amongst these achievements was the successful financing of the company, which allowed us to complete the development and installation of the cameras. It also set the foundation for the commencement of company operations in 2014.”
The full financial statements and accompanying Management’s Discussion & Analysis are available on UrtheCast’s profile on the System for Electronic Document Analysis and Retrieval (“SEDAR”) at its website www.sedar.com and on UrtheCast’s website at www.urthecast.com.
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 renowned aerospace partners from across the globe, UrtheCast has built, launched, installed, and will soon operate two cameras on the Russian segment of the ISS. Video and still image data captured by the cameras will be downlinked to ground stations across the planet and displayed on the UrtheCast web platform, or distributed directly to exclusive partners and customers. UrtheCast’s cameras will provide Ultra HD video and still imagery of Earth that will allow for monitoring of the environment, humanitarian relief, social events, agricultural land, etc. Common shares of UrtheCast trade on the Toronto Stock Exchange as ticker ‘UR’.
For more information visit our website at www.urthecast.com.
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”, “believe”, “plan”, “estimate”, “expect”, and “intend”, statements that an action or event “may”, “might”, “could”, “should”, or “will” be taken or occur, or other similar expressions and includes, but is not limited to, statements about the commissioning of the cameras, plans to operate camera components on, and stream video footage from, the ISS, proposed image and video product offerings, expected partners and customers to distribute such products and expected 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, damage which may have occurred to the cameras during launch or installation, unexpected changes in Russian or Canadian government policies, technology changes, reliance on key personnel, the potential for conflicts of interest among certain officers, directors or promoters with certain other projects, competition, risks related to the business activities of Longford Energy Inc. (now UrtheCast) prior to the reverse take-over transaction with Earth Video Camera Inc., as well as those factors discussed in the Company’s annual information form dated March 26, 2014, (the “AIF”) and the Company’s preliminary short form base shelf prospectus dated March 26, 2014 (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 AIF and Prospectus, and as otherwise disclosed from time to time on UrtheCast’s SEDAR profile.
Forward-looking statements are made based on management’s beliefs, estimates and opinions on the date that statements are made and UrtheCast undertakes no obligation to update forward-looking statements if these beliefs, estimates and opinions or other circumstances should change, except as may be required by applicable Canadian securities laws. Readers are cautioned against attributing undue certainty to forward-looking statements.
SOURCE UrtheCast Corp.
Issa Nakhleh, CFO
(778) 331-7827 Direct