Space RF Reconnaissance DaaS Provider, Kleos Space is in Trading Halt, Know Why!

Summary

• Kleos Space (KSS) has requested two consecutive trading halts with effect from 6 July 2020, awaiting release of an announcement concerning the issue of a considerable number of securities, which might have a material effect on its share price.
• As part of its R&D programme, KSS had integrated new data collecting technology in an In-Space Missions Ltd Faraday-1 spacecraft launched from New Zealand by Rocket Lab on 4 July 2020.
• As the mission did not complete successfully, KSS plans to spend next few weeks on assessing financial or time impact on its R&D roadmap. Meanwhile, R&D programme remains robust with momentum building across a range of technologies.
• KSS is expecting revenue generating post imminent launch of first satellites that are waiting at the launch site in India.

In contemporary world, data is woven into every industry and function of an economy, thus, making data an extremely important factor for the functioning of multiple organisations.

Just like human capital and tangible assets are one of the crucial factors of production, economic activities in the current times cannot simply take place without the essence of data.

Companies collect and analyse data to derive insights and make appropriate decisions. But where can this data be acquired from?

The simple answer to this question is Data as a Service (DaaS).

This concept empowers businesses to procure the data and boost their data analytics, while lessening the time to draw data insights along with enhancing reliability of their data.

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In light with the above information, let us now apprise ourselves with an ASX-listed data as a service (DaaS) company, Kleos Space.

Kleos Space S.A (ASX: KSS)

Luxembourg-based, Kleos Space is a space-powered, radio frequency reconnaissance data as a service company, focused on safeguarding borders and saving lives as well as assets by providing activity-based intelligence and geolocation as a service. The Company creates subscription-based revenues from delivery of essential data to government and commercial entities around the globe.

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Request of Two Consecutive Trading Halts

On 6 July 2020, the Company requested two consecutive back-to-back trading halts to be applied to its securities, with effect from the same day, as KSS plans to issue securities for raising capital, and information regarding the same might have a material impact on the price or value of the securities. Over the course of four days, the capital raising and book building process would be undertaken.

Further, the trading halt would remain in place until the release of capital raise announcement or will terminate no later than the commencement of trading on 10 July 2020.

KSS stock last traded at AU$0.360 on 3 July 2020.

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Update on Data Collecting Technology Launch into the Orbit

On 26 June 2020, KSS released an announcement regarding the launch of its new data-collecting technology as a ‘hosted payload’ on an In-Space Missions Ltd Faraday-1 spacecraft, for launch into a sun-synchronous orbit from New Zealand by Rocket Lab.

However, the mission did not complete successfully. According to the Company announcement dated 6 July, following a successful lift-off, first stage burn, and separation, an anomaly was detected in approximately four minutes into the flight, leading to the non-entry of Faraday-1 satellite hosting the KSS technology into the orbit.

The launch of KSS’ development technology in a sun-synchronous orbit was considered as part of the Company’s R&D programme. It was meant to complement the Scouting Mission Satellites awaiting launch in India and a significant step on the Company’s technology roadmap in expanding the range of target markets.

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Over the next few weeks, the Company plans to assess any financial or time impact to its R&D roadmap, arising from the non-successful test.

As per KSS, although the in-orbit test for the technology was not successful, the Company noted no effect on the Scouting Mission Satellites, which are ready for launch in India on a Polar Satellite Launch Vehicle (PSLV).

If you aren't familiar with the concept, Kleos Scouting Mission Satellites would assist in detecting maritime activity such as illegal fishing, piracy, drug and people smuggling, even when the Automatic Identification System (AIS) would be switched off.

On 19 June 2020, KSS responded to one of the queries of ASX and highlighted that it expects to continue to report negative operating cash flows for the time being; however, following the launch of Scouting Satellite Mission Satellites, the Company anticipates delivering revenue. The Company has already secured a number of early pre-orders, contracts and agreements, in addition to others in negotiation.

Government Repayable Aid

On 21 May 2020, KSS updated to have received €146,457 in repayable aid, from the Government of Luxembourg, as part of coronavirus support schemes for business, assisting the Company in maintaining operational strength.

The repayment of the aid would commence from May 2021 with advance to be repaid at a simple interest of 0.5 per cent.

March Quarter Update

On 30 April 2020. KSS provided a business update for the quarter ended 31 March 2020 (Q1 2020), highlighting:

• KSS awaits the launch date for PSLV C49 by the Indian Space Research Organisation, which was delayed due to COVID-19 induced restrictions.
• Senior business developer appointment for the markets of the United States and the Middle East.
• KSS had a cash balance of AU$1.38 million at the end of March 2020.
• Directors of the Company considered business outlook to be positive amid COVID-19, with over 100 active opportunities across the entire pipeline following deployment of Scouting Mission Satellites.
• Higher level of Management, including Board and Executive team, agreed for ~30% deferment of their remuneration to preserve cash.

Kleos Space, which owns satellites creating a highly valuable, independent data set, is expecting revenue generation post imminent launch of first satellites that are waiting at the launch site.