Maritime Launch Services reported a quarterly loss of $4,315,979 for the three month period ended June 30, 2022 and a loss of $4,580,700 for the six month period ended June 30, 2022. It also disclosed that it has a letter of intent (LOI) for the use of another medium class launch vehicle if the the Ukrainian Cyclone 4M is not available.
Financial results
The quarterly and six month period ended June 30, 2022 losses reported by Maritime Launch Services (MLS) are not unexpected as the company continues spending without any revenue sources at this time. MLS did report that it had $6,532,534 in cash.
A majority of the losses for the six month period ended June 30, 2022 is a result of their stock-based compensation ($826,000), professional services ($891,521) which they list as, “but are not limited to, legal, financial advisory, community relations, and fees associated with the Company’s listing on the NEO Exchange,” and listing expenses ($2,242,404).
MLS stated in their Management Discussion and Analysis (MD&A) filing that “Professional fees were high during the three-month period ended June 30, 2022 as they included a number of legal, financial advisory and listing related costs associated with the completion of the Reverse Takeover and the Company’s public listing.”
With respect to listing expenses, MLS stated that “During the three-months ended June 30, 2022, the Company incurred a non-cash listing expense charge of $2,242,404. The listing expense charge represents the excess of the theoretical fair market value of the common shares and stock options “issued” to the former shareholders of Jaguar at the time of the Reverse Takeover over the fair market value of the assets and liabilities of the former Jaguar at the time of the Reverse Takeover.”
As with many companies in the startup phase and publicly listed, MLS must discuss whether it is a “Going Concern.” This is not to say the company will fail or succeed, but rather what the financial status of the company is. In their Condensed Interim Consolidated Financial Statements MLS stated the following which is typical of companies at this stage;
The condensed interim consolidated financial statements have been prepared on a going concern basis, which assumes that the Company will be able to continue in operation for the foreseeable future and will be able to realize its assets and discharge its liabilities in the normal course of business. In assessing whether the going concern assumption is appropriate, management takes into account all available information, which is at least, but is not limited to, twelve months from the end of the reporting period.
At June 30, 2022, the Company had no source of operating cash flow. Operations have been funded from the issuance of share capital and convertible debentures and as such, the Company’s ability to continue as a going concern is dependent upon the ability to obtain financing to be able to secure adequate bonding for future projects. It is not possible at this time to predict the outcome of these matters. The Company incurred a net comprehensive loss of $4,315,979 and $4,580,700 during the three and six month periods ended June 30, 2022, respectively (2021 – total comprehensive loss of $263,865 and $439,806 during the three and six month periods ended June 30, 2021, respectively). As a result, there is material uncertainty that may cast significant doubt as to whether the Company will have the ability to continue as a going concern.
These condensed interim consolidated financial statements do not reflect the material adjustments to carrying values of assets and liabilities, and the reported expenses, that would be necessary if the going concern assumption was inappropriate.
MLS filings are available on SEDAR.
MLS company updates
We’re working on another story specific to the war in Ukraine with an update on the status of the development of the Cyclone 4M medium class launch vehicle. We expect to file that story in the next couple of days. In the meantime, MLS did provide some information in their MD&A filing.
One item relates to what happens if MLS does not have the Ukrainian Cyclone 4M available in a timely fashion. Here’s what they said, “If it is required, the medium class launch vehicle capability of the Cyclone 4M can be replaced with at least two others that are in development in the United States, one of which with we have a letter of intent.”
That there is a letter of intent with another unnamed launch provider is positive news. And as a reminder, MLS is planning a phased approach to the development of spaceport. In Phase One it plans on demonstrating the launch of a small launch vehicle. That would happen in the second half of 2023 and the small launch vehicle provider would be Montreal based Reaction Dynamics (RDX).
In the MD&A filing and with regards to the Phase One financing, MLS stated that “the financing required to achieve first small vehicle launch demonstration in the first phase (‘Phase One’) (calculated until approximately the third quarter of 2023) is approximately $5 million.” This is considerably lower than what is needed for Phase Two which would see facilities built to support a medium class launch vehicle.
MLS further stated that “The Company intends to advance the concurrent portion of the second phase (‘Phase Two’). This includes the design of the Launch Complex, construction of the initial road system throughout the Land into the Launch Complex and supports the first small vehicle launch demonstration. The phased approach to development will allow the Company to achieve early Flight Heritage for the launch site. This Flight Heritage demonstrates the successful collaboration between the Company and federal partners for rocket launch, will prove out the processes and procedures for launch giving the team vital experience, and provide a clear path for paying customers to launch their satellites. The phased approach will optimally schedule Facility development to accelerate towards the launch of a medium class launcher through additional investment rounds including equity, debt and federal government support.”
“A small vehicle launch requires significantly less infrastructure to support and can be completed earlier in the construction process of the Launch Complex. In Phase One, the launch vehicle developer would provide the vehicle and support equipment required while the Company would be responsible for providing road access, a small launch pad site for set up of the developer’s equipment, portable power, control of public access to the Launch Complex and the regulatory approval for the launch in coordination with Transport Canada and NavCanada.”
The latter statements are not new, but worth reiterating as this indicates MLS is staying the course with respect to its updated phased approach it announced earlier this year.