Kleos Space Q2 2022 Activities Update and Positive Outlook

Press

Cash receipts from customers for Q2 of AUD$1.3M (€0.89M) up over 600% from previous quarter
- Net operating cash out flows reduced from -AUD$2.5M (-€1.6M)in Q1 2022 to -AUD$0.9M(-€0.6M) in Q2 2022
AUD$10m secured to accelerate growth, expected to complete mid-August
Data collection constellation continues to build with
- Patrol Mission; Kleos’ third cluster of four satellites successfully deployed into orbit
- Observer Mission; Kleos’ fourth cluster of four satellites manifest to launch on upcoming SpaceX Transporter-6
Strengthened Board and management with key appointments:
- Highly experienced space industry executive Ms. Dawn Harms appointed to the Board as a Non-Executive Director
- Alan Khalili appointed as new CFO, experienced in the field of aerospace/satellite, technology, and DaaS
Continuing to build world-class industry partnerships and market engagement including agreements signed with US Navy Surface Warfare Center and with international aerospace company; Kongsberg
Corporate brochure published

Kleos Space S.A (ASX: KSS, Frankfurt: KS1), a space-powered Radio Frequency Reconnaissance data-as-a-service (DaaS) and Mission-as-a-Service (MaaS) provides the following update for the quarter ending 30 June 2022 (Q2 2022).

Commenting on the Company’s second (June) quarter progress, Kleos Space CEO Andy Bowyer said:

“Data is the foundation of all decision making, our recent agreement with the US Navy is a great example of a government user engaging early with unique data sets such as ours to rapidly innovate with solutions for military challenges that facilitate quicker decision making.

“Kleos’ radio frequency (RF) geospatial data provides this value, enabling users to speed up decision making in time-critical, high-risk areas of conflict. Our exceptional engineers use our proprietary software and algorithms to analyse, process and extract ‘needles in the haystack’ from the radio noise that our sensors collect. This intelligence assists in the detection of environmentally, economically, and societally damaging human activity and empowers the ability to act.

“As our market and business continues to mature, it is this decision-enabling value that we are monetising. Our ‘product’ is not a commodity, it is a value-add technology & service. We continue to increase the value of our data through innovation and industry leadership in world-class signal processing and RF technologies.

“In Q2 we have delivered customer receipts of AUD 1.3 million reducing net operating cashflows and marking a major step towards positive operating cash flow. Our new Mission-as-a-Service offering improves cash flow, although revenue recognition may be more backloaded as the service ramps up. Additionally, Mission-as-a-Service will ensure longer-term asset utilisation and return, focused on building long term customer relationships.

“Funding enables us to respond to market needs and is clearly vital for future Company growth. We are proud to have secured a new and highly respected funding partner in PURE Asset Management, to help fund further satellite constellation and team expansion.

“The team has done a fantastic job this quarter, further enhancing our space-based sensor network as well as our services and technologies on the ground, which is driving continued growth in cash receipts, contracts and bookings.

“Finally, I am delighted to welcome Dawn and Alan to our global Board and executive teams. Both are exceptionally high calibre candidates with extensive industry-specific experience in financial and business operations and will deliver great value for Kleos’ next chapter of growth.”

COMMERCIAL PROGRESS
During the quarter, cash receipts from customers were AUD$1.3M (€0.89M) and Kleos received purchase orders and contracts with a total value of approximately AUD$1.95M (€1.3M) and of that, €0.7M of non-refundable cash receipts were booked as deferred revenues.

Annualised revenue of US$18M previously targeted to be achieved by calendar year-end is now targeted for Q1 2023 and the achievement of monthly Adjusted EBITDA positive status during mid-2022 is now targeted for the second half of 2022, due to satellite launch and commission delays.

Kleos currently has a global pipeline of more than 260 government and commercial, qualified deals, spanning defence departments, national security agencies, coast guards, sanctions agencies and data aggregators.

During the quarter, Kleos entered into a Cooperative Research and Development Agreement (CRADA) with the U.S. Navy to test the capability of its RF geolocation data in realistic maritime scenarios, such as sanctions reporting, trans-shipment monitoring, resource management, smuggling, and border control. The agreement is the first phase of the SCOUT Experimentation Campaign. It includes discovery test exercises, which will contribute to the development and integration of technologies that allow for quicker leadership decision-making.

In July, Kleos signed a non-exclusive channel partner agreement with Kongsberg Satellite Services for the delivery and integration of Kleos’ data within a larger dataset, complementing other intelligence sources.

Secured A$10 million debt facility

In July, Kleos secured a four-year A$10 million debt facility under a binding term sheet with PURE Asset Management. Kleos will use the two-tranche debt facility to expand its constellation and to increase Kleos’ team to support operational growth. It is expected that the initial funding of AUS$6M will be closed in mid-August, upon the completion of the loan documents.

OUTLOOK

Kleos remains focused on continuing to enhance the quality and frequency of its satellite capacity and data delivery, converting introductory subscriber contracts to growing revenue, and targeting monthly Adjusted EBITDA positive status in the second half of 2022. In addition, Kleos will continue to build its constellation to increase the value and volume of its radio frequency geolocation data, growing subscriber numbers and increasing revenue contribution from existing subscribers.

For more information, please contact MMR Corporate:
e: kleos@mmrcorporate.com