- Divestiture will result in net cash savings of approximately $1.0 million per year
- Transaction has no impact on Company's Satellite-AIS data service performance
CAMBRIDGE, ON, March 31, 2020 /CNW/ - exactEarth Ltd. (TSX:XCT) ("exactEarth"), a leading provider of Satellite-AIS data services for ship tracking and maritime situational awareness solutions, announces that it has entered into an agreement to divest four satellites from its first-generation constellation and its ground station assets to Myriota Canada Inc. ("Myriota Canada"), a wholly-owned subsidiary of Myriota PTY Ltd. ("Myriota"). All financial figures are in Canadian dollars unless otherwise stated.
"This transaction, which is subject to Canadian regulatory approval, will achieve several strategic objectives," said Peter Mabson, President and CEO of exactEarth. "First, it lowers our cost base and reduces our annual cash outlay by a meaningful amount, which will strengthen our financial position and move us more rapidly toward our goal of being cash flow positive. Second, it positions our business and overall financial profile more in-line with that of a pure-play data services business, one with stronger margins and significant recurring revenue. Third, we will maintain access to the AIS data from the satellites to support our service and by extension we will continue to maintain a working relationship with Myriota, a company that exactEarth has invested in and one that we have built a strong business relationship with over the past several years."
Under the terms of the agreement, Myriota Canada will acquire the satellites EV1, EV6, EV9 and EV11, exactEarth's ground station assets and certain related operating contracts. Four of exactEarth's full-time personnel will cease employment with exactEarth and will become employees of Myriota Canada. In consideration for the assets, exactEarth will receive payment of $600,000, comprised of $150,000 cash and $450,000 in preferred shares of Myriota, and Myriota Canada will provide exactEarth with Satellite-AIS data originating from these four satellites as well as the other satellites in exactEarth's first-generation constellation for their remaining operating lifetimes. exactEarth will retain ownership of the EV2 and EV8 hosted AIS satellite payloads from its first-generation constellation as well as the data license with the Government of Canada related to the M3M advanced AIS satellite.
On a net basis, this divestiture is expected to generate cash savings of approximately $1.0 million annually for exactEarth. These savings result from the expected reduction of exactEarth's annual expenses by approximately $2.45 million which includes approximately $350,000 of depreciation expense. The agreement will also see the termination of a revenue arrangement between the two companies under which Myriota accounted for approximately $1.1 million of exactEarth's revenue in Fiscal 2019.
The closing of the sale of assets to Myriota Canada is subject to Canadian Government regulatory approvals involving the acquisition and/or divestiture of satellite assets and other customary closing conditions. It is anticipated that the transaction will close in the third quarter of fiscal 2020.
About Myriota PYT Ltd.
Myriota was founded to revolutionise the Internet of Things (IoT) by offering disruptively low-cost and long-battery-life global connectivity. Based in Adelaide, a focal point of the Australian space industry and home of the Australian Space Agency, Myriota has a growing portfolio of more than 20 patents, and support from major Australian and international investors. With deep heritage in telecommunications research, world-first transmission of IoT data direct to nanosatellite was achieved in 2013. Myriota has made this ground-breaking technology commercially available for partners worldwide. www.myriota.com
About exactEarth Ltd.
Since its formation in 2009, exactEarth has pioneered a powerful new method of maritime surveillance called Satellite AIS and has delivered to its clients a view of maritime behaviours across all regions of the world's oceans unrestricted by terrestrial limitations. exactEarth's second-generation constellation, exactView RT, securely relays satellite-detected AIS vessel signals from any location on the earth's surface to the ground in seconds – thus enabling global real-time vessel tracking. This unique capability consists of 58 advanced satellite payloads designed and built by L3Harris Technologies, Inc. under agreement with exactEarth and that are hosted onboard the Iridium NEXT constellation of satellites. www.exactearth.com
This news release contains statements that, to the extent they are not recitations of historical fact, may constitute "forward-looking statements" within the meaning of applicable Canadian securities laws. Forward-looking statements may include financial and other projections, as well as statements regarding exactEarth's future plans, objectives or economic performance, or the assumptions underlying any of the foregoing, including statements regarding, among other things, expectations of the anticipated benefits of the sale of certain assets to Myriota. exactEarth uses words such as "may", "would", "could", "will", "likely", "expect", "anticipate", "believe", "intend", "plan", "forecast", "project", "estimate" and similar expressions to identify forward-looking statements. Any such forward-looking statements are based on assumptions and analyses made by exactEarth in light of its experience and its perception of historical trends, current conditions and expected future developments, as well as other factors exactEarth believes are appropriate under the relevant circumstances. However, whether actual results and developments will conform to exactEarth's expectations and predictions is subject to any number of risks, assumptions and uncertainties. Many factors could cause exactEarth's actual results, historical financial statements, or future events to differ materially from those expressed or implied by the forward-looking statements contained in this news release. These factors include, without limitation: governmental regulatory approvals, uncertainty in the global economic environment; anticipated savings as a result of the transaction; fluctuations in currency exchange rates; delays in the purchasing decisions of exactEarth's customers, including as a result of the COVID-19 pandemic; the competition exactEarth faces in its industry and/or marketplace; the reduced scope of significant existing contracts; and the possibility of technical, logistical or planning issues in connection with the deployment of exactEarth's products or services.
SOURCE exactEarth Ltd.