UrtheCast has opened bidding for the sale of its Deimos Imaging division, including the Deimos-1 and Deimos-2 satellites. Here are the financial results from Deimos. Figures are in thousands of Canadian dollars. Credit: UrtheCast

PARIS — Satellite geospatial imagery and service provider UrtheCast Corp. said its Deimos Imaging subsidiary, which it is trying to sell, reported a 15% increase in revenue in Q1 2019 but a still-substantial operating loss.

UrtheCast said Spain’s Banco de Sabadell has eased some repayment requirements for the loan, valued at 25 million euros ($28 million), taken out in 2015, but the Spanish company’s indebtedness will weigh heavily in negotiations for the sale of Deimos.

In a May 14 report to shareholders, Canada-based UrtheCast said it hopes to generate sufficient proceeds from the Deimos sale to pay off the Sabadell loan.

The Deimos-1 satellite was launched in 2009 and has a designed operational life of 10 years. The higher-resolution Deimos-2, launched in 2014, has at least a seven-year life. Earth observation satellites usually exceed their estimated operating lives, but the likely need to replace the two spacecraft in the near term will be another factor in the sale.

Here are Deimos’s contract obligations as of March 31. Credit: UrtheCast

UrtheCast’s decision to sell its principal satellite assets to shed Deimos’s operating costs is part of UrtheCast’s planned path to regain financial viability and build its own UrtheDaily optical satellite constellation and, later on, its OptiSAR radar satellites using proprietary technology: http://bit.ly/2E8OI7C

The company had just 2.96 million Canadian dollars ($2.2 million) in cash as of March 31, insufficient to carry it though 2019 and maintain the business. It is seeking additional financing beyond a $12-million, one-year loan from Balzano  Investments Ltd., which carries a 14% interest. Balzano was given a seat on the UrtheCast board.

UrtheCast management contributed to the transaction in exchange for share-purchase warrants.

UrtheCast reported net finance charges of 1.64 million Canadian dollars in Q1 2019, compared to 158,000 Canadian dollars a year ago, reflecting the weight of the $12-million loan.

Another source of UrtheCast revenue is processing and distributing imagery for the PanGeo Alliance of Earth observation satellite operators.

What UrtheCast’s relationship will be with the PanGeo group after the sale of Deimos is unclear. The company said “ a material portion of its EO business revenue will be derived from the distribution and value-added services it provides… other operators in the PanGeo Alliance.”

In a statement filed May 14 with the Toronto Stock Exchange, UrtheCast said it booked no engineering or value-added revenue in the three months ending March 31, compared to 3.25 million Canadian dollars a year earlier.

The company said “progress delays incurred by its key subcontractors in completing milestones under its engineering and value-added services contract” was the reason.

UrtheCast reported a net operating loss of 1.4 million Canadian dollars in Q1 2019 on revenue of 4.425 million Canadian dollars.