This is out today in the AFR (free access). I'm not sure what to make of the part highlighted in yellow. Is the AFR warning potential investors about KSS?
https://www.copyright link/technolo...e-closes-11-million-ipo-raise-20180712-h12l6x
Satellite start-up Kleos Space closes $11 million IPO raise
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Kleos Space co-founder Andy Bowyer signing a deal with Luxembourg Deputy Prime Minister Etienne Schneider, which saw it get early-stage funding. Supplied
by
Yolanda Redrup
A Luxembourg-based satellite technology start-up, which claims to help defence forces track down criminals at sea, from pirates to illegal fishermen, is expected to finalise an $11 million capital raise early this week and list on the ASX on July 27.
Kleos Space, which is a spinout of UK space technology company Magna Parva, has developed a system of shoe-box sized satellites that will give governments the ability to track ships used by drug and people smugglers, terrorists, pirates, illegal fishermen and those in need of search and rescue.
The satellites collect geolocation data based on radio transmissions happening across the ocean that can pinpoint a ship's location, without relying on a GPS signal which can be easily jammed.
Space engineers Andy Bowyer and Miles Ashcroft launched the business in Luxembourg because, like Australia, it was establishing its own space agency and invested €2 million in its research and development.
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Kleos Space APAC managing director Erik Tyler has advised a range of ASX-listed small cap technology companies which have performed poorly.
"In essence we're an observation company. If you are a ship operating in the ocean and wanting to smuggle something on to shore or from ship to ship, there's a serious amount of communications activity going on in the maritime VHS bandwidth that walkie-talkies and mounted transmitters use," Mr Bowyer said.
"It's hard to detect if you're on another boat because it's only picked up within a few miles' radius at sea, but the transmissions all float up into space and there's nothing to stop it."
Shipping vessels transmit data via an automated identification system (AIS) and via the VHF radio frequency, which refers to the range between 156 and 174 megahertz.
If a ship is emitting an AIS and a VHF signal, it's considered standard practice, but if it's admitting just a VHF signal without an AIS signal, that can be an indicator of illegal activity.
Kleos Space will be valued at $28 million when it lists.
The company had to make an amendment to its original prospectus after accidentally saying it owned an expired patent.
It has not generated any revenue to date, but its first delivery of satellites will occur in the second quarter of 2019. At this point it intends to sell its data through direct and indirect sales and it is developing a data analytics platform which will integrate with the satellites.
APAC leader
The company has also established an office in Canberra and appointed local business adviser Erik Tyler as the managing director of the Asia Pacific region.
Mr Tyler began his career in the satellite industry as part of the defence force, but more recently has acted as an adviser to a range of emerging ASX-listed businesses, most of which have performed poorly.
He was an adviser to messaging app Thred (between July 2016 and November 2017), Kalina Power (between June 2017 and March this year), Robo 3D (between August 2017 and February this year), Zyber Holdings (between July and November 2016) and The Search Party (between June 2016 and February 2017).
Thred is now trading at less than a cent, as is Canadian security firm Zyber, while Kalina Power is selling for around 1.4¢. Robo 3D is down to 2.2¢ and HR tech company The Search Party delisted last year amid growing losses.
Mr Tyler is also a mergers and acquisitions adviser to start-up accelerator BlueChilli and has been an adviser to Hunter Capital. He said he came across Kleos Space while in Europe and was introduced to the business through the chief executive of listed counter-drone technology business Department 13, Jonathan Hunter.
"The past few years have been a learning curve, especially in the early stage micro and small-cap segment of the market. I have learned that identifying a strong management team with a track record of delivery is the single most important element when working with emerging businesses," Mr Tyler said.
"I've also learnt that being involved in a company from an early stage is critical ... After meeting Kleos and the team, it was clear to me that they had a first-mover advantage, strong validation from their past business success, and strong government backing.
"Kleos Space isn't just some guys with a good idea on a PowerPoint presentation that are pitching it. It's a really interesting play that's captured the attention of the market."
Mr Bowyer and Mr Ashcroft's first business, Magna Parva, developed components for spacecraft involved in missions such as ExoMars, BepiColombo and MetOpSG. This business is still running, although not at the scale it was a few years ago, and Mr Bowyer is a 50 per cent shareholder.
When asked about Mr Tyler's connection to the other ASX-listed small caps, Mr Bowyer said he was not concerned, and that he was a "brilliant, intelligent salesman" who had already made inroads in the defence, security and space sectors in Australia, and had positive relationships with a range of investors.
Mr Bowyer said opening in Canberra and pursuing the ASX was a strategic move by the business.
"There's a degree of education in the Australian market that seems to be very high ... people understood the offer and what we're trying to achieve," he said.
"The marketplace is large and it has challenges around border control and maritime security. There was almost a cultural understanding of the challenge we're looking to solve and that gave us enthusiasm."
