If online forums and social media are anything to go by, Sky and Space Global (ASX: SAS) could potentially implode if they ever come out of the voluntary trading suspension which the Company entered on 4 April 2019.
During that time, shareholders have been unable to sell trade the stock which last traded at 2.8 cents per share on 3 April which would give Sky and Space a market cap around $60 million. Much of that value, however, may be at risk if the stock ever resumes trading on the ASX. Most shareholders are furious with the company, whose share price has fallen from around 20 cents in mid-2017.
Largely contributing to the speculative stock’s share price decline has been their cash grabs, coupled with the extremely unrealistic ambitious plans to launch 200 nano-satellites into space as a means for telecommunications in the equatorial region.
In March 2018, the Company undertook an institutional Placement which secured $10 million in funds at an Offer Price of 12 cents per share. Sky And Space reported the raise as “heavily oversubscribed”. They then went on to raise a further $5 million from a combination of shareholders and an underwriter at the same Offer Price.
During the campaign, Sky And Space Global was promoted by OzFinancial (now named Reach Markets) who were the advisors assisting with the SPP, referencing a research report from AAP Securities published on 5 December 2017. The report listed a “speculative” target price for SAS of $0.45.
The core of the campaign was to raise funds which would enable Sky and Space to commence launching their revenue-generating nano-satellites into space having undertaken a number of Memorandum of Understandings (MoUs) with suppliers and customers.
Source: OzFinancial (retrieved 15 August 2019)
Had Sky and Space been able to meet their lofty intentions, the Company would have their first 100 nano-satellites in the air in 2019 which could equate to $300-500 million in revenue per annum. In fairness to them, there is still time to reach 100 from their current orbit of zero.
Since undertaking those capital raises in 2018, Sky and Space went on to raise a further $12 million via private Placement at an Offer Price of 3 cents per share in February 2019, followed by another $3.24 million from shareholders via an “oversubscribed” Priority Offer, also at 3 cents per share.
Following their trading halt on 4 April, Sky and Space entered voluntary suspension from trading on the ASX on 8 April 2019 citing “a key supplier agreement and provide a material business update” and that it “expects the voluntary suspension to end no later than the commencement of trade on Wednesday 10 April 2019.”
True to their word, they released details of the supplier agreement on 8 April but on the same day requested an extension to the voluntary suspension as a result of two Board member resignations. However, “The Company expects the voluntary suspension to end at the commencement of trade on Thursday 18 April 2019”.
And so the extensions kept coming. One request on 18 April, the next on 3 May, again on 14 May and more again on 27 May, 1 July, 19 July and most recently 15 August.
The last of which the Company announced it “is continuing to make considerable progress with completing its financing arrangements and its search for two new Australian resident non-executive Directors with the requisite skills and experience to support the Company’s ongoing operations and growth strategy.”
If Sky and Space see out this extension and resume trading before their requested resumption date of 27 September 2019, the Company will have prevented shareholders from selling their stock for almost 6 months, whilst still yet to launch a single of their revenue-generating satellites, which they have raised large amounts of capital for.
Alfred Chan is an Analyst at Emerald Financial, specialising in ASX-listed small cap companies.
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3 Comments
MTRC
What government or stock exchange entity is responsible for investigating companies performing like this and how much more rope is the ASX going to give them before saying enough is enough
ReplyLJT@MTRC
It’s ridiculous how much they have gotten away with. ASIC are the ones who should be investigating as it is just about securities fraud based on how much money they have raised, without actually applying it to what the money was raised for. Meanwhile, the execs take home their pay packet and pay their suppliers – who are probably linked back to the execs in one way or another. Whilst the ASX are the ones who apply the trading halt – they do so from a operational level rather than a regulatory one which is where ASIC needs to step in, and they don’t do anything lightly which is why it’s more likely that they’ll conduct their investigation after SAS goes under and then bar anyone associated with SAS from serving on the board of an ASX-listed company in the future.
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