UrtheCast : Reports Second Quarter 2017 Financial ResultsUrthe Cast Reports Second Quarter 2017 Financial Results VANCOUVER, August 14, 2017 | UrtheCast Corp. (TSX:UR) ("UrtheCast" or the "Company") today announces financial results for the three and six months ended June 30, 2017. (in millions of Canadian dollars) Q2 2017 Q2 2016 YTD 2017 YTD 2016 Revenue excluding non-cash revenue (1) $ 11.9 $ 15.9 $ 21.3 $ 22.7 Revenue 11.9 21.0 21.3 33.1 Operating costs 16.4 22.4 32.0 46.4 Net loss (3.9) (0.3) (9.0) (11.4) Adjusted EBITDA(1) 0.9 5.0 (0.4) (1.0) 1 Non-IFRS earnings measure. See reconciliation to Revenue and Net Loss later in this press release Excluding the non-cash revenue related to the ISS cameras of $5.1 million recorded in the second quarter of 2016, revenues decreased by $4.0 million in the second quarter of 2017. While EO imagery sales increased by $0.2 million compared to the prior year, engineering services revenue was $4.2 million lower, primarily due to an adjustment in the second quarter of 2016 to record $8.0 million of engineering services revenue from a contract amendment, which included some services performed in the first quarter of 2016. Operating costs of $16.4 million in the second quarter were $6.0 million lower than the prior year. When excluding the $5.1 million of depreciation and non-cash costs related to the ISS cameras, operating costs were $0.9 million lower than the same period last year, mainly due to lower salary and benefit expenses resulting from the consolidation of certain software development activities and lower cloud storage costs. The net loss of $3.9 million in the second quarter of 2017 increased by $3.6 million when compared to the prior year, primarily due to the lower engineering services revenues, which was also the main factor in the $4.1 million decrease in Adjusted EBITDA compared to the prior year. Business Highlights Earth Observation ("EO") EO revenues of $3.3 million grew by 5%, compared to $3.1 million in the same period in 2016 (excluding non-cash revenues) and were 104% higher than in the first quarter of this year. Government Funding As previously announced, during the first quarter of 2017 the Company was awarded approximately $17.6 million in funding from Innovation, Science and Economic Development Canada's Industrial Technologies Office as part of its Strategic Aerospace & Defense Initiative program to support the development of the OptiSAR Constellation. The agreement is structured as a repayable contribution that management anticipates will be disbursed in quarterly installments, on a cost-reimbursement basis, over the next four years and repaid by the Company in annual installments over 15 years. Subsequent to the quarater end, the Company submitted its first claims for reimbursement of eligible costs of $5,178 for the period from April 2016 to June 2017. During the first quarter of 2017, the Company was also awarded three non-repayable grants from the Government of Canada's Defense Innovation Research Program to reimburse up to approximately $2.2 million of eligible OptiSAR development costs. The Company has submitted claims of $0.6 million with respect to eligible costs incurred in the second quarter ($0.9 million for the six months ending June 30, 2017). Financing and Liquidity As previously announced, the Company obtained a new C$10 million revolving demand credit facility from the Royal Bank of Canada (RBC) in the first quarter of 2017, which was originally intended to be used to finance up to 90% of bank-approved accounts receivable. The agreement was amended during the second quarter to enable the Company to have unrestricted access to the facility by providing security in the amount of $10 million through a combination of bank-approved accounts receivable and cash. The interest rate on this facility is RBC's prime rate plus 2% and borrowings are repayable on demand. At June 30, 2017, $3 million had been drawn under this facility. In April 2017, the Company obtained an additional credit facility to finance up to 1 million Euros of trade accounts receivables. At June 30, 2017, $0.3 million (or 0.2 million Euros) had been drawn under this facility. Update on OptiSAR Constellation and UrtheDaily Constellation In June 2015, the Company announced its plans to build, launch and operate the OptiSAR Constellation and, in March 2016, the Company announced its plans to build, launch and operate the UrtheDaily Constellation. Today, the Company announced that it had entered into a contract with a value in excess of one hundred million Canadian dollars with a confidential customer for the development and delivery of a dual-frequency stand-alone SAR operational-class satellite as an accelerator mission for the OptiSAR Constellation. This contract will allow the Company to accelerate both the operationalization of the SAR technology and the start of the SAR data services business. The Company believes that the sale of one or more accelerator SAR satellites mitigates some of the technical risks associated with the OptiSAR Constellation and assists in demonstrating the advantages of the SAR technology to the market. The acclerator program also allows the Company to continue to work closely with its current and prospective OptiSAR customers to refine the technical specifications. Selling one or more stand-alone SAR satellites provides a means to finance a significant portion of the ongoing development costs of the OptiSAR Constellation. While the Company continues to work towards consummating deals with potential OptiSAR customers, it is now believed that the OptiSAR Constellation will not begin operations prior to 2023, or approximately 12 months later than previously expected. The primary reason for this delay is a result of the challenges involved in converting customer interest into binding contracts. The development of the UrtheDaily Constellation continues to progress and, subject to financing the UrtheDaily Constellation before the end of 2017, management believes that the UrtheDaily Constellation remains on schedule to commence operations in 2020. The Company continues to validate market interest in data and services derived from the UrtheDaily constellation as evidenced by the previously announced strategic partnerships with OmniEarth, Inc. in July 2016, the advance data subscription agreement with GEOSYS, a subsidiary of Land O'Lakes, Inc., announced in February 2017 The Company continues to engage in negotiations with additional prospective UrtheDaily data purchasers, as well as potential lenders and financing partners for the financing of the UrtheDaily Constellation. Although the above statements reflect the Company's current views on the OptiSAR Constellation and the UrtheDaily Constellation, the completion of the Constellations are inherently subject to significant business, economic, competitive, political, timing and social uncertainties and contingencies and there can be no guarantee that the Constellations will be completed on the expected time frame or at all. "The results this quarter are in line with our expectations and our guidance for the year, which we are maintaining", said Wade Larson, UrtheCast's President and CEO. "Our focus has been on progressing our strategic initiatives for long-term shareholder value, and we're really pleased with the progress we're making." SELECTED FINANCIAL INFORMATION The following table provides selected financial information of the Company, which was derived from, and should be read in conjunction with, the unaudited condensed interim consolidated financial statements for the three and six months ended June 30, 2017. (in thousands of Canadian dollars) Three Months Ended June 30, Six Months Ended June 30, 2017 2016 2017 2016 Revenue $ 11,854 $ 20,973 $ 21,250 $ 33,125 Other operating income 61 695 111 695 11,915 21,668 21,361 33,820 Operating costs Direct costs, selling, general and administrative expenses 10,894 13,915 21,403 29,042 Research expenditures 112 1,493 388 3,229 Depreciation and amortization 4,188 6,392 8,662 12,956 Asset impairment 309 - 309 - Share-based payments 878 565 1,211 1,123 16,381 22,365 31,973 46,350 Operating loss (4,466) (697) (10,612) (12,530) Net finance costs (436) (580) (878) (1,101) Gain on derivative financial instruments 681 - 923 - Foreign exchange loss (986) (210) (1,205) (402) Loss before income taxes (5,207) (1,487) (11,772) (14,033) Income tax recovery 1,302 1,210 2,788 2,656 Net loss (3,905) (277) (8,984) (11,377) Other comprehensive income (loss) 2,463 (1,498) 3,004 (3,457) Comprehensive loss $ (1,442) $ (1,775) $ (5,980) $ (14,834) Net loss per share - basic and diluted $ (0.03) $ (0.00) $ (0.08) $ (0.11)