SAS and GomSpace have conducted recent evaluation discussions regarding the provision and manufacturing by GomSpace of an additional constellation of nanosatellites (6U Agreement). In connection with these discussions, and in order to reflect changes to the existing project, the parties have also discussed changes to the existing Pearls nanosatellites manufacturing agreement ("Pearls Agreement") and have signed a Heads of Agreement (HoA) covering some of the principle terms for the provision and manufacturing by GomSpace of an additional constellation of nanosatellites under a new agreement ("6U Agreement") and some of the principle terms for changes to the existing Pearls Agreement entered into in 2017 (as amended). SAS and GomSpace have agreed to finalise their negotiations on the new 6U Agreement and the Pearls Agreement within 30 days.

Once the new 6U Agreement is signed with GomSpace, SAS will be able to address the increased demand to provide global Internet of Things (IoT) and Machine to Machine (M2M) services outside of the Equatorial region. The new nanosatellites are intended to be launched into Global Coverage high inclination orbits, allowing full global coverage, providing SAS with the ability to: enter into new markets (including Australia, Russia, China, South Africa, Argentina, Canada); generate higher revenues with the added coverage capability; reduce risk by using space proven hardware and technology. SAS plans to use assets already developed for its Equatorial constellation (including proprietary software, concept of operations and network infrastructure) under the Pearls Agreement as part of the new 6U Agreement's Global Coverage constellation.

In addition, subsequent launches beyond the Global Coverage constellation are intended to remain as planned under the current Pearls Agreement. Key terms from the HoA signed with GomSpace in relation to the 6U Agreement include: Provision and manufacturing by GomSpace of a new constellation of nanosatellites under the 6U Agreement Delivery in two batches, with the first batch of 8 nanosatellites anticipated to be delivered by the end of 2019 (second batch of 8 nanosatellites optional for Sky and Space Global) Total order expected to be valued in the range of EUR 4 to 7 million (depending on whether 8 or 16 nanosatellites are ordered and the final to be agreed price for those nanosatellites) Technical specifications, statement of work, delivery schedule, and the commercial, payment and legal terms to be finally decided in a definitive agreement Advance payments and financial assurance for payments to be agreed for the project, but initially SAS has paid GomSpace EUR 550,000 on signing of the HoA to allow GomSpace to initiate activity Conditional upon the parties reaching an agreement on changes to the existing Pearls 8U Agreement entered into in 2017 (as amended) within 30 days. Principle terms for changes to the existing Pearls Agreement include: Provision and manufacturing by GomSpace of nanosatellites Delivery in batches similar to the existing agreement, that would be aligned to the new constellation agreement.

Total order value depends on several options including development, services and choice of satellites, and will therefore range between approximately EUR 48 million and EUR 70 million; Technical specifications, statement of work, delivery schedule, and the commercial, payment and legal terms to be finally decided in a definitive agreement; Advance payments to be made and security for payments to be provided by SAS to be agreed; The existing pricing model shall be replaced with a cost plus model; Conditional upon the parties entering into the new agreement within 30 days, necessary for the continued cooperation under the existing project.