Monday, November 24, 2014

"Horiemon" Sues Excalibur Almaz over "Museum Pieces" Misrepresented as Working SpaceCraft

          by Brian Orlotti

Takafumi Horie. Photo c/o Wikipedia.
A Japanese investor, popularly known as Horiemon (ホリエモン?) due to his resemblance to Doraemon, the chubby robot cat in a popular Japanese cartoon, is suing Isle of Man-registered space transportation firm Excalibur Almaz (EA) for allegedly misleading him into investing $49Mln USD ($55.2Mln CDN) in a commercial space venture.

According to the November 19th, 2014 IOM Today article "Manx-registered space exploration firm to fight civil suit in US," Japanese businessman Takafumi Horie has filed a civil suit in Harris County district court, Texas, against EA founders Art Dula and J Buckner Hightower. Horie’s suit accuses Dula and Hightower of fraud, breach of contract and breach of fiduciary duty.

Horie claims he realized that his investment was a “sham” when he learned that Dula had sold a Russian spacecraft at auction that allegedly was "only suitable for display in a museum, and not as a potential flight vehicle as had been falsely represented to the plaintiff from the beginning."

But as outlined in the May 18th, 2014 Financial Times article "Takafumi Horie – return of Japan’s enfant terrible," the well known Japanese investor also comes with some history. According to the article, he once spent 21 months in prison for violating Japanese securities laws.

EA founder Art Dula in front of re-purposed ex-Soviet Almaz hardware in 2012. Dula also acts as the literary executor for science fiction author Robert A. Heinlein and maintains a legal practice focused around aerospace, business and intellectual property law.  Photo c/o Pocket Lint.

As for Excalibur Almaz, it was founded in 2005 on the Isle of Man, a self-governing British Crown dependency located in the Irish Sea between Ireland and the UK. According to the company's website, EA had planned to provide a variety of space related services, including:
  • Unmanned micro-gravity scientific research missions
  • Human transportation including crew and tourism
  • Cargo delivery and return
  • Chartered space exploration
EA's strategy focused on the use of re-purposed Soviet-era space hardware. This vintage hardware was originally part of the "Almaz" (Diamond) program, a top-secret Soviet military space station project which ran from the early 1960's to the late 1970's. Three crewed military reconnaissance stations were launched between 1973 and 1976.

To conceal the program's military purpose, the three launched Almaz stations were designated as civilian space stations: Salyut 2, 3 and 5.  Salyut 2 failed shortly after reaching orbit, but Salyut 3 and Salyut 5 both conducted successful crewed tests.

In 1978, following the Salyut 5 mission, the Soviet Ministry of Defence concluded that the time spent on station upkeep outweighed the stations' benefits compared to automated reconnaissance satellites and the program was ended.

A full scale model of the Salyut 7 space station (with a Soyuz spacecraft docked at the front port and a Progress spacecraft at the rear) which is on display as part of the Exhibition of Soviet National Economic Achievement in Moscow. Photo c/o Wikipedia.  

The Almaz program used three main hardware components:
  • the Orbital Piloted Station (OPS) module, forming the space station itself
  • the Functional Cargo Block (FGB), a resupply craft for the stations
  • the VA spacecraft (known in the West as the Merkur), a launch and return vehicle for the crews, reusable for up to 10 flights.
In a move that could be described as "proto-Star Wars," in addition to reconnaissance equipment, Salyut-3 was armed with a modified Rikhter R-23 aircraft auto cannon mounted on its forward belly.

Originally used as a tailgun on Tu-22 bombers, the R-23 had a theoretical firing rate of up to 2600 rounds per minute and its projectiles flew at a speed of 850 m/s relative to the station. The cannon was envisioned as both a point defence weapon against incoming enemy spacecraft and as an antisatellite weapon. Since the cannon was on a fixed mount, the entire station needed to be turned to aim it. The R-23 carried 32 rounds and was test fired three times at the end of the 1974 Salyut-3 mission, when the station was operating uncrewed, so as to avoid issues with excessive vibration and noise.

The Amlaz-205 module in 2011. At the time of its purchase by EA in 2011, the module was missing payload and subsystems, at least according to a May 21st, 2011 Russian Space web post on the topic. Photo c/o Russian Space Web.

Of course, the Almaz program left behind a rich legacy, which continues to the present-day.

The DOS series of space station modules (based on the Almaz OPS) served as the core of the Salyut 1, 6, and 7 space stations, the Mir space station and the Zvezda service module of the International Space Station (ISS). Hardware derived from the Almaz FGB would also become the basis for the Kvant-1 module of the Mir space station and the Zarya Functional Cargo Block, in use on the ISS.

In 2011, EA purchased two partially completed Almaz-205 and Almaz-206 (i.e. Almaz-OPS) modules and four VA spacecraft hulls from Russia's NPO Mashinostroyeniya (the former Soviet OKB-52 design bureau). The company claimed that the Soviet-era electronics had been gutted and replaced with modern avionics from an unnamed supplier. EA claimed that using refurbished hardware rather than developing new technology would save some $2Bln USD ($2.25Bln CDN) in development costs.


Signs of trouble first appeared in September of 2012, when EA was refused a second round of funding in NASA's Commercial Crew Development program. Then, the company was hit with a lawsuit from investor Donna Beck who claimed that the company had swindled her and her late husband into investing $300,000 USD ($338,000 CDN) in an asteroid mining scheme.

EA settled out of court with Beck for an undisclosed amount.

In May 2014, in what has been seen as the company's dying gasp, one of EA's VA spacecraft was sold at an auction in Belgium for €1.26Mln EUR ($1.77Mln CDN). In July 2014, EA founder Art Dula told the Isle of Man Examiner that the company had abandoned its space tourism plans. Its likely that the financial pressure of this latest lawsuit will trigger further liquidation of the company's assets.

Brian Orlotti.
Although the Excalibur Almaz story reads like a Kurt Vonnegut novel, it can be instructive as a case study for both NewSpace companies and investors.

Due diligence, from both investors and companies remains the key to the industry's future.
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Brian Orlotti is a Toronto-based IT professional and a regular contributor to the Commercial Space blog.

Sunday, November 23, 2014

Meanwhile, Back in Richmond, an Iconic MacDonald Dettwiler Quietly Plots its Next Move!

          by Chuck Black

PSN CEO Adi Rahman Adiwoso. Photo c/o PSN.
Last week's announcement from BC based MacDonald Dettwiler (MDA) subsidiary Space System/Loral (SSL) that a previously announced satellite construction contract was for the Indonesian satellite operator PT Pasifik Satelit Nusantara (PSN), is simply another reminder that the MDA focus of operations is slowly shifting out of Canada.

As outlined in the November 19th, 2014 SSL press release, "SSL names undisclosed customer announced last month," SSL will be designing and building a new commercial communications satellite, named PSN VI, which will provide service throughout South East Asia.

The satellite will include both C-band (used for the data distribution of videos, cellular phones and other data communication) and Ku-band transponders (used for providing satellite services for the pay-TV industry) as part of its high throughput satellite (HTS) payload.

Overall, the win would seem to be a big one. As recently as the December 21st, 2013 Jakarta Post article "PSN to spend $220m on expansion," PSN president director Adi Rahman Adiwoso was quoted as stating that the new satellite, expected to cost approximately $200Mln USD ($224.7Mln CDN) would be provided through American Boeing Satellite System International, a subsidiary of the Seattle based Boeing Corp.

However, the most recent press release from SSL also quoted Adiwoso as stating that the new partnership "will strengthen our commitment to be the best satellite-based company regarding the technology innovation and its products. SSL has provided PSN with a solution including a committed launch, which strengthens and supports PSN's business plan and strategy going ahead."


As outlined in the October 27th, 2014 post "MDA Promotes Recent Wins as Preliminary to Quarterly Conference Call," the company has also promoted recently signed contracts with the US Air Force, Beijing-based EarthSTAR Inc (a subsidiary of EarthView Image Inc, a Chinese geographic information systems developer) and with "undisclosed customers in the oil and gas, and mining sectors" to deliver RADARSAT-2 surface movement monitoring products and services.

But there hasn't been an equivalent growth in domestic business for the company since MDA won the award for RADARSAT Constellation (RCM). As outlined in the January 12th, 2013 post "A $706Mln Fixed Price Contract and Hard Launch Date for RADARSAT Constellation," the final RCM agreement included a contractual requirement to "launch the (three) satellites in 2018" for a fixed price but with no substantive follow-on funding.

Of course, the Canadian market hasn't really been critical to MDA's prospects since its November 2012 acquisition of SSL. But the absence of new Canadian government business has caused at least some public hand wringing from MDA executives, along with an implied threat to move the Richmond based head office to another, friendlier jurisdiction if things don't improve.

MDA CEO Daniel Friedmann. Photo c/o MDA.
For example, the October 31st, 2014 Space News article "Canada’s MDA Suggests Lack of Government Support May Prompt Another Move," quoted MDA CEO Daniel Friedmann as stating that, “we are concerned that Canada will not continue in the radar area — just as we were concerned about robotics, and we were right, unfortunately."

According to Friedman, MDA used to invest 90 percent of its research and development budget in Canada, but that has now shrunk to one-third of the total budget, as US and other nations show more promise and offer more support to operations.

The article went on to state that "Canada’s seeming vacillation as to how to advance the nation’s specialty in space-based robotics was in part responsible for the company’s (MDA's) purchase of a small U.S. company that has since been folded into MDA’s satellite manufacturing business, Space Systems/Loral (SSL) of Palo Alto, California."

With R&D money already moving out of Canada and a growing international customer base for MDA satellites and services, only time will tell if the next strategic move for MDA ends up being a physical one.

Wednesday, November 19, 2014

Industry Minister Moore Announces Space Advisory Board Members

          by Chuck Black

Minister Moore at the Aerospace Summit. Photo c/o author.
Industry Minister James Moore has announced the membership of the long awaited Canadian Space Advisory Board, composed of industry leaders with a mandate to report on the direction of the Canadian Space Agency (CSA).

Moore made the announcement during the second day of the Canadian Aerospace Summit, an event organized by the Aerospace Industries Association of Canada (AIAC), which was held in Ottawa on November 18th - 19th.

As outlined in the November 19th, 2014 Industry Canada press release "Supporting Canadian Aerospace Excellence," the members of the advisory board will include:
  • Retired general and former CSA president Walt Natynczyk, who is currently the deputy minister of veterans affairs, in the Stephen Harper government. 
  • Dr. Arlene Ponting, the president emerita of MindFuel (formerly Science Alberta) a not-for-profit organization dedicated to inspiring young people's involvement in science through education.
Moore said he expects the advisory board to have real influence over the future direction of Canadian space activities. "I'm not going to ask them (the advisory board members) to waste their time," he said during his presentation on Wednesday.


The creation of a space advisory board was one of the recommendations of the November 2012 Federal Review of Aerospace and Space Programs and Policies (or "Emerson Report") which was presented to then Industry Minister Christian Paradis in November 2012.

There was no word on when the new board will begin deliberations.