Spike strikes pay dirt in US

Glenn Milnes says the US deal validates Spike's usefulness for the intelligence and defence market.

IkeGPS Group, the makers of remote measuring devices, says it will beat its prospectus forecast and earn some contract revenue this year after it expanded a deal with American defence technology investor In-Q-Tel.

The company's shares jumped.

Chief executive Glenn Milnes said the Wellington-based firm would partner with IQT to further develop its smartphone measuring tool, Spike, for US intelligence and security forces, and would boost contract sales forecast in its June prospectus.

According to offer documents lodged with the Companies Office, ike expected no contract revenue this year, and $617,000 in 2016.

"We're constrained under the terms of the contract from disclosing real detail but it more than underpins the level that was forecast," Milnes said. "We see this as a major validator of Spike for the intelligence and defence market, that's the real implication for this particular contract."

The company's shares rose as much as 25 per cent to a record $1.06 during trading, eventually closing up 17.65 per cent yesterday at $1.

Ike raised $25 million in new capital when it listed on the NZX in July, through the sale of 22.7 million shares at $1.10 apiece. Existing shareholders, which include Jenny Morel's No 8 Ventures and business partner General Electric, withdrew plans to sell $6 million of shares into the float. There was no public pool.

According to offer documents, the company expected "revenue and other sources of income" to treble this financial year to $6.5 million, and rise again to $14.3 million in 2016.

Other sources of income include "contract revenue from discrete services contracts" which were "historically at the request of US defence and intelligence customers".

Milnes said the nature of its deal with IQT was sensitive, but essentially the company acts as a middleman between ike and the client, and helps accelerate security and intelligence products, matching them to the customer and market's needs.

IkeGPS is forecasting its net loss will widen 133 per cent to $5.33 million this year, and extend further to a loss of $5.8 million in 2016.

The company is forgoing profit as it chases growth in the US market, and sees particular opportunity in the intelligence and security sector. It will release its interim report next month.