The Canadian government’s favoured space-launch company is facing a lawsuit from a former Russian state media anchor and a Toronto marketing firm, who allege they haven’t been compensated for work they did when Maritime Launch Services was teetering on the brink less than two years ago. 

Now that the company has a nine-figure deal with the federal government to host a launch site for the Department of National Defence, they’re seeking what they say they’re owed: stock options that were all but worthless at the time, but now have increased in value well over tenfold.

According to a statement of claim in Ontario Superior Court, public relations firm One Network Productions was retained to “provide promotion and introductory services, including to clients and contacts of One Network who were potential investors in Maritime Launch Services.”

One Network now primarily advertises services helping clients appear credible and authoritative to large language models, arguing that AI systems’ knowledge is cumulative and getting attention from ChatGPT now will pay off indefinitely. It also offers a service package for companies seeking “growth capital or sales introductions,” for $2,000 to $5,000 a month.

Co-plaintiff Alex Mihailovich was once a reporter and anchor at CTV and Global News. He went on to be an anchor at the now-defunct Sun News Network, and then an anchor and correspondent for Russia’s English-language state broadcasting service, RT, from 2015 to 2022.

Now he’s a freelance journalist, analyst, media consultant and clean-energy entrepreneur, according to his LinkedIn profile; the statement of claim says he “sometimes works together with, alongside and in conjunction with One Network,” and that was the case with the Maritime Launch Services (MLS) business.

Their court filing says that starting Sept. 1, 2024, they agreed to work for MLS in exchange for stock options in the publicly traded company.

At the time, after years of working on the dream of launching rockets from a spot near Canso, a fishing town on the Nova Scotia mainland near Cape Breton, Maritime Launch Services was in deep trouble.

Its public filings for the quarter ending Sept. 30 that year disclosed that it was down to just over $236,000 in current assets—including only about $24,000 in cash—and had posted an operating loss of nearly $778,000 in the same period. It was covering its costs by selling equity and convertible debentures and there was “material uncertainty that may cast significant doubt as to whether the company will have the ability to continue as a going concern.”

MLS shares were trading at five or six cents each and heading downward. They’d bottom out at 2.5 cents a few months later. 

“We worked for one of the board members, Sasha Jacob, previously and he brought us in to move the needle on media coverage, which we did,” One Network partner Richard Garner told The Logic in an email. Jacob is a cleantech investment adviser who chairs MLS’s board.

Mihailovich said in an interview that he and One Network brought MLS “a lot of media coverage,” and worked with the company’s PR people on other initiatives. “As for investors, we talked to a lot of people,” he added. “I mean, I invested myself.”

(Mihailovich told The Logic that he left RT and became a freelance jack-of-all-trades after economic sanctions made it impossible to keep working for a Russian outlet, but it was a great job. “RT was the only place I’ve ever worked that never told me what to say,” he said.)

The claim says One Network and Mihailovich were to be paid for their promotional efforts with stock options—some they’d receive immediately, and more as they worked over coming months. They’d get unspecified bonuses for each investor they brought in who put $100,000 or more into the launch company, the claim says.

The claim does not say whether One Network and Mihailovich found any investors, and Garner didn’t answer a question about whether they did. Mihailovich said he believes numerous people invested in MLS because of their efforts, but doesn’t know for sure whether they added up to $100,000, even put together.

The claim suggests MLS ended the arrangement after about seven months, and alleges that the company didn’t honour the payment deal.

“MLS purported to shift the compensation to out-of-the-money options which had the effect of reducing the value of One Network’s earned securities by over $140,000,” the claim says. It says the parties went on to negotiate a settlement, but alleges that MLS drew up final documents that didn’t reflect the agreement.

MLS has several weeks to file a formal defence to the lawsuit. Its vice-president of corporate affairs, Sarah McLean, sent The Logic a statement in response to questions about the case, saying the company is aware of the suit.

“As the matter is currently before the courts, it would not be appropriate for us to comment on the allegations or the issues raised in the proceeding. The company intends to respond through the appropriate legal process and will file the necessary materials within the timelines established by the court,” McLean wrote.

Months after MLS and One Network parted ways, the company landed a $10-million investment from MDA Space and then a 10-year, $200-million contract with the federal government to lease a launch pad at MLS’s site. On June 10, it launched a suborbital rocket, in front of federal and provincial ministers and Canadian astronaut Jeremy Hansen.

MLS’s share price has recently gone as high as 70 cents. It’s now retreated closer to 50 cents, but that’s still a dramatic increase from the five- and 10-cent options that One Network and Mihailovich claim they were promised. At current prices, its market capitalization is well over $350 million.

One Network is seeking 1.2 million MLS options at a strike price of five cents and 500,000 at a strike price of 10 cents. Mihailovich is seeking 600,000 options at five cents and 250,000 options at 10 cents. At today’s share price, all those shares together would have a net value of just over $1.1 million.

Each plaintiff is seeking damages for breach of previous agreements; the statement of claim says they’d accept the terms of the settlement they say they reached with MLS, plus interest and $50,000 in punitive or aggravated damages.