Firm in legal limbo
THE operator of a leading Gold Coast tourism asset – the iFLY indoor skydiving facility at Surfers Paradise – is involved in a legal stoush with the US-based trailblazer of vertical wind tunnel (VWT) technology.
ASX-listed Indoor Skydive Australia Group (ISAG) voluntarily suspended trading of its shares in July due to the dispute with Texas-based SkyVenture International, a subsidiary of iFLY Holdings.
Last month it announced it was not in a position to lodge its preliminary final report for the past financial year due to the legal problems, which had also impacted revenue and prompted the company to seek a $3 million loan in June.
Last year iFLY claimed ISAG was in breach of its licensing agreement when it announced plans to develop an indoor skydiving facility in Malaysia.
The company said it had given ISAG permission in 2012, as outlined in the prospectus for the initial public offering, to operate vertical wind tunnels in Penrith, Perth, and the Gold Coast, that were based on its technology and designs.
However, iFLY said it explicitly restricted ISAG from directly or indirectly acquiring access to VWTs from suppliers other than SkyVenture.
“In return for access to proprietary iFLY systems, processes and know how, ISAG further promised not to compete with or assist others in competing with iFLY,” the company said. “Nevertheless, in public statements ... ISAG declared its intention to develop, construct and operate an indoor skydiving facility in Malaysia with equipment provided by a third-party manufacturer. This constitutes a material breach of ISAG’s various agreements with iFLY.”
iFLY said if the breaches of the agreement were not corrected, it reserved the right to terminate ISAG’s licences for the operation of the VWTs in Australia, including the Gold Coast.
In an ASX update in June, ISAG said it entered an arbitration hearing in early May with iFLY, which resulted in the establishment of a regime for the formal negotiation of the dispute.
“If that process is unsuccessful the arbitrator will need to issue a decision, which is now expected in mid-August,” it said.
However, that time frame has come and gone with no further indication of when the dispute is expected to be resolved.
iFLY Gold Coast opened in 2016 and operates an indoor skydive centre with a 3.66m-high glass wind tunnel. ISAG shares last traded at 11¢. CEO Wayne Jones did not return calls yesterday.