LTE.V - Opportunity?


Lite Access Technologies Inc. (LTE.V) use of innovative and proven trenching technologies, alternate methods of deployment and specialist products reducing the cost the network deployment for telecommunications operators.


LTE.V provides clients with integrated solutions, select components, for the design and implementation of fibre optic networks. Lite Access' products have been deployed in many high-profile communication networks including Olympic facilities, military and government, and numerous communities throughout the UK, the USA and Canada.


In addition, global telecommunications companies that have adopted Lite Access as the "solution of choice" for the least invasive, most cost effective and future-proof fibre optic connectivity available.


Coverage was initiated on October 2020. Here's an update.


News Releases


Nov. 24 - Temporarily Suspends UK Operations: primarily due to the ongoing COVID-19 pandemic, which continues to become worse, along with challenges related to its ongoing builds. The Company is unable to meet targets with the continuing conditions and is implementing a mitigation strategy.


UK operations have been suspended temporarily to allow Lite Access time to consult with stakeholders to optimize both its current operations and existing contracts in a COVID-19 environment.


Dec. 1 - Resumes Partial UK Operations: effective immediately; working to build a pathway to increase the ramp-up.


The Company is working with stakeholders to create a sustainable path forward incorporating planning and operational efficiencies and optimizing existing contracts.


Dec. 4 - Provides Update on its UK Operations: The Company received a notice from its customer that Lite Access had allegedly committed a repudiatory breach of its contracts for FTTP installation in Cambridge, Lowestoft and Bury St Edmunds (the "contracts") by its suspension of works.


Notwithstanding the notices to terminate, Lite Access intends to vigorously defend its position that it was not in repudiatory breach of the contracts at the time of its receipt of the notices and is actively engaged with its UK legal counsel regarding this matter, as well as potential remedies. As a result, Lite Access is taking steps to mitigate any unnecessary cash burn for its U.K operations.


Dec. 11 - Provides Further Update on its UK Operations: As a result of the recent development at its UK operations, Lite Access Technologies (UK) Ltd. has elected to file a notice of intent to appoint an administrator (the "NOI"). The purpose of this filing is to create a moratorium over the Company for a period of 10 days in order to protect its assets.


"We plan to use our core team members to continue advanced discussions with a number of potential UK customers and aggressively pursue other attractive opportunities in the UK FTTP market. Despite these recent developments, the UK FTTP market remains incredibly attractive as the government is working with industry to target a minimum of 85% gigabit capable coverage by 2025 and seeks to accelerate rollout further to get as close to 100% as possible in numerous cities and towns across the UK." - Carlo Shimoon, President & CEO of Lite Access


Jan. 20 - Provides Update on Canadian Operations:


Brooks, Alberta: Brooks Alberta City council unanimously agreed to accept a proposal from Lite Access to construct a city-wide broadband network valued at approximately $14.4 million, pending a successful negotiation of a contract.


West Vancouver, British Columbia: awarded a fibre build contract valued at over $400,000 from a major Canadian carrier. LTE.V provided civils and construction services to install fibre using its advanced deployment and excavation methods. The project commenced in December 2020 and is substantially completed.


Southeastern British Columbia: In the Fall of 2020, a region in southeastern British Columbia issued an RFP for the provision of project management and construction services, utilizing both aerial and underground fibre construction methodologies, to deploy fibre optic cable. Lite Access was successful in the RFP process with its proposal of approximately $1 million for the services, the terms of which are being negotiated towards a mutually acceptable agreement. Construction for the project is planned to start in the June timeframe.


Prince George, British Columbia: Further to the Company's press release dated September 17, 2020, Lite Access recently completed Phase 1 of the fibre project for the City of Prince George valued at approximately $1.1 million. Phases 2 and 3 of the project, valued at approximately $400,000, is scheduled to be completed by the end of June.


Clearwater County, Alberta: Further to the Company's press release dated May 28, 2020, Lite Access has completed the majority of the design/build fibre project for Clearwater County, Alberta with the remainder to be completed in April. The project has a total contract value worth approximately $1.2 million


Jan. 28 -Reports 2020 Q4 and Year End Financial Results - Revenues Up 55% Year Over Year: Subsequent to the fiscal year-end, in January 2021, the UK business officially appointed FRP Advisory Trading Limited as administrators.


As a result, our year-end results were negatively impacted by a number of factors, including non-cash impairment charges of $4,736,127 and an accrual of $3,315,147 related to an onerous contract provision.

Jan. 29 - Announces Intention to Acquire AMEC Cutting & Coring Limited: Entered into a non-binding term sheet with AMEC Cutting & Coring Limited, a British Columbia based company that offers a wide range of services including concrete/ asphalt cutting and coring, scanning and utility locates, as well as fibre optic cable installation, pulling, splicing and testing. Concurrent with closing of the transaction, Mr. Curkovic will be retained as General Manager of Lite Access Technologies (Canada) Inc. Terms of the transaction will be disclosed subsequent to closing.


As a result of the proposed transaction with AMEC and the focus on North America, Carlo Shimoon intends to transition from the President & CEO and Director roles. LTE.V will soon commence the recruitment process.


Feb. 11 - Receives $1,18M Order From Clearwater County, Alberta: To supply of microduct and fibre optic components.


Feb. 12 -Announces $750,000 Private Placement: up to 3,000,000 units at $0.25 cents (Warrant $0.35 cents) for gross proceeds of up to $750,000. Proceeds will be used to fund growth initiatives and for working capital purposes


Feb. 16 - Announces Upsize of Previously Announced Private Placement to $1,260,000:


Certain directors and officers are expected to participate in the private placement. Such participation would be considered to be a "related party transaction" as defined under Multilateral Instrument 61-101 ("MI 61-101").


Mar. 1 - Closes Private Placement Financing of $1,260,000: Issued 5,040,000 units at a price of $0.25 per Unit (Warrant $0.35 cents) for gross proceeds of $1,260,000. Certain directors of the Company acquired 120,000 Units.


Mar. 1 - Reports Q1 2021 Financial Results: The net loss for the first quarter ended December 31, 2020, included revenues, costs of sales, and operating expenses from the UK business, as the Company was executing its operations in Lowestoft, Bury St. Edmunds and Cambridge, until the contracts were terminated in December 2020.


Mar. 10 - Acquires AMEC Cutting & Coring Limited:


Terms: LTE Canada, being a wholly owned subsidiary of the Company, will acquire all of the issued and outstanding shares of AMEC from Tony Curkovic. In consideration of which, LTE Canada will pay $500,000 to Mr. Curkovic on the first anniversary of closing of the transaction.


Mr. Curkovic will also be entitled to the following earnout payments (the "Earn-Out Payments"): (i) 10% of annual EBITDA of LTE Canada and AMEC for 31 months after closing date; and (ii) 5% of the annual EBITDA of LTE Canada and AMEC for an additional 36 months. For a period of three years following closing of the transaction, LTE Canada, at its sole option, will have the right to make a one-time payment of $500,000 to satisfy all Earn-Out Payments.


Concurrent with closing, Mr. Curkovic was retained as General Manager of LTE Canada, reporting to the CEO and granted 500,000 options with an exercise price of $0.29 per share for a period of five years.


Apr. 9 - Appoints New Director and Officers: Carlo Shimoon will be stepping down as President and CEO as of April 30, 2021. Thereafter, Chui Wong will serve as interim CEO and Linda Han will be appointed as interim CFO.


The Company also announces that it has appointed John Farlinger to the Board of Directors.


The Company also wishes to announce that it has granted option to purchase 460,000 common shares at a price of $0.29 to the above noted directors and interim executive officers. The options will expire in five years.


June 1 - Reports Second Quarter Financial Results and Appointment of Interim CEO:


On January 26, 2021, the UK business officially appointed FRP Advisory Trading Limited as administrators. Accordingly, the Company no longer has control over the UK business as of the date of the appointment of the administrators. As a result, LAT UK financial results have been classified as a discontinued operation as at March 31, 2021. Certain prior year comparative figures have been reclassified to compare with the current year presentation.


With the completion of the acquisition of AMEC in March 2021, the integration has proceeded as planned and we expect to see revenue scale and cost synergies as we progress as a consolidated entity. In fact, these quarterly results only reflect less than one month of the two combined entities and our expectation is to see further improvement across most major performance metrics in subsequent quarters.


Chui Wong is stepping down as the Company's Interim CEO effective June 4, 2021 to pursue other opportunities. Greg Smith, Lite Access' Chairman, will assume the CEO position, on an interim basis, on June 4, 2021. The Company is repositioning its executive leadership with a refocus on Canada and Mr. Smith will facilitate this transition period.

June 22 - Provides Update on the City of Brooks' Next Generation Broadband Network: Lite Access refers to the City of Brooks' media release on June 21, 2021: "The City of Brooks has reached an agreement in principle with a consortium led by Community Network Partners, a subsidiary of Crown Capital Partners Inc., for the construction and operation of a next generation broadband fibre optic network, capable of 10 Gigabytes per second to every household and business.


The City will invest $5.3 million and will own the backbone network. Community Network Partners will invest $15.7 million to connect residents and business locations to the backbone, with the network being operated as one seamless network. Lite Access Technologies will be responsible for the construction of the entire network with IBI Group providing planning, design, and project management services to the partners.


June 24 -Grants Stock Options: Granted a total of 200,000 stock options to the Interim CEO Greg Smith as compensation. The options were granted at a price of $0.22 per share, are exercisable for a period of five years from the date of grant and be subject to certain vesting requirements.



Summary


UK

Late November 2020, LTE.V suspended its activities in the UK. LTE.V reported that it "is unable to meet targets with the continuing conditions and is implementing a mitigation strategy". In early December the company resumed partial operations and stated that "...working with stakeholders to create a sustainable path forward". Three days later, it disclosed that it had received noticed and committed a repudiatory breach of contracts for the FTTP installation (Cambridge, Lowestof and Bury St Edmond) from the suspension of its activities and therefore being terminated.


A week later LTE.V filed a notice of intent to appoint an administrator.


Canada

January 2021, an update on Canadian Operations was provided. a) Brooks, Alberta; City Council unanimously agreed to $14.4M city wide broadband network. b) West Vancouver, BC: Awarded a fiber build contract of $0.4M from a Canadian Carrier (now complete). c) Southwestern BC: Won a $1M for which construction was expected to commence June 2021. d) Price George BC: Completed $1M phase one project (Jan 2021). Expect $0.4M phase II to be completed by July 2021.


February 2021 a $1.18M order from Clearwater County, AB was reported. Recently, an update on Brooks, Alberta:


The City will invest $5.3 million and will own the backbone network. Community Network Partners will invest $15.7 million to connect residents and business locations to the backbone, with the network being operated as one seamless network. Lite Access Technologies will be responsible for the construction of the entire network with IBI Group providing planning, design, and project management services to the partners.


Acquisition

March 2021, LTE.V acquired AMEC Cutting & Coring Limited. AMEC offers a wide range of services including concrete/ asphalt cutting/coring, scanning and utility locates, as well as fibre optic cable installation, pulling, splicing and testing.


Terms: $0.5M on the first anniversary of transaction along with earn out payment based on performance metrics that can be satisfied with another $0.5M payment within three years.


Earnings

Due to the termination of the UK operations earnings have been re-stated to reflect continuing operations activity.




1) On January 26, 2021, the UK business officially appointed FRP Advisory Trading Limited as administrators. Accordingly, the Company no longer has control over the UK business as of the date of the appointment of the administrators. As a result, LAT UK financial results have been classified as a discontinued operation as at March 31, 2021. Certain prior year comparative figures have been reclassified to compare with the current year presentation.





Financing

February 2021, a $0.75M placement was announced which was subsequently raised to $1.26M. Within two weeks of the announcement, the offer closed at $0.25 per Unit (Warrant $0.35 cents).


Appointments

With the AMEC Acquisition (March 2021) Tony Curkovic was retained as GM of LTE Canada. Mr. Carlos Shimon stepped down as President and CEO as of April 30, 2021. Mr. Chui Wong served as interim CEO until Greg Smith LTE.V's board chairman was recently appointed (June 4, 2021) as the CEO.


In Short

The termination of the UK operations had a material impact on valuation. The way the event unfolded leaves much to be desired for shareholders. The voluntary suspension of UK operations resulted in a contract breach and the eventual going into administration. This has led the company to restate earnings to be in line with continuous operations.


However, the outlook of the Canadian business seems promising given that the Federal Government ongoing funding.


With the proposed Budget 2021, the now $2.75 billion Universal Broadband Fund will support high-speed Internet projects across the country. Budget 2021 proposes to provide an additional $1 billion over six years, starting in 2021-22, to the Universal Broadband Fund to support a more rapid rollout of broadband projects.


Nonetheless, the return to domestic projects has been highlighted by the company on a sporadic manner. In fact, contracts are often announced when close to completion (West Vancouver, $0.4M), or almost six month before the start date with no actual update whether they are initiated, completed or delayed. For instance, Southwestern BC $1M award was announced in January and was expected to commence in June 2021. Similarly, Prince George BC phase II of $0.4M was expected to be completed in July 2021. No update were provided on either. Also some announcement (i.e. Clearwater County, AB) do not have a timeline. However, there was an update from the county recently provided.


Overall, the total addressable market in Western Canada for Lite Access is unknown. There is no investor presentation readily available and no revenue objectives cited by the company.


The acquisition of ACME could lead to a higher revenue but it is unclear again how much. Positive such as "synergy, cost savings, larger facility, broader service offering, expanded customer base, and net positive balance sheet" have simply not been quantified making it difficult for investors/market to assess potential.


LTE.V is currently trading well below its latest financing of $0.25 cents but also has over 5M warrants at $0.35 cents. While some see potential upside, others question the actual size of the opportunity.


DISCLAIMER: The work included in this article is based on current events, technical charts, and the author’s opinions. It may contain errors, and you shouldn’t make any investment decision based solely on what you read here. This publication contains forward-looking statements, including but not limited to comments regarding predictions and projections. Forward-looking statements address future events and conditions and therefore involve inherent risks and uncertainties. Actual results may differ materially from those currently anticipated in such statements.

The content of rally is provided for informational and entertainment purposes only and is not a recommendation to buy or sell any security. Always thoroughly do your own due diligence and talk to a licensed investment adviser prior to making any investment decisions - rally cannot take responsibility for your investment decisions.

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