NuRAN Wireless Inc. (NUR.CN) is a supplier of mobile and broadband wireless infrastructure solutions. Its innovative radio access network (RAN), core network, and backhaul products dramatically drop the total cost of ownership, thereby creating new opportunities for established, as well as emerging mobile network operator.
Coverage was initiated January 2020 with notes on August 2020 and September 2020. Below is an update.
New Releases
Sept. 17 - Provides Corporate Update: Announce that it is currently engaged in advanced discussions with its key stakeholders. The company is confident that these discussions can lead to a reasonable solution.
Sept 30 - Reports Third Quarter 2020 Financial Results: Demonstrating ongoing activities to potentially resume its operations after the insolvency filing of its subsidiary announced in August.
Oct. 16 - Plans to Consolidate and Appointment of Additional Directors and Officers: On the basis of twenty-five (25) to one (1). The Consolidation was approved by the resolution of the board of directors of the Company.
In addition, the Company is pleased to announce that Binyomin Posen and Brendan Purdy have been appointed as directors, and that James Albert Bailey has been appointed as Chief Financial Officer of the Company.
Oct. 29 - Resumptions of operations and Corporate Updates: Completed the corporate restructuring relating to the assignment into bankruptcy of its wholly owned subsidiary and operating company Nutaq Innovation Inc. (“Nutaq”).
In connection with the corporate restructuring the Company purchased all of the assets of Nutaq with the support of its secured creditors and has resumed the entire mobile and broadband wireless infrastructure supply operations previously operated by Nutaq as further described below.
-NuRAN has entered into an Network as a Service (NAAS ) contract with Orange Cameroun SA providing for gross revenues of up to $20M CAD over the term of the agreement and in connection with the agreement: "1) The contract is expected to commence in the current quarter and has a term of 10 years. 2) Once fully operational, revenue is expected to be over $2M CAD per year with expected EBITDA of over 50%. 3) Financing for the majority of the project’s capital expenditure is being finalized with a Cameroonian Bank. During the first year of the contract (Phase 1), the Company expects to deploy up to 122 sites in rural locations previously lacking mobile coverage. The agreement with Orange includes an option to add up to 150 additional sites in Year 2 and Year 3 of the contract.
-NuRAN has received purchase orders for its existing product line valued at approximately $630,000 with significant down payments already received from customers which are anticipated to be sufficient to fund NuRan's operating expenses and allow Nuran to achieve positive cash flow in the near term. These are for rural and northern Canada.
Nov. 16 - Announces Debt Restructuring: One of the Company’s largest debt holders has agreed to convert $100,000 of debt into a secured convertible debenture of the Company.
Nov. 20 - Announces Restructuring of Additional Debt: One of the Company’s largest debt holders has agreed to convert an additional $250,000 of debt into a secured convertible debenture at 0.60 cents. The principal amount of the Debenture is $287,500 for the original $250,000 of debt. The Debenture bears interest at a rate of 10% per annum, calculated and payable in cash in arrears on the maturity date of the Debenture, being May 31, 2021.
Nov. 20 - Selected by ISAT Africa for Rural Deployment: Received its first purchase order from iSAT Africa for its initial commercial rural deployment in a Sub-Saharan African country. In addition, signed a preliminary agreement with iSAT Africa to supply a complete turnkey solution under a vendor financed model including managed services.
ISAT Africa has a Network As A Service (“NAAS”) contract signed with a Mobile Network Operator (“MNO”) to supply and manage up to 500 sites over 5 years. NuRAN is selected to provide its Radio Access Network solution in addition to engineering services, installation, tower procurement, solar power systems and miscellaneous ancillaries.
All of this will be done under the NAAS Model in a lease to purchase structured agreement whereby the assets will be transferred after the maturity of the term with the exception of managed services which will continue indefinitely.
Total potential contract value is estimated at over $13,000,000 with expected yearly revenue of over $2,600,000 once at full scale. The signed preliminary agreement confirms the intent of NuRAN and iSAT Africa to engage in a network expansion project and lays out commercial parameters of an eventual agreement. The agreement allows NuRAN to further its network build strategy while the terms of the definitive contract are being finalized.
Nov. 30 -Offer to Restructure Senior Secured Debt to December 31, 2021 and Restructuring of Additional Debt: Commenced the process of seeking a forbearance from the holders of the senior secured convertible debentures of the Company issued pursuant to a private placement closed on February 23, 2017 .
Dec. 3 - Announces Forbearance of Senior Secured Debt to December 31, 2021: Secured Creditors agreed to forbear from enforcing their rights under the security agreements relating to the Debentures until December 31, 2021. In consideration of the foregoing forbearance the conversion price was adjusted to $0.33 per common share.
Dec. 14 - Announces Non-Brokered Private Placement: Up to 1,000,000 Units at a price of $0.40 per Unit (Warrant 0.50 cents). The proceeds from the Offering are expected to be used by the Company for general working capital purposes.
Dec. 15 -Closes Non-Brokered Private Placement: Closed its previously announced non-brokered private placement of units for gross proceeds of up to $400,000 (the “Offering”) to a unique subscriber.
Jan. 7 - Appoints of Gaël Campan as Chief Operating Officer. Mr. Campan has over 20 years of experience working with various Telecom and Consulting companies in Europe, Africa and South-East Asia, the United States and Canada.
Jan. 12 - Execution of Forberance Agreement by All Senior Secured Debtholders: All have agreed to forbear from enforcing their rights under the security agreements relating to the Debentures until December 31, 2021.
(i) the maturity date of the Debentures is amended to December 31, 2021; (ii) all accrued but unpaid interest and penalties on the Debentures in common shares of the Company up to and as of January 12, 2021 will be settled at a deemed price of $0.28 (being last closing market price). As at January 12, 2021 the total amount of interest and penalties owed under the Debentures totaled approximately $875,000; (iv) in the event that the Company elects to pay accrued interest in Common Shares, the effective interest rate is increased to 15% (from 12%).
Feb. 8 - Announces Major Network as a Service Agreement with Orange DRC: Entered into a Network as a Service (NAAS) contract dated as of February 5, 2021 with Orange DRC SA (Orange DRC), a subsidiary of Orange S.A (NYSE:ORAN) in the Democratic Republic Of the Congo ("DRC"), for its NAAS model which is estimated to generate gross revenue for the Company of up to CAD$500 Million during the term of the agreement.
Under the terms of the agreement with Orange DRC, NuRAN is partnering with an ecosystem of partners for the purpose of constructing and operating 2,000 new NuRAN towers over the next 40 months throughout the DRC in Central Africa to meet pent-up demand, with a particular focus for rural communities with populations around 5,000.
The contract has a minimum term of 10 years for each site built. Each site consists of the installation by NuRAN and its partners of its networking equipment as well as antennas, cabling, solar power systems, towers and related installation services. The agreement features a revenue sharing structure including a minimum guaranteed monthly fee per site built for the first five years which is intended to partially cover the operating and financing costs.
Upon conclusion of the initial 40 month term of the agreement and once all sites are fully operational, gross revenue is expected to be over CAD$40 Million per year, with expected EBITDA (earnings before interest, taxes, depreciation and amortization) of over 50% for the local operating company, which is a 100%-owned subsidiary of NuRAN formed for the purpose of the agreement with Orange DRC.
NuRAN agreed to the delivery of 2,000 turnkey sites over the initial 40 month term of the agreement. NuRAN has established 4 different site categories to support multiple population densities and coverage patterns. Once fully operational, the network will have the capacity to connect close to 10 Million people.
Feb. 8 - Grant Stock Options: Aggregate of 1,225,000 common shares of the Company at an exercise price of $0.395 per share. Pursuant to the terms of the grant, 950,000 options will vest immediately and the remaining 275,000 options will vest over a period of 12 months from the date of grant. 1,150,000 of the options expire five years from the date of grant and the remaining 75,000 options will expire three years from the date of grant.
Feb. 10 - Announces Repricing of Stock Options: further to its news release on February 8, 2021 announcing the grant of an aggregate of 1,225,000 stock options, the Company has obtained the approval of the Canadian Securities Exchange to increase the exercise price of the stock options from $0.395 to $2.35 per common share.
Feb. 16 - Announces Significant Debt Reduction and Provides Corporate Update: Since announcing the forbearance agreement in January 2021, a total of 5,721,212 common shares have been issued to settle $1,888,000 of outstanding principal owing to holders of its 12% senior secured convertible debentures and a further 1,988,917 common shares was issued to settle $850,000 of other long-term secured debt.
The debt settlements have considerably reduced the Company's long-term debt to a total of $947,000 principal outstanding on the Debentures and $437,637 principal outstanding on all other long-term secured debt as of the date hereof. The Company also recently received gross proceeds of $220,500 from the exercise of outstanding warrants resulting in the issuance of 133,600 common shares to warrant holders.
Corporate Update
NuRAN has formed its wholly owned subsidiary in Cameroon, NuRAN Wireless Cameroon Ltd. in connection with its previously announced Network as a Service (NAAS) contract with Orange Cameroon SA.
NuRAN has completed the site build of its previously announced project with GSMA in Ghana for Vodafone. Effective immediately, NuRAN will manage daily operations, monitoring and maintenance of seven sites in Ghana. Over the next 12 months, GSMA and NuRAN will report on the outcome of their performance on the project. The project is also intended to expand the GSMA network and relationship with Vodafone.
Also appointed Mr. Badi Abdallah as Director of Operations and Mr. Charles Kouadio as Director of Finance (Africa).
Mar. 1 - Announces Annual Financial Results: Current backlog of NuRAN’s radio access network solution
which sits at approximately $2 Million CAD with Intelsat and others and to focus on growing its Mobile
Network Enabler business, now rebranded as Network as a Service (NAAS)."
Mar. 11 - Announces Expansion of NAAS Aggreement with Orange Cameroon and Corporate update: Further to its previously disclosed Network as a Service (“NAAS”) contract with Orange Cameroon SA announced on October 29, 2020, Orange has exercised its option under the agreement to add an additional 120 networking sites in Cameroon.
The original contract for 122 sites entered into by NuRAN and Orange is a Network as a Service contract with expected gross revenues of up to $20M CAD over the term of the agreement. Following execution of the option by Orange, the overall total sites to be built over the term of the agreement has increased to 242.
The additional 120 sites are expected to be deployed in 2021-22 of the contract with similar economics to the previous 122 sites. Each site are to be installed by NuRAN with a focus on rural communities .
Other items include the appointment of Vitor Fonseca as Director of the Corporation and Debt Restructuring of Debt. NuRAN entered into debt settlement agreements with certain creditors to convert $1,000,000 of outstanding debt into secured convertible debentures of the Company and extended the maturity date to December 31, 2021.
Apr. 5 - Reports First Quarter 2021 Financial Results And Announces Entry Into New CEO Employment Agreement:
Apr. 29 - Provides Update on Operations in Cameroon and DRC: Provide update on the progress of its NAAS contracts with Orange S.A. (ORAN) and its affiliates previously announced February 8, 2021 and March 11, 2021 for the build out of networking sites in Cameroon and Democratic Republic of the Congo (DRC).
Cameroon Rollout Plan (242 Sites Total): First set of 48 sites have been acquired and the procurement process has been completed. The entire 48 sites are expected to be acquired by July, 2021 and fully operational in September, 2021 at which time Nuran will start invoicing Orange Cameroon. The second set of 74 sites have been selected. The site planning and procurement process for the 74 sites is expected to be completed in May, 2021 with delivery of materials and networking equipment in order to have the site operational and delivering revenue in December, 2021.
The site selection and site acquisition are currently ongoing for the remainder of the 242 sites. A revised financial analysis of the initial 122 sites selected suggests a 50% gross revenue increase to approximately $3 Million (CAD) per year compared to initial projections of $2 Million (CAD) per year therefore resulting in potential gross revenue of $30 Million (CAD) over the 10-year life of the contract as opposed to $20 Million (CAD) that was initially projected.
DRC Rollout Plan (2,000 Sites Total): NuRAN is currently evaluating a list of 3,000 potential site locations. NuRAN has presented its rollout strategy and plan to Orange. NuRAN is engaged in discussions with a number of international financial institutions on alternative financing strategies to support the rollout.
Additional Revenue Streams for NuRAN (Cameroon and DRC): NuRAN has signed a distribution agreement with Orange to manage, market and promote the various Orange products and services once the sites are operational leading to new channels of revenue for the Company. The services which may be included are cellular recharging on site, battery rental to take home, connecting in home devices, and sale of accessories.
Other Developments: NuRAN continues to work on the development of its next generation product expected to be launched in June, 2021. The product will support 2G/3G/4G migration allowing the company to position itself for broadband services and addressing the market demand for Asia Pacific and Latin America. The product is expected to enable NuRAN's clients to upgrade the technology remotely while greatly reducing commissioning costs.
NuRAN is currently in either proposal stage or negotiation stage with other major MNO (Mobile Network Operators) in Africa for potential multi-country projects.
Summary
NuRAN had a re-birth in the last eight months. The company went from ceasing operation of its wholly-owned subsidiary and operating company (Nutaq Innovation, Inc.) to completing a comprehensive corporate re-structuring.
In the span of three months, NuRAN purchased back all of the assets of Nutaq and resume its commercial activities. During the halt and bankruptcy, Nuran communicated with shareholders and provided numerous updates. Notably, NuRAN completed a 25 to 1 share consolidation, as well as, posted earnings for Q3 2020.
Contracts
In late October, NuRAN disclosed a Network as a Service (NAAS) contract with Orange Cameroon SA providing for gross revenues of up to $20M CAD over the term of the agreement. The initial expectations were to deploy up to 122 sites in rural locations previously lacking mobile coverage. At the time, NuRAN also mentioned that a second NAAS MOU was still under final negotiation with a MNO in Africa with 600 projected sites over 3 to 5 years.
In November, NuRAN announced a first purchase order from ISAT Africa for an initial commercial development. It was specified that ISAT Africa has a Network As A Service (NAAS) contract signed with a Mobile Network Operator (MNO) to supply and manage up to 500 sites over 5 years. It was estimated that the total potential contract value is of over $13,000,000 with expected yearly revenue of over $2,600,000 once at full scale.
In February, NuRAN entered into a Network as a Service (NAAS) contract with Orange DRC SA (Orange DRC), a subsidiary of Orange S.A (NYSE:ORAN) in the Democratic Republic Of the Congo (DRC), for its NAAS model which is estimated to generate gross revenue for the Company of up to CAD$500 Million.
Also disclosed was the completion of sites (7) with GSMA in Ghana for Vodafone. Over the next 12 months, GSMA and NuRAN will report on the outcome of their performance on the project.
In March, NuRAN disclosed that the original contract with Orange Cameroon SA for 122 sites, has been increased to 242. The additional 120 sites are expected to be deployed in 2021-22 with similar economics to the previous 122 sites.
In April, NuRAN provided an update on Operations in Cameroun and DRC. In Cameroon, site selection and site acquisition were ongoing. Moreover, revised financial suggested 50% more gross revenue than original forecast. Specifically, from ($2M to $3M/per year) or from ($20M to $30M/ for 10 years i.e. length of the contract).
In the DRC, site selection and financing were also ongoing. Furthermore, additional distribution agreements in both Cameroon and DRC with Orange for additional revenue streams through product and services were signed.
Earnings
Compared to FY2019, FY2020 (Ending October 31, 2020) Revenue were up and Losses were down.
Earning for Q1 2021 (Ending January 30, 2021) were relatively low. Per MD&A: "shift in focus post-bankruptcy to the NaaS model and planning for implementation of these contracts as well as timing of invoicing for projects already underway."
Financing
In December, a $0.4M non-brokered placement (1,000,000 Units) at a price of $0.40 cents (Warrant 0.50 cents) was proposed. The placement was closed within 24 hours by a unique subscriber. NuRAN also recently disclosed receiving $220,500 from the exercise of outstanding warrants.
Debentures & Debt Structuring
After months of negotiations, NuRAN finally reached a forbearance agreement with holders of its 12% Senior Secured Debentures in January 2021. A total of 5,721,212 shares have been issued to settle $1,888,000 of outstanding principal owing to holders and a further 1,988,917 shares was issued to settle $850,000 of other long-term secured debt.
The debt settlements have considerably reduced the Company's long-term debt to a total of $947,000 principal outstanding on the 12% debentures and $437,637 principal outstanding on all other long-term secured debt.
Appointments
Denis Lambert, VP Sales & Business Development; James Albert Bailey, Chief Financial Officer (CFO); Gaël Campan, Chief Operating Officer (COO); Badi Abdallah, Director of Operations (Africa); Charles Kouadio, Director of Finance (Africa). Additionally, Binyomin Posen, Brendan Purdy, and Victor Fonseca were appointed to the board of directors.
Stock Options
A total of 1,225,000 common shares were granted at $2.35 cents (repriced from $0.395 cents).
Product Development
NuRAN reported working on the development of its next generation product expected to be launched in June, 2021.
LiteRAN xG, a mobile wireless infrastructure solution is intended to provide operators with 2G, 3G, & 4G capability from a single piece of equipment allowing them to run multiple technologies simultaneously and evolve their services in time.
In Short
NuRAN had a strong comeback from the last eight months. It re-emerged from bankruptcy proceeding, came to an agreement with its debenture holders, and announced engagements with Orange (Cameroon, DRC) among others.
For perspective, Orange Cameroon ($3M/year) and ISAT Africa ($2.6M/year) alone represents revenue of $5M/year. Hence, the contract in the DRC ($40M/year) had a significant impact on valuation. This lead to a 52 week high ($3.55).
Since then, valuation has been trending downward despite mostly positive monthly progress update.
It is likely attributed to future financing needs. Per Q1 2021 MD&A: Although the Company’s cash position at the end of January 2021 was positive, current inflows are not sufficient to cover its selling, administrative and R&D costs and finance its sales growth. The Company will continue to depend on its ability to convert its sales opportunities into purchase orders, raise debt to finance NaaS projects and future equity issuances or other means to finance its operations. The ability of the Company to continue operating will therefore be dependent upon obtaining additional financing as required.
Given the tasks at hand (site selection, acquisition, sourcing), it is highly likely that more financing will be required. NuRAN closed today at $1.85 with an intra-day low of $1.69 (note S1 is at $1.56) in relation to the $2.18 pivot point.
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