November ended with good news and bad news for Craig Wireless Systems, the Winnipeg-based company that’s trying to shift from fixed to mobile WiMAX-based services.
The company announced in a statement at the end of last week that Industry Canada has approved its request to swap some of its multi-point spectrum in the Vancouver area, used to deliver fixed wireless Internet access, for broadband spectrum. That will enable Craig to deliver advanced wireless services to customers wanting mobile data or television on portable devices.
At the same time it said it lost $7.7 million for the year ending Aug. 31 on sales of $1.8 million, the second year it a row it ended up in the red. That was better than the $9.3 million it lost the year before.
But in its financial statements the company also said there is “significant doubt” about its ability to continue as a going concern unless it can make use of the $25 million in spectrum it owns around the world.
The company has an accumulated deficit of $32 million
“Given the condition of financial markets and the impact of such conditions on the ability of the company to raise funds on acceptable terms” it has decided to reduce or defer building networks in B.C., Manitoba, southern California, New Zealand, Norway and Greece, where it owns WiMAX spectrum, co-CEO Boyd Craig said in a news release.
“We remain confident that the investments we have made in our spectrum assets have the potential to have a substantial positive impact on our future and our position,” the statement also said.
Co-chief executive officer Drew Craig didn’t return a call Monday for comment.
It’s been a rough year for Craig Wireless, whose ownership is dominated by the Craig family. In April it recruited former Bell Mobility and Allstream executive David Lazzarato to be CEO of the company. But in October it was announced Lazzarato is leaving the company, with Drew Craig and Boyd Craig taking over as co-CEOs.
It was just over a year ago that the Craig family combined its small wireless holdings and executed a reverse takeover of a company to put Craig Wireless on the Toronto Stock Exchange. The goal at the time was to raise $35 million to build new WiMAX networks for the spectrum it was acquiring.
That buying continued this year, when it spent some $25 million, mostly on licences in Norway and New Zealand.
The demand for high-speed broadband connectivity for everything from laptops to WiMAX-enabled cell phones is expected to be prodigious. Primus Canada has been in a long-term mobile WiMAX (802.16e) trial in Hamilton, Ont. and Look Communications recently started a trial in Milton, Ont. More significantly, in the U.S. Clearwire is in the middle of building a WiMAX network in select cities.
However, mobile WiMAX infrastructure gear is only just coming to market. Meanwhile, financial markets, where companies raise money for infrastructure, are in wild upheaval. So now, with the Industry Canada approval of the B.C. broadband licence, it is unknown when or if Craig Wireless can exploit it.
The company has just over $7 million in cash. The $25 million in licences are also listed as assets. Liabilities include just over $9 million advanced by the company’s directors.
