Woosh posts annual loss as costs mount, will need more cash from parent
Woosh Wireless Holdings, the local internet service provider, posted a loss in the 2013 financial year and will need more cash from its unprofitable Californian parent, Craig Wireless Systems, to meet future cash-flow requirements.
The Auckland-based company made a net loss of $2.59 million in the 12 months ended Aug. 31, 2013, compared to a loss of $2.39 million in the 10 months ended Aug. 31, 2012, according to financial statements lodged with the Companies Office. Woosh made an operating loss of $1.45 million on sales of $16.1 million. It held cash and equivalents of $448,000 as at Aug. 31.
The losses decreased Woosh's cash resources and indicated a "material uncertainty that may cast doubt about the ability of the group to continue as a going concern," according to a note to the accounts. Craig Wireless intends to provide additional support and won't require repayment of almost $7 million in shareholder loans, it said.
"Ongoing operation and cost improvement initiatives are underway to reduce operating losses," the accounts said. "However, it is forecast that further cash injections will be required in order for future cash-flow requirements to be met."
The accounts were tagged by new auditor William Buck Christmas Gouwland over Woosh's ability to continue as a going concern because of the company's losses and net liabilities of $2.44 million, though they didn't qualify their opinion.
Woosh and Craig Wireless president Gary Birkland said the parent company has "committed management resource and continue to financially support Woosh to ensure that it is able to fulfil its potential in the New Zealand wireless broadband market."
Craig Wireless bought 51 percent of Woosh for US$5.5 million in 2011 in a deal to satisfy $20.6 million of debt owed to then-investor Kuwait Finance House. The following year it lifted its stake to 75 percent with an equity injection of US$1 million.
TSX-listed Craig Wireless has its own issues to continue as a going concern, with accounts for the three months ended Nov. 30 showing the telecommunications company obtained a US$2 million loan from chief executive Boyd Craig and was holding "active negotiations with other potential sources of third party financing as required in the cash flow model."
At the time, Craig Wireless said the financing hadn't been completed, and "would materially impact the company if the funding is not available."
Woosh's parent company made a loss of C$10.7 million on sales of C$13.5 million in the year ended Aug. 31, and reported a loss of C$1.9 million on sales of C$3.2 million in the three months ended Nov. 30. It held cash resources of C$898,000 as at Nov. 30.
The New Zealand assets were valued at C$8.57 million as at Nov. 30, making up the bulk of Craig Wireless's almost C$12 million in non-current assets.
Last year, Craig Wireless subsidiary Craig Wireless New Zealand Spectrum Operations bought management rights for an additional 35 megahertz in the 2.3 gigahertz range in New Zealand from state-owned Kordia for $2.2 million.