Solidus Communications Inc.

What they do

Solidus Communications, through its Amgentech subsidiary, provides technology solutions, VoIP infrastructure, managed servers, and software/website development. Under the Telco Cuba brand, it offers low-cost prepaid mobile phone services and calling cards to the Cuban-American community in the United States.

Revenue drivers

• Prepaid mobile services — Low-cost prepaid plans with predefined or unlimited minutes, targeting Cuban-American consumers.
• VoIP and technology solutions — Amgentech provides VoIP infrastructure, managed collocated and leased servers, and consulting to clients in the U.S. and Latin America.
• Calling cards — Telecommunication services including calling cards for international calls, primarily to Cuba.
• Equipment sales — Mobile phones and related telecommunication equipment sold as part of service offerings.

Recent performance

As of February 28, 2017, the company had total current assets of $19,921 and total current liabilities of $5,490,782, resulting in a net working capital deficit of $5,470,861. Revenue for fiscal 2016 was $146,731, down from $173,560 in fiscal 2015. Net income for fiscal 2016 was $644,287, a turnaround from a net loss of $1.2 million in fiscal 2015. Cash and equivalents were $9,362 at February 28, 2017, and total liabilities were $5.5 million against total assets of $31,671.

Strategy

The company is focused on building a low-cost mobile phone service for the Cuban-American market in the U.S., leveraging Amgentech's technical expertise. It aims to expand services and equipment offerings while positioning for a future entry into the Cuban telecommunications market. Management plans to raise additional capital through equity or debt financing to fund operations and expansion, and it is deferring payments due to management to preserve cash.

Risks

• Going concern risk — Independent auditors have expressed substantial doubt about the company's ability to continue as a going concern due to lack of operating history and inability to generate adequate revenues.
• Working capital deficit — The company has a significant net working capital deficit of $5.47 million as of February 2017.
• Financing uncertainty — No financing is arranged; if the company cannot raise sufficient funds, management states the business will fail.
• Operational history — The company has a limited operating history and has incurred operating losses historically, expecting continued losses in the foreseeable future.

Outlook

Management anticipates incurring operating losses in the foreseeable future due to the high cost of rolling out a telecommunications operation, which may take several years to become profitable. The company must raise additional capital to meet general and administrative expenses and achieve business objectives, with no assurance of success.