Last Mile Holdings (TSXV: MILE) appears to be on its last leg, with the company announcing last night that it was issued a notice of default by one of its secured lenders on November 27. An acceleration of the secured debt was also filed at the same time, with the company currently at risk of losing its Gotcha subsidiary.
Furthermore it appears that the holder of the debt may intend to acquire the assets of Gotcha, with the company recently acquiring the secured debt on November 25 following a sale by MSouth, the original holder of the debt. The new holder of the debt as per the news release however, Gotcha Mobile Holdings LLC, is previously indicated within company filings to be the holder of this debt anyways however, bringing some confusion into whom exactly held the debt.
The company initially entered into two secured promissory notes with Gotcha Media Holdings, as per the latest financial filings, in February 2020 in connection with the acquisition of Gotcha Mobility for a total figure of US$12.3 million. The company is a mobility operator who’s services include point to point transportation through the use of “low-speed” electric vehicles, bike share programs, and electric scooter sharing systems, all of which is offered at universities and municipal partners. In short, it was an acquisition at potentially the worst possible time given the looming pandemic.
As part of the consideration, a promissory note for US$750,000 was issued with a due date of August 2020, along with a $5.0 million promissory note due in February 2022. Both notes were secured against the assets of Gotcha Mobility, while containing an interest rate of 12% per annum. The first note, as of the second quarter financial statements filed October 15, is said to be outstanding, despite the company having reportedly raised C$7.8 million via capital markets in August 2020.
Following this deadline in August however, members of management have begun to depart the company en masse. On September 25, it was announced that “the company formally enacted the resignations of Jessica Van Den Akker and Alan Shapiro as members of the Board of Directors.” Then on October 15, once the company formally filed its overdue second quarter financials, the recently appointed CFO, Kate Marley, resigned from the company for undisclosed personal reasons, with no replacement named.
Days later, the company announced that it had begun exploring strategic alternatives to “further enhance shareholder value.” This is despite several announcements related to the expansion of service offerings and newly enhanced electric bikes that the company was to launch.
Furthermore, despite the reported $7.8 million in funds raised by the company in August, by November 16 the company indicated that it was needing to bolster liquidity. To do so, “some hard assets” were to be sold by the end of the week while the company continued to look to sell off further aspects of its business. Where exactly the millions of dollars raised vanished to is unclear, given that the secured promissory note evidently was not paid off, and the company as of June 30 only had $6.7 million in outstanding current liabilities.
This brings us to this morning, with the company announcing that Chairman Lou Lucido has left his position at the company, along with the market being updated that a notice of default has been served against the company. The company has also failed to file its third quarter financials on time with a management cease trade order now being levied against the firm. Presently, its stated that the latest results will be filed by December 31, however without a proper CFO in place, that timeline is questionable at best.
Last Mile Holdings last traded at $0.03 on the TSX Venture.
Information for this briefing was found via Sedar and Last Mile Holdings. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
As the founder of The Deep Dive, Jay is focused on all aspects of the firm. This includes operations, as well as acting as the primary writer for The Deep Dive’s stock analysis. In addition to The Deep Dive, Jay performs freelance writing for a number of firms and has been published on Stockhouse.com and CannaInvestor Magazine among others.