Ethernity Networks (LON: ENET) shares are up 125% in London this morning. The trigger for this move in ENET shares is that it might just survive the administration/Chapter 11/ TSP process that it finds itself in. The new deal announced means that they’ve got royalty revenues flowing in. They’re also coming in right now, in this trading period. That means that they might just have the cash to be able to trade out of their problems.
The announcement: “Ethernity Networks (AIM: ENET.L; OTCMKTS: ENETF), a leading supplier of data processing semiconductor technology for networking appliances, is pleased to announce that it has signed a contract for $800,000 (the "Contract") with a long-term networking data communications customer (the "Customer").” What this actually means is more important: “The receipt of payments under the Contract would result in Ethernity having received total cash collections from its customer base of between $4.5 million and $4.7 million for FY 2023. Whilst at this stage the total revenues for 2023 are unknown, these cash collections will assist the Company in exiting the ongoing temporary suspension of proceedings ("TSP") process. In addition, together with the contract win announced on 2 November 2023, the Company has been able to secure the future relationship with two important long-standing customers.” That is, it might just be able to exit administration with the equity actually worth something.
Ethernity Networks share price from Google Finance
We spoke before about Ethernity: “Ethernity Networks (LON: ENET) shares are down 76% over the past 5 days. Sure, we could say there’s a war on (not that there quite is but we could say it) and that’s what’s causing the problems. But this isn’t, in fact, quite so. Clearly, events in Israel do not help matters. But the economy still works, the courts, the banks and so on. The problems are more deep seated than what’s been happening this past couple of weeks. Effectively, no one seems to want to pay Ethernity. Or, not enough with to do so. Therefore there’s something of a gaping hole where the revenue receipts should be. And so an application for what is the Israeli equivalent of a Chapter 11 filing.”
Then in November, that contract win for ENET: “Ethernity Networks (LON: ENET) shares are up 36% in London today. The cause is a contract win which should provide some much needed cash to bolster the corporate finances. This is both - by reference to corporate size at least - a substantial sum and also a near immediate one. This does indeed aid the company in these harsh times”
Now, whether they do fully survive without a dilutive equity issuance we’ll have to see. But it’s at least possible they will - which, we have to admit, surprises the heck out of us.
