Ethernity Networks Ltd Market Update and Proposed EGM (1467M)
May 06 2020 - 6:08AM
UK Regulatory
TIDMENET
RNS Number : 1467M
Ethernity Networks Ltd
06 May 2020
The information contained within this announcement is deemed by
the Company to constitute inside information stipulated under the
Market Abuse Regulation (EU) No. 596/2014. Upon the publication of
this announcement via a Regulatory Information Service, this inside
information is now considered to be in the public domain.
6 May 2020
ETHERNITY NETWORKS LTD.
("Ethernity" or the "Company")
Market Update
and
Proposed Extraordinary General Meeting
Ethernity (AIM: ENET), a leading supplier of functional
acceleration ethernet adapter cards on FPGA (field programmable
gate array) for virtualised networking appliances, provides the
following update on the business, its markets and the Company's
response to COVID-19.
The Company has seen some recovery in Chinese markets in which
the Company is currently significantly engaged, specifically in the
5G marketplace. The Company continues to experience an increase in
engagement with system integrators and operators interested in
Ethernity's solutions where these solutions are proving
increasingly aligned to the offerings operators wish to make to
their customers in their marketplaces, as evidenced by a design win
with a large Chinese OEM who are building their 5G UPF offering
based on the Ethernity ACENIC-100 FPGA Smart NIC. The Company has
recently signed a new design contract with a North American tier-1
telecommunications OEM, as announced on 30 April 2020, and is now
in contract negotiations for a new design order in the Summer for a
complete hardware and software NIC solution for a
Military/Aerospace tier-1 vendor which, on success, would lead to
initial milestone revenue followed by recurrent multi-year revenue
from 2021.
The Company anticipates that its current 5G UPF (user plane
functionality) engagements with the Chinese OEMs will lead to a
roll-out of up to 2,000 FPGA SmartNIC cards during 2021 at unit
prices ranging from $2k to $3k. Additionally, design kit and
licensing revenues from existing customer relationships, including
those detailed above are anticipated to result in up to $2m of
revenues over the next 12 months, on top of the ongoing recurrent
royalties and FPGA revenue.
Due to the online nature and connectivity capabilities of the
business, staff required to work from home due to COVID-19
regulations are operating at capacity on a remote basis. While,
certain anticipated near-term agreements have been the subject of
delays due to disruptions outside the Company's control,
discussions are ongoing with further potential customers in both
the 5G market (FPGA SmartNIC) and licensing contracts, which could
provide additional opportunities.
On the basis of 5G deployment and the resultant increased use of
NFV technologies in the telco cloud and Radio Access Network (RAN),
the Company anticipates that positive cash flow generation will
commence by from H2 2021.
As at 31 March 2020 the Company had retained cash reserves of
$1.5m ($2.7m as at 31 December 2019) (unaudited) and, as announced
on 8 April 2020, in light of the current COVID-19 situation the
Company has taken prudent steps to mitigate any impact through
certain short-term cash conservation measures. The Company has
applied for a grant from the Innovation Authority in Israel
(previously the Office of the Chief Scientist) under a new program
that has been initiated in light of the COVID-19 situation, which
response is expected by the end of the first week of June 2020. The
Company may also seek to take advantage of other
government-sponsored COVID-19 assistant packages should these
become available.
However, given the continued high levels of uncertainty created
by COVID-19, in the absence of receiving the Innovation Authority
grant, it is likely the Company will need to seek access to
alternative funding in order to trade to its current plan and
maximise its ability to secure contracts and conclude negotiations
on terms favourable to the Company. Accordingly, the Company
expects to shortly dispatch to shareholders a circular to include a
notice of Extraordinary General Meeting ("EGM") to approve
resolutions granting the Directors authority to issue shares and
allow the Company greater flexibility and funding options. The
proposals will also provide the Directors with share issuance
authorities in line with other growth companies on the AIM
market.
The EGM will also include individual resolutions for (i) the
re-election of certain Directors, who are up for re-election as the
conclusion of a three-year period since IPO nears, and (ii) certain
amendments to the Company's articles of association to reflect
developments in market practice and the law.
A further announcement on details of the EGM and the circular
will be made in due course.
For further enquiries please contact:
Ethernity Networks Ltd +972 8 915 0392
David Levi, Chief Executive Officer
Mark Reichenberg, Chief Financial Officer
Arden Partners plc (Nominated Adviser, Broker) +44 207 614 5900
Richard Johnson / Benjamin Cryer
The PR Office (Investor Relations) +44 207 284 6969
Marc Cohen/Tom Gilby
ethernity@theproffice.com
About Ethernity (www.ethernitynet.com)
Ethernity Networks Ltd. (AIM: ENET) provides innovative,
comprehensive networking and security solutions on programmable
hardware for accelerating telco/cloud networks performance.
Ethernity's FPGA logic offers complete Carrier Ethernet Switch
Router data plane processing and control software with a rich set
of networking features, robust security, and a wide range of
virtual function accelerations to optimize telecommunications
networks. Ethernity's complete solutions quickly adapt to
customers' changing needs, improving time-to-market and
facilitating the deployment of 5G, edge computing, and different
NFV appliances including 5G UPF, SD-WAN, vCMTS and vBNG with the
current focus on 5G emerging appliances.
COVID-19 virus
Given the rapidly changing global situation, and the current
uncertainty over the duration of the disruption caused by the
COVID-19 pandemic, it is impossible to predict, with any certainty,
the continuing impact on the Company's business. As such, this
announcement should be considered against this backdrop and
shareholders and potential investors should understand that there
is a corresponding level of uncertainty surrounding any
forward-looking statements and assumptions stated.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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