Key Takeaways:
Ethernity Networks Ltd. (AIM:ENET), a semiconductor technology company, saw its shares fall by a third after announcing drastic measures to preserve cash, cutting the valuation of the company to less than £200,000.
"The near-term exercise of the warrants is unlikely," the company's board said in a statement, referring to the failed funding mechanism that triggered the crisis. The company had built its 2026 cash flow plan around the expectation that warrant holders would inject fresh funds.
The AIM-listed stock has now lost 92 percent of its value over the past year. To conserve cash, Chief Executive David Levi and VP of Research and Development Shavit Baruch will reduce their work to approximately 20 percent of their full-time commitment starting in mid-May 2026. This move is designed to lower operating costs while keeping the business operational.
Ethernity is now targeting revenues of $1.6 million to $1.8 million for 2026, which it expects to come principally from an existing contract with a Tier-1 U.S. defence and aerospace customer. The company acknowledged that it would need to raise additional funds this year if these revenues do not materialize. The stated goal is to continue as a going concern and meet short-term debt obligations.
The sharp decline in share price to its current level makes it improbable that warrant holders will exercise their rights to buy new shares at a fixed price. The company's focus now shifts to servicing existing customers and preserving its core research and development capabilities with a skeleton senior staff.
This development puts the company in a precarious position, with its survival heavily dependent on a single customer contract. Investors will be watching for any news of additional funding or new commercial deals, with the company's ability to continue operations hanging in the balance.
This article is for informational purposes only and does not constitute investment advice.
