DragonWave, Inc. (USA) (NASDAQ:DRWI) Explodes On NASDAQ Delisting Reversal

DragonWave, Inc. (USA) (NASDAQ:DRWI)

DragonWave, Inc. (USA) (NASDAQ:DRWI) has regained compliance with the NASDAQ having been hit with a delisting notice for failing to meet the minimum shareholders’ equity of $2.5 million. However, the company’s continued listing on the NASDAQ is still subject to meeting certain milestones which includes ensuring the minimum shareholder equity stands at $2.5 million.

While the company’s listing on the Toronto Stock Exchange is not impacted by the decision, DragonWave maintains it is working round the clock to meet the minimum requirement.

SmartSky Contract

Separately, the global supplier of packet microwave radio systems says it has inked a product supply and services contract with SmartSky Networks. The North American 4G LTE inflight service provider is to deploy the company’s Harmony Enhanced and Harmony Enhanced MC products as part of the contract.

“The DragonWave Harmony Enhanced MC product solution offers our desired capacity requirements for SmartSky. Harmony Enhanced MC delivers simple installation, operation, and sophisticated remote management, so we are thrilled to partner with them to further enhance SmartSky’s capabilities, “said SmartSky Networks vice president of services Dave Claassen.

SmartSky is in the process of deploying its coast-to-coast national network having recently secured $170 million Series B financing.

Disappointing Q4 Earnings

The signing of the contract with SmartSky comes on the heels of DragonWave, Inc. (USA) (NASDAQ:DRWI) posting disappointing financial results for its fourth quarter. The company has been experiencing difficult operating conditions after having posted a net loss of $3.9 million. Revenue for the fourth quarter tanked to $8 million from $10.2 million in the third quarter.

DragonWave, Inc. (USA) (NASDAQ:DRWI) Operating expense for F2017 dropped by $9.9 million compared to the previous fiscal year, to $27.9 million, having dropped to $6.7 million in the fourth quarter compared to $7 million as of the third quarter.

“Our results in Q4 reflect the difficult operating conditions. Earlier this year we communicated that we had made a restructuring proposal to our credit facility partners to reduce operating expenses and address working capital. In co-operation with our secured lenders we have engaged Alvarez & Marsal Canada ULC to assist us with the identification and assessment of strategic alternatives in relation to short-term liquidity requirements,” said CEO, Peter Allen.

DragonWave, Inc. (USA) (NASDAQ:DRWI) exited the fourth quarter with cash and cash equivalent of $4.1 million compared to $4.5 million as of the end of the third quarter.

DragonWave, Inc. (USA) (NASDAQ:DRWI) stock ended Wednesday trading session at $1.13 a share having rallied by 75.19%.

I have no positions in any of the stocks mentioned, and have no plans to initiate any positions within the next 72 hours. All information, including any data, is provided without any guarantees of accuracy.

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About the author: Monica Grey has an undergraduate degree in Accounting and an MBA she earned – with Honors. She has six years of experience in the financial markets and has been an analyst for the past two years.

DragonWave, Inc. (USA) (NASDAQ:DRWI) Announces Receipt of NASDAQ Staff Determination; Company to Request Hearing

DragonWave, Inc. (USA) (NASDAQ:DRWI)

DragonWave, Inc. (USA) (NASDAQ:DRWI) has receivied a notification letter from Nasdaq indicating that the company failed to regain compliance with Nasdaq Listing Rule 5550(b)(1). This is after the company failed to maintain the $2,500,000 minimum shareholders’ equity at the end of the, compliance period that was granted to the company.  Following the failure to regain compliance, the company may be delisted on May 1, 2017 unless it requests a hearing session with the Nasdaq Listing Qualifications Panel.

DragonWave, Inc. (USA) (NASDAQ:DRWI) will request a hearing with the panel at which it plans to table its plans on how to regain compliance and request a time extension. The Panel has the power to extend the company’s compliance period for an additional 180 days starting April 20. The request will put off any suspension or delisting move pending the panel’s final ruling over the matter as well as the expiry of any other granted to the company. There is no automatic assurance that the company’s request for extension will be granted. The announcement does not affect the trading of the company’s securities on the Toronto Stock Exchange.

In other segment, DragonWave, Inc. (USA) (NASDAQ:DRWI)’ Harmony Enhanced MC backhaul solution has been selected by Knoxville Utilities Board’s. KUB is an agency of the City of Knoxville and engaged in offering water, gas, electricity and waste water services. The agency offers its services to residents of Knoxville and other surrounding counties. With this deployment, KUB will seek to increase the available bandwidth, cut on overall cost of operation and maintenance, as well as improve the reliability of its field network. The Harmony Enhanced MC will help in extending KUB’s current wireline/fibre facilities and establish a hybrid wireline and wireless network. The agency will use the platform to setup fiber type networks via wireless using radios to support several channels with high modulation in one form factor.

In a statement, President and CEO of Future Technologies Peter Cappiello said DragonWave, Inc. (USA) (NASDAQ:DRWI)’s Harmony Enhanced MC enabled them to exceed their capacity as well as the reliability values needed by using only 3′ antennas instead of other options that require 6′ antennas. The Harmony Enhanced MC is a high capacity microwave solution that allows customers to get 1 Gbps of uncompressed throughput in one radio and up to 2 Gbps on every radio with the Bandwidth Accelerator+ bulk compression feature.

I have no positions in any of the stocks mentioned, and have no plans to initiate any positions within the next 72 hours. All information, including any data, is provided without any guarantees of accuracy.

About the author: Monica Gray has an undergraduate degree in Accounting and an MBA – earned with Honors. She has six years of experience in the financial markets and has been a securities analyst for the past two years.

Will Deal Improve Shareholder Performance for Dragonwave Inc. (NASDAQ:DRWI)?

Dragonwave Inc. (NASDAQ:DRWI)

News of a new sales and services agreement has sent shares of DRWI up over 65% on heavy volumes. Dragonwave Inc. (NASDAQ:DRWI) has a market cap of less than $8.5 million but has sales of $48 million. DRWI has been the victim of poor profit margins and poor stock performance that could be partly attributed to a yearly share issuance which dilutes shares. Dragon wave is based in Ottowa, Canada and offers high-capacity packet microwave IP solutions to wireless communication, and broadband service providers through its own salesforce and its partners.

Revenues peaked in Q3 2015 for Dragonwave Inc. (NASDAQ:DRWI) when it reported a figure of $47.3 million but in Q4 2016 the company reported revenues of just $12 million. In Q4 2016 the loss attributable to shareholders was $9.1 million which was over four times the loss of $2.3 million for Q4 2015.

Today Dragonwave Inc. (NASDAQ:DRWI) announced it has signed a new Master Sales and Services Agreement with Ingram Micro Australia. The agreement between the two companies will see Ingram Micro expand its wireless vendor portfolio to the Australian channel with the introduction of DragonWave’s extensive product portfolio.

Ingram Micro is the world’s largest wholesale technology distributor in IT supply-chain and mobile device lifecycle services. Ingram Micro has a presence in over 170 countries and claims that it is the world’s only global broad-based IT distributor. Given that geography, it is of no wonder that Ingram Micro also claims it has the world’s broadest offering of IT products and services.

This partnership is welcomed, and likely needed, by Dragonwave. While its gross margin figures show a mixed picture, its net profit margin of -29.76% deters many investors as it is well below the industry average. The Ingram Micro deal may help DRWI shareholder’s attitudes towards the under-performing stock. What remains to be seen is if Dragonwave Inc. (NASDAQ:DRWI) can utilize any additional revenues to increase overall margins. DRWI shareholders have been hit by dilutive public offerings each year since 2012 when the number of outstanding shares was 1.42 million. By 2016 that number had expanded to 3.02 million. Unfortunately for the stock, 2016 also saw lower sales figures ($86.3 vs. $157.8 million) and wider EPS losses (-$14.01 vs -$7.90).

Ticker Symbol DRWI
Last Price a/o 10:59 AM EST  $                      1.99
Average Volume                    127,800
Market Cap (mlns)  $                      8.25
Sales (mlns) $48.00
Shares Outstanding (mlns) 7.17
Share Float (mlns) 5.48
Shortable Yes
Optionable No
Inside Ownership 4.00%
Short Float 4.60%
Short Interest Ratio 1.98
Quarterly Return -57.41%
YTD Return -55.77%
Year Return -50.00%

I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 96 hours. All information, or data, is provided with no guarantees of accuracy. 

About the author: Marc has a degree in economics and a MSc. in Finance. Over his 20-year career, Marc has worked for global investment firms in Europe and the United States as an analyst, fund manager, and consultant.