DragonWave (TSX:DRWI)(NASDAQ:DRWI) shares took off in early morning trading after the local telecom firm said it landed an aviation contract from a U.S. firm flush with cash.
Later in the day, the producer of microwave radio systems for mobile networks announced it will continue to be listed on the Nasdaq exchange. The firm had been threatened with de-listing for failing to meet certain requirements, including maintaining at least $2.5 million in shareholders’ equity. DragonWave has now been given until Oct. 17 to meet that requirement.
Shareholders were impressed by news the Kanata-based firm will partner with SmartSky Networks to install Wi-Fi technology on planes. Share prices nearly doubled this morning, opening at $1.64 on the TSX as compared to $0.87 at close yesterday. By midday trading, shares retreated to around $1.33, an increase of more than 50 per cent compared to the day before.
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Despite today’s surge, the company’s share price is still well off the 52-week high of $8.82.
DragonWave will provide its Harmony product line as a support system for SmartSky’s air-to-ground 4G networks, a solution the latter firm believes will deliver seamless in-air connectivity. Investors also appear convinced, as SmartSky is currently flush with cash after landing a $170-million series-B round in March.
“DragonWave is excited to be working with SmartSky on its innovative high capacity and low latency inflight offering. This application is ideally suited for Harmony Enhanced MC,” said DragonWave president and CEO Peter Allen in a statement. Details of the contract were not disclosed.
The contract couldn’t come at a better time for DragonWave, whose shares have continued to fall after hitting an all-time low last week. The company has faced significant challenges from declining revenue for the past few years, and is in the midst of restructuring to meet minimum listing requirements of at least $2.5 million in shareholders’ equity in order to remain on the NASDAQ exchange.
Last week, DragonWave reported annual revenues of $43.9 million for fiscal 2017, roughly half of what it earned the year before. The firm has enlisted restructuring consultant Alvarez & Marsal Canada ULC to assist in finding a long-term solution to its woes.
