Facing the prospect of running out of cash by the end of the month, Ethernet access equipment vendor Amedia Networks obtained $1.5 million in interim debt financing from an institutional investor this week, aiming to use the funds for “general corporate purposes.”

Amedia intends to replace the bridge loan, whose annual interest rate is 7%, with long-term financing.

Before obtaining the bridge loan, Amedia declared in filings with the U.S. Securities and Exchange Commission last week that it had enough cash to finance operations only through April 30, 2005. The company spent $5.2 million funding its operations last year, including more than $3.2 million on research and development, most of which was paid to Lucent Technologies. Amedia ended 2004 with $2.3 million in cash and equivalents. In this year’s first quarter, the company paid investors a mandatory dividend of $145,000.

Last week Amedia estimated it needed to raise between $5 million and $7 million to complete product development and testing and to launch and market its QoStream products.

“This interim financing enables us to refine [long-term financing] proposals and implement a larger funding that meets our strategic growth goals,” said Amedia’s president and chief executive officer Frank Galuppo in a statement issued this week.

The bridge loan will mature in one year or upon the acquisition of long-term financing, whichever comes first. After that, the lender may convert it to shares valued at $1.25 (this afternoon, the stock price rose to about $1.20) and receive five-year warrants to buy up to 150,000 shares of Amedia common stock at $2.50 per share.

Amedia has not generated any revenue since the company entered the access equipment market in March 2004 (before that, it was in the copy protection business for 8 years, the sale of which helped fund its current business) and expects to operate at a loss through at least 2005. It makes access gear for triple-play networks and hopes to raise enough funds this year to expand its products’ application “to encompass sophisticated business applications and other in-house wiring, including copper networks,” the company said.