Company Announcements

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23 April 2025

ETHERNITY NETWORKS LIMITED

("Ethernity" or the "Company")

Trading Update

Ethernity Networks Limited (AIM: ENET.L) (OTCMKTS: ENETF), a leading supplier of data processing and PON semiconductor technology for networking appliances, announces an update on trading for the year ended 31 December 2024 and on the potential ASIC business.

2024 trading update

The Company announces the following unaudited headline results for 2024, subject to the completion of the full year audit:

·      revenue of approximately US$1.38 million (2023: US$3.78 million);

·      gross profit of approximately US$1.37 million (2023: US$2.34 million);

·      an EBITDA loss of approximately US$2.79 million (2023: EBITDA loss of US$3.86 million); and

·      US$2.45 million spent on R&D (2023 R&D expenditure: US$4.2 million).

In 2024, the Company's R&D efforts were primarily focused on finalizing the release of the UEP-2025 solution for the wireless backhaul market. The UEP-2025 embeds Carrier Ethernet Switching, MPLS routing, timing and optional patented wireless link bonding, and underwent successful testing with several vendors during the year. One result led to a $1.05 million contract with a Tier-1 U.S. aerospace company (as announced on 28 June 2024) and delivery was completed in the first quarter of 2025. Another test from a prospective customer resulted in a request to develop an ASIC based on the technology embedded in the UEP-2025. Additionally, other companies that evaluated the UEP-2025 advised the Company that they were pleased with the performance and may re-engage to explore potential go-to-market opportunities.

Furthermore, the Company has completed the integration of the open-source Virtual OLT ("VOLTHA") Network Operating System ("NOS") with its PON OLT solution running on the UEP-2025 platform. The integrated PON UEP-2025 solution is currently undergoing a series of demonstrations showcasing its operation with the VOLTHA.

Current trading

·     Following the successful delivery of the $1.05 million contract with the Tier-1 U.S. aerospace customer, Ethernity received an additional order from the customer in March 2025 valued at $290,000.

·      In the first four months of 2025, total cash collections are expected to be approximately $700,000.

·    One of Ethernity's royalty-based customers has successfully completed the initial deployment of several thousand units as stipulated in their agreement. As a result, the Company anticipates an overall increase in royalty payments during 2025 compared to 2024.

·    As previously announced, the Company will be required to raise additional funds in order to settle its payment obligations under the creditor settlement plan and to progress its potential ASIC business, as detailed further below, and is currently exploring a number of options to raise such funds.

Update on Ethernity's strategy and the potential ASIC opportunity

The world of semiconductor innovation is rapidly evolving. At the heart of this transformation lies the surging interest and adoption of application-specific integrated circuit ("ASIC") design services. Across industries, companies are waking up to the competitive benefits of tailored chip designs-driven by the demand for faster, smarter, and more energy-efficient electronic solutions.

ASICs are no longer just for large corporations with significant budgets; they're becoming an essential ingredient for companies of all sizes seeking unique advantages in their markets. Several mega-trends are contributing to the rise in customer demand for highly specialized ASICs, including the need for improved performance, power, energy efficiency, miniaturization and improved integration, together with a reduced total cost of ownership.  

As a result, the Company is actively working to transform its operations into a semiconductor business. Ethernity aims to develop an Application-Specific Standard Product ("ASSP") tailored for the global Telecom Access market, leveraging its existing FPGA-based UEP-2025 solution. To support this initiative, the Company is seeking a lead OEM partner to co-fund the ASIC non-recurring engineering (NRE) costs under a partnership arrangement. This arrangement would enable the Company to commercialize the ASSP and offer it to additional vendors across the industry.

The Company is currently in discussions at varying levels of advancement with four leading Western wireless vendors, collectively representing roughly half of the global wireless backhaul market, that have expressed an interest in this ASSP solution, where the aggregate volume from the four vendors could potentially generate a business volume of up to 400,000 units per year.

Whilst no formal agreements have been entered into to date, the Directors consider that Ethernity is making promising progress with one of the wireless vendors. Ethernity estimates that the value to a wireless vendor of Ethernity's existing FPGA based UEP-2025 offering is between $16 million to $25 million compared to developing the ASIC solution from scratch and therefore believes that it can offer significant value to these vendors. Based on valid quotes received from different sources, the Company estimates that the cost of conversion of the UEP-2025 code into an ASIC would be approximately US$16 million, which would need to be co-funded by a partner and Ethernity. Whilst there can be no guarantees that these discussions will lead to signed contracts, the Directors see a clear path toward securing a multi-million-dollar business opportunity as a semiconductor provider, subject to being able to secure the required funding.

In addition to its wireless market offering, the Company plans to integrate its PON technology, operated in conjunction with the well-known Virtual OLT open-source NOS, into an ASIC, targeting an additional market segment of approximately 400,000 devices per year. This strategic expansion could significantly enhance the overall business potential.

The Company believes that, with appropriate funding, its technology developed over the years of innovation ported into ASIC has the potential to generate substantial business.

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About Ethernity Networks

Ethernity Networks (AIM: ENET.L; OTCMKTS: ENETF) provides innovative, comprehensive networking and security solutions on programmable hardware, enhancing telco/cloud network infrastructure capacity. Ethernity's semiconductor logic offers data processing functionality for various networking applications, alongside patented wireless access technology and fiber access media controllers, all equipped with control software boasting a rich set of networking features. Ethernity's solutions swiftly adapt to customers' evolving needs, accelerating time-to-market and facilitating the deployment of 5G over wireless and fiber infrastructure.