REG - Ethernity Networks - Trading Update

Ethernity NetworksAnnouncement

23/04/2025 07:00

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RNS Number : 7541F  Ethernity Networks Ltd  23 April 2025

The information contained within this announcement is deemed by the Company to
constitute inside information as stipulated under the Market Abuse (amendment)
(EU Exit) Regulations 2019/310 ("MAR"). With the publication of this
announcement via a Regulatory Information Service, this inside information is
now considered to be in the public domain.

 

 

 

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 (https://opennetworking.org/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.

 

For further information, please contact:

 

 Ethernity Networks Ltd                                         Tel: +972 3 748 9846
 David Levi, Chief Executive Officer

 Tomer Assis, Chief Financial Officer

 Allenby Capital Limited (Nominated Adviser and Joint Broker)   Tel: +44 (0)20 3328 5656
 James Reeve / Piers Shimwell (Corporate Finance)

 Amrit Nahal / Stefano Aquilino (Sales and Corporate Broking)

 CMC Markets UK plc (Joint Broker)                              Tel: +44 (0)20 3003 8632
 Douglas Crippen

 Peterhouse Capital Limited (Joint Broker)                      Tel: +44 (0)20 7562 0930
 Lucy Williams / Duncan Vasey / Eran Zucker

 

 

 

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.

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