The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the UK version of the Market Abuse Regulations (EU) No. 596/2014 ("MAR"). With the publication of this announcement via a Regulatory Information Service, this inside information is now considered to be in the public domain.

05 December 2023

ETHERNITY NETWORKS LTD.

("Ethernity" or the "Company")

Full year trading update

Ethernity Networks (AIM: ENET.L; OTCMKTS: ENETF), a leading supplier of data processing and fibre access semiconductor technology for networking appliances, is pleased to provide an update on the Company's anticipated trading for the year ending 31 December 2023 ("FY 2023").

Subject to completion of the FY2023 audit, the Company anticipates that its headline results for 2023 will be:

·    revenue of between US$3.6m and US$3.8m (2022: US$2.97m);

·    underlying gross profit of between US$2.4m and US$2.6m (2022: US$1.59m) representing an underlying gross margin of 67%-68% (2022: 54%);

·    EBITDA loss of not more than US$3.8m (2022: EBITDA loss of US$6.4m); and

·    a reduction in monthly operating expenses from US$660k in June 2023 to US$300k in December 2023.

The Company's current cash balance is c. US$954k. This includes the proceeds of the NIS 1,000,000 short term loan from David Levi, CEO of Ethernity, details of which were announced on 26 October 2023. Under the ongoing temporary suspension of proceedings ("TSP") process, details of which were announced on 12 October 2023 (the "TSP Announcement"), the Company will be required to agree a settlement with its creditors from the commencement of the TSP. The Board anticipates that the current cash balances, together with the anticipated cash receipts due ahead of the year end (details of which were announced on 29 November 2023), will enable the Company to exit the TSP process. Notwithstanding this, the Company is considering options to raise additional funding to strengthen its balance sheet, which the Directors believe would improve the Company's ability to secure significant contracts with potential new customers.

Outlook

Subject to successfully exiting the TSP, the Company's strategic focus for 2024 will be on enhancing sales of its Universal Edge Platform ("UEP") fibre access offering, including the low power remote OLT and optical interworking units, as well as its 5G Open RAN data plane offload solutions. These solutions are based on Ethernity's networking semiconductor technology that enables it to provide a differentiated and innovative offering to its customers. The Board considers that these growing markets offer significant growth potential for Ethernity.

The Company's UEP employs the ENET Flow Processor firmware with best-in-class Carrier Ethernet Switch technology that, to date, has been deployed in more than 950,000 different systems. The global market for Carrier Ethernet Access devices was estimated to be valued at US$17.2 billion in 2022[1] and several OEMs are currently evaluating the Company's UEP. The UEP is available to potential customers either through licensing of the Company's IP or via sales of complete systems, including software applications up to an eASIC offering. While the majority of the ongoing discussions with OEMs for Ethernity's UEP are in the field of support for wireless link bonding, certain potential opportunities are targeting general purpose Carrier Ethernet Switch appliances, which include other unique monitoring and AI differentiated networking functions. Ethernity is able to provide a differentiated and cost-effective offering to its clients due to the Company's proprietary IP and technology.

An updated version of the Ethernity's corporate presentation, providing further background to the Company's target markets and solutions in these markets, will shortly be available on the Company's website, www.ethernitynet.com/investors.  

David Levi, CEO of Ethernity Networks, commented: "While we have had an extremely challenging year, particularly over the last three months, the team has been working tirelessly to release the UEP products with the required functionalities for our targeted customers. Together with our Fibre Access offering, which is targeting the US$50bn PON Market, and our 5G Open RAN data plane offload solutions, we are hopeful that 2024 will be a transformative year for Ethernity and, with our careful cost control on the reduced operating cost base, our goal is to generate positive cashflow."

For further information, please contact:

About Ethernity (www.ethernitynet.com)

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