Half-year Results

Ethernity Networks Ltd (AIM: ENET.L; OTCMKTS: ENETF), a leading supplier of data processing and PON semiconductor technology for networking appliances, today announces its interim results for the six months ended 30 June 2025.

Key Highlights:

• Revenue of $598,599 (H1 2024: $582,008)
• Gross profit of $598,599 (H1 2024: $566,602)
• Gross margin of 100% (H1 2024: 97.4%)
• Net comprehensive loss for the period decreased by 40% to $2,124,278 (H1 2024: $3,538,014)
• EBITDA and Adjusted EBITDA loss decreased by 35.8% and 28.4% to $1,021,118 and $1,186,414 respectively (H1 2024: $1,590,542 and $1,657,094)
• Cash Collection during the period of approximately $772,000

Chief Executive Officer's statement

The majority of the revenue during H1 2025 was an attribute to the deliveries of the extended order and the original contract signed with the Tier 1 U.S Aerospace vendors, at a total value of approximately $1.3m. The Company had completed all deliveries under the original contract and the extended order by the end of August 2025, and plans to pursue further engagement with the customer, leveraging its domain expertise in the aerospace and aviation sectors.

Over the past few months, Ethernity has been progressing the ASIC opportunities detailed in previous announcements, most recently in the business update on 24 July 2025. The Company previously indicated that it continues to engage with a leading wireless backhaul OEM on various execution strategies of the ASIC plan, with a goal to converge on the best joint route for execution. The Company has now decided to de-risk its ASIC plan by shifting from an OEM co-funded model to a semiconductor partnership model, supported by interest from leading wireless vendors. Under this approach, the Company would partner with a semiconductor vendor who would fund the full ASIC cost, meaning Ethernity would not be required to raise the millions of dollars upfront to co-fund the development costs. Instead, Ethernity would receive non-recurring engineering ("NRE") income for its role in the development, along with a future revenue share. Execution of such a plan with a lead semiconductor vendor would enable Ethernity to achieve near-term positive cash flow and profitability, in contrast to the years of investment required under the previous model.

The Company has commenced discussions for this model with a lead semiconductor vendor operating in the mobile and broadband market, and will continue to update the market should these opportunities materialize into a contract.

Notwithstanding the fact that the shift to a possible partnership with semiconductor partner would not require the significant fundraising that was necessary under the original ASIC plan, the Company still has an immediate cash requirement to continue operating as a going concern. The Board is actively exploring ways to address this and further announcements will be made as appropriate.

By order of the Board

David Levi

CEO

OPERATIONAL AND FINANCIAL REVIEW

Revenues

Revenues for the period were $598,599 (H1 2024: $582,008), with the majority attributed to the tier 1 U.S Aerospace contract.

Gross profit and margin

During the period, the Company focused on sales with a 100% gross margin resulting from licensing fees or royalties, and refrained from taking any commitment that would require pre-purchasing of components or pre-production based on future orders, with its main goal being to minimise any cash flow risks.

The gross profit of $598,599 increased by 5.6% compared with the previous year (H1 2024: $566,602), and the gross margin increased to 100% (H1 2024: 97.4%).

EBITDA

The EBITDA for the six months ended 30 June 2025 is presented as follows:

EBITDA loss for the first six-month period of the year decreased by 35.8% to $1,021,118 (H1 2024: $1,590,542). The Adjusted EBITDA loss in the first six months of the year decreased by 28.4% to $1,186,414 (H1 2024: $1,657,094).

Operating costs

Operating expenses (before amortisation, depreciation and IFRS adjustments) decreased by an overall 19.7% from $2,223,696 to $1,785,655 during the period against the same period in 2024.

Within the R&D division, the Company reduced its operating expenses (including headcount and other R&D expenses) by a total of 20.1%.

General and Administration costs (before amortisation, depreciation and IFRS adjustments) have decreased by 17.7%, also mainly attributed to headcount savings.

The decrease in Marketing expenses (net of share-based compensation and vacation accruals) of 23.1% is also mainly attributed to headcount savings.

After adjusting for the following non-cash items; amortisation costs of the development intangible asset, depreciation, share based compensation adjustments and IFRS adjustments, the resultant decreases in operating costs, as adjusted are:

Financing costs

The majority of the financing costs recognised during the period relate to the equity raise in May 2025 and exchange rate differences. Refer to note 4[3] below which discusses the accounting treatment applied in this regard.

Going Concern

Based on the major cut in expenses and the move to a proposed semiconductor partnership model for the Company's ASIC plan, as well as bearing in mind the ability and success of the Company to raise funds previously, the Directors have a reasonable expectation that the Company will have access to adequate resources to continue in operational existence for the foreseeable future and therefore have adopted the going concern basis of preparation in the financial statements. Notwithstanding this, the Company has an immediate cash requirement and the Board is actively exploring ways to address this.

By order of the Board

Tomer Assis

Chief Financial Officer

Interim Unaudited Financial Statements

as at 30 June 2025

STATEMENT OF FINANCIAL POSITION

US dollars

The accompanying notes are an integral part of the interim financial statements.

STATEMENT OF COMPREHENSIVE LOSS

US dollars

The accompanying notes are an integral part of the interim financial statements.

STATEMENT OF CHANGES IN EQUITY

The accompanying notes are an integral part of the interim financial statements.

US dollars

The accompanying notes are an integral part of the interim financial statements.

NOTES TO THE FINANCIAL STATEMENTS

NOTE 1 - NATURE OF OPERATIONS

The Company provides innovative, comprehensive networking and security solutions on programmable hardware for accelerating telco/cloud networks performance. Ethernity's FPGA logic offers complete Carrier Ethernet Switch Router data plane processing firmware, PON MAC firmware and control software with a rich set of networking features, robust security, and a wide range of virtual function accelerations to optimise telecommunications networks. Ethernity's complete solutions quickly adapt to customers' changing needs, improving time-to-market and facilitating the deployment of 5G, edge computing, and different NFV appliances including wireless backhaul with wireless link bonding, 5G UPF, 5G CU and vRouter offload with the current focus on 5G emerging appliances. The Company's customers are situated worldwide.

NOTE 2 - SUMMARY OF ACCOUNTING POLICIES

Basis of presentation of the financial statements and statement of compliance with IFRS

The interim condensed financial statements for the six months ended 30 June 2025 have been prepared in accordance with IAS 34, Interim Financial Reporting. The interim condensed financial statements do not include all the information and disclosures required in the annual financial statements in accordance with IFRS and should be read in conjunction with the Company's annual financial statements as at 31 December 2024. The accounting policies applied in the preparation of the interim condensed financial statements are consistent with those followed in the preparation of the Company's annual financial statements for the year ended 31 December 2024.

The interim condensed financial statements for the half-year ended 30 June 2025 (including comparative amounts) were approved and authorized for issue by the board of directors on 30 September 2025.

NOTE 3 - GOING CONCERN

The financial statements have been prepared assuming that the Company will continue as a going concern. Under this assumption, an entity is ordinarily viewed as continuing in business for the foreseeable future unless management intends or has no realistic alternative other than to liquidate the entity or to stop trading for at least, but not limited to, 12 months from the reporting date. This assessment has been made of the Company's prospects, considering all available information about the future, which have been included in the financial budget, from managing working capital and among other factors such as debt repayment schedules. Consideration has been given inter alia to the value of funds raised during 2025 to date, and the Company's ability to raise funds in the past. Furthermore, the Company has made positive commercial progress and is currently executing multiple customer projects, whilst simultaneously engaging in active discussions with prominent global OEM potential customers.

Considering the outlined factors above and based on experience, the directors have an expectation that the Company will have access to adequate resources to continue in operational existence for the foreseeable future.

NOTE 4 - SIGNIFICANT EVENTS

EQUITY RELATED TRANSACTIONS DURING THE ACCOUNTING PERIOD

During the 6 month period ended 30 June 2025, ordinary shares of the Company were issued, as follows:

4,036,363,633

[1] Issuance of shares for warrants exercised in December 2024

On the 23rd of December 2024, the subscriber to the May 2024 structured investment deed, exercised their last remaining warrants to acquire 222,500,000 shares of the Company. These shares were issued in January 2025 and were accounted for in share capital and share premium after having been removed from "Shares to be allotted" in the Statement of changes in equity.

[2] March 2025 equity raise

In March 2025 the Company issued 177,500,000 shares at 0.05 pence per share, realising gross proceeds of $0.12 million (£0.09 million) and net proceeds after issuance costs of $0.11 million.

The gross proceeds, after deduction of the issuance costs were allocated to share capital and share premium.

No warrants were issued in this equity raise.

[3] May 2025 equity raise

In May 2025 the Company issued 3,636,363,633 shares attached to, a corresponding 3,636,363,633 warrants. Each share with its attached warrant was issued for 0.022 pence per share, realising gross proceeds of $1.06 million (£0.80 million) and net cash proceeds after issuance expenses of $0.99 million (£0.74 million).

David Levi, a director and the CEO of the Company and Joseph Albagli, a director and the non-executive chairman of the Company subscribed for 186,363,635 of these shares and 186,363,635 corresponding warrants, on the same terms that outside investors participated, for an aggregate sum of approximately $54,000 (£41,000).

Each warrant is exercisable at 0.022 pence per share expiring on the 7th of May 2026. The warrants are not transferable, are not traded on an exchange and have an accelerator clause, whereby these warrants may be called by the Company if the closing mid-market share price of the Company equal or exceed 0.045 pence per share over a 5-consecutive day period. If such 5-consecutive day period condition is met, the Company may serve notice on the warrant holders to exercise their relevant warrants within 7 calendar days, failing which, such remaining unexercised warrants shall be cancelled.

As the exercise price of the warrants is denominated in GBP and not in the Company's functional currency, it was determined that the Company's obligation under such warrants cannot be considered as an obligation to issue a fixed number of equity instruments in exchange for a fixed amount of cash. Accordingly, it was determined that such warrants represent a derivative financial liability required to be accounted for at fair value through the profit or loss category. Upon initial recognition the Company allocated the gross proceeds as follows: an amount of $1.0 million was allocated to the par value of share capital with the remainder of the proceeds of $0.06 million recorded as a derivative warrants liability. The issuance expenses of approximately $0.09 million were allocated in a consistent manner to the above allocation. The expenses related to the warrant component were carried to profit or loss as an immediate expense while the expenses related to the share capital component were netted against the amount carried to equity, thereby reducing the share premium. In subsequent periods the company measures the derivative financial liability at fair value and the periodic changes in fair value are carried to profit or loss under financing costs or financing income, as applicable. The fair value of the derivative warrant liability is categorized as level 3 of the fair value hierarchy.

Risk free rate 3.9%

Volatility 148.4%

As at 30 June 2025, none of these warrants have been exercised.

Upon this equity raise being concluded, the brokers for this transaction received 163,409,086 warrants with identical terms as those described above, with a fair value of approximately $9,000.

NOTE 5 - FINANCING COSTS

US dollars

NOTE 7 - SEGMENT REPORTING

The Company has implemented the principles of IFRS 8, in respect of reporting segmented activities. In terms of IFRS 8, the management has determined that the Company has a single area of business, being the development and delivery of high-end network processing technology.

The Company's revenues are divided into the following geographical areas:

US dollars

The Company's revenues are divided into the following geographical areas:

%

Revenue from customers in the company's domicile, Israel, as well as its major market, the United States, have been identified on the basis of the customer's geographical locations.