Operational Update and Cost Reduction Measures

Ethernity Networks Limited (AIM: ENET.L; OTCMKTS: ENETF), a leading supplier of data processing semiconductor technology for networking appliances and PON, provides the following operational update.

The Company's cash flow plan for 2026 was based, in part, on anticipated revenues from customers and the exercise of outstanding warrants over the Company's ordinary shares. As of the date of this announcement, such warrant exercises have not materialised and, given the current share price, the likelihood of near-term exercise is considered low. In light of this, the Board has implemented immediate measures to preserve the Company's cash and maintain operational continuity.

Management Cost Reduction

Effective from mid-May 2026, the Company's senior management, David Levi (CEO) and Shavit Baruch (VP R&D), will transition to a part-time engagement of approximately 20% of their previous full-time commitment. This measure is intended to significantly reduce operating expenses while ensuring that management remains available to support the Company's ongoing activities.

The objective of this step is to:

• maintain support for existing customers;
• continue ongoing engagement and business expansion with key customers; and
• preserve the core R&D capabilities required to deliver the Company's planned revenues.

The Company's aim and objective is to continue operation as a going concern towards a break-even position, while seeking to continue meeting its short-term debt and creditor obligations as they fall due, and maintaining the operational team required to support customers and revenue generation.

Outlook

The Company now targets revenues in the range of $1.6 million to $1.8 million for 2026, based on existing customer engagements, principally the ongoing engagement with the Company's Tier-1 U.S. defence and aerospace customer.

In addition, the Company has several ongoing commercial opportunities, including ASIC licensing activities, as referenced in previous announcements, and additional engagements with existing customers. These opportunities are not yet secured, and there can be no certainty as to their outcome, timing, or potential contribution to revenues. Should the revenues not materialise in line with the expectations set out above, it is anticipated that the Company would be required to raise additional funds in 2026.

The Board will continue to monitor the Company's financial position closely and will provide further updates as appropriate.