11 December 2025

Ethernity Networks Ltd

("Ethernity" or the "Company")

Business Update

Ethernity Networks Limited (AIM: ENET.L; OTCMKTS: ENETF), a leading supplier of data processing semiconductor technology for networking appliances and PON, provides an update on its current business and plans for 2026.

Highlights

·      The Company is confident in its ability to secure a partnership for the ASSP opportunity.

·      A long-standing OEM customer completed its second ASIC development earlier this year under the $800k agreement signed in November 2023. The Company anticipates increased royalty revenues from this engagement during 2026.

·      Tier-1 U.S. PON vendors have placed an order for an additional 2,000 unit licenses.

·      A Tier-1 U.S. defense and aerospace customer has successfully delivered a product to market based on the Company's IP. Close development collaboration continues, and the customer is expected to purchase additional platform-use licenses in 2026.

·      The Company is expanding its FPGA portfolio with a new low-latency solution targeting Defence, Mobile, and Internet-of-Things (IoT) applications.

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Application-specific standard product ("ASSP") Opportunity

The Company remains confident in securing a partnership for the development of its planned ASSP device, which is designed to address large and diverse markets, including wireless backhaul through the integration of the Company patented L1 bonding, carrier ethernet, and broadband access through the combination of the  PON functionality as a complete Optical Line Termination ("OLT")  on a chip.

The ASSP will be architected as a true multi-platform solution, deployable across a wide range of systems such as cell-site routers, microwave backhaul Indoor Units ("IDU"), PON OLTs, compact carrier Ethernet switches, enterprise gateways, and 5G edge units. This broad applicability would create a strong foundation for large-scale commercial opportunities for both partners and OEMs. A growing number of leading OEMs have expressed interest in receiving the ASSP and acting as early adopters.

For partners, the solution offers a compelling advantage as investment in the ASSP can refresh a broad portfolio across multiple product lines, significantly reducing duplicated R&D efforts while accelerating time-to-market and improving overall return on investment.

Progress with Existing Customers

Long-standing OEM customer

On 29 November 2023, the Company announced an $800,000 order to expand an existing license to cover a wide range of products, which is expected to increase annual royalty revenues.

In July 2025, the Company further announced that this customer had reached a significant milestone, having shipped over 1,000,000 units based on the Company's IP. Building on the extended license delivered in November 2023, the customer successfully completed fabrication of a second ASIC earlier this year. As a result, the Company anticipates a growing royalty stream from this customer during 2026.

Additionally, the Company is collaborating with this customer on a joint proposal for a new FPGA-based product leveraging Ethernity's proven and widely deployed technology platform.

U.S. Tier-1 PON OLT OEM Customer

As indicated in the Company's 24 July 2025 business update, this customer surpassed deployment of several thousand Remote OLT (RoLT) units with its leading U.S. Tier-1 OEM customer, with approximately 40% of the total volume shipped in the preceding 12 months. This milestone satisfied the initial contracted volume threshold.

The pace of deployment has continued through Q3 and Q4 of 2025. Consequently, the Company received royalty revenues for Q3 and secured a pre-purchase order of licenses for an additional 2,000 units, most of which are expected to be deployed during Q4 2025.

The customer has indicated its intention to engage in discussions regarding the development of two next-generation RoLT platforms, expected to incorporate additional functionality delivered by Ethernity. These discussions are anticipated to lead to further commercial orders, subject to entering into new contractual arrangements.

U.S. Tier-1 Defence and Aerospace Customer

In its interim results published on 30 September 2025, the Company announced that by the end of August 2025 it had successfully completed all deliveries under the single-platform use license agreement and related extended order, with a total contract value of US$1.3 million.

Since September, the Company has been working closely with the customer on enhancements to the original product functionality, generating additional revenue during Q4 2025 which is expected to continue into 2026.

The customer has commenced shipments of its product based on the Company's IP. In parallel, both parties are engaged in technical discussions regarding major product enhancements, including low-latency design improvements, anticipated to materialise in 2026.

From a commercial perspective, as the original agreement was limited to a single-platform use license, and following the success of the first platform, the customer is now considering the purchase of an additional use license for a new platform planned for 2026.

Extending product functionality for existing markets in 2026

Alongside ongoing work with existing customers and the ASSP program, the Company is expanding its focus on the Defence and Aerospace markets through new development of low-latency networking on FPGA and adaptive routing. This initiative aligns with the U.S. Government's approval to sell this technology to U.S. Defence and Aerospace vendors.

Low-latency switching is increasingly mission-critical across multiple markets. These markets are shifting toward deterministic, time-sensitive, and high-fidelity data flows, creating a clear business rationale for Ethernity's investment in a new low-latency switch and higher-capacity architecture targeting Internet of Things (IoT) industrial automation and robotics, mobile xHaul (5G/6G Fronthaul & Midhaul), and defence aerospace. The combination of deep buffering for secure and reliable data transmission across all scenarios, applicable to wireless and satellite communications, together with ultra-low latency and Layer-1 bonding, uniquely positions us to deliver highly customized FPGA solutions for the defense, mobile, and industrial markets.

Defence vendors are migrating to Ethernet-based architectures with FPGAs, as demonstrated by the Company's current defence and military business. Low-latency switching will become part of Ethernity's secure, deterministic communication suite, directly relevant to Tier-1 U.S. customers and applicable to other defence companies.

Supporting low-latency switching is a natural extension of Ethernity's existing capabilities, including deterministic ingress processing hardware datapaths, low-latency LPM engines (recently patented on 19 November 2025), and TSN-like deterministic flows. Developing a low-latency FPGA-based switch solution addresses near-term opportunities within the existing customer base while creating a strategic technology platform that can later be extended to additional markets.

The Company also believes that the same solution developed on FPGA can later be adapted for ASIC, enabling dual business models of FPGA-based customised solutions and IP licensing for ASIC in markets requiring higher throughput.

David Levi, CEO of Ethernity Networks, commented: "The Company is pleased to report an extended royalty stream from its long-standing OEM customer and Tier-1 U.S. PON OLT customer, alongside the successful deployment of our Tier-1 U.S. defence and Aerospace vendor's defence appliance. This defence deployment has already resulted in additional customization work and is anticipated to generate further follow-on business.

"Our low-latency design capabilities are expected to enable expansion of this customer engagement into FPGA-based solutions across existing markets and customers. Furthermore, we are confident in our ability to successfully materialize the ASSP opportunity, which is expected to support near-term positive cash flow and a return to profitability, representing a significant contrast to the extended investment cycles required under the previous business model."

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About Ethernity Networks

Ethernity Networks (AIM: ENET.L; OTCMKTS: ENETF) provides innovative and comprehensive networking, security and PON semiconductor technology that enhances the capacity and efficiency of telco/cloud network infrastructure. Ethernity's silicon-proven logic provides advanced data processing functionality for various networking applications, alongside patented wireless access technology, patented routing technology and passive optical network (PON) controller. These are complemented by robust control software boasting a rich set of networking functions. Ethernity's technology adaptable solutions accelerate time-to-market and facilitate the deployment of 5G services over both wireless and fiber infrastructure.

Forward-looking statements  

This document contains forward-looking statements. Those statements reflect the current opinions, evaluations and estimations of the Company's management, and are based on the current data regarding the Company's business as is detailed in this document and in the Company's periodical, interim and immediate reports. The Company does not undertake any obligation or make any representation that actual results and events will be in line with those statements, and stresses that they may differ materially from those statements, due to changes in the Company's business, market, competition, demand for the Group's products or services, general economic factors or other factors that can influence the Company's business and results, due to the risk factors that are detailed in the Company's communication , and due to information and factors that are currently unknown to the Company's management and that, if known, would affect the management's opinions, evaluations or estimations. The Company will report the actual results and events according to its legal, accounting and regulatory obligations, and does not undertake any other obligation to report them or their deviations from the forward-looking statements.