Ethernity Networks Ltd
28 September 2026
28 September 2026
Ethernity Networks Ltd.
("Ethernity" or the "Company")
Interim results for the six months ended 30 June 2026
Ethernity Networks Ltd (AIM: ENET.L; OTCMKTS: ENETF), a supplier of data processing and PON semiconductor technology for networking appliances, today announces its interim results for the six months ended 30 June 2026.
Key Highlights:
- Revenue of $416,569 (H1 2025: $598,599).
- Gross profit of $416,569 (H1 2025: $598,599).
- Gross margin of 100% (H1 2025: 100%)
- Net comprehensive loss for the period decreased by 41.6% to $1,240,396 (H1 2025: $2,124,278)
- EBITDA and Adjusted EBITDA losses decreased by 49.2% and 36.9% to $518,919 and $748,291 respectively (H1 2025: $1,021,118 and $1,186,414)
- Cash collections during the period were approximately $495,000
Chief Executive Officer’s statement
The majority of the revenue during H1 2026 was attributed to the deliveries of the extended order and the original contract signed with the Tier 1 U.S Aerospace vendor, at a total contract value of approximately $1.71m. The Company completed all deliveries under the original contract and the extended order by the end of April 2026. Ethernity may pursue further engagement with this customer, leveraging its domain expertise in the aerospace and aviation sectors, following completion of this latest integration phase. The Company also received recurring royalty revenue from previously deployed products.
The Company continues to pursue additional IP licensing and strategic opportunities with both existing and prospective industry players.
As part of its strategy to maximise the value of its intellectual property assets, the Company has engaged a leading intellectual property monetisation brokerage firm to evaluate licensing opportunities for its patent portfolio. The patent portfolio includes seven U.S. patents covering technologies applicable to AI infrastructure related to memory processing and networking, as well as 5G wireless backhaul. As part of this process, the Company will evaluate potential licensing opportunities with industry participants.
The Board believes that the combination of further expense reductions, recurring royalty revenue, engineering services, future licensing opportunities and the potential monetisation of the Company's intellectual property portfolio provide multiple avenues to strengthen the Company's balance sheet, to meet its financial obligations and, ultimately, create value for shareholders.
By order of the Board
David Levi
CEO
28 September 2026
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 / David Asquith (Corporate Finance) Amrit Nahal (Sales and Broking) |
|
|
|
|
|
CMC Markets UK plc (Joint Broker) |
Tel: +44 (0)20 3003 8632 |
|
Douglas Crippen |
|
|
|
|
|
ALBR Capital Limited (Joint Broker) |
Tel: +44 (0)20 7562 0930 |
|
Lucy Williams / Duncan Vasey |
|
About Ethernity (www.ethernitynet.com)
Ethernity Networks, headquartered in Israel, Ethernity Networks (AIM: ENET.L OTCMKTS: ENETF) provides innovative data processing and Passive Optical Network (“PON”) semiconductor technology for networking appliances. The Company’s comprehensive networking and security solutions deliver a Carrier Ethernet Switch Router data plane and control software, featuring a rich set of networking capabilities, robust security, and a wide array of virtual function accelerations to optimize telecommunications networks.
Ethernity's semiconductor technology has been deployed in both FPGA and ASIC form factors and has been integrated into over one million networking platforms worldwide. Its complete, flexible solutions adapt rapidly to customers' evolving needs, reducing time-to-market and enabling efficient deployment of 5G, edge computing, mobile backhaul, carrier Ethernet, broadband access networks, and various NFV appliances including 5G UPF, vRouter, and vBNG.
OPERATIONAL AND FINANCIAL REVIEW
Revenues
Revenues for the period were $416,569 (H1 2025: $598,599), with the majority attributed to the tier 1 U.S Aerospace contract.
Gross profit and margin
During the period, the Company focused on sales generating a 100% gross margin resulting from licensing fees or royalties. To minimise cash-flow risk, it did not enter into commitments requiring components to be purchased, or production to begin, in advance of future orders.
The gross profit of $416,569 decreased by 30.4% compared with the previous year (H1 2025: $598,599), and the gross margin remained at 100% (H1 2025: 100%).
EBITDA
Although EBITDA is not a recognised reportable accounting measure, it provides a meaningful insight into the operations of the Company when removing the non-cash or intangible asset elements from trading results along with recognising actual costs versus various IFRS adjustments, in this case being the amortisation and non-cash items charged in operating income and the effects of IFRS 16 treatment of operational leases.
The EBITDA for the six months ended 30 June 2026 is presented as follows:
|
EBITDA |
For the 6 months ended |
For the 12 months ended |
6 month change of 2026 vs 2025 | ||
|
|
30-Jun-2026 |
30-Jun-2025 |
31-Dec-2025 |
|
% |
|
Revenues |
416,569 |
598,599 |
1,049,922 |
(182,030) |
(30.4%) |
|
Gross Profit |
416,569 |
598,599 |
1,049,922 |
(182,030) |
(30.4%) |
|
Gross Margin % |
100.00% |
100.0% |
100.0% |
|
0.0% |
|
Operating Loss |
(1,023,090) |
(1,796,978) |
(5,444,325) |
773,888 |
(43.1%) |
|
Amortisation of Intangible Assets |
186,411 |
480,690 |
961,380 |
(294,279) |
|
|
Impairment of intangible assets |
- |
- |
1,578,660 |
- |
|
|
Depreciation charges on fixed assets |
150,560 |
127,970 |
260,029 |
39,230 |
|
|
Depreciation in respect of IFRS16 lease assets |
167,200 |
167,200 |
439,068 |
(16,640) |
|
|
EBITDA |
(518,919) |
(1,021,118) |
(2,205,188) |
502,199 |
(49.2%) |
|
Add back Share based compensation charges |
22,478 |
57,494 |
90,844 |
(35,016) |
|
|
Add back impairments |
- |
- |
(32,207) |
- |
|
|
Add back vacation accrual charges |
12,086 |
- |
55,990 |
12,086 |
|
|
Adjust IFRS16 rent expense reversals |
(263,936) |
(222,790) |
(464,971) |
(41,146) |
|
|
Adjusted EBITDA |
(748,291) |
(1,186,414) |
(2,555,532) |
438,123 |
(36.9%) |
EBITDA loss for the first six-month period of the year decreased by 49.2% to $518,919 (H1 2025: $1,021,118). The Adjusted EBITDA loss in the first six months of the year decreased by 36.9% to $748,291 (H1 2025: $1,186,414).
Operating costs
Operating expenses (before amortisation, depreciation and IFRS adjustments) decreased by an overall 34.8% from $1,785,655 to $1,164,860 during the period against the same period in 2025.
Within the R&D division, the Company reduced its operating expenses (including headcount and other R&D expenses) by a total of 55.9%.
General and Administration costs (before amortisation, depreciation and IFRS adjustments) have decreased by 4%, also mainly attributed to headcount savings.
The decrease in Marketing expenses (net of share-based compensation and vacation accruals) of 24.1% 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:
|
Operating costs |
|
|
Increase (Decrease) June |
% | |
|
For the 6 months ended |
31-Dec | ||||
|
30-Jun | |||||
|
2026 |
2025 |
2025 | |||
|
Research and Development Costs net of amortisation, Share Based Compensation, IFRS adjustments and Vacation accruals |
429,592 |
974,673 |
1,711,377 |
(545,081) |
(55.9%) |
|
General and Administrative expenses, net of depreciation, Share Based Compensation, IFRS adjustments, Vacation accruals and impairments |
572,285 |
596,287 |
1,001,767 |
(24,002) |
(4.0%) |
|
Marketing expenses, net of Share Based Compensation and Vacation accruals |
162,983 |
214,695 |
427,981 |
(51,712) |
(24.1%) |
|
Total |
1,164,860 |
1,785,655 |
3,141,125 |
(620,795) |
(34.8%) |
Summarised trading results
|
Summarised Trading Results |
|
|
Increase (Decrease) June |
% | |
|
For the 6 months ended |
31-Dec | ||||
|
30-Jun | |||||
|
2026 |
2025 |
2025 | |||
|
Revenues |
416,569 |
598,599 |
1,049,922 |
(182,030) |
(30.4%) |
|
Gross Profit |
416,569 |
598,599 |
1,049,922 |
(182,030) |
(30.4%) |
|
Gross Margin % |
100.00% |
100.0% |
100.0% |
|
0.0% |
|
Operating Loss |
(1,023,090) |
(1,796,978) |
(5,444,325) |
773,888 |
(43.1%) |
|
Financing costs |
(273,888) |
(327,339) |
(554,827) |
53,451 |
|
|
Financing income |
56,582 |
39 |
272,690 |
56,543 |
|
|
Net comprehensive loss for the period |
(1,240,396) |
(2,124,278) |
(5,726,462) |
883,882 |
(41.6%) |
|
Basic and Diluted earnings per ordinary share |
(0.00) |
(0.00) |
(0.00) |
0.00 |
(90.3%) |
|
Weighted average number of ordinary shares for basic earnings per share |
22,429,896,364 |
3,731,471,356 |
4,179,048,317 |
| |
Financing costs
The majority of the financing costs recognised during the period relate exchange rate differences and interest.
Going Concern
Management has determined that the balance of cash and cash equivalents as of 30 June 2026 (and as of the date of the approval of these financial statements), together with other current available resources, is not sufficient for the Company to fund its current obligations including arrears for payment of certain of its liabilities as specified in the Company’s annual financial statements as at 31 December 2025.
However, the Company has implemented plans to meet these and future obligations.
The Company’s ongoing operations are dependent on Management’s plans for securing funds including through further design services and recurring royalty revenue from existing customers, monetizing its patent portfolio, including strategic options to maximize the value of its intellectual property assets.
However, the success of the Company’s plans to secure further design services, monetize its patent portfolio and close a strategic deal as outlined above is not assured and thus a material uncertainty exists that may cast a significant doubt on the Company’s ability to continue as a going concern and fulfil its obligations and liabilities in the normal course of business in the future. The financial statements do not include any adjustments relating to recoverability and classification of the recorded asset amounts, and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
FORWARD LOOKING STATEMENTS
This announcement includes statements that are, or may be deemed to be, "forward-looking statements". By their nature, forward-looking statements involve risk and uncertainty since they relate to future events and circumstances. Actual results may, and often do, differ materially from any forward-looking statements. Any forward-looking statements in this announcement reflect Ethernity’s view with respect to future events as at the date of this announcement. Save as required by law or by the AIM Rules for Companies, Ethernity undertakes no obligation to publicly revise any forward-looking statements in this announcement, following any change in its expectations or to reflect events or circumstances after the date of this announcement.
By order of the Board
Tomer Assis
Chief Financial Officer
28 September 2026
Interim Unaudited Financial Statements
as at 30 June 2026
STATEMENT OF FINANCIAL POSITION
|
|
|
|
US dollars | ||
|
|
|
|
30 June |
31 December | |
|
|
|
|
2026 |
2025 |
2025 |
|
|
|
|
Unaudited |
Audited | |
|
ASSETS |
|
|
|
|
|
|
Current |
|
|
|
|
|
|
Cash and cash equivalents |
|
|
32,399 |
37,749 |
31,817 |
|
Other short-term financial assets |
|
|
- |
2,938 |
- |
|
Trade receivables |
|
|
69,795 |
189,929 |
123,878 |
|
Inventories |
|
|
- |
218,168 |
- |
|
Other current assets |
|
|
62,793 |
127,250 |
104,494 |
|
Current assets |
|
|
164,987 |
576,034 |
260,189 |
|
|
|
|
|
|
|
|
Non-Current |
|
|
|
|
|
|
Property and equipment |
|
|
413,221 |
477,670 |
563,781 |
|
Intangible asset |
|
|
813,589 |
3,059,350 |
1,000,000 |
|
Right-of-use asset |
|
|
235,282 |
674,350 |
402,482 |
|
Other long term assets |
|
|
10,338 |
118,905 |
10,338 |
|
Non-current assets |
|
|
1,472,430 |
4,330,275 |
1,976,601 |
|
|
|
|
|
|
|
|
Total assets |
|
|
1,637,417 |
4,906,309 |
2,236,790 |
|
|
|
|
|
|
|
|
LIABILITIES AND EQUITY |
|
|
|
|
|
|
Current |
|
|
|
|
- |
|
Trade payables |
|
|
1,209,242 |
498,077 |
1,327,683 |
|
Warrants liability |
|
|
18,900 |
173,907 |
2,711 |
|
Other current liabilities |
|
|
2,302,996 |
1,827,780 |
2,395,149 |
|
Current liabilities |
|
|
3,531,138 |
2,499,764 |
3,725,543 |
|
|
|
|
|
|
|
|
Non-Current |
|
|
|
|
|
|
Lease liability |
|
|
- |
241,602 |
- |
|
Other non current liabilities |
|
|
50,830 |
457,630 |
50,830 |
|
Non-current liabilities |
|
|
50,830 |
699,232 |
50,830 |
|
|
|
|
|
|
|
|
Total liabilities |
|
|
3,581,968 |
3,198,996 |
3,776,373 |
|
|
|
|
|
|
|
|
Equity |
|
|
|
|
|
|
Share capital |
|
|
- |
1,380,441 |
- |
|
Share premium |
|
|
52,203,673 |
49,499,287 |
51,390,723 |
|
Other components of equity |
|
|
1,660,533 |
1,604,705 |
1,638,055 |
|
Accumulated deficit |
|
|
(55,808,757) |
(50,777,120) |
(54,568,361) |
|
Total equity |
|
|
(1,944,551) |
1,707,313 |
(1,539,583) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and equity |
|
|
1,637,417 |
4,906,309 |
2,236,790 |
The accompanying notes are an integral part of the interim financial statements.
STATEMENT OF COMPREHENSIVE LOSS
|
|
|
|
US dollars | ||
|
|
|
|
Six months ended 30 June |
For the year ended | |
|
|
|
|
2026 |
2025 |
2025 |
|
|
Note |
|
Unaudited |
Audited | |
|
Revenue |
7 |
|
416,569 |
598,599 |
1,049,922 |
|
Cost of sales |
|
|
- |
- |
- |
|
Gross profit |
|
|
416,569 |
598,599 |
1,049,922 |
|
Research and development expenses |
|
|
647,050 |
1,513,153 |
2,820,546 |
|
Impairment of intangible assets |
|
|
- |
|
1,578,660 |
|
General and administrative expenses |
|
|
626,109 |
668,371 |
1,668,361 |
|
Marketing expenses |
|
|
166,500 |
214,695 |
427,322 |
|
Other income |
|
|
- |
(642) |
(642) |
|
Operating loss |
|
|
(1,023,090) |
(1,796,978) |
(5,444,325) |
|
|
|
|
|
|
|
|
Financing costs |
5 |
|
(273,888) |
(327,339) |
(554,856) |
|
|
|
|
|
|
|
|
Financing income |
6 |
|
56,582 |
39 |
272,719 |
|
|
|
|
|
|
|
|
Loss before tax |
|
|
(1,240,396) |
(2,124,278) |
|
|
|
|
|
|
|
|
|
Tax expense |
|
|
- |
- |
- |
|
Net comprehensive loss for the period |
|
|
(1,240,396) |
(2,124,278) |
(5,726,462) |
|
|
|
|
|
|
|
|
Basic and diluted loss per ordinary share |
|
|
(0.0001) |
(0.001) |
(0.001) |
|
Weighted average number of ordinary shares for basic and diluted loss per share |
|
|
22,429,896,364 |
3,731,471,356 |
4,179,048,317 |
The accompanying notes are an integral part of the interim financial statements.
STATEMENT OF CHANGES IN EQUITY
|
|
|
|
||||||||||||||
|
|
|
|
|
US dollars | ||||||||||||
|
|
Number of shares |
|
Share capital |
|
Share premium |
|
Shares to be allotted |
|
Other components of equity |
|
Accumulated deficit |
|
Total equity | |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
|
Balance at 1 January 2026 (Audited) |
10,031,828,493 |
|
- |
|
51,390,723 |
|
- |
|
1,638,055 |
|
(54,568,361) |
|
(1,539,583) | |||
|
Employee share-based compensation |
- |
|
- |
|
- |
|
- |
|
22,478 |
|
- |
|
22,478 | |||
|
Net proceeds allocated to the issuance of ordinary shares |
14,937,500,000 |
|
- |
|
699,799 |
|
- |
|
- |
|
- |
|
699,799 | |||
|
Expenses paid in shares and warrants |
1,500,857,437 |
|
- |
|
113,151 |
|
- |
|
- |
|
|
|
113,151 | |||
|
Net comprehensive loss for the period |
- |
|
- |
|
- |
|
- |
|
- |
|
(1,240,396) |
|
(1,240,396) | |||
|
Balance at 30 June 2026 (Unaudited) |
26,470,185,930 |
|
- |
|
52,203,673 |
|
- |
|
1,660,533 |
|
(55,808,757) |
|
(1,944,551) | |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
|
Balance at 1 January 2025 (Audited) |
1,000,000,000 |
|
271,255 |
|
49,255,030 |
|
323,725 |
|
1,547,211 |
|
(48,652,842) |
|
2,744,379 | |||
|
Employee share-based compensation |
- |
|
- |
|
- |
|
|
|
57,494 |
|
- |
|
57,494 | |||
|
Net proceeds allocated to the issuance of ordinary shares |
3,813,863,633 |
|
1,048,177 |
|
(27,691) |
|
|
|
- |
|
|
|
1,020,486 | |||
|
Shares allotted |
222,500,000 |
|
61,009 |
|
262,716 |
|
(323,725) |
|
- |
|
- |
|
- | |||
|
Expenses paid in shares and warrants |
|
|
|
|
9,232 |
|
|
|
- |
|
|
|
9,232 | |||
|
Net comprehensive loss for the period |
- |
|
- |
|
- |
|
|
|
- |
|
(2,124,278) |
|
(2,124,278) | |||
|
Balance at 30 June 2025 (Unaudited) |
5,036,363,633 |
|
1,380,441 |
|
49,499,287 |
|
- |
|
1,604,705 |
|
(50,777,120) |
|
1,707,313 | |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
|
Balance at 1 January 2025 (Audited) |
1,000,000,000 |
|
271,255 |
|
49,255,030 |
|
323,725 |
|
1,547,211 |
|
(48,652,842) |
|
2,744,379 | |||
|
Employee share-based compensation |
- |
|
- |
|
- |
|
- |
|
90,844 |
|
- |
|
90,844 | |||
|
Net proceeds allocated to the issuance of ordinary shares |
8,809,328,493 |
|
1,270,497 |
|
260,984 |
|
- |
|
- |
|
(189,057) |
|
1,342,424 | |||
|
Shares to be allotted |
222,500,000 |
|
61,009 |
|
262,716 |
|
(323,725) |
|
- |
|
- |
|
- | |||
|
Expenses paid in shares and warrants |
- |
|
- |
|
9,232 |
|
- |
|
- |
|
- |
|
9,232 | |||
|
Conversion to non-par value |
- |
|
(1,602,761) |
|
1,602,761 |
|
- |
|
- |
|
- |
|
- | |||
|
Net comprehensive loss for the year |
- |
|
- |
|
- |
|
- |
|
- |
|
(5,726,462) |
|
(5,726,462) | |||
|
Balance at 31 December 2025 (Audited) |
10,031,828,493 |
|
- |
|
51,390,723 |
|
- |
|
1,638,055 |
|
(54,568,361) |
|
(1,539,583) | |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
STATEMENT OF CASH FLOWS
|
|
US dollars | ||||
|
|
Six months ended 30 June |
Year ended 31 December | |||
|
|
2026 |
2025 |
2025 | ||
|
|
Unaudited |
Audited | |||
|
|
|
|
| ||
|
Operating activities |
|
|
| ||
|
Net comprehensive loss for the period |
(1,240,396) |
(2,124,278) |
(5,726,462) | ||
|
|
|
|
| ||
|
Non-cash adjustments |
|
|
| ||
|
Depreciation of property and equipment |
150,560 |
127,970 |
260,028 | ||
|
Depreciation of right of use asset |
167,200 |
167,200 |
439,068 | ||
|
Share-based compensation |
22,478 |
57,494 |
90,844 | ||
|
Amortisation of intangible assets |
186,411 |
480,690 |
961,380 | ||
|
Impairment of intangible assets |
- |
- |
1,578,660 | ||
|
Amortisation of liabilities |
26,276 |
50,132 |
77,674 | ||
|
Lease liability Interest |
18,812 |
36,418 |
65,134 | ||
|
Foreign exchange losses on cash balances |
8,709 |
(4,045) |
(24,196) | ||
|
Capital Loss |
- |
255 |
254 | ||
|
Revaluation of financial instruments, net |
(56,582) |
96,308 |
(218,087) | ||
|
Expenses paid in shares and options |
113,151 |
9,232 |
9,232 | ||
|
|
|
|
| ||
|
Net changes in working capital |
|
|
| ||
|
Decrease(Increase) in trade receivables |
54,083 |
195,071 |
261,122 | ||
|
Decrease (Increase) in other current assets |
41,701 |
5,586 |
28,342 | ||
|
Decrease (Increase) in other long-term assets |
- |
(8,227) |
100,340 | ||
|
Increase (decrease) in trade payables |
(118,441) |
(863,035) |
(33,429) | ||
|
Increase (decrease) in other liabilities |
126,695 |
441,586 |
1,007,903 | ||
|
Increase (decrease) in IIA royalty liability |
- |
- |
(3,796) | ||
|
Increase (decrease) in other non current liabilities |
- |
457,630 |
- | ||
|
Net cash used in operating activities |
(499,343) |
(874,013) |
(1,125,990) | ||
|
|
|
|
| ||
|
Investing activities |
|
|
| ||
|
Deposits to short-term financial assets |
- |
(2,938) |
- | ||
|
Net cash used in investing activities |
- |
(2,938) |
- | ||
|
|
|
|
| ||
|
Financing activities |
|
|
| ||
|
Proceeds allocated to ordinary shares |
743,111 |
1,118,293 |
1,434,248 | ||
|
Proceeds allocated to warrants |
72,771 |
67,987 |
205,445 | ||
|
Issuance costs |
(43,312) |
(103,548) |
(91,824) | ||
|
Repayment of lease liability |
(263,936) |
(222,790) |
(464,971) | ||
|
Net cash provided by financing activities |
508,634 |
859,942 |
1,082,898 | ||
|
|
|
|
| ||
|
Net change in cash and cash equivalents |
9,291 |
(17,009) |
(43,092) | ||
|
Cash and cash equivalents, beginning of year |
31,817 |
50,713 |
50,713 | ||
|
Exchange differences on cash and cash equivalents |
(8,709) |
4,045 |
24,196 | ||
|
Cash and cash equivalents, end of period |
32,399 |
37,749 |
31,817 | ||
|
|
|
|
| ||
|
Supplementary information: |
|
|
| ||
|
Interest paid during the period |
|
- |
25,455 | ||
|
Interest received during the period |
- |
39 |
1,270 | ||
|
|
|
|
| ||
|
Supplementary information on non-cash activities: |
|
|
| ||
|
Shares issued pursuant to share subscription agreement |
- |
- |
9,232 | ||
|
Expenses paid in shares and warrants |
113,151 |
9,232 |
218,168 | ||
The accompanying notes are an integral part of the interim financial statements.
NOTES TO THE FINANCIAL STATEMENTS
NOTE 1-NATURE OF OPERATIONS
ETHERNITY NETWORKS LTD. (hereinafter: the "Company"), was incorporated in Israel on the 15th of December 2003 as Neracore Ltd. The Company changed its name to ETHERNITY NETWORKS LTD. on the 10th of August 2004.
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 2026 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 2025. 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 2025.
The interim condensed financial statements for the half-year ended 30 June 2026 (including comparative amounts) were approved and authorized for issue by the board of directors on 28 September 2026.
NOTE 3-GOING CONCERN
Management has determined that the balance of cash and cash equivalents as of June 30, 2026 (and as of the date of the approval of these financial statements), together with other current available resources, is not sufficient for the Company to fund its current obligations including arrears for payment of certain of its liabilities as specified in the Company’s annual financial statements as at 31 December 2025. However, the Company has implemented plans to meet these and future obligations.
The Company’s ongoing operations are dependent on Management’s plans for securing funds including through further design services and recurring royalty revenue from existing customers, monetizing its patent portfolio, including strategic options to maximize the value of its intellectual property assets.
However, the success of the Company’s plans to secure further design services, monetize its patent portfolio and closing a strategic deal as outlined above is not assured and thus a material uncertainty exists that may cast a significant doubt on the Company’s ability to continue as a going concern and fulfil its obligations and liabilities in the normal course of business in the future. The financial statements do not include any adjustments relating to recoverability and classification of the recorded asset amounts, and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
NOTE 4-SIGNIFICANT EVENTS
EQUITY RELATED TRANSACTIONS DURING THE ACCOUNTING PERIOD
During the 6 month period ended 30 June 2026, ordinary shares of the Company were issued, as follows:
|
|
Note |
|
Number of ordinary shares |
|
|
|
|
|
|
Issuance of shares (issued together with warrants) |
[1] |
|
14,937,500,000 |
|
Issuance of shares to Directors |
[2] |
|
1,500,857,437 |
|
|
|
|
16,438,357,437 |
[1]Issuance of shares, issued together with warrants
In February 2026, in two separate transactions with the same terms, the Company issued 14,937,500,000 shares attached to, a corresponding 14,937,500,000 warrants. Each share with its attached warrant was issued for 0.004 pence per share, realising gross proceeds of $0.82 million (£0.60 million) and net cash proceeds after issuance expenses of $0.77 million (£0.56 million).
Each warrant is exercisable at 0.004 pence per share expiring 12 months later, in February 2027. 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 0.006 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 $0.75 million was allocated to the share capital with the remainder of the proceeds of $0.07 million recorded as a derivative warrants liability. The issuance expenses of approximately $0.05 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.
The fair value valuation of the warrants was based on the Black-Scholes option pricing model, calculated in two stages. Initially, the fair value of these call warrants issued to investors were calculated, assuming no restrictions applied to such call warrants. As the Company, under certain circumstances, has a right to force the investors to either exercise their warrants or have them cancelled, the second calculation calculates the value of the warrants as call warrants that were issued by the investor to the company. The net fair value results from reducing the call investor warrantsfair value from the call warrants fair value, as long as the intrinsic value of the call warrants (share price at the period end, less exercise price of the warrants) is not greater than such value. Should the intrinsic value of the warrants be higher than the Black-Scholes two stage method described above, then the intrinsic value of the warrants is considered to be a more accurate measure to use in determining the fair value. The following factors were used in calculating the fair value of the warrants at their issuance:
Risk free rate3.5%
Volatility162.5%
As at 30 June 2026, none of these warrants have been exercised.
[2]Issuance of shares to Directors
In March 2026, as part of the agreed share element component of Mr. Albagli’s remuneration as non-Executive Chairman, the Company issued 6,936,578 shares to him for the period from 1 March 2024 to 28 February 2025 at an average issue price of 0.43p per share, and 143,920,859 shares in respect of the period from 1 March 2025 to 28 February 2026, at an average issue price of 0.02p per share.
In addition, during March 2026, the following directors agreed to convert unpaid salaries and fees owing to them, into shares of the Company, at the same price as the February 2026 capital raise (0.004 pence per share), however these directors did not receive any associated warrants.
|
Director |
Amount converted (in thousands) |
Shares received | |
|
GBP |
USD | ||
|
|
|
|
|
|
David Levi |
30 |
40 |
750,000,000 |
|
Shavit Baruch |
12 |
16 |
300,000,000 |
|
Joseph (Yosi) Albagli |
12 |
16 |
300,000,000 |
|
|
|
|
1,350,000,000 |
NOTE 5-FINANCING COSTS
|
|
US dollars | ||
|
|
Six months ended 30 June |
Year ended 31 December | |
|
|
2026 |
2025 |
2025 |
|
|
Unaudited |
Audited | |
|
|
|
|
|
|
Bank fees and interest |
96,768 |
4,899 |
226,869 |
|
Lease liability financial expenses |
18,812 |
36,418 |
65,134 |
|
Expenses allocated to issuing warrants |
4,250 |
96,308 |
12,292 |
|
Exchange rate differences, net |
154,058 |
189,714 |
250,532 |
|
Total financing costs |
273,888 |
327,339 |
554,827 |
NOTE 6-FINANCING INCOME
|
|
US dollars | ||
|
|
Six months ended 30 June |
Year ended 31 December | |
|
|
2026 |
2025 |
2025 |
|
|
Unaudited |
Audited | |
|
|
|
|
|
|
Revaluation of warrant derivative liability |
56,582 |
- |
218,087 |
|
Revaluation of liability related to share subscription agreement and structured investment deed, measured at FVTPL |
- |
- |
53,333 |
|
Interest received |
- |
39 |
- |
|
Exchange rate differences, net |
- |
- |
1,270 |
|
Total financing income |
56,582 |
39 |
272,690 |
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 | ||
|
|
Six months ended 30 June |
Year ended 31 December | |
|
|
2026 |
2025 |
2025 |
|
|
Unaudited |
Audited | |
|
|
|
|
|
|
Israel |
124,262 |
99,851 |
205,424 |
|
United States |
292,305 |
498,748 |
844,498 |
|
|
416,567 |
598,599 |
1,049,922 |
The Company's revenues are divided into the following geographical areas:
|
|
% | ||
|
|
Six months ended 30 June |
Year ended 31 December | |
|
|
2026 |
2025 |
2025 |
|
|
Unaudited |
Audited | |
|
|
|
|
|
|
Israel |
29.8% |
16.7% |
19.6% |
|
United States |
70.2% |
83.3% |
80.4% |
|
|
100.0% |
100.0% |
100.0% |
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.
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