Building Innovative Programmable Networking Solutions
Annual Report and Financial Statements For the Year Ended 31 December 2021
Ethernity Networks Ltd
Company registration number: 51-347834-7.
01
Ethernity Networks, headquartered in Israel, provides innovative, comprehensive networking and security solutions on programmable hardware for accelerating telco/ cloud networks. Ethernity's FPGA logic offers complete Carrier Ethernet Switch Router data plane processing and control software with a rich
set of networking features, robust security, and a wide range of virtual function accelerations to optimize 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 NFV.
The Company's core technology enables the delivery of data offload functionality at the pace of software development, improves performance, and reduces capital expenses, power consumption and latency, which facilitates the deployment of network function virtualisation for 5G, Broadband, and Edge Computing.
Contents
• Statutory and Other Information | 2 | |
• | Chairman's Statement | 3 |
• | Chief Executive's Statement | 5 |
• | Financial Review | 10 |
• | Board of Directors | 18 |
• | Corporate Governance Statement | 20 |
• | Directors' Report | 26 |
• Statement of Directors' Responsibilities | 27 |
- Independent Auditor's Report to the Members of Ethernity
Networks Limited | 29 |
• Statement of Financial Position | 32 |
• Statement of Comprehensive Loss | 33 |
• Statement of Changes in Equity | 34 |
• Statement of Cash Flows | 35 |
• Notes to the Financial Statements | 37 |
Annual Report and Financial Statements for the year ended 31 December 2021
02
Statutory and Other Information
Directors | Joseph (Yosi) Albagli | Independent Non-Executive Chairman |
David Levi | Chief Executive Officer | |
Mark Reichenberg | Chief Financial Officer | |
Shavit Baruch | VP Research & Development | |
Chen Saft-Feiglin | Independent Non-Executive Director | |
Zohar Yinon | Independent Non-Executive Director | |
Richard Bennett | Independent Non-Executive Director* | |
*Appointed 7 April 2022 subject to ratification at the upcoming AGM | ||
Secretary | Mark Reichenberg | |
Registered office | Beit Golan, 3rd Floor | |
1 Golan St., Corner HaNegev | ||
Airport City 7019900 | ||
Israel | ||
Auditor | Fahn Kanne & Co. Grant Thornton Israel | |
32 Hamasger Street | ||
Tel Aviv 6721118 | ||
Israel | ||
Registrars | Link Group | |
10th Floor, Central Square | ||
29 Wellington Street | ||
Leeds | ||
LS1 4DL | ||
Nominated Adviser | Arden Partners plc | |
and Joint Broker | 125 Old Broad Street | |
London | ||
EC2N 1AR | ||
Joint Broker | Peterhouse Capital Limited | |
80 Cheapside | ||
London | ||
EC2V 6DZ | ||
UK Solicitors | Edwin Coe LLP | Howard Kennedy LLP |
2 Stone Buildings | No.1 London Bridge | |
Lincoln's Inn | London | |
London | WC2A 3TH | |
SE1 9BG | ||
Israel Solicitors | Gornitzky & Co | |
HaHarash St 20 | ||
Tel Aviv-Yafo 6761310 | ||
Israel |
Ethernity Networks
STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIAL STATEMENTS | 03 |
Chairman's Statement
It gives me great pleasure to present my report as Chairman of the Board.
Since my appointment as Chair on 10 March 2021, I have spent considerable time with the CEO and members of the Board and management both inside and outside of formal meetings so as to fully appreciate the Company strategy, the challenges and the current dynamic environment in which the Company operates. I believe that the strategic direction the Company has taken with its offerings to include systems and solutions in addition to
IP licensing and services is proving to be the correct strategy as has been evidenced from the signed contracts, increased engagements and in line with the market direction in the past year. The continued level of engagement with more significant market players as well as progress being made to date is proof to me that the strategic direction of the Company is the right one and carries my full support.
We are progressing in achieving the desired mix of revenue streams from the sale of product and solutions in addition to IP licenses and services.
With the immense opportunities in the market for not only 5G deployment but also for other desirable solutions, such as the fixed wireless and 1G/10G PON OLT, I believe this will fuel our revenue growth to position us as a validated supplier with differentiated offerings and growing revenue streams.
The past year was not without its challenges for Ethernity, and while the Company continued with its strategic direction, the ongoing impacts of COVID-19 remained felt and had an effect on planned deliveries specifically related to the worldwide components shortage that emerged during the year. Whilst the Company took immediate steps to secure components needed for delivery on its order commitments, the
impact was also felt by our customers and suppliers who inevitable pushed out their planned deliveries. The offshoot of the worldwide component shortage did however impact on the realisation of planned revenues for 2021, resulting in certain revenue delays. Revenue increased by 42.2% for the 2021 financial year to $2.63 million (FY 2020 $1.85 million), while gross margin for the year was $1.94m (2020 $1.58m) and an operating loss of $6.32m (2020 $5.09m). This is further expanded upon in the Financial Report section of this Annual Report. The Company continues to invest significantly in planned Research and Development.
Fundraising
During the year under review the Company finalised and closed the Investment Facility with the 5G Innovation Leaders Fund LLC ("5G Fund") which introduced a total of £3.2m funding commencing from 25 September 2020 through to
1 November 2021. Additional funding was realised via the 30p Warrants exercises along with the Company having concluded a successful oversubscribed placing of £4.6m on 29 September of 2021.
Subsequent to the 2021 year end, the Company entered into a further Share Subscription Agreement with the 5G Fund on 25 February 2022, raising $2m on significantly more favourable terms to the Company. This has allowed the Company to accelerate production of its UEPs and ACE-NIC and provides an increased cash buffer for the Company.
These fundraising efforts have significantly strengthened the financial position of the Company and allows the Company to be well-positioned for the next stage of its development and growth with significantly larger customers, and to service expected
mass deployment growth from current contracted customers and from anticipated new contracts from end 2022 onwards.
COVID-19
The Company managed to maintain its operational capacity and deliverables during the difficult time the world endured due to COVID-19. I am pleased to report that until the emergence
of the Omicron variant, due to the exceptional and worldwide noted efforts of both the Israeli government and
the population in general, the country managed the pandemic inside of its borders and the Company managed to continue meeting its deliverables within the constraints of its customers and the worldwide component shortages challenges that emerged. The medium to long term effects of the 5th wave of COVID-19 related to the Omicron variant remain unknown.
Thanks
Neil Rafferty stepped down as a director on 1 December 2021 and on behalf of the Board I would like to express our appreciation to him for his contributions to the Company since the date of its admission to AIM.
Richard Bennett was appointed by the Board as an Independent Non- Executive Director on 7 April 2022. His appointment will be ratified by shareholders, as required, at the upcoming AGM of the Company. The Company is pleased to have Richard join the board with his wealth of knowledge in the industry as well as deep experience having served as a non-executive director on various AIM company boards since 2005.
The Board is very appreciative of the considerable efforts of the CEO, the CFO, the VP R&D and all our management and staff, who work
Annual Report and Financial Statements for the year ended 31 December 2021
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Ethernity Networks Ltd. published this content on 11 August 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 11 August 2022 06:20:01 UTC.