Ethernity Networks Ltd (AIM:ENET, OTCQB:ENETF) shares dropped 21% to 0.0044p in early trading after the company launched a heavily discounted placing and warned it may need to raise more cash later this year.
The data processing technology group is raising £367,500 by issuing over 9.1 billion new shares at 0.004p each – a 29% discount to the previous closing price.
Each placing share comes with a warrant that allows investors to buy an additional share at the same price over the next 12 months. If fully exercised, those warrants would raise another £367,500.
The funds will go towards short-term debt repayments and general working capital. The company said these obligations currently run to several tens of thousands of US dollars each month.
Ethernity reported unaudited revenue of $1.03 million for 2025 and is targeting $1.7 million to $2 million in 2026, helped by ongoing contracts with broadband and defence customers. It is also developing a new high-capacity traffic manager and expanding its partnerships with chipmakers.
To preserve cash, directors intend to convert up to £70,000 of unpaid salaries into shares, subject to shareholder approval. A general meeting will be held to approve this and the issue of warrants.
Chief executive David Levi said the company had cut costs and refocused the business, and was now “better positioned for recovery and growth”.
The company said it would seek approval for additional fundraising powers at the upcoming meeting, in case more capital is required before the end of 2026.