REG - Ethernity Networks - Contract cancellation

Ethernity NetworksAnnouncement

01/09/2022 08:15

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RNS Number : 8224X  Ethernity Networks Ltd  01 September 2022

01 September 2022

ETHERNITY NETWORKS LIMITED

("Ethernity" or the "Company")

 

Contract cancellation

 

Ethernity Networks (AIM: ENET.L), a leading supplier of data processing
offload solutions on programmable FPGA (field programmable gate array) for
accelerating telco/cloud networks, announces that it received notice on 31
August 2022 that its contract for the provision of the Company's UEP module
(Universal Edge Platform), details of which were first announced on 30 July
2021, (the "Contract") has been cancelled.

 

The Contract was signed with an Israeli international wireless connectivity
vendor and the Company has been informed that it has been cancelled due to
customer claims of delays in the product delivery. Ethernity strongly rejects
the allegations by the customer, which has itself caused continual delays due
to subsequent pricing issues, amendments to technical requirements and
designs, faulty hardware definitions, as well as faults in the customer
product on which the Company needed to integrate its solution. These factors
drove the delays experienced by the Ethernity development teams.

 

The Contract was for an initial total of $930,000 with various scheduled
deliveries and billings. To date, the Company has invoiced the customer for a
total of $107,000 which included deliveries as required for prototypes in
accordance with the Contract terms. The Company had budgeted for a further
c.$240,000 to be delivered and invoiced in 2022, with the balance being
delivered and invoiced in 2023. These amounts had been factored into the
Company's contracted revenue figures for 2022 and 2023 provided in the 2021
full year results, announced on 8 April 2022, and these figures are now
expected to reduce commensurately as a result of the Contract cancellation.

 

On 13 June 2022, the Company announced it has been continuing with development
of a higher end UEP product for the market and that it had delivered the UEP
module adapted for use in conjunction with a leading OEM wireless backhaul
transmission product to the customer, in line with the Contract, following the
successful conclusion of the development and prototype testing stages. It
further announced that the completed UEP module is a similar design to the
Company's forthcoming UEP2025. The Ethernity development team that has
focussed on the customer development will continue to focus on the UEP2025 as,
per customer interactions and discussions, the management remain of the view
that the UEP2025 has the potential to generate additional revenues for the
Company.

 

The Company is in discussions with potential customers for supply of the
UEP2025, which is equipped with the Company's patented wireless link bonding
and is targeted to serve as an ideal disaggregated, all-in-one, wireless
backhaul Indoor Unit, facilitating 5G infrastructure deployment by offering
higher bandwidth transport, faster time to market, and lower cost to deploy.

 

Ethernity CEO, David Levi, said: "We are extremely disappointed with the
customer's stance and believe that their decision has been driven by other
internal factors at the customer, which is resulting in them not being able to
deliver to their anticipated plans. We consider that these factors are
unrelated to the Ethernity developments. We are however highly encouraged by
the progress and developments of our UEP2025 and will continue to focus our
resources on this development."

 

About Ethernity Networks

Ethernity Networks (AIM: ENET.L) provides innovative, comprehensive networking
and security solutions on programmable hardware for accelerating telco/cloud
networks. Ethernity's semiconductor 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.

 

For more information on Ethernity's products and solutions, please see The
Company's website at www.ethernitynet.com (http://www.ethernitynet.com) .

 

For further information, please contact:

 

 Ethernity Networks Ltd                                            Tel: +972 8 915 0392
 David Levi, Chief Executive Officer
 Mark Reichenberg, Chief Financial Officer

 Allenby Capital Limited (Nominated Adviser and Joint Broker)      Tel: +44 (0)20 3328 5656
 James Reeve / Piers Shimwell (Corporate Finance)

 Amrit Nahal (Sales and Corporate Broking)

 Peterhouse Capital Limited (Joint Broker)                         Tel: +44 (0)20 7562 0930
 Lucy Williams / Duncan Vasey / Eran Zucker

 

MARKET ABUSE REGULATION

The information contained within this announcement is deemed by the Company to
constitute inside information as stipulated under the Market Abuse (amendment)
(EU Exit) Regulations 2019/310 ("MAR"). With the publication of this
announcement via a Regulatory Information Service, this inside information is
now considered to be in the public domain.

 

 

 

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