Ethernity Networks said an order from a customer for its UEP (Universal Edge Platform) placed in July 2021 has now been cancelled.
David Levi, Ethernity’s chief executive, 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.”
The contract, worth US$930,000, was with an Israeli international wireless connectivity vendor, which cited delays in the product delivery for its decision to cancel.
To date, Ethernity said it had invoiced the customer for a total of US$107,000, adding that forecasts for 2022 and 2023 would now be adjusted to reflect the absence of the contract.
Ethernity added it 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.
Mark Reichenberg, Ethernity's CFO added: “Unfortunately these things happen, and as you can read in the announcement, the work on the contract was extremely frustrating due to the customer issues noted in the announcement, amongst others from their side.
"From our point of view, nobody ever wants to lose a contract, but that is business.
"Fortunately, there are two relevant points here. The first being the revenue lost for this year is not significantly material (and same applies as for next year), and most importantly, while revenues are ego, the cash result is the gross profit on the contracted items supplied.
"Because of pricing issues from the customer's side, component price increases etc, the GP was under pressure, so the real net impact on the company gross margin is not materially significant.”
Levi said Ethernity was also "highly encouraged" by the progress and developments of UEP2025 and will continue to focus our resources on this development.
The company is in discussions with potential customers for the supply of the UEP2025, he noted, 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.
-- adds comment from CFO-