EXPERT SYS(08319): Termination of Service Agreement

EXPERT SYS (08319) announced that its wholly-owned subsidiary, EXPERT SYS Limited (ESL), submitted a tender document to a customer on October 24, 2022, regarding the supply of several software licenses and services. The tender submitted by ESL was based on a quotation provided by a software product supplier to ESL. According to the supplier's quotation, the supplier is prepared to provide software products to ESL based on a licensing plan at an agreed price, initially from March 2023 to March 2026, and then from March 2026 to March 2028. Subsequently, ESL was awarded a service agreement by the customer, under which ESL was commissioned to supply the software products under the licensing plan. ESL was informed by the supplier that the supplier will cease to provide the software products supplied under the licensing plan to ESL from March 2026 onwards for the second term. Therefore, ESL will not be able to continue providing the software products under the licensing plan to the customer in the second term as per the terms of the service agreement. Given the above situation, ESL has been in negotiations with the customer to terminate the service agreement after the first term ends, and to provide an alternative solution. Under the alternative solution, ESL will supply the agreed quantity of software licenses and services to the customer. The estimated total cost of terminating the service agreement and obtaining and providing alternative software products to the customer is between HK$4 million and HK$8 million. As of the date of this announcement, ESL is in discussions with the customer on the terms of terminating the service agreement and providing alternative solutions, and has not entered into any binding agreements with the customer.