Firstwave Cloud Technology Ltd, page-4

Interesting risk from the prospectus

Under a Product and Services Agreement with Telstra (the “Telstra PSA”), FirstWave provides its technology platform and services to Telstra which then provides the platform and services to its own corporate and government customers under a reseller arrangement.

The majority of FirstWave’s revenue is generated through the supply of services to end customers under the Telstra PSA.

Early termination or non-renewal of the Telstra PSA will have a material adverse effect on FirstWave’s prospects and future financial performance, including a decline in projected revenue streams.

Telstra may terminate the Telstra PSA (in whole or in part) for reasons including Telstra’s convenience, material breach of the agreement by FirstWave, or FirstWave’s failure to perform under certain service levels.

If FirstWave fails to perform its services to the required standard, there is a risk it may be exposed to significant financial liability in addition to possible termination of contract. This may occur where a “catastrophic” failure across the FirstWave platform occurs.
Additionally, breach of certain intellectual property obligations, or FirstWave’s privacy, data security and confidentiality obligations, (such as a major data breach or loss of customer information) may result in significant financial exposure to FirstWave extending beyond the entire contract value, as well as the possibility of termination of the Telstra PSA in whole or in part.