Bluechiip Limited announced that key customer Labcon North America has provided notice to Bluechiip purporting to terminate the chip supply agreement it has with Bluechiip. Bluechiip considers that the termination is unlawful. Labcon has also asserted in its correspondence a claim for damages in the region of USD 500,000 which Bluechiip categorically refutes. Bluechiip had, at Labcon's request, been negotiating in good faith to reach a mutually acceptable and more flexible position, including possible deferral of contracted minimums in the current environment. Negotiations with Labcon have now ceased and as a result Bluechiip has instructed its lawyers to pursue all rights and remedies available to it under the supply agreement, including, but not limited to, recovery from Labcon of an outstanding balance of USD 3.5 million which Bluechiip considers is now immediately due and payable. Internally, Bluechiip is maintaining a focus on R&D, increasing efficiencies in chip production, broadening its product offering with multiple chip configurations and size formats and refining its reader and software platforms. The company is in a strong position financially with over AUD 7.9 million cash in the bank at financial year end and expects to emerge from the current COVID-19 challenges better positioned to improve market penetration. Bluechiip will keep the market informed in relation to the status of its claim against Labcon in compliance with its continuous disclosure obligations.