Licensing Agreement and Supply Agreement

RNS Number : 7903B

Spectra Systems Corporation

15 January 2018

 

Spectra Systems Corporation ("Spectra")

Licensing Agreement and Supply Agreement

This announcement contains inside information for the purposes of Article 7 of Regulation 596/2014.

Spectra Systems Corporation, a leader in machine-readable high-speed banknote authentication and brand protection technologies, is delighted to announce that it executed on Friday an exclusive, worldwide, licensing agreement for one of its existing products which is in use by 18 central banks through an existing licensee, a major supplier of banknotes worldwide. 

The licensing agreement will extend the rights to the underlying technology, which has been in use since 2003, in perpetuity and generate $11.2 million in royalty payments over the next five years. The payments will be settled in eleven equally spaced payments.

In addition, Spectra also executed a Material Supply Agreement with the same licensee to provide them with covert materials exclusively for a period of ten years at reduced rates relative to the current agreement. The Board anticipates that the supply of material, which does not incorporate minimum quantities, will generate a total revenue of approximately $1.5 million -$2.0 million over the next five years.  

It is estimated however that the combined licence and supplied material sales will generate a contribution per annum from this product through 2023 which is approximately 2.7 times that of the current agreement, based on the minimum purchase requirements in that agreement and experienced in certain recent years.

Based on the execution of these agreements, Spectra is expecting that both its revenue and particularly its profit before taxes for the year ending 31 December 2018 will significantly exceed market expectations.

Dr. Nabil Lawandy, Chief Executive Officer, stated: "We are delighted to have consummated these agreements with our existing partner for over a decade and thereby provided shareholders with further contracted revenues on this product, which has already been in the market for 15 years.  Together these agreements are expected to result in over $14 million in revenues from this licensee for this product through the period 2018-2028.

Enquiries:

Spectra Systems Corporation

Dr. Nabil Lawandy, Chief Executive Officer                                          Tel: [phone]

WH Ireland Limited

Chris Fielding (Managing Director, Corporate Finance)                    Tel: [phone]

 

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