Ethernity Networks Ltd. announced that it has signed a contract for $800,000 with a long-term networking data communications customer. Pursuant to the Contract, the company has agreed to an expansion of its existing licence with the Customer (the Licence Expansion) for the use of Ethernity's "ENET flow processor" technology. The Customer has been Licensing this technology from Ethernity for over ten years and the Licence Expansion permits the deployment of the technology on a broader range of the Customer's ethernet access system products.

The Customer will pay additional royalties to the Company based on the number of uses of the ENET flow processor in the Customer's products, such amount to be calculated on a quarterly basis. Under the Contract, the Customer has agreed to a further payment to the Company of $300,000 as a prepayment against future royalties. The full $800,000 due under the Contract is expected to be received in Fourth Quarter 2023.

The $500,000 licence fee is expected to contribute towards the Company's 2023 revenues, whereas the $300,000 of royalty payments are expected to contribute towards the Company' revenues in 2024. The Company has received recurring royalty payments from the Customer under the previous licence agreement for more than a decade, and the Board is optimistic that the expansion of the license under the Contract will lead to higher year-on-year royalties going forward. The Company is also hopeful that it will be able to further expand its business with the Customer by utilising newer Ethernity technologies for additional markets served by the Customer.

The receipt of payments under the Contract would result in Ethernity having received total cash collections from its customer base of between $4.5 million and $4.7 million for fiscal 2023. Whilst at this stage the total revenues for 2023 are unknown, these cash collections will assist the Company in exiting the ongoing temporary suspension of proceedings (TSP) process. In addition, together with the contract win announced on 2 November 2023, the Company has been able to secure the future relationship with two important long-standing customers.