Forbidden will license its video editing platform FORscene to YouTube, which will use it to support remote video editing and publishing for web and broadcast delivery.
No financial details were released, though the agreement would make a “significant contribution to the performance of the company over the next twelve months,” Forbidden's statement said.
YouTube, bought by internet search engine giant Google is in 2006, is best known as the home for film and music clips and as an outlet for amateur videos.
Forbidden said it will provide the Cloud editing element in a larger integrated system.
The firm says it has been using Cloud Computing-based solutions since 2004, adding its systems can communicate with one another through the Cloud, which allows the editing of videos on devices such as tablets and smart mobiles and publishing to others' Cloud servers.
A user can log on anywhere, anytime as long as there is access to a broadband connection, Forbidden said.
Shares in the group jumped by 90% to 29.9p, valuing the Forbidden at about £25.9 million.
The group made a loss of £157,200 in the half –year to June on revenues of £182,000, up 8% on the first half in the previous year.