Business Context and Reporting Period
This Form 6-K filing by Integrated Media Technology Ltd (IMTE) is dated April 29, 2019. The report discloses a material distribution agreement entered into on the same date with Teko International Limited ("TEKO") for the territory of Hong Kong and Guangdong Province, China.
Key Financial Metrics
The filing text does not provide specific values for revenue, profit, cash flow, margins, debt, or liquidity. The document focuses exclusively on the terms of a new contractual agreement.
Material Changes and Agreement Terms
IMTE granted TEKO distribution rights for proprietary conductive film and 3rd generation Polymer Dispersed Liquid Crystal Film ("Conductive Film Products"). Key terms include:
- Equity Compensation: TEKO is entitled to receive IMTE shares based on milestones:
- 50,000 shares upon commissioning of the first lamination line.
- 50,000 shares if annual revenue reaches USD$10 million within the next 3 years.
- 50,000 shares if annual revenue reaches USD$20 million within the next 3 years.
- 50,000 shares for each additional lamination line installed.
- Profit Sharing: TEKO will receive 25% of Net Profits from the sale of Conductive Film Products and the lamination operation in exchange for providing management expertise and managing operations.
- Term and Renewal: The agreement commences on the signing date and lasts until the first full calendar year following equipment installation for commercial production. It may be renewed for an additional 5 years if IMTE meets a sales volume target of 70,000 square meters of Conductive Film Products per year.
Related Party Transaction
The filing discloses a significant related party transaction. Mr. Con Unerkov (CEO of IMTE) and Mr. Cecil Te Hwai Ho (CFO of IMTE) are both directors and shareholders of TEKO.
Outlook and Risks
The filing does not provide general financial guidance or outlook beyond the specific revenue targets tied to the TEKO agreement. The primary risk highlighted is the potential dilution of existing shareholders through the issuance of up to 200,000 shares (or more depending on additional lines) and the profit-sharing arrangement with a related party.
Investor Verification Checklist
- Verify the current share capital of IMTE to assess the dilution impact of the potential 200,000+ share issuance to TEKO.
- Confirm the ownership percentage of Mr. Con Unerkov and Mr. Cecil Te Hwai Ho in TEKO to fully understand the related party exposure.
- Review the definition of "Net Profits" in the full agreement to understand the calculation basis for the 25% profit share.
- Assess the feasibility of the USD$10 million and USD$20 million revenue targets within the 3-year window.
- Check for any subsequent filings regarding the installation of the lamination line or achievement of initial milestones.