Toronto-based tech firm Internet of Things Inc (CVE: ITT) has struck a partnership deal with a global conglomerate, which will see the Canadian company enter the huge Chinese market and gain a profitable income stream.
It has inked a letter of intent to form a joint venture with New Hope Data Technology Co Ltd, which is affiliated to the $15.5bn annual revenue New Hope Group.
The latter is one of China’s largest privately-owned enterprises, with around 70,000 employees and has been in the top 500 enterprises for the last 14 consecutive years.
IoT Inc’s chief executive Michael Frank told investors on Wednesday: “This is a great opportunity to transform and modernize New Hope’s expansive network of more than 600 businesses across China with measurable and effective IoT solutions.
“We are now on our way to implementing IoT Inc’s strategy to enter the vast and profitable marketplace across China, which needs industrial IoT solutions.”
It’s no secret that Chinese industries are rapidly modernizing to remain competitive globally.
According to one recent analyst report, a broad adoption of IoT technologies could produce an eye-watering cumulative growth for China’s GDP (gross domestic product) of US$1.8 trillion by 2030.
The Chinese giant will hold a 49% interest in the new joint venture (IoT: 51%) and invest initially $2mln for an operating and working capital loan.
New Hope will also initially invest $300,000 by way of a convertible debenture into IoT for general corporate purposes.
In return, IoT Inc will issue 28mln shares to New Hope, which will be subject to performance milestones based upon the joint venture generating $3.5 million in total net income over the first three years with annual releases from escrow as milestones are achieved.
Revenues over the three years are expected to be between $20mln and $30mln.
As well as being expected to provide IoT with ongoing revenue and a profitable income stream, the joint venture plans to negotiate strategic distribution partnerships with various IoT technology companies around the world.
There is significant market demand for IoT solutions in a many areas, from factory automation and plant floor control systems to security and surveillance, inventory management, IoT Inc noted.
Story by ProactiveInvestors