Under the terms of the letter, Future Tech expects to form a joint venture that will own and operate a manufacturing facility in Changzhou, China. Future Tech will also be responsible for creating an organization to sell, market and distribute metal mesh touch screen sensors to original equipment manufacturers (OEMs) headquartered in the Asia Pacific region. Future Tech intends to manufacture sensors for UniPixel, subject to agreement on volume and pricing. A definitive agreement is expected to be executed during September 2017.
The letter of intent provides that Future Tech will pay UniPixel up to $5.1 million for rights, know-how and manufacturing assets that will be transferred to the joint venture; $2 million will be paid at an initial closing, with the remaining amounts payable upon equipment qualification and manufacturing milestones. Future Tech will separately provide all funding necessary to establish the manufacturing facilities, acquire the necessary manufacturing equipment, operate the facility and meet required working capital needs.
The joint venture will market the XTouch product in the Asia Pacific region, including to China-based mobile and computer OEM companies where Future Tech maintains existing relationships. UniPixel will continue to manufacture and conduct R&D for new products in Colorado Springs and will also purchase sensors from Future Tech.
“I have long held the view that UniPixel should conduct manufacturing in Asia so that our products are closer to our customers,” Jeff Hawthorne, president and CEO of UniPixel, said. “This partnership will allow us to deliver products more quickly, eliminate freight cost arising with shipment from Colorado Springs to Asia, and give us a greater exposure to potential customers in Asia as well as capturing the lower cost benefits of Asia-based manufacturing. While our customers include many US headquartered major computer companies, they all have their display modules assembled in Asia.”