| Item 1.01. | Entry into a Material Definitive Agreement. |
On January 21,, 2021, the Company entered into a definitive agreement with Beijing Ryzur Medical Investment Co., Ltd. (“Ryzur Medical”), a medical device manufacturer based in Beijing, China, to form a joint venture (the “JV”) to manufacture and sell the Company’s current and future products in greater China, including Hong Kong, Macau and Taiwan (the “JV Agreement”).
Majority ownership in the JV, to be named Jiangxi Myomo Medical Assistive Appliance Co., Ltd., will be held by Ryzur Medical and Chinaleaf Capital Management Co., Ltd., a private fund based in Shanghai that invests in growth opportunities in new technologies. The Company will own a minimum 19.9% stake in the JV. Ryzur Medical and its partners have committed to invest a minimum of $8 million and up to $20 million in the JV over five years. The establishment of the JV is subject to governmental filings and approvals in China.
Once established, the JV Agreement contemplates that each of the Company and JV will enter into a ten-year agreement to license the Company’s intellectual property and purchase MyoPro Control System units from the Company (the “Technology License Agreement”). Under the Technology License Agreement, the Company will be entitled to receive an upfront license fee of $2.5 million. Pursuant to the JV Agreement, the JV has agreed to an escalating purchase commitment for a minimum of $10.75 million in MyoPro Control System Units during the next ten years, subject to receipt of regulatory approvals necessary to permit sales of the product in the greater China territory. Payment of the license fee and transfer of technology requires the completion of certain milestones by the parties to the JV Agreement, which are expected to be completed before the end of 2021. In addition, the JV Agreement contemplates that each of the Company and the JV will enter into a trademark license agreement to license of certain of the Company’s trademarks (the “Trademark License Agreement”).
On January 21, 2021, Myomo, Inc. (the “Company”) and Geauga Rehabilitation Engineering, Inc. (“GRE”), an Ohio corporation, entered into a Fabrication and Services Agreement (the “Services Agreement”) which is effective retroactively to January 1, 2021. Pursuant to the Services Agreement, the Company will ship MyoPro Kits to GRE based on customer orders or minimum stock quantities, subject to adjustment, and GRE will provide central fabrication and other services for the Company. The Company will pay GRE a base fee per unit, subject to minimum volume guarantees and adjustment in the event that GRE’s costs and/or expenses increase during the term of the Services Agreement. The Services Agreement shall be non-exclusive and remain in effect for one year, provided that the parties shall negotiate in good faith should either party desire to extend the term of the Services Agreement or terminate the Services Agreement upon ninety days’ written notice.
The foregoing summaries of the terms of the JV Agreement and Services Agreement do not purport to be complete and are qualified in their entirety by reference to the Services Agreement and JV Agreement, copies of which will be filed as Exhibit 10.1 and Exhibit 10.2, respectively, to this Current Report on Form 8-K and incorporated herein by reference.
| Item 2.03. | Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of Registrant. |
The information set forth above in Item 1.01 of this Current Report on Form 8-K regarding the Services Agreement is incorporated into this Item 2.03 by reference.
