Bisan Limited (ASX:BSN) is preparing for its first smartphones sales in Hong Kong, which has emerged as a hub for the international trade in the devices.
It is estimated that more than 100 trading companies handle used smartphones in Hong Kong and sell for around USD$220 brands such as Apple iPhone, Samsung Galaxy and other popular brands.
Bisan said that the smartphones are now being graded in preparation for sale, and the company has hired expert labour to grade and upgrade the smartphones.
This is in preparation for sale with buyers from China and other parts of Asia which are expected to purchase the first shipment valued at around AUD$350,000.
Bisan is targeting the smartphone trade-in market which is forecast to expand from 53 million units per annum in 2013 to 257 million units per annum by 2017.
Traded-in smartphones are professionally graded and categorised to most efficiently meet consumer demand for affordable regenerated second hand smartphones.
My Generation Smartphones (HK) Limited
The company has a service agreement with Yehuda Shmaya Szender where he can earn a 60% interest if he can achieve sales of $10 million over 5 months ($25 million annualised).
There are also additional terms and conditions included in the service agreement.
Bisan said that unexpected delays in the shipment and the setting up of the Hong Kong Bank account have delayed the commencement of trading.
As a result, both parties have agreed that the period for Mr Szender to meet the targets under the Service Agreement will commence from the date the first shipment is sold and the sale proceeds are received.
Under the binding Memorandum of Understanding, the contracting party also has 30 days to decide whether to vend their interest in MyGeneration Smartphones for equity in Bisan Ltd for the same percentages of equity (60% or 70% depending on performance targets reached).
The vend is subject to capital raising of between $3 million and $5 million as well as all shareholder and regulatory and statutory approvals.
Bisan may be required to re-comply with Chapters 1 and 2 of the listing rules.
The regenerated smart phone business places Bisan on a potentially fast growth trajectory with growing cash flows and revenues.
It is estimated that more than 100 trading companies handle used smartphones in Hong Kong.
The smartphone trade-in market which is forecast to expand from 53 million units per annum in 2013 to 257 million units per annum by 2017.
In essence, Bisan becomes a "play" on not only growth in these markets but a proxy to tap growth in an established network of Asian resellers, low income households, and younger demographics.
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