What’s going on with the MyFiziq (ASX:MYQ) share price today?

The MyFiziq Ltd (ASX: MYQ) share price is all over the place today, following the announcement of a distribution agreement in China.

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The MyFiziq Ltd (ASX: MYQ) share price hit a new 52-week high today. This follows the announcement of a binding agreement for integration and distribution in China.

Upon open, MyFiziq share’s rallied 12.7% to $2.04. However, the excitement appears to have worn off throughout the day. This is reflected in a flat share price at the time of writing, sitting at $1.81.

Details of the agreement

MyFiziq is a software application company that has developed a way of converting photos of the human body into 3D images. The images are then used within the company’s application to track weight, fitness, etc.

The deal struck today is with China-based Tinjoy Biotech Limited. Tinjoy owns multiple brands in China and services over 28 million monthly consumers. The company also owns 650 Dongchen pharmacies, catering to 3.5 million repeat monthly customers.

As part of the agreement, MyFiziq’s CompleteScan platform will be integrated and distributed by Tinjoy. This will be carried by integrating the platform with Tinjoy’s own WinScan Digital Health Platform (WinScan).

The WinScan platform itself addresses wellness, preventive health, and precision nutrition.

MyFiziq plans on utilising Tinjoy’s 500 person call centres to facilitate the China launch. However, as part of the deal, the company is expected to contribute US$100,000 towards the training of the call centre marketers. An additional US$100,000 will be made towards the marketing and launch of the product.

Reading the finer details

Included in the term sheet, revenue sharing between MyFiziq and Tinjoy will be a 70% and 30% split respectively. Furthermore, MyFiziq has the option to acquire up to 40% of the WinScan platform for a consideration of US$2 million to US$4 million. This option will remain valid for 12 to 24 months.

Depending on user sign-ups, MyFiziq might also be triggered to invest in Tinjoy based on the terms of the agreement.

The company anticipates collecting licensing fees from the commercial arrangement in the future, although no forecast could be given.

MyFiziq share price in view

The MyFiziq share price has performed exceptionally over the last 12 months, increasing by 598%. This blows the socks off the S&P/ASX 200 Index (ASX: XJO) loss of 3.4% over the same timeframe.

However, big returns typically come with big risk and at a market capitalisation of $232 million, MyFiziq is still a small fish.

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Motley Fool contributor Mitchell Lawler has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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