Biostats phone case maker G Medical says it can’t guarantee that revenue from a multi-million dollar Taiwan distribution deal will be achieved.

G Medical, which is commercialising a phone cover that measures vital signs, announced to the market in November last year that it had signed a deal with First Channel to distribute the company’s products in India and Taiwan.

The arrangement was supposed to generate a minimum of $US90 million ($124m) in the first year of operation and $US405 million over three years.

It was conditional on First Channel lining up Tier 1 partners to buy the products, which would then allow them to apply for a letter of credit in order to pay G Medical (ASX:GMV).

On Wednesday, G Medical said First Channel had not yet formalised those partnerships, but they had sent some cases to Taiwan anyway.

It did not mention India.

While G Medical “remain confident of distributing the full quantum of units under the agreement”, they cannot “categorically state that the full anticipated revenues under the previously disclosed agreement with FCL can be achieved, until such time as the above have been formalised”.

They have also released First Channel from a non-compete clause in the original binding MoU.

Long awaited China audits are finally starting

G Medical warmed investors with better news on Wednesday, saying that Chinese regulatory audits of its factory will start later in September.

They ran into delays waiting on China Food and Drug Association (CFDA) approval which would allow it to start manufacturing the device in China.

The audits are expected to be completed by mid-October.

The company had expected these approvals by the end of June.

That will clear the way for deals with distributors SilverLake, Shandong Boletong and MEDTL to start.

The SilverLake deal for Chinese distribution was signed in May 2017 and didn’t specify a revenue figure, but did say a minimum of 4.05 million cases would be sold over five years.

The Shandong Boletong deal, signed in July last year, to distribute G Medical’s case and set up a medical call centre with support services was worth a minimum of $67.5 million in sales over 60 months.

And the MEDTL deal was to distribute in Cyprus and Greece and worth at least $US10.5 million in the first 12 months.

G Medical says it has started distributing product in the US and is looking to start in the UK.

G Medical shares were up 15 per cent to 38c on the news.

G Medical shares over the last 12 months.

Without the expected sales, the company has been running through its cash pile, but in August said it was considering a $260 million IPO in Hong Kong of its Chinese subsidiary.

At the end of June it had $3.2 million left in the bank.

The company said on Wednesday that it was in initial talks with institutions about running the IPO and potential institutional investors.

Stockhead is seeking comment from G Medical.