Caleco Pharma Signs Letter Of Intent With Caleco Pharma Europe

Caleco Pharma has signed a letter of intent with Caleco Pharma Europe (SL), a Spanish corporation. The Letter of Intent sets out the proposed terms of a License agreement whereby SL has agreed to acquire an exclusive license in Continental Europe to market and exploit certain products the Caleco Pharma has developed or is developing.

The term of the proposed license is for a period of 20 years. The products under the proposed license include the Caleco Pharma’s natural hair care products (LamiriShampoo, LamiriHair Conditioner and LarimiHair Tonic), natural skin products (LamiriGel and LamiriCreme), energy drinks (KTKin) and chewing gum (KTK Chewing Gum and KTKids Children Chewing Gum). The formulations of these products are derived from Caleco Pharma’s proprietary technology that it refers to as the ‘Liver Health Formula’.

Under the terms of the proposed license agreement, Caleco Pharma will receive10% of the shares of SL which will be delivered no later than 30 days from the execution of the proposed license agreement. A royalty of 5% of SL gross sales of the products will go to Caleco.

Moreover, SL will have to achieve annual gross revenues of $3,000,000 from the sale of Caleco Pharma’s product during the period of July 31, 2012 to July 30, 2013; $5,000,000 from the sale of Caleco Pharma’s product during the period of July 31, 2013 to July 30, 2014; and $12,000,000 from the sale of Caleco Pharma’s product during the period of July 31, 2014 to July 30, 2015. If SL is unable to achieve these revenues, the Caleco Pharma will have the right to terminate the proposed license agreement.

Under the proposed license agreement, subject to the approval of Caleco Pharma, SL will have the right to sub-license the products in continental Europe. Caleco Pharma or SL will also have the right to assign its entire interest in the proposed license agreement. The assignment is subject to the mutual agreement of both the companies on the conditions of the proposed assignment and any refusal of approval by the Caleco Pharma will not be considered reasonable if the transaction that is the subject of the refusal is in accordance with internationally accepted standards for the licensing of products.

The terms of the Letter of Intent are non-binding and will expire unless a formal agreement is entered into by November 29, 2009. The above is subject to the conclusion of a formal agreement. There is no assurance that a formal agreement will be concluded or that the terms will not change from those described above.