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AXM Pharma gets termination notice from Sunkist Growers for vitamin licensing deal
By E. Janene Geiss
Philadelphia, Feb. 24 - AXM Pharma, Inc. said Friday that it has received a notice of termination of the trademark license agreement with Sunkist Growers, Inc. and Shenyang Tianwei Werke Pharmaceuticals, Ltd., which granted the company exclusive rights to manufacture and market certain vitamin and vitamin supplements in China under the Sunkist brand name and trademark.
Under terms of the agreement, the company said it was required to achieve certain sales targets each year for each category of product licensed, according to a company news release.
Sunkist terminated the agreement as a result of the company's breach of certain financial and contractual obligations, including the non-payment of royalties and the company's failure to achieve certain sales targets under the agreement, officials said.
There were no sales made under the agreement in 2005 because the company did not obtain approval to receive an import license from the Chinese government.
Under the agreement, products that have been delivered to distributors may still continue to be sold, officials said.
The company has said that the amount claimed by Sunkist for the minimum royalty payment has already been accrued as a liability.
The company also is exploring various alternatives to enhance its liquidity in order to meet the payment of royalties and other pending obligations.
A separate license with Sunkist relating to rights to sell certain products in Hong Kong, Macau and Taiwan expired on the Dec. 31 termination date, officials said.
Las Vegas-based AXM Pharma, through its wholly owned subsidiary, AXM Pharma Shenyang, Inc., is a manufacturer of proprietary and generic pharmaceutical products, including injectables, capsules, tablets, liquids and medicated skin products for export and domestic Chinese sales.
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