LifeWave Hi-Tech Medical Devices Ltd. (TASE:LIFE) has cancelled its distribution agreement with its Belgian distributor after the latter failed to meet the minimum terms of the agreement. The distributor was set to trial LifeWave's product following which the agreement would have been signed, but it failed to recruit patients for the trial, and LifeWave cancelled the agreement. Had the agreement been signed, it would have generated orders worth €19 million for the company over four years.
The minimum quantities that LifeWave stipulated in its European contracts are probably not the most effective way of estimating the company's future revenue, both because some of the contracts are contingent on a trial period or have not yet been signed, and because the failure by a distributor to procure the minimum quantity would cost him no more than his concession, so distributors are not taking any risks by committing themselves to large quantities. At present, LifeWave has one guaranteed order worth a few hundred thousand euros from a distributor in Germany, following the completion of the product trials, and this is already more tangible evidence of the desire and ability of European distributors to market the company's product.
LifeWave said earlier this year, that in addition to the order from Germany, it had also received an order worth €60,000 from a distributor in Italy. Earlier this month the company signed MOUs with three European distributors for orders worth a minimum of €13.7 million over the next five years.
Published by Globes [online], Israel business news - www.globes.co.il - on June 10, 2007
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