UNITED STATESSECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549










FORM
20-F










| |  ̈ | REGISTRATION
                                                                                                          STATEMENT PURSUANT TO
                                                                                                          SECTION 12(b) OR (g)
                                                                                                          OF THE SECURITIES EXCHANGE
                                                                                                          ACT OF 1934
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



OR



| | x | ANNUAL
                                                                                                             REPORT PURSUANT TO
                                                                                                             SECTION 13 OR 15(d)
                                                                                                             OF THE SECURITIES
                                                                                                             EXCHANGE ACT OF 1934
                                                                                                             FOR THE YEAR ENDED
                                                                                                             DECEMBER 31, 2011
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



OR



| |  ̈ | TRANSITION
                                                                                                          REPORT PURSUANT TO SECTION
                                                                                                          13 OR 15(d) OF THE SECURITIES
                                                                                                          EXCHANGE ACT OF 1934
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



OR



| |  ̈ | SHELL
                                                                                                          COMPANY REPORT PURSUANT
                                                                                                          TO SECTION 13 OR 15(d)
                                                                                                          OF THE SECURITIES EXCHANGE
                                                                                                          ACT OF 1934
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Date of event requiring this shell company
report



For the year ended December 31, 2011



Commission File Number 0-20420



CALCITECH LTD.
(Exact name of Registrant as specified in its charter)



A CORPORATION FORMED UNDER
THE LAWS OF BERMUDA
(Jurisdiction of Incorporation or Organization)



10 route de l’aeroport
1215 GenevaSwitzerland
(Address of principal executive offices)



Roger A. Leopard

President and Chief Executive Officer of
CalciTech Ltd.

10 route de l’aeroport

1215 Geneva, Switzerland

Telephone: +41 22 7883092



Securities registered or to be registered
pursuant to Section 12(b) of the Act: NONE



Securities registered or to be registered
pursuant to Section 12(g) of the Act



Common Shares
(Title of Class)



Securities for which there is a reporting obligation pursuant
to Section 15(d) of the Act: NONE



The number of outstanding Common Shares as of December 31,
2011 is 200,933,204



Indicate by check mark if the Company
is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.  ̈Yes
xNo



Indicate by check mark if the Company is not required to file
reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.  ̈Yes
xNo



Indicate by check mark whether the Company
(1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the Company was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

SYes   ̈No



Indicate by check mark whether the registrant
has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted
and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such
shorter period that the registrant was required to submit and post such files). xYes 
 ̈No



Indicate by check mark whether the Company
is a large accelerated filer, an accelerated filer or a non-accelerated filer.  ̈Large
accelerated filer  ̈Accelerated filer x
Non-accelerated filer



Indicate by check mark which basis of
accounting the registrant has used to prepare the financial statements included in this filing:

|U.S. GAAP ̈ | International Financial Reporting Standards as issued      x | Other  ̈
|---------- | ------------------------------------------------------------ | -------
|           | by the International Accounting Standards Board              |        



If “Other” has been checked
in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.

Item 17  ̈                 Item
18  ̈



Indicate by check mark whether the Company
is a shell company (as defined in Rule 12b-2 of the Exchange Act.

 ̈ Yes  x No



(APPLICABLE ONLY TO ISSUERS INVOLVED IN
BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)



Indicate by check mark whether the Company
has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent
to the distribution of securities under a plan confirmed by a court. NOT APPLICABLE











TABLE OF CONTENTS





|         |                                                         | Page
|-------- | ------------------------------------------------------- | ----
|PART I   |                                                         | 1   
|Item 1.  | Identity of Directors, Senior Management and Advisors   | 1   
|Item 2.  | Offer Statistics and Expected Timetable                 | 1   
|Item 3.  | Key Information                                         | 1   
|3A.      | Selected Financial Data                                 | 1   
|3B.      | Capitalization and Indebtedness                         | 2   
|3C.      | Reasons for the Offer and Use of Proceeds               | 2   
|3D.      | Risk Factors                                            | 2   
|Item 4.  | Information on the Company                              | 5   
|4A.      | History and Development of the Company                  | 5   
|4B.      | Business Overview                                       | 6   
|4C.      | Property, Plant and Equipment                           | 17  
|Item 5.  | Operating and Financial Review and Prospects            | 18  
|5A.      | Operating Results                                       | 19  
|5B.      | Liquidity and Capital Resources                         | 20  
|5C.      | Research and Development, Patents and Licenses, etc.    | 22  
|5D.      | Trend Information                                       | 22  
|5E.      | Off Balance Sheet Arrangements                          | 22  
|5F.      | Tabular Disclosure of Contractual Obligations           | 22  
|Item 6.  | Directors, Senior Management and Employees              | 23  
|6A.      | Directors, Senior Management                            | 23  
|6B.      | Compensation                                            | 24  
|6C.      | Board Practices                                         | 25  
|6D.      | Employees                                               | 25  
|6E.      | Share Ownership                                         | 25  
|Item 7.  | Major Shareholders and Related Party Transactions       | 26  
|7A.      | Major Shareholders                                      | 26  
|7B.      | Related Party Transactions                              | 26  
|7C.      | Interest of Experts and Counsel.                        | 27  
|Item 8.  | Financial Statements                                    | 27  
|8A.      | Consolidated Statements and Other Financial Information | 27  
|8B.      | Significant Changes                                     | 27  
|Item 9.  | The Offer and Listing                                   | 28  
|9A.      | Price History of Stock                                  | 28  
|9B.      | Plan of Distribution                                    | 29  
|9C.      | Markets                                                 | 29  
|9D.      | Selling Shareholders                                    | 29  
|9E.      | Dilution                                                | 29  
|9F.      | Expenses of the Issue                                   | 29  
|Item 10. | Additional Information                                  | 29  
|10A.     | Share Capital                                           | 29  
|10B.     | Memorandum and Articles of Association                  | 29  
|10C.     | Material Contracts                                      | 30  
|10D.     | Exchange Controls                                       | 31  
|10E.     | Taxation                                                | 31  



i









|10F.     | Dividends and Paying Agents.                                                 | 35
|-------- | ---------------------------------------------------------------------------- | --
|10G.     | Statement of Experts.                                                        | 35
|10H.     | Documents on Display.                                                        | 35
|10I.     | Subsidiary Information                                                       | 35
|Item 11. | Quantitative and Qualitative Disclosures About Market Risk                   | 35
|Item 12. | Description of Securities Other than Equity Securities                       | 35
|Item 13. | Defaults, Dividend Arrearages and Delinquencies                              | 35
|Part II  |                                                                              | 35
|Item 14. | Material Modifications to the Rights of Security Holders and Use of Proceeds | 35
|Item 15. | Controls and Procedures.                                                     | 35
|Item 16. |                                                                              | 37
|16A      | Audit Committee Financial Report                                             | 37
|16B      | Code Of Ethics                                                               | 37
|16C      | Principal Accountant Fees And Services                                       | 37
|16D      | Exemptions From The Listing Standards For Audit Committees                   | 38
|16E      | Purchases Of Equity Securities By The Issuer And Affiliated Purchasers       | 38
|Part III |                                                                              | 38
|Item 17. | Financial Statements                                                         | 38
|Item 18. | Financial Statements                                                         | 38
|Item 19. | Exhibits                                                                     | 38











PART I



The following discussion
contains forward-looking statements regarding events and financial trends, which may affect CalciTechLtd’s (“CalciTech,”
the “Company,” “we,” “our” or “us”) future operating results and financial position.
Such statements are subject to risks and uncertainties that could cause our actual results and financial position to differ materially
from those anticipated in forward-looking statements. These factors include, but are not limited to, the fact that we are in the
commercialization stage, will need additional financing to build our proposed plants and will be subject to certain technological
risks associated with scaling up production to a commercial level, all of which factors are set forth in more detail in the section
entitled “Risk Factors” in Item 3.D. and “Operating and Financial Review and Prospects” at Item 5.



| | Item 1. | Identity of Directors, Senior Management and Advisors
| | ------- | -----------------------------------------------------



Not Applicable.



| | Item 2. | Offer Statistics and Expected Timetable
| | ------- | ---------------------------------------



Not Applicable.



| | Item 3. | Key Information
| | ------- | ---------------



| | 3A. | Selected Financial Data
| | --- | -----------------------



The following tables
set forth selected consolidated financial data of the Company for the years ended December 31, 2011, 2010, 2009, 2008, and 2007.
We derived all figures from our financial statements, which were audited by our independent auditor and prepared in accordance
with International Financial Reporting Standards (IFRS).



This information
should be read in conjunction with our audited financial statements for the years ended December 31, 2011, 2010 and 2009 included
in this annual report. Historical information for periods prior to the year ended December 31, 2008 are not included in this annual
report.



All financial information is presented
in U.S. dollars, unless indicated otherwise.



|                                         |  | year to      |             |   | Year  to     |   |             | Year to      |  |   | Year to      |   |  | Year to      |           
|---------------------------------------- |  | ------------ | ----------- | - | ------------ | - | ----------- | ------------ |  | - | ------------ | - |  | ------------ | ----------
|                                         |  | Dec 31, 2011 |             |   | Dec 31, 2010 |   |             | Dec 31, 2009 |  |   | Dec 31, 2008 |   |  | Dec 31, 2007 |           
|                                         |  |              |             |   |              |   |             |              |  |   |              |   |  |              |           
|Operations Data                          |  | $            |             |   |              | $ |             |              |  | $ |              |   |  | $            |           
|Revenue                                  |  |              | 196,000     |   |              |   | 0           |              |  |   | 0            |   |  |              | 0         
|Income (loss) from operations            |  |              | (1,077,000  | ) |              |   | (699,000    | )            |  |   | (965,000     | ) |  |              | (1,234,000
|Net loss                                 |  |              | (1,266,000  | ) |              |   | (870,000    | )            |  |   | (1,081,000   | ) |  |              | (2,025,000
|Number of shares                         |  |              | 200,933,204 |   |              |   | 200,933,204 |              |  |   | 185,639,086  |   |  |              | 99,998,665
|Loss per Common Share                    |  |              | (0.008      | ) |              |   | (0.004      | )            |  |   | (0.005       | ) |  |              | (0.02     
|                                         |  |              |             |   |              |   |             |              |  |   |              |   |  |              |           
|Balance Sheet Data                       |  |              |             |   |              |   |             |              |  |   |              |   |  |              |           
|Cumulative Deferred                      |  |              |             |   |              |   |             |              |  |   |              |   |  |              |           
|Development Expenditure                  |  |              | 0           |   |              |   | 0           |              |  |   | 0            |   |  |              | 0         
|Total Assets                             |  |              | 9,733,000   |   |              |   | 9,612,000   |              |  |   | 8,206,000    |   |  |              | 7,157,000 
|Long Term Obligations                    |  |              | 3,738,000   |   |              |   | 1,121,000   |              |  |   | 2,206,000    |   |  |              | 5,545,000 
|Capital stock                            |  |              | 1,899,000   |   |              |   | 1,899,000   |              |  |   | 1,898,000    |   |  |              | 1,846,000 
|Total Stockholders’ Equity/ (Deficiency) |  |              | 4,093,000   |   |              |   | 5,546,000   |              |  |   | 5,236,000    |   |  |              | 609,000   



1







| | 3B. | Capitalization and Indebtedness
| | --- | -------------------------------



Not Applicable.



| | 3C. | Reasons for the Offer and Use of Proceeds
| | --- | -----------------------------------------



Not Applicable.



| | 3D. | Risk Factors
| | --- | ------------



In addition to the
other information presented in this Annual Report, the following should be considered carefully in evaluating us and our business.
This Annual Report contains forward-looking statements that involve risk and uncertainties. Our actual results may differ materially
from the results discussed in the forward-looking statements. Factors that might cause such a difference include, but are not
limited to, those discussed below and elsewhere in this Annual Report.



Notwithstanding the
foregoing, our future success will be affected by many factors that are frequently associated with the development of a new business,
which include, but are not limited to, the following:



We Have Incurred
Net Losses Since Our Inception and Expect Losses to Continue. Except for net income of $732,000 for fiscal year ended
February 28, 1996, we have not been profitable since our inception. During the year ended December 31, 2011, we earned $NIL from
the sale of Synthetic Calcium Carbonate (“SCC”) samples. As our marketing activities have been concentrated during
2011 in other industrial sectors, no sample sales were possible with new products. For the year ended December 31, 2011, we had
a net loss of $1,266,000 and an accumulated deficit of $49,610,000. The report of independent auditors on our December 31, 2011
financial statements includes an explanatory paragraph assuming the Company will continue as a going concern. Lack of operating
funds may result in staff reductions and curtailing the construction currently planned.



If We Are Unable
to Raise Funds Our Growth May Be Adversely Affected. Historically, we have had to seek capital for research and development
of our SCC products due to lack of revenues. Based on the available amount of $35,000 in cash and together with our working capital
credit facility, and the continuing control of expenses, we believe that we have sufficient working capital to meet our obligations
over the next 12 months following the date of the approval of these financial statements. Due to the global financial crisis and
the difficulties in the banking sector in Germany, we were unable to secure the endorsement of a House Bank in Germany of our
application to secure a grant from the European Regional Structural Fund towards 50% of the capital expenditure (CapEx) of our
planned 100,000 tonnes per annum plant in Leuna, Germany, nor were we able to find a strategic partner on terms which we considered
to be acceptable to our shareholders. Through this process of finding a strategic partner, we have determined that the best approach
is to maintain 100% ownership of our plants in the early stages of our building plan. As such, we recently changed our strategy
and are now seeking to raise funding of Euro 27.50 million in the UK market for our European licensee, CalciTech Synthetic Minerals
Europe Ltd. (“CSME”). This would enable CSME, with the help of European Union grants, to build a commercial plant
in mainland Europe producing circa 50,000 tonnes per annum of SCC and provide working capital until we generate revenue. However,
we may not be able to raise funds, or to raise funds on commercially reasonable terms. If we are unable to raise additional funds,
we may not be able to build the plants or to implement our business plans as described in this Annual Report.



Uncertainty
over carrying value of the Intangible assets.The majority of our assets are intangible assets. Our ability to recover
the carrying value of our intangible assets is dependent upon our ability to raise sufficient funds to build the production plants
required for the commercial exploitation of our intangible assets. We have commenced discussions with a number of Alternative
Investment Market Nominated Adviser/brokers to secure the appropriate funding and an admission of the Company’s European
operations subsidiary, CSME, to the AIM market of the London Stock Exchange (“AIM market”). In addition, we continue
to pursue other funding opportunities including potential commercial partners to fund the commercialization of our intangible
assets and funding in the US and European financial markets. We believe that we will be able to secure the appropriate funding
to commercially exploit our intangible assets. However as of this date, such funding has not been secured and therefore there
is a significant possibility that commercialisation cannot proceed and that ultimately we may not be able to recover the carrying
value of our intangible assets as they are stated in our consolidated financial statements. Our consolidated financial statements
do not include any adjustments that would be necessary if we were unable to secure the appropriate funding for the commercial
utilization of the intangible assets.



2







Uncertainty
of continuing as a going concern.Our continuation as a going concern depends upon our ability to raise
sufficient capital to build our first full scale SCC plants, attain profitable operations and generate cash flow from operations.  Our
consolidated financial statements do not include the adjustments that would be necessary if we were unable to continue as a going
concern.



New investors
or commercial partners may require participation interests which could decrease future profitability.In order to build
our commercial plants, we will require additional funding or commercial partners. Under this type of arrangement, an investor
or commercial partner would invest in a specific commercial plant and receive a negotiated interest in that specific commercial
plant. This could reduce the potential profitability of the remaining interest in the commercial plant and reduce our ability
to control and manage the commercial plant. We expect that entering into these partnering relationships would entail transferring
a portion of our interest in CSME to such partner.



Our Inability
to Protect Our Patents and Other Proprietary Rights Could Adversely Impact Our Competitive Position. We believe that our
patents and other proprietary rights are important to our success and our competitive position. Accordingly, we devote substantial
resources to the establishment and protection of our patents and proprietary rights. We currently hold patents for processes and
have patents pending for additional processes that we intend to use to market our SCC technology. However, our actions to establish
and protect our patents and other proprietary rights may be inadequate to prevent others from using our processes outside of the
jurisdiction of our patent or to prevent others from claiming violations of their patents and proprietary rights by us. If our
processes are challenged as infringing upon patents of other parties, we will be required to modify our processes, obtain a license
or litigate the issue, all of which may have an adverse effect on our business.



Failure to Protect
Our Trade Secrets May Assist Our Competitors. We protect our trade secrets and proprietary know-how for our processes
by various methods, including the use of confidentiality agreements with employees and strategic partners. However, such methods
may not provide complete protection and there can be no assurance that others will not obtain our know-how or independently develop
the same or similar technology.



We Have Never
Produced SCC on a Commercial Scale.We have operated a small process pilot plant based in Norway, which was moved to Leuna
in Germany in 2002. We have scaled up our operations in this plant by a ratio of 60:1, but to reach commercial scale operations
we will need to further scale up by a ratio of 20:1. Although specialist suppliers of filtration and drying equipment have conducted
trials for us and found the scale up ratio to be within acceptable limits, there are no guarantees that the technology will operate
as planned or that costs for additional modifications will not occur. In addition, if we are unable to produce SCC on a commercial
scale we will be unable to successfully commercialise our SCC technology as planned in our business plan.



Our Competitors
May Develop a Competing Technology. One of our competitive advantages depends on our ability to use waste lime, low quality
lime and paper sludge ash which is available at little or no cost in our manufacture of SCC products. If competitors are able
to develop a competing technology, we may no longer have the free or low cost source of raw material.



Our SCC Product
is at Initial Market Introduction and We Are Not Sure the Market Will Accept it.We intend to target our SCC products
in the following markets: paper; food and pharmaceutical, plastic, sealants and adhesives industries. The market acceptance of
SCC products produced by our process for use in pharmaceutical and food additives will depend upon consumer adoption and regulatory
approval. Moreover, although we have signed letters of intent with paper and other industrial producers for the SCC products to
be manufactured upon our commencement of commercial scale operations, there is no assurance that we will be able to convince these
potential customers to convert these letters of intent into contracts of purchase. Failure to achieve market share in these industries
could have material adverse effects on our long-term business, financial condition and results of operation.



3







All of our operations
are located outside of the United States, substantially all of our sales from samples are generated outside of the United States
and all of our assets are located outside of the United States, subjecting us to risks associated with international operations.Our operations are in Europe and we have no operations in the United States. 100% of our revenue from our sales of samples
was generated from outside of the United States. The international nature of our business subjects us to the laws and regulations
of the jurisdictions in which we operate and sell our products. In addition, we are subject to risks inherent in international
business activities, including:





| ̈ | difficulties in collecting accounts receivable and longer collection periods,
|- | -----------------------------------------------------------------------------
|  |                                                                              
| ̈ | changes in overseas economic conditions,                                     
|  |                                                                              
| ̈ | fluctuations in currency exchange rates,                                     
|  |                                                                              
| ̈ | potentially weaker intellectual property protections,                        
|  |                                                                              
| ̈ | changing and conflicting local laws and other regulatory requirements,       
|  |                                                                              
| ̈ | political and economic instability,                                          
|  |                                                                              
| ̈ | war, acts of terrorism or other hostilities,                                 
|  |                                                                              
| ̈ | potentially adverse tax consequences,                                        
|  |                                                                              
| ̈ | difficulties in staffing and managing foreign operations, and                
|  |                                                                              
| ̈ | tariffs or other trade regulations and restrictions.                         







Litigation.Although we are not currently subject to litigation, we may become involved in disputes with other parties in the future
which may result in litigation. Any litigation could be costly and time consuming and could divert our management from our business
operations. In addition, if we are unable to resolve any litigation favorably, it may have a material adverse impact on our financial
performance, cash flow and results of operations.



Our results
of operations may be adversely impacted by currency fluctuations.Our revenue is in currencies other than United States
dollars, primarily in Euros. Because our financial statements are reported in United States dollars, fluctuations in Euros against
the United States dollar may cause us to recognise foreign currency transaction gains and losses, which may be material to our
operations and impact our reported financial condition and results of operations.



Penny stock
rules may make it more difficult to trade our Common Shares.The Securities and Exchange Commission has adopted
regulations which generally define a “penny stock” to be any equity security that has a market price, as defined,
of less than $5.00 per share or an exercise price of less than $5.00 per share, subject to certain exceptions. Our securities
may be covered by the penny stock rules, which impose additional sales practice requirements on broker-dealers who sell to persons
other than established customers and accredited investors such as, institutions with assets in excess of $5,000,000 or an individual
with net worth in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly with his or her spouse. For transactions
covered by this rule, the broker-dealers must make a special suitability determination for the purchase and receive the purchaser’s
written agreement of the transaction prior to the sale. Consequently, the “penny stock” rules may affect the ability
of broker-dealers to sell our securities and also affect the ability of our investors to sell their shares in the secondary market.



4







FINRA rules
will make it more difficult to trade our Common Shares. The Financial Industry Regulatory Authority, or FINRA, has adopted
sales practice requirements which may limit a stockholder’s ability to buy and sell our stock. In addition to the “penny
stock” rules described above, FINRA has adopted rules that require that in recommending an investment to a customer, a broker-dealer
must have reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending speculative
low priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information
about the customer’s financial status, tax status, investment objectives and other information. Under interpretations of
these rules, FINRA believes that there is a high probability that speculative low priced securities will not be suitable for at
least some customers. FINRA requirements make it more difficult for broker-dealers to recommend that their customers buy our common
stock, which may limit your ability to buy and sell our stock and have an adverse effect on the market for our shares



Potential litigation
or environmental exposure may have a material adverse effect on our financial condition or results of operation. Our operations
are subject to international, federal, state and local governmental, tax and other laws and regulations, and potentially to claims
for various legal, environmental and tax matters. While we carry liability insurance, which we believe to be appropriate to our
business, an unanticipated liability, arising out of such a litigation matter or a tax or environmental proceeding could have
a material adverse effect on our financial condition or results of operations.



Our shares have been thinly traded
and we cannot predict the extent to which a trading market will develop. Our Common Shares trade on the “OTCBB”
and are thinly traded compared to larger, more widely known companies.  Thinly traded common stock can be more volatile
than common stock trading in an active public market.  We cannot predict the extent to which an active public market
for our Common Shares will develop or be sustained.



We may be classified
as a passive foreign investment company, which could result in adverse United States federal income tax consequences to U.S. holders.We believe that we were not a “passive foreign investment company”, or PFIC, for U.S. federal income tax purposes
for our taxable year ending December 31, 2011, and we do not expect to become one for our current taxable year or in the future,
although there can be no assurance in this regard. A non-U.S. corporation will be considered a PFIC for any taxable year if either
(1) at least 75.0% of its gross income is passive income or (2) at least 50.0% of the value of its assets (based on an average
of the quarterly values of the assets during a taxable year) is attributable to assets that produce or are held for the production
of passive income. The market value of our assets may be determined in large part by the market price of our Common Shares, which
is likely to fluctuate. In addition, the composition of our income and assets will be affected by how, and how quickly, we spend
the cash we receive. If we are treated as a PFIC for any taxable year during which U.S. holders hold our shares, certain adverse
United States federal income tax consequences could apply to U.S. holders. See “Special United States Federal Income Tax
Considerations - Passive Foreign Investment Company.”



| | Item 4. | Information on the Company
| | ------- | --------------------------



| | 4A. | History and Development of the Company
| | --- | --------------------------------------



CalciTech Ltd., a
Bermuda Company (“we”, “our”, or “us”) has developed a new process for manufacturing high
quality Synthetic Calcium Carbonate (“SCC”). Our process produces SCC from waste lime and air polluting carbon dioxide.
SCC is a white pigment. It is also a calcium source for pharmaceuticals and food. As of the date of this report, we do not have
facilities to commence production of SCC on a full commercial scale.



Originally, we were
formed on November 9, 1978, under the laws of British Columbia, Canada with the name Cornwall Petroleum & Resources Ltd. We
then changed our name to Rexplore Resources International Limited and were engaged in petroleum and resource development. In December
of 1987, we were restructured and the prior management was replaced in connection with the acquisition of a license to develop
Trylene Gas. In July 1994, we changed our domicile from British Columbia, Canada to Bermuda and changed our name from Kemgas Sydney
Ltd. to Kemgas Ltd. On July 25, 2000, we changed our name from Kemgas Ltd. to our present name, CalciTech Ltd., to better reflect
our change in business to the production and sale of SCC.



5







For the purpose
of commercialising our technology, we established CalciTech Synthetic Minerals Ltd., a Bermuda company (“CSM”)
that is 100% owned by us. On February 1, 2003, we transferred all of our SCC intellectual property rights and associated
business activity to CSM. CSM has two subsidiaries, CalciTech Group Services SA, a Swiss corporation which is wholly-owned by
CSM, and CalciTech Synthetic Minerals Europe Ltd., a UK corporation which is 89.875% owned by CSM (“CSME”). Our
projected European business has been independently valued at Euro 64 million. On October 1, 2010, the business undertaking
for the European territory was transferred to CSME and the consideration was satisfied by the issue of 80 million common
shares of CSME, with a par value of Euro 0.10 per share and a purchase price of Euro 0.80 per share. As part of the transfer
CSME, has been granted a license covering all of Europe, for the exclusive use of the Company’s SCC technology. This
license is for a period of 30 years with a royalty payable of 5% of net revenues. This license will not pass to CSME until
such time as adequate funding is secured to build the first commercial plant. At that time, the license will be granted for
the consideration of further ordinary shares in CSME up to a value of Euro 56 million.



Our administrative
headquarters are located at Covenant House, 85 Reid Street, Bermuda. We also have a representative office at World Trade Centre,
10 route de l’Aeroport, Geneva, Switzerland. We currently do not have full-scale commercial plants. We are currently engaged
in the commercialisation and project development stage using sample material produced by a small-scale production plant located
in Leuna, Germany. This small-scale plant was initially built for commercial purposes. It produces samples for all future plants,
tests input materials from around the world and will provide the necessary training for staff to be employed on the future commercial
plants. The small-scale plant has also been used in the design development of future commercial plants and has supported the development
of a 100,000 tonnes per annum plant originally planned in Germany. However, as a result of the global financial crisis and difficulties
in the banking sector in Germany, we were unable to secure financing for our planned 100,000 tonnes per annum plant. Currently,
we have deferred the development of the planned 100,000 tonnes per annum plant in Germany, and through CSME, we are looking to
develop a number of circa 50,000 tonnes per annum plants throughout Europe.



The Company, through
CSME, is now planning a matrix of plants in Europe and has made presentations to the European Investment Bank (“EIB”)
to confirm that such projects will qualify under its technological innovation program for financial support. The Company’s
financial advisors are currently in negotiations with a number of UK banks, in the context of the EIB borrowing for funding of
all European plants. CSME is now envisioning a number of circa 50,000 tonnes per annum plants which could be in Germany, France,
Spain, the Benelux or the United Kingdom.



We are also evaluating
new product developments for new market applications and testing various feedstocks. It is intended that the small-scale plant,
now operated through CSME, will continue to test and trial all feed materials, and produce our sample material to support other
projects in other regions. See “4B. Business Overview – Business Activities.” No assurance can be given that
the planned plants will be economically or technically feasible. We have generated no cash flows from our operations, other than
those generated through limited sample sales. See "Item 3D Risk Factors."



| | 4B. | Business Overview
| | --- | -----------------



Synthetic Calcium Carbonate (“SCC”)



Since June 1999, we
have actively pursued our plan to develop and commercialize SCC from waste lime using our proprietary process. Acutely aware of
the industrial waste created from the production of acetylene gas, one of our former businesses, we have moved forward to develop
a method to extract a commercial product from what is considered to be waste product: waste lime. Waste lime is generated from
(i) the production of acetylene gas, (ii) manufacture of dicyandiamide from calcium cyanamide, (iii) the manufacture of paper
sludge ash from recycled paper, and (iv) the manufacture of other chemical and mineral processes. In our pursuit to turn an environmental
problem into a commercially viable business, we have developed our proprietary process to extract and produce quality SCC from
waste lime. SCC is a white filler pigment and is used for paper filling and coating, as well as in, for example paint, polymers,
food and pharmaceuticals.



6







In September 2010,
we signed a Cooperation Agreement with leading research institutes in Germany and launched the project with the participation
of the largest paper and cement companies in Europe: Stora Enso and Heidelberg Cement as well as other partners the Papiertechnische
Stiftung (“PTS”), the German Paper Research Centre and Verein Deutscher Zementwerke (“VDZ”), and the German
Cement Works Association (the “Cooperation Agreement Project”).



The aim of the Cooperation
Agreement Project is to optimise our process for converting the waste stream from recycled paper production into industrially
valuable Synthetic Calcium Carbonate (SCC) and Sustainable Metakaolin (SMK).



The Cooperation Agreement
Project has now passed its first milestones successfully which triggers the next phase of funding. The Cooperation Agreement Project
is expected to be completed by the middle of 2013.



Due to the environmental
benefits, the Cooperation Agreement Project received a research grant in the amount of approximately $627,436 from Bundesministerium
für Wirtschaft und Technologie (German Federal Ministry for Research and Technology). The grant is for a period of three
years from September 2010 to May 2013 and is in the form of reimbursements for costs incurred in the Cooperation Agreement Project.
Our obligation under the project is approximately $371,476, of which 45% is reimbursable under the grant. As of December 31, 2011,
we have expended approximately $13,177 and received approximately $5,930 from the grant.



Currently, we are
seeking to establish our first full scale commercial merchant plant and are engaged in sales activity within the paper, polymers,
paints, food, pharmaceutical and cosmetic industries to seek commitment from potential customers to purchase SCC products from
the first full scale commercial plants. In addition, we will have to raise additional funds through loans from business partners,
debt or equity financing and/or through environmental grants from authorities to build our initial plants. Assuming we have the
capital to proceed, we intend to build up to 10 commercial plants over the next 15 years in Europe, some through joint ventures
with financial or industry partners.



Below is a discussion
of our proprietary SCC process, conventional Precipitated Calcium Carbonate (“PCC”) production, our products and a
summary of our current activities by site. We refer to the PCC produced by our technology as Synthetic Calcium Carbonate, SCC.



Our SCC Process



Our SCC process can
utilise most grades of lime, including low quality lime or industrial waste lime such as carbide lime. In our process, the waste
lime is mixed with a solution of water and a proprietary promoter in a digester, which selectively dissolves the calcium and leaves
the impurities behind as insoluble solids, which are readily removed by subsequent flocculation. The clear calcium solution is
then pumped into a reactor into which carbon dioxide from any industrial emission source is passed to produce synthetic calcium
carbonate by precipitation. After the SCC product is filtered off, the promoter solution is recycled back into the digester. The
SCC can be supplied directly as slurry or dried and bagged for market.



By the use of this
process, we reduce waste lime and carbon dioxide emissions into the environment. Carbide lime is a waste problem in many countries.
Currently, this waste lime is stored in large ponds with no or very limited disposal processes available. Its high pH has potential
pollution impacts to soil and ground water. This is a common environmental problem in the former Eastern Block countries, including
the eastern section of Germany and Slovakia and remains a problem in other industrial nations. Many of these governments have
regulations for the clean up of these ponds, which gives us the opportunity to have sources of free or low cost waste lime. Many
private companies are also willing to supply waste lime at little or no cost because they have limited storage for the waste lime.
Additionally, each year over a million tonnes of waste lime is created as a by-product of on-going acetylene plants in China alone.
Although availability of new waste carbide lime from acetylene production will reduce in the future, we expect to utilise other
available waste lime sources. In particular paper sludge ash (“PSA”). The usage of recycled paper has reached 50 million
tonnes in Europe and continues to grow as the demand for sustainable products increases. However it is not generally realised
that paper contains up to 40% minerals, which remain as a waste sludge after the recovery of the cellulose fibres. The elimination
of this sludge is a growing problem following the new EU Waste Directive. Similar problems exist with recycled paper in North
America and China. By enabling the raw material to be renewed in a closed loop, the paper industry can move closer towards the
goal of zero waste, zero environmental impact and carbon footprint-free production. This will significantly reinforce their sustainability
credentials.



7







Our new process overcomes
the problem of impurities that has hitherto hindered the re-use of the minerals. The new process uses our original technology
for treating waste lime and applies it to solve a growing environmental problem. Trials have been successfully completed with
waste from a range of paper mills. The SCC produced from this waste is of exceptionally high brightness and low abrasivity. Extensive
trials are being carried out with potential customers.



Conventional PCC Process



Other PCC producers
must use the conventional method for producing their PCC starting from high-grade limestone, which has limited availability. High-grade
limestone deposits are found in quarries that must be mined, creating dust and noise pollution and leaving scars on the land.
The conventional process involves calcining high quality white limestone to produce high purity quicklime. The quicklime is slaked
with water to create milk of lime. PCC is produced by sparging carbon dioxide through a batch reactor containing the milk of lime,
then the PCC is filtered and sold dried at low solids or, more normally, as slurry in paper filling.



SCC Versus PCC Production Process



The SCC Process



There are a number
of ways in which the SCC process differs from the conventional process. The advantages resulting from the differences between
the SCC process and the PCC process are as follows:



| | · | The
                                                                                                             SCC process does
                                                                                                             not require lime
                                                                                                             slaking and classification
                                                                                                             steps. This gives
                                                                                                             us significant advantages
                                                                                                             in both quality and
                                                                                                             cost effectiveness.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | The
                                                                                                             SCC process includes
                                                                                                             a digester circuit
                                                                                                             that facilitates
                                                                                                             the use of any waste
                                                                                                             lime, such as carbide
                                                                                                             lime, thereby removing
                                                                                                             the need to purchase
                                                                                                             lime as is required
                                                                                                             in the conventional
                                                                                                             process.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | The
                                                                                                             SCC process includes
                                                                                                             a promoter recycle
                                                                                                             loop to enhance the
                                                                                                             process economics.
                                                                                                             Any impurities in
                                                                                                             the lime feed are
                                                                                                             rejected as insolubles
                                                                                                             in the digester resulting
                                                                                                             in a final SCC product
                                                                                                             of the highest purity.
                                                                                                             SCC is less dependent
                                                                                                             on the purity of
                                                                                                             the starting material
                                                                                                             and is always superior
                                                                                                             to that of the starting
                                                                                                             material.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | In
                                                                                                             the SCC process,
                                                                                                             the total lime content
                                                                                                             is present in solution
                                                                                                             whereas in the conventional
                                                                                                             process the lime
                                                                                                             is present in suspension
                                                                                                             (milk-of-lime). The
                                                                                                             reaction times in
                                                                                                             the SCC process are
                                                                                                             therefore much shorter
                                                                                                             than in the conventional
                                                                                                             process as the SCC
                                                                                                             process eliminates
                                                                                                             the slow lime dissolution
                                                                                                             step. This advantage
                                                                                                             allows for the use
                                                                                                             of smaller equipment
                                                                                                             as well as providing
                                                                                                             a much higher degree
                                                                                                             of control over the
                                                                                                             process. The SCC
                                                                                                             solution process
                                                                                                             is therefore more
                                                                                                             flexible and easier
                                                                                                             controlled than the
                                                                                                             conventional suspension
                                                                                                             process enabling
                                                                                                             a narrower particle
                                                                                                             size distribution.
                                                                                                             Additionally, the
                                                                                                             higher level of control
                                                                                                             enables us to tailor
                                                                                                             make SCC products
                                                                                                             to serve a wide range
                                                                                                             of markets.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



8







Recycling of Paper Minerals using the CalciTech process



In 2010 and 2011,
we have broadened the basic technology by developing a new application that addresses the growing problem of mineral waste from
recycled paper plants. In Europe the total paper and board consumption is about 100 million tonnes per annum of which 82 million
tonnes per annum is cellulose fibre and about 16 million tonnes per annum is mineral filler and pigments. While 34 million tonnes
per annum of the fibre is recovered and recycled, the minerals are not recycledand have to be quarried, ground, treated
and transported to mills across Europe. A significant portion of the white minerals has to be transported from remote sources
to the centres of production and consumption. For example ultra white ground calcium carbonate for paper coating is mined and
ground in northern Norway and shipped to north and central Europe. Special clays are imported from Brazil to provide properties
that European clays cannot. Calcined clays are produced using an energy intensive process.



At present, when paper
is recycled, these minerals are treated as a waste stream and disposed of as landfill or low value applications in agriculture.
The EU Waste Directive 2008/98/EC, adopted in December, 2010, classifies the mineral sludge as waste and unsuitable for agricultural
use as it contains organics. Many recycled paper mills therefore incinerate this sludge to make Paper Sludge Ash (PSA), which
has a disposal cost of over €60 per tonne.



PSA can be converted
economically to SCC using the CalciTech patented processes. This is an additional source of raw material that CSME can use in
its planned plant expansion. We have identified a large number of sites where plants at a higher tonnage could be applied to using
PSA as a source.



In addition to producing
SCC, the metakaolin in the PSA can be separated and used as an additive to high strength cement. After incineration, the kaolin
and talcs become a form of metakaolin which we name Sustainable MetaKaolin or SMK. The cement industry is very interested in using
SMK as a cement substitute as it is free of calcium oxide and is sourced from recycled materials. The German cement industry is
supporting the qualification of SMK through the German Cement Institute (VDZ) in a joint project with us.



The recycling of PSA
brings very significant benefits for the paper mill: disposal costs of waste minerals, generally in excess of €60 per tonne,
are eliminated; remotely sourced mined minerals are eliminated; carbon dioxide from the incineration is recaptured in the manufacture
of SCC; the SCC has better performance than the original mineral with its higher brightness, opacity and printability. Furthermore,
the use of recycled minerals will enable paper companies to reinforce their claims of sustainability.



Where an on-site plant
is not feasible, CSME will build a plant in the center of a cluster of ash producers and SCC users.



Patents and other Intellectual Properties



We first applied to
patent our process of transforming waste lime into high quality SCC in 1998 and subsequently a patent was granted in the United
Kingdom. An international application was filed under the European Patent Cooperation Treaty in December of 1999 to expand the
protection of our intellectual property on an international level. The patent examination was completed in May 2001 and patents
were granted on July 31, 2003 in 13 European countries. Since then, patents have also been granted in Eurasia (Russia and the
independent states formerly part of the Soviet Union), South Africa, Hong Kong, Indonesia, China, Republic of Korea, Slovakia,
Australia, New Zealand and Poland. During 2008 further patents were granted in The United States, Canada, Brazil, Czech Republic,
Hungary and India.



In October 2009, we
filed an application for a new patent at the UK Patent Office. This new patent will protect the processes to be used by us to
produce SCC with exceptional features including, but not limited to, a unique morphology (rice grain shape), a very narrow particle
size distribution and exceptional purity, which itself gives very high brightness. Typically, we produce particles in the sub-micron
range which satisfies the large majority of potential applications, as demonstrated by extensive trials with potential customers.
However, we can use the same process to produce other particle sizes in the nano and micron range but as there is further development
work required, this has been delayed until market demand dictates. This wide range of capability opens up new applications in
growing markets.



9







In December 2009,
we filed a new patent at the United Kingdom Patent Office for a technology that enables paper producers
to recycle all the minerals used in paper, in particular PSA.In December 2009, CSM filed another patent application in
the UK covering the conversion of waste sludge, especially from paper mills using recycled paper, into two valuable product streams,
SCC and Synthetic Metakaolin (“SMK”).



If granted, these
patents will extend patent protection of our process and product in terms of lifetime and coverage.



Development of the SCC Technology



The research and development
of our SCC process began in 1994 with J.W. Bunger & Associates, a technical research company based in Salt Lake City, USA.
This led to a research project associated with the Swiss Federal Institute of Technology in Lausanne, Switzerland and University
of Lyon in France. We began a pilot project in Manchester, England, which ran between September 1998 and November 1999. During
the pilot project, we were successful in converting waste-lime into high quality SCC. The Recherche et Valorisation des Mineraux
(“RVM”) of Paris, France confirmed the application as a superior quality paper coating pigment, a market currently
dominated by GCC and kaolin. The pilot plant was moved to the site of an industrial partner at Odda in Norway, where the SCC development
program continued.



In 2007, worldwide
PCC capacity was 13 million tonnes, of which two-thirds was utilised by the paper industry. Within the paper industry, SCC is
aimed at the coatings sector, currently dominated by Kaolin and GCC. In Western Europe, consumption of kaolin and GCC for coating
was 2.6 million tonnes and 3.7 million tonnes respectively in 2002, representing around $1.5 billion in sales.



On July 8, 2002, we
announced that we had commissioned and fine-tuned our Synthetic Calcium Carbonate “SCC” small scale production plant
at Leuna, Germany. Presentations were held at Leuna in September 2002 to introduce the new small plant and our SCC technology
to a variety of interested parties, including potential project partners, financial institutions and those from the region that
may be involved with the project. A laboratory facility was also installed adjacent to the plant. Confirmation and fine-tuning
of the key operational parameters of this plant was necessary as a result of the large scale-up from the original pilot plant.
The plant has been used to test raw materials from various other sites located around the world in order to ascertain not only
their suitability to the SCC process but also the quality of SCC that can be produced and for the ongoing production of samples
for sales purposes and product developments with certain customers.



This plant has consistently
produced a range of SCC products primarily in the sub micron range, all with a brightness of over 96% ISO and a steep particle
size distribution. The SCC process produces particles of uniform size and shape, tailor made to the needs of our end markets.
For the paper industry this means that a new pigment will be available that addresses key issues such as quality and runnability
improvements.



In October 2002, we
completed trials at the Centre Technique du Papier at Grenoble in France and with a paper manufacturer. These results met our
expectations and led to the design and launch in February 2003 of our first two SCC products: CalciLSTM and CalciSGTM.



Development and Marketing of SCC Product



The SCC products manufactured
by the use of our SCC process involves the selective dissolution of calcium from industrial waste and its subsequent precipitation
from solution with waste CO2 into pure calcium carbonate. The high calcium selectivity at the initial dissolution step
guarantees the final purity of the product at a unique level. The solution environment assures the exceptional uniformity of the
final precipitate with easy control of the desired particle size, particle size distribution and crystal morphology.



10







We initially developed
SCC products for the paper industry. However, since the introduction of our SCC products to the paper industry in February 2003,
we have developed three non-paper SCC products targeting the food, pharmaceutical and cosmetic industry, and the plastic, sealant,
rubber and adhesives industries.



Paper Industry



We currently have
three SCC products targeting the paper industry: CalciLSTM, CalciSGTM and CalciRGTM. All three
are directed at the high value end of the paper pigment market.



CalciLSTMProducts.CalciLSTM is designed to maximize light scattering. CalciLSTM is targeted to partially
replace and extend costly Titanium Dioxide “TiO2”, Aluminium TriHydrate “ATH” and Precipitated
Silica “PS” and substitute calcined clay in fine paper applications and Super Calendered A+ (“SCA+”) on
a cost effective basis. Examples of such applications are Bible paper, security paper, laminating paper, auto-adhesive labels,
flexible packaging etc. Several trial runs on various applications confirmed the high performance of CalciLSTM. Using
CalciLSTM in pre-coating, allows board producers to totally replace calcined clay, while finished product quality remains
at the high levels required. CalciLSTM used as filler in SCA+ grades shows similar impressive results. Brightness increases
of around 2.5 units can be expected, while opacity is maintained at levels reached with standard PCC filler. Porosity, a very
important parameter for this type of paper grade, will also improve significantly.



CalciLSTM
is also very suitable for pigmentation applications. Adding CalciLSTM to a starch based formulation helps the papermaker
to increase brightness and opacity. The low binder demand due to the absence of fines will maintain paper dusting levels at normal
levels.



CalciSGTMProducts.CalciSGTM, is designed to provide a super gloss coating for premium grade printing and writing papers
including both Ultra Light Weight Coated (“ULWC”) and Light Weight Coated (“LWC”) and coated folding boxboard.
In the latter application, CalciSGTM allows for a reduction in calendaring nips to improve bulk at no loss in gloss.



CalciRGTMProducts. In October 2004, we launched CalciRGTM for the paper coatings market. CalciRGTM is a
performance-enhancing additive aimed at the rotogravure market. For the launch of this product, we worked closely with our potential
customers to identify specific needs. CalciRGTM was designed and developed in collaboration with these customers, and
thoroughly tested in commercial trials, showing the unique properties of our SCC based products.



Rotogravure is a printing
method used, among others, for LWC and ULWC. These paper grades are predominantly aimed at the highly competitive catalogue and
magazine markets, where bulk is an important factor contributing to costs. Lightweight papers typically consist of approximately
30% coating material. The worldwide market for LWC and ULWC papers is estimated to be around 10 million tonnes of which approximately
7 million tonnes is produced in Europe, with the US and Japan accounting for the balance. This market segment of the paper industry
is intensely competitive. Other market segments using rotogravure are super calendared papers and lightweight papers for flexible
packaging.



First commercial tests
have shown that substituting as little as 10% of the original coatings mix with CalciRGTM show a significant improvement
in opacity, a very important quality parameter in this segment due to the thinness of the paper and the demands for high quality
prints. Other characteristics such as brightness, roughness reduction, and smoothness also showed a significant improvement in
performance.



In addition to the
normal quality parameters, CalciRGTM has the same rheological characteristics as our other SCC related products. With
typical machine speeds for these paper types of around 1,200 m/min (45 mph), rheology of the coatings mix is extremely important.
Using CalciRGTM as an additive to an existing coating product for the LWC and ULWC can provide a paper producer and
its supplier of coating material with important cost and quality related competitive advantages.



11







In November 2004,
we announced the results of the most exhaustive trial programme to date of our SCC based products, carried out by BASF. BASF is
the dominant supplier to the paper coating industry for various additives. These additives do not have a pigment related function
such as SCC but impart certain properties on the coatings mix and typically contribute up to 15%. A good example of this group
of additives is a binding agent. BASF approached us in order to ascertain whether its additives would be compatible with SCC based
products.



In the trials our
SCC product was benchmarked against leading products in the mineral pigments for paper industry. It was shown that our SCC:



| | · | Is
                                                                                                             the only product
                                                                                                             to show consistent
                                                                                                             low viscosity at
                                                                                                             all shear levels:applying our
                                                                                                             SCC in a coatings
                                                                                                             mix will positively
                                                                                                             influence the running
                                                                                                             behaviour of the
                                                                                                             paper producing machinery,
                                                                                                             leading to increased
                                                                                                             productivity and
                                                                                                             lower costs.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Imparts
                                                                                                             superior whiteness
                                                                                                             and brightness:
                                                                                                             these are essential
                                                                                                             product quality parameters,
                                                                                                             required to produce
                                                                                                             high quality high-end
                                                                                                             paper.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Leads
                                                                                                             to greater opacity:another very
                                                                                                             important quality
                                                                                                             parameter, especially
                                                                                                             important for light-weight
                                                                                                             papers.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Has
                                                                                                             superior print gloss:this parameter
                                                                                                             greatly determines
                                                                                                             the quality of the
                                                                                                             printed product.
                                                                                                             Our SCC imparts a
                                                                                                             higher gloss on the
                                                                                                             coated paper, but
                                                                                                             over and above that,
                                                                                                             the contrast between
                                                                                                             the print and background
                                                                                                             shows superiority
                                                                                                             as well.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Gives
                                                                                                             slow ink settling:this leads to
                                                                                                             lower ink consumption
                                                                                                             and hence significant
                                                                                                             cost savings for
                                                                                                             the printer.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Provides
                                                                                                             superior rotogravure
                                                                                                             printability:this has shown
                                                                                                             printability performance
                                                                                                             superior to industry
                                                                                                             standard calcium
                                                                                                             carbonates with superior
                                                                                                             whiteness, brightness
                                                                                                             and opacity.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Following these tests
using CalciSGTM, we developed our latest product, CalciRGTM for the rotogravure market as a high-end additive
to Kaolin. In total, over twenty trials have been conducted with both scientific institutions and commercial paper producers,
varying from lab scale to pilot machine trials.



Food, Pharmaceutical and Cosmetic Industries



CalciSPTMProduct. In October 2005, we launched our first product following the implementation of our diversification strategy.
This product, CalciSPTM, is our first non-paper product that is aimed at the food, pharmaceutical and cosmetics industries.
We launched this product following tests by the Geneva Institute of Technology, certifying that CalciSPTM shows extreme
high purity, especially regarding heavy metals content. With the target industries for this product moving increasingly towards
higher purity products, we expect that both the purity and processibility characteristics of CalciSPTM will contribute
to advantageous competitive characteristics.



The first tests carried
out on CalciSPTM show that the product has certain characteristics that make it very suitable for use in bakery and
cacao products. Further tests are currently being conducted on other applications within the target markets. Since its introduction
in October 2005, we have been marketing this product in trade shows and assessing different opportunities for the distribution
of this product.



Plastic, Sealant, Rubber and Adhesives Industry



CalciRCTMProduct. In January 2006, we launched CalciRCTM. This product is aimed at polymer applications such as plastics,
sealants, rubber and adhesives. Initial trials within the plastics industries have shown that CalciRCTM significantly
improves certain strength characteristics of the finished product. When trialled in PVC profiles, significant improvements in
gloss, brightness and lifetime were measured. Due to the rheological properties of the SCC, higher filler loadings can be achieved
which reduce the amount of polymer resin used with consequent cost savings. Further trials are currently being conducted into
the processibility characteristics of the product.



12







Paint Industry



SCC products are currently
being developed and are expected to be launched in due course to serve the water based decorative paint market. SCC brings benefits
of brightness and opacity that enables the producer to reduce the amount of expensive titanium dioxide in the formulation. While
paint overall is growing at a rate of two percent (2%) annually, water based emulsion paint is growing at nine percent (9%) driven
by environmental considerations and generally carries a premium price over paper industry products. The sustainability benefits
of SCC from recycled minerals are being sought by the major paint producers who are urgently trying to make their products more
ecofriendly.



Business Activity: Small scale production plant



We have been operating
a small-scale production plant in Leuna, Germany. The small-scale production plant, while not a full size commercial plant is,
nevertheless, a commercial plant as the products manufactured, in particular, high grade SCC, can be sold. High grade SCC for
the pharmaceutical industry is often sold in relatively small amounts and command prices in excess of Euro 800 per ton. We intend
to manufacture and sell high-grade product in these specialist areas where supplies are not available to meet such demands. The
small-scale plant continues to test new materials such as PSA, be used in the design of any commercial size plant variant and
for training purposes.



Business Activity: Europe



After the collapse
of the credit markets, the European Investment Bank (“EIB”) announced several programs late in 2008, to assist in
financing of developments within the Member States of the European Union. In particular the Innovation and New Technology Programmes
and EIB have confirmed that SCC plants, licensed with our intellectual property rights from outside Europe, would qualify on an
aggregated capital expenditure (CapEx) basis, subject to all the normal due diligence requirements. The funding from the EIB allows
up to 50% of CapEx to be financed at favourable interest rates for extended terms. They have also confirmed that our indirectly
owned subsidiary, CSME, may arrange all financings for each Member State through a UK House Bank, thereby facilitating the due
diligence process. The proposed locations are generally in depressed areas and many are eligible for grants of varying amounts
depending on the rating of the region.



During October 2010,
we transferred the business undertaking for the European territory to CSME. Payment for this transfer was made by issuing 80,000,000
common shares with a par value of €0.10 per share to CSM at a value of €0.80 per share. Upon securing the funding to
build the first plant, we will issue an exclusive license to CSME for the European territory for the payment of Euro 56 million.
The license will be for a period of 30 years with an option to extend.



Typically all projects
will require equity investment of some 20% of CapEx. We are in discussions with London financial advisers with a view to raising,
by way of an institutional private placement for CSME, equity funding and working capital to fund the initial projects for building.
We have also commenced discussions with a number of AIM market adviser brokers to secure the appropriate funding and an admission
of CSME, to the AIM. Industrial partners at the roll out stage in some projects will provide their share of funding for their
equity participation. We are now seeking to raise funding of Euro 27.50 million in the UK market for our European licensee, CalciTech
Synthetic Minerals Europe Ltd. (“CSME”). This would enable CSME, with the help of European Union grants, to build
a commercial plant in mainland Europe producing circa 50,000 tonnes per annum of SCC and provide working capital until revenue
earning.



CSME will operate
entirely independently which will allow us to concentrate on introducing SCC into other territories, initially the United States
of America and certain developing territories. An independent Board of Directors has been appointed to conform with London Governance
allowing CSME to be the exclusive operators in the European territory. Mr. Michael Brickell, a director of our company has been
appointed as a non-executive director of CSME to represent the parent company.



13







In December 2011,
CSME signed an agreement with Mott MacDonald Ltd. of the United Kingdom, a global management, engineering and development consultancy.
Mott MacDonald has more than 14,000 staff, £1 billion revenue and work in 140 countries for the public and private sectors.
Mott MacDonald's core business sectors cover buildings, transport, energy, water, environment, health, education, industry, oil
and gas, communications and international development. The company has a significant and growing business in the industry sector
and is currently working on a range of major projects in USA, China, Middle East, Russia, Europe and the UK. The company will
prepare basic engineering design documentation for a 50,000 tonnes per annum Synthetic Calcium Carbonate (SCC) plant



The project with CSME
will be managed by John Challenger, a Divisional Director of Mott MacDonald's Nuclear and Process business.



Business Activity: Germany



In April 2003, we
appointed GUSCO Handel as our sole sales representative to the paper and board industry in Germany for our SCC products: CalciLSTMand CalciSGTM. GUSCO Handel is a subsidiary of family owned G. Schürfeld Group, founded in 1937 and is active
as an accredited agency in the marketing and sales of forest products (pulp, paper, board and timber). The broad experience of
GUSCO Handel in the paper industry gained from its wide customer relations developed over many years, made them spot the unique
growth opportunity presented by our SCC.



As part of our efforts
to develop a market for our products in Germany, we built a small scale plant at Leuna, Germany on a large industrial and chemical
site owned and managed by InfraLeuna GmbH, who also provided all the necessary utilities. We also retained the services of W S
Atkins plc of Stockport, UK, as consulting engineers for our first large scale commercial plant based on 40,000 tonnes production
per annum, which resulted in their production of an in-depth feasibility study and technical due diligence report. InfraLeuna
allocated a site in the complex upon which it was agreed that we would build its first commercial plant and an agreement was negotiated
for its purchase. This agreement was to be completed on the finalization of the project financing. It was also upon the advice
of InfraLeuna that a local company, WUP Consulting GmbH & Co. KG, was engaged to carry out the building and environmental
permitting application. In September 2007, the Company received all the permitting documents for the planned plant.



By the end of February
2004, we secured Letters of Intents (“LOI”) from various German companies in the paper industry for our SCC products:
CalciLSTM and CalciSGTM. The customers who have signed the LOIs are a cross section of major German companies
in the paper industry. Each customer has signed confidentiality agreements and tested, at their own expense, our SCC sample product
in their manufacturing process. These LOIs are subject to definitive agreements that are to be executed upon the completion of
the 100,000 tonnes per annum plant in Leuna, Germany.



In 2006, a major Finnish
contractor, part of a multi-national Austrian group, was engaged to complete the design and planning work on a larger first commercial
plant capable of producing 100,000 tonnes per annum. This contractor is able to provide all the principle components from companies
within its group. All the additional design work has been carried out at the contractor's own cost.



However, as a result
of global financial crisis and the difficulties in the banking sector in Germany, we were unable to secure the endorsement of
a House Bank in Germany of our application to secure a grant from the European Regional Structural Fund towards 50% financing
of the capital expenditure (CapEx) of our planned 100,000 tonnes per annum plant in Leuna, Germany, nor were we able to find a
strategic partner on terms which we considered to be acceptable to our shareholders. Although our project was approved and the
due diligence completed satisfactorily, the House Bank was unable to endorse our application as its credit lines were withdrawn
and it was subsequently closed down. As such, we have suspended the development of our 100,000 tonnes per annum plant in Leuna,
Germany and focused our energy in the European market with the smaller circa 50,000 tonnes per annum plants. With the change in
strategy, any large scale plant to be built in Germany has been deferred into the European roll-out program. We are in the process
of renegotiating the existing LOIs with the various German companies as well as negotiating new LOIs as part of the European roll-out
program.



14







During November 2011,
we signed a Letter of Intent relating to the construction and operation of a Synthetic Calcium Carbonate ("SCC") plant
on the site of SKW Stickstoffwerke Piesteritz GmbH ("SKWP"). The plant, with planned production of 50,000 tonnes per
annum will be situated on the Agro-Chemie Park, Piesteritz in Lutherstadt-Wittenberg, Germany. Feasibility should be completed
by 31 December 2012.



SKWP is the largest
producer of ammonia in Germany and is actively developing business on the Agro-Chemie Park. In addition to renting a suitable
plot of land to CSME, and providing utilities and site services, SKWP will supply the CO2 required for this SCC plant.



Business Activity: Spain



In September 2009,
we signed a Letter of Intent with Calcinor SA of Spain. Calcinor is Spain’s largest producer of lime, which is the principal
raw material for CalciTech’s Synthetic Calcium Carbonate (SCC). The objective of this potential relationship is to build
a plant at one of Calcinor’s sites.



Business Activity: Republic of Slovakia



We originally signed
a memorandum of understanding with Novaky Chemical Company (“Novaky”) to form a joint venture company to produce SCC
from Novaky's waste lime. A joint venture agreement was signed on March 23, 2004. Novaky currently has over 1.5 million tonnes
of waste lime in temporary storage and continues to produce more in its ongoing acetylene production. Following the granting of
our patent in the Slovak Republic in February 2005, we commenced the technical, financial and marketing feasibility of a large
production facility plant to serve the Central European market.



Under the terms of
the memorandum of understanding, we will control the joint venture. We expect the project to qualify for environmental and investment
incentives from The Republic of Slovakia, which is an early entrant to the European Union enlargement. Following the granting
of our patent in Slovakia in 2006, we are now actively working on developing this project.



Novaky, a renowned
chemical conglomerate with a turnover of around $170 million, was founded in 1940. The company manufactures intermediate products
such as electrolysis products, basic organic chemicals, vinyl chloride as well as end products manufactured from these intermediates
and from polyvinyl chloride ("PVC"). Products are sold on both the domestic and the wider European market. Previously
a state company, Novaky was partially privatized in 2001 when Canadian company Exall Resources was selected by the Slovak National
Property Fund to buy a 40.97% stake in the company. With the entrance of the Slovak Republic into the EU, compliance with environmental
standards has become critical. As such, Novaky approached us for use of our proprietary technology in solving their carbide lime
related environmental problems.



Following a change
of management at Novacky and in view of delays with our project in Germany with the credit market turmoil, we determined to delay
matters until our phased roll out program.



Business Activity: Americas and Other Territories



In August 2002, we
appointed Charles Kunesh, formerly research director of Specialty Minerals Inc. in America, to represent our program to identify
suitable waste deposits for possible SCC manufacture. This has led to a number of discussions and we announced in April 2003 an
agreement to conduct feasibility studies for such a project with Carbide Industries LLC of Louisville, Kentucky. We are not pursuing
this project or any other North American project at the present time until commencement of our roll out program. With the management
of CSME concentrating on the development of the European territory, this will allow us time to attend to this territory and others,
including China and India.



15







Financing



We are currently financed
through a loan facility, up to $3,000,000, from Epsom Asset Management Ltd (“Epsom”). In September 2007, Epsom agreed
to convert $2,001,000 of the balance due under the credit facility agreement into our Common Shares on the basis of one share
for each $0.29 of note. This conversion resulted in the issue of 6,900,000 Common Shares. In addition, in December 2007, Epsom
agreed to convert a further $1,259,697 of the balance due under the credit facility agreement into our Common Shares on the basis
of one share for each $0.30 of note. This conversion resulted in the issue of 4,198,990 Common Shares. In December 2007, Epsom
agreed to extend the credit facility to August 30, 2009. In the third quarter of 2008, Epsom agreed to a temporary increase of
the facility to $5 million up to December 31, 2008 in the absence of any new fund raising by placement of Common Shares. Epsom
has extended the credit facility to November 30, 2013.



In addition, we had
outstanding 6% convertible debenture notes, with a maturity date of December 31, 2009, which are only repayable in cash at our
option. Holders of the debenture notes did not have such an option and may only convert into our Common Shares at a conversion
price of $1.75 on the maturity date. This, therefore, had no effect on our liquidity.



During December 2008,
all 6% convertible debenture holders with a value of $4,642,000 agreed to convert 50% of the capital with accrued interest to
December 31, 2008, amounting to $2,321,000 into Common Shares of the Company at a price of $0.095 per share. The remaining debenture
notes were extended until December 31, 2011 at an interest rate of 1.75% per annum, payable quarterly, with the right to convert
into our Common Shares at $0.75 per share, amended from a conversion of $1.75 per share. We have the right, upon 10 days notice,
without penalty, to repay all or any portion of the outstanding principal. These debenture notes have been further extended until
December 31, 2012 with no change to their terms.



In December 2009,
we authorized a new series of convertible debenture notes with an annual interest rate of 4% and a conversion rate of $0.40 per
share for a period of two years from date of issue. All other terms and conditions are the same as the previous series of convertible
notes. Epsom has converted $1,500,000 of its outstanding loan facility into these new notes.



In December 2010,
Epsom agreed to convert $2,300,000 of its outstanding balance into $1,000,000 of the new series of 4% convertible debenture notes
issued in 2009 and $1,300,000 into common shares of the Company at a price of $0.085 per share. This resulted in the issue of
a further 15,294,118 of our Common Shares.



In December 2011,
Epsom agreed to convert $1,000,000 of its outstanding balance into 8,100,000 ordinary shares of CSME at the par value of Euro
0.10 per share. This gives Epsom a 10.125% holding in CSME. Epsom further agreed to extend their 4% convertible debentures until
March 31, 2014 with no other changes to the terms.



Revenue



During the fiscal
year ended December 31, 2011 and the year ended December 31, 2010, we received revenues totalling $NIL and $NIL respectively from
the sale of SCC samples. Only small sized samples are being sent out to potential customers for testing, especially in non-paper
applications, for which it is customary not to charge clients. Please see the “Consolidated Statement of Comprehensive Income”
and Item 3A, “Selected Financial Data”, and Item 5, “Operating and Financial Review and Prospects”, for
more information.



16







Dependence on Customers and Suppliers



We are not dependent
upon a single or a few customers or suppliers for revenues from our operations.



Project and Product Development



During the year ended
December 31, 2007 and continuing through the fiscal year ended December 31, 2011, we moved out of the research and development
stage and into the commercialization stage, and project and product development. Accordingly, we no longer expense project and
development expenses. $494,000 spent in 2011 on project and product development appears on the Balance Sheet as an intangible
asset.



We expensed $NIL on
research and development in the year ended December 31, 2011 and $NIL in the year ended December 31, 2010.



Organizational Structure:The
following is our organizational chart:







| | 4C. | Property, Plant and Equipment
| | --- | -----------------------------



We rent our representative
office facility in Switzerland and intend to continue to locate an office in Switzerland, but will reassess our need for future
expansion to meet our business plan. CSME has temporary office facilities in Cheltenham, United Kingdom until its funding is completed
and new offices are located.



We maintain a Synthetic
Calcium Carbonate “SCC” small scale production plant at Leuna, Germany, through a branch office of CSME. This small
plant has a maximum capacity of 800 tonnes per annum. A suitably equipped laboratory facility has also been installed adjacent
to the plant, in the same building. No additional land or rental is involved. The small-scale plant will continue to produce samples,
test materials, be used to design commercial plant size variants and for training pruposes.



| | Item 4A. | Unresolved
                                                                                            Comments
| | -------- | ---------------------------------------------------------------------------------------------------------------



Not applicable.



17







| | Item 5. | Operating and Financial Review and Prospects
| | ------- | --------------------------------------------



Overview



We are currently in
the process of commercialising our SCC based products. An important aspect of this commercialisation has been the building and
commissioning of our small-scale production plant in Leuna, Germany. This small-scale plant was initially built for commercial
purposes. It produces samples for all future plants, tests input materials from around the world and will provide the necessary
training for staff to be employed in the future commercial plants. The small-scale plant has also been used in the design development
of future commercial plants and has supported the development of a 100,000 tonnes per annum plant originally planned in Germany.
However, as a result of the global financial crisis and difficulties in the banking sector in Germany, we were unable to secure
financing for our planned 100,000 tonnes per annum plant. Currently, we have deferred the development of the planned 100,000 tonnes
per annum plant in Germany, and through CSME, are looking to develop a number of circa 50,000 tonnes per annum plants throughout
Europe.



The Company, through
CSME, is now planning a matrix of plants in Europe and has made presentations to the European Investment Bank (“EIB”)
to confirm that such projects will qualify under its technological innovation program for financial support. The Company’s
financial advisors are currently in negotiations with a number of UK banks, in the context of the EIB borrowing for funding of
all European plants. CSME is now envisioning a number of circa 50,000 tonnes per annum plants and these could be in Germany, France,
Spain, the Benelux or the United Kingdom.



We are also evaluating
new product developments for new market applications and testing various feedstocks. It is intended that the small-scale plant,
now operated through CSME, will continue to test and trial all feed materials, and produce our sample material to support other
projects in other regions.



We are currently financed
through a loan facility, up to $3,000,000, from Epsom Asset Management Ltd. (“Epsom”). Epsom has extended the credit
facility to November 30, 2013. In addition, we have outstanding convertible debenture notes, with a maturity date of December
31, 2011, which are only repayable in cash at our option. These notes, with the agreement of the holders have been extended with
a maturity date of December 31, 2012 on the same terms as before Holders of the debenture notes do not have such an option and
may only convert into our Common Shares at a conversion price of $0.75 on the maturity date. This, therefore, has no effect on
our liquidity.



In December 2009,
the Company authorized a new series of 4% convertible debenture notes with a conversion rate of $0.40 per share for a period of
two years from date of issue. All other terms and conditions are the same as the previous series of convertible notes. Epsom has
converted $1,500,000 of its outstanding loan facility into these new notes. These notes have been extended until December 31,
2012.



In December 2010,
Epsom agreed to convert $2,300,000 of its outstanding balance into $1,000,000 of the new series of 4% convertible debenture notes
issued in 2009 and $1,300,000 into common shares of the Company at a price of $0.085 per share. This resulted in the issue of
a further 15,294,118 common shares.



In December 2011,
Epsom agreed to convert $1,000,000 of its outstanding balance into 8,100,000 ordinary shares of CSME at the par value of Euro
0.10 per share. This gives Epsom a 10.125% holding in CSME.



Critical accounting policies



The significant accounting
policies that we believe are the most critical to aid in fully understanding and evaluating our reported financial results include
the following:



18







Going concern and future funding



The financial statements
have been prepared assuming we will continue as a going concern. Under the going concern assumption, an entity is ordinarily viewed
as continuing in business for the foreseeable future with neither the intention nor the necessity of liquidation, ceasing trading
or seeking protection from creditors pursuant to laws or regulations. In assessing whether the going concern assumption is appropriate,
management takes into account all available information for the foreseeable future, in particular for the twelve months from the
date of approval of the financial statements.



Assets and liabilities
are recorded on the basis that we will be able to realise our assets and discharge our liabilities in the normal course of business.
Accordingly, the financial statements do not include any adjustments to the carrying values of assets and liabilities that might
be necessary should we be unable to continue as a going concern. In addition, the majority of our assets are intangible assets.
Our ability to recover the carrying value of our intangible assets is dependent upon our ability to raise additional funds sufficient
for the commercial exploitation of these assets. The financial statements do not include any adjustment that would result if our
efforts to secure additional funding for the commercialisation of our intangible assets described above are not successful.



| | 5A. | Operating Results
| | --- | -----------------



The following discussion
and analysis relates to items that have affected our results of operations for the years ended December 31, 2011, December 31,
2010, and December 31, 2009. The information contained in the table below should be read in conjunction with our consolidated
financial statements and accompanying notes included in this Annual Report on Form 20-F.



|                                    |  | Year Ended December 31, 2011 |            |   | Year Ended December 31, 2010 |   |          | Year Ended December 31, 2009 | 
|----------------------------------- |  | ---------------------------- | ---------- | - | ---------------------------- | - | -------- | ---------------------------- | 
|Operating Revenue                   |  | $                            | 196,000    |   |                              | $ | NIL      |                              | 
|Cost of Revenues                    |  | $                            | NIL        |   |                              | $ | NIL      |                              | 
|Gross Margin                        |  | $                            | 196,000    |   |                              | $ | NIL      |                              | 
|Research and development expenses   |  | $                            | -0-        |   |                              | $ | -0-      |                              | 
|Project development expenses        |  | $                            | -0-        |   |                              | $ | -0-      |                              | 
|Product development expenses        |  | $                            | -0-        |   |                              | $ | -0-      |                              | 
|General and administrative expenses |  | $                            | 1,273,000  |   |                              | $ | 699,000  |                              | 
|Operating Loss                      |  | $                            | (1,077,000 | ) |                              | $ | (699,000 | )                            | 
|Net Loss Before Income Taxes        |  | $                            | (1,265,000 | ) |                              | $ | (869,000 | )                            | 
|Provision for Income Taxes          |  | $                            | (1,000     | ) |                              | $ | (1,000   | )                            | 
|Net Loss                            |  | $                            | (1,266,000 | ) |                              | $ | (870,000 | )                            | 



December 31, 2011 compared to December 31, 2010.



Revenue. We
had revenues totalling $196,000 for the year ended December 31, 2011 compared to $NIL for the year ended December 31, 2010. There
was no revenue from the sale of Synthetic Calcium Carbonate (“SCC”) samples during the year. Other revenue of $196,000
was a result of grant monies and other contributions received in the development of our Paper Sludge Ash technology.



Expenses.
Product development and project development costs for the year ended December 31, 2011, remained at $NIL. Product development
and project development expenditure of $494,000 (December 31, 2010: $551,000) was capitalised as an intangible asset. General
Administrative expenditure increased from $699,000 to $1,273,000. This was as a result of CSME development costs increasing from
$49,000 to $711,000 whilst the same costs for all other group companies decreased from $650,000 to $562,000. Salaries and charges
increased from $168,000 to $202,000 and legal fees increased from $23,000 to $42,000 during the year. These increases were mainly
due to the continuing development of the Company’s European licensee and its commercialization program. Interest charges
have increased from $142,000 to $175,000. Even though we are now firmly engaged in the commercialisation stage, project and product
development continue but are recorded as Intangible Assets.



19







Net Loss.
The net loss in year ended December 31, 2011 increased to $1,266,000. In the year ended December 31, 2010 it was $870,000.



December 31, 2010 compared to December 31, 2009.



Revenue. We
had revenues totalling $NIL for the year ended December 31, 2010 compared to $NIL for the year ended December 31, 2009. Only small
sized samples are being sent out to potential customers for testing, especially in non-paper applications, for which it is customary
not to charge clients.



Expenses.
Product development and project development costs remained at $NIL. Product development and project development expenditure of
$1,406,000 (December 31, 2009: $1,127,000) was capitalised as an intangible asset. General Administrative expenditure decreased
from $965,000 to $699,000. Salaries and charges decreased from $346,000 to $168,000 and legal fees decreased from $70,000 to $23,000
during the year. These decreases were mainly due to tight budgetary controls. Interest charges have increased marginally from
$103,000 to $142,000. Even though we are now firmly engaged in the commercialisation stage, project and product development continue
but are recorded as Intangible Assets.



Net Loss.
The net loss in year ended December 31, 2010 decreased to $870,000. In the year ended December 31, 2009 it was $1,081,000.



Foreign Currency Exchange Rates



A significant portion
of our business is conducted in currencies other than the United States dollar. As a result, we are subject to exposure from movements
in foreign currency exchange rates. We do not currently engage in hedging transactions designed to manage currency fluctuation
risks. See Notes to Consolidated Financial Statements – Note 2.5. Foreign Currency Translation.



Inflation



Historically, inflation
has not affected our business in the current locations where it does business and we do not expect that it will do in the future.



Interest Rate Sensitivity



We are not currently
subject to adverse movement in interest rates because our credit facilities are fixed at an interest rate of 1.50% and Convertible
Debentures at an interest rate of 1.75% and 4.00%. The credit facility agreement requires repayment on November 30, 2013. We may
redeem the Convertible Debentures before December 31, 2012. We do not currently engage in hedging transactions designed to manage
interest rate fluctuation risks.



| | 5B. | Liquidity and Capital Resources
| | --- | -------------------------------



As of December 31,
2011, our working capital deficiency decreased to $805,000 from the working capital deficiency of $2,823,000 on December 31, 2010.
Cash deposits were up to $35,000 and current liabilities were down $2,043,000 on December 31, 2011.



As of December 31,
2010, our working capital deficiency increased to $2,823,000 from the working capital deficiency of $577,000 on December 31, 2009.
Cash deposits were down to $18,000 and current liabilities were up $2,181,000 on December 31, 2009.



20















As of December 31,
2009, our working capital deficiency decreased to $577,000 from the working capital deficiency of $744,000 on December 31, 2008.
Cash deposits were down to $22,000 and current liabilities were down $167,000 on December 31, 2008.



We are partially financed
through a credit facility from Epsom Asset Management Ltd. (“Epsom”). This credit facility was originally issued by
Epsom Investment Services, N.V., but was assigned to Epsom Asset Management Ltd. in November 2008 following a reorganization of
the Epsom Group. The credit facility agreement with Epsom to provide up to $5,000,000 was re-negotiated during February 2003 whereby
the maximum amount of draw down was reduced to $2,500,000 with a reduction in interest charged to 7.5% per annum. Pursuant to
an addendum to the credit facility agreement dated August 2006, effective as of February 2006 Epsom no longer has a right to convert
outstanding balance into our Common Shares. The credit facility has been extended several times, and as of September 10, 2012,
the credit facility has been extended until November 30, 2013.



From time to time,
the balance of this facility has been reduced by the mutually agreed conversion of the balance into our Common Shares, in order
to provide on-going working capital. During February 2005, Epsom agreed to convert part of this facility into equity for $1,400,000.
As at February 28, 2006, $213,000 of this facility had been drawn down. In September 2007, Epsom agreed to convert $2,001,000
of the balance due under the credit facility agreement into our Common Shares on the basis of one share for each $0.29 of note.
This conversion resulted in the issue of 6,900,000 of our Common Shares. In addition, in December 2007, Epsom agreed to convert
a further $1,259,697 of the balance due under the credit facility agreement into our Common Shares on the basis of one share for
each $0.30 of note. This conversion resulted in the issue of 4,198,990 of our Common Shares. In December 2007, Epsom agreed to
extend the credit facility to August 30, 2009. As at December 31, 2008, with the prior written consent of Epsom, the facility
was temporarily extended by $2,936,000 (December 31, 2007: $1,630,000 available). A restructuring of the debt in order to make
available additional working capital was completed on June 2009. Epsom increased the credit facility to $3,000,000 and extended
it until November 30, 2013.



In addition, we have
outstanding convertible debenture notes. During December 2008, all 6% convertible debenture holders with a value of $4,642,000,
agreed to convert 50% of the capital with accrued interest to December 31, 2008, amounting to $2,321,000 into our Common Shares
at a price of $0.095 per share. The remaining debenture notes were extended until December 31, 2011 at an interest rate of 1.75%
per annum, payable quarterly, with the right to convert into our Common Shares at $0.75 per share, amended from a conversion of
$1.75 per share. We have the right, upon 10 days notice, without penalty, to repay all or any portion of the outstanding principal.



In December 2009,
we authorized a new series of 4% convertible debenture notes with a conversion rate of $0.40 per share for a period of two years
from date of issue. All other terms and conditions are the same as the previous series of convertible notes. Epsom converted $1,500,000
of its outstanding facility into these new notes.



In December 2010,
Epsom agreed to convert $2,300,000 of its outstanding balance into $1,000,000 of the new series of 4% convertible debenture notes
issued in 2009 and $1,300,000 into our Common Shares at a price of $0.085 per share. This resulted in the issue of a further 15,294,118
of our Common Shares. These debenture notes were extended until December 31, 2012 with no other changes to the terms.



In December 2011,
Epsom agreed to convert $1,000,000 of its outstanding balance into 8,100,000 ordinary shares of CSME at the par value of Euro
0.10 per share. This gives Epsom a 10.125% holding in CSME.



21







Given the cash on
hand of $35,000, together with working capital credit facility and the continuing control of expenses, we believe that we have
sufficient working capital to maintain our administrative operations and obligations for the next 12 months. We have received
assurances from the provider of this credit facility that it will continue to keep this credit facility available for this period.
However, to implement our current business plan and develop commercial production of the SCC products, this credit facility would
be insufficient and further funding would be required. We will need additional capital to finance the development of the commercial
plants. We have commenced discussions with a number of AIM market adviser brokers to secure the appropriate funding and an admission
of CSME, to the AIM.



We will need approximately
Euro 27.50 million for our first full-scale plant. The construction of these plants will be financed by a combination of grants
from the European Structural fund for up to 50% of the capital expenditure, funding from the European Investment Bank and the
remainder from arrangements made by the Company and by the Company’s house bank. Where state guarantees are also available
these will be sought.



Additional financing
will be required to enable us to implement our business strategy of growth, which includes investment in joint ventures in the
SCC industry. No assurances can be given that we will be able to raise cash from additional financing efforts. If we are unable
to obtain sufficient funds from future financing, we may not be able to fully achieve our business objectives.



5C.        Research
and Development, Patents and Licenses, etc.



We expensed $NIL
in the year ended December 31, 2011 and $NIL in the year ended December 31, 2010 on research and development.



5D.         Trend
Information



Revenue
from the principal activity commenced for trial purposes since the year ended February 29, 2004.At the present time, we
have not generated any revenue from producing SCC on a commercial scale and have incurred substantial losses due to expenses associated
with our close of past Trylene and Acetylene Gas businesses and research and development expenses.



5E.         Off
Balance Sheet Arrangements



None.



5F.          Tabular
Disclosure of Contractual Obligations



Contractual obligations
for the fiscal year ended December 31, 2011are disclosed as follows:



|                                   |  | Dec 31, 2011 |           |  | Payments Due by Period | 
|---------------------------------- |  | ------------ | --------- |  | ---------------------- | 
|                                   |  | Total        |           |  | < 1 year               | 
|Contractual Obligations            |  | $            |           |  | $                      | 
|                                   |  |              |           |  |                        | 
|Credit facility                    |  |              | 1,520,000 |  |                        | 
|Convertible debentures             |  |              | 0         |  |                        | 
|Debenture Interest payable         |  |              | 0         |  |                        | 
|Equipment leasing                  |  |              | 0         |  |                        | 
|Property rental                    |  |              | 0         |  |                        | 
|                                   |  |              |           |  |                        | 
|Total Contractual Cash Obligations |  |              | 1,520,000 |  |                        | 



We categorized our contractual obligations
based on the following:



Credit facility.This is the balance on the credit facility with Epsom as at December 31, 2011. It is not repayable until November 2013 and
is therefore a non-current liability. Under the original credit facility agreement with Epsom, any outstanding balance due under
the credit facility agreement can be converted in part or in whole into our Common Shares at any time at the option of Epsom.
The conversion price is equal to 80% of the trading price per share of our Common Share on the date such note was made or additional
advances were made. In December 2011, Epsom agreed to convert $1,000,000 of its outstanding balance
under the credit facility into 8,100,000 ordinary shares of CSME at the par value of Euro 0.10 per share.



22







Convertible Debentures.
Debenture holders were offered and accepted new debentures with a maturity date of December 31, 2012, and falls into the 1-3 year(s)
period.Epsom agreed to extend their 4% convertible debentures until March 31, 2014.



Interest payable.
The interest payable on convertible debentures is due up to the date of maturity.



Property Rental.
During the year, a new building containing the Small Scale Production Plant and laboratory was leased in Leuna, Germany.



Item 6.            Directors,
Senior Management and Employees



6A.          Directors,
Senior Management



The following is a
list of our directors and officers and a brief description of their business experience. There are no family relationships between
any officers and directors.



At our Annual General
Meeting of Shareholders held on December 31, 2011 the Board of Directors were elected.



|Name                  |  | Age |  | Positions Held                                                          |  | Period                                                    
|--------------------- |  | --- |  | ----------------------------------------------------------------------- |  | ----------------------------------------------------------
|                      |  |     |  |                                                                         |  |                                                           
|Roger A. Leopard      |  | 70  |  | Director
        
        President and Chief
        Executive Officer |  | June 2001-Present
        
        February 2000 – Present
|                      |  |     |  |                                                                         |  |                                                           
|Michael J.B. Brickell |  | 71  |  | Director                                                                |  | March 2010 – Present                                      
|                      |  |     |  |                                                                         |  |                                                           
|John O’Kelly-Lynch    |  | 53  |  | Director                                                                |  | January 2012 - Present                                    



Roger A. Leopard.Mr. Leopard is our Chief Executive Officer, President and Director. Mr. Leopard is a Chartered Accountant, initially with
Deloittes until leaving the profession in 1966 to join The Great Universal Stores as Assistant Treasurer. He played a key role
in the development of the corporation’s financial services division. In 1976, Mr. Leopard was appointed Vice President of
Finance of the CIG Group, a computer leasing and related product marketing and service operation with diversified European operations.
He was subsequently appointed Chairman of the Board and Chief Executive of CIG Group’s U.S. listed parent company. During
this period, he specialized in innovative methods of financing a wide range of businesses and was involved in early stage company
development and finance. This involved the arranging of funding for many commercial organizations in North America, Europe and
Russia. Before becoming our director, Mr. Leopard was a director of Epsom Asset Management Ltd. Upon his appointment, he resigned
from this position and is no longer involved with Epsom Asset Management Ltd



Michael J.B. Brickell.
Mr. Brickell is a Chartered Accountant and has over 40 years of experience at senior management levels in business enterprises
in England, Europe and North America. He was formerly with The Great Universal Stores Ltd and a director of a number of subsidiary
companies, both in the UK and continental Europe. Mr. Brickell was also President and COO of Holt, Renfrew & Co. Ltd. a leading
fashion stores group operating throughout Canada. He is currently an owner and Chairman of Cotswold Collections Limited, a retail
mail order company in England, and Deputy Chairman and non-executive director of Industrial Minerals Corporation, an Australian
listed company involved in the exploration and production of mineral sands in the USA.



23







John O'Kelly-Lynch.
Born in Ireland in 1959, John moved to Bermuda in 1982 to work with KPMG. A Fellow of the Institute of Chartered Accountants in
Ireland, John joined a private shipping and venture capital group in 1984 as CFO. During the 80s and the 90s he was actively involved
in many US based venture capital projects and over the years has served in senior finance related roles for various international
shipping and oil companies before forming Delphi in 1997. John sits on the board of the funds that are managed by Delphi and also
holds directorships in various investment holding, and publicly listed companies in Bermuda. He is former Chairman of the Bermuda
Shipping Association and a Board Member of the Association of Bermuda International Companies.



Both John M. Smith
and Dr. Howard E. Browning stepped down as directors on December 31, 2011.



6B.        Compensation



During our fiscal
year ended December 31, 2011, we paid an aggregate of $187,000 in compensation to our directors and officers as a group for services
in all capacities. We did not make any payments for pension or retirement plans for officers and directors.



Directors’ Compensation



Directors, who are
not our employees, are compensated by stock options and $1,000 for each board meeting attended, in addition to travel expenses.
Directors, who are also our officers, do not receive additional compensation for serving as Directors.



Executive Compensation



The following table sets forth the aggregate
cash compensation paid for the past fiscal year for executive compensation:



SUMMARY COMPENSATION TABLE



|                             |  |          |  |                     |         |  |              |     |             |     |            |  |           | Long Term Compensation
|---------------------------- |  | -------- |  | ------------------- | ------- |  | ------------ | --- | ----------- | --- | ---------- |  | --------- | ----------------------
|                             |  |          |  | Annual Compensation |         |  | Awards       |     | and Payouts
|                             |  |          |  |                     |         |  |              |     |             |     | Securities |  |           |                       
|Name and                     |  | Fiscal   |  | Cash                |         |  | Other Annual |     | Restricted  |     | Underlying |  |           | LTIP                  
|Principal Position           |  | Period   |  | Compensation        |         |  | Compensation |     | Stock       |     | Options    |  |           | Payouts               
|                             |  |          |  | $                   |         |  | $            |     | Award(s)    |     | #          |  |           | $                     
|                             |  |          |  |                     |         |  |              |     |             |     |            |  |           |                       
|Roger A. Leopard             |  | Dec 2011 |  |                     | 153,000 |  |              | Nil |             | Nil |            |  | 1,250,000 |                       
|C.E.O. & President, Director |  |          |  |                     |         |  |              |     |             |     |            |  |           |                       
|                             |  |          |  |                     |         |  |              |     |             |     |            |  |           |                       
|Michael J.B. Brickell        |  | Dec 2011 |  |                     | 22,598  |  |              | Nil |             | Nil |            |  | Nil       |                       
|Director                     |  |          |  |                     |         |  |              |     |             |     |            |  |           |                       
|                             |  |          |  |                     |         |  |              |     |             |     |            |  |           |                       
|Howard E. Browning           |  | Dec 2011 |  |                     | 10,546  |  |              | Nil |             | Nil |            |  | Nil       |                       
|Director                     |  |          |  |                     |         |  |              |     |             |     |            |  |           |                       



24







STOCK OPTIONS



On October 1, 2003,
our board of directors approved our Stock Option Plan (the “Option Plan”), which was approved by our shareholders
on February 24, 2004. The Option Plan offers selected employees, directors, officers, and consultants the opportunity to acquire
our common shares, and serves to encourage such persons to remain employed by us and to attract new employees



As of December 31, 2011, stock options
to purchase a total of up to 7,000,000 shares have been granted and remain outstanding under the Plan, leaving 13,093,320 options
available for issuance. All previous grants of option-based awards are taken into account when considering new grants.



6C.         Board
Practices



Our Directors serve
a one-year term and are elected at the Annual General Meeting of Shareholders. At the Annual General Meeting of Shareholders,
held on May 22, 2012 the shareholders elected Messrs. Roger A. Leopard, Michael J.B. Brickell, and John O’Kelly-Lynch. Our
officers are elected by the Board to serve at the pleasure of the Board. We have no contracts with any of our Directors that provide
for payments upon termination.



During the period
ended December 31, 2011, Messrs. Brickell and Smith comprised the Audit Committee and Messrs Leopard and Browning comprised the
Compensation Committee. The primary functions of the Audit Committee are to review the scope and result of the audit performed
by our independent accountants, our internal accounting controls, non-audit services performed by the independent accountants
and the cost of accounting services. The Compensation Committee reviews all compensation proposed for senior management and Board
members.



6D.         Employees



Our subsidiary, CalciTech
Group Services SA, has no full-time employees and no part-time employees located in Switzerland. We have one (1) officer located
in Switzerland: Mr. Leopard. CalciTech Synthetic Minerals Europe Ltd. has three (3) full-time employees and no part-time employees
located in Germany and one (1) full-time employee based in the United Kingdom. We and our other subsidiaries do not have employees.



6E.         Share
Ownership



The following table sets forth the share
ownership of our Officers and Directors as of date of October 31, 2012.



|                                  |  | Dec 31, 2011 |           |  |         | 
|--------------------------------- |  | ------------ | --------- |  | ------- | 
|                                  |  | Number of    |           |  |         | 
|                                  |  | Shares       |           |  | Percent | 
|                                  |  |              |           |  |         | 
|Roger A. Leopard (non-beneficial) |  |              | 1,468,125 |  |         | 
|Michael J.B. Brickell             |  |              | 250,000   |  |         | 
|John O’Kelly-Lynch                |  |              | 0         |  |         | 



Mr. Leopard is a
non-beneficiary of the above shares as they are owned by a trust in which he has no interest.



Stock Option Plan/Equity Incentive Plans



Our stock option
plan is available for directors, officers, employees and strategic consultants. Options may be granted with the approval of the
Board of Directors and are subject to the approval of the listing authority. All options must be exercised within 30-days of the
optionee leaving us, otherwise they lapse. Shareholders approved the plan and approve the directors’ authority to grant
a certain number of options in their general meeting.



25







During the fiscal
year ended December 31, 2011, we issued NIL share options. The Balance of outstanding options held by directors is shown in the
table below:



Outstanding Options





|Name             |  | Shares Underlying Options |         |  | Exercise Price |   |       | Purchase Price,  if any |  |  | Expiration Date
|---------------- |  | ------------------------- | ------- |  | -------------- | - | ----- | ----------------------- |  |  | ---------------
|                 |  |                           |         |  |                |   |       |                         |  |  |                
|                 |  |                           |         |  |                |   |       |                         |  |  |                
|Roger A Leopard  |  |                           | 750,000 |  |                | $ | 0.30  |                         |  |  | -              
|                 |  |                           | 500,000 |  |                | $ | 0.27  |                         |  |  | -              
|                 |  |                           | 500,000 |  |                | $ | 0.095 |                         |  |  | -              
|                 |  |                           |         |  |                |   |       |                         |  |  |                
|M.J.B. Brickell  |  |                           | 250,000 |  |                | $ | 0.095 |                         |  |  |                
|                 |  |                           |         |  |                |   |       |                         |  |  |                
|J. O’Kelly-Lynch |  |                           | 250,000 |  |                | $ | 0.095 |                         |  |  |                



Item 7.            Major
Shareholders and Related Party Transactions



7A.         Major
Shareholders



Past development expenditures
were and are currently funded through a Credit Facility Agreement with Epsom Asset Management Ltd (“Epsom”), whose
clients collectively hold less than 15% of the equity interest in us. Epsom has no control over these shares as they are held
by clients in their own right. Subject to the foregoing, we are not directly or indirectly owned or controlled by any other corporation
or by any foreign government. Further, we do not know of any arrangement, which may by its operation result in a change in our
control at some subsequent date.



Based solely on the
information contained in the Schedule 13G/A filed with the SEC on February 9, 2011, New Star Institutional Managers, Ltd., Family
UT Asset Trust, Gregor Logan, Mark Beale, Ian Bettie, Timothy Bray, Keith Brown, Howard Covington, John Duffield, Anna Kirk, Richard
Lewis, Rupert Francis James Henry Ruvigny, and Deborah Weeke, shared voting power over 6,338,000 shares, which represents 3.15%
of our outstanding Common Shares at December 31, 2011.



During November 2009,
CalciTech was advised that a Schedule 13G had been filed by Envirinvest Ltd., reporting that it beneficially owns 12.16% of CalciTech’s
Common Stock. Envirinvest Ltd. is a European private investment fund with particular emphasis on environmental and sustainable
technologies. They have been a shareholder and supporter of us since 2002 and substantially increased their stake in the 2009
restructuring of CalciTech previously announced.



As of December 31,
2011, there were 3,100 record holders of Common Shares in the United States representing approximately 85.1% of the total shareholders
as reported to be held in the records of Computershare Trust Company, the Registrar and Transfer Agent for the Common Shares.



7B.         Related
Party Transactions



The amount paid to
our shareholders, directors and officers and their related companies for consulting and other services totaled $426,000 and $684,000
for the year ended December 31, 2011 and for the year ended December 31, 2010 respectively.



In the financial year
ended December 31, 2011, this amount included $187,000 paid to directors and $197,000 paid to EuroHelvetia Trust Co S.A. In the
financial year ended December 31, 2010, this amount included $258,000 paid to directors ($259,000 in the period ended December
31, 2009) and $426,000 paid to EuroHelvetia Trust Co S.A. ($222,000 in the period ended December 31, 2009), who were contracted
by us to act as our exclusive financial advisors. EuroHelvetia charge their fees for work related to advice on private placements,
fund raising and project finance. Roger A. Leopard, our Chief Executive Officer and President, is also a director of EuroHelvetia
Trust Co S.A. EuroHelvetia also provides administration of Epsom.



26







The fees and services were approved by the independent
directors.



7C.        Interest
of Experts and Counsel.



Not Applicable.



Item 8.            Financial
Statements



8A.         Consolidated
Statements and Other Financial Information



We have attached the following financial statements
to this Annual Report:



| | · | Auditors’
                                                                                                             Report.
| | - | ------------------------------------------------------------------------------------------------------------------------------



| | · | Consolidated
                                                                                                             Statement of Financial
                                                                                                             Position as of December
                                                                                                             31, 2011, December
                                                                                                             31, 2010, and December
                                                                                                             31, 2009.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Consolidated
                                                                                                             Statement of Comprehensive
                                                                                                             Income for the years
                                                                                                             ended December 31,
                                                                                                             2011, December 31,
                                                                                                             2010, and December
                                                                                                             31, 2009.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Consolidated
                                                                                                             Statement of Shareholders’
                                                                                                             (Deficit) Equity
                                                                                                             for the years ended
                                                                                                             December 31, 2011,
                                                                                                             December 31, 2010,
                                                                                                             and December 31,
                                                                                                             2009.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Consolidated
                                                                                                             Statement of Cash
                                                                                                             Flows for the years
                                                                                                             ended December 31,
                                                                                                             2011, December 31,
                                                                                                             2010, and December
                                                                                                             31, 2009.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Notes to Consolidated
                                                                                                             Financial Statements.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------



Dividend Policy



We have never paid any dividends and do not intend
to in the near future.



8B.         Significant
Changes



None.



27







Item 9.            The
Offer and Listing



9A.         Price
History of Stock



Until January 19,
2005, our Common Shares were listed in Canada on the TSX Venture Exchange (“TSX”), under the symbol CLK and in the
United States on the OTC Electronic Bulletin Board (“OTCBB”), under the symbol CLKTF.OB. On May 15, 2002, our shares
were approved to trade on the Third Segment of the Frankfurt Stock Exchange in Germany, under the symbol XCH. However, following
our voluntary delist from the TSX, our Common Shares no longer have a quotation on the Freiverkehr. In July 2005, our Common Shares
were approved for listing on the OFEX under the symbol CLK. Due to the high costs of maintaining this listing, our Common Shares
were withdrawn from OFEX in December 2008.



As a result of our
failure to timely file our Form 20-F for our fiscal year ended December 31, 2011 with the Securities and Exchange Commission ("SEC"),
our stock ceased tradining on the OTCBB and began trading on the OTC Markets Pink Sheets (the “Pink Sheets”). Our
trading symbol has remained unchanged as "CLKTF". We anticipate that upon filing of our Form-20-F for our fiscal year
ended December 31, 2011 with the SEC, we will seek sponsorship for the resumption of trading on the OTCBB.



The high and low prices
for our Common Shares expressed in United States dollars quoted on the OTCBB for the last six (6) months, each quarter for the
last two (2) fiscal years and annually for the last five (5) years are as follows:



|                 |  | OTC Bulletin Board |        |  | OFEX
|---------------- |  | ------------------ | ------ |  | ----
|                 |  | US$                |        |  | US$ 
|Last Nine Months |  | High               |        |  | Low 
|September 2012   |  | $                  | 0.007  |  |     
|August 2012      |  | $                  | 0.006  |  |     
|July 2012        |  | $                  | 0.009  |  |     
|June 2012        |  | $                  | 0.0375 |  |     
|May 2012         |  | $                  | 0.04   |  |     
|April 2012       |  | $                  | 0.0475 |  |     
|March 2012       |  | $                  | 0.06   |  |     
|February 2012    |  | $                  | 0.06   |  |     
|January 2012     |  | $                  | 0.06   |  |     



|2011                             |  | High |       |  | Low |   |       | High |  | Low
|-------------------------------- |  | ---- | ----- |  | --- | - | ----- | ---- |  | ---
|4th QTR ended December 31, 2011  |  | $    | 0.08  |  |     | $ | 0.02  |      |  | N/A
|3rd QTR ended September 30, 2011 |  | $    | 0.095 |  |     | $ | 0.05  |      |  | N/A
|2nd QTR ended June 30, 2011      |  | $    | 0.10  |  |     | $ | 0.05  |      |  | N/A
|1st QTR ended March 31, 2011     |  | $    | 0.085 |  |     | $ | 0.055 |      |  | N/A



|2010                             |  | High |      |  | Low |   |      | High |  | Low
|-------------------------------- |  | ---- | ---- |  | --- | - | ---- | ---- |  | ---
|4th Qtr ended December 31, 2010  |  | $    | 0.10 |  |     | $ | 0.05 |      |  | N/A
|3rd Qtr ended September 30, 2010 |  | $    | 0.10 |  |     | $ | 0.06 |      |  | N/A
|2nd Qtr ended June 30, 2010      |  | $    | 0.10 |  |     | $ | 0.06 |      |  | N/A
|1st Qtr ended March 31, 2010     |  | $    | 0.10 |  |     | $ | 0.05 |      |  | N/A



28







|Period      |  | High |      |  | Low |   |      | High |  | Low  
|----------- |  | ---- | ---- |  | --- | - | ---- | ---- |  | -----
|2011 Annual |  | $    | 0.10 |  |     | $ | 0.02 |      |  | N/A  
|2010 Annual |  | $    | 0.10 |  |     | $ | 0.05 |      |  | N/A  
|2009 Annual |  | $    | 0.12 |  |     | $ | 0.02 |      |  | N/A  
|2008 Annual |  | $    | 0.29 |  |     | $ | 0.20 |      |  | £0.15
|2007 Annual |  | $    | 0.56 |  |     | $ | 0.16 |      |  | £0.25



9B.         Plan
of Distribution



Not Applicable.



9C.         Markets



Our Common Shares
currently trade on the OTC Markets Pink Sheets under the symbol CLKTF. Up until January 19, 2005, our Common Shares were listed
in Canada on TSX, when delisting from this exchange was formalized. With effect from May 15, 2002, our Common Shares have been
listed in Germany on the Third Segment of the Frankfurt Stock Exchange under the symbol XCH. However, following our voluntary
delist from the TSX-V, our shares no longer have a quotation on the Freiverkehr. In July 2005, our Common Shares were approved
for listing on the PLUS Markets (then still named OFEX) under the symbol CLK. Due to the high cost of maintaining this listing
and the lack of market makers provided by the PLUS markets, we decided to delist our shares in December 2008.



9D.        Selling
Shareholders



Not Applicable.



9E.         Dilution



Not Applicable.



9F.        
Expenses of the Issue



Not Applicable.



Item 10. Additional Information



10A.       Share
Capital



Not Applicable.



10B.       Memorandum
and Articles of Association



We were incorporated
on November 9, 1978 in British Colombia, Canada. On February 13, 1995, we filed a memorandum of continuance to reincorporate
from British Colombia, Canada to Bermuda. On September 11, 2000, we amended our Articles to change our name to CalciTech Ltd.



Common Shares



We are authorized
to issue 300,000,000 Common Shares, par value $0.001. All issued and outstanding Common Shares are fully paid and non-assessable.
Each holder of record of Common Shares is entitled to one vote for each common share so held on all matters requiring a vote of
shareholders, including the election of directors. Shareholders are not entitled to cumulative voting for directors. The holders
of Common Shares will be entitled to dividends on a pro-rata basis, if and when declared by the Board of Directors. There are
no preferences, conversion rights, pre-emptive rights, subscription rights, or restrictions on transfers attached to the Common
Shares. In the event of our liquidation, dissolution or winding up, the shareholders are entitled to participate in the distribution
of our assets available after satisfaction of the claims of creditors.



29







Powers and Duties of Directors



The Directors shall
manage or supervise the management of our affairs and business and shall have authority to exercise all such powers as are not,
by the Company Act, Articles or Bye-laws, required to be exercised by the shareholders in a general meeting or prohibited by law.



Directors serve for
one (1) year, until the next annual meeting of shareholders. In general, a Director who is, in any way, directly or indirectly
interested in an existing or proposed contract or transaction with us whereby a duty or interest might be created to conflict
with his duty or interest as a director, shall declare the nature and extent of his interest in such contract or transaction or
the conflict or potential conflict with his duty and interest as a director. Such a Director shall not vote in respect of any
such contract or transaction with us if the Chairman disqualifies him. If he votes, his vote shall not be counted, but he shall
be counted in the quorum present at the meeting at which such a vote is taken. The shareholders at the general meeting shall determine
the remuneration of the Directors. However, notwithstanding the foregoing, Directors shall be paid all expenses incurred in attending
meetings or conducting business on our behalf.



The Directors may
from time to time on our behalf: (a) borrow money in such manner and amount from such sources and upon such terms and conditions
as they think fit; (b) issue bonds, debentures and other debt obligations; or (c) mortgage, charge or give other security on the
whole or any part of our property and assets.



Our Directors are
not required to be residents of Bermuda. There is no age limitation or minimum share ownership for our Directors.



Shareholders



An Annual General
Meeting of Shareholders shall be held once in every year at such time and place as may be determined by the Directors. Notice
of the meeting must be given not less than twenty-one (21) nor more than fifty (50) days prior to the noticed meeting. A quorum
at an Annual General Meeting and Special Meeting shall be two shareholders. There is no limitation imposed by the laws of Bermuda
or by our charter or other constituent documents on the right of a non-resident to hold or vote Common Shares.



In accordance with
our Bye-laws , Directors shall be elected by an “ordinary resolution” which means (a) a resolution passed by our shareholders
in a General Meeting by a simple majority of the votes cast in person or by proxy, or (b) a resolution that has been submitted
to our shareholders who would have been entitled to vote on it in person or by proxy at our general meeting and that has been
consented to in writing by all of our shareholders entitled to vote on it.



The Bermuda law and
our Articles and Bye-laws contain no provisions that would prevent or delay a change in control of the Company.



10C.       Material
Contracts



Credit Facility
Agreement between Epsom Investment Services N.V. and CalciTech Ltd. dated February 27, 1998. On February 28, 1998, we entered
into a credit facility agreement of up to $2,330,000 with Epsom Investment Services N.V. bearing interest at 8% per annum and
a repayment date of 2000. In November 2008, Epsom Investment Services, N.V., assigned the credit facility to Epsom Asset Management
Ltd. (“Epsom”) following a reorganization of the Epsom Group. The credit facility has been amended several times over
the years. Currently, the revolving 1.75% credit facility is for $3,000,000 of which $1,520,000 is owing as of December 31, 2011.
The credit facility is due on November 30, 2013.



30







10D.       Exchange
Controls



Control over foreign
currency has existed in Bermuda since 1940 and is now governed by the Exchange Control Act of 1972 (the “Exchange Control
Act”) and regulations promulgated thereunder and is administered by the Bermuda Monetary Authority (“Foreign Exchange
Control”). The Exchange Control Act regulates foreign currency transactions between a resident of Bermuda and a non-resident
of Bermuda. However, exempted companies, like us, are designated as “non-resident” for purposes of the Exchange Control
Act, and as such, are entitled to maintain foreign currency bank accounts and to freely convert the balances in such accounts
into currencies of other countries. Because exempted companies are designated as “non-resident” under the Exchange
Control Act, consent from Foreign Exchange Control is required prior to incorporation. Prior consent of Foreign Exchange Control
is also required to issue or transfer any share, debenture or other security of an exempted company. General permission may be
given to issue or transfer shares or other securities, in connection with a public issue, which are to be freely transferable.
We received Bermuda’s permission to transfer our shares, which may be traded on the OTC Bulletin Board.



10E.        Taxation



There are no income, profits, capital gains,
sale of goods, death, or inheritance taxes in Bermuda. Exempted companies, such as us, pay annual fees to the Bermuda government,
which are determined by the amount of their share capital. Although the United States and the United Kingdom of Great Britain
and Northern Ireland (on behalf of Bermuda) signed a mutual assistance and insurance tax agreement on July 11, 1986, the agreement
does not provide for the withholding of taxes on the distribution of dividends to United States taxpayers. While the convention
provides for the sharing of information, it primarily deals with the taxation of insurance premiums paid by United States residents
to insurance companies domiciled in Bermuda.



Certain United States Federal Income Tax Considerations



The following is a
summary of United States federal income tax considerations material to a holder of Common Shares who is a United States citizen
or resident or a United States domestic corporation who owns the Common Shares ("U.S. Investor"). The summary is of
a general nature only and is not exhaustive of all possible income tax consequences applicable to U.S. Investors and does not
address the tax consequences of U.S. Investors subject to special provisions of federal income tax law.



This summary is based
on the Internal Revenue Code of 1986, as amended (the "Code"), Treasury regulations, court decisions and current administrative
rulings and pronouncements of the United States Internal Revenue Service ("IRS") that are currently applicable, all
of which are subject to change, possibly with retroactive effect. There can be no assurance that future changes in applicable
law or administrative and judicial interpretations thereof will not adversely affect the tax consequences discussed herein. Potential
investors are advised to consult their own tax advisors regarding the tax consequences of acquiring, holding or disposing of the
Common Shares in light of their particular circumstances.



Since your United
States federal income and withholding tax treatment may vary depending upon your particular situation, you may be subject to special
rules not discussed below. Special rules will apply, for example, if you are:



| | · | an insurance
                                                                                                             company;
| | - | ----------------------------------------------------------------------------------------------------------------------------------



| | · | a tax-exempt
                                                                                                             organization;
| | - | ---------------------------------------------------------------------------------------------------------------------------------------



| | · | a financial institution;
| | - | ------------------------



31







| | · | a person subject
                                                                                                             to the alternative
                                                                                                             minimum tax;
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | a person who
                                                                                                             is a broker-dealer
                                                                                                             in securities;
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | an S corporation;
| | - | -----------------



| | · | an expatriate
                                                                                                             subject to Section 877
                                                                                                             of the Code;
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | an owner of,
                                                                                                             directly, indirectly
                                                                                                             or by attribution,
                                                                                                             10% or more of the
                                                                                                             outstanding Common
                                                                                                             Shares; or
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | an owner holding
                                                                                                             Common Shares as
                                                                                                             part of a hedge,
                                                                                                             straddle, synthetic
                                                                                                             security or conversion
                                                                                                             transaction.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



In addition, this
summary is generally limited to persons holding common stock as “capital assets” within the meaning of Section 1221
of the Code and whose functional currency is the U.S. dollar. The discussion below also does not address the effect of any United
States state or local tax law or foreign tax law. Prospective investors are advised to consult their own tax advisors with respect
to their particular circumstances and with respect to the effects of state, local or foreign tax laws to which they may be subject.



Dividends.
For United States federal income tax purposes, the gross amount of a distribution, including any foreign withholding taxes, with
respect to your Common Shares will be treated as a taxable dividend to the extent of our current and accumulated earnings and
profits, computed in accordance with United States federal income tax principles. For taxable years beginning before January 1,
2011, if you are a non-corporate taxpayer such dividends may be taxed at the lower applicable capital gains rate provided (1) certain
holding period requirements are satisfied, (2) we are eligible for the benefits of the income tax treaty, and (3) we are
not, for the taxable year in which the dividend was paid, or in the preceding taxable year, a “passive foreign investment
company.” Non-corporate U.S. Investors are strongly urged to consult their own tax advisors as to the applicability of the
lower capital gains rate to dividends received with respect to the Common Shares. Distributions in excess of our current or accumulated
earnings and profits will be applied against and will reduce your tax basis in your Common Shares and, to the extent in excess
of such tax basis, will be treated as gain from a sale or exchange of such Common Shares. You should be aware that we do not intend
to calculate our earnings and profits for United States federal income tax purposes and, unless we make such calculations, you
should assume that any distributions with respect to common stock generally will be treated as a dividend, even if that distribution
would otherwise be treated as a return of capital or as capital gain pursuant to the rules described above. If you are a
corporation, you will not be allowed a deduction for dividends received in respect of distributions on Common Shares, which is
generally available for dividends paid by U.S. corporations.



A dividend distribution
will be treated as foreign source income and will generally be classified as “passive income” or, in some cases, “financial
services income” for United States foreign tax credit purposes. For taxable years beginning after December 31, 2006,
dividends will generally constitute “passive category income” but could, in the case of certain U.S. Investors, constitute
“general category income.” The rules relating to the determination of the foreign tax credit, or deduction in
lieu of the foreign tax credit, are complex and you should consult your own tax advisors with respect to those rules.



Dispositions of
Common Shares. Subject to the discussion below of the consequences of being treated as a passive foreign investment company,
gain or loss realized by a U.S. Investor (other than a 10-percent shareholder) on the sale or other disposition of Common Shares
will be subject to United States federal income tax as capital gain or loss in an amount equal to the difference between such
U.S. Investor’s basis in the Common Shares and the amount realized on the disposition. In general, such capital gain or
loss will be long-term capital gain or loss if the U.S. Investor has held the Common Shares for more than one year at the time
of the sale or exchange. If you are an individual, such realized long-term capital gain is generally subject to a reduced rate
of United States federal income tax. Limitations may apply to your ability to offset capital losses against ordinary income.



32







In general, gain from
a sale, exchange or other disposition of the Common Shares by a U.S. Investor will be treated as U.S. source income. Therefore
the use of foreign tax credits relating to any foreign taxes imposed upon such sale may be limited. You are strongly urged to
consult your own tax advisors as to the availability of tax credits for any foreign taxes withheld on the sale of Common Shares.



Special United States Federal Income Tax Considerations



Passive Foreign
Investment Company. Management has determined that we have not been a passive foreign investment company ("PFIC")
for United States federal income tax purposes for prior taxable years and believe that we will not be treated as a PFIC for the
current and future taxable years, but this conclusion is a factual determination made annually and thus subject to change. We
will be a PFIC with respect to a U.S. Investor if, for any taxable year in which such U.S. Investor held our Common Shares, either
(i) at least 75% of our gross income for the taxable year is passive income, or (ii) at least 50% of our assets are attributable
to assets that produce or are held for the production of passive income. In each case, we must take into account a pro rata share
of the income and the assets of any company in which we own, directly or indirectly, 25% or more of the stock by value (the "look-through"
rules). Passive income generally includes dividends, interest, royalties, rents (other than rents and royalties derived from the
active conduct of a trade or business and not derived from a related person), annuities, and gains from assets that produce passive
income. Because we are not publicly traded as defined under the statute and regulations governing PFICs, and are not a controlled
foreign corporation ("CFC"), we would apply the 50% asset test based on fair market values unless we elect to use the
adjusted tax bases of our assets.



If we are a passive
foreign investment company for any taxable year during which a U.S. Investor holds Common Shares the U.S. Investor will be subject
to special tax rules with respect to:



| | · | any “excess
                                                                                                               distribution”
                                                                                                               that the U.S. Investor
                                                                                                               receives on Common
                                                                                                               Shares, and
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | any gain the
                                                                                                               U.S. Investor realizes
                                                                                                               from a sale or
                                                                                                               other disposition
                                                                                                               (including a pledge)
                                                                                                               of the Common Shares,
                                                                                                               unless the U.S.
                                                                                                               Investor makes
                                                                                                               a “mark-to-market”
                                                                                                               election as discussed
                                                                                                               below.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Distributions the
U.S. Investor receives in a taxable year that are greater than 125% of the average annual distributions the U.S. Investor received
during the shorter of the three preceding taxable years or the U.S. Investor’s holding period for the Common Shares will
be treated as an excess distribution. Under these special tax rules:



| | · | the excess distribution
                                                                                                             or gain will be allocated
                                                                                                             ratably over your
                                                                                                             holding period for
                                                                                                             the Common Shares,
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | the
                                                                                                             amount allocated
                                                                                                             to the current taxable
                                                                                                             year, and any taxable
                                                                                                             year prior to the
                                                                                                             first taxable year
                                                                                                             in which we were
                                                                                                             a passive foreign
                                                                                                             investment company,
                                                                                                             will be treated as
                                                                                                             ordinary income,
                                                                                                             and
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | the
                                                                                                             amount allocated
                                                                                                             to each other year
                                                                                                             will be subject to
                                                                                                             tax at the highest
                                                                                                             tax rate in effect
                                                                                                             for that year and
                                                                                                             the interest charge
                                                                                                             generally applicable
                                                                                                             to underpayments
                                                                                                             of tax will be imposed
                                                                                                             on the resulting
                                                                                                             tax attributable
                                                                                                             to each such year.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



The tax liability
for amounts allocated to years prior to the year of disposition or “excess distribution” cannot be offset by any net
operating losses, and gains (but not losses) realized on the sale of the Common Shares cannot be treated as capital, even if the
U.S. Investor holds the Common Shares as capital assets.



33







A U.S. Investor of
a passive foreign investment company may avoid taxation under the excess distribution rules discussed above by making a “qualified
electing fund” election to include the U.S. Investor’s share of our income on a current basis. However, a U.S. Investor
may make a qualified electing fund election only if we, as a passive foreign investment company, agree to furnish the shareholder
annually with certain tax information. We do not presently intend to prepare or provide such information.



Alternatively, a U.S.
Investor of “marketable stock” in a passive foreign investment company may make a mark-to-market election for stock
of a passive foreign investment company to elect out of the excess distribution rules discussed above. If a U.S. Investor makes
a mark-to-market election for the Common Shares, the U.S. Investor will include in income each year an amount equal to the excess,
if any, of the fair market value of the Common Shares as of the close of the U.S. Investor’s taxable year over the U.S.
Investor’s adjusted basis in such shares. A U.S. Investor is allowed a deduction for the excess, if any, of the adjusted
basis of the shares over their fair market value as of the close of the taxable year only to the extent of any net mark-to-market
gains on the shares included in the U.S. Investor’s income for prior taxable years. Amounts included in a U.S. Investor’s
income under a mark-to-market election, as well as gain on the actual sale or other disposition of the Common Shares are treated
as ordinary income. Ordinary loss treatment also applies to the deductible portion of any mark-to-market loss on the Common Shares,
as well as to any loss realized on the actual sale or disposition of the Common Shares, to the extent that the amount of such
loss does not exceed the net mark-to-market gains previously included for such Common Shares. A U.S. Investor’s basis in
the Common Shares will be adjusted to reflect any such income or loss amounts. The tax rules that apply to distributions by corporations
which are not passive foreign investment companies would apply to distributions by us.



The mark-to-market
election is available only for stock which is regularly traded on a national securities exchange that is registered with the Securities
and Exchange Commission, or the national market system established pursuant to section 11A of the Exchange Act, or any exchange
or market that the IRS has determined has rules sufficient to carry out the purposes of the income tax rules. We are not currently
a company meeting the requirements of mark-to-market so such an election is not currently available if we were to be a PFIC.



Non-U.S. Investors



A Non-U.S. Investor
generally will not be subject to U.S. federal income tax on dividends paid by us with respect to our Common Shares unless the
income is effectively connected with the Non-U.S. Investor’s conduct of a trade or business in the United States.



A Non-U.S. Investor
generally will not be subject to U.S. federal income tax on any gain attributable to a sale or other disposition of our Common
Shares unless such gain is effectively connected with the Non-U.S. Investor’s conduct of a trade or business within the
United States or the Non-U.S. Investor is a natural person who is present in the United States for 183 days or more and certain
other conditions exist.



Dividends and gains
that are effectively connected with a Non-U.S. Investor’s conduct of a trade or business in the United States generally
will be subject to tax in the same manner as they would be if the Non-U.S. Investor were a U.S. Investor, except that the passive
foreign investment company rules will not apply. Effectively connected dividends and gains received by a corporate Non-U.S. Investor
may also be subject to an additional branch profits tax.



U.S. Information Reporting and Backup Withholding



In general, information
reporting requirements will apply to dividends in respect of our Common Shares, or the proceeds received on the sale, exchange
or redemption of our Common Shares paid within the United States (and, in certain cases, outside the United States) to U.S. Investors
other than certain exempt recipients, such as corporations, and backup withholding tax may apply to such amounts if the U.S. Investor
fails to provide an accurate taxpayer identification number or to report interest and dividends required to be shown on its U.S. federal
income tax returns. The amount of any backup withholding from a payment to a U.S. Investor will be allowed as credit against the
U.S. Investor’s U.S. federal income tax liability provided that the appropriate returns are filed. Holders that are
not U.S. persons generally are not subject to information reporting or backup withholding, but such holders may be required to
provide certification as to their Non-U.S. status.



34







A U.S. Investor who
holds Common Shares in any year in which we are a passive foreign investment company would be required to file IRS Form 8621
regarding distributions received on our shares and any gain realized on the disposition of our Common Shares.



10F.       Dividends
and Paying Agents.



Not Applicable.



10G.      Statement
of Experts.



Not Applicable.



10H.      Documents
on Display.



We file Annual Reports
and other information with the Securities and Exchange Commission. These accounts are filed electronically at the SEC Edgar website.
You may read and copy any document that we file at the Commission’s Public Reference Room at 100 F Street, N.E., Washington,
D.C. 20549 or by accessing the SEC's website (http://www.sec.gov). Please call the Securities and Exchange Commission at 1-800-SEC-0330
for more information about the Public Reference Rooms.



Copies of our material
contracts are kept in our administrative headquarters.



10I.        Subsidiary
Information



Not Applicable.



Item 11. Quantitative and Qualitative
Disclosures About Market Risk



We have no significant
market sensitive instruments other than foreign currency transactions discussed in Item 5.A.



Item 12. Description of Securities
Other than Equity Securities



Not Applicable.



Part II



Item 13. Defaults, Dividend Arrearages
and Delinquencies



None.



Item 14. Material Modifications to
the Rights of Security Holders and Use of Proceeds



None.



Item 15. Controls and Procedures.



(a) Disclosure Controls and Procedures.



As a Bermuda company
listed on the Over-the-Counter Bulletin Board (OTCBB), CalciTech complies with the disclosure requirements of the Securities and
Exchange Commission (SEC) and the OTCBB for foreign private issuers. These include the requirement to make certain filings with
the SEC. As a foreign private issuer, some of the SEC’s regulations and requirements which apply to domestic issuers are
not applicable to CalciTech. CalciTech’s reports, including its annual report on Form 20-F, are available at www.calcitech.com/investors.



35







As required by paragraph
(b) of Rules 13a-15 or 15d-15 under the U.S. Securities Exchange Act of 1934, as amended (“Exchange Act”), our principal
executive officer and principal financial officer evaluated our disclosure controls and procedures (as defined in rules 13a-15(e)
and 15d-15(e) of the Exchange Act) as of the end of the period covered by this Annual Report. Based upon that evaluation, the
CEO and CFO concluded that these disclosure controls and procedures were effective as of the end of the period covered by this
annual report. No significant changes were made in CalciTech’s internal controls or in other factors that could significantly
affect these controls subsequent to the date of their evaluation.



In addition, our officers
have also concluded that our disclosure controls and procedures are effective to ensure that information required under the Exchange
Act is accumulated and communicated to our management, including our chief executive officer and chief financial officer, to allow
all timely decisions regarding required disclosure.



It should be noted
that while our management believes that our disclosure controls and procedures provide a reasonable level of assurance, they do
not expect that our disclosure controls and procedures or internal financial controls will prevent all errors and fraud. A control
system, no matter how well conceived or operated, can provide only reasonable, not absolute, assurance that the objectives of
the control system are met.



(b) Management’s Annual Report on Internal Control
over Financial Reporting.



The management of
CalciTech Ltd. (CalciTech) is responsible for establishing and maintaining adequate internal control over financial reporting.
CalciTech’s internal control over financial reporting is designed to provide reasonable assurance regarding the preparation
and fair presentation of published financial statements in accordance with International Financial Reporting Standards (IFRS)
as issued by the International Accounting Standards Board. CalciTech’s internal control over financial reporting includes
those policies and procedures that:



| | · | Pertain
                                                                                                               to the maintenance
                                                                                                               of records that,
                                                                                                               in reasonable detail,
                                                                                                               accurately and
                                                                                                               fairly reflect
                                                                                                               transactions and
                                                                                                               dispositions of
                                                                                                               assets;
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Provide
                                                                                                               reasonable assurance
                                                                                                               that transactions
                                                                                                               are recorded as
                                                                                                               necessary to permit
                                                                                                               preparation and
                                                                                                               fair presentation
                                                                                                               of financial statements,
                                                                                                               and that receipts
                                                                                                               and expenditures
                                                                                                               of the company
                                                                                                               are being made
                                                                                                               only in accordance
                                                                                                               with authorizations
                                                                                                               of CalciTech management;
                                                                                                               and
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Provide
                                                                                                               reasonable assurance
                                                                                                               regarding prevention
                                                                                                               or timely detection
                                                                                                               of unauthorized
                                                                                                               acquisition, use
                                                                                                               or disposition
                                                                                                               of the company’s
                                                                                                               assets that could
                                                                                                               have a material
                                                                                                               effect on the financial
                                                                                                               statements.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Because of its inherent
limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation
of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions,
or that the degree of compliance with the policies or procedures may deteriorate.



CalciTech management
assessed the effectiveness of CalciTech’s internal control over financial reporting as of December 31, 2011 based on the
criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated
Framework, Guidance for Smaller Public Companies. Based on this assessment, management believes that, as of December 31, 2011,
CalciTech’s internal control over financial reporting was effective.



(c) Attestation Report of the Registered Public Accounting
Firm.



Not Applicable.



(d) Changes in Internal Control over Financial Reporting.



None.



36







Item 16.



16AAudit
Committee Financial Report



There are
currently two members on the Audit Committee. Mr. Michael J.B. Brickell and Mr. John O’Kelly-Lynch constitute the
members of the Audit Committee. Both Mr.  Brickell and Mr. O’Kelly-Lynch are independent directors. Due to the size of
the Audit Committee, the Board has not determined that a member of the Audit Committee is qualified as an Audit Committee
Financial Expert.



16BCode
Of Ethics



We currently in the
process of adopting a "code of ethics" which will apply to our principal executive officer, principal financial officer,
and principal accounting officer. When adopted, our code of ethics will be available on our website at www.calcitech.com.



16CPrincipal
Accountant Fees And Services



The independent auditor
for the fiscal year ended December 31, 2011 was Reeves & Co. For the fiscal years ended December 31, 2010and December 31,
2009 the independent auditor was HW Fisher & Co.



Audit Fees



The aggregate fees
billed by Reeves & Co LLP for professional services rendered for the audit of our annual financial statements on Form 20-F
for the fiscal year ended December 31, 2011 was $35,000.



The aggregate fees
billed by HW Fisher & Co for professional services rendered for the audit of our annual financial statements on Form 20-F
for the fiscal year ended December 31, 2010 was $45,000.



The aggregate fees
billed by HW Fisher & Co for professional services rendered for the audit of our annual financial statements on Form 20-F
for the fiscal year ended December 31, 2009 was $50,000.



Audit-Related Fees



The aggregate fees
billed for assurance and related services by the principal accountant that are reasonably related to the performance of the audit
or review of our financial statements for the year ended December 31, 2011 was $NIL, December 31, 2010was $NIL and December 31,
2009was $ NIL



Tax Fees



The aggregate fees
billed for tax compliance, tax advice and tax planning rendered by our independent auditors for the fiscal year ended December
31, 2011 was $1,000, December 31, 2010was $NIL, and December 31, 2009was $NIL.



All Other Fees



The aggregate fees
billed for all other professional services rendered by our independent auditors for the fiscal year ended December 31, 2011 was
$NIL, December 31, 2010was $NIL, and December 31, 2009was $NIL.



The Audit Committee
does not have any pre-approval policies or procedures. The percentage of hours expended on the principal accountant's engagement
to audit our financial statements for the most recent fiscal year that were attributed to work performed by persons other than
the principal accountant's full-time, permanent employees was 0%.



37







16DExemptions
From The Listing Standards For Audit Committees



Not applicable.



16EPurchases
Of Equity Securities By The Issuer And Affiliated Purchasers



None.



Part III



Item 17. Financial Statements



The following Financial Statements pertaining
to us are filed as part of this Annual report:



| | · | Auditors’
                                                                                                             Report.
| | - | ------------------------------------------------------------------------------------------------------------------------------



| | · | Consolidated
                                                                                                             Statement of Financial
                                                                                                             Position as of December
                                                                                                             31, 2011, December
                                                                                                             31, 2010, and December
                                                                                                             31, 2009.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Consolidated
                                                                                                             Statement of Comprehensive
                                                                                                             Income for the years
                                                                                                             ended December 31,
                                                                                                             2011, December 31,
                                                                                                             2010, and December
                                                                                                             31, 2009.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Consolidated
                                                                                                             Statement of Shareholders’
                                                                                                             (Deficit) Equity
                                                                                                             for the years ended
                                                                                                             December 31, 2011,
                                                                                                             December 31, 2010,
                                                                                                             and December 31,
                                                                                                             2009.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Consolidated
                                                                                                             Statement of Cash
                                                                                                             Flows for the years
                                                                                                             ended December 31,
                                                                                                             2011, December 31,
                                                                                                             2010, and December
                                                                                                             31, 2009.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Notes to Consolidated
                                                                                                             Financial Statements.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------



Item 18. Financial Statements



See Item 17.



Item 19. Exhibits



|Exhibit No |  | Name                                                                                        
|---------- |  | --------------------------------------------------------------------------------------------
|           |  |                                                                                             
|1.1        |  | Articles of Kemgas Ltd. (1)                                                                 
|           |  |                                                                                             
|1.2        |  | Altered Memorandum of Kemgas. (1)                                                           
|           |  |                                                                                             
|1.3        |  | Altered Memorandum of Kemgas, dated July 29, 1994 (2)                                       
|           |  |                                                                                             
|1.4        |  | Certificate of Continuance to Bermuda, dated February 13, 1995 (2)                          
|           |  |                                                                                             
|1.5        |  | Bye-Laws of Kemgas, as adopted June 1995 (2)                                                
|           |  |                                                                                             
|1.6        |  | Certificate of Incorporation on Change of Name dated September 11, 2000 (3)                 
|           |  |                                                                                             
|1.7        |  | Certificate of Deposit of Memorandum of Increase of Share Capital, dated January 5, 2010 (6)



38







|4.1  |  | Addendum to Credit Facility Agreement between Epsom Investment Services N.V. and
    CalciTech Ltd. dated February 28, 2005 (4)
|---- |  | -------------------------------------------------------------------------------------------------------------------------------
|     |  |                                                                                                                                
|4.2  |  | Addendum to Credit Facility Agreement between Epsom Investment Services N.V. and CalciTech
    Ltd. dated April 2006 (5)       
|     |  |                                                                                                                                
|4.3  |  | Addendum to Credit Facility Agreement between Epsom Investment Services N.V. and CalciTech
    Ltd. dated August 15, 2006 (5)  
|     |  |                                                                                                                                
|4.4  |  | Addendum to Credit Facility Agreement between Epsom Investment Services N.V. and CalciTech
    Ltd. dated February 25, 2009 (6)
|     |  |                                                                                                                                
|4.5  |  | Addendum to Credit Facility Agreement between Epsom Investment Services N.V. and CalciTech
    Ltd. dated March 31, 2010 (6)   
|     |  |                                                                                                                                
|4.6  |  | Form of 5% Convertible Debenture due February 28, 2005 (4)                                                                     
|     |  |                                                                                                                                
|4.7  |  | Form of Addendum to 5% Convertible Debenture Due February 28, 2005 (4)                                                         
|     |  |                                                                                                                                
|4.8  |  | Addendum to Credit Facility dated September 10, 2012*                                                                          
|     |  |                                                                                                                                
|8.1  |  | List of Subsidiaries (4)                                                                                                       
|     |  |                                                                                                                                
|10.1 |  | CalciTech Ltd. Stock Option Plan*                                                                                              
|12.1 |  | Certification of the Principal Executive and Financial Officer under the Sarbanes-Oxley
    Act*                               
|     |  |                                                                                                                                
|13.1 |  | Certification under Section 1350*                                                                                              










| | * | To be filed herewith
| | - | --------------------

| | (1) | Previously filed
                                                                               with Registration Statement on Form 20-F under
                                                                               the Securities Exchange Act of 1934 on June
                                                                               29, 1992.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (2) | Previously filed
                                                                               with the Form 20-F submitted for the fiscal year
                                                                               ended February 28, 1997.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (3) | Previously filed
                                                                               with the Form 20-F submitted for the fiscal year
                                                                               ended February 29, 2000.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (4) | Previously filed
                                                                               with the Form 20-F submitted for the fiscal year
                                                                               ended February 28, 2005.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (5) | Previously filed
                                                                               with the Form 20-F submitted for the fiscal year
                                                                               ended February 28, 2006.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (6) | Previously filed
                                                                               with the Form 20-F submitted for the fiscal year
                                                                               ended December 31, 2009.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



39







SIGNATURE



The registrant hereby
certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned
to sign this Annual Report on Form 20-F on its behalf.



|DATED: December 7, 2012 | CALCITECH LTD.
|----------------------- | --------------
|                        |               
|                        | By:           
|                        |               
|                        |               





40















CONSOLIDATED FINANCIAL STATEMENTS



December 31, 2011











Dear Shareholder,



I have pleasure in presenting the audited
accounts of CalciTech Ltd. for the year ended December 31, 2011 and firstly comment on these.



There was no revenue from the sale of Synthetic
Calcium Carbonate (“SCC”) samples during the year. Other revenue of $195,560 was a result of grant monies and other
contributions received in the development of our Paper Sludge Ash technology.



The development of projects and products
has continued during the past year. This has resulted in the further capitalization of $550,662. As was the case last year, $NIL
project and product development expenses were charged to the profit and loss account.



During 2011, your Company has continued
development work to commercialise its process through CalciTech Synthetic Minerals Europe Ltd. (“CSME”), the Company’s
subsidiary and European licensee. General Administrative expenditure increased from $699,176 to $1,272,445. This was as a result
of CSME development costs increasing from $48,285 to $707,254 whilst the same costs for all other group companies decreased from
$650,890 to $562,585.



In this current year, your Company has
continued to focus on developing CSME to become an independent operation. CSME is concentrating on funding strategies to complete
its early projects based on the first-of-a-kind technology. In view of the unique process technology, the Company is developing
innovative funding strategies to deal with the first plant construction. This is a challenging task with current financial markets
so uncertain, particularly in Europe. However, opportunities are still available and particularly so for a situation like ours,
where we meet a number of the criteria interesting to professional investors today. In December 2011, Epsom Asset Management Ltd.
agreed to convert $1,000,000 of its outstanding credit facility balance into 8,100,000 ordinary shares of CSME at the par value
of Euro 0.10 per share. This gives Epsom a holding of 10.125% in CSME.



The Securities & Exchange Commission
(“SEC”) implemented new filing requirements, first outlined in late 2008 and introduced for financial years ending
in 2011. The SEC now requires foreign registrant companies to file their audited financial statements and Form 20-F four months
after year end rather than six months. Your Company was unaware of this change until early May 2012 when it was preparing for its
audit to meet the previous June 30 filing date. As a result we were unable to meet our filing date of April 30 resulting in our
share quotation being moved to the OTC Link (formerly “Pink Sheets”) where the shares continue to trade at low volume.



In view of the requirement for a Public
Company Accounting Oversight Board (“PCAOB”) registered auditor for the Company and the inability to agree realistic
audit fees, your Board decided to make a change of auditors and appointed Reeves & Co. LLP of London, United Kingdom. Reeves
& Co. LLP have been PCAOB registered auditors since 2006 and conduct a number of similar audits. The audit and filing of CSME’s
financial statements for 2011 was completed on September 27, 2012. We are pleased to appoint Reeves & Co. LLP as auditors to
the CalciTech Group.



In December 2011, after many years service,
both Mr. John Smith and Dr. Howard Browning retired as directors of the Company. I would like to thank them for the invaluable
contribution that they have made. Your Company has sought to appoint a Bermudan resident director to its board for sometime. In
January 2012, we were pleased to welcome John O’Kelly Lynch to our Board of Directors in a non executive capacity. His appointment
was confirmed by shareholders at the Annual General Meeting held in May 2012. John, a Fellow of the Institute of Chartered Accountants
in Ireland, is a long time resident of Bermuda. He is managing director of Atlantic Corporate Management Ltd. and they have taken
over as your Company’s registered agent in Bermuda.



F-2







Completion of the CSME funding process
will allow your Company to concentrate on further territorial licenses where a considerable amount of development work has been
carried out. This will require our raising additional funds in the territories to complete projects and we will also look to raise
further equity, most likely in the US markets to support the equity calls to participate in these ventures.



R.A. Leopard

President & CEO



F-3







Report of Independent Auditors

CalciTech Ltd



To the shareholders and board of directors of CalciTech
Ltd



We have audited the accompanying consolidated
statement of financial position of CalciTech Limited as of December 31, 2011, upon our appointment on October 12, 2012, the related
consolidated statement of comprehensive income, statement of shareholders’ equity and statement of cash flows for the year
ended December 31, 2011. The accompanying statements for the two years ended December 31, 2010 were audited by the predecessor
auditors, HW Fisher.



We conducted our audit in accordance with
International Standards on Auditing and with the standards of the Public Company Accounting Oversight Board (United States). Those
standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating
the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.



The financial statements have been prepared
in accordance with International Financial Reporting Standards, as issued by the International Accounting Standards Board.



In our opinion, the financial statements
referred to above present fairly, in all material respects, the consolidated financial position of CalciTech Ltd as of December
31, 2011 and December 31, 2010 and the consolidated results of its operations and its cash flows for each of the three years in
the period ended December 31, 2011 in accordance with International Financial Reporting Standards, as issued by the International
Accounting Standards Board.



Uncertainty over carrying value of the
Intangible assets

As disclosed in note 2.1 the ability of
the Group to recover the carrying value of the intangible assets is dependent upon the Group’s ability to raise sufficient
funds to build the production plants required for the commercial exploitation of its intangible assets. The Directors have commenced
discussions to secure the appropriate funding. The Directors remain confident that they will secure the appropriate funding to
commercially exploit the intangible assets. However as of this date, such funding has not been secured and therefore there is a
significant possibility that commercialisation cannot proceed and that ultimately the intangible assets may not recover the amounts
at which they are stated in the financial statements. These conditions along with other matters explained in the financial statements
indicate the existence of a material uncertainty which may cast significant doubt on the carrying value of the intangible assets
of the Group. The financial statements do not include any adjustments that would result if the Group was unable to secure the appropriate
funding for the commercial exploitation of the intangible assets.



Going concern

As disclosed in note 2.1 to the financial
statements, the Group has incurred losses for the years ended 31 December 2011, 31 December 2010 and 31 December 2009, and negative
cash flows from operations for the years ended 31 December 2010 and 31 December 2009. These matters raise doubt about the ability
of the Group to continue as a going concern. Management plans in regards to these matters are described in Note 2.1. The financial
statements do not include any adjustments that might result from the outcome of this uncertainty.



UK Statutory Auditors & Chartered Accountants



/s/ Reeves & Co. LLP

Reeves & Co. LLP

24 Chiswell Street

London

United Kingdom

Date: 15 November 2012



F-4







CALCITECH LTD

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

As of December 31, 2011, December 31,
2010 and December 31, 2009

(amounts
in thousands of US dollars)



|                                                       |  |            |  |  | Year to      |       |       | Year to      |  |       | Year to      | 
|------------------------------------------------------ |  | ---------- |  |  | ------------ | ----- | ----- | ------------ |  | ----- | ------------ | 
|ASSETS                                                 |  | Notes      |  |  | Dec 31, 2011 |       |       | Dec 31, 2010 |  |       | Dec 31, 2009 | 
|                                                       |  |            |  |  | $            |       |       | $            |  |       | $            | 
|Current assets                                         |  |            |  |  |              |       |       |              |  |       |              | 
|Cash and cash equivalents                              |  | 2.6 and 11 |  |  |              | 35    |       |              |  | 18    |              | 
|Receivables, prepaid expenses and other current assets |  | 3          |  |  |              | 62    |       |              |  | 104   |              | 
|                                                       |  |            |  |  |              |       |       |              |  |       |              | 
|Total current assets                                   |  |            |  |  |              |       | 97    |              |  |       | 122          | 
|                                                       |  |            |  |  |              |       |       |              |  |       |              | 
|Non-current assets                                     |  |            |  |  |              |       |       |              |  |       |              | 
|Property, plant and equipment                          |  | 2.7 and 4  |  |  |              | 970   |       |              |  | 1,019 |              | 
|Intangible assets                                      |  | 2.8 and 5  |  |  |              | 8,666 |       |              |  | 8,471 |              | 
|                                                       |  |            |  |  |              |       |       |              |  |       |              | 
|Total non-current assets                               |  |            |  |  |              |       | 9,636 |              |  |       | 9,490        | 
|                                                       |  |            |  |  |              |       |       |              |  |       |              | 
|TOTAL ASSETS                                           |  |            |  |  |              | $     | 9,733 |              |  | $     | 9,612        | 



The accompanying notes are an integral part
of the consolidated financial statements



F-5







CALCITECH LTD

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

As of December 31, 2011, December 31,
2010 and December 31, 2009

(amounts in thousands
of US dollars, except per share data)



|LIABILITIES & SHAREHOLDERS' EQUITY                                                                                                                                                                          |  |  |            |  | year to |              |         | year to |              |   | year to |             
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  |  | ---------- |  | ------- | ------------ | ------- | ------- | ------------ | - | ------- | ------------
|                                                                                                                                                                                                            |  |  | Notes      |  |         | Dec 31, 2011 |         |         | Dec 31, 2010 |   |         | Dec 31, 2009
|                                                                                                                                                                                                            |  |  |            |  | $       |              |         | $       |              |   | $       |             
|Current liabilities                                                                                                                                                                                         |  |  |            |  |         |              |         |         |              |   |         |             
|Trade and other payables                                                                                                                                                                                    |  |  |            |  |         |              | 624     |         |              |   | 384     |             
|Accruals                                                                                                                                                                                                    |  |  |            |  |         |              | 278     |         |              |   | 178     |             
|Tax provisions                                                                                                                                                                                              |  |  | 2.13       |  |         |              | 0       |         |              |   | 0       |             
|Hire Purchase Agreement - current portion                                                                                                                                                                   |  |  | 2.18 and 7 |  |         |              | 0       |         |              |   | 0       |             
|Convertible debenture notes                                                                                                                                                                                 |  |  | 2.15 and 8 |  |         |              | 0       |         |              |   | 2,383   |             
|                                                                                                                                                                                                            |  |  |            |  |         |              |         |         |              |   |         |             
|Total Current Liabilities                                                                                                                                                                                   |  |  |            |  |         | $            | 902     |         |              | $ | 2,945   |             
|                                                                                                                                                                                                            |  |  |            |  |         |              |         |         |              |   |         |             
|Non Current Liabilities                                                                                                                                                                                     |  |  |            |  |         |              |         |         |              |   |         |             
|Credit facility                                                                                                                                                                                             |  |  | 6          |  |         |              | 1,520   |         |              |   | 1,121   |             
|Convertible debenture notes                                                                                                                                                                                 |  |  | 2.15 and 8 |  |         |              | 2,218   |         |              |   | 0       |             
|                                                                                                                                                                                                            |  |  |            |  |         |              |         |         |              |   |         |             
|Total Non Current Liabilities                                                                                                                                                                               |  |  |            |  |         | $            | 3,738   |         |              | $ | 1,121   |             
|                                                                                                                                                                                                            |  |  |            |  |         |              |         |         |              |   |         |             
|Total liabilities                                                                                                                                                                                           |  |  |            |  |         | $            | 4,640   |         |              | $ | 4,066   |             
|                                                                                                                                                                                                            |  |  |            |  |         |              |         |         |              |   |         |             
|Shareholders' Equity                                                                                                                                                                                        |  |  | 9          |  |         |              |         |         |              |   |         |             
|Common stock, Cdn $ 0.001 par value; 300,000,000 shares authorised; issued & fully paid
    200,933,204 at December 31, 2011,     (200,933,204 at December 31, 2010) (185,639,086 at December     31, 2009) |  |  |            |  |         |              | 1,899   |         |              |   | 1,899   |             
|Share premium, holders' options outstanding on credit facility and contribution surplus                                                                                                                     |  |  |            |  |         |              | 49,731  |         |              |   | 49,731  |             
|Convertible debentures – equity component                                                                                                                                                                   |  |  | 8          |  |         |              | 2,630   |         |              |   | 2,465   |             
|Accumulated deficit during the development stage                                                                                                                                                            |  |  |            |  |         |              | (49,610 | )       |              |   | (48,344 | )           
|                                                                                                                                                                                                            |  |  |            |  |         |              |         |         |              |   |         |             
|Cumulative foreign currency translation adjustments                                                                                                                                                         |  |  |            |  |         |              | (557    | )       |              |   | (205    | )           
|                                                                                                                                                                                                            |  |  |            |  |         |              |         |         |              |   |         |             
|Total Amounts Attributable to the owners of the parent                                                                                                                                                      |  |  |            |  |         |              | 4,093   |         |              |   | 5,546   |             
|                                                                                                                                                                                                            |  |  |            |  |         |              |         |         |              |   |         |             
|Amounts attributable to minority interest                                                                                                                                                                   |  |  | 9.5        |  |         |              | 1,000   |         |              |   | 0       |             
|                                                                                                                                                                                                            |  |  |            |  |         |              |         |         |              |   |         |             
|Amounts attributable to the owners                                                                                                                                                                          |  |  |            |  |         |              | 5,093   |         |              |   | 5,546   |             
|                                                                                                                                                                                                            |  |  |            |  |         |              |         |         |              |   |         |             
|TOTAL LIABILITIES & SHAREHOLDERS' EQUITY                                                                                                                                                                    |  |  |            |  |         | $            | 9,733   |         |              | $ | 9,612   |             



The accompanying notes are an integral part
of the consolidated financial statements



F-6







CALCITECH LTD

CONSOLIDATED STATEMENT OF COMPREHENSIVE
INCOME

For the year ended December 31, 2011,

the year ended December 31, 2010,

and the year ended December 31, 2009,

(amounts in thousands of US dollars, except
per share data)



|                                                       |  |       |      |  | year to      |   |             | Year to      |  |   | year to      |  
|------------------------------------------------------ |  | ----- | ---- |  | ------------ | - | ----------- | ------------ |  | - | ------------ | -
|                                                       |  | Notes |      |  | Dec 31, 2011 |   |             | Dec 31, 2010 |  |   | Dec 31, 2009 |  
|                                                       |  |       |      |  | $            |   |             | $            |  |   | $            |  
|                                                       |  |       |      |  |              |   |             |              |  |   |              |  
|Revenues                                               |  |       | 2.19 |  |              |   | 196         |              |  |   | 0            |  
|Cost of revenues                                       |  |       |      |  |              |   | 0           |              |  |   | 0            |  
|                                                       |  |       |      |  |              |   |             |              |  |   |              |  
|Gross profit                                           |  |       |      |  |              |   | 196         |              |  |   | 0            |  
|                                                       |  |       |      |  |              |   |             |              |  |   |              |  
|General and administrative expenses                    |  |       | 15   |  |              |   | 1,273       |              |  |   | 699          |  
|                                                       |  |       |      |  |              |   |             |              |  |   |              |  
|Operating loss                                         |  |       |      |  |              |   | (1,077      | )            |  |   | (699         | )
|                                                       |  |       |      |  |              |   |             |              |  |   |              |  
|Interest on convertible debenture                      |  |       |      |  |              |   | (13         | )            |  |   | (28          | )
|Interest expense                                       |  |       | 15   |  |              |   | (175        | )            |  |   | (142         | )
|Loss before income taxes                               |  |       |      |  |              |   | (1,265      | )            |  |   | (869         | )
|                                                       |  |       |      |  |              |   |             |              |  |   |              |  
|Provision for income taxes                             |  |       | 2.13 |  |              |   | (1          | )            |  |   | (1           | )
|Net Loss                                               |  |       |      |  |              | $ | (1,266      | )            |  | $ | (870         | )
|                                                       |  |       |      |  |              |   |             |              |  |   |              |  
|Other Comprehensive Income                             |  |       |      |  |              |   |             |              |  |   |              |  
|Exchange differences on translation foreign operations |  |       | 2.5  |  |              | $ | (352        | )            |  |   | 47           |  
|                                                       |  |       |      |  |              |   |             |              |  |   |              |  
|TOTAL COMPREHENSIVE INCOME                             |  |       |      |  |              |   | (1,618      | )            |  |   | (823         | )
|                                                       |  |       |      |  |              |   |             |              |  |   |              |  
|Net loss per share:                                    |  |       |      |  |              |   |             |              |  |   |              |  
|Basic                                                  |  |       |      |  |              | $ | (0.008      | )            |  | $ | (0.004       | )
|                                                       |  |       |      |  |              |   |             |              |  |   |              |  
|Shares used in net loss per share calculation:         |  |       |      |  |              |   |             |              |  |   |              |  
|Basic                                                  |  |       |      |  |              |   | 200,933,204 |              |  |   | 200,933,204  |  



The accompanying notes are an integral part
of the consolidated financial statements

F-7





CALCITECH LTD

CONSOLIDATED STATEMENT OF SHAREHOLDERS'
(DEFICIT) EQUITY

For the year ended December 31, 2011,

the year ended December 31, 2010,

and the year ended December 31, 2009

(amounts in thousands of US dollars except
number of shares)





|                                                          |  | Common stock |             |  | Share premium, holders’ option
    outstanding and contributed surplus |  |       | Convertible debentures – equity
    component |  |  | Accumulated
deficit during development 
stage |   |  | Cumulative foreign currency translation
    adjustments |       |  | Total amounts attributable to owners of
    parent |  |         | Minority interest |  |  | Total consolidated shareholders (deficit)
    equity |  
|--------------------------------------------------------- |  | ------------ | ----------- |  | ---------------------------------------------------------------------- |  | ----- | --------------------------------------------- |  |  | --------------------------------------------- | - |  | ------------------------------------------------------- | ----- |  | -------------------------------------------------- |  | ------- | ----------------- |  |  | ---------------------------------------------------- | -
|                                                          |  | Shares       |             |  | $                                                                      |  |       | $                                             |  |  | $                                             |   |  | $                                                       |       |  | $                                                  |  |         | $                 |  |  | $                                                    |  
|                                                          |  |              |             |  |                                                                        |  |       |                                               |  |  |                                               |   |  |                                                         |       |  |                                                    |  |         |                   |  |  |                                                      |  
|Balances, December 31, 2008                               |  |              | 126,588,812 |  |                                                                        |  | 1,846 |                                               |  |  | 43,165                                        |   |  |                                                         | 2,321 |  |                                                    |  | (46,393 | )                 |  |  | (330                                                 | )
|                                                          |  |              |             |  |                                                                        |  |       |                                               |  |  |                                               |   |  |                                                         |       |  |                                                    |  |         |                   |  |  |                                                      |  
|Net loss                                                  |  |              |             |  |                                                                        |  |       |                                               |  |  |                                               |   |  |                                                         |       |  |                                                    |  | (1,081  | )                 |  |  | 78                                                   |  
|Issuance of common stock on conversion of credit facility |  |              | 59,050,274  |  |                                                                        |  | 52    |                                               |  |  | 5,557                                         |   |  |                                                         |       |  |                                                    |  |         |                   |  |  |                                                      |  
|Placing fees                                              |  |              |             |  |                                                                        |  |       |                                               |  |  | (70                                           | ) |  |                                                         |       |  |                                                    |  |         |                   |  |  |                                                      |  
|Convertible Debentures: equity component                  |  |              |             |  |                                                                        |  |       |                                               |  |  |                                               |   |  |                                                         | 91    |  |                                                    |  |         |                   |  |  |                                                      |  
|                                                          |  |              |             |  |                                                                        |  |       |                                               |  |  |                                               |   |  |                                                         |       |  |                                                    |  |         |                   |  |  |                                                      |  
|Balances, December 31, 2009                               |  |              | 185,639,086 |  |                                                                        |  | 1,898 |                                               |  |  | 48,652                                        |   |  |                                                         | 2,412 |  |                                                    |  | (47,474 | )                 |  |  | (252                                                 | )
|                                                          |  |              |             |  |                                                                        |  |       |                                               |  |  |                                               |   |  |                                                         |       |  |                                                    |  |         |                   |  |  |                                                      |  
|Net loss                                                  |  |              |             |  |                                                                        |  |       |                                               |  |  |                                               |   |  |                                                         |       |  |                                                    |  | (870    | )                 |  |  | 47                                                   |  
|Issuance of common stock on conversion of credit facility |  |              | 15,294,118  |  |                                                                        |  | 1     |                                               |  |  | 1,299                                         |   |  |                                                         |       |  |                                                    |  |         |                   |  |  |                                                      |  
|Placing fees                                              |  |              |             |  |                                                                        |  |       |                                               |  |  | (220                                          | ) |  |                                                         |       |  |                                                    |  |         |                   |  |  |                                                      |  
|Convertible Debentures: equity component                  |  |              |             |  |                                                                        |  |       |                                               |  |  |                                               |   |  |                                                         | 53    |  |                                                    |  |         |                   |  |  |                                                      |  
|                                                          |  |              |             |  |                                                                        |  |       |                                               |  |  |                                               |   |  |                                                         |       |  |                                                    |  |         |                   |  |  |                                                      |  
|Balances, December 31, 2010                               |  |              | 200,933,204 |  |                                                                        |  | 1,899 |                                               |  |  | 49,731                                        |   |  |                                                         | 2,465 |  |                                                    |  | (48,344 | )                 |  |  | (205                                                 | )
|                                                          |  |              |             |  |                                                                        |  |       |                                               |  |  |                                               |   |  |                                                         |       |  |                                                    |  |         |                   |  |  |                                                      |  
|Net loss                                                  |  |              |             |  |                                                                        |  |       |                                               |  |  |                                               |   |  |                                                         |       |  |                                                    |  | (1,266  | )                 |  |  | (352                                                 | )
|Convertible Debentures: equity component                  |  |              |             |  |                                                                        |  |       |                                               |  |  |                                               |   |  |                                                         | 165   |  |                                                    |  |         |                   |  |  |                                                      |  
|Amounts attributable to minority interest                 |  |              |             |  |                                                                        |  |       |                                               |  |  |                                               |   |  |                                                         |       |  |                                                    |  |         |                   |  |  |                                                      |  
|                                                          |  |              |             |  |                                                                        |  |       |                                               |  |  |                                               |   |  |                                                         |       |  |                                                    |  |         |                   |  |  |                                                      |  
|Balances, December 31, 2011                               |  |              | 200,933,204 |  |                                                                        |  | 1,899 |                                               |  |  | 49,731                                        |   |  |                                                         | 2,630 |  |                                                    |  | (49,610 | )                 |  |  | (557                                                 | )



The accompanying notes are an integral part
of the consolidated financial statements

F-8







CALCITECH LTD

CONSOLIDATED STATEMENT OF CASH FLOWS

For the year ended December 31, 2011,

the year ended December 31, 2010,

and the year ended
December 31, 2009

(amounts in thousands of US dollars)



|                                                             |  | year to      |        |   | Year to      |   |        | year to      | 
|------------------------------------------------------------ |  | ------------ | ------ | - | ------------ | - | ------ | ------------ | 
|                                                             |  | Dec 31, 2011 |        |   | Dec 31, 2010 |   |        | Dec 31, 2009 | 
|                                                             |  | $            |        |   | $            |   |        | $            | 
|                                                             |  |              |        |   |              |   |        |              | 
|Cash flows from operating activities                         |  |              |        |   |              |   |        |              | 
|Net loss                                                     |  |              | (1,266 | ) |              |   | (870   | )            | 
|Adjustments for:                                             |  |              |        |   |              |   |        |              | 
|Loss on disposal of fixed assets                             |  |              | 0      |   |              |   | 0      |              | 
|Depreciation and amortization                                |  |              | 6      |   |              |   | 4      |              | 
|Operating loss before working capital changes                |  |              | (1,260 | ) |              |   | (866   | )            | 
|                                                             |  |              |        |   |              |   |        |              | 
|Changes in working capital:                                  |  |              |        |   |              |   |        |              | 
|Receivables, prepayments & current assets                    |  |              | 42     |   |              |   | 60     |              | 
|Accounts payable, accruals and provisions                    |  |              | 340    |   |              |   | (202   | )            | 
|                                                             |  |              |        |   |              |   |        |              | 
|Net cash used in operating activities                        |  |              | (878   | ) |              |   | (1,008 | )            | 
|                                                             |  |              |        |   |              |   |        |              | 
|Cash flows from investing activities in:                     |  |              |        |   |              |   |        |              | 
|Purchase of property, plant and equipment                    |  |              | 43     |   |              |   | 0      |              | 
|Plant pre-financing, project & product development           |  |              | (138   | ) |              |   | (1,406 | )            | 
|Patents                                                      |  |              | (57    | ) |              |   | (69    | )            | 
|                                                             |  |              |        |   |              |   |        |              | 
|Net cash used in investing activities                        |  |              | (152   | ) |              |   | (1,475 | )            | 
|                                                             |  |              |        |   |              |   |        |              | 
|Cash flows from financing activities:                        |  |              |        |   |              |   |        |              | 
|Repayment of other loans                                     |  |              | 0      |   |              |   | 0      |              | 
|Proceeds from credit facility                                |  |              | 399    |   |              |   | 324    |              | 
|Proceeds attributable to minority interest                   |  |              | 1,000  |   |              |   | 1,108  |              | 
|Proceeds from conversion                                     |  |              | 0      |   |              |   | 1,000  |              | 
|                                                             |  |              |        |   |              |   |        |              | 
|Net cash provided by financing activities                    |  |              | 1,399  |   |              |   | 2,432  |              | 
|                                                             |  |              |        |   |              |   |        |              | 
|Effect of exchange rate changes on cash and cash equivalents |  |              | (352   | ) |              |   | 47     |              | 
|                                                             |  |              |        |   |              |   |        |              | 
|Net decrease in cash & cash equivalents                      |  |              | 17     |   |              |   | (4     | )            | 
|Cash and cash equivalents, beginning of year                 |  |              | 18     |   |              |   | 22     |              | 
|                                                             |  |              |        |   |              |   |        |              | 
|Cash and cash equivalents, end of year                       |  | $            | 35     |   |              | $ | 18     |              | 



The accompanying notes are an integral part
of the consolidated financial statements



F-9







CALCITECH LTD

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Year ended December 31, 2011   (amounts
in thousands of US dollars, except share data)



1. BUSINESS OF THE COMPANY



CalciTech Ltd (the "Company")
is incorporated in the jurisdiction of Bermuda. Starting from the production of acetylene from which revenues were generated until
1997, the Company changed its business model to concentrate on the production of precipitated calcium carbonate (PCC). PCC is a
white pigment, which can only be produced from pure, white limestone deposits and is currently mainly used in filling and, to a
lesser extent, in other industrial applications. After an extended period of development, a PCC technology, substantially different
from the existing technology was discovered and patented. The Company’s technology to produce Synthetic Calcium Carbonate
(“SCC”) can utilise most grades of lime, including low quality lime or industrial waste lime such as carbide lime and
paper sludge ash. SCC can be applied in a wide variety of industrial applications including paper, polymers, paints, foods and
pharmaceuticals.



The Company has been in the development
stage since 2000 and revenue from the principal activity commenced for trial purposes in the year ended February 29, 2004. In 2006,
the Company changed its accounting year-end to December 31 partly to recognise the move from the development stage to the commercialisation
stage. New patents have extended the range of waste products, which can be utilized. Extensive project development and marketing,
on a worldwide basis, has taken place. However, the main thrust during the year has been focused on Europe where the Company expects
to develop its products in a number of industry applications and build its first plants to produce the offtake required.



2. BASIS OF PRESENTATION AND SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES



2.1 Going concern and future funding



The financial statements have been prepared
assuming the Company will continue as a going concern. Under the going concern assumption, an entity is ordinarily viewed as continuing
in business for the foreseeable future with neither the intention nor the necessity of liquidation, ceasing trading or seeking
protection from creditors pursuant to laws or regulations. In assessing whether the going concern assumption is appropriate, management
takes into account all available information for the foreseeable future, in particular for the twelve months from the date of approval
of the financial statements.



The Company is in the commercialisation
stage and has a growing portfolio of defined products for which samples are being produced and tested by many potential customers
in a range of industrial applications. The Company has completed a number of feasibility studies, some with potential industrial
partners, for the construction of plants to produce SCC and continues to seek out new projects. An additional patent was filed
during 2009 and extends the life of its original patent. No new patents were filed during 2011. Up to December 31, 2011, cumulative
losses were $49,610.



F-10







CALCITECH LTD

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Year ended December 31, 2011   (amounts
in thousands of US dollars, except share data)



A working capital facility has been available
from Epsom Asset Management Ltd. (“EAM”) since February 1998. From time to time, the balance of this facility has been
reduced by the mutually agreed conversion of the balance or part thereof into the common stock and debentures of the Company, in
order to provide on-going working capital. A restructuring of the debt in order to make available additional working capital was
completed in early 2009. The EAM working capital credit facility of $3,000 is available and has been extended until November 30,
2013. As at December 31, 2011, the balance available on the credit facility was $1,480.



During 2007, debentures with a value of
$4,642 were re-negotiated by their retirement against the issue of new 6% debentures with a value of $4,642 to December 31, 2009.
In December 2008, following negotiations with the debenture holders, an agreement was reached whereby all the debenture holders
agreed to convert 50% of their notes, plus accrued interest to December 31, 2008, into common shares of the Company at a price
of $0.095 per share. The notes were further amended with an interest rate of 1.75% and a new conversion price of $0.75 per share.
These notes were also extended until December 31, 2012.



In December 2009, the Company authorised
a new series of convertible debenture notes with an annual interest rate of 4% and a conversion rate of $0.40 per share for a period
of two years from date of issue. All other terms and conditions are the same as the previous series of convertible notes. EAM has
agreed to convert $1,500 of its outstanding facility into these new notes. In December 2010, EAM agreed to convert an additional
$1,000 in these notes. These notes have been extended until March 31, 2014.



In December 2011, EAM agreed to convert
$1,000 of its outstanding balance into 8,100,000 ordinary shares of CalciTech Synthetic Minerals Europe Ltd. (“CSME”)
at the par value of Euro 0.10 per share. This gives EAM a 10.125% holding in CSME. This will provide the Company with sufficient
working capital for the next eighteen months operations.



Management believes that given the cash
and cash equivalents of $35 together with its working capital credit facility from EAM and assuming their willingness to convert
outstanding facility balances into loan notes or shares, and the continuing control of expenses, the Company has sufficient working
capital to meet its obligations up to the next 12 months following the date of the approval of these financial statements.



However, this EAM credit facility is not
sufficient to enable the Company to commence the building of commercial plants and further funding would be required. The financial
statements and capitalisation of project and product development costs are based on the Directors assumption that such funds can
be secured. The Company is exploring a variety of financing options and is working with a number of financial institutions, subject
to market conditions, to secure the necessary funding.



F-11







CALCITECH LTD

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Year ended December 31, 2011   (amounts
in thousands of US dollars, except share data)



The Company is in the process of finalizing
plans to build on its first full scale SCC plants in Europe. Construction is dependent on availability of funds through financing.
As part of its effort to develop the plant in Europe, the Company transferred its business undertaking for Europe under the grant
of a license to its indirectly owned subsidiary, CSME. The European projected business has been independently valued at €64
million based on the Directors’ financial projections. The transfer of the business undertaking was satisfied by the issue
of 80 million shares of CSME to CalciTech Synthetic Minerals Ltd. (“CSM”), our wholly-owned subsidiary, at a price
of Euro 0.10 per share. On the securing of satisfactory funding to commence building, this transaction will be completed by CalciTech
Synthetic Minerals Ltd extending an exclusive license of the Company’s SCC technology to CSME for Europe by the issuance
of further shares to a value of €56 million. This transaction incorporates CalciTech Synthetic Minerals Ltd extending an exclusive
license of the Company’s SCC technology to CSME for Europe. The license is for a period of 30 years with a royalty payable
of 5% of net revenues earned. CSME has an independent UK Board of Directors and senior management and will operate independently
within Europe.



The Company, through CSME, is now planning
a matrix of plants in Europe and has made presentations to the European Investment Bank (“EIB”) to confirm that such
projects will qualify under its technological innovation program and other programs for financial support. The Company’s
financial advisors are currently in negotiations with a number of UK banks, in the context of the EIB borrowing and funding for
all European plants. The Company expects European Union grants, in varying amounts, to be available on a number of its prospective
plants in the planning stage.



In addition, as part of our fund raising
strategy and depending on the market conditions, the Company is considering a listing on the AIM market of the London Stock Exchange
to raise the capital necessary to implement its businesses plan of developing a series of plants throughout Europe. The Company
is in preliminary discussions with various Nominated Advisors (“Nomads”) for such listing efforts. However, any such
listing will be subject to market conditions and our ability to raise the funds necessary to implement our near goal business plan
of developing commercial plants in Europe. CSME is presently entirely funded in its day-to-day operation by the Company.



At the same time, the Company is also exploring
other markets outside of Europe for its commercial plants. For example, the Company may seek to enter the market in China by seeking
additional funds or cooperate with local commercial partners. Under this type of arrangement, an investor or commercial partner
may invest in a specific commercial plant and receive a negotiated interest in that specific commercial plant.



F-12







CALCITECH LTD

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Year ended December 31, 2011   (amounts
in thousands of US dollars, except share data)



Assets and liabilities are recorded on
the basis that the Company will be able to realise its assets and discharge its liabilities in the normal course of business. Accordingly,
the financial statements do not include any adjustments to the carrying values of assets and liabilities that might be necessary
should the Company be unable to continue as a going concern. In addition, the majority of the Company’s assets are intangible
assets as more specifically described in note 5. The Company’s ability to recover the carrying value of its intangible assets
is dependent upon the Company’s ability to raise additional funds sufficient for the commercial exploitation of these assets.
The financial statements do not include any adjustment that would result if the Company’s efforts to secure additional funding
for the commercialisation of its intangible assets described above are not successful.



For these reasons the financial statements
have been prepared on a going concern basis.



2.2 Basis of presentation



The consolidated financial statements are
prepared under the historical cost convention, as modified by the revaluation of financial assets and liabilities, and they are
also presented in accordance with International Financial Reporting Standards (“IFRS”).



2.3 Principles of consolidation



The accompanying consolidated financial
statements include the accounts of the Company and its subsidiaries made up to December, 31 2011. The results of subsidiaries sold
or acquired are included in the consolidated statement of comprehensive income up to, or from the date control passes. Intercompany
balances and transactions have been eliminated fully on consolidation.



2.4 Use of estimates



The preparation of financial statements
in conformity with IFRS requires management to make estimates and assumptions that affect reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ from those estimates. Where estimates and assumptions have
been used, these are stated in the relevant accounting policy note.



2.5 Foreign currency translation



The reporting currency of the Group is
the US dollar ($), which is also the measurement currency of the parent company. The parent company elected the US dollar as its
measurement currency rather than the Bermudan dollar (BMD), which is the currency of its country of domicile, to reflect the fact
that the majority of its transactions are denominated in US dollars.



F-13







CALCITECH LTD

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Year ended December 31, 2011   (amounts
in thousands of US dollars, except share data)



The measurement currency of the Company's
operating foreign subsidiaries is their local currency, generally the Euro. Assets and liabilities of the Company's foreign subsidiaries
are translated into US dollars using the exchange rate in effect at the balance sheet date. Additionally, their expenses are translated
using exchange rates approximating average rates prevailing during the year. Translation adjustments that arise from translating
their financial statements from their local currencies to US dollars are accumulated and reflected as a separate component of shareholders'
equity.



Gains and losses that arise from the effect
of exchange rate changes on balances denominated in currencies other than the measurement currency of each of the Company and its
subsidiaries are included in the statements of operations as incurred.



|                                       |  | year to      |      |   | year to      |   |     | year to      | 
|-------------------------------------- |  | ------------ | ---- | - | ------------ | - | --- | ------------ | 
|                                       |  | Dec 31, 2011 |      |   | Dec 31, 2010 |   |     | Dec 31, 2009 | 
|                                       |  | $            |      |   | $            |   |     | $            | 
|                                       |  |              |      |   |              |   |     |              | 
|Unrealised gain / (loss) on currencies |  |              | (177 | ) |              |   | (51 | )            | 
|                                       |  |              |      |   |              |   |     |              | 
|Change in foreign currency adjustments |  |              | (352 | ) |              |   | 47  |              | 
|                                       |  |              |      |   |              |   |     |              | 
|Exchange Gain / (Loss)                 |  | $            | (529 | ) |              | $ | (4  | )            | 



2.6 Cash and cash equivalents



Cash and cash equivalents include all highly
liquid investments purchased with an original maturity of three months or less to be cash equivalents.



2.7 Property, plant and equipment



Property, plant and equipment are stated
at historical cost and are depreciated on a straight-line basis over their estimated useful lives:



| | Plant and equipment            |  | 5 to 10 years
| | ------------------------------ |  | -------------
| | Office furniture and equipment |  | 3 to 8 years 



Asset residual values and useful lives
are reviewed and adjusted if appropriate at the end of each year. The asset carrying amounts are written down to recoverable amount
if greater. Maintenance and repairs are charged to expenses when incurred. When an asset is not in use due to its dismantling and
relocation, depreciation is not charged until it is back in use unless its useful life has been impaired during the period of its
inactivity. Gains and losses on sale are equal to the proceeds less the carrying amount and are taken to the statement of comprehensive
income.



F-14







CALCITECH LTD

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Year ended December 31, 2011   (amounts
in thousands of US dollars, except share data)



2.8 Intangible Assets



Expenditure on intangible assets (Product
Development, Project Development, Commercial Plant pre-financing costs and Patents) will be capitalised and amortised against production
and sales of SCC. Legal expenditure for the protection of technology developed by the Group is recognised as an expense in the
statement of comprehensive income, as incurred, except when additional future economic benefits can be attributed to such protection
at closing date. The intangible assets are not amortised because the Group is not yet utilising them on a commercial level. Amortisation
will begin upon the commencement of commercial production. Management regularly reviews the intangible assets to consider their
carrying value and whether there is any impairment in light of the project or product development.



The recoverability of the carrying value
of intangible assets is based upon Directors assumptions that sufficient funds can be raised to commence commercial production.



2.9 Research and development



Research and development costs are expensed
as incurred, except for Project Development, Product Development and Commercial Plant Pre-financing costs, which are deferred as
intangible assets if the Group can demonstrate all of the following:



| | · | the technical feasibility of completing the intangible asset so that it will be available for use
or sale;
| | - | ----------------------------------------------------------------------------------------------------------



| | · | the intention to complete the intangible asset and use or sell it;
| | - | ------------------------------------------------------------------



| | · | its ability to use or see the intangible asset;
| | - | -----------------------------------------------



| | · | how the intangible asset will generate probable future economic benefits. Among other things, the
entity can demonstrate the existence of a market for the output of the intangible asset or the intangible asset itself or, if it
is to be used internally, the usefulness of the intangible asset;
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | the availability of adequate technical, financial and other resources to complete the development
and to use or sell the intangible asset;
| | - | ------------------------------------------------------------------------------------------------------------------------------------------



| | · | its ability to measure reliably the expenditure attributable to the intangible asset during its
development.
| | - | ------------------------------------------------------------------------------------------------------------



Deferred
Project Development costs of $4,822, Product Development costs of $1,502, Commercial Plant Pre-financing Costs of $1,849 and Patents
of $492 are recorded at cost, which include:



| | · | expenditure on materials and services used or consumed in generating the intangible asset;
| | - | ------------------------------------------------------------------------------------------



| | · | the salaries, wages and other employment related costs of personnel directly engaged in generating
the asset, and
| | - | -----------------------------------------------------------------------------------------------------------------



| | · | any expenditure that is directly attributable to generating the asset, such as the amortisation
of patents used to generate the asset.
| | - | --------------------------------------------------------------------------------------------------------------------------------------

F-15







CALCITECH LTD

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Year ended December 31, 2011   (amounts
in thousands of US dollars, except share data)



Any costs capitalised are amortised on
a straight-line basis over the period of expected future benefit.



The intangible assets of Project Development,
Product Development and Commerical Plant Pre-financing Costs are not yet being amortised as full commercialisation has not yet
commenced.



2.10 Patents



The costs incurred in establishing patents
are either expensed or capitalised in accordance with corresponding treatment of the development expenditure for the product to
which they relate.



When full-scale production plants are producing
revenues, patents will be amortised on a straight-line basis over the remaining life of the patent.



2.11 Net loss per common share



Basic net loss per share is computed by
dividing net loss by the weighted average number of shares outstanding.



For the purpose of calculating diluted
earnings per share, the net loss attributable to ordinary shareholders and the weighted average number of shares outstanding is
adjusted for the effects of all dilutive potential ordinary shares. The effects of anti-dilutive potential ordinary shares are
ignored in calculating diluted earnings per share. Potential ordinary shares are anti-dilutive when their conversion to ordinary
shares would decrease loss per share from continuing operations.



2.12 Fair value of financial instruments



Carrying amounts of the Group's financial
instruments including cash and cash equivalents, accounts receivable, accounts payable, and accrued expenses approximate fair value
due to their short maturities, based on borrowing rates currently available to the Company. This would include convertible debentures
where the fair value of the conversion option is recognised under shareholders’ equity.



2.13 Deferred and current taxation



Current tax is that payable to the Swiss
Tax Authorities on profits generated by the Company’s administrative headquarter company, CalciTech Group Services S.A.



Deferred tax assets and liabilities are
determined based on differences between financial reporting and tax bases of assets and liabilities, and are measured using the
enacted tax rates and laws that will be in effect when the differences are expected to reverse. Valuation allowances are recorded
for deferred tax assets that are not more likely than not to be realised.



Deferred tax assets are recognised only
to the extent that future taxable profit will be available such that realisation of the related tax benefit is more likely than
not.



F-16







CALCITECH LTD

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Year ended December 31, 2011   (amounts
in thousands of US dollars, except share data)



2.14 Stock options



The Company has a stock option plan, which
allows stock options to be issued up to 10% of the Company’s issued share capital. The Company has applied the requirements
of IFRS 2 “Share-based payment”. The Company accounts for employee and non-employee share-based compensation awards
based on their fair value in accordance with IFRS 2 “Share-based payment”. The cost of granting share options and other
share-based remuneration is recognised through the statement of comprehensive income over the vesting period.



2.15 Convertible debt



Convertible debt – at the option
of the Company and the holder



On issue of convertible debentures where
conversion is at the Company’s or the holder’s option, the fair value of the conversion element is determined. This
amount is recognised in shareholders' equity. The obligation to make future payments of principal and interest to the holder of
the option is calculated using a deemed market interest rate for an equivalent non-convertible debt. The obligation to make future
payments of interest is carried as a liability until extinguished on conversion or payment.



Convertible debt – at the option
of the holder



Compound financial instruments issued by
the Company comprise convertible notes that can be converted to share capital at the option of the holder, and the number of shares
to be issued does not vary with changes in their fair value.



The liability component of a compound financial
instrument is recognized initially at the fair value of a similar liability that does not have an equity conversion option. The
equity component is recognized initially at the difference between the fair value of the compound instrument as a whole and the
fair value of the liability component.



Subsequent to initial recognition, the
liability component of a compound financial instrument is measured at amortised cost using the effective interest method. The equity
component of a compound financial instrument is not re-measured subsequent to initial recognition except on conversion,expiry or
extension.



F-17







CALCITECH LTD

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Year ended December 31, 2011   (amounts
in thousands of US dollars, except share data)



2.16 Modification of debt instruments



The Company may effect a modification or
an exchange of debt instruments with a creditor. The modification or exchange may include changes in the principal amount, interest
rate, term to maturity, borrowing currency or creditor. Whether a modification or exchange of debt instruments represents a settlement
of the original debt or merely a renegotiation of that debt determines the accounting treatment that is applied by the Group. A
modification or exchange of debt instruments represents a settlement when the terms of the new or modified debt are substantially
changed from the terms of the original debt instrument. Substantial change occurs when:



| | a. | The present value of the cash flows under the terms of the modified or new debt instrument is at
least 10% different from the present value of the remaining cash flows under the terms of the original debt instrument;
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | b. | There is a change in the borrowing currency; or
| | -- | -----------------------------------------------



| | c. | There is a change in the creditor and the original debt is legally discharged by the debtor through
a cash payment or otherwise.
| | -- | --------------------------------------------------------------------------------------------------------------------------------



If a modification or an exchange of debt
instruments represents a settlement, the Company calculates a loss or gain that is charged, or credited, to income when settlement
occurs. This loss or gain is the difference between the fair value of the new debt instrument and the carrying amount of the original
debt instrument, together with all unamortised debits or credits related to the original debt instrument.



If a modification or exchange of debt instruments
does not represent a settlement but, instead, is merely a renegotiation of a debt instrument, all existing deferred debits and
credits related to the original debt instrument are maintained and are amortised over the remaining term of the renegotiated debt.



2.17 Government grants



Government grants are recognised when there
is reasonable assurance that the Group will comply with the conditions attaching to them, and the grants will be received or earned.
A government grant that becomes receivable as compensation for research and development expenses already incurred with no future
related costs is recognised as a reduction in research and development expenses in the period in which it becomes receivable.



Grants for the acquisition of assets and
development activities that are capitalised are set off against the cost price of the assets for which grants are awarded.



F-18







CALCITECH LTD

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Year ended December 31, 2011   (amounts
in thousands of US dollars, except share data)



2.18 Leases



Leases are classified as finance leases
wherever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are
classified as operating leases.



Assets held under finance leases are recognised
as assets of the Group at their fair value at the date of acquisition or, if lower, at the present value of the minimum lease payments.
The corresponding liability to the lessor is included in the balance sheet as a finance lease obligation. Lease payments are apportioned
between finance charges and reduction of the lease obligation so as to achieve a constant rate of interest on the remaining balance
of the liability. Finance charges are charged directly against the statement of operations. Assets held under finance leases are
depreciated at the shorter of the lease term and their useful economic lives.



2.19 Revenue recognition



The Company has no large-scale commercial
SCC plants, and since 2004 has received revenues from the sale of SCC samples only. Revenue is measured at the fair value of the
consideration received or receivable and represents amounts receivable for goods and services provided in the normal course of
business, net of discounts, VAT and other sales related taxes.



Interest is accrued on a time basis, by
reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts
estimated future cash receipts through the expected life of the financial asset to that asset’s net carrying amount.



The allowance for doubtful accounts reflects
management’s best estimate of probable losses inherent in the accounts receivable balance. Management determines the allowance
based on known troubled accounts, historical experience, and other currently available evidence. The Group writes off accounts
receivable when they become uncollectable. The Group currently has no allowance for doubtful accounts.



2.20 Borrowing costs



All borrowing costs are recognised in the
consolidated statement of operations in the period in which they are incurred.



2.21 Inventories



Inventories are stated at the lower of
cost and net realisable value. The Company has no inventory at present but will apply the First In First Out (FIFO) method when
this arises.



F-19







CALCITECH LTD

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Year ended December 31, 2011   (amounts
in thousands of US dollars, except share data)



3. RECEIVABLES, PREPAID EXPENSES
AND OTHER CURRENT ASSETS



Receivables, prepaid expenses and other
current assets consist of the following:



|                    |  | Dec 31, 2011 |    |  | Dec 31, 2010 |   |     | Dec 31, 2009 | 
|------------------- |  | ------------ | -- |  | ------------ | - | --- | ------------ | 
|                    |  | $            |    |  | $            |   |     | $            | 
|Accounts receivable |  |              | 5  |  |              |   | 0   |              | 
|VAT receivable      |  |              | 17 |  |              |   | 2   |              | 
|Deposits            |  |              | 18 |  |              |   | 34  |              | 
|Prepaid expenses    |  |              | 22 |  |              |   | 68  |              | 
|Total               |  | $            | 62 |  |              | $ | 104 |              | 



4. Property,
plant and equipment



Property, plant and equipment consists
of the following:



|                             |  | Computer Equipment |     |   | Building,  Plant & Equipment |  |      | Commercial Plant Pre-
financing |  |  | Office Furniture & Equipment |   |  | Total |    
|---------------------------- |  | ------------------ | --- | - | ---------------------------- |  | ---- | ------------------------------- |  |  | ---------------------------- | - |  | ----- | ---
|                             |  | $                  |     |   | $                            |  |      |                                 |  |  | $                            |   |  | $     |    
|                             |  |                    |     |   |                              |  |      |                                 |  |  |                              |   |  |       |    
|Balance at December 31, 2010 |  |                    | 0   |   |                              |  | 446  |                                 |  |  | 558                          |   |  |       | 15 
|Additions                    |  |                    | 0   |   |                              |  | 0    |                                 |  |  | 0                            |   |  |       | 3  
|Disposals                    |  |                    | 0   |   |                              |  | 0    |                                 |  |  | 0                            |   |  |       | 0  
|Depreciation during year     |  |                    | 0   |   |                              |  | 0    |                                 |  |  | 0                            |   |  |       | (6 
|Foreign Currency Adjustments |  |                    | 0   |   |                              |  | (18  | )                               |  |  | (28                          | ) |  |       | 0  
|                             |  |                    |     |   |                              |  |      |                                 |  |  |                              |   |  |       |    
|Balance at December 31, 2011 |  | $                  | 0   |   |                              |  | 428  |                                 |  |  | 530                          |   |  |       | 12 
|                             |  |                    |     |   |                              |  |      |                                 |  |  |                              |   |  |       |    
|Gross Amount                 |  |                    | 40  |   |                              |  | 973  |                                 |  |  | 530                          |   |  |       | 22 
|Accumulated Depreciation     |  |                    | (40 | ) |                              |  | (545 | )                               |  |  | 0                            |   |  |       | (10
|                             |  |                    |     |   |                              |  |      |                                 |  |  |                              |   |  |       |    
|Balance at December 31, 2011 |  | $                  | 0   |   |                              |  | 428  |                                 |  |  | 530                          |   |  |       | 12 



For the year ended December 31, 2011, the
year ended December 31, 2010, and the year ended December 31, 2009, depreciation expense totalled $6, $4 and $12 respectively.



During the year ended December 31, 2011
and 2010, the small-scale production plant was dismantled and moved to a new facility in Germany. As at December 31, 2011, it had
not been re-assembled nor been in use due to on-going work to improve the new facility. There has been no impairment of its value
due to its non use. As a result no depreciation charge has been made for this period.



F-20







CALCITECH LTD

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Year ended December 31, 2011   (amounts
in thousands of US dollars, except share data)



During
the year ended February 29, 2004, the Company disposed of its small-scale plant and leased it back for an annual rental
of €120 ($176) for a period of five years at the end of which the Company retains the right to re-acquire the plant. The amount
capitalised in respect of this plant is $428, of which depreciation of $NIL was recognised in the period ending December 31, 2009,
as the plant was not in use during the period (December 31, 2008: $120 and December 31, 2007: $124). The final payment on the lease
agreement was made in February 2010 and under the terms of the agreement the plant was acquired for €1.



The assets and liabilities under capital
leases are recorded at the lower of present values of the minimum lease payments or the fair values of the assets. The assets are
included in property and equipment and are depreciated over their estimated useful lives.



As of December 31, 2011, in connection
with building, plant and equipment the future minimum lease payments under non-cancellable finance
leases was $NIL.



5. INTANGIBLE ASSETS



Intangible Assets can be summarised as
following:



|                             |  | Project
Development |       |   | Product
Development |  |       | Commercial
Plant Pre-
financing |  |  | Patents |   |  | Total |    
|---------------------------- |  | ------------------- | ----- | - | ------------------- |  | ----- | ------------------------------- |  |  | ------- | - |  | ----- | ---
|                             |  | $                   |       |   | $                   |  |       | $                               |  |  | $       |   |  | $     |    
|                             |  |                     |       |   |                     |  |       |                                 |  |  |         |   |  |       |    
|Balance at December 31, 2010 |  |                     | 4,699 |   |                     |  | 1,393 |                                 |  |  | 1,944   |   |  |       | 435
|Reclassification             |  |                     | 0     |   |                     |  | 0     |                                 |  |  | 0       |   |  |       | 0  
|Additions                    |  |                     | 316   |   |                     |  | 178   |                                 |  |  | 0       |   |  |       | 57 
|Disposals                    |  |                     | 0     |   |                     |  | 0     |                                 |  |  | 0       |   |  |       | 0  
|Foreign currency adjustment  |  |                     | (193  | ) |                     |  | (68   | )                               |  |  | (95     | ) |  |       | 0  
|                             |  |                     |       |   |                     |  |       |                                 |  |  |         |   |  |       |    
|Balance at December 31, 2011 |  | $                   | 4,822 |   |                     |  | 1,503 |                                 |  |  | 1,849   |   |  |       | 492
|                             |  |                     |       |   |                     |  |       |                                 |  |  |         |   |  |       |    
|Gross Amount                 |  |                     | 4,822 |   |                     |  | 1,503 |                                 |  |  | 1,849   |   |  |       | 492
|Accumulated Amortisation     |  |                     | 0     |   |                     |  | 0     |                                 |  |  | 0       |   |  |       | 0  
|                             |  |                     |       |   |                     |  |       |                                 |  |  |         |   |  |       |    
|Balance at December 31, 2011 |  | $                   | 4,822 |   |                     |  | 1,503 |                                 |  |  | 1,849   |   |  |       | 492



For the year ended December 31, 2011, the
year ended December 31, 2010 and the year ended December 31, 2009, amortisation expense totaled $NIL, $NIL and $NIL respectively.
When full-scale production plants are producing revenues, patents will be amortised on a straight-line basis over the remaining
life of the patent.



F-21







CALCITECH LTD

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Year ended December 31, 2011   (amounts
in thousands of US dollars, except share data)



6. CREDIT FACILITY AGREEMENT



Since February 28, 1998 the Company has
had available a credit facility with EAM. From time to time, the balance due payable under the facility has been reduced, by mutually
agreed conversions of the debt into the common stock and debentures of the Company. A restructuring of the debt in order to make
available additional working capital was completed in early 2009. During February 2009, EAM agreed to convert the full amount of
the credit facility as at December 31, 2008, amounting to $5,436, at a price of $0.095 per share. The credit facility was increased
to $3,000 with a reduced interest rate of 1.75% per annum. The conversion of the aforementioned EAM facility and creditors resulted
in the issue of 59,050,274 common shares.



As part of the restructuring, the original
charge agreement with Epsom Investment Services N.V. was assigned, by mutual consent to EAM providing the first charge over the
intellectual property rights, collateralised by 100% of the issued share capital of CalciTech Synthetic Minerals Ltd. with the
new facility.



In December 2009, EAM agreed to convert
$1,500 of its credit facility into a new series of convertible debenture notes and to extend the facility of $3,000 to 31st
August 2011.



In December 2010, Epsom agreed to convert
a further $1,300 of the balance due on the credit facility agreement into common stock of the Company on the mutually agreed basis
of one share for each $0.085 of note. This conversion resulted in the issue of 15,294,118 common shares. In addition, EAM agreed
to convert a further $1,000 into the series of convertible notes created in December 2009 on the same basis and to extend the facility
of $3,000 to 30th November 2013.



In December 2011, EAM agreed to convert
$1,000 of its outstanding balance into 8,100,000 ordinary shares of CSME at the par value of Euro 0.10 per share. This gives EAM
a 10.125% holding in CSME.



The credit facility is presented as follows:



|                                             |  | year to      |        |   | year to      |   |        | year to      | 
|-------------------------------------------- |  | ------------ | ------ | - | ------------ | - | ------ | ------------ | 
|                                             |  | Dec 31, 2011 |        |   | Dec 31, 2010 |   |        | Dec 31, 2009 | 
|                                             |  | $            |        |   | $            |   |        | $            | 
|Face value of note issued during the year    |  |              | 1,366  |   |              |   | 2,538  |              | 
|                                             |  |              |        |   |              |   |        |              | 
|Interest expense                             |  |              | 33     |   |              |   | 86     |              | 
|Conversion of note into common shares        |  |              | (1,000 | ) |              |   | (1,300 | )            | 
|Convertible debenture notes                  |  |              | 0      |   |              |   | (1,000 | )            | 
|                                             |  |              |        |   |              |   |        |              | 
|                                             |  |              | 399    |   |              |   | 324    |              | 
|                                             |  |              |        |   |              |   |        |              | 
|Non-current liability at beginning of period |  |              | 1,121  |   |              |   | 797    |              | 
|                                             |  |              |        |   |              |   |        |              | 
|Non-current liability at end of period       |  | $            | 1,520  |   |              | $ | 1,121  |              | 
|                                             |  |              |        |   |              |   |        |              | 
|Effective interest rate at period end        |  |              | 1.75   | % |              |   | 1.75   | %            | 



F-22







CALCITECH LTD

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Year ended December 31, 2011   (amounts
in thousands of US dollars, except share data)



7. OTHER LOANS



Other loans are as follows:



|                                  |  | Dec 31, 2011 |   |  | Dec 31, 2010 |   |   | Dec 31, 2009 | 
|--------------------------------- |  | ------------ | - |  | ------------ | - | - | ------------ | 
|                                  |  | $            |   |  | $            |   |   | $            | 
|                                  |  |              |   |  |              |   |   |              | 
|Finance lease                     |  |              | 0 |  |              |   | 0 |              | 
|                                  |  |              |   |  |              |   |   |              | 
|Total loans                       |  | $            | 0 |  |              | $ | 0 |              | 
|                                  |  |              |   |  |              |   |   |              | 
|Falling due split:                |  |              |   |  |              |   |   |              | 
|Amounts due within one year       |  |              |   |  |              |   |   |              | 
|Finance lease                     |  |              | 0 |  |              |   | 0 |              | 
|                                  |  |              |   |  |              |   |   |              | 
|Total amounts due within one year |  |              | 0 |  |              |   | 0 |              | 
|                                  |  |              |   |  |              |   |   |              | 
|Balance at the end of the year    |  | $            | 0 |  |              | $ | 0 |              | 



8. CONVERTIBLE DEBENTURE



The value of the convertible loans, created
in the year ended December 31, 2009, at the balance sheet date have been determined in accordance with IAS 32 “Financial
Instruments Presentation”, as described more fully in Note 2.15. IAS 32 requires the separate recognition of the debt and
equity components of the amounts received, with equity components shown directly in equity reserves.



|                               |  | Dec 31, 2011 |       |  | Dec 31, 2010 |  
|------------------------------ |  | ------------ | ----- |  | ------------ | -
|                               |  | $            |       |  | $            |  
|Convertible loans              |  |              | 2,218 |  |              |  
|                               |  |              |       |  |              |  
|Total loans                    |  | $            | 2,218 |  |              | $
|                               |  |              |       |  |              |  
|Loan maturity analysis:        |  |              |       |  |              |  
|Less than one year             |  |              | -     |  |              |  
|Between one and two years      |  |              | 2,218 |  |              |  
|                               |  |              |       |  |              |  
|Balance at the end of the year |  | $            | 2,218 |  |              | $



The fair value of the liability component
was calculated using a market interest rate for an equivalent non-convertible loan. The residual amount, representing the value
of the equity conversion option, is included in Equity Reserves.



F-23







CALCITECH LTD

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Year ended December 31, 2011   (amounts
in thousands of US dollars, except share data)



The convertible loan recognised in the
balance sheet is calculated as follows:



|                                                   |  | Dec 31, 2011 |        |   | Dec 31, 2010 |  
|-------------------------------------------------- |  | ------------ | ------ | - | ------------ | -
|                                                   |  | $            |        |   | $            |  
|Face value of convertible loan issued              |  |              | 4,821  |   |              |  
|Equity component                                   |  |              | (2,630 | ) |              |  
|Liability component on initial recognition         |  | $            | 2,191  |   |              | $
|                                                   |  |              |        |   |              |  
|Interest expense in prior years                    |  |              | -      |   |              |  
|Interest expense in current year                   |  |              | 135    |   |              |  
|Interest paid                                      |  |              | (108   | ) |              |  
|Liability component carried forward                |  | $            | 2,218  |   |              | $
|                                                   |  |              |        |   |              |  
|Disclosed in liabilities due in less than one year |  | $            | -      |   |              | $
|                                                   |  |              |        |   |              |  
|Disclosed in liabilities due in more than one year |  | $            | 2,218  |   |              | $



The Convertible Loan Notes are convertible
into 6,250,000 Ordinary Shares. Any note holder is entitled to convert their proportion into Ordinary Shares or be repaid in cash
at the Repayment Date. The convertible debentures above are due to be repaid March 31, 2014.



The Company agreed to pay the Loan Note
Holder interest of $200 in consideration of this agreement.



9. SHAREholders'
EQUITy



The Company has ordinary common shares
with the par value of $ 0.001. There are no restrictions on the distribution of dividends and repayment of capital.



9.1 Capital risk management



The Group’s objectives when managing
capital are to safeguard the Group’s ability to continue as a going concern in order to provide returns for shareholders
and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital.



9.2 Convertible debentures



In February 2001, the Company issued 8%
convertible debenture notes in the sum of $1,500. These notes are redeemable by the Company, in whole or in part, up to the date
of maturity. On maturity, the Company also has the right, but not the obligation, to convert any or all of the amounts of principal
and any accrued interest, into common stock. Further debenture notes were issued in July 2001 in the sum of $2,500.



F-24







CALCITECH LTD

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Year ended December 31, 2011   (amounts
in thousands of US dollars, except share data)



By December 31, 2007, none of the debentures
or outstanding interest were converted into common stock. At this date, the Company’s 8% convertible debentures with a value
of $4,402 and €188 were re-negotiated by their retirement against the issue of new 6% debentures with a value of $4,642, to
December 31, 2009. The Company had the right, but not the obligation, upon 10 days notice, without penalty, to repay all or any
portion of the outstanding principal. Debenture holders had the right to convert on 31st December 2009 at $1.75. All
other terms of the convertible debentures remained unchanged from the original debenture notes.



During December 2008, all 6% convertible
debenture holders with a value of $4,642, agreed to convert 50% of the capital with accrued interest to December 31, 2008, amounting
to $2,526 into common shares of the Company at a price of $0.095 per share. The remaining debenture notes were extended until December
31, 2010 at an interest rate of 1.75% per annum, payable quarterly, with the right to convert into common shares of the Company
at $0.75 per share, amended from a conversion of $1.75 per share. The Company has the right, but not the obligation, upon 10 days
notice, without penalty, to repay all or any portion of the outstanding principal. These debentures have been classified as equity
as there is no contractual obligation to deliver cash and the contract will be settled by the Company delivering a fixed number
of its own equity instruments in exchange for a fixed amount of cash. During December 2010, these debentures were extended until
December 31, 2012 with unchanged terms and interest rate.



In December 2009, the Company authorised
$2,500 in a new series of convertible debenture notes with an annual interest rate of 4% payable quarterly in arrears. These notes,
with a two year maturity date, are convertible into ordinary shares of the Company at $0.40 per share. All other terms and conditions
remain the same as those of the existing series of debentures.



The equity element can be summarised as
follows:



|                                           |  | Dec 31, 2011 |       |  | Dec 31, 2010 |   |       | Dec 31, 2009 | 
|------------------------------------------ |  | ------------ | ----- |  | ------------ | - | ----- | ------------ | 
|                                           |  | $            |       |  | $            |   |       | $            | 
|Principal amount of debentures at issuance |  |              | 2,630 |  |              |   | 2,465 |              | 
|Less finders' fee                          |  |              | 0     |  |              |   | 0     |              | 
|Debentures Converted                       |  |              | 0     |  |              |   | 0     |              | 
|                                           |  |              |       |  |              |   |       |              | 
|                                           |  | $            | 2,630 |  |              | $ | 2,465 |              | 



9.3 Conversion of credit facility



The original Epsom Investment Services
N.V. (“Epsom”) credit facility, effected in February 1998, has been subject to a number of conversions of the balance
into common stock of the Company in order to reduce the balance and thereby provide additional working capital both during and
after assignment date of November 2008 to EAM.



In September 2007, Epsom agreed to convert
a further $2,000 of the balance due on the credit facility agreement into common stock of the Company on the mutually agreed basis
of one share for each $0.29 of note. This conversion resulted in the issue of 6,900,000 common shares.



F-25







CALCITECH LTD

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Year ended December 31, 2011   (amounts
in thousands of US dollars, except share data)



In December 2007, Epsom agreed to convert
a further $1,260 of the balance due on the credit facility agreement into common stock of the Company on the mutually agreed basis
of one share for each $0.30 of note. This conversion resulted in the issue of 4,198,990 common shares.



During February 2009, EAM agreed to convert
the full amount of the credit facility as at December 31, 2008, amounting to $5,436, at a price of $0.095 per share. EAM agreed
to this conversion and the placement of 50% of the resulting shares with its clients, providing other existing shareholders and
new shareholders acquire the remaining 50% of the shares at the same price per share. The proceeds were loaned to the Company under
the existing credit facility for working capital purposes with interest charged at a reduced rate of 1.75% per annum, payable quarterly.
The conversion of the aforementioned EAM facility and creditors resulted in the issue of 59,050,274 common shares. It was further
agreed to increase the facility to $3,000.



In December 2009, EAM agreed to convert
$1,500 of its credit facility into the new series of convertible debenture notes issued by the Company. The credit facility was
extended to 31st August 2012.



In December 2010, Epsom agreed to convert
a further $1,300 of the balance due on the credit facility agreement into common stock of the Company on the mutually agreed basis
of one share for each $0.085 of note. This conversion resulted in the issue of 15,294,118 common shares. In addition, EAM agreed
to convert a further $1,000 into the series of convertible notes created in December 2009 on the same basis.



In December 2011, EAM agreed to convert
$1,000 of its outstanding balance into 8,100,000 ordinary shares of CSME at the par value of Euro 0.10 per share. This gives EAM
a 10.125% holding in CSME.



F-26







CALCITECH LTD

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Year ended December 31, 2011   (amounts
in thousands of US dollars, except share data)



9.4 Stock option plan



Under the provision of the Company’s
share option plan, a maximum total of 10% of issued shares may be granted to directors, officers, employees and consultants of
the Company in the form of stock options. The options generally expire five years from the date of the grant. 250,000 stock options
granted are not subject to vesting requirements. The balance of 6,750,000 will vest upon the construction of the first commercial
plant. Stock option activity was as follows:



|                             |  | Number of  Shares |           |  | Exercise price per share
|---------------------------- |  | ----------------- | --------- |  | ------------------------
|                             |  |                   |           |  |                         
|Balance at December 31, 2009 |  |                   | 9,750,000 |  |                         
|                             |  |                   |           |  |                         
|Options exercised            |  |                   | 0         |  |                         
|Options lapsed               |  |                   | 1,850,000 |  |                         
|Options granted              |  |                   | 0         |  |                         
|                             |  |                   |           |  |                         
|Balance at December 31, 2010 |  |                   | 7,900,000 |  |                         
|                             |  |                   |           |  |                         
|Options exercised            |  |                   | 0         |  |                         
|Options lapsed               |  |                   | 900,000   |  |                         
|Options granted              |  |                   | 0         |  |                         
|                             |  |                   |           |  |                         
|Balance at December 31, 2011 |  |                   | 7,000,000 |  |                         



The following table summarises information
with respect to stock options as of December 31, 2011:



|Exercise Price |       |  | Weighted-
average Number of options outstanding |           |           | Number of options exercisable |  |           | Weighted average remaining contractual life (years) | 
|-------------- | ----- |  | ----------------------------------------------- | --------- | --------- | ----------------------------- |  | --------- | --------------------------------------------------- | 
|               |       |  |                                                 |           |           |                               |  |           |                                                     | 
|$              | 0.22  |  |                                                 |           | 1,000,000 |                               |  |           | 1,000,000                                           | 
|$              | 0.27  |  |                                                 |           | 700,000   |                               |  |           | 700,000                                             | 
|$              | 0.30  |  |                                                 |           | 1,750,000 |                               |  |           | 1,750,000                                           | 
|$              | 0.37  |  |                                                 |           | 250,000   |                               |  |           | 250,000                                             | 
|$              | 0.095 |  |                                                 |           | 3,300,000 |                               |  |           | 3,300,000                                           | 
|Total          |       |  |                                                 | 7,000,000 |           |                               |  | 7,000,000 |                                                     | 



No options were granted in the year ended
December 31, 2011.



All stock options are issued at or over
the market price of the Company’s shares on the date of their granting.



F-27







CALCITECH LTD

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Year ended December 31, 2011   (amounts
in thousands of US dollars, except share data)



The fair value of the options granted could
not be realistically calculated using a valuation model. Therefore the intrinsic method was used, which led to no charge being
recognized as the market price is lower than the exercise price.



9.5 Minority interest



|                                     |  | $ |      
|------------------------------------ |  | - | -----
|Balance, December 31, 2010           |  |   | 0    
|                                     |  |   |      
|Attributable to minority shareholder |  |   | 1,000
|                                     |  |   |      
|Balance, December 31, 2011           |  |   | 1,000



In December 2011, EAM agreed to convert
$1,000 of its outstanding credit facility balance into 8,100,000 ordinary shares of CSME at the par value of Euro 0.10 per share.
As a result EAM now owns 10.125% of CSME.



10. Income
taxes



Under the current Bermuda law, the Company
is not required to pay any income taxes in Bermuda. The Company has received an undertaking from the Minister of Finance of Bermuda
that in the event of any such taxes being imposed, the Company will be exempted from such taxation until March 28, 2035.



Net loss before income taxes consists of
the following:



|              |  | year to      |        |   | year to      |   |      | year to      | 
|------------- |  | ------------ | ------ | - | ------------ | - | ---- | ------------ | 
|              |  | Dec 31, 2011 |        |   | Dec 31, 2010 |   |      | Dec 31, 2009 | 
|              |  | $            |        |   | $            |   |      | $            | 
|              |  |              |        |   |              |   |      |              | 
|Bermuda       |  |              | (726   | ) |              |   | (893 | )            | 
|Rest of world |  |              | (540   | ) |              |   | 23   |              | 
|              |  |              |        |   |              |   |      |              | 
|Total         |  | $            | (1,266 | ) |              | $ | (870 | )            | 



There are no significant deferred taxes
reflecting the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes.



There are no significant operating loss
carry-forwards, which would have an impact on income tax as of December 31, 2011.



F-28







CALCITECH LTD

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Year ended December 31, 2011   (amounts
in thousands of US dollars, except share data)



11. CASH AND CASH EQUIVALENTS



|                         |  | year to      |    |  | year to      |   |    | year to      | 
|------------------------ |  | ------------ | -- |  | ------------ | - | -- | ------------ | 
|                         |  | Dec 31, 2011 |    |  | Dec 31, 2010 |   |    | Dec 31, 2009 | 
|                         |  | $            |    |  | $            |   |    | $            | 
|Cash at bank and in hand |  |              | 35 |  |              |   | 18 |              | 
|Total                    |  | $            | 35 |  |              | $ | 18 |              | 



The fair value of cash and cash equivalents
at December 31, 2011 was $35



The fair value of cash and cash equivalents
as at December 31, 2011, 2010 and 2009 was equal to the carrying value.



12. PROVISIONS AND CONTINGENCIES



The Company is subject to legal proceeding,
claims, and litigation arising in the ordinary course of business. The Company and its subsidiaries are occasionally challenged
by local tax authorities. The Company records a provision for these tax risks based on its most available information on the tax
claim in each tax jurisdiction. The Company's management does not expect that the ultimate cost to resolve these matters will have
a material adverse effect on the Company's consolidated financial position, results of operations, or cash flows.



13. RELATED PARTY TRANSACTIONS



For the year ended December 31, 2011, the
year ended December 31, 2010 and the year ended December 31, 2009, the amounts paid to shareholders, directors and officers of
the Company and their related companies for consulting and other services totaled as follows:



|                                                                                                          |  | Year to      |     |  | year to      |   |     | year to      | 
|--------------------------------------------------------------------------------------------------------- |  | ------------ | --- |  | ------------ | - | --- | ------------ | 
|                                                                                                          |  | Dec 31, 2011 |     |  | Dec 31, 2010 |   |     | Dec 31, 2009 | 
|                                                                                                          |  | $            |     |  | $            |   |     | $            | 
|Amounts paid to shareholders, directors and officers of the Company for consulting
    and other services |  | $            | 187 |  |              | $ | 258 |              | 
|                                                                                                          |  |              |     |  |              |   |     |              | 
|Amounts paid to Cotswold Collections Limited for head office services                                     |  | $            | 42  |  |              | $ | 0   |              | 
|                                                                                                          |  |              |     |  |              |   |     |              | 
|Amounts paid to EuroHelvetia TrustCo SA for financial advice                                              |  | $            | 197 |  |              | $ | 426 |              | 
|                                                                                                          |  |              |     |  |              |   |     |              | 
|Amounts payable at Balance Sheet date to EuroHelvetia TrustCo SA                                          |  | $            | 82  |  |              | $ | 21  |              | 
|                                                                                                          |  |              |     |  |              |   |     |              | 
|Amounts payable at Balance Sheet date to Cotswold Collections Limited                                     |  | $            | 33  |  |              | $ | 0   |              | 



F-29







CALCITECH LTD

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Year ended December 31, 2011   (amounts
in thousands of US dollars, except share data)



EuroHelvetia TrustCo S.A. is contracted
by CalciTech to act as the Company’s financial advisors. EuroHelvetia charge their fees for work related to advice on private
placements, fund raising and project finance. Roger A. Leopard, Chief Executive Officer and President of the Company, is also a
director of EuroHelvetia TrustCo S.A. EuroHelvetia also provides the administration of EAM. Cotswold Collections Limited, a Company
for whom Michael Brickell is also a director, is contracted to provide head office services for the UK subsidiary, CSME. All these
transactions were at “arms length”.



14.
FINANCIAL INFORMATION BY INDUSTRY SEGMENT AND GEOGRAPHIC AREA



The Group operates in one business segment.
The following table presents information by geographical area:



|                    |  | year to      |              |   | year to      |   |              | year to      | 
|------------------- |  | ------------ | ------------ | - | ------------ | - | ------------ | ------------ | 
|                    |  | Dec 31, 2011 |              |   | Dec 31, 2010 |   |              | Dec 31, 2009 | 
|                    |  | $            |              |   | $            |   |              | $            | 
|Revenues            |  |              |              |   |              |   |              |              | 
|Bermuda             |  |              | 0            |   |              |   | 0            |              | 
|Rest of world       |  |              | 196          |   |              |   | 0            |              | 
|Total               |  | $            | 196          |   |              | $ | 0            |              | 
|                    |  |              |              |   |              |   |              |              | 
|                    |  |              | year to      |   |              |   | year to      |              | 
|                    |  |              | Dec 31, 2011 |   |              |   | Dec 31, 2010 |              | 
|                    |  | $            |              |   | $            |   |              | $            | 
|Operating loss      |  |              |              |   |              |   |              |              | 
|Bermuda             |  |              | (553         | ) |              |   | (733         | )            | 
|Rest of world       |  |              | (524         | ) |              |   | 34           |              | 
|Total               |  | $            | (1,077       | ) |              | $ | (699         | )            | 
|                    |  |              |              |   |              |   |              |              | 
|Identifiable assets |  |              |              |   |              |   |              |              | 
|Bermuda             |  |              | 952          |   |              |   | 1,010        |              | 
|Rest of world       |  |              | 8,781        |   |              |   | 8,602        |              | 
|Total               |  | $            | 9,733        |   |              | $ | 9,612        |              | 



| | 15. | ANALYSIS OF MAJOR EXPENDITURES INCLUDED IN GENERAL AND ADMINISTRATIVE EXPENSES AND INTEREST
EXPENSE
| | --- | ---------------------------------------------------------------------------------------------------



The following is a breakdown of the major
expenditures included in General and Administrative Expenses:



|                      |  | year to      |     |  | year to      |  |     | year to      | 
|--------------------- |  | ------------ | --- |  | ------------ |  | --- | ------------ | 
|                      |  | Dec 31, 2011 |     |  | Dec 31, 2010 |  |     | Dec 31, 2009 | 
|                      |  | $            |     |  | $            |  |     | $            | 
|                      |  |              |     |  |              |  |     |              | 
|Employee costs        |  |              | 202 |  |              |  | 168 |              | 
|Professional fees     |  |              | 382 |  |              |  | 148 |              | 
|Investor relations    |  |              | 16  |  |              |  | 60  |              | 
|Rent, rates & charges |  |              | 60  |  |              |  | 40  |              | 
|Travel                |  |              | 3   |  |              |  | 3   |              | 
|Depreciation          |  |              | 6   |  |              |  | 4   |              | 



F-30







CALCITECH LTD

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Year ended December 31, 2011   (amounts
in thousands of US dollars, except share data)



The following is a breakdown of interest
expense:



|                         |  | year to      |     |  | year to      |  |     | year to      | 
|------------------------ |  | ------------ | --- |  | ------------ |  | --- | ------------ | 
|                         |  | Dec 31, 2011 |     |  | Dec 31, 2010 |  |     | Dec 31, 2009 | 
|                         |  | $            |     |  | $            |  |     | $            | 
|                         |  |              |     |  |              |  |     |              | 
|Debenture interest       |  |              | 135 |  |              |  | 41  |              | 
|Credit facility interest |  |              | 33  |  |              |  | 86  |              | 
|Bank charges             |  |              | 7   |  |              |  | 15  |              | 
|                         |  |              |     |  |              |  |     |              | 
|Total                    |  |              | 175 |  |              |  | 142 |              | 



16.
ifRS 7: RISKS ARISING FROM FINANCIAL INSTRUMENTS



The Group’s market risk is identified
as those financial instruments that are subject to foreign exchange fluctuations. Below is a table of cash and cash equivalents,
accounts receivable and accounts payable that are subject to the risk described. A sensitivity analysis is shown below suggesting
the value of such financial assets and liabilities and % risk involved had the highest and lowest exchange rates been applied during
the year ending December 31, 2011, and during the year ending December 31, 2010:



|                    |  | year to      |      |   | year to      |  |      |   |  |  | year to      |   |  |   |     
|------------------- |  | ------------ | ---- | - | ------------ |  | ---- | - |  |  | ------------ | - |  | - | ----
|Market Risk         |  | Dec 31, 2011 |      |   | Dec 31, 2011 |  |      |   |  |  | Dec 31, 2011 |   |  |   |     
|                    |  |              |      |   | High         |  |      | % |  |  | Low          |   |  | % |     
|                    |  | $            |      |   | $            |  |      |   |  |  | $            |   |  |   |     
|                    |  |              |      |   |              |  |      |   |  |  |              |   |  |   |     
|Cash at Bank        |  |              | 33   |   |              |  | 217  |   |  |  | 557.58       | % |  |   | 4   
|                    |  |              |      |   |              |  |      |   |  |  |              |   |  |   |     
|Petty Cash          |  |              | 2    |   |              |  | 8    |   |  |  | 300.0        | % |  |   | 1   
|                    |  |              |      |   |              |  |      |   |  |  |              |   |  |   |     
|Accounts Receivable |  |              | 5    |   |              |  | 4    |   |  |  | 0.0          | % |  |   | 4   
|                    |  |              |      |   |              |  |      |   |  |  |              |   |  |   |     
|Accounts Payable    |  |              | (624 | ) |              |  | (654 | ) |  |  | 4.8          | % |  |   | (258
|                    |  |              |      |   |              |  |      |   |  |  |              |   |  |   |     
|Accruals            |  |              | (278 | ) |              |  | (282 | ) |  |  | -1.4         | % |  |   | (106



F-31







CALCITECH LTD

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Year ended December 31, 2011   (amounts
in thousands of US dollars, except share data)



|                    |  | year to      |      |   | year to      |  |      |   |  |  | year  to     |   |  |   |     
|------------------- |  | ------------ | ---- | - | ------------ |  | ---- | - |  |  | ------------ | - |  | - | ----
|Market Risk         |  | Dec 31, 2010 |      |   | Dec 31, 2010 |  |      |   |  |  | Dec 31, 2010 |   |  |   |     
|                    |  |              |      |   | High         |  |      | % |  |  | Low          |   |  | % |     
|                    |  | $            |      |   | $            |  |      |   |  |  | $            |   |  |   |     
|                    |  |              |      |   |              |  |      |   |  |  |              |   |  |   |     
|Cash at Bank        |  |              | 15   |   |              |  | 17   |   |  |  | 13.3         | % |  |   | 14  
|                    |  |              |      |   |              |  |      |   |  |  |              |   |  |   |     
|Petty Cash          |  |              | 3    |   |              |  | 3    |   |  |  | 0            | % |  |   | 2   
|                    |  |              |      |   |              |  |      |   |  |  |              |   |  |   |     
|Accounts Receivable |  |              | 0    |   |              |  | 0    |   |  |  | 0            | % |  |   | 0   
|                    |  |              |      |   |              |  |      |   |  |  |              |   |  |   |     
|Accounts Payable    |  |              | (384 | ) |              |  | (418 | ) |  |  | 8.8          | % |  |   | (345
|                    |  |              |      |   |              |  |      |   |  |  |              |   |  |   |     
|Accruals            |  |              | (178 | ) |              |  | (194 | ) |  |  | 9.6          | % |  |   | (160



The Group’s exposure to currency
fluctuations is not considered material to operations at the present time.



Liquidity risk is identified as the Group’s
ability to satisfy Accounts Payables out of liquid assets at December 31, 2011. Liquid assets only represent 5.6% of accounts payable,
the Group does not regard liquidity as a material risk at the present time. This is because the Group has the ability to draw down
sufficient funds from its current credit facility, hence there is no strategy currently in place to hedge against this risk.



CalciTech’s credit risk is identified
as the Group’s ability to recover outstanding receivables in full at December 31, 2011. On accounts receivable, the Group
currently offers terms of 6 days to customers. However the Group relies on strong and longstanding relationships with its existing
debtors, and therefore has not made provision for bad and doubtful debts.



|Credit Risk         |  | 2011 |   |  | <30 days |  |   | 30-60 days |  |  | 60-90 days |  |  | >90 days |  
|------------------- |  | ---- | - |  | -------- |  | - | ---------- |  |  | ---------- |  |  | -------- | -
|                    |  | $    |   |  | $        |  |   | $          |  |  | $          |  |  | $        |  
|Accounts Receivable |  | $    | 5 |  |          |  | 0 |            |  |  | 0          |  |  |          | 0



|Credit Risk         |  | 2010 |   |  | <30 days |  |   | 30-60 days |  |  | 60-90 days |  |  | >90 days |  
|------------------- |  | ---- | - |  | -------- |  | - | ---------- |  |  | ---------- |  |  | -------- | -
|                    |  | $    |   |  | $        |  |   | $          |  |  | $          |  |  | $        |  
|Accounts Receivable |  | $    | 0 |  |          |  | 0 |            |  |  | 0          |  |  |          | 0



F-32







CALCITECH LTD

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Year ended December 31, 2011   (amounts
in thousands of US dollars, except share data)



17.
List of principal consolidated companies



Principal consolidated companies are as
follows:



|Name of Company                          |  | Countries   |  | Holding         |  | Proportion held | Nature of business                              
|---------------------------------------- |  | ----------- |  | --------------- |  | --------------- | ------------------------------------------------
|CalciTech Synthetic Minerals Ltd.        |  | Bermuda     |  | Ordinary shares |  | 100%            | Technology licensor                             
|CalciTech Group Services SA              |  | Switzerland |  | Ordinary shares |  | 100%            | HQ Administration                               
|CalciTech Synthetic Minerals Europe Ltd. |  | UK          |  | Ordinary shares |  | 89.9%           | European holding company and operations licensee



On February 1, 2003, the Group’s
intellectual property interests in its Synthetic Calcium Carbonate (“SCC”) technology were assigned to a new Bermuda
organised wholly owned subsidiary, CalciTech Synthetic Minerals Ltd., which now acts as the holding Company and will license within
the group rights and use of the technology on a territorial basis.



As part
of the restructuring, in April 2009, a subsidiary of CalciTech Synthetic Minerals Europe Ltd. was established. CalciTech Synthetic
Minerals Europe Ltd., a UK company, has become the principal company for all European operations. A branch office was
registered in Germany for the operation of the Group’s small scale production plant.



18. ULTIMATE CONTROLLING PARTY



No individual has an ultimate controlling
interest in the Company.



19. SUPPLEMENTAL DISCLOSURE OF CASH
FLOW INFORMATION



Non-cash transactions were as follows:

|                                                     |  | year to      |       |   | year to      |   |       | year to      | 
|---------------------------------------------------- |  | ------------ | ----- | - | ------------ | - | ----- | ------------ | 
|                                                     |  | Dec 31, 2011 |       |   | Dec 31, 2010 |   |       | Dec 31, 2009 | 
|                                                     |  | $            |       |   | $            |   |       | $            | 
|                                                     |  |              |       |   |              |   |       |              | 
|Upon conversion of credit facility into common stock |  |              | 1,000 |   |              |   | 0     |              | 
|Convertible Debenture Notes                          |  |              | 0     |   |              |   | 2,500 |              | 
|Issuance of common stock                             |  |              |       |   |              |   |       |              | 
|Upon private placement through credit facility       |  |              | 0     |   |              |   | 0     |              | 
|Interest expense through credit facility             |  |              | (33   | ) |              |   | (86   | )            | 
|                                                     |  |              |       |   |              |   |       |              | 
|Total                                                |  | $            | 967   |   |              | $ | 2,414 |              | 



20. COMMITMENT



The Group rents its principal management
services office under an annually renewable agreement. During the period ending December 31, 2011, the Group paid $Nil. There are
no future obligations for rent over 12 months.



F-33







CALCITECH LTD

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Year ended December 31, 2011   (amounts
in thousands of US dollars, except share data)



21. NUMBER OF EMPLOYEES (UNAUDITED)



Headcount was 5, 3 and 5 as of December
31, 2011, December 31, 2010, and December 31, 2009. It is the Group’s practice to employ consultants in various capacities
due to the specific nature of the industries in which they are operating. As at December 31, 2011, the Group employed 5 consultants.
Various additional professional firms are also employed for the prevision of specialist advice.



22. POST BALANCE SHEET EVENT



There were no post balance sheet events
to report.



23. APPROVAL OF FINANCIAL STATEMENTS



The financial statements were approved
by the board of directors and authorised for issue on November 15, 2012



Roger A. Leopard



Michael J.B. Brickell



CalciTech Limited

P.O Box HM 2257, 3rd Floor, Par la Ville
Place, 14 Par-La-Ville Road

Hamilton HM JX, BERMUDA



F-34