XML 57 R13.htm IDEA: XBRL DOCUMENT

7. SUBSEQUENT EVENTS

6 Months Ended

Jun. 30, 2019

Subsequent Events [Abstract]

SUBSEQUENT EVENTS

Amended Office Lease

On July 1, 2019, the Company amended its office lease agreement related to its current office space located at 1200 Summit Ave., Suite 414, Fort Worth, TX 76102. The amended lease is effective upon completion by landlord of certain leasehold improvements (the “Commencement Date”) which were expected to be completed in late August 2019. Under the terms of the amended lease agreement, the Company will lease an additional 1,682 rentable square feet of office space which will bring the total square footage leased to 5,877. The amended lease agreement extends the original term of the lease for a period of 36 months through June 30, 2024. Upon the Commencement Date of the amended lease, the monthly base rental payments are as follows:

From		Through					Monthly Base Rental
Commencement Date			June 30,2020				$12,243.75
July 1,2020			June 30,2020				$12,488.63
July 1,2020			June 30,2020				$12,488.63
July 1,2020			June 30,2020				$12,733.50
July 1,2020			June 30,2020				$12,978.38

BIAKŌS™ License Agreement

On July 8, 2019, the Company executed a license agreement with Rochal Industries, LLC (“Rochal”) whereby Sanara acquired an exclusive world-wide license to market, sell and further develop antimicrobial products for the prevention and treatment of microbes on the human body utilizing certain Rochal patents and pending patent applications (the “License Agreement”). Currently, the products covered by the License Agreement are BIAKŌS™ Antimicrobial Wound Gel, and FDA cleared BIAKŌS™ Antimicrobial Skin and Wound Cleanser. A director and indirect principal shareholder of Sanara is also a director of Rochal, and indirectly a significant shareholder of Rochal, and through the potential exercise of warrants a majority shareholder.

Key terms of the License Agreement include:

1.	In consideration for the license, Sanara paid to Rochal $1,000,000 and agreed to pay an additional $500,000 upon FDA clearance of the BIAKŌS™ Antimicrobial Wound Gel product for sale within the United States.

2.	Subject to the occurrence of specified Sanara financing conditions in 2019, Sanara will also pay Rochal $1,500,000, which at Sanara’s option may be in cash or Sanara Common Stock; or a combination of cash and Sanara Common Stock.

3.	Sanara will pay Rochal a royalty of:

a.	4% of net sales of licensed products in countries in which patents are registered

b.	2% of net sales of licensed products in countries without patent protection.

c.	The minimum annual royalty due to Rochal will be $100,000 beginning with calendar year 2020. The annual minimum royalty will increase by 10% each subsequent calendar year up to a maximum amount of $150,000.

d.

Beginning with the 2020 calendar year, Sanara will pay an additional royalty based on specific net profit targets related to the licensed products. Net profits for the licensed products are defined as net sales, less cost of goods sold (including royalties) and direct marketing and selling expenses. The additional royalty will be 25% of the amount of actual net profits in excess of the established net profit targets, subject to a maximum of $1,000,000 for any calendar year. The established net profit targets for each calendar year are:

i.	2020 - $1,500,000

ii.	2021 - $5,000,000

iii.	2022 - $8,000,000

iv.	2023 - $10,000,000

v.	2024 - $15,000,000

vi.

Beginning in 2025 and for each calendar year thereafter, net profit targets will be equal to the immediately preceding calendar year’s net profit target incremented by the greater of (1) 50% of the U.S. dollar growth in the amount of net profit in the current year over net profit in the immediately preceding calendar year, or (2) the percentage of overall growth of the market for the category by which the licensed products are generally described.

4.	Unless previously terminated by the parties, the License Agreement will expire with the related patents in December 2031.

The foregoing summary of the License Agreement does not purport to be complete and is qualified in its entirety by reference to the License Agreement. See Exhibit 10.1 for a full copy of the License agreement.