Blueprint
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K
CURRENT REPORT
Pursuant
to Section 13 or 15(d) of the Securities Exchange Act of
1934
Date of Report (Date of earliest event reported): July 8,
2019
SANARA MEDTECH INC.
(Exact name of registrant as specified in its
charter)
Texas
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000-11808
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59-2219994
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(State
or other jurisdiction of incorporation)
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(Commission
File Number)
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(I.R.S.
Employer Identification No.)
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1200
Summit Avenue, Suite 414 Fort
Worth, Texas
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76102
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(Address
of principal executive offices)
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(zip
code)
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Registrant’s telephone number, including area code:
(817)-529-2300
Check
the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant
under any of the following provisions:
☐
Written
communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
☐
Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
☐
Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17
CFR 240.14d-2(b))
☐
Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17
CFR 240.13e-4(c))
Indicate
by check mark whether the registrant is an emerging growth company
as defined in in Rule 405 of the Securities Act of 1933
(§230.405 of this chapter) or Rule 12b-2 of the Securities
Exchange Act of 1934 (§240.12b-2 of this
chapter).
Emerging growth company ☐
If an emerging growth company, indicate by
checkmark if the registrant has elected not to use the extended
transition period for complying with any new or revised financial
accounting standards provided pursuant to Section 13(a) of the
Exchange Act. ☐
Item
1.01 Entry into a Material Definitive Agreement.
On July
8, 2019, Sanara MedTech Inc. (“Sanara” or 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.
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.
4. 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:
a. 2020 -
$1,500,000
b. 2021 -
$5,000,000
c. 2022 -
$8,000,000
d. 2023 -
$10,000,000
e. 2024 -
$15,000,000
f. 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.
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. Sanara expects to file a copy of the License
Agreement as an exhibit to its Quarterly Report on Form 10-Q for
its quarter ending June 30, 2019.
SIGNATURE
Pursuant
to the requirements of the Securities Exchange Act of 1934, the
Company has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
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Sanara
MedTech Inc. |
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Date:
July 12, 2019
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By:
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/s/
Michael
D. McNeil
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Name:
Michael D. McNeil |
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Title:
Chief Financial Officer |
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