Company: BOF
Filing Date: 2025-05-15
Form Type: 10-Q
Source: 0001641172-25-010566
Chunk: 86

Company: BranchOut Food Inc.
Filing Date: 2025-05-15
Form: 10-Q
Item: Item 8
Chunk 86
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May 7, 2021, the Company entered into a license agreement (“License Agreement”) with EnWave, pursuant to which EnWave licensed
to the Company a collection of patents and intellectual property (the “EnWave Technology”) used to manufacture and operate
vacuum microwave dehydration machines purchased by the Company from EnWave (the “EnWave Equipment”). The License Agreement
was amended on October 26, 2022, September 27, 2023 and May 23, 2024, to, among other things, modify the exclusivity retention royalty
payments required to be paid by the Company. The License Agreement entitles EnWave to a fixed royalty percentage on all of the Company’s
revenue from the sale of products produced using the EnWave Technology, net of trade or volume discounts, refunds paid, settled claims
for damaged goods, applicable excise, sales and withholding taxes imposed at the time of the sale, and provides the Company with certain
exclusivity rights with respect to the production of avocado products. In order to maintain the exclusivity, the Company must make annual
royalty minimum payments to EnWave of $250,000 per year, commencing in 2025 and continuing through each subsequent year in perpetuity,
as long as the Company elects to maintain exclusivity.

In
addition to the initial EnWave Equipment we purchased, the Company agreed to purchase additional equipment from EnWave over time. The
additional equipment purchase schedule, as amended, required the Company to purchase a “Second EnWave Machine”, which was
purchased in full on December 12, 2024. The Company is also required to execute an Equipment Purchase Agreement for a 120kW, or greater
rated power, EnWave Equipment (the “Third EnWave Machine”) on or before December 31, 2025, and satisfy the payment obligations
required with respect to the Third EnWave Machine by the License Agreement. The Company is also required to enter into an Equipment Purchase
Agreement for a 120kW, or greater, rated power EnWave Equipment (the “Fourth EnWave Machine”) on, or before, December 31,
2026, and to satisfy the payment obligations required with respect to the Fourth EnWave Machine by the License Agreement. The License
Agreement is effective as long as EnWave possesses its EnWave technology. The Company recognized $40,585 of royalty expenses for the
three months ended March 31,2025. Any future minimum