Note 2 – Contracts with Desmet Ballestra

Research and Development, Marketing and Technology License Agreements (“TLA”)

In October 2021, the Company signed a three-year global Research and Development, Marketing and Technology License Agreement (“TLA”) with Desmet Ballestra (“Desmet”) for the sale and licensing of the Company’s nano reactors. This agreement was a continuation of the similar TLA agreements the Company signed with Desmet in fiscals 2012, 2016 and 2018.

On February 15, 2024, Desmet and the Company terminated the October 2021 TLA agreement and entered into a new three-year Technology License Agreement (“February 2024 TLA”). The February 2024 TLA provides for a worldwide limited exclusive license to market, sell, supply and assistance to customers of Nano reactor systems and nano reactor devices for the treatment of certain oil and fats, oleochemicals, biodiesels, fatty acids and fatty alcohols. The February 2024 TLA may be terminated by Desmet on March 15 each year on at least one month’s written notice if the licensee and its affiliates failed to sell a minimum of 6 nano reactor systems during the preceding 12 month period. As part of the February 2024 TLA, Desmet also agreed to provide advances of $25,000 per month, subject to limitations. The advances will then be applied as payment against future sales of reactors to Desmet.

On October 9, 2024, the Company executed a Patent Assignment and License Back Agreement with Desmet with regards to the patents and intellectual property used in the production of reactors sold to Desmet. This agreement superseded certain terms of the February 2024 TLA, including, the termination of $25,000 monthly advances the Company used to receive from Desmet.

During the year ended June 30, 2026 and 2025, pursuant to these TLA agreements, the Company recognized revenues from sale of Nano Reactors to Desmet totaling $0 and $198,000, respectively.

Patent Assignment and License Back Agreement

On October 9, 2024, the Company entered into a patent assignment and license back agreement with Desmet, whereby the Company assigned certain of its U.S. and non-U.S. patents, technical information and related intellectual property (the “Assigned Patents”) that for several years have been licensed to Desmet, on a global basis, for its use in vegetable oil, fats and oleo applications, effectively terminating the February 2024 TLA Agreement.

The Company also assigned to Desmet, ownership of two U.S. trademark registrations that it holds for its Nano Neutralization® and Nano Reactor® marks, respectively (the “Assigned Marks”). The consideration for the assignment of the patents amounted to $880,000, which was collected in full. The Company has also agreed to provide to Desmet any consultation, technical assistance and support services that Desmet may reasonably request in; (a) installing, operating or troubleshooting for any Nano Reactor® Device; (b) testing, startup or maintenance of any Nano Reactor® Device or any problems associated therewith; and (c) providing training to representatives, contractors or employees of Desmet or any Site User, to be charged at a rate of $1,000 per day, plus reimbursement of reasonable expenses.

Pursuant to the patent assignment and license back agreement, the Company reserved for itself, and received a Grant Back License (“Reserved Grant Back License”) of a worldwide, exclusive, transferable and royalty-free license and right to practice and use the Assigned Patents and associated technical information in businesses, activities, projects, uses and applications in the field of; (i) water and wastewater processing, recovery, recycling and purification (including oilfield wastewater) and; (ii) manufacture, distillation, brewing, enhancements, sale and marketing of alcoholic beverages, together the Licensed Fields (the “Licensed Fields”). Under the Reserved Grant Back License retained and received, the Company will have a worldwide, exclusive, transferable and royalty-free license and right to design, build, use, export, improve, sell and market Nano Reactor® devices and Nano Reactor® devices and systems (and products) that incorporate or utilize Nano Reactor® devices, in each case within the Licensed Fields, and to continue to use the Nano Reactor® trademark in connection with its business, systems and products within the Licensed Fields.

The Company has expensed costs associated with these patents in prior years and had no carrying value upon closing of this transaction. The Company followed the guidance of ASC 610, Other Income, to account for this transaction. As a result, during the year ended June 30, 2025, the Company recognized the entire $880,000 as Gain on Patent Assignment in the accompanying Consolidated Statement of Operations.