Zerify Inc (ZRFY)

[dukeb]

Interestingly, in the latest 10-Q:

PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.

And yet the notes to the financial statements include:

Note 7 - Contingent Payment Obligation
On September 6, 2017, the Company entered into a litigation funding agreement with Therium Inc. (subsequently Therium Luxembourg) and VGL Capital, LLC (collectively the “Funders”). Under the agreement, the Company received $1,500,000 from the Funders to allow the Company to pursue patent enforcement actions against infringements of its patents. In exchange, the Funders are entitled to receive, after the payment of legal fees, the first $1,500,000 from the gross proceeds of any claims awarded, 10% of any additional claim proceeds until the Funders have received an additional $7,500,000, and 2.5% of any claim proceeds thereafter. The Funders shall be paid only in the event that the Company achieves recoveries of claim proceeds.

At June 30, 2022 and December 31, 2021, the Company has reflected the $1,500,000 received from the Funders as a contingent payment obligation to be paid only if claim proceeds are recovered.

There is no patent litigation going on now but since the Therium contingent payment is still on the balance sheet maybe that deal stays alive in the event there is future litigation. Generally, courts don't look kindly on contracts that don't have end dates: even if the deal with Therium says "we get a piece of any litigation proceeds for the next 20 years" that would make sense. Maybe there is a deadline in the actual Therium contract but the 10-Q doesn't mention it.