8-K: Zerify Inc. Enters Strategic Partnership with SIM Tech Licensing for Global IP Monetization

Zerify Inc. has partnered with SIM Tech Licensing to monetize and enforce its global intellectual property portfolio, aiming to generate significant revenue.

Summary

• Zerify Inc. has entered into a letter agreement with SIM Tech Licensing, a subsidiary of Sauvegarder Investment Management, Inc., to act as its worldwide intellectual property licensing agent.
• SIM Tech will handle the acquisition, sale, licensing, commercialization, monetization, enforcement, prosecution, and settlement of Zerify's intellectual property.
• SIM Tech will be reimbursed for advanced costs plus a 15% interest factor and any litigation funding costs.
• SIM Tech will receive 40% of the gross consideration received by Zerify from SIM Tech's efforts.
• The agreement terminates one year after the last patent expires, or earlier under certain conditions, including a failure to achieve $5 million in gross consideration.
• Zerify will grant SIM Tech an option to purchase up to 5% of the company's outstanding shares, vesting upon achieving $3 million and $10 million in gross consideration milestones.
• The option exercise price will be the same as that granted to Zerify's key officers under an amended employee incentive plan.

Sentiment

Score: 7

Explanation: The document indicates a positive strategic move for Zerify to monetize its IP, but the high revenue share for SIM Tech and the termination clause introduce some risk. The involvement of a known IP monetization expert is a positive sign.

Positives

• Zerify gains access to SIM Tech's expertise in intellectual property monetization and enforcement.
• The partnership aims to generate revenue from Zerify's existing patent portfolio.
• The agreement includes a success-based incentive structure for SIM Tech, aligning interests.
• The option grant to SIM Tech provides a potential upside for both parties.
• The agreement includes a mechanism for SIM Tech to be reimbursed for advanced costs and litigation expenses.

Negatives

• Zerify will pay a significant 40% of gross revenue to SIM Tech.
• The agreement can be terminated if Zerify does not achieve a $5 million gross consideration milestone within 24 months.
• The agreement includes a 15% interest factor on advanced costs reimbursed to SIM Tech.
• Zerify is responsible for its own legal and tax costs.

Risks

• There is a risk that the partnership may not generate the expected revenue.
• The agreement could be terminated if the $5 million gross consideration milestone is not met.
• Zerify may incur significant costs related to litigation and other expenses.
• The 40% fee to SIM Tech could significantly reduce Zerify's net revenue from IP monetization.
• The vesting of the option is dependent on achieving specific revenue milestones, which may not be reached.

Future Outlook

Zerify aims to generate revenue by leveraging its intellectual property through its partnership with SIM Tech Licensing. The company expects to issue options to SIM Tech and key officers in December 2024.

Management Comments

• Zerify Inc. partnered with SIM Tech Licensing LLC (an affiliate of Sauvegarder Investment Management, Inc.) for its worldwide IP licensing & enforcement services, led by Erich Spangenberg.
• Partnership will commercialize and address infringements of our 13 US & international patents.
• Watch how this alliance fuels innovation, growth, & shareholder value!

Industry Context

This agreement reflects a growing trend of companies seeking to monetize their intellectual property assets through strategic partnerships. The involvement of Sauvegarder Investment Management, known for its focus on intellectual property monetization, suggests a serious effort to extract value from Zerify's patent portfolio.

Comparison to Industry Standards

• The 40% revenue share for SIM Tech is relatively high compared to some licensing agreements, but it is not uncommon for specialized IP monetization firms.
• The vesting of options based on revenue milestones is a common practice to align the interests of both parties.
• The agreement's termination clause based on a minimum revenue target is a standard risk mitigation measure.
• The involvement of Erich Spangenberg, a well-known figure in IP monetization, suggests a high level of expertise and potential for success.
• Companies like Acacia Research and Marathon Patent Group are comparable in that they specialize in IP monetization, but their specific terms and structures vary.

Stakeholder Impact

• Shareholders may benefit from increased revenue and potential growth.
• Employees may see increased job security and opportunities.
• Customers may see improved products and services.
• Suppliers may see increased business opportunities.
• Creditors may see improved financial stability.

Next Steps

• SIM Tech will begin working to monetize Zerify's intellectual property.
• Zerify will issue an option to SIM Tech prior to December 15, 2024.
• Zerify will monitor the progress of the partnership and the achievement of revenue milestones.

Key Dates

Keywords

intellectual property, licensing, monetization, patents, SIM Tech Licensing, Sauvegarder Investment Management, option agreement, enforcement, gross consideration