Zerify, Inc. - Quarter Report: 2023 June (Form 10-Q)

UNITED STATES

SECURITIES EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒	QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

	For the quarterly period ended June 30, 2023

☐	TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

	For the transition period from __________ to __________

ZERIFY, INC.

(Exact name of registrant as specified in its Charter)

Wyoming

000-55012

22-3827597

(State or other jurisdiction of

incorporation or organization)

(Commission

file number)

(I.R.S. Employer

Identification No.)

1090 King Georges Post Road, Suite 603

Edison, NJ 08837

(Address of Principal Executive Offices)

(732) 661-9641

(Issuer’s telephone number)

Securities registered pursuant to Section 12(b) of the Exchange Act:

Title of each class

Name of each exchange

on which registered

N/A

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Stock, $0.0001 par value		ZRFY		OTCQB

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. ☐ Yes No ☒

Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically, every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such a shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b–2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated Filer	☐	Smaller reporting company	☒
		Emerging growth company	☐

If an emerging growth company, indicate by check mark 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 7(a)(2)(B) of the Securities Act. ☐

The aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter, was $2,844,000.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act.) Yes ☐ No ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Class		Outstanding at September 1, 2023
Common stock, $0.0001 par value		2,012,230,283

Indicate the number of shares outstanding of each of the issuer’s classes of preferred stock, as of the latest practicable date.

Class		Outstanding at September 1, 2023
Preferred stock, Series A, no par value		3

Class		Outstanding at September 1, 2023
Preferred stock, Series B, $0.10 par value		36,667

Transitional Small Business Disclosure Format Yes ☐ No ☒

Documents Incorporated By Reference

None

ZERIFY, INC.

INDEX TO FORM 10-Q FILING

JUNE 30, 2023

TABLE OF CONTENTS

PART I	Financial Information	Page Number

Item 1.	Financial Information	3

	Condensed Consolidated Balance Sheets at June 30, 2023 (unaudited) and December 31, 2022	3

	Condensed Consolidated Statements of Operations for the Three and Six months ended June 30, 2023 and 2022 (unaudited)	4

	Condensed Consolidated Statements of Changes in Stockholders’ Deficit for the Three and Six months ended June 30, 2023 and 2022 (unaudited)	5

	Condensed Consolidated Statements of Cash Flows for the Six months ended June 30, 2023 and 2022 (unaudited)	6

	Notes to the Condensed Consolidated Financial Statements for the Six months ended June 30, 2023 and 2022 (unaudited)	7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	18

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	23

Item 4.	Controls and Procedures	23

PART II	Other Information

Item 1.	Legal Proceedings	25

Item 1A.	Risk Factors	25

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	26

Item 3.	Defaults Upon Senior Securities	26

Item 4.	Mine Safety Disclosures	26

Item 5.	Other Information	26

Item 6.	Exhibits	27

SIGNATURES		29

EX-31.1	Management Certification

EX-32.1	Sarbanes-Oxley Act

Table of Contents

PART I

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AND NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

ZERIFY, INC.
CONDENSED CONSOLIDATED BALANCE SHEET

	June 30, 2023			December 31, 2022
	(Unaudited)
ASSETS
Current Assets:
Cash (includes VIE balances of $300 and $1,000, respectively)	$	43,000		$	192,000
Accounts receivable, net		5,000			20,000
Prepaid expenses		1,000			-

Total current assets		49,000			212,000

Property and equipment, net		33,000			36,000
Operating lease right-of-use asset		27,000			54,000
Other assets		10,000			11,000

Total Assets	$	119,000		$	313,000

LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities:
Accounts payable and accrued expenses (includes VIE balances of $4,000 and $4,000, respectively)	$	1,250,000		$	1,160,000
Convertible notes payable, net of discount of $114,000 and $96,000 respectively (including $895,000 in default)		1,328,000			1,282,000
Convertible notes payable - related parties		268,000			268,000
Notes payable (including $2,930,000 and $1,930,000 in default, respectively) (includes VIE balances of $286,000 and $286,000, respectively)		3,157,000			2,826,000
Notes payable - related parties		693,000			693,000
Accrued interest (including $1,685,000 and $1,557,000 due to related parties, respectively)(includes VIE balances of $176,000 and $134,000, respectively)		6,390,000			5,865,000
Contingent payment obligation		1,500,000			1,500,000
VIE Financing obligation		1,263,000			1,263,000
Operating lease liability, current portion		29,000			56,000
Derivative liability		1,023,000			112,000

Total current liabilities		16,901,000			15,025,000

Notes payable, long-term portion		142,000			142,000
Operating lease liability, long-term portion		-			1,000

Total Liabilities		17,043,000			15,168,000

Commitments and Contingencies

Stockholders' Deficit
Series A Preferred stock, no par value; 100 shares authorized; 3 shares issued and outstanding		987,000			987,000
Series B Preferred stock par value $0.10: 100,000,000 shares authorized; 36,667 shares issued and outstanding		4,000			4,000
Preferred stock series not designated par value $0.10: 10,000,000 shares authorized; none issued or outstanding		-			-

Common stock par value $0.0001: 10,000,000,000 shares authorized; 1,452,654,997 and 1,109,417,572 shares issued and outstanding, respectively		149,000			110,000

Additional paid-in capital		69,608,000			67,124,000
Accumulated deficit		(86,759,000	)		(82,190,000	)
Total Zerify, Inc. stockholders' deficit		(16,011,000	)		(13,965,000	)
Noncontrolling interest in consolidated subsidiary		(913,000	)		(890,000	)

Total Stockholders' Deficit		(16,924,000	)		(14,855,000	)

Total Liabilities and Stockholders' Deficit	$	119,000		$	313,000

See accompanying notes to the condensed consolidated financial statements

Table of Contents

ZERIFY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2023 AND 2022
(UNAUDITED)

	For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2023			2022			2023			2022
	(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)

Revenue	$	19,000			24,000		$	41,000		$	56,000

Operating expenses:
Cost of revenue		20,000			12,000			37,000			22,000
Selling, general and administrative expenses		533,000			2,451,000			1,699,000			5,087,000
Research and development		133,000			158,000			290,000			312,000

Total operating expenses		686,000			2,621,000			2,026,000			5,421,000

Loss from operations		(667,000	)		(2,597,000	)		(1,985,000	)		(5,365,000	)

Other income (expense):
Interest and financing expenses (including $30,000 and $60,000 to related parties, respectively)		(1,215,000)			(100,000	)		(1,355,000	)		(199,000	)
Debt discount amortization		(268,000	)		-			(501,000	)		-
Financing costs		-			(165,000	)		-			(165,000	)
Change in fair value of derivative liabilities		48,000			-			70,000			-
Loss on extinguishment of debt, net		(19,000	)		-			(19,000	)		-
Other expense		-			(1,000	)		-			(1,000	)

Total other expense, net		(1,454,000	)		(266,000	)		(1,805,000	)		(365,000	)

Net loss		(2,121,000	)		(2,862,000	)		(3,790,000	)		(5,730,000	)

Net loss attributable to noncontrolling interest		1,000			6,000			23,000			13,000

Net loss attributable to Zerify, Inc.	$	(2,120,000	)		(2,857,000	)	$	(3,767,000	)	$	(5,717,000	)

Deemed dividend to warrant holders		(802,000	)		-			(802,000	)		-

Net loss to common stockholders	$	(2,922,000	)		(2,857,000	)	$	(4,569,000	)	$	(5,717,000	)

Net loss per common share
-Basic and diluted	$	(0.00	)	$	(0.00	)	$	(0.00	)	$	(0.01	)

Weighted average common shares outstanding
-Basic and diluted		1,355,837,954			984,334,754			1,272,312,349			969,980,079

See accompanying notes to the condensed consolidated financial statements

Table of Contents

ZERIFY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT
FOR THE PERIODS ENDED JUNE 30, 2023 AND 2022 (UNAUDITED)


	Series A Preferred stock, no par value				Series B Preferred stock, par value $0.10				Common stock, par value $0.0001				Additional Paid-in		Accumulated			Non controlling			Total Stockholders'
	Shares		Amount		Shares		Amount		Shares		Amount		Capital		Deficit			Interest			Deficit
Balance at December 31, 2022		3	$	987,000		36,667	$	4,000		1,109,417,572	$	110,000	$	67,124,000	$	(82,190,000	)	$	(890,000	)	$	(14,855,000	)

Vested stock options		-		-		-		-		-		-		292,000		-			-			292,000

Sale of common shares and warrants		-		-		-		-		176,599,998		18,000		777,000		-			-			795,000

Proceeds on the sale of warrants		-		-		-		-		-		-		18,000		-			-			18,000

Net loss		-		-		-		-		-		-		-		(1,647,000	)		(22,000	)		(1,669,000	)

Balance at March 31, 2023		3	$	987,000		36,667	$	4,000		1,286,017,570	$	128,000	$	68,211,000	$	(83,837,000	)	$	(912,000	)	$	(15,419,000	)

Sale of common shares and warrants		-								130,000,000		13,000		483,000								496,000

Fair value of shares issued for services		-		-		-		-		5,000,000		5,000		21,000		-			-			26,000

Common shares issued upon conversion of note payable		-		-		-		-		31,637,427		3,000		91,000		-			-			94,000

Deemed dividend on sale of warrant for cash														802,000		(802,000)						-

Net loss		-		-		-		-		-		-		-		(2,120,000	)		(1,000	)		(2,121,000	)

Balance at June 30, 2023		3	$	987,000		36,667	$	4,000		1,452,654,997	$	149,000	$	69,608,000	$	(86,759,000	)	$	(913,000	)	$	(16,924,000	)

Balance at December 31, 2021		3	$	987,000		36,667	$	4,000		955,380,255	$	96,000	$	59,788,000	$	(71,595,000	)	$	(869,000	)	$	(11,589,000	)

Fair value of common stock issued for services		-		-		-		-		134,853		-		6,000		-			-			6,000

Fair value of vested options		-		-		-		-		-		-		1,636,000		-			-			1,636,000

Net loss		-		-		-		-		-		-		-		(2,860,000	)		(7,000	)		(2,867,000	)

Balance at March 31, 2022		3	$	987,000		36,667	$	4,000		955,515,078	$	96,000	$	61,430,000	$	(74,455,000	)	$	(876,000	)	$	(12,814,000	)

Common stock issued for cash		-		-		-		-		50,000,000		5,000		935,000		-			-			940,000

Fair value of common stock issued for services		-		-		-		-		7,596,083		-		163,000		-			-			163,000

Fair value of vested options		-		-		-		-		-		-		1,322,000		-			-			1,322,000

Net loss		-		-		-		-		-		-		-		(2,857,000	)		(6,000	)		(2,863,000	)

Balance at June 30, 2022		3	$	987,000		36,667	$	4,000		1,013,111,161	$	101,000	$	63,850,000	$	(77,312,000	)	$	(882,000	)	$	(13,252,000	)

See accompanying notes to the condensed consolidated financial statements

Table of Contents

ZERIFY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2023 AND 2022
(UNAUDITED)
	For the Six Months			For the Six Months
	Ended			Ended
	June 30, 2023			June 30, 2022
	(Unaudited)			(Unaudited)
Cash flows from operating activities:
Net loss	$	(3,790,000	)	$	(5,730,000	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		4,000			(1,000	)
Amortization of discount		501,000			-
Fair value of derivative liability upon default of a note payable		852,000			-
Fair value of common stock issued for services		26,000			168,000
Fair value of vested options and warrants		292,000			2,959,000
Loss on extinguishment of debt		19,000			-
Allowance for bad debts		11,000			-
Change in fair value of derivative liabilities		(70,000	)		-
Changes in operating assets and liabilities:
Accounts receivable		4,000			11,000
Prepaid expenses and other assets		(1,000	)		4,000
Right of use assets		27,000			26,000
Accounts payable and accrued expenses		90,000			75,000
Accrued interest		525,000			192,000
Operating lease liability		(28,000	)		(27,000	)
Net cash used in operating activities		(1,538,000	)		(2,321,000	)

Cash flows from investing activities:
Purchases of property and equipment		-			(36,000	)
Net cash used in investing activities		-			(36,000	)

Cash flows from financing activities:
Proceeds from issuance of common stock and warrants		1,309,000			940,000
Proceeds from convertible notes		154,000			-
Repayment of convertible note payable		(30,000)			(50,000)
Proceeds from advances on future receipts		185,000
Repayment of advance on future receipts		(133,000	)		-
Repayment of notes payable		(96,000)			(38,000)
Net cash provided by financing activities		1,389,000			852,000

Net decrease in cash		(149,000	)		(1,505,000	)

Cash at beginning of the period		192,000			2,084,000

Cash at end of the period	$	43,000		$	579,000

Supplemental disclosure of cash flow information:
Interest paid	$	45,000		$	8,000
Income tax paid	$	-		$	1,000

Supplemental disclosure of non-cash investing and financing transactions
Fair value of derivative upon the issuance of convertible debt recorded as debt discount	$	176,000
Deemed dividends from issuance of warrant for cash	$	802,000		$	-
Common stock issued upon conversion of debt settlement	$	94,000		$	-

See accompanying notes to the condensed consolidated financial statements

Table of Contents

ZERIFY, INC.

NOTES TO THE CONDENSED CONSOLIDATD FINANCIAL STATEMENTS

SIX MONTHS ENDED JUNE 30, 2023 AND 2022

(UNAUDITED)

Note 1 - Organization and Summary of Significant Accounting Policies

Zerify, Inc. (formerly known as StrikeForce Technologies, Inc.) (the “Company”), a software development and services company, offers a suite of integrated computer network security products using proprietary technology. The Company’s operations are based in Edison, New Jersey and the Company’s common stock is traded on the OTCQB Market under the symbol “ZRFY” (formerly “SFOR”).

In June 2023, the Company increased its authorized capital from 4 billion common shares to 10 billion common shares.

Basis of presentation and principles of consolidation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and with the rules and regulations of the United States Securities and Exchange Commission (the “SEC”) to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation of the financial position, results of operations and cash flows for the interim periods have been included. The results of operations for the six months ended June 30, 2023 are not necessarily indicative of the results of operations to be expected for the full fiscal year ending December 31, 2023. These financial statements should be read in conjunction with the financial statements of the Company for the year ended December 31, 2022 and notes thereto contained in the Annual Report on Form 10-K of the Company as filed with the SEC on April 14, 2023.

The condensed consolidated financial statements include the accounts of the Company and its subsidiary, BlockSafe Technologies, Inc. (“BST”). BST is owned 49% by the Company and 31% by three executive officers of the Company. BST meets the definition of a variable interest entity (“VIE”) and based on the determination that the Company is the primary beneficiary of BST. BST’s operating results, assets and liabilities are consolidated by the Company. Intercompany balances and transactions have been eliminated in consolidation.

The Company and BST have a management agreement pursuant to which BST shall remit a monthly management fee of $36,000 to the Company; when BST reaches $1,000,000 in financing, BST will owe the Company an additional monthly management fee of approximately $140,000 for a three-year period. The management fee is eliminated in consolidation. At June 30, 2023 and December 31, 2022, the amount of VIE cash on the accompanying condensed consolidated balance sheets can be used only to settle obligations of BST. The amounts of VIE accounts payable, VIE Notes Payable, VIE Accrued Interest, and VIE Financing Obligation have no recourse to the Company’s general creditors.

Table of Contents

Going Concern

The Company has yet to establish any history of profitable operations. During the six months ended June 30, 2023, the Company incurred a net loss of $3,790,000 used cash in operating activities of $1,538,000 and at June 30, 2023, the Company had a stockholders’ deficit of $16,924,000. In addition, the Company is in default on notes payable and convertible notes payable in the aggregate amount of $3,825,000. These factors raise substantial doubt about our ability to continue as a going concern within one year after the date the financial statements are issued. In addition, the Company’s independent registered public accounting firm, in its report published on our December 31, 2022 year-end financial statements, raised substantial doubt about the Company’s ability to continue as a going concern. The Company’s financial statements do not include any adjustments that might result from the outcome of this uncertainty should we be unable to continue as a going concern.

Management estimates that the current funds on hand will be sufficient to continue operations through the next few months. Our ability to continue as a going concern is dependent upon our ability to continue to implement our business plan. Currently, management is attempting to increase revenues by selling through a channel of new distributors, value added resellers, strategic partners and original equipment manufacturers. While we believe in the viability of its strategy to increase revenues, there can be no assurances to that effect. The Company’s ability to continue as a going concern is dependent upon its ability to increase its customer base and realize increased revenues. No assurance can be given that any future financing, if needed, will be available or, if available, that it will be on terms that are satisfactory to the Company. Even if the Company is able to obtain additional financing, if needed, it may contain undue restrictions on our operations, in the case of debt financing, or cause substantial dilution to its stockholders, in the case of equity financing.

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Management bases these estimates and assumptions upon historical experience, existing and known circumstances, and other factors that management believes to be reasonable. In addition, the Company has considered the potential impact of the pandemic, as well as certain macroeconomic factors, including inflation, rising interest rates, and recessionary concerns, on its business and operations.

Significant estimates include those related to accounting for financing obligations, assumptions used in valuing equity instruments issued for cash and services, assumptions used in valuing derivative liabilities, the valuation allowance for deferred tax assets, and the accrual of potential liabilities. Actual results could differ from those estimates.

Revenue Recognition

The Company follows the guidance of Accounting Standards Codification (ASC) 606, Revenue from Contracts with Customers. ASC 606 creates a five-step model that requires entities to exercise judgment when considering the terms of contracts, which includes (1) identifying the contracts or agreements with a customer, (2) identifying our performance obligations in the contract or agreement, (3) determining the transaction price, (4) allocating the transaction price to the separate performance obligations, and (5) recognizing revenue as each performance obligation is satisfied. The Company only applies the five-step model to contracts when it is probable that the Company will collect the consideration it is entitled to in exchange for the services it transfers to its clients.

The Company’s revenue consists of revenue from sales and support of our software products. Revenue primarily consists of sales of software licenses of our ProtectID®, GuardedID®, MobileTrust®, Zerify Meet™ and Zerify Defender™ products. The Company recognizes subscription revenue over a one-month period based on a typical monthly renewal cycle in accordance with its customer agreement terms. For service contracts, the Company’s performance obligations are satisfied, and the related revenue is recognized, as services are rendered.

The Company offers no discounts, rebates, rights of return, or other allowances to clients which would result in the establishment of reserves against service revenue. To date, the Company has not incurred incremental costs in obtaining customer contracts.

Cost of revenue includes direct costs and fees related to the sale of the Company’s products.

Table of Contents

The following tables present our revenue disaggregated by major product and service lines:

	Three Months Ended June 30,
	2023		2022
Software	$	19,000	$	24,000
Service		-		-
Total revenue	$	19,000	$	24,000

	Six Months Ended June 30,
	2023		2022
Software	$	38,000	$	56,000
Service		3,000		-
Total revenue	$	41,000	$	56,000

Fair Value of Financial Instruments

The Company follows the authoritative guidance issued by the Financial Accounting Standards Board (“FASB”) for fair value measurements. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. A fair value hierarchy was established, which prioritizes the inputs used in measuring fair value into three broad levels as follows:

Level 1—Quoted prices in active markets for identical assets or liabilities.

Level 2—Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly.

Level 3—Unobservable inputs based on the Company’s assumptions.

The Company is required to use observable market data if such data is available without undue cost and effort.

The Company believes the carrying amounts reported in the balance sheet for accounts receivable, accounts payable, accrued expenses, convertible notes, and notes payables approximate fair values because of the short-term nature of these financial instruments.

As of June 30, 2023, and December 31, 2022, the Company’s balance sheet includes Level 3 liabilities comprised of the fair value of embedded derivative liabilities of $1,023,000 and $112,000, respectively (see Note 8).

Derivative Financial Instruments

The Company evaluates its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the statements of operations. The Company evaluates embedded conversion features within its convertible debt to determine whether the embedded conversion features should be bifurcated from the host instrument and accounted for as a derivative. The fair values of the embedded derivatives are determined using the trinomial/binomial valuation method at inception and on subsequent valuation dates. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period.

Stock-Based Compensation

The Company periodically issues stock options, warrants, and shares of common stock as share-based compensation to employees and non-employees in non-capital raising transactions for services and for financing costs. The Company accounts for such grants issued and vesting based on FASB ASC 718, Compensation – Stock Compensation (Topic 718) whereby the value of the award is measured on the date of grant and recognized as compensation expense on the straight-line basis over the vesting period. The Company recognizes the fair value of stock-based compensation within its Statements of Operations with classification depending on the nature of the services rendered.

The fair value of the Company’s stock options and warrants are estimated using the Black-Scholes-Merton Option Pricing model, which uses certain assumptions related to risk-free interest rates, expected volatility, expected life of the stock options or restricted stock, and future dividends. Compensation expense is recorded based upon the value derived from the Black-Scholes-Merton Option Pricing model and based on actual experience. The assumptions used in the Black-Scholes-Merton Option Pricing model could materially affect compensation expense recorded in future periods.

Table of Contents

Loss per Share

Basic loss per share is computed by dividing net loss available to common stockholders by the weighted average number of common shares outstanding during the period. Diluted loss per share is computed by dividing net loss applicable to common stockholders by the weighted average number of common shares outstanding, plus the number of additional common shares that would have been outstanding if all dilutive potential common shares had been issued using the treasury stock method. Diluted loss per share excludes all potential common shares if their effect is anti-dilutive. The following potentially dilutive shares were excluded from the shares used to calculate diluted earnings per share as their inclusion would be anti-dilutive:

	Six Months Ended June 30,
	2023		2022
Options to purchase common stock		150,633,000		83,133,001
Warrants to purchase common stock		606,049,076		68,375,757
Convertible notes		786,698,512		21
Convertible Series B Preferred stock		7,333,400		2,347,752
Total		1,550,713,988		153,856,531

Concentrations

For the six months ended June 30, 2023, sales to two customers comprised 41% and 33% of revenues. For the six months ended June 30, 2022, sales to two customers comprised 42% and 30% of revenues. At June 30, 2023, only two customers comprised more than 41% of accounts receivable.

The Company maintains the majority of its cash balances with one financial institution, in the form of demand deposits. Cash deposits are federally insured up to $250,000 per account. The Company believes that no significant concentration of credit risk exists with respect to its cash balances because of its assessment of the creditworthiness and financial viability of the financial institution.

Segments

The Company operates in one segment for the development and distribution of our software products. In accordance with the “Segment Reporting” Topic of the ASC, the Company’s chief operating decision maker has been identified as the Chief Executive Officer and President, who reviews operating results to make decisions about allocating resources and assessing performance for the entire Company. Existing guidance, which is based on a management approach to segment reporting, establishes requirements to report selected segment information quarterly and to report annually entity-wide disclosures about products and services, major customers, and the countries in which the entity holds material assets and reports revenue. All material operating units qualify for aggregation under “Segment Reporting” due to their similar customer base, single sales team, marketing department, customer service department, operations department, finance and accounting department to support its operations and similarities in: economic characteristics; nature of products and services; and procurement, manufacturing and distribution processes. Since the Company operates in one segment, all financial information required by “Segment Reporting” can be found in the accompanying financial statements.

Recent Accounting Pronouncements

In June 2016, the FASB issued ASU No. 2016-13, Credit Losses – Measurement of Credit Losses on Financial Instruments (“ASC 326”). The standard significantly changes how entities will measure credit losses for most financial assets, including accounts and notes receivable. The standard will replace today’s “incurred loss” approach with an “expected loss” model, under which companies will recognize allowances based on expected rather than incurred losses. Entities will apply the standard’s provisions as a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective. As a small business filer, ASU 2020-06 will be effective January 1, 2024, for the Company and the provisions of this update can be adopted using either the modified retrospective method or a fully retrospective method. Management is currently assessing the impact of adopting this standard on the Company’s financial statements and related disclosures.

Other recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company’s present or future consolidated financial statements.

Table of Contents

Note 2 – Convertible Notes Payable

Convertible notes payable consisted of the following:

	June 30, 2023			December 31, 2022
Unsecured
(a) Convertible notes due to AL-Bank	$	353,000		$	383,000
(b) Convertible note with Diagonal Lending		194,000			100,000

Unsecured
(c) Convertible notes with fixed conversion features, in default		895,000			895,000
Convertible notes payable		1,442,000			1,378,000
Less debt discount		(114,000	)		(96,000	)
Total Convertible notes payable	$	1,328,000		$	1,282,000

(a) During fiscal 2005, the Company issued notes payable to DART/Citco Global in the aggregate of $543,000. The notes bear interest at an average rate of 7.5% per annum and matured in December 2010. The aggregate notes are convertible by the note holder into less than one share of the Company’s common stock based on a fixed conversion price adjusted for applicable reverse stock splits that occurred in prior fiscal years.

In fiscal 2009, the note holders agreed to the forbearance of any interest on the notes payable to DART/Citco Global.

In August 2021, the notes were assigned to Aktieselskabet Arbejdernes Landsbank (“AL-Bank”), a Denmark based financing institution.

In September 2021, the Company executed a repayment agreement with AL-Bank requiring the Company to make monthly payments of $10,000 to AL-Bank, starting in October 2021 and ending in March 2025, for a total of $400,000. Once the payments are made in full pursuant to the repayment agreement, the remaining balance of $143,000 will be forgiven and will be accounted for at that time. At December 31, 2022, the outstanding balance of the unsecured convertible notes payable amounted to $383,000.

During the six months ended June 30, 2023, the Company made principal payments of $30,000. In June 2023, AL- Bank amended the agreement and extended the maturity date by three months with no changes to the original terms and conditions the agreement.

At June 30, 2023, the outstanding balance of the unsecured convertible notes payable amounted to $353,000. The convertible notes payable, including accrued interest are convertible into approximately two shares of the Company’s common stock.

(b) On December 15, 2022, the Company issued a convertible note payable to 1800 Diagonal Lending LLC (“Diagonal Lending”) for $100,000. The note is unsecured, bears interest at a rate of 12%, or 22% on default, is due on December 15, 2023, and has a repayment penalty of 120% of the unpaid principal and unpaid interest if prepaid within 180 days of December 15, 2022. The convertible note payable is convertible into shares of the Company’s common stock at a conversion price of 65% of the two lowest daily volume weighted average price (“VWAP”) of the Company’s common stock during the 15 trading days immediately preceding the conversion date. At December 31, 2022, the outstanding balance of the unsecured convertible notes payable amounted to $100,000.

On January 19, 2023, February 6, 2023, and March 4, 2023, the Company issued additional convertible notes payable to Diagonal Lending in the aggregate of $154,000 on comparable terms.

In June 2023, the Company converted a note payable of $60,000 by issuing 31,637,000 shares of common stock with a fair value of $94,000, leaving the outstanding balance of the unsecured convertible notes payable of $194,000 . The Company followed the general extinguishment model to record the conversion and settlement of the debt. Note payable converted totaled $60,000, the related unamortized debt discount amounted to $32,000, and the derivative liability related to the conversion option of these notes, after final valuation, amounted to $47,000. The fair value of the common shares issued and the difference between the total debt settled and fair value of the common shares issued amounted to $19,000 and was recorded as loss on extinguishment of debt in the consolidated statements operations.

At June 30, 2023, the convertible notes payable, including accrued interest, are convertible to approximately 145,428,671 shares of the Company’s common stock.

As the ultimate determination of shares of common stock to be issued upon conversion of these debentures may exceed the current number of available authorized shares, the Company determined that the conversion features of these debentures are not considered indexed to the Company’s own stock and characterized the fair value of the conversion features as a derivative liability (see Note 8). In December 2022, as a result of the issuance of a convertible note payable, the Company recognized derivative liability of $164,000 related to the conversion feature of the debentures, of which, $100,000 was accounted as debt discount, and the remaining $64,000 as interest expense. The debt discount is being amortized to interest expense over the term of the corresponding debentures. As of December 31, 2022, the unamortized debt discount was $96,000.

During the six months ended June 30, 2023, the Company recognized similar derivative liability in the aggregate of $176,000 related to the conversion feature of the debentures issued, of which, $154,000 was accounted as debt discount, and the remaining $21,000 as interest expense. The debt discount is being amortized to interest expense over the term of the corresponding debentures. As of June 30, 2023, the unamortized debt discount was $114,000.

(c) During fiscals 2005 through 2007, the Company issued notes payable in the aggregate of $895,000. The notes are unsecured, bear interest at a rate starting at 8% up to 18% per annum, were due on various dates from March 2008 to March 2015, and are currently in default. The aggregate notes are convertible by the note holders into less than one share of the Company’s common stock based on fixed conversion prices adjusted for applicable reverse stock splits that occurred in prior fiscal years.

At June 30, 2023 and December 31, 2022, the outstanding balance of unsecured convertible notes payable amounted to $895,000 and $895,000, respectively, and are deemed in default. The convertible notes payable, including accrued interest are convertible to approximately thirteen shares of the Company’s common stock.

Table of Contents

Note 3 – Convertible Notes Payable – Related Parties

In prior years, the Company issued unsecured convertible notes to its Chief Executive Officer (CEO) in exchange for cash and/or services rendered. The notes have a compounded interest rate of 8% per annum and will mature on December 31, 2023, as amended. The aggregate notes are convertible by the note holder into less than one share of the Company’s common stock at fixed conversion prices adjusted for applicable reverse stock splits. As of June 30, 2023 and December 31, 2022, the outstanding balance of the notes payable amounted to $268,000.

Note 4 – Notes Payable

Notes payable consisted of the following:

	June 30, 2023			December 31, 2022
Unsecured
(a) Notes payable - in default	$	1,639,000		$	1,639,000
(b) Notes payable issued by BlockSafe - in default		286,000			286,000
(c) Note payable - SBA EID		146,000			149,000

Secured
(d) Note payable – October 2022 in default		1,000,000			1,000,000
(e) Notes payable - in default		6,000			6,000
(f) Notes payable – July 2022		118,000			211,000
(g) Advances on future receipts		142,000
Total notes payable principal outstanding		3,337,000			3,291,000
Less debt discount		(38,000	)		(323,000	)
Total notes payable		3,299,000			2,968,000
Less current portion of notes payable, net of discount		(3,157,000	)		(2,826,000	)
Long term notes payable	$	142,000		$	142,000

(a) In previous years, the Company issued notes payable in exchange for cash. The notes are unsecured, bear interest at a rate of 8% through 14% per annum and matured starting in fiscal 2011 up to November 2021. At June 30, 2023 and December 31, 2022, the outstanding balance of the notes payable was $1,639,000, respectively, and are in default.

(b) In 2018, the Company’s consolidated subsidiary BlockSafe, issued promissory notes in exchange for cash. The notes are unsecured, bearing interest at a rate of 8% per annum, and matured in September 2019. At December 31, 2022 and June 30, 2023 the outstanding balance of the BlockSafe notes payable amounted to $286,000, and are in default.

(c.) On May 15, 2020, the Company received a $150,000 loan (the “EID Loan”) from the Small Business Administration (SBA) under the SBA’s Economic Injury Disaster Loan program. The EID Loan has a thirty-year term and bears interest at a rate of 3.75% per annum. Monthly principal and interest payments of $250 per month were deferred for twenty-four months and commenced in June 2022. The EID Loan may be prepaid at any time prior to maturity with no prepayment penalties. The proceeds from the EID Loan must be used for working capital. The EID Loan contains customary events of default and other provisions customary for a loan of this type. As of December 31, 2022, the outstanding balance of the EID loan amounted to $149,000.

During the six months ended June 30, 2023, the Company made principal payments of $3,000.

At June 30, 2023, the outstanding balance of the EID loan amounted to $146,000. The Company was in compliance with the terms of the EID loan as of June 30, 2023.

Table of Contents

(d) On October 26, 2022, the Company entered into a Securities Purchase Agreement with Walleye Opportunities Master Fund Ltd., a Cayman Islands company (“Walleye”), whereby Walleye purchased a promissory note of the Company, in the aggregate principal amount of One Million Dollars ($1,000,000) (the “Note”), which is convertible by Walleye into shares of the Company’s common stock, par value $0.0001 per share (the “Common Stock”) upon an Event of Default .

The Company received $800,000 in cash, which represented the principal of $1,000,000 less an original issue discount in the amount of $200,000 paid to Walleye. Walleye received a seven (7) month note, with no interest and, only in the event of a default (after the Maturity Date) of twelve percent (12%) per annum. The Company shall have the right, exercisable on seven (7) Trading Days prior written notice to Walleye, to prepay the outstanding Principal Amount then due under this Note prior to any default. Walleye may demand immediate repayment in the event of certain events, including a financing event. In the event of default, Walleye shall have, as of and after any event of default, the option to cover the outstanding obligation of the Note at 90% of the lowest VWAP of the Common Stock on the date of the applicable conversion (the “Conversion Date”) or at any point during the four (4) Trading Day period immediately prior to the date of the applicable conversion.

In addition, on the Closing Date, Walleye received a five year Fifty Million (50,000,000) common stock purchase warrants, exercisable at $0.0045 per share which shall be earned in full as of the Closing Date of October 26, 2022. The common stock purchase warrant has a cashless exercise provision (unless there is a registration statement registering the underlying shares to the common stock purchase warrants). As a result of these issuances and grants, the Company incurred the following (a) relative fair value of the warrants granted of $260,000; and (b) original issue discounts of $200,000 of the debentures for a total of $460,000 which was allocated as debt discount. The debt discount is being amortized to interest expense over the term of the corresponding debentures.

From October 26, 2022 until the Note is extinguished in its entirety, Walleye shall receive a right of participation and first right of refusal on subsequent financings as described in the Agreement.

On October 26, 2022, through a Security Agreement of the same date, the Company’s Subsidiaries (specifically BlockSafe Technologies, Inc. and Cyber Security Risk Solutions, LLC) agreed to guarantee and act as surety for payment of the Note.

As of December 31, 2022, outstanding balance of the note payable amounted to $1,000,000 and the unamortized debt discount was $323,000.

On May 26, 2023, the Walleye note payable matured and became past due. Pursuant to the note agreement, the Company recorded penalty interest of $200,000 and started accruing interest at a rate of 12% per annum. In addition, the Walleye note payable also became convertible to common stock at the option of the noteholder based upon a discounted conversion price equal to 90% of the lowest 4 day VWAP of the Company’s stock price. As the ultimate determination of shares of common stock to be issued upon conversion of this debenture may exceed the current number of available authorized shares, the Company determined that the conversion features of this debenture is not considered indexed to the Company’s own stock and characterized the fair value of the conversion features as a derivative liability (see Note 8). As such, the Company recorded interest expense of $852,000 to account the derivative liability recognized upon default of this note payable.

As a result of the default of the Walleye note payable in May 2023, the Company recognized penalty interest expense totaling $1,052,000. In addition, the Company expensed the entire unamortized debt discount of $323,000 during period ended June 30, 2023.

As June 30, 2023, outstanding balance of the note payable amounted to $1,000,000

(e) In fiscal 2019 and 2020, the Company issued notes payable aggregating $468,000. The notes bear interest at a rate starting from 8% to 37% per annum, each agreement secured by substantially all of the assets of the Company, maturing between March 2020 and July 2021. The Company also made principal payments of $319,000, and one unsecured note of $21,000 was extinguished as part of a debt settlement obligation transaction.

At June 30, 2023 and December 31, 2022, the outstanding balance of the secured notes payable was $6,000 and $6,000, respectively, and is in default.

(f) In July 2022, the Company issued notes payable aggregating $275,000. The notes bear an average interest rate of 51% per annum, each agreement secured by substantially all of the assets of the Company and maturing in January 2024. At December 31, 2022, the outstanding balance of the secured notes payable was $211,000.

During the six months ended June 30, 2023, the Company made principal payments of $93,000.

At June 30, 2023, the outstanding balance of the secured notes payable was $118,000.

(g) During the period ended June 30, 2023, the Company executed agreements with financing companies and sold future receipts totaling $275,000 in exchange for cash $185,000. Under the terms of the agreements, the Company is obligated to pay these financing companies approximately$8,000 on a daily basis until the advances has been paid in full. The term future receipts mean cash, check, ACH, credit card, debit card, bank card, charged card or other form of monetary payment. These agreements matures in various dates starting in June 2023 up to October 2023 and are personally guaranteed by the Company’s CEO.

The Company accounted these advances on future receipts as a “liability” pursuant to ASC 470-10-25-2. As a result, the Company recorded a liability of $275,000 which is equal to the future receipts sold. In addition, the Company also recorded a debt discount of $90,000 to account for the difference between the future receipts sold and cash received. The debt discount is being amortized to interest expense over the term of the agreement.

During the period ended June 30, 2023, the Company paid the financing companies a total of $133,000 and amortized debt discount of $52,000.

As of June 30, 2023, outstanding balance of the advances amounted to $142,000 and unamortized debt discount of $38,000, or a net balance of $104,000.

Table of Contents

Note 5 – Notes Payable – Related Party

Notes payable-related party notes represent unsecured notes payable to the Company’s Chief Executive Officer (CEO) ranging in interest rates of 0% per annum to 10% per annum and will mature on December 31, 2023, as amended. The outstanding balance of these notes payable at June 30, 2023 and December 31, 2022 amounted to $693,000, respectively

Note 6 – VIE Financing Obligation

The Company is in the process of developing Coins or Tokens which are envisioned as virtual currency. In fiscal 2018, the Company’s consolidated subsidiary, BlockSafe, issued promissory notes to unrelated parties aggregating $776,000. As part of issuance, the Company agreed to pay a financing obligation to the note holders equal to the note principal in tokens, as defined by promissory notes and subscription agreements that would be controlling with respect to any offer or sale of tokens to be issued by BlockSafe. In addition, the Company also agreed to issue tokens to an unrelated party in exchange for cash of $50,000.

During the year ended December 31, 2019, BlockSafe agreed to issue tokens to unrelated parties in exchange for cash of $122,000. In addition, certain note holders of promissory notes issued by BlockSafe agreed to exchange $315,000 of outstanding principal and accrued interest into the financing obligation to be paid by tokens to be issued by BlockSafe.

At June 30, 2023 and December 31, 2022, the outstanding balance of financing obligations amounted to $1,263,000, respectively, to be paid in tokens. At June 30, 2023 and through the date of filing, BlockSafe has not developed or issued any tokens and there is no assurance as to whether, or at what amount, or on what terms, tokens will be available to be issued, if ever.

At June 30, 2023 and the date of this report, as the tokens do not exist, and any amounts received for tokens are not considered equity or revenue, management determined that 100% of the obligation of $1,263,000 is a liability to be settled by BlockSafe, through the issuance of tokens, or through other means if tokens are never issued.

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”) for financing of $1,500,000 from the Funders to allow the Company to pursue patent enforcement actions against alleged infringements of its patents. In exchange for the financing, 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 are to be paid only if the Company achieves recoveries of claim proceeds.

At June 30, 2023 and December 31, 2022, the Company has reflected the $1,500,000 received from the Funders as a contingent payment obligation to be paid only if patent enforced claim proceeds are recovered.

Note 8 – Derivative Financial Instruments

The FASB has issued authoritative guidance whereby instruments which do not have fixed settlement provisions are deemed to be derivative instruments. The Company has issued convertible debentures, and in accordance with the FASB authoritative guidance, the conversion features have been characterized as derivative liabilities to be re-measured at the end of every reporting period with the change in value reported in the statement of operations.

The derivative liabilities were valued using the Binomial pricing model and/or Black Scholes pricing model with the following assumptions:

	At June 30, 2023			Issued 2023			At December 31, 2022

Stock Price	$	0.0020		$	0.0054		$	0.0055
Exercise Price	$	0.0014		$	0.0034		$	0.0034
Expected Life (Years)		0.79			1.00			0.80
Volatility		163	%		162	%		165	%
Dividend Yield		0	%		0	%		0	%
Risk-Free Interest Rate		5.40	%		4.84	%		4.73	%

Fair value:
Conversion feature	$	1,023,000		$	1,028,000		$	112,000

Table of Contents

The risk-free interest rate was based on rates established by the Federal Reserve Bank. The Company uses the historical volatility of its common stock to estimate the future volatility for its common stock. The expected life of the conversion feature of the notes was based on the remaining term of the notes. The expected dividend yield was based on the fact that the Company has not customarily paid dividends in the past and does not expect to pay dividends in the future. At December 31, 2022, the balance of the derivative liabilities was $112,000.

During the six months ended June 30, 2023, the Company recognized derivative liabilities of $1,023,000 upon issuance of additional secured convertible debentures (see Note 4). In addition, the Company also extinguished derivative liability of $47,000 (see Note 2 and 4) pursuant to conversion of a note payable.

At June 30, 2023, the Company determined the fair value of the derivative liability to be $1,028,000, and as a result, recorded a change in fair value of $70,000 as a component of other income and expenses in the consolidated statements of operations.

Note 9 - Stockholders’ Deficit

Common Stock

During the six months ended June 30, 2023, pursuant to the Company’s Qualified Regulation A Offering, the Company issued 306,599,998 shares of common stock in exchange for cash of $1,272,000, net of direct fees and commissions. As part of the offering, the Company also issued warrants to certain investors and placement agent to purchase 61,319,999 shares of common stock. The warrants are fully vested, exercisable at an average exercise price of $0.0145 per share and will expire in five years.

Warrants

The table below summarizes the Company’s warrant activities for the six months ended June 30, 2023:

	Number of Warrant Shares		Exercise Price Range Per Share		Weighted Average Exercise Price

Balance, January 1, 2023		362,729,077	$	0.0018-0.75	$	0.006
Granted		243,319,999		0.02		0.02
Canceled/Expired		-		-		-
Exercised		-		-		-
Balance outstanding and exercisable, June 30, 2023		606,049,076	$	0.00018 – 0.75	$	0.009

At June 30, 2023, the warrants had no intrinsic value.

The following table summarizes information concerning outstanding and exercisable warrants as of June 30, 2023:

		Warrants Outstanding and Exercisable
Range of Exercise Prices		Number Outstanding		Average Remaining Contractual Life (in years)		Weighted Average Exercise Price

$	0.0045		346,666,653		4.47	$	0.0045
	0.02		254,339,999		4.90		0.02
	0.05		5,000,000		3.48		0.50
	0.75		42,424		1.68		0.75

$	0.0045 - $0.75		606,049,076		4.43	$	0.009

During the six months ended June 30, 2023, the Company sold 182,000,000 warrants to purchase shares of common stock in exchange for cash of $37,000, net of direct fees and commissions. The warrants are fully vested, exercisable at $0.02 per share, and expire in five years.

At the date of sale of these warrants, the estimated fair value of these warrants sold for cash was $839,000 using a Black Scholes Option Pricing Model. The difference between the fair value of the warrants sold and cash received of $802,000 was recorded as a deemed dividend because the issuance of the warrants was only made available to certain shareholders, and not all the common shareholders.

Table of Contents

Note 10 – Stock Options

The table below summarizes the Company’s stock option activities for the six months ended June 30, 2023:

	Number of Options Shares			Exercise Price Range Per Share		Weighted Average Exercise Price
Balance, January 1, 2023		150,633,001		$	0.0045- 1,121,250,000	$	0.0307
Granted		-			-		-
Expired		(1	)		-		-
Balance outstanding, June 30, 2023		150,633,000		$	0.0045-3.00	$	0.0306
Balance exercisable, June 30, 2023		120,591,791		$	0.0045-3.00	$	0.0371

The following table summarizes information concerning the Company’s stock options as of June 30, 2023:

		Options Outstanding						Options Exercisable
Range of Exercise Prices		Number Outstanding		Average Remaining Contractual Life (in years)		Weighted Average Exercise Price		Number Exercisable		Average Remaining Contractual Life (in years)		Weighted Average Exercise Price

$	3.0000		518,000		3.80	$	3.0000		518,000		3.80	$	3.000
	2.0000		115,000		6.72		2.0000		115,000		6.72		2.0000
	0.0375		65,000,000		8.73		0.0375		65,000,000		8.73		0.0375
	0.005		17,500,000		7.84		0.0050		17,500,000		7.84		0.0050
	0.0045		67,500,000		9.72		0.0045		37,458,791		9.97		0.0045
$	0.0045 – 3.000		150,633,000		6.18	$	0.0307		120,591,791		6.18	$	0.0371

At June 30, 2023 and December 31, 2022, the intrinsic value of outstanding options was $0 and $76,000, respectively.

Note 11 – Commitment and Contingencies

Constantino Zanfardino, Derivatively on Behalf of Nominal Defendant Zerify, Inc., formerly known as Strikeforce Technologies, Inc. v. Mark L. Kay, Ramarao Pemmaraju and George Waller, Defendants, and Zerify, Inc. formerly known as Strikeforce Technologies, Inc., Nominal Defendant (U.S. District Court, District of New Jersey, Civil Action No. 2:22-cv-07258-MCA-AME)

On December 13, 2022, a claimed stockholder, Constantino Zanfardino (“Plaintiff”), filed a stockholder derivative Complaint against our directors, Mark L. Kay, Ramarao Pemmaraju and George Waller (collectively, “Defendants”). Plaintiff asserts claims against each of the Defendants for breach of fiduciary duty, waste of corporate assets and unjust enrichment resulting from Defendants’ alleged wrongdoing in their management of the Company. Through the litigation, Plaintiff seeks judgment against each of the Defendants in favor of the Company. On March 3, 2023, the Defendants’ filed a Memorandum of Law in Support of their Motion to Dismiss Plaintiff’s Complaint. On March 10, 2023, the Defendants served a motion to dismiss the complaint upon the Plaintiff. On June 8, 2023, the Defendants filed a Reply Memorandum in further support of their motion to dismiss Plaintiff’s Complaint. Defendants are vigorously defending this litigation. At this time, it is not possible to estimate the ultimate outcome of this litigation.

Onstream Media Corporation

We were engaged in several patent litigations brought by Onstream Media Corporation (“Onstream”) in the United States District Court, District of Wyoming.

Table of Contents

The cases and their filing dates follow:

Case		Date Filed
Onstream Media Corporation v. Zerify Inc. Case No. 22-cv-00191 (DWY)		September 9, 2022
Onstream Media Corporation v. Zerify Inc. Case No. 22-cv-00192 (DWY)		September 9, 2022
Onstream Media Corporation v. Zerify Inc. Case No. 22-cv-00193 (DWY)		September 9, 2022
Onstream Media Corporation v. Zerify Inc. Case No. 22-cv-00194 (DWY)		September 9, 2022
Onstream Media Corporation v. Zerify Inc. Case No. 22-cv-00195 (DWY)		September 9, 2022
Onstream Media Corporation v. Zerify Inc. Case No. 22-cv-00196 (DWY)		September 9, 2022
Onstream Media Corporation v. Zerify Inc. Case No. 22-cv-00197 (DWY)		September 9, 2022

The above Onstream litigation has been resolved subject to a Confidential License and Settlement Agreement.

Note 12 – Subsequent Events

In July and August 2023, the Company entered into a Securities Purchase Agreements in connection with the issuance of convertible notes of the Company issued to an arm’s length lender. The notes have an aggregate principal amount of $132,000 and matures starting in July 5, 2024 through August 11, 2024, and has an annual rate of interest of 12%. These convertible notes are convertible into shares of the Company’s common stock at a conversion price of 65% of the two lowest daily volume weighted average price (“VWAP”) of the Company’s common stock during the 15 trading days immediately preceding the conversion date.

Subsequent to June 30, 2023, the Company issued 411 million shares of common stock pursuant to an S1 offering which resulted in net cash proceeds of $289,000.

Subsequent to June 30, 2023, the Company issued 149 million shares of common stock pursuant to conversion of notes payable amounting to $140,000.

Table of Contents

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

Included in this interim report are “forward-looking” statements, within the meaning of the Private Securities Litigation Reform Act of 1995 (“PSLRA”) as well as historical information. Some of our statements under “Business”, “Properties”, “Legal Proceedings”, “Management’s Discussion and Analysis of Financial Condition and Results of Operations”,” the Notes to Condensed Consolidated Financial Statements” and elsewhere in this report constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Although we believe that the expectations reflected in these forward-looking statements are reasonable, we cannot assure you that the expectations reflected in these forward-looking statements will prove to be correct. Our actual results could differ materially from those anticipated in forward-looking statements as a result of certain factors, including matters described in the section titled “Risk Factors.” Forward-looking statements include those that use forward-looking terminology, such as the words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “project,” “plan,” “will,” “shall,” “should,” and similar expressions, including when used in the negative. Although we believe that the expectations reflected in these forward-looking statements are reasonable and achievable, these statements involve risks and uncertainties and we cannot assure you that actual results will be consistent with these forward-looking statements. We claim the protection afforded by the safe harbor for forward-looking statements provided by the PSLRA.

Such risks include, among others, the following: international, national and local general economic and market conditions: our ability to sustain, manage or forecast our growth; material costs and availability; new product development and introduction; existing government regulations and changes in, or the failure to comply with, government regulations; adverse publicity; competition; the loss of significant customers or suppliers; fluctuations and difficulty in forecasting operating results; changes in business strategy or development plans; business disruptions; the current inflation rate and supply chain disruptions; the implications and consequences of the COVID-19 pandemic on our business and on our clients’ business, and the transitioning from a pandemic to an endemic; the ability to attract and retain qualified personnel; the ability to protect technology; and other factors referenced in this filing.

Consequently, all the forward-looking statements made in this Form 10-Q are qualified by these cautionary statements and there can be no assurance that the actual results anticipated by management will be realized or, even if substantially realized, that they will have the expected consequences to or effects on our business operations. We undertake no obligation to update or revise these forward-looking statements, whether to reflect events or circumstances after the date initially filed or published, to reflect the occurrence of unanticipated events or otherwise.

Unless otherwise noted, references in this Form 10-Q to “Zerify”, “we”, “us”, “our”, “our company”, and the “Company” means Zerify, Inc., a Wyoming corporation.

Background

We are a software development and services company that offers a suite of integrated computer network security products using proprietary technology. Our ongoing strategy is developing and marketing our suite of network security products to the corporate, financial, healthcare, legal, government, technology, insurance, e-commerce and consumer sectors. We plan to continue to grow our business primarily through our expanding sales channel and internally generated sales, rather than by acquisitions. We hold a 49% interest in BlockSafe Technologies, Inc., and a 100% interest in Cybersecurity Risk Solutions, LLC.

On April 26, 2022, the Company applied for the Zerify trademark. ZERIFY™. The trademark registration is intended to cover the categories of downloadable or recorded computer software for encryption; downloadable or recorded computer software for cyber security assessment and protection; anti-spyware software; downloadable or recorded computer application software for mobile devices, namely, software for protecting people from identity theft; downloadable or recorded computer software for guarding users of computers and remote access devices from identity theft, featuring various software tools, namely, anti-keyboard logger and keyboard stroke encryption.

Table of Contents

On June 14, 2022, the Board of Directors and holders of a majority of the voting power approved a resolution to change our name from StrikeForce Technologies, Inc. to Zerify, Inc.

The Board of Directors believes that the name change will better reflect the business plans of the Company as reflected in the current cyber security software and in the name Zerify which emphasizes the Company’s mission to ensure Zero-Trust for the most secure collaborative communications and that every participant is verified prior to entering a video conference.

On August 1, 2022, pursuant to the approval from FINRA, our Common Stock is now quoted on the OTCQB Market under the symbol “ZRFY” (formerly “SFOR”).

Our executive office is located at 1090 King Georges Post Road, Suite 603, Edison, NJ 08837. Our telephone number is (732) 661-9641. At March 31, 2023, we had 14 employees. Our Company’s website is www.zerify.com (we are not including the information contained in our website as part of, nor should the information be relied upon or incorporated by reference into, this report on Form 10-Q).

Downturns in economic conditions, or other macroeconomic factors more generally, including inflation, could have adverse effects on our results of operations.

While we make our strategic planning decisions based on the assumption that the markets we are targeting will grow in the long term, our business is dependent, in large part on, and directly affected by, business cycles and other factors affecting the economy generally. Our industry depends on general economic conditions and other factors, including consumer spending and preferences, changes in inflation rates, supply chain issues and impediments should they arise for us, as the U.S. and various other major economies are now experiencing, consumer confidence, fuel costs, fuel availability, environmental impact, any consequences arising from the COVID 19 endemic governmental incentives and regulatory requirements, and political volatility, especially in cybersecurity growth markets.

In addition, the outbreak of hostilities between Russia and Ukraine and global reactions thereto have increased U.S. domestic and global energy prices. Oil supply disruptions related to the Russia-Ukraine conflict, and sanctions and other measures taken by the U.S. and its allies, could lead to higher costs for gas, food, and goods in the U.S. and other geographies and exacerbate the inflationary pressures on the worldwide economy, with potentially adverse impacts on our customers and on our business, results of operations and financial condition.

Results of Operations

FOR THE THREE MONTHS ENDED JUNE 30, 2023 COMPARED TO THE THREE MONTHS ENDED JUNE 30, 2022

Revenues for the three months ended June 30, 2023 were $19,000 compared to $24,000 for the three months ended June 30, 2022, a decrease of $5,000 or 21%. The decrease in revenues was primarily due to revenues relating to our ProtectID®, GuardedID® and MobileTrust® and Zerify™ Meet products as several of our clients changed their strategy. Revenues are derived from software and services.

Cost of revenues for the three months ended June 30, 2023 was $20,000 compared to $12,000 for the three months ended June 30, 2022, an increase of $8,000 or 67%. The increase in cost of revenues was primarily due to an increase in the software fees related to our product offerings. Cost of revenues are fees and key fobs related to our revenues, and as a percentage of total revenues for the three months ended June 30, 2023 was (105)% compared to 50% for the three months ended June 30, 2022.

Compensation, professional fees, and selling, general and administrative (collectively, “SGA”) expenses for the three months ended June 30, 2023 were $533,000 compared to $2,451,000 for the three months ended June 30, 2022, a decrease of $1,918,000. The decrease was due primarily to stock compensation, offset by an increase in compensation/benefits expenses and professional fees. SG&A expenses consist primarily of salaries, benefits and overhead costs for executive and administrative personnel, insurance, fees for professional services, including consulting, legal, and accounting fees, plus travel costs and non-cash stock compensation expense for the issuance of stock options to employees and other general corporate expenses.

Table of Contents

Research and development expenses for the three months ended June 30, 2023 were $133,000 compared to $158,000 for the three months ended June 30, 2022, an decrease of $25,000 or 15%. The decrease was primarily due to decrease in salaries and benefit expenses as compared to the prior year period. The salaries, benefits and overhead costs of personnel conducting research and development of our software products primarily comprise our research and development expenses.

For the three months ended June 30, 2023, other expense was $1,454,000 as compared to other expense of $266,000 for the three months ended June 30, 2022. The increase was primarily due to debt discount amortization of $268,000 which did not occur in the prior period. Interest expenses increased to $1,215,000, a difference of $1,115,000 due to our increased debt levels and penalty interest.

Our net loss for the three months ended June 30, 2023 was $2,121,000 compared to $2,862,000 for three months ended June 30, 2022, a decrease of $741,000. The decrease was primarily due to decreased revenue and increased other expenses, offset by decreased operating expense discussed above.

FOR THE SIX MONTHS ENDED JUNE 30, 2023 COMPARED TO THE SIX MONTHS ENDED JUNE 30, 2022

Revenues for the six months ended June 30, 2023 were $41,000 compared to $56,000 for the six months ended June 30, 2022, a decrease of $15,000 or 27%. The decrease in revenues was primarily due to revenues relating to our ProtectID®, GuardedID® and MobileTrust® and Zerify™ Meet products as several of our clients changed their strategy. Revenues are derived from software and services.

Cost of revenues for the six months ended June 30, 2023 was $37,000 compared to $22,000 for the six months ended June 30, 2022, an increase of $15,000 or 67%. The increase in cost of revenues was primarily due to an increase in the software fees related to our product offerings. Cost of revenues are fees and key fobs related to our revenues, and as a percentage of total revenues for the six months ended June 30, 2023 was 90% compared to 39% for the six months ended June 30, 2022.

Compensation, professional fees, and selling, general and administrative (collectively, “SGA”) expenses for the six months ended June 30, 2023 were $1,699,000 compared to $5,087,000 for the six months ended June 30, 2022. The decrease was due primarily to stock compensation, offset by an increase in compensation/benefits expenses and professional fees. SG&A expenses consist primarily of salaries, benefits and overhead costs for executive and administrative personnel, insurance, fees for professional services, including consulting, legal, and accounting fees, plus travel costs and non-cash stock compensation expense for the issuance of stock options to employees and other general corporate expenses.

Research and development expenses for the six months ended June 30, 2023 were $290,000 compared to $312,000 for the six months ended June 30, 2022, an increase of $22,000 or 7%. The decrease was primarily due to a slight decrease in salaries and benefit expenses as compared to the prior year period. The salaries, benefits and overhead costs of personnel conducting research and development of our software products primarily comprise our research and development expenses.

For the six months ended June 30, 2023, other expense was $1,805,000 as compared to other income of $365,000 for the six months ended June 30, 2022. The increase was primarily due to debt discount amortization of $501,000 which did not occur in the prior period. Interest expenses increased $1,156,000, due to our increased debt levels and penalty interest.

Our net loss for the six months ended June 30, 2023 was $3,790,000, compared to $5,730,000 for six months ended June 30, 2022. The decrease was primarily due to decreased revenue and increased other expenses, offset by decreased operating expense discussed above.

Table of Contents

Liquidity and Capital Resources

Our total current assets at June 30, 2023 were $49,000, as compared with $212,000 in total current assets at December 31, 2022. Additionally, we had a stockholders’ deficit in the amount of $16,924,000 at June 30, 2023 compared to a stockholders’ deficit of $14,855,000 at December 31, 2022. We have historically incurred recurring losses and have financed our operations through loans, principally from affiliated parties such as our directors, and from the proceeds of debt and equity financing. We financed our operations during the six months ended June 30, 2023 primarily from the cash balance from the year ended December 31, 2022 and from proceeds of equity instruments and notes payable issued during the six months ended June 30, 2023.

During the six months ended June 30, 2023, pursuant to our Qualified Regulation A Offering, we issued 306,599,998shares of common stock in exchange for cash of $1,272,000, net of direct fees and commissions. As part of the offering, we also issued warrants to certain investors and placement agent to purchase 61,319,999 shares of common stock. The warrants are fully vested, exercisable at $0.02 per share and will expire in five years.

During the six months ended June 30, 2023, pursuant to our private placement under Rule 506(b) of Regulation D, we sold 182,000,000 warrants to purchase shares of common stock in exchange for cash of $37,000, net of direct fees and commissions. The warrants are fully vested, exercisable at $0.02 per share and will expire in five years.

Going Concern

We have yet to establish any history of profitable operations. During the six months ended June 30, 2023, the Company incurred a net loss of $3,790,000 and used cash in operating activities of $1,538,000 and at June 30, 2023, the Company had a stockholders’ deficit of $16,924,000. In addition, we are in default on notes payable and convertible notes payable in the aggregate amount of $3,825,000. These factors raise substantial doubt about our ability to continue as a going concern within one year after the date the financial statements are issued. In addition, the Company’s independent registered public accounting firm, in its report published on our December 31, 2022 year-end financial statements, raised substantial doubt about the Company’s ability to continue as a going concern. The Company’s financial statements do not include any adjustments that might result from the outcome of this uncertainty should we be unable to continue as a going concern.

Management estimates that the current funds on hand will be sufficient to continue operations through the next six months. Our ability to continue as a going concern is dependent upon our ability to continue to implement our business plan. Currently, management is attempting to increase revenues by selling through a channel of distributors, value added resellers, strategic partners and original equipment manufacturers. While we believe in the viability of its strategy to increase revenues, there can be no assurances to that effect. Our ability to continue as a going concern is dependent upon our ability to increase our customer base and realize increased revenues. No assurance can be given that any future financing, if needed, will be available or, if available, that it will be on terms that are satisfactory to us. Even if we are able to obtain additional financing, if needed, it may contain undue restrictions on our operations, in the case of debt financing, or cause substantial dilution for our stockholders, in the case of equity financing.

Table of Contents

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements that are reasonably likely to have a current or future effect on our financial condition, revenues, result of operations, liquidity or capital expenditures.

Critical Accounting Policies

Use of Estimates

Significant estimates include those related to accounting for financing obligations, assumptions used in valuing stock instruments issued for services, assumptions used in valuing derivative liabilities, the valuation allowance for deferred tax assets, and the accrual of potential liabilities. Actual results could differ from those estimates.

Revenue Recognition

The Company’s revenue consists of revenue from sales and support of our software products. Revenue primarily consists of sales of software licenses and subscriptions of our ProtectID®, GuardedID®, Zerify Meet™ and Zerify Defender™ products. We recognize revenue from these arrangements ratably over the contractual service period. For service contracts, the Company’s performance obligations are satisfied, and the related revenue is recognized, as services are rendered.

The Company offers no discounts, rebates, rights of return, or other allowances to clients which would result in the establishment of reserves against service revenue. Additionally, to date, the Company has not incurred incremental costs in obtaining a client contract.

Cost of revenue includes direct costs and fees related to the sale of our products.

Share-Based Payments

The Company periodically issues stock options, warrants, and shares of common stock as share-based compensation to employees and non-employees in non-capital raising transactions for services and for financing costs. The Company accounts for such grants issued and vesting based on FASB ASC 718, Compensation – Stock Compensation (Topic 718) whereby the value of the award is measured on the date of grant and recognized as compensation expense on the straight-line basis over the vesting period. The Company recognizes the fair value of stock-based compensation within its Statements of Operations with classification depending on the nature of the services rendered.

Table of Contents

Derivative Financial Instruments

The Company evaluates its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the statements of operations. The Company evaluates embedded conversion features within its convertible debt to determine whether the embedded conversion features should be bifurcated from the host instrument and accounted for as a derivative. The fair value of the embedded derivatives are determined using the trinomial/binomial valuation method at inception and on subsequent valuation dates. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period.

Recently Issued Accounting Pronouncements

Refer to Note 1 in the accompanying condensed consolidated financial statements.

Additional Information

You are advised to read this Form 10-Q in conjunction with other reports and documents that we file from time to time with the SEC. In particular, please read our Quarterly Reports on Form 10-Q, Annual Reports on Form 10-K, and Current Reports on Form 8-K that we file from time to time. You may obtain copies of these reports directly from us or from the SEC at the SEC’s Public Reference Room at 100 F. Street, N.E. Washington, D.C. 20549, and you may obtain information about obtaining access to the Reference Room by calling the SEC at 1-800-SEC-0330. In addition, the SEC maintains information for electronic filers at its website http://www.sec.gov.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As a smaller reporting company, we are not required to provide the information required by this Item.

ITEM 4. CONTROLS AND PROCEDURES

(a) Evaluation of Disclosure Controls and Procedures.

Regulations under the Securities Exchange Act of 1934 (the “Exchange Act”) require public companies to maintain “disclosure controls and procedures,” which are defined as controls and other procedures that are designed to ensure that information required to be disclosed by the issuer in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

We carried out an evaluation, with the participation of our management, including our Chief Executive Officer (“CEO”) and our Chief Financial Officer (CFO) of the effectiveness our disclosure controls and procedures (as defined under Rule 13a-15(e) under the Exchange Act) as of June 30, 2023. Based upon that evaluation, our CEO and CFO concluded that our disclosure controls and procedures are not effective at the reasonable assurance level due to the following material weaknesses:

1. We do not have written documentation of our internal control policies and procedures. Written documentation of key internal controls over financial reporting is a requirement of Section 404 of the Sarbanes-Oxley Act which is applicable to us as of and for the interim period ended June 30, 2023. Management evaluated the impact of our failure to have written documentation of our internal controls and procedures on our assessment of our disclosure controls and procedures and has concluded that the control deficiency that resulted represented a material weakness.

Table of Contents

2. Our board of directors has no independent director or member with financial expertise which causes ineffective oversight of our external financial reporting and internal control over financial reporting.

3. We do not have sufficient segregation of duties within accounting functions, which is a basic internal control. Due to our size and nature, segregation of all conflicting duties may not always be possible and may not be economically feasible. However, to the extent possible, the initiation of transactions, the custody of assets and the recording of transactions should be performed by separate individuals. Management evaluated the impact of our failure to have segregation of duties on our assessment of our disclosure controls and procedures and has concluded that the control deficiency that resulted represented a material weakness.

To address these material weaknesses, management performed additional analyses and other procedures to ensure that the financial statements included herein fairly present, in all material respects, our financial position, results of operations and cash flows for the periods presented.

Remediation of Material Weaknesses

We intend to remediate the material weaknesses in our disclosure controls and procedures identified above by adding an independent director or member with financial expertise or hiring a full-time CFO with SEC reporting experience in the future when working capital permits and by working with our independent registered public accounting firm to refine our internal procedures.

(b) Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act, during our most recently completed fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Table of Contents

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

Onstream Media Corporation

We are engaged in several patent litigations brought by Onstream Media Corporation (“Onstream”) in the United States District Court, District of Wyoming.

The cases and their filing dates follow:

Case		Date Filed
Onstream Media Corporation v. Zerify Inc. Case No. 22-cv-00191 (DWY)		September 9, 2022
Onstream Media Corporation v. Zerify Inc. Case No. 22-cv-00192 (DWY)		September 9, 2022
Onstream Media Corporation v. Zerify Inc. Case No. 22-cv-00193 (DWY)		September 9, 2022
Onstream Media Corporation v. Zerify Inc. Case No. 22-cv-00194 (DWY)		September 9, 2022
Onstream Media Corporation v. Zerify Inc. Case No. 22-cv-00195 (DWY)		September 9, 2022
Onstream Media Corporation v. Zerify Inc. Case No. 22-cv-00196 (DWY)		September 9, 2022
Onstream Media Corporation v. Zerify Inc. Case No. 22-cv-00197 (DWY)		September 9, 2022

The above Onstream litigation has been resolved subject to a Confidential License and Settlement Agreement.

ITEM 1A. RISK FACTORS

The risk factors required pursuant to Regulation S-K, Item 503(c) are not required for smaller reporting companies.

Table of Contents

ITEM 2. RECENT ISSUANCES OF UNREGISTERED SECURITIES

During the six months ended June 30, 2023, pursuant to our private placement under Rule 506(b) of Regulation D, the Company sold 182,000,000 warrants to purchase shares of common stock in exchange for cash of $37,000, net of direct fees and commissions. The warrants are fully vested, exercisable at $0.02 per share, and expire in five years.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

At June 30, 2023, the Company is in default on notes payable and convertible notes payable in the aggregate amount of $2,825,000. We have not made various principal and interest payments on many of our debt obligations. We continue to seek work-out arrangements and applicable refinancing with new or revised debt or equity instruments. See Notes 2 and 4 to the condensed consolidated financial statements.

ITEM 4. MINE SAFETY DISCLOSURES.

Not applicable.

ITEM 5. OTHER INFORMATION.

None.

Table of Contents

ITEM 6. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

Exhibit Number		Description
1.1		Placement Agreement dated July 7, 2020, by and between StrikeForce Technologies, Inc. and Spencer Clarke LLC (23)
1.2		Addendum to Placement Agreement dated November 11, 2020, by and between StrikeForce Technologies, Inc. and Spencer Clarke LLC (25)
1.3		Addendum to Placement Agreement dated April 20, 2021, by and between StrikeForce Technologies, Inc. and Spencer Clarke LLC (28)
3.1		Amended and Restated Certificate of Incorporation of StrikeForce Technologies, Inc. (1)
3.2		By-laws of StrikeForce Technologies, Inc. (1)
3.3		Amended By-laws of StrikeForce Technologies, Inc. (2)
3.4		Amended By-laws of StrikeForce Technologies, Inc. (3)
3.5		Articles of Amendment of StrikeForce Technologies, Inc. (2)
3.6		Amendments to Articles of Incorporation (6)
3.7		Amendments to Articles of Incorporation (7)
3.8		Registration of Classes of Securities (8)
3.9		Amendments to Articles of Incorporation (9)
3.10		Registration of Classes of Securities (10)
3.11		Amendments to Articles of Incorporation (11)
3.12		Registration of Classes of Securities (12)
3.13		Amendments to Articles of Incorporation (13)
3.14		Amendments to Articles of Incorporation (14)
3.15		Amendments to Articles of Incorporation (15)
3.16		Amendments to Articles of Incorporation (16)
3.17		Amendments to Articles of Incorporation (17)
3.18		Amendments to Articles of Incorporation (18)
3.19		Amendments to Articles of Incorporation (22)
3.20		Amendments to Articles of Incorporation (26)
3.21		Amendments to Articles of Incorporation (30)
4.1		Form of Subscription Agreement (25)
4.2		Form of Convertible Promissory Note-Related Party (24)
4.3		Form of Promissory Note-Related Party (24)
4.4		Form of Warrant (29)
10.1		Employment Agreement dated as of May 20, 2003, by and between StrikeForce Technologies, Inc. and Mark L. Kay (1)
10.2		Irrevocable Waiver of Conversion Rights of Mark L. Kay (4)
10.3		Irrevocable Waiver of Conversion Rights of Ramarao Pemmaraju (4)
10.4		Irrevocable Waiver of Conversion Rights of George Waller (4)
10.5		CFO Consultant Agreement with Philip E. Blocker (4)
10.6		2012 Stock Option Plan (5)
10.7		Asset Purchase Agreement between StrikeForce Technologies, Inc. and Cyber Safety, Inc., dated August 24, 2015 (18)
10.8		Amendment to the Asset Purchase Agreement and Distributor and Reseller Agreement between StrikeForce Technologies, Inc. and Cyber Safety, Inc. (19)
10.9		Execution of Litigation Funding Agreement (20)
10.10		BlockSafe Technologies, Inc. Intellectual Property License Agreement (21)
10.11		BlockSafe Technologies, Inc. Management Agreement (21)
10.12		BlockSafe Technologies, Inc. Amended Management Agreement (21)
10.13		Software License and Development Agreement, amendment two, by and between StrikeForce Technologies, Inc. and Intersections, Inc., dated October 1, 2010 (24)
10.14		Form of Settlement and Exchange Agreement (26)
10.15		Cybersecurity Risk Solutions LLC Member Interest Purchase Agreement, dated April 15, 2021 (27)
10.16		Inducement Offer to Exercise Common Stock Purchase Warrants, dated May 5, 2022 (29)

Table of Contents

31.1		Certification by Chief Executive Officer, required by Rule 13a-14(a) or Rule 15d-14(a) of the Exchange Act, promulgated pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. (31)
31.2		Certification by Chief Financial Officer, required by Rule 13a-14(a) or Rule 15d-14(a) of the Exchange Act, promulgated pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. (31)
32.1		Certification by Chief Executive Officer, required by Rule 13a-14(b) or Rule 15d-14(b) of the Exchange Act and Section 1350 of Chapter 63 of Title 18 of the United States Code, promulgated pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (31)
32.2		Certification by Chief Financial Officer, required by Rule 13a-14(b) or Rule 15d-14(b) of the Exchange Act and Section 1350 of Chapter 63 of Title 18 of the United States Code, promulgated pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (31)
101.INS		Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document). (31)
101.SCH		Inline XBRL Taxonomy Extension Schema Document. (31)
101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document. (31)
101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document. (31)
101.LAB		Inline XBRL Taxonomy Extension Labels Linkbase Document. (31)
101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document. (31)
104		Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101). (31)

(1)	Filed as an exhibit to the Registrant’s Form SB-2 dated as of May 11, 2005 and incorporated herein by reference.
(2)	Filed as an exhibit to the Registrant’s Form 8-K dated February 4, 2011 and incorporated herein by reference.
(3)	Filed as an exhibit to the Registrant’s Form 10-Q dated December 13, 2010 and incorporated herein by reference.
(4)	Filed as an exhibit to the Registrant’s Form S-1/A dated July 31, 2012 and incorporated herein by reference.
(5)	Filed in conjunction with the Registrant’s Form 14A filed October 5, 2012 and incorporated herein by reference.
(6)	Filed as an exhibit to the Registrant’s Form 8-K dated February 5, 2013 and incorporated herein by reference.
(7)	Filed as an exhibit to the Registrant’s Form 8-K dated May 14, 2013 and incorporated herein by reference.
(8)	Filed as an exhibit to the Registrant’s Form 8-A dated July 29, 2013 and incorporated herein by reference.
(9)	Filed as an exhibit to the Registrant’s Form 8-K dated August 22, 2013 and incorporated herein by reference.
(10)	Filed as an exhibit to the Registrant’s Form 8-A dated October 3, 2013 and incorporated herein by reference.
(11)	Filed as an exhibit to the Registrant’s Form 8-K dated October 3, 2013 and incorporated herein by reference.
(12)	Filed as an exhibit to the Registrant’s Form 8-A dated December 31, 2013 and incorporated herein by reference.
(13)	Filed as an exhibit to the Registrant’s Form 8-K dated December 31, 2013 and incorporated herein by reference.
(14)	Filed as an exhibit to the Registrant’s Form 8-K dated March 18, 2014 and incorporated herein by reference.
(15)	Filed as an exhibit to the Registrant’s Form 8-K dated December 22, 2014 and incorporated herein by reference.
(16)	Filed as an exhibit to the Registrant’s Form 8-K dated February 13, 2015 and incorporated herein by reference.
(17)	Filed as an exhibit to the Registrant’s Form 8-K dated August 4, 2015 and incorporated herein by reference.
(18)	Filed as an exhibit to the Registrant’s Form 8-K dated August 24, 2015 and incorporated herein by reference.
(19)	Filed as an exhibit to the Registrant’s Form 8-K dated February 2, 2016 and incorporated herein by reference.
(20)	Filed as an exhibit to the Registrant’s Form 8-K dated September 11, 2017 and incorporated herein by reference.
(21)	Filed as an exhibit to the Registrant’s Form 10-Q dated June 30, 2018 and incorporated herein by reference.
(22)	Filed as an exhibit to the Registrant’s Form 8-K dated June 25, 2020 and incorporated herein by reference.
(23)	Filed as an exhibit to the Registrant’s Form 1-A dated July 13, 2020 and incorporated herein by reference.
(24)	Filed as an exhibit to the Registrant’s Form 1-A.1 dated September 11, 2020 and incorporated herein by reference.
(25)	Filed as an exhibit to the Registrant’s Form 1-A.1 dated November 12, 2020 and incorporated herein by reference.
(26)	Filed as an exhibit to the Registrant’s Form 8-K dated February 8, 2021 and incorporated herein by reference.
(27)	Filed as an exhibit to the Registrant’s Form 8-K dated April 19, 2021 and incorporated herein by reference.
(28)	Filed as an exhibit to the Registrant’s Form 1A/A- dated April 26, 2021 and incorporated herein by reference.
(29)	Filed as an exhibit to the Registrant’s Form 8-K dates May 10, 2022 and incorporated herein by reference.
(30)	Filed as an exhibit to the Registrant’s Form 8-K/A dated August 3, 2022 and incorporated herein by reference.
(31)	Filed herewith.

Table of Contents

SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	ZERIFY, INC.

Dated: October 3, 2023	By:	/s/ Mark L. Kay
		Mark L. Kay
		Chief Executive Officer

Dated: October 3, 2023

By:

/s/ Philip E. Blocker

Philip E. Blocker

Chief Financial Officer and

Principal Accounting Officer