NOTE 10 COMMITMENTS AND CONTINGENCIES Legal Matters The Company is involved in litigation and arbitrations from time to time in the ordinary course of business. Legal fees and other costs associated with such actions are expensed as incurred. In addition, the Company assesses, in conjunction with its legal counsel, the need to record a liability for litigation and contingencies. The Company reserves for costs relating to these matters when a loss is probable, and the amount can be reasonably estimated. As of December 31, 2019, the Company was involved in a legal matter with the University of South Florida (USF), whereby USF sent a demand letter to IRX and BITX on December 21, 2018, contending its right to 25% of IRX proceeds from the business combination. The Company entered into a settlement agreement with USF on August 7, 2020. The amount of $150,000 was paid on August 13, 2020. Licensing Agreements The Company has license agreements with USF, granting the Company the right to sell, market, and distribute IRX-2, subject to a royalty payable to USF based on a percentage of gross product sales. Under the license agreement with USF, the Company is obligated to repay patent prosecution expenses incurred by USF. To date, the Company has not recorded any product sales, or obligations related to USF patent prosecution expenses. The license agreement terminates upon the expiration of the IRX-2 patents. Royalty Agreements IRX Royalty Agreements In connection with the acquisition of IRX, BITX assumed IRXs obligation to pay a royalty in the aggregate amount of 7% of revenues from any future IRX-2 product sales, pursuant to royalty agreements with certain noteholders and shareholders of IRX. Collaborator Royalty Agreement Effective June 28, 2018, IRX terminated its Research, Development and Option Facilitation Agreement (the RDO Agreement) and its Options Agreement with a collaborative partner (the Collaborator), pursuant to a Termination Agreement. In connection with the Termination Agreement, all of the rights granted to the Collaborator under the RDO and Option Agreements were terminated, and the IRX has no obligation to refund any payments received from the Collaborator. As consideration for entering into the Termination Agreement, the Collaborator will receive a royalty equal to 6% of revenues from the sale of IRX-2, for the period of time beginning with the first sale of IRX-2 through the later of (i) the twelfth anniversary of the first sale of IRX-2, or (ii) the expiration of the last IRX patent, or other exclusivity of IRX-2. Investor Royalty Agreement During September 2018, the BITX entered into a royalty agreement with the Class A membership investors (the Investor Royalty Agreement), pursuant to which owners of Class A membership units will receive compensatory royalties in an aggregate amount equal to 4% of the net revenues of the Company. The Investor Royalty Agreement expires in September 2028. This royalty agreement will be restructured at the closing of the merger to reflect ownership of the Class A units at the closing. The Company has not recognized any revenues to date, and no royalties are due pursuant to the any of the above-mentioned royalty agreements. Employment Agreements On December 13, 2019, the Company entered into a separation agreement (the CEO Separation Agreement) with its former Chief Executive Officer (the Former CEO). Pursuant to the terms of the Separation Agreement, the Former CEO was entitled to a six months of severance pay equal to $225,000, a one-time payout of accrued but unused vacation time equal to $37,518, and continued coverage under the Companys group health and dental insurance plan equal to $14,032. On July 8, 2020, the BITX entered into a retention agreement (the Retention Agreement) with an employee (the Employee). Pursuant to the Retention Agreement, the Employee will continue full performance as an employee to BITX through January 8, 2021 (the Initial Retention Agreement) for which, subject to certain conditions, the Employee will be a lump sum of $200,000 within 30 days after January 8, 2021. In addition, the Company may unilaterally elect a second retention period from January 8, 2021 to July 8, 2021 (the Second Retention Period). Should the Company do so, subject to certain conditions, the Employee will be eligible for another payment of $200,000 within 30 days after July 8, 2021. Sublease Agreement The Company received sublease payments of $58,957 and $6,535 during the nine months ended September 30, 2020 and September 30, 2019, respectively. In connection with the sublease, the Company recognized a lease liability of $100,700 and $103,056 at September 30, 2020 and December 31, 2019 respectively.