Cover
Cover - shares | 3 Months Ended | |
Mar. 31, 2021 | May 10, 2021 | |
Cover [Abstract] | ||
Entity Registrant Name | NETWORK 1 TECHNOLOGIES INC | |
Entity Central Index Key | 0001065078 | |
Document Type | 10-Q | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Small Business | true | |
Entity Shell Company | false | |
Entity Emerging Growth Company | false | |
Entity Current Reporting Status | Yes | |
Document Period End Date | Mar. 31, 2021 | |
Entity Filer Category | Non-accelerated Filer | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2021 | |
Entity Common Stock Shares Outstanding | 24,117,129 | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Entity Interactive Data Current | Yes |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) | Mar. 31, 2021 | Dec. 31, 2020 |
CURRENT ASSETS: | ||
Cash and cash equivalents | $ 24,122,000 | $ 25,505,000 |
Marketable securities, at fair value | 17,149,000 | 19,366,000 |
Royalty receivables | 18,692,000 | 0 |
Other current assets | 88,000 | 120,000 |
TOTAL CURRENT ASSETS | 60,051,000 | 44,991,000 |
OTHER ASSETS: | ||
Deferred tax assets, net | 0 | 954,000 |
Patents, net of accumulated amortization | 1,512,000 | 1,578,000 |
Equity investment | 3,440,000 | 3,650,000 |
Convertible note investment | 1,000,000 | 0 |
Security deposits | 13,000 | 21,000 |
Total Other Assets | 5,965,000 | 6,203,000 |
TOTAL ASSETS | 66,016,000 | 51,194,000 |
CURRENT LIABILITIES: | ||
Income taxes payable | 890,000 | 0 |
Accounts payable | 363,000 | 597,000 |
Accrued contingency fees and related costs | 5,422,000 | 932,000 |
Accrued payroll | 941,000 | 277,000 |
Other accrued expenses | 164,000 | 226,000 |
Total Current Liabilities | 7,780,000 | 2,032,000 |
LONG TERM LIABILITIES: | ||
Deferred tax liability | 769,000 | 0 |
TOTAL LIABILITIES | 8,549,000 | 2,032,000 |
COMMITMENTS AND CONTINGENCIES | 0 | 0 |
STOCKHOLDERS' EQUITY | ||
Preferred stock, $0.01 par value, authorized 10,000,000 shares; none issued and outstanding at March 31, 2021 and December 31, 2020 | 0 | 0 |
Common stock, $0.01 par value; authorized 50,000,000 shares; 24,117,129 and 24,105,879 shares issued and outstanding at March 31, 2021 and December 31, 2020, respectively | 241,000 | 241,000 |
Additional paid-in capital | 66,183,000 | 66,124,000 |
Accumulated deficit | (8,958,000) | (17,193,000) |
Accumulated other comprehensive income (loss) | 1,000 | (10,000) |
TOTAL STOCKHOLDERS' EQUITY | 57,467,000 | 49,162,000 |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ 66,016,000 | $ 51,194,000 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Mar. 31, 2021 | Dec. 31, 2020 |
STOCKHOLDERS' EQUITY | ||
Preferred stock, par value | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 50,000,000 | 50,000,000 |
Common stock, shares issued | 24,117,129 | 24,105,879 |
Common stock, shares outstanding | 24,117,129 | 24,105,879 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) (UNAUDITED) - USD ($) | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) (UNAUDITED) | ||
REVENUE | $ 18,692,000 | $ 161,000 |
OPERATING EXPENSES: | ||
Costs of revenue | 5,420,000 | 32,000 |
Professional fees and related costs | 355,000 | 399,000 |
General and administrative | 513,000 | 486,000 |
Amortization of patents | 74,000 | 72,000 |
Stock-based compensation | 59,000 | 72,000 |
TOTAL OPERATING EXPENSES | 6,421,000 | 1,061,000 |
OPERATING INCOME (LOSS) | 12,271,000 | (900,000) |
OTHER INCOME (LOSS): | ||
Interest and dividend income, net | 50,000 | 178,000 |
Net realized and unrealized gain (loss) on marketable securities | (46,000) | (322,000) |
Total other income (loss), net | 4,000 | (144,000) |
INCOME (LOSS) BEFORE INCOME TAXES AND EQUITY IN NET LOSSES OF EQUITY METHOD INVESTEE | 12,275,000 | (1,044,000) |
INCOME TAXES PROVISION: | ||
Current | 890,000 | 0 |
Deferred taxes, net | 1,724,000 | 0 |
Total income taxes provision | 2,614,000 | 0 |
INCOME (LOSS) BEFORE SHARE OF NET LOSSES OF EQUITY METHOD INVESTEE | 9,661,000 | (1,044,000) |
SHARE OF NET LOSSES OF EQUITY METHOD INVESTEE | (210,000) | (293,000) |
NET INCOME (LOSS) | $ 9,451,000 | $ (1,337,000) |
Net Income (Loss) Per Share | ||
Basic | $ 0.39 | $ (0.06) |
Diluted | $ 0.38 | $ (0.06) |
Weighted average common shares outstanding: | ||
Basic | 24,107,879 | 24,029,513 |
Diluted | 24,616,379 | 24,029,513 |
Cash dividends declared per share | $ 0.05 | $ 0.05 |
OTHER COMPREHENSIVE INCOME (LOSS) | ||
Net unrealized holding gain (loss) on corporate bonds and notes during the period, net of tax | $ 11,000 | $ (163,000) |
Amounts reclassified from accumulated other comprehensive income (loss) | 0 | (20,000) |
Net other comprehensive income (loss) | 11,000 | (183,000) |
COMPREHENSIVE INCOME (LOSS) | $ 9,462,000 | $ (1,520,000) |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY (UNAUDITED) - USD ($) | Total | Common Stock [Member] | Additional Paid-in Capital [Member] | Accumulated Deficit [Member] | Accumulated Other Comprehensive Income (Loss) [Member] |
Balance, shares at Dec. 31, 2019 | 24,036,071 | ||||
Balance, amount at Dec. 31, 2019 | $ 53,507,000 | $ 240,000 | $ 65,824,000 | $ (12,636,000) | $ 79,000 |
Dividends and dividend equivalents declared | (1,221,000) | 0 | 0 | (1,221,000) | 0 |
Stock-based compensation | 72,000 | $ 0 | 72,000 | 0 | 0 |
Vesting of restricted stock units, shares | 11,250 | ||||
Vesting of restricted stock units, amount | 0 | $ 0 | 0 | 0 | 0 |
Cashless exercise of stock options, shares | 105,000 | ||||
Cashless exercise of stock options, amount | 1,000 | $ 1,000 | 0 | 0 | 0 |
Shares delivered to fund stock option exercises, shares | (100,293) | ||||
Shares delivered to fund stock option exercises, amount | (1,000) | $ (1,000) | 0 | 0 | 0 |
Treasury stock purchased and retired, shares | (72,300) | ||||
Treasury stock purchased and retired, amount | (154,000) | $ (1,000) | 0 | (153,000) | 0 |
Net other comprehensive gain (loss) | (183,000) | 0 | 0 | 0 | (183,000) |
Net income (loss) | (1,337,000) | $ 0 | 0 | (1,337,000) | 0 |
Balance, shares at Mar. 31, 2020 | 23,979,728 | ||||
Balance, amount at Mar. 31, 2020 | 50,684,000 | $ 239,000 | 65,896,000 | (15,347,000) | (104,000) |
Balance, shares at Dec. 31, 2020 | 24,105,879 | ||||
Balance, amount at Dec. 31, 2020 | 49,162,000 | $ 241,000 | 66,124,000 | (17,193,000) | (10,000) |
Dividends and dividend equivalents declared | (1,216,000) | 0 | 0 | (1,216,000) | 0 |
Stock-based compensation | 59,000 | $ 0 | 59,000 | 0 | 0 |
Vesting of restricted stock units, shares | 11,250 | ||||
Vesting of restricted stock units, amount | 0 | $ 0 | 0 | 0 | 0 |
Net other comprehensive gain (loss) | 11,000 | 0 | 0 | 0 | 11,000 |
Net income (loss) | 9,451,000 | $ 0 | 0 | 9,451,000 | 0 |
Balance, shares at Mar. 31, 2021 | 24,117,129 | ||||
Balance, amount at Mar. 31, 2021 | $ 57,467,000 | $ 241,000 | $ 66,183,000 | $ (8,958,000) | $ 1,000 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) - USD ($) | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net income (loss) | $ 9,451,000 | $ (1,337,000) |
Adjustments to reconcile income (loss) to net cash used in operating activities: | ||
Amortization of patents | 74,000 | 72,000 |
Stock-based compensation | 59,000 | 72,000 |
Loss from equity method investment | 210,000 | 293,000 |
Amortization of right of use asset, net | 0 | 32,000 |
Unrealized loss on marketable securities | 23,000 | 220,000 |
Deferred tax expense | 1,724,000 | 0 |
Changes in operating asset and liabilities: | ||
Royalty receivables | (18,692,000) | 199,000 |
Other current assets | 32,000 | 23,000 |
Income taxes payable | 890,000 | 0 |
Security deposit | 8,000 | 0 |
Accounts payable | (232,000) | (207,000) |
Operating lease obligations | 0 | (33,000) |
Accrued expenses | 5,078,000 | (872,000) |
NET CASH USED IN OPERATING ACTIVITIES | (1,375,000) | (1,538,000) |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Sales of marketable securities | 4,499,000 | 10,919,000 |
Purchases of marketable securities | (2,293,000) | (4,001,000) |
Development of patents | (8,000) | (8,000) |
Convertible note investment | (1,000,000) | 0 |
NET CASH PROVIDED BY INVESTING ACTIVITIES | 1,198,000 | 6,910,000 |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Cash dividends paid | (1,206,000) | (1,211,000) |
Repurchases of common stock, inclusive of commissions | 0 | (154,000) |
NET CASH USED IN FINANCING ACTIVITIES | (1,206,000) | (1,365,000) |
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | (1,383,000) | 4,007,000 |
CASH AND CASH EQUIVALENTS, beginning of period | 25,505,000 | 22,587,000 |
CASH AND CASH EQUIVALENTS, end of period | 24,122,000 | 26,594,000 |
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION | ||
Cash paid for Interest | 0 | 0 |
Cash paid for Income taxes | 0 | 0 |
NON-CASH FINANCING ACTIVITY | ||
Accrued dividend rights on restricted stock units | $ 10,000 | $ 19,000 |
BASIS OF PRESENTATION AND NATUR
BASIS OF PRESENTATION AND NATURE OF BUSINESS | 3 Months Ended |
Mar. 31, 2021 | |
BASIS OF PRESENTATION AND NATURE OF BUSINESS | |
NOTE A - BASIS OF PRESENTATION AND NATURE OF BUSINESS | [1] BASIS OF PRESENTATION The accompanying condensed consolidated financial statements are unaudited, but, in the opinion of the management of Network-1 Technologies, Inc. (the “Company”), contain all adjustments consisting only of normal recurring items which the Company considers necessary for the fair presentation of the Company’s financial position as of March 31, 2021, and the results of its operations and comprehensive income (loss) for the three month periods ended March 31, 2021 and March 31, 2020, changes in stockholders’ equity for the three month periods ended March 31, 2021 and March 31, 2020, and its cash flows for the three month periods ended March 31, 2021 and March 31, 2020. The unaudited condensed consolidated financial statements included herein have been prepared in accordance with the accounting principles generally accepted in the United States of America (U.S. GAAP) for interim financial information and the instructions to Form 10-Q and Regulation S-X. Accordingly, certain information and footnote disclosures normally included in the consolidated financial statements prepared in accordance with U.S. GAAP may have been omitted pursuant to such rules and regulations, although management believes that the disclosures are adequate to make the information presented not misleading. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements for the year ended December 31, 2020 included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 31, 2021. The results of operations for the three months ended March 31, 2021 are not necessarily indicative of the results of operations to be expected for the full year. The accompanying unaudited condensed consolidated financial statements include accounts of the Company and its wholly-owned subsidiary, Mirror Worlds Technologies, LLC. [2] BUSINESS The Company is engaged in the development, licensing and protection of its intellectual property assets. The Company presently owns eighty-four (84) patents including (i) the remote power patent (the “Remote Power Patent”) covering the delivery of power over Ethernet (PoE) cables for the purpose of remotely powering network devices, such as wireless access ports, IP phones and network based cameras; (ii) the Mirror Worlds patent portfolio (the “Mirror Worlds Patent Portfolio”) relating to foundational technologies that enable unified search and indexing, displaying and archiving of documents in a computer system; (iii) the Cox patent portfolio (the “Cox Patent Portfolio”) relating to enabling technology for identifying media content on the Internet and taking further actions to be performed based on such identification; and (iv) the M2M/IoT patent portfolio (the “M2M/IoT Patent Portfolio”) relating to, among other things, enabling technology for authenticating, provisioning and using embedded sim cards in next generation IoT, Machine-to-Machine, and other mobile devices, including smartphones, tablets and computers. Until March 7, 2020, when the Remote Power Patent expired, the Company had been actively engaged in licensing its Remote Power Patent (U.S. Patent No. 6,218,930). As of March 7, 2020, the Company had twenty-seven (27) license agreements with respect to its Remote Power Patent. As a result of the expiration of the Remote Power Patent, the Company no longer receives licensing revenue for its Remote Power Patent for any period subsequent to the expiration date (March 7, 2020). As a result of the decision on September 24, 2020 of the U.S. Court of Appeals for the Federal Circuit to overturn the District Court’s judgment of non-infringement that resulted from the Company’s trial with Hewlett-Packard involving the Remote Power Patent, the Company believed that Cisco Systems, Inc. (“Cisco”), the largest licensee of the Remote Power Patent, was obligated to pay the Company royalties that accrued but were not paid beginning in the fourth quarter of 2017 through the expiration of the Remote Power Patent. On March 30, 2021, the Company entered into an amendment (the “Amendment”) to the Settlement and License Agreement, dated May 25, 2011, between the Company and Cisco (the “Agreement”). Pursuant to the Amendment, Cisco paid $18,692,000 to the Company in April 2021 to resolve a dispute relating to Cisco’s contractual obligation to pay royalties under the Agreement to the Company for the period beginning in the fourth quarter of 2017 through March 7, 2020 (when the Remote Power Patent expired) with respect to licensing the Remote Power Patent (see Note I[2] hereof). The Company also believes that NETGEAR, Inc. (“Netgear”), another licensee of the Remote Power Patent, is obligated to pay the Company royalties that accrued but were not paid during the same period. The Company has commenced litigation against Netgear (see Note I[5] hereof). In addition, the Company may receive additional revenue related to its Remote Power Patent from Hewlett-Packard depending upon the outcome of the new trial scheduled to commence on August 2, 2021 as a result of the Federal Circuit’s decision in September 2020 (see Note I[1] hereof). The Company’s current strategy includes continuing to pursue licensing opportunities for its intellectual property assets. In addition, the Company continually reviews opportunities to acquire or license additional intellectual property as well as other strategic alternatives. The Company’s patent acquisition and development strategy is to focus on acquiring high quality patents which management believes have the potential to generate significant licensing opportunities as the Company has achieved with respect to its Remote Power Patent and Mirror Worlds Patent Portfolio. In addition, the Company may also enter into strategic relationships with third parties to develop, commercialize, license or otherwise monetize their intellectual property. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 3 Months Ended |
Mar. 31, 2021 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | [1] Use of Estimates and Assumptions The preparation of the unaudited condensed consolidated financial statements in conformity with U.S. GAAP 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 unaudited condensed consolidated financial statements, and the reported amounts of revenues and expenses during the reporting periods. The significant estimates and assumptions made in the preparation of the Company’s unaudited condensed consolidated financial statements include revenue recognition, income taxes, valuation of patents and equity method investments, including evaluation of the Company’s basis difference. Actual results could be materially different from those estimates, upon which the carrying values were based. [2] Cash and Cash Equivalents The Company maintains cash deposits in high quality financial institutions insured by the Federal Deposit Insurance Corporation (“FDIC”). Accounts at each institution are insured by the FDIC up to $250,000. At March 31, 2021, the Company maintained a cash balance of $4,241,000 in excess of the FDIC insured limit. The Company considers all highly liquid short-term investments, including certificates of deposit and money market funds, that are purchased with an original maturity of three months or less to be cash equivalents. [3] Marketable Securities The Company’s marketable securities are comprised of certificates of deposit with original maturity greater than three months from date of purchase, fixed income mutual funds, and corporate bonds and notes. At March 31, 2021, included in marketable securities, the Company had aggregate certificates of deposit of $2,250,000 at financial institutions which were within the FDIC limit. The Company’s marketable securities are measured at fair value and are accounted for in accordance with ASU 2016-01. Unrealized holding gains and losses on certificates of deposit and fixed income mutual funds are recorded in net realized and unrealized gain (loss) from investments on the unaudited condensed consolidated statements of operations and comprehensive loss. Unrealized holding gains and losses, net of the related tax effect, on corporate bonds and notes are excluded from earnings and are reported as a separate component of stockholders’ equity until realized. Dividend and interest income are recognized when earned. Realized gains and losses are included in earnings and are derived using the specific identification method for determining the cost of the marketable securities. [4] Revenue Recognition Under ASC 606, revenue is recognized when the Company completes the licensing of its intellectual property to its licensees, in an amount that reflects the consideration the Company expects to be entitled to in exchange for licensing its intellectual property. The Company determines revenue recognition through the following steps: • identification of the license agreement; • identification of the performance obligations in the license agreement; • determination of the consideration for the license; • allocation of the transaction price to the performance obligations in the contract; and • recognition of revenue when the Company satisfies its performance obligations. All of the Company’s revenue for the three months ended March 31, 2021 was as a result of resolution of a contractual dispute with a licensee to pay royalties to the Company pursuant to a royalty bearing license for the Remote Power Patent for the period beginning in the fourth quarter of 2017 through March 7, 2020 (when the Remote Power Patent expired) (see Note I[2] hereof). The Company relies on royalty reports received from third party licensees to record its revenue. From time to time, the Company may audit or otherwise dispute royalties reported from licensees. Any adjusted royalty revenue as a result of such audits or dispute is recorded by the Company in the period in which such adjustment is agreed to by the Company and the licensee or otherwise determined. Revenue from the Company’s patent licensing business is generated from negotiated license agreements. The timing and amount of revenue recognized from each licensee depends upon a variety of factors, including the terms of each agreement and the nature of the obligations of the parties. These agreements may include, but not be limited to, elements related to past infringement liabilities, non-refundable upfront license fees, and ongoing royalties on licensed products sold by the licensee. Generally, in the event of settlement of litigation related to the Company’s assertion of patent infringement involving its intellectual property, defendants will either pay (i) a non-refundable lump sum payment for a non-exclusive fully-paid license (a “Fully-Paid License”), or (ii) a non-refundable lump sum payment (license initiation fee) together with an ongoing obligation to pay quarterly or monthly royalties to the Company for the life of the licensed patent (a “Royalty Bearing License”). The Company’s license agreements, both Fully-Paid Licenses and Royalty Bearing Licenses, typically include some combination of the following: (i) the grant of a non-exclusive license to manufacture and/or sell products covered by its patented technologies; (ii) the release of the licensee from certain claims, and (iii) the dismissal of any pending litigation. The intellectual property rights granted pursuant to these licenses typically extend until the expiration of the related patents. Pursuant to the terms of these agreements, the Company typically has no further performance obligations with respect to the grant of the non-exclusive licenses. Generally, the license agreements provide for the grant of the licenses, releases, and other obligations following execution of the agreement and the receipt of the up-front lump sum payment for a Fully-Paid License or a license initiation fee for a Royalty Bearing License. Ongoing Royalty Payments: Certain of the Company’s revenue from Royalty Bearing Licenses results from the calculation of royalties based on a licensee’s actual quarterly sales (one licensee pays monthly royalties) of licensed products, applied to a contractual royalty rate. Licensees that pay royalties on a quarterly basis generally report to the Company actual quarterly sales and related quarterly royalties due within 45 days after the end of the quarter in which such sales activity takes place. Licensees with Royalty Bearing Licenses are obligated to provide the Company with quarterly (or monthly) royalty reports that summarize their sales of licensed products and their related royalty obligations to the Company. The Company receives these royalty reports subsequent to the period in which its licensees underlying sales occurred. The amount of royalties due under Royalty Bearing Licenses, each quarter, cannot be reasonably estimated by management. Consequently, the Company recognizes revenue for the period in which the royalty report is received in arrears and other revenue recognition criteria are met. The Company recognizes revenue from their Royalty Bearing Licenses in a manner consistent with the legal form of the arrangement, and in accordance with the royalty recognition constraint that applies to licenses of IP for which some or all of the consideration is in the form of sales or usage based royalty. Consequently, the Company recognizes revenue at the later of when (1) the subsequent sale occurs or (2) the performance obligation to which some or all of the sales based royalty has been satisfied. Non-Refundable Up-Front Fees: Fully-Paid Licenses provide for a non-refundable up-front payment, for which the Company has no future obligations or performance requirements, revenue is generally recognized when the Company has obtained the signed license agreement, all performance obligations have been substantially performed, amounts are fixed and determinable, and collectability is reasonably assured. Revenue from Fully-Paid Licenses may consist of one or more installments. The timing and amount of revenue recognized from each licensee depends upon a number of factors including the specific terms of each agreement and the nature of the deliverables and obligations. [5] Equity Method Investments Equity method investments are equity securities in entities the Company does not control but over which it has the ability to exercise significant influence. These investments are accounted for under the equity method of accounting in accordance with ASC 323, Investments — Equity Method and Joint Ventures [6] Costs of Revenue The Company includes in costs of revenue for the three months ended March 31, 2021 and 2020 contingent legal fees payable to patent litigation counsel (see Note G[1] hereof), any other contractual payments to third parties related to net proceeds from settlements (see Note G[2] hereof) and incentive bonus compensation payable to its Chairman and Chief Executive Officer (see Note H[1] hereof). [7] Income Taxes The Company accounts for income taxes in accordance with Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 740, Income Taxes ASC 740-10, Accounting for Uncertainty in Income Taxes U.S. federal, state and local income tax returns prior to 2017 are not subject to examination by any applicable tax authorities, except that tax authorities could challenge returns (only under certain circumstances) for earlier years to the extent they generated loss carry-forwards that are available for those future years. The personal holding company (“PHC”) rules under the Internal Revenue Code impose a 20% tax on a PHC’s undistributed personal holding company income (“UPHCI”), which means, in general, taxable income subject to certain adjustments. For a corporation to be classified as a PHC, it must satisfy two tests: (1) that more than 50% in value of its outstanding shares must be owned directly or indirectly by five or fewer individuals at any time during the second half of the year (after applying constructive ownership rules to attribute stock owned by entities to their beneficial owners and among certain family members and other related parties) (the “Ownership Test”) and (2) at least 60% of its adjusted ordinary gross income for a taxable year consists of dividends, interest, royalties, annuities and rents (the “Income Test”). During the second half of 2020, based upon available shareholder information and certain assumptions as to the attribution of stock ownership, the Company may have satisfied the Ownership Test. In addition, the Company may have satisfied the Income Test for 2020. However, the Company did not have UPHCI for 2020 because the Company did not have taxable income as adjusted for purposes of computing UPHCI for 2020. Based on net income of $9,451,000 for the three months ended March 31, 2021, the Company is likely to have UPHCI for 2021 if it satisfies both the Ownership Test and Income Test for 2021. If the Company satisfies the Ownership Test and the Income Test for 2021, and has UPHCI for 2021 (or in any subsequent year in which the tests are satisfied), the Company would be subject to a 20% tax on the amount of UPHCI that it does not distribute to its shareholders. In the event that the Company is determined to be a Personal Holding Company in 2021 (satisfying both the Ownership Test and Income Test) and the Company has UPHCI for 2021, the Company may issue a special cash dividend to its shareholders in an amount equal to the UPHCI rather than incur the 20% tax. [8] New Accounting Standards Income Taxes In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740), Simplifying the Accounting for Income Taxes Equity Securities In January 2020, the FASB issued ASU 2020-01, Investments – Equity Securities (Topic 321), Investments – Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815). Codification Improvements In October 2020, the FASB issued ASU 2020-10, Codification Improvements |
PATENTS
PATENTS | 3 Months Ended |
Mar. 31, 2021 | |
PATENTS | |
NOTE C - PATENTS | The Company’s intangible assets at March 31, 2021 include patents with estimated remaining economic useful lives ranging from 0.50 to 12.50 years. For all periods presented, all of the Company’s patents were subject to amortization. The gross carrying amounts and accumulated amortization related to acquired intangible assets as of March 31, 2021 and December 31, 2020 were as follows: March 31, 2021 December 31, 2020 Gross carrying amount – patents $ 7,856,000 $ 7,848,000 Accumulated amortization – patents (6,344,000 ) (6,270,000 ) Patents, net $ 1,512,000 $ 1,578,000 Amortization expense for the three months ended March 31, 2021 and 2020 was $74,000 and $72,000, respectively. Future amortization of intangible assets, net is as follows: Twelve Months Ended March 31, 2022 $ 294,000 2023 294,000 2024 230,000 2025 83,000 2026 and thereafter 611,000 Total $ 1,512,000 The Company’s Remote Power Patent expired on March 7, 2020. All of the patents within the Company’s Mirror Worlds Patent Portfolio have expired. The expiration dates of the patents within the Cox Patent Portfolio range from September 2021 to November 2023. The expiration dates of patents within the Company’s M2M/IoT Patent Portfolio range from September 2033 to May 2034. |
STOCK-BASED COMPENSATION
STOCK-BASED COMPENSATION | 3 Months Ended |
Mar. 31, 2021 | |
STOCK-BASED COMPENSATION | |
NOTE D - STOCK-BASED COMPENSATION | Restricted Stock Units The 2013 Stock Incentive Plan (“2013 Plan”) provides for the grant of any or all of the following types of awards: (a) stock options, (b) restricted stock, (c) deferred stock, (d) stock appreciation rights, and (e) other stock-based awards including restricted stock units. Awards under the 2013 Plan may be granted singly, in combination, or in tandem. Subject to standard anti-dilution adjustments as provided, the 2013 Plan provides for an aggregate of 2,600,000 shares of the Company’s common stock to be available for distribution. The Company’s Compensation Committee generally has the authority to administer the 2013 Plan, determine participants who will be granted awards, the size and types of awards, the terms and conditions of awards and the form and content of the award agreements representing awards. Awards under the 2013 Plan may be granted to employees, directors and consultants of the Company and its subsidiaries. As of March 31, 2021, there are 1,832,308 shares of common stock available for issuance under the 2013 Plan. A summary of restricted stock unit activity for the three months ended March 31, 2021 is as follows (each restricted stock unit issued by the Company represents the right to receive one share of the Company’s common stock): Number of Shares Weighted-Average Grant Date Fair Value Balance of restricted stock units outstanding at December 31, 2020 162,500 $ 2.25 Grants of restricted stock units 45,000 3.51 Vested restricted stock units (11,250 ) (3.51 ) Balance of unvested restricted stock units at March 31, 2021 196,250 $ 2.47 Restricted stock unit compensation expense was $59,000 and $72,000 for the three months ended March 31, 2021 and 2020, respectively. The Company has an aggregate of $232,000 of unrecognized restricted stock unit compensation as of March 31, 2021 to be expensed over a weighted average period of 1.02 years. All of the Company’s outstanding (unvested) restricted stock units have dividend equivalent rights. As of March 31, 2021, there was $63,000 accrued for dividend equivalent rights. As of December 31, 2020, there was $53,000 accrued for dividend equivalent rights. Stock Options There were no stock option grants during the three months ended March 31, 2021 and 2020. The following table presents information relating to all stock options outstanding and exercisable at March 31, 2021: Options Outstanding Weighted Average Exercise Price Weighted Average Remaining Life in Years Options Exercisable 500,000 $ 1.19 1.59 500,000 The Company had no recorded stock-based compensation related to stock option grants for the three months ended March 31, 2021 and 2020. The Company had no unrecognized stock-based compensation cost as of March 31, 2021. The aggregate intrinsic value of stock options exercisable at March 31, 2021 was $965,000. |
EARNINGS (LOSS) PER SHARE
EARNINGS (LOSS) PER SHARE | 3 Months Ended |
Mar. 31, 2021 | |
Net Income (Loss) Per Share | |
NOTE E - EARNINGS (LOSS) PER SHARE | Basic earnings (loss) per share is calculated by dividing the net loss by the weighted average number of outstanding common shares during the period. Diluted earnings (loss) per share data includes the dilutive effects of options, warrants and restricted stock units. Potentially dilutive shares of 696,250 and 873,750 at March 31, 2021 and 2020, respectively, consisted of options and restricted stock units. Computations of basic and diluted weighted average common shares outstanding were as follows: Three Months Ended March 31, 2021 2020 Weighted-average common shares 24,107,879 24,029,513 Dilutive effect of options and 508,500 — Weighted-average common shares 24,616,379 24,029,513 Options and restricted stock units excluded from the computation of diluted earnings (loss) per share because the effect of inclusion would have been anti-dilutive — 873,750 |
MARKETABLE SECURITIES
MARKETABLE SECURITIES | 3 Months Ended |
Mar. 31, 2021 | |
MARKETABLE SECURITIES | |
NOTE F - MARKETABLE SECURITIES | Marketable securities as of March 31, 2021 and December 31, 2020 were composed of: March 31, 2021 Cost Basis Gross Unrealized Gains Gross Unrealized Losses Fair Value Certificates of deposit $ 2,279,000 $ — $ (7,000 ) $ 2,272,000 Fixed income mutual funds 11,377,000 — (16,000 ) 11,361,000 Corporate bonds and notes 3,515,000 1,000 — 3,516,000 Total marketable securities $ 17,171,000 $ 1,000 $ (23,000 ) $ 17,149,000 December 31, 2020 Cost Basis Gross Unrealized Gains Gross Unrealized Losses Fair Value Certificates of deposit $ 3,534,000 $ 7,000 $ — $ 3,541,000 Fixed income mutual funds 11,255,000 80,000 — 11,335,000 Corporate bonds and notes 4,500,000 18,000 (28,000 ) 4,490,000 Total marketable securities $ 19,289,000 $ 105,000 $ (28,000 ) $ 19,366,000 |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 3 Months Ended |
Mar. 31, 2021 | |
COMMITMENTS AND CONTINGENCIES | |
NOTE G - COMMITMENTS AND CONTINGENCIES | [1] Legal Fees Russ, August & Kabat provides legal services to the Company with respect to its patent litigation filed in May 2017 against Facebook, Inc. in the U.S. District Court for the Southern District of New York relating to several patents within the Company’s Mirror Worlds Patent Portfolio (see Note I[4] hereof). The terms of the Company’s agreement with Russ, August & Kabat provide for cash payments on a monthly basis subject to a cap plus a contingency fee ranging between 15% and 24% of the net recovery (after deduction of expenses) depending on the stage of the proceeding in which the result (settlement or judgment) is achieved. The Company is responsible for all of the expenses incurred with respect to this litigation. Russ, August & Kabat also provides legal services to the Company with respect to its pending patent litigations filed in April 2014 and December 2014 against Google Inc. and YouTube, LLC in the U.S. District Court for the Southern District of New York relating to certain patents within the Company’s Cox Patent Portfolio (see Note I[3] hereof). The terms of the Company’s agreement with Russ, August & Kabat provide for legal fees on a full contingency basis ranging from 15% to 30% of the net recovery (after deduction of expenses) depending on the stage of the proceeding in which the result (settlement or judgment) is achieved. The Company is responsible for all of the expenses incurred with respect to this litigation. Dovel & Luner, LLP provides legal services to the Company with respect to its patent litigation filed in September 2011 against sixteen (16) data networking equipment manufacturers in the U.S. District Court for the Eastern District of Texas, Tyler (see Note I[1] hereof). The terms of the Company’s agreement with Dovel & Luner LLP essentially provide for legal fees on a full contingency basis ranging from 12.5% to 35% (with certain exceptions) of the net recovery (after deduction for expenses) depending on the stage of the preceding in which a result (settlement or judgment) is achieved. For the three months ended March 31, 2021 and 2020, the Company incurred aggregate contingent legal fees to Dovel & Luner, LLP with respect to the litigation of $-0- and $19,000, respectively. As of March 31, 2021 and for the year ended December 31, 2020, the Company included in accrued expenses aggregate contingent legal fees to Dovel & Luner, LLP with respect to the litigation of $38,000. The Company is responsible for a certain portion of the expenses incurred with respect to the litigation. As of March 31, 2021, the Company had accrued expenses of $887,000 owed to Dovel & Luner, LLP with respect to the litigation. Dovel & Luner, LLP also provided legal services to the Company with respect to the litigation settled in July 2010 against Cisco and several other major data networking equipment manufacturers (see Note I[2] hereof). The terms of the Company’s agreement with Dovel & Luner, LLP with respect to this litigation provided for legal fees of a maximum aggregate cash payment of $1.5 million plus a contingency fee of 24% (based on the settlement being achieved at the trial stage). With respect to royalty payments received from Cisco in accordance with the Company’s Settlement and License Agreement with Cisco, the Company has an obligation to pay Dovel & Luner, LLP (including local counsel) 24% of such royalties received. For the three months ended March 31, 2021 and 2020, the Company incurred aggregate contingent legal fees to Dovel & Luner, LLP with respect to the litigation of $4,485,000 and $-0-, respectively. The Company is responsible for a portion of the expenses incurred with respect to the litigation. As of March 31, 2021, the Company had accrued expenses of $4,490,000 (consisting of contingency fees and costs) owed to Dovel & Luner, LLP with respect to the litigation. [2] Patent Acquisitions In connection with the Company’s acquisition of its Cox Patent Portfolio, the Company is obligated to pay Dr. Cox 12.5% of the net proceeds (after deduction of expenses) generated by the Company from licensing, sale or enforcement of the patent portfolio. As part of the acquisition of the Mirror Worlds Patent Portfolio, the Company also entered into an agreement with Recognition Interface, LLC (“Recognition”) pursuant to which Recognition received from the Company an interest in the net proceeds realized from the monetization of the Mirror Worlds Patent Portfolio, as follows: (i) 10% of the first $125 million of net proceeds; (ii) 15% of the next $125 million of net proceeds; and (iii) 20% of any portion of the net proceeds in excess of $250 million. Since entering into the agreement with Recognition in May 2013, the Company has paid Recognition an aggregate of $3,127,000 with respect to such net proceeds interest related to the Mirror Worlds Patent Portfolio. No such payments were made by the Company to Recognition during the three months ended March 31, 2021 and 2020. In connection with the Company’s acquisition of its M2M/IoT Patent Portfolio, the Company is obligated to pay M2M 14% of the first $100 million of net proceeds (after deduction of expenses) and 5% of net proceeds greater than $100 million from Monetization Activities (as defined) related to the patent portfolio. In addition, M2M will be entitled to receive from the Company $250,000 of additional consideration upon the occurrence of certain future events related to the patent portfolio. [3] Lease Agreements The Company leases its principal office in New York City at a monthly base rate of approximately $3,900 which expired on May 31, 2020 and is currently occupied on a month-to-month basis. The Company also leases office space in New Canaan, Connecticut at a base rent of $7,300 per month which expired on March 31, 2020 and is currently occupied on a month-to-month basis. As of March 31, 2021, there were no future lease payments included in the measurement of operating lease liabilities on the unaudited condensed consolidated balance sheet as all of the Company’s leases are now on a month-to-month basis. In accordance with ASC 842 and the Company’s policy, the Company does not recognize an operating lease right-of-use asset and associated lease obligation for leases with an initial term of less than 12 months. |
EMPLOYMENT ARRANGEMENTS AND OTH
EMPLOYMENT ARRANGEMENTS AND OTHER AGREEMENTS | 3 Months Ended |
Mar. 31, 2021 | |
EMPLOYMENT ARRANGEMENTS AND OTHER AGREEMENTS | |
NOTE H - EMPLOYMENT ARRANGEMENTS AND OTHER AGREEMENTS | [1] Under the terms of the Agreement, so long as the Chairman and Chief Executive Officer continues to serve as an executive officer of the Company, whether pursuant to the Agreement or otherwise, the Chairman and Chief Executive Officer shall also receive incentive compensation in an amount equal to 5% of the Company’s gross royalties or other payments from Licensing Activities (as defined) (without deduction of legal fees or any other expenses) with respect to its Remote Power Patent and a 10% net interest (gross royalties and other payments after deduction of all legal fees and litigation expenses related to licensing, enforcement and sale activities, but in no event shall he receive less than 6.25% of the gross recovery) of the Company’s royalties and other payments relating to Licensing Activities with respect to patents other than the Remote Power Patent (including the Mirror Worlds Patent Portfolio, Cox Patent Portfolio and M2M/IoT Patent Portfolio) (collectively, the “Incentive Compensation”). During the three months ended March 31, 2021 and 2020, the Chairman and Chief Executive Officer earned Incentive Compensation of $935,000 and $8,000, respectively. At March 31, 2021 and December 31, 2020, $935,000 and $2,000 of such compensation were included in accrued payroll expenses, respectively. The Incentive Compensation shall continue to be paid to the Chairman and Chief Executive Officer for the life of each of the Company’s patents with respect to licenses entered into with third parties during the term of his employment or at any time thereafter, whether he is employed by the Company or not; provided, that, the Chairman and Chief Executive Officer’s employment has not been terminated by the Company “For Cause” (as defined) or terminated by him without “Good Reason” (as defined). In the event of a merger or sale of substantially all of the assets of the Company, the Company has the option to extinguish the right of the Chairman and Chief Executive Officer to receive future Incentive Compensation by payment to him of a lump sum payment, in an amount equal to the fair market value of such future interest as determined by an independent third party expert if the parties do not reach agreement as to such value. In the event that the Chairman and Chief Executive Officer’s employment is terminated by the Company “Other Than For Cause” (as defined) or by him for “Good Reason” (as defined), the Chairman and Chief Executive Officer shall also be entitled to (i) a lump sum severance payment of 12 months base salary, (ii) a pro-rated portion of the $175,000 target bonus provided bonus criteria have been satisfied on a pro-rated basis through the calendar quarter in which the termination occurs and (iii) accelerated vesting of all unvested options, warrants, RSUs and other awards. In connection with the Agreement, the Chairman and Chief Executive Officer has also agreed not to compete with the Company as follows: (i) during the term of the Agreement and for a period of 12 months thereafter if his employment is terminated by us “Other Than For Cause” (as defined) provided he is paid his 12 month base salary severance amount and (ii) for a period of two years from the termination date, if terminated “For Cause” by the Company or “Without Good Reason” by the Chairman and Chief Executive Officer. [2] [3] |
LEGAL PROCEEDINGS
LEGAL PROCEEDINGS | 3 Months Ended |
Mar. 31, 2021 | |
LEGAL PROCEEDINGS | |
NOTE I - LEGAL PROCEEDINGS | [1] On November 13, 2017, a jury empaneled in the U.S. District Court for the Eastern District of Texas, Tyler Division, found that certain claims of the Company’s Remote Power Patent were invalid and not infringed by HP. On February 2, 2018, the Company moved to throw out the jury verdict and have the Court determine that certain claims of the Remote Power Patent are not obvious (invalid) as a matter of law by filing motions for judgment as a matter of law on validity and a new trial on validity and infringement. On August 29, 2018, the District Court issued an order granting the Company’s motion for judgment as a matter of law that the Remote Power Patent is valid, thereby overturning the jury verdict of invalidity and denied the Company’s motion for a new trial on infringement. On August 30, 2018, the Company appealed the District Court’s denial of its motion for a new trial on infringement to the U.S. Court of Appeals for the Federal Circuit. On September 13, 2018, HP filed a cross-appeal of the District Court’s order that the Remote Power Patent is valid as a matter of law. On September 24, 2020, the U.S. Court of Appeals for the Federal Circuit overturned the judgment of non-infringement of the U.S. District Court of the Eastern District of Texas. The Federal Circuit also vacated the District Court judgment of validity of the Remote Power Patent. The Federal Circuit has remanded the case to the District Court for a new trial on infringement against HP and further proceedings on validity. On May 7, 2021, the U.S. District Court for the Eastern District of Texas, Tyler Division, granted the Company’s motion for new trial and denied the Company’s request for judgment as a matter of law on validity (which will be a part of the trial). In addition, the District Court scheduled the trial to commence on August 2, 2021. [2] [3] [4] [5] [6] |
INVESTMENT
INVESTMENT | 3 Months Ended |
Mar. 31, 2021 | |
INVESTMENT | |
NOTE J - INVESTMENT | During the period December 2018 through March 2021, the Company made an aggregate investment of $6,000,000 in ILiAD Biotechnologies, LLC (“ILiAD), a privately held clinical stage biotechnology company dedicated to the prevention of human disease caused by Bordetella pertussis with a current focus on its proprietary intranasal vaccine BPZE1, for the prevention of pertussis (whooping cough). The aggregate investment of $6,000,000 by the Company includes a $5,000,000 equity investment and a $1,000,000 investment in a convertible note (see below). At March 31, 2021, the Company owned approximately 9.5% of the outstanding units of ILiAD on a non-fully diluted basis and 7.6% of the outstanding units on a fully diluted basis (after giving effect to the exercise of all outstanding options and warrants). In connection with its investment, the Company’s Chairman and Chief Executive Officer obtained a seat on ILiAD’s Board of Managers and receives the same compensation for service on the Board of Managers as other non-management Board members. The Company incurred approximately $41,000 of advisory and legal expenses in conjunction with its equity investment in ILiAD which have been capitalized as a component of the equity investment carrying value. On September 29, 2020, ILiAD presented positive topline Phase 2b trial results of its lead pertussis (whooping cough) vaccine candidate BPZE1 at the virtual World Vaccine Congress. BPZE1 met both primary endpoints of overall safety and induction of mucosal immunity. Specifically, a single vaccination with BPZE1 prevented 90% of colonization by revaccination/challenge three months later (only 10% colonization observed). BPZE1 was differentiated in its ability to demonstrate induction of broad mucosal immunity against whole cell extract (WCE) and pertussis-specific protein antibodies. In addition, BPZE1 induced both IgG and IgA systemic immunity using WCE and pertussis specific protein assays, with durability of response measured to end of study (nine months). On March 12, 2021, the Company invested an additional $1,000,000 in ILiAD as part of a private offering of up to $23,500,000 of convertible notes (the “Notes”). The Notes have a maturity of three years with interest accruing at 6% per annum. The Notes are required to be converted into a Qualified Financing (minimum financing of $15 million) at the lesser of (i) 80% of the price paid per unit in such offering or (ii) a price based on an enterprise value of $176,000,000. In addition, the Notes shall convert in the event of a merger at the lower of an enterprise value of $176,000,000 or the stated valuation of ILiAD in the merger transaction. In the event of a change-in-control, noteholders will also have the option to have the Notes repaid except in a Qualified Offering or a stock-for-stock merger. The convertible note held by the Company in the principal amount of $1,000,000 has been recorded on the Company’s balance sheet at March 31, 2021 as “Convertible note investment”. The Company’s investment in ILiAD is accounted for as an equity method investment in accordance with ASC 323, Investments — Equity Method and Joint Ventures The difference between the Company’s share of equity in ILiAD’s net assets and the equity investment carrying value reported on the Company’s unaudited condensed consolidated balance sheet at March 31, 2021 is due to an excess amount paid over the book value of the equity investment totaling approximately $5,000,000 which is accounted for as equity method goodwill. |
CONCENTRATIONS
CONCENTRATIONS | 3 Months Ended |
Mar. 31, 2021 | |
CONCENTRATIONS | |
NOTE K - CONCENTRATIONS | Revenue from the Company’s Remote Power Patent from one licensee constituted 100% of the Company’s revenue for the three months ended March 31, 2021. Revenue from five licensees constituted approximately 99% of the Company’s revenue for the three months ended March 31, 2020. At March 31, 2021, one licensee constituted 100% of the Company’s royalty receivables and at December 31, 2020 the Company had no royalty receivables. |
DIVIDEND POLICY
DIVIDEND POLICY | 3 Months Ended |
Mar. 31, 2021 | |
DIVIDEND POLICY | |
NOTE L - DIVIDEND POLICY | On June 9, 2020, the Board of Directors of the Company approved the continuation of the Company’s dividend policy which consists of semi-annual cash dividends of $0.05 per share ($0.10 per share annually) which are anticipated to be paid in March and September of each year. On February 23, 2021, the Company’s Board of Directors declared a semi-annual cash dividend of $0.05 per share with a payment date of March 31, 2021 to all common shareholders of record as of March 16, 2021. The Company’s dividend policy undergoes a periodic review by the Board of Directors and is subject to change at any time depending upon the Company’s earnings, financial requirements and other factors existing at the time. |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 3 Months Ended |
Mar. 31, 2021 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Use of Estimates and Assumptions | The preparation of the unaudited condensed consolidated financial statements in conformity with U.S. GAAP 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 unaudited condensed consolidated financial statements, and the reported amounts of revenues and expenses during the reporting periods. The significant estimates and assumptions made in the preparation of the Company’s unaudited condensed consolidated financial statements include revenue recognition, income taxes, valuation of patents and equity method investments, including evaluation of the Company’s basis difference. Actual results could be materially different from those estimates, upon which the carrying values were based. |
Cash and Cash Equivalents | The Company maintains cash deposits in high quality financial institutions insured by the Federal Deposit Insurance Corporation (“FDIC”). Accounts at each institution are insured by the FDIC up to $250,000. At March 31, 2021, the Company maintained a cash balance of $4,241,000 in excess of the FDIC insured limit. The Company considers all highly liquid short-term investments, including certificates of deposit and money market funds, that are purchased with an original maturity of three months or less to be cash equivalents. |
Marketable Securities | The Company’s marketable securities are comprised of certificates of deposit with original maturity greater than three months from date of purchase, fixed income mutual funds, and corporate bonds and notes. At March 31, 2021, included in marketable securities, the Company had aggregate certificates of deposit of $2,250,000 at financial institutions which were within the FDIC limit. The Company’s marketable securities are measured at fair value and are accounted for in accordance with ASU 2016-01. Unrealized holding gains and losses on certificates of deposit and fixed income mutual funds are recorded in net realized and unrealized gain (loss) from investments on the unaudited condensed consolidated statements of operations and comprehensive loss. Unrealized holding gains and losses, net of the related tax effect, on corporate bonds and notes are excluded from earnings and are reported as a separate component of stockholders’ equity until realized. Dividend and interest income are recognized when earned. Realized gains and losses are included in earnings and are derived using the specific identification method for determining the cost of the marketable securities. |
Revenue Recognition | Under ASC 606, revenue is recognized when the Company completes the licensing of its intellectual property to its licensees, in an amount that reflects the consideration the Company expects to be entitled to in exchange for licensing its intellectual property. The Company determines revenue recognition through the following steps: • identification of the license agreement; • identification of the performance obligations in the license agreement; • determination of the consideration for the license; • allocation of the transaction price to the performance obligations in the contract; and • recognition of revenue when the Company satisfies its performance obligations. All of the Company’s revenue for the three months ended March 31, 2021 was as a result of resolution of a contractual dispute with a licensee to pay royalties to the Company pursuant to a royalty bearing license for the Remote Power Patent for the period beginning in the fourth quarter of 2017 through March 7, 2020 (when the Remote Power Patent expired) (see Note I[2] hereof). The Company relies on royalty reports received from third party licensees to record its revenue. From time to time, the Company may audit or otherwise dispute royalties reported from licensees. Any adjusted royalty revenue as a result of such audits or dispute is recorded by the Company in the period in which such adjustment is agreed to by the Company and the licensee or otherwise determined. Revenue from the Company’s patent licensing business is generated from negotiated license agreements. The timing and amount of revenue recognized from each licensee depends upon a variety of factors, including the terms of each agreement and the nature of the obligations of the parties. These agreements may include, but not be limited to, elements related to past infringement liabilities, non-refundable upfront license fees, and ongoing royalties on licensed products sold by the licensee. Generally, in the event of settlement of litigation related to the Company’s assertion of patent infringement involving its intellectual property, defendants will either pay (i) a non-refundable lump sum payment for a non-exclusive fully-paid license (a “Fully-Paid License”), or (ii) a non-refundable lump sum payment (license initiation fee) together with an ongoing obligation to pay quarterly or monthly royalties to the Company for the life of the licensed patent (a “Royalty Bearing License”). The Company’s license agreements, both Fully-Paid Licenses and Royalty Bearing Licenses, typically include some combination of the following: (i) the grant of a non-exclusive license to manufacture and/or sell products covered by its patented technologies; (ii) the release of the licensee from certain claims, and (iii) the dismissal of any pending litigation. The intellectual property rights granted pursuant to these licenses typically extend until the expiration of the related patents. Pursuant to the terms of these agreements, the Company typically has no further performance obligations with respect to the grant of the non-exclusive licenses. Generally, the license agreements provide for the grant of the licenses, releases, and other obligations following execution of the agreement and the receipt of the up-front lump sum payment for a Fully-Paid License or a license initiation fee for a Royalty Bearing License. Ongoing Royalty Payments: Certain of the Company’s revenue from Royalty Bearing Licenses results from the calculation of royalties based on a licensee’s actual quarterly sales (one licensee pays monthly royalties) of licensed products, applied to a contractual royalty rate. Licensees that pay royalties on a quarterly basis generally report to the Company actual quarterly sales and related quarterly royalties due within 45 days after the end of the quarter in which such sales activity takes place. Licensees with Royalty Bearing Licenses are obligated to provide the Company with quarterly (or monthly) royalty reports that summarize their sales of licensed products and their related royalty obligations to the Company. The Company receives these royalty reports subsequent to the period in which its licensees underlying sales occurred. The amount of royalties due under Royalty Bearing Licenses, each quarter, cannot be reasonably estimated by management. Consequently, the Company recognizes revenue for the period in which the royalty report is received in arrears and other revenue recognition criteria are met. The Company recognizes revenue from their Royalty Bearing Licenses in a manner consistent with the legal form of the arrangement, and in accordance with the royalty recognition constraint that applies to licenses of IP for which some or all of the consideration is in the form of sales or usage based royalty. Consequently, the Company recognizes revenue at the later of when (1) the subsequent sale occurs or (2) the performance obligation to which some or all of the sales based royalty has been satisfied. Non-Refundable Up-Front Fees: Fully-Paid Licenses provide for a non-refundable up-front payment, for which the Company has no future obligations or performance requirements, revenue is generally recognized when the Company has obtained the signed license agreement, all performance obligations have been substantially performed, amounts are fixed and determinable, and collectability is reasonably assured. Revenue from Fully-Paid Licenses may consist of one or more installments. The timing and amount of revenue recognized from each licensee depends upon a number of factors including the specific terms of each agreement and the nature of the deliverables and obligations. |
Equity Method Investments | Equity method investments are equity securities in entities the Company does not control but over which it has the ability to exercise significant influence. These investments are accounted for under the equity method of accounting in accordance with ASC 323, Investments — Equity Method and Joint Ventures |
Costs of Revenue | The Company includes in costs of revenue for the three months ended March 31, 2021 and 2020 contingent legal fees payable to patent litigation counsel (see Note G[1] hereof), any other contractual payments to third parties related to net proceeds from settlements (see Note G[2] hereof) and incentive bonus compensation payable to its Chairman and Chief Executive Officer (see Note H[1] hereof). |
Income Taxes | The Company accounts for income taxes in accordance with Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 740, Income Taxes ASC 740-10, Accounting for Uncertainty in Income Taxes U.S. federal, state and local income tax returns prior to 2017 are not subject to examination by any applicable tax authorities, except that tax authorities could challenge returns (only under certain circumstances) for earlier years to the extent they generated loss carry-forwards that are available for those future years. The personal holding company (“PHC”) rules under the Internal Revenue Code impose a 20% tax on a PHC’s undistributed personal holding company income (“UPHCI”), which means, in general, taxable income subject to certain adjustments. For a corporation to be classified as a PHC, it must satisfy two tests: (1) that more than 50% in value of its outstanding shares must be owned directly or indirectly by five or fewer individuals at any time during the second half of the year (after applying constructive ownership rules to attribute stock owned by entities to their beneficial owners and among certain family members and other related parties) (the “Ownership Test”) and (2) at least 60% of its adjusted ordinary gross income for a taxable year consists of dividends, interest, royalties, annuities and rents (the “Income Test”). During the second half of 2020, based upon available shareholder information and certain assumptions as to the attribution of stock ownership, the Company may have satisfied the Ownership Test. In addition, the Company may have satisfied the Income Test for 2020. However, the Company did not have UPHCI for 2020 because the Company did not have taxable income as adjusted for purposes of computing UPHCI for 2020. Based on net income of $9,451,000 for the three months ended March 31, 2021, the Company is likely to have UPHCI for 2021 if it satisfies both the Ownership Test and Income Test for 2021. If the Company satisfies the Ownership Test and the Income Test for 2021, and has UPHCI for 2021 (or in any subsequent year in which the tests are satisfied), the Company would be subject to a 20% tax on the amount of UPHCI that it does not distribute to its shareholders. In the event that the Company is determined to be a Personal Holding Company in 2021 (satisfying both the Ownership Test and Income Test) and the Company has UPHCI for 2021, the Company may issue a special cash dividend to its shareholders in an amount equal to the UPHCI rather than incur the 20% tax. |
New Accounting Standards | Income Taxes In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740), Simplifying the Accounting for Income Taxes Equity Securities In January 2020, the FASB issued ASU 2020-01, Investments – Equity Securities (Topic 321), Investments – Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815). Codification Improvements In October 2020, the FASB issued ASU 2020-10, Codification Improvements |
PATENTS (Tables)
PATENTS (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
PATENTS | |
Accumulated amortization related to acquired intangible assets | March 31, 2021 December 31, 2020 Gross carrying amount – patents $ 7,856,000 $ 7,848,000 Accumulated amortization – patents (6,344,000 ) (6,270,000 ) Patents, net $ 1,512,000 $ 1,578,000 |
Future amortization of current intangible assets, net | Twelve Months Ended March 31, 2022 $ 294,000 2023 294,000 2024 230,000 2025 83,000 2026 and thereafter 611,000 Total $ 1,512,000 |
STOCKBASED COMPENSATION (Tables
STOCKBASED COMPENSATION (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
STOCKBASED COMPENSATION (Tables) | |
Summary of restricted stock unit activity | Number of Shares Weighted-Average Grant Date Fair Value Balance of restricted stock units outstanding at December 31, 2020 162,500 $ 2.25 Grants of restricted stock units 45,000 3.51 Vested restricted stock units (11,250 ) (3.51 ) Balance of unvested restricted stock units at March 31, 2021 196,250 $ 2.47 |
Summary of information of stock options outstanding and exercisable | Options Outstanding Weighted Average Exercise Price Weighted Average Remaining Life in Years Options Exercisable 500,000 $ 1.19 1.59 500,000 |
EARNINGS (LOSS) PER SHARE (Tabl
EARNINGS (LOSS) PER SHARE (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Net Income (Loss) Per Share | |
Schedule of Loss Per Share | Three Months Ended March 31, 2021 2020 Weighted-average common shares 24,107,879 24,029,513 Dilutive effect of options and 508,500 — Weighted-average common shares 24,616,379 24,029,513 Options and restricted stock units excluded from the computation of diluted earnings (loss) per share because the effect of inclusion would have been anti-dilutive — 873,750 |
MARKETABLE SECURITIES (Tables)
MARKETABLE SECURITIES (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
MARKETABLE SECURITIES (Tables) | |
Marketable securities | March 31, 2021 Cost Basis Gross Unrealized Gains Gross Unrealized Losses Fair Value Certificates of deposit $ 2,279,000 $ — $ (7,000 ) $ 2,272,000 Fixed income mutual funds 11,377,000 — (16,000 ) 11,361,000 Corporate bonds and notes 3,515,000 1,000 — 3,516,000 Total marketable securities $ 17,171,000 $ 1,000 $ (23,000 ) $ 17,149,000 December 31, 2020 Cost Basis Gross Unrealized Gains Gross Unrealized Losses Fair Value Certificates of deposit $ 3,534,000 $ 7,000 $ — $ 3,541,000 Fixed income mutual funds 11,255,000 80,000 — 11,335,000 Corporate bonds and notes 4,500,000 18,000 (28,000 ) 4,490,000 Total marketable securities $ 19,289,000 $ 105,000 $ (28,000 ) $ 19,366,000 |
BUSINESS (Details Narrative)
BUSINESS (Details Narrative) | 3 Months Ended | 26 Months Ended |
Mar. 31, 2021integer | Mar. 07, 2020USD ($) | |
Patents owned | 84 | |
Number of Remote Power Patent License Agreements | 27 | |
Number of Mirror Worlds Patent Portfolio Licensing Agreements | 2 | |
Cisco [Member] | Settlement and License Agreement [Member] | ||
Contractual obligation to pay royalties | $ | $ 18,692,000 |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
FDIC insured limit | $ 250,000 | |
Net income (loss) | 9,451,000 | $ (1,337,000) |
Cash in excess of FDIC insured limit | $ 4,241,000 | |
Description of quarterly sales by license bearer | Licensees that pay royalties on a quarterly basis generally report to the Company actual quarterly sales and related quarterly royalties due within 45 days after the end of the quarter in which such sales activity takes place. | |
Certificates of Deposit [Member] | ||
Certificate of deposits within FDIC limit | $ 2,250,000 |
PATENTS (Details)
PATENTS (Details) - USD ($) | Mar. 31, 2021 | Dec. 31, 2020 |
Patents, net | $ 1,512,000 | $ 1,578,000 |
Patents [Member] | ||
Gross carrying amount | 7,856,000 | 7,848,000 |
Accumulated amortization | (6,344,000) | (6,270,000) |
Patents, net | $ 1,512,000 | $ 1,578,000 |
PATENTS (Details 1)
PATENTS (Details 1) - Patents [Member] | Mar. 31, 2021USD ($) |
2022 | $ 294,000 |
2023 | 294,000 |
2024 | 230,000 |
2025 | 83,000 |
2026 and thereafter | 611,000 |
Total | $ 1,512,000 |
PATENTS (Details Narrative)
PATENTS (Details Narrative) - USD ($) | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Amortization expense | $ 74,000 | $ 72,000 |
Expiration date of Remote Power Patent | March 7, 2020 | |
Minimum [Member] | ||
Estimated remaining economic useful of patents | 5 months 30 days | |
Expiration dates of the patents within the Cox patent portfolio | September 2021 | |
Expiration dates of the patents within the Company's M2M/IoT Patent Portfolio | September 2033 | |
Maximum [Member] | ||
Estimated remaining economic useful of patents | 12 years 5 months 30 days | |
Expiration dates of the patents within the Cox patent portfolio | November 2023 | |
Expiration dates of the patents within the Company's M2M/IoT Patent Portfolio | May 2034 |
STOCK-BASED COMPENSATION (Detai
STOCK-BASED COMPENSATION (Details) | 3 Months Ended |
Mar. 31, 2021$ / sharesshares | |
Number of shares | |
Restricted stock, Outstanding Number of shares, Beginning Balance | shares | 162,500 |
Grants of restricted stock units | shares | 45,000 |
Vested restricted stock units | shares | (11,250) |
Unvested Resricted stock, Outstanding Number of shares, Ending Balance | shares | 196,250 |
Weighted Average Grant Date Fair Value | |
Restricted stock, Weighted Average Grant Date Fair Value, Beginning Balance | $ / shares | $ 2.25 |
Grants of restricted stock units, Weighted Average Grant Date Fair Value | $ / shares | 3.51 |
Vested restricted stock units, Weighted Average Grant Date Fair Value | $ / shares | (3.51) |
Unvested Restricted stock, Weighted Average Grant Date Fair Value, Ending Balance | $ / shares | $ 2.47 |
STOCK-BASED COMPENSATION (Det_2
STOCK-BASED COMPENSATION (Details 1) | 3 Months Ended |
Mar. 31, 2021$ / sharesshares | |
STOCKBASED COMPENSATION (Tables) | |
Options outstanding | 500,000 |
Weighted average exercise price | $ / shares | $ 1.19 |
Weighted Average Remaining Life in Years | 1 year 7 months 2 days |
Options exercisable | 500,000 |
STOCKBASED COMPENSATION (Detail
STOCKBASED COMPENSATION (Details Narrative) - USD ($) | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | Dec. 31, 2020 | |
Aggregate intrinsic value of options exercisable | $ 965,000 | ||
Restricted Stock Units (RSUs) [Member] | |||
Restricted stock unit compensation expense | 59,000 | $ 72,000 | |
Unrecognized restricted stock unit compensation expense | $ 232,000 | ||
Weighted average amortized period | 1 year 7 days | ||
Accrued dividend rights on restricted stock unit | $ 63,000 | $ 100,000 | $ 53,000 |
Restricted Stock Units (RSUs) [Member] | 2013 Stock Incentive Plan [Member] | |||
Common stock originally for issuance | 2,600,000 | ||
Common stock available for issuance | 1,832,308 |
EARNINGS (LOSS) PER SHARE (Deta
EARNINGS (LOSS) PER SHARE (Details) - shares | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Net Income (Loss) Per Share | ||
Weighted-average common shares outstanding - basic | 24,107,879 | 24,029,513 |
Dilutive effect of stock options and restricted stock units | 508,500 | |
Weighted-average common shares outstanding - diluted | 24,616,379 | 24,029,513 |
Options and restricted stock units excluded from the computation of diluted earnings (loss) per share because the effect of inclusion would have been anti-dilutive | 873,750 |
EARNINGS (LOSS) PER SHARE (De_2
EARNINGS (LOSS) PER SHARE (Details Narrative) - shares | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Net Income (Loss) Per Share | ||
Potentially Dilutive Shares | 696,250 | 873,750 |
MARKETABLE SECURITIES (Details)
MARKETABLE SECURITIES (Details) - USD ($) | Mar. 31, 2021 | Dec. 31, 2020 |
Fair Value [Member] | ||
Certificates of deposit | $ 2,272,000 | $ 3,541,000 |
Fixed income mutual funds | 11,361,000 | 11,335,000 |
Corporate bonds and notes | 3,516,000 | 4,490,000 |
Total marketable securities | 17,149,000 | 19,366,000 |
Cost Basis [Member] | ||
Certificates of deposit | 2,279,000 | 3,534,000 |
Fixed income mutual funds | 11,377,000 | 11,255,000 |
Corporate bonds and notes | 3,515,000 | 4,500,000 |
Total marketable securities | 17,171,000 | 19,289,000 |
Gross Unrealized Gains [Member] | ||
Certificates of deposit | 0 | 7,000 |
Fixed income mutual funds | 0 | 80,000 |
Corporate bonds and notes | 1,000 | 18,000 |
Total marketable securities | 1,000 | 105,000 |
Gross Unrealized Losses [Member] | ||
Certificates of deposit | (7,000) | 0 |
Fixed income mutual funds | (16,000) | 0 |
Corporate bonds and notes | 0 | (28,000) |
Total marketable securities | $ (23,000) | $ (28,000) |
COMMITMENTS AND CONTINGENCIES L
COMMITMENTS AND CONTINGENCIES Legal Fees (Details Narrative) - USD ($) | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | Dec. 31, 2020 | |
Legal Service Agreement With Dovel And Luner For Litigation Settlement In July 2010 [Member] | |||
Contingent legal fees | $ 4,485,000 | $ 0 | |
Legal Fees payment ,Terms | Legal fees of a maximum aggregate cash payment of $1.5 million plus a contingency fee of 24% (based on the settlement being achieved at the trial stage). | ||
Accrued expenses | $ 4,490,000 | ||
Legal Service Agreement With Dovel And Luner For Litigation Filed In September 2011 [Member] | |||
Contingent legal fees | $ 0 | $ 19,000 | $ 38,000 |
Legal Fees payment ,Terms | Legal fees on a full contingency basis ranging from 12.5% to 35% (with certain exceptions) of the net recovery (after deduction for expenses) | ||
Accrued expenses | $ 887,000 | ||
Legal Service Agreement With Russ, August Kabot For Litigation Filed In April 2014 and December 2014 [Member] | |||
Legal Fees payment ,Terms | Legal fees on a full contingency basis ranging from 15% to 30% of the net recovery (after deduction of expenses) | ||
Legal Service Agreement With Russ, August Kabot For Litigation Filed In May 2017 [Member] | |||
Legal Fees payment ,Terms | Cash payments on a monthly basis subject to a cap plus a contingency fee ranging between 15% and 24% of the net recovery (after deduction of expenses) |
COMMITMENTS AND CONTINGENCIES P
COMMITMENTS AND CONTINGENCIES Patent Acquisitions (Details Narrative) | 94 Months Ended |
Mar. 31, 2021USD ($) | |
COMMITMENTS AND CONTINGENCIES | |
Obligated to pay Cox, net proceeds percentage | 12.50% |
Recognition net proceeds payment related to Mirror Worlds patents | $ 3,127,000 |
Recognition Net Proceeds | |
First $125 Million | 10.00% |
Next $125 Million | 15.00% |
Over $250 Million | 20.00% |
M2M Net Proceeds | |
First $100 Million | 14.00% |
Next $100 Million | 5.00% |
Additional consideration payable upon occurrence of certain future events | $ 250,000 |
COMMITMENTS AND CONTINGENCIES_2
COMMITMENTS AND CONTINGENCIES Lease Agreements (Details Narrative) | 3 Months Ended |
Mar. 31, 2021USD ($) | |
New York City [Member] | |
Rental cost per month | $ 3,900 |
Expiring date | May 31, 2020 |
Lease occupied | month-to-month basis |
New Canaan CT [Member] | |
Rental cost per month | $ 7,300 |
Expiring date | March 31, 2020 |
Lease occupied | month-to-month basis |
EMPLOYMENT ARRANGEMENTS AND O_2
EMPLOYMENT ARRANGEMENTS AND OTHER AGREEMENTS (Details Narrative) - USD ($) | Jul. 14, 2021 | Jul. 14, 2016 | Mar. 31, 2021 | Mar. 31, 2020 | Dec. 31, 2020 |
Annual base salary of Chief Financial Officer | $ 175,000 | ||||
Earned incentive compensation - Chairman and CEO | 935,000 | $ 8,000 | |||
Incentive compensation included in accrued expenses - chairman and chief executive officer | 935,000 | $ 2,000 | |||
RSUs vested to chairman and chief executive officer since July 14, 2016 | 625,000 | ||||
Executive Vice President [Member] | |||||
Annual base salary of Executive Vice President | $ 200,000 | ||||
Chairman and Chief Executive Officer [Member] | Subsequent Event [Member] | |||||
Restricted stock units vested or to be vested | 125,000 | ||||
2013 Stock Incentive Plan [Member] | Restricted Stock Units (RSUs) [Member] | |||||
RSUs to chairman and chief executive officer on July 14, 2016 | 750,000 | ||||
NewEmploymentAgreement [Member] | Chairman and Chief Executive Officer [Member] | |||||
Target annual bonus paid Chairman and CEO | $ 175,000 | ||||
Annual base salary | $ 475,000 | ||||
EmploymentAgreement [Member] | Chairman and Chief Executive Officer [Member] | |||||
CEO Incentive Compensation - percentage of gross royalties - Remote Power Patent | 5.00% | ||||
CEO Incentive Compensation - percentage of net royalties - Additional Patents | 10.00% | ||||
CEO Incentive Compensation - percentage of gross royalties - Additional Patents | 6.25% |
LEGAL PROCEEDINGS (Details Narr
LEGAL PROCEEDINGS (Details Narrative) - USD ($) | May 09, 2017 | Dec. 31, 2020 | Mar. 07, 2020 | Mar. 31, 2020 |
Maximum Cisco royalty payment per year for remaining term of the remote power patent | $ 9,000,000 | |||
Facebook [Member] | ||||
Litigation pending, description | The Company’s wholly-owned subsidiary, initiated litigation against Facebook, Inc. (“Facebook”) in the U.S. District Court for the Southern District of New York, for infringement of U.S. Patent No. 6,006,227, U.S. Patent No. 7,865,538 and U.S. Patent No. 8,255,439 (among the patents within the Company’s Mirror Worlds Patent Portfolio). The lawsuit alleged that the asserted patents are infringed by Facebook’s core technologies that enable Facebook’s Newsfeed and Timeline features. | |||
Google [Member] | On April 4, 2014 and December 3, 2014 [Member] | ||||
Litigation pending, description | The Company initiated litigation against Google Inc. (“Google”) and YouTube, LLC (“YouTube”) in the United States District Court for the Southern District of New York for infringement of several of its patents within its Cox Patent Portfolio acquired from Dr. Cox which relate to the identification of media content on the Internet. The lawsuit alleges that Google and YouTube have infringed and continue to infringe certain of the Company’s patents by making, using, selling and offering to sell unlicensed systems and related products and services, which include YouTube’s Content ID system. | |||
License Agreement [Member] | ||||
Amount of royalties agreed to be paid by Cisco | $ 18,692,000 |
INVESTMENT (Details Narrative)
INVESTMENT (Details Narrative) - USD ($) | Mar. 12, 2021 | Mar. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2018 |
Equity Method Goodwill | $ 5,000,000 | |||
Aggregate investment | 6,000,000 | |||
Equity investment | 3,440,000 | $ 3,650,000 | ||
Convertible note investment | 1,000,000 | |||
ILiAD [Member] | ||||
Advisory and legal expenses | $ 41,000 | |||
Equity investment - net loss | $ (210,000) | |||
ILiAD [Member] | Class C units [Member] | ||||
Ownership percentage fully diluted | 7.60% | |||
Ownership percentage - non fully diluted | 9.50% | |||
ILiAD [Member] | Maximum [Member] | ||||
Aggregate investment | $ 6,000,000 | |||
ILiad Biotechnologies LLC [Member] | ||||
Maximum convertible debt offering | $ 23,500,000 | |||
Interest rate | 6.00% | |||
Notes conversion, description | The Notes have a maturity of three years with interest accruing at 6% per annum. The Notes are required to be converted into a Qualified Financing (minimum financing of $15 million) at the lesser of (i) 80% of the price paid per unit in such offering or (ii) a price based on an enterprise value of $176,000,000. In addition, the Notes shall convert in the event of a merger at the lower of an enterprise value of $176,000,000 or the stated valuation of ILiAD in the merger transaction. In the event of a change-in-control, noteholders will also have the option to have the Notes repaid except in a Qualified Offering or a stock-for-stock merger. | |||
Additional convertible note investment | $ 1,000,000 |
CONCENTRATIONS (Details Narrati
CONCENTRATIONS (Details Narrative) | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Remote Power Patent [Member] | ||
Percentage revenue | 100.00% | |
Licensees One [Member] | ||
Royalty receivables percentage | 100.00% | |
Licensees Five [Member] | ||
Percentage revenue | 99.00% |
DIVIDEND POLICY (Details Narrat
DIVIDEND POLICY (Details Narrative) - $ / shares | Jun. 09, 2020 | Feb. 23, 2021 | Mar. 31, 2021 | Mar. 31, 2020 |
Dividend declaration date | $ 0.05 | $ 0.05 | ||
Board Of Directors [Member] | ||||
Semi-annual cash dividend record date | Mar. 16, 2021 | |||
Dividend declaration date | $ 0.05 | |||
Dividend policy payment description | The Board of Directors of the Company approved the continuation of the Company’s dividend policy which consists of semi-annual cash dividends of $0.05 per share ($0.10 per share annually) which are anticipated to be paid in March and September of each year. | |||
Dividend payment date | Mar. 31, 2021 |