Document And Entity Information
Document And Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2021 | Mar. 31, 2022 | Jun. 30, 2021 | |
Document Information Line Items | |||
Entity Registrant Name | QUEST PATENT RESEARCH CORP | ||
Document Type | 10-K | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Common Stock, Shares Outstanding | 533,334,630 | ||
Entity Public Float | $ 2,612,706 | ||
Amendment Flag | false | ||
Entity Central Index Key | 0000824416 | ||
Entity Current Reporting Status | Yes | ||
Entity Voluntary Filers | No | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Well-known Seasoned Issuer | No | ||
Document Period End Date | Dec. 31, 2021 | ||
Document Fiscal Year Focus | 2021 | ||
Document Fiscal Period Focus | FY | ||
Entity Small Business | true | ||
Entity Emerging Growth Company | false | ||
Entity Shell Company | false | ||
ICFR Auditor Attestation Flag | false | ||
Document Annual Report | true | ||
Document Transition Report | false | ||
Entity File Number | 33-18099-NY | ||
Entity Incorporation, State or Country Code | DE | ||
Entity Tax Identification Number | 11-2873662 | ||
Entity Address, Address Line One | 411 Theodore Fremd Ave | ||
Entity Address, Address Line Two | Suite 206S | ||
Entity Address, City or Town | Rye | ||
Entity Address, State or Province | NY | ||
Entity Address, Postal Zip Code | 10580-1411 | ||
City Area Code | (888) | ||
Local Phone Number | 743-7577 | ||
Entity Interactive Data Current | Yes | ||
Auditor Firm ID | 206 | ||
Auditor Name | MaloneBailey, LLP | ||
Auditor Location | Houston, Texas |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Dec. 31, 2021 | Dec. 31, 2020 |
Current assets | ||
Cash | $ 264,840 | $ 247,862 |
Accounts receivable, net of allowance for doubtful accounts of $0 and $66,000, respectively | 1,032,886 | |
Other current assets | 12,305 | 5,934 |
Total current assets | 277,145 | 1,286,682 |
Patents, net of accumulated amortization of $715,519 and $2,266,158, respectively | 539,481 | 2,200,959 |
Total assets | 816,626 | 3,487,641 |
Current liabilities | ||
Accounts payable and accrued liabilities | 129,426 | 2,892,025 |
Loans payable | 138,000 | 147,000 |
Purchase price of patents, current portion | 1,500,000 | |
Funding Liability | 3,202,765 | |
Loan payable – related party | 2,805,000 | 4,672,810 |
Warrant liability | 1,636,187 | |
Accrued interest | 491,971 | 284,885 |
Total current liabilities | 8,403,349 | 9,496,720 |
Non-current liabilities | ||
Loan payable - SBA | 150,000 | 174,392 |
Purchase price of patents, net of unamortized discount of $0 and $131,793, respectively | 190,000 | 658,207 |
Total liabilities | 8,743,349 | 10,329,319 |
Stockholders’ deficit | ||
Preferred stock, par value $0.00003 per share – authorized 10,000,000 shares – no shares issued and outstanding | ||
Common stock, par value $0.00003 per share; authorized 10,000,000,000 at December 31, 2021 and 2020; shares issued and outstanding 533,334,630 and 383,038,334 at December 31, 2021 and 2020, respectively | 16,000 | 11,491 |
Additional paid-in capital | 17,493,027 | 14,427,782 |
Accumulated deficit | (25,435,978) | (21,281,179) |
Total Quest Patent Research Corporation stockholders’ deficit | (7,926,951) | (6,841,906) |
Non-controlling interest in subsidiary | 228 | 228 |
Total stockholders’ deficit | (7,926,723) | (6,841,678) |
Total liabilities and stockholders’ deficit | $ 816,626 | $ 3,487,641 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parentheticals) - USD ($) | Dec. 31, 2021 | Dec. 31, 2020 |
Statement of Financial Position [Abstract] | ||
Allowance for doubtful accounts (in Dollars) | $ 0 | $ 66,000 |
Patents, net of accumulated amortization (in Dollars) | 715,519 | 2,266,158 |
Purchase price of patents unamortized discount (in Dollars) | $ 0 | $ 131,793 |
Preferred stock, par value (in Dollars per share) | $ 0.00003 | $ 0.00003 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, shares issued | ||
Preferred stock, shares outstanding | ||
Common stock, par value (in Dollars per share) | $ 0.00003 | $ 0.00003 |
Common stock, shares authorized | 10,000,000,000 | 10,000,000,000 |
Common stock, shares issued | 533,334,630 | 383,038,334 |
Common stock, shares outstanding | 533,334,630 | 383,038,334 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Income Statement [Abstract] | ||
Patent licensing fees | $ 2,050,000 | $ 5,488,088 |
Revenues total | 2,050,000 | 5,488,088 |
Cost of revenues: | ||
Litigation and licensing expenses | 1,314,928 | 4,692,969 |
Selling, general and administrative expenses | 3,848,611 | 1,513,822 |
Total operating expenses | 5,163,539 | 6,206,791 |
Loss from operations | (3,113,539) | (718,703) |
Gain on forgiveness of debt | 1,850,018 | |
Gain on settlement of accounts payable and accrued expenses | 1,725,965 | |
Warrant expense | (1,154,905) | |
Change in fair market value of warrant liability | (481,282) | 275,000 |
Change in fair market value of derivative liability | 275,000 | |
Loss on conversion of debt | (305,556) | |
Loss on debt extinguishment | (730,378) | |
Loss on impairment of assets | (1,651,614) | |
Other Income | 1,000 | |
Interest expense | (291,702) | (804,456) |
Total other expense | (1,039,454) | (528,456) |
Net loss before income tax | (4,152,993) | (1,247,159) |
Provision for income taxes | (1,806) | (65,363) |
Net loss | (4,154,799) | (1,312,522) |
Net income attributable to non-controlling interest in subsidiary | 11 | |
Net Loss Attributable to Quest Patent Research Corporation | $ (4,154,799) | $ (1,312,511) |
Net loss per share – Basic and Diluted (in Dollars per share) | $ (0.01) | $ 0 |
Weighted average shares outstanding – basic (in Shares) | 511,863,731 | 383,038,334 |
Weighted average shares outstanding - diluted (in Shares) | 613,878,234 | 383,038,334 |
Consolidated Statements of Chan
Consolidated Statements of Changes in Stockholders’ Deficit - USD ($) | Common Stock | Additional Paid-in Capital | Deficit | Non-controlling Interest in Subsidiaries | Total |
Balances at Dec. 31, 2019 | $ 11,491 | $ 14,107,782 | $ (19,968,668) | $ 239 | $ (5,849,156) |
Balances (in Shares) at Dec. 31, 2019 | 383,038,334 | ||||
Resolution of derivative liability | 320,000 | 320,000 | |||
Net loss | (1,312,511) | (11) | (1,312,522) | ||
Balances at Dec. 31, 2020 | $ 11,491 | 14,427,782 | (21,281,179) | 228 | (6,841,678) |
Balances (in Shares) at Dec. 31, 2020 | 383,038,334 | ||||
Restricted shares issued for services | $ 3,120 | 1,244,880 | 1,248,000 | ||
Restricted shares issued for services (in Shares) | 104,000,000 | ||||
Shares issued for conversion of debt | $ 1,389 | 554,167 | 555,556 | ||
Shares issued for conversion of debt (in Shares) | 46,296,296 | ||||
Option issued for debt extinguishment | 598,188 | 598,188 | |||
Options granted for compensation | 668,010 | 668,010 | |||
Net loss | (4,154,799) | (4,154,799) | |||
Balances at Dec. 31, 2021 | $ 16,000 | $ 17,493,027 | $ (25,435,978) | $ 228 | $ (7,926,723) |
Balances (in Shares) at Dec. 31, 2021 | 533,334,630 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Statement of Cash Flows [Abstract] | ||
Net loss | $ (4,154,799) | $ (1,312,522) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Amortization of debt discount | 88,094 | 435,415 |
Change in fair market value of warrant liability | 481,282 | |
Change in fair market value of derivative liability | 481,282 | (275,000) |
Stock based compensation | 1,916,011 | |
Warrant expense | 1,154,905 | |
Gain on settlement of accounts payable | (1,725,965) | |
Gain on forgiveness of debt | (1,850,018) | |
Amortization of intangible assets | 1,159,865 | 648,395 |
Loss on conversion of debt | 305,556 | |
Loss on impairment of assets | 1,651,614 | |
Bad debt expense | 667 | 66,000 |
Changes in operating assets and liabilities | ||
Accounts receivable | 1,032,219 | 751,489 |
Accrued interest | 203,526 | (100,420) |
Accounts payable and accrued expenses | (1,036,637) | (470,907) |
Other current asses | (6,371) | 11,246 |
Net cash provided by/(used in) operating activities | (49,673) | (246,304) |
Cash flows from investing activities: | ||
Purchase of patents | (1,150,000) | (95,000) |
Net cash used in investing activities | (1,150,000) | (95,000) |
Cash flows from financing activities: | ||
Proceeds from sale of future revenues | 95,000 | |
Proceeds from SBA loans | 171,732 | |
Payment on loan – related party | (1,750,000) | |
Loan payable – third party | (9,000) | |
Proceeds from third party loan | 3,900,000 | |
Repayment of purchase price of patents | (924,349) | (194,386) |
Repayment from sale of future revenues | (20,378) | |
Net cash from/(used in) financing activities | 1,216,651 | 51,968 |
Net increase (decrease) in cash | 16,978 | (289,336) |
Cash at beginning of year | 247,862 | 537,198 |
Cash at end of year | 264,840 | 247,862 |
Non Cash Investing and Financing Activities | ||
Shares issued for conversion of debt | 555,556 | |
Resolution of derivative liability | 320,000 | |
Options granted for settlement of debt | 598,188 | |
Accrued interest added to principal | 5,626 | 2,660 |
Supplemental disclosure of cash flow information | ||
Income taxes, including foreign taxing authorities withheld taxes of $0 and $60,255 during the years ended December 31, 2021, and 2020 respectively. | 1,806 | 65,363 |
Interest | $ 472,121 |
Consolidated Statements of Ca_2
Consolidated Statements of Cash Flows (Parentheticals) - USD ($) | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Statement of Cash Flows [Abstract] | ||
Foreign taxing authorities withheld taxes | $ 0 | $ 60,255 |
Description of Business
Description of Business | 12 Months Ended |
Dec. 31, 2021 | |
Description of Business and Basis of Presentation | |
DESCRIPTION OF BUSINESS | NOTE 1 – DESCRIPTION OF BUSINESS The Company is a Delaware corporation, incorporated on July 17, 1987 and has been engaged in the intellectual property monetization business since 2008. As used herein, the “Company”, “we”, “us” or “our” refers to Quest Patent Research Corporation and its wholly and majority-owned and controlled operating subsidiaries unless the context indicates otherwise. All intellectual property acquisition, development, licensing and enforcement activities are conducted by the Company’s wholly and majority-owned and controlled operating subsidiaries. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2021 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Principles of consolidation and financial statement presentation The consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles (“US GAAP”) and present the consolidated financial statements of the Company and its wholly owned and majority owned subsidiaries as of December 31, 2021 and 2020. The consolidated financial statements include the accounts and operations of: Quest Patent Research Corporation (“The Company”) Quest Licensing Corporation (NY) (wholly owned) Quest Licensing Corporation (DE) (wholly owned) Quest Packaging Solutions Corporation (90% owned) Quest Nettech Corporation (65% owned) Semcon IP, Inc. (wholly owned) Mariner IC, Inc. (wholly owned) IC Kinetics, Inc. (wholly owned) CXT Systems, Inc. (wholly owned) Photonic Imaging Solutions Inc. (wholly owned) M-RED Inc. (wholly owned) Audio Messaging Inc. (wholly owned) Peregrin Licensing LLC (wholly owned) Taasera Licensing LLC (wholly owned) Soundstreak Texas, LLC (wholly owned) Multimodal Media LLC (wholly owned) LS Cloud Storage Technologies, LLC (wholly owned) Significant intercompany transaction and balances have been eliminated in consolidation. Use of Estimates In preparing financial statements in conformity with accounting principles generally accepted in the United States of America, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and revenue and expenses during the reporting period. On an on-going basis, management evaluates estimates including the allowance for doubtful accounts, income taxes and contingencies. The Company bases its estimates on historical experience and on other assumptions that management believes to be reasonable under the circumstances, the results of which form its basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results could differ from those estimates. Cash and Cash Equivalents The Company considers all highly liquid investments with original maturity dates of three months or less when purchased, to be cash equivalents. Cash equivalents were $0 as of December 31, 2021 and 2020. Accounts Receivable Accounts receivable, which generally relate to licensed sales, are presented on the balance sheet net of estimated uncollectible amounts. The Company records an allowance for estimated uncollectible accounts in an amount approximating anticipated losses. Individual uncollectible accounts are written off against the allowance when collection of the individual accounts appears doubtful. The Company recorded an allowance for doubtful accounts of approximately $0 and $66,000 at December 31, 2021 and 2020, respectively. Intangible Assets Intangible assets consist of patents which are amortized using the straight-line method over their estimated useful lives or statutory lives whichever is shorter and are reviewed for impairment upon any triggering event that may give rise to the assets ultimate recoverability as prescribed under the guidance related to impairment of long-lived assets. Costs incurred to acquire patents, including legal costs, are also capitalized as long-lived assets and amortized on a straight-line basis with the associated patent. Patents include the cost of patents or patent rights (hereinafter, collectively “patents”) acquired from third-parties or acquired in connection with business combinations. Patent acquisition costs are amortized utilizing the straight-line method over their remaining economic useful lives, ranging from one to twenty years from the date of filing. Certain patent application and prosecution costs incurred to secure additional patent claims, that based on management’s estimates are deemed to be recoverable, are capitalized and amortized over the remaining estimated economic useful life of the related patent portfolio. Impairment of long-lived assets Long-lived assets, including intangible assets with a finite life, are reviewed for impairment in accordance with Accounting Standards Codification (“ASC”) 360, “ Property, Plant, and Equipment Warrant liability The Company reflects a warrant liability with respect to warrants for which number of shares underlying the warrants is not fixed until the date of the initial exercise. The amount of the liability is determined at the end of each fiscal period and the period to period change in the amount of warrant liability is reflected as a gain or loss in warrant liability and is include under other income (expense). See Note 4. Fair value of financial instruments Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. A fair value hierarchy is used which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. See Note 4 for information about warrant liabilities. The fair value hierarchy based on the three levels of inputs that may be used to measure fair value are as follows: Level 1 Level 2 Level 3 The carrying value reflected in the consolidated balance sheets for cash and cash equivalents, accounts receivable, accounts payable and accrued expenses and short-term borrowings approximate fair value due to the short-term nature of these items. The carrying value of long-term debt approximates fair value since the related rates of interest approximate current market rates. Revenue Recognition Patent Licensing Fees Revenue is recognized upon transfer of control of promised bundled intellectual property rights and other contractual performance obligations to licensees in an amount that reflects the consideration we expect to receive in exchange for those intellectual property rights. Revenue contracts that provide promises to grant “the right” to use intellectual property rights as they exist at the point in time at which the intellectual property rights are granted, are accounted for as performance obligations satisfied at a point in time and revenue is recognized at the point in time that the applicable performance obligations are satisfied and all other revenue recognition criteria have been met. For the periods presented, revenue contracts executed by the Company primarily provided for the payment of contractually determined, one-time, paid-up license fees in consideration for the grant of certain intellectual property rights for patented technologies owned or controlled by the Company’s operating subsidiaries. Intellectual property rights granted included the following, as applicable: (i) the grant of a non-exclusive, retroactive and future license to manufacture and/or sell products covered by patented technologies, (ii) a covenant-not-to-sue, (iii) the release of the licensee from certain claims, and (iv) the dismissal of any pending litigation. The intellectual property rights granted were perpetual in nature, extending until the legal expiration date of the related patents. The individual intellectual property rights are not accounted for as separate performance obligations, as (i) the nature of the promise, within the context of the contract, is to transfer combined items to which the promised intellectual property rights are inputs and (ii) the Company’s promise to transfer each individual intellectual property right described above to the customer is not separately identifiable from other promises to transfer intellectual property rights in the contract. Since the promised intellectual property rights are not individually distinct, the Company combined each individual IP right in the contract into a bundle of IP rights that is distinct, and accounted for all of the intellectual property rights promised in the contract as a single performance obligation. The intellectual property rights granted were “functional IP rights” that have significant standalone functionality. The Company’s subsequent activities do not substantively change that functionality and do not significantly affect the utility of the IP to which the licensee has rights. The Company’s subsidiaries have no further obligation with respect to the grant of intellectual property rights, including no express or implied obligation to maintain or upgrade the technology, or provide future support or services. The contracts provide for the grant (i.e. transfer of control) of the licenses, covenants-not-to-sue, releases, and other significant deliverables upon execution of the contract. Licensees legally obtain control of the intellectual property rights upon execution of the contract. As such, the earnings process is complete and revenue is recognized upon the execution of the contract, when collectability is probable and all other revenue recognition criteria have been met. Revenue contracts generally provide for payment of contractual amounts within 30-90 days of execution of the contract. Contractual payments made by licensees are generally non-refundable. We do not have any significant payment terms, as payment is received shortly after goods are delivered or services are provided, therefore there is no significant financing component or consideration payable to the customer in these transactions. Cost of Revenues Cost of revenues include the costs and expenses incurred in connection with our patent licensing and enforcement activities, including inventor royalties paid to original patent owners, contingent litigation funding fees, contingent legal fees paid to external patent counsel, other patent-related legal expenses paid to external patent counsel, licensing and enforcement related research, consulting and other expenses paid to third-parties and the amortization of patent-related investment costs. These costs are included under the caption “Cost of revenues” in the accompanying consolidated statements of operations. No such fees are recognized as cost of revenue to the extent that the Company has no obligation with respect to such fees prior to a settlement or license. Inventor Royalties, Litigation Funding Fees and Contingent Legal Expenses. In connection with the investment in certain patents and patent rights, certain of the Company’s operating subsidiaries may execute related agreements which grant to the inventors and/or former owners of the respective patents or patent rights, the right to receive a percentage of future net revenues (as defined in the respective agreements) generated as a result of licensing and otherwise enforcing the respective patents or patent portfolios. The Company’s operating subsidiaries may retain the services of law firms that specialize in patent licensing and enforcement and patent law in connection with their licensing and enforcement activities. These law firms may be retained on a contingent fee basis whereby such law firms are paid a percentage of any negotiated fees, settlements or judgments awarded. The Company’s operating subsidiaries may engage with funding sources that specialize in providing financing for patent licensing and enforcement. These litigation finance firms may be engaged on a non-recourse basis whereby such litigation finance firms are paid a percentage of any negotiated fees, settlements or judgments awarded in exchange for providing funding for legal fees and out of pocket expenses incurred as a result of the licensing and enforcement activities. The economic terms of the inventor agreements, operating agreements, contingent legal fee arrangements and litigation financing agreements associated with the patent portfolios owned or controlled by the Company’s operating subsidiaries, if any, including royalty rates, contingent fee rates and other terms, vary across the patent portfolios owned or controlled by such operating subsidiaries. Inventor/former owner royalties, payments to non-controlling interests, contingent legal fees expenses and litigation finance expenses fluctuate period to period, based on the amount of revenues recognized each period, the terms and conditions of revenue agreements executed each period and the mix of specific patent portfolios with varying economic terms and obligations generating revenues each period. Inventor/former owner royalties, contingent legal fees expenses and litigation finance expenses will continue to fluctuate and may continue to vary significantly period to period, based primarily on these factors. Research and development Research and development costs are expensed as incurred. We did not incur any research and development costs in the years ended December 31, 2021 and 2020. Income Taxes Deferred income tax assets and liabilities are recognized for the expected future income tax consequences of events that have been included in the consolidated financial statements or income tax returns. Deferred income tax assets and liabilities are determined based on differences between the financial statement and tax bases of assets and liabilities using tax rates in effect for the years in which the differences are expected to reverse. In evaluating the ultimate realization of deferred income tax assets, management considers whether it is more likely than not that the deferred income tax assets will be realized. Management establishes a valuation allowance if it is more likely than not that all or a portion of the deferred income tax assets will not be utilized. The ultimate realization of deferred income tax assets is dependent on the generation of future taxable income, which must occur prior to the expiration of the net operating loss carryforwards. The Company also follows the guidance related to accounting for income tax uncertainties. In accounting for uncertainty in income taxes, the Company recognizes the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an audit. For tax positions meeting the more likely than not threshold, the amount recognized in the consolidated financial statements is the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the relevant tax authority. No liability for unrecognized tax benefits was recorded as of December 31, 2021 and 2020. Stock-based compensation The Company recognizes stock-based compensation pursuant to ASC 718, “Compensation — Stock Compensation,” which prescribes accounting and reporting standards for all stock-based payment transactions in which employee services, and non-employee services, are acquired. Transactions include incurring liabilities, or issuing or offering to issue shares, options and other equity instruments such as employee stock ownership plans and stock appreciation rights. Stock-based payments to employees, including grants of employee stock options, are recognized as compensation expense in the financial statements based on their fair values. That expense is recognized over the period during which an employee or non-employee is required to provide services in exchange for the award, known as the requisite service period (usually the vesting period). Leases In February 2016, the FASB issued ASU 2016-02, “Leases” (Topic 842), to provide a new comprehensive model for lease accounting under this guidance, lessees and lessors should apply a “right-of-use” model in accounting for all leases (including subleases) and eliminate the concept of operating leases and off-balance-sheet leases. Recognition, measurement and presentation of expenses will depend on classification as a finance or operating lease. Similar modifications have been made to lessor accounting in-line with revenue recognition guidance. Concentration of credit risk The Company maintains its cash in bank deposit accounts, which at times, may exceed federally insured limits. The Company has not experienced any such losses in these accounts. Business Acquisitions The acquisition of STX and LS Cloud Storage Technologies, LLC (“LSC”) did not constitute acquisition of a business and therefore were accounted for as asset acquisitions in accordance with ASC 805, Business Combinations (“ASC 805”). ASC 805 provides, among other things, that asset acquisitions be accounted for using a cost accumulation and allocation model under which the cost of the acquisition is allocated to the assets acquired and liabilities assumed. See Note 11 with regarding the STX and LSC acquisitions. Gain from Cancelation of Indebtedness The Company recognized a gain from the elimination of liability for minimum cumulative net proceeds distributions constituting a portion of the purchase price due to the seller of two of the Company’s patent portfolios and the reduction of liability for legal services resulting from the settlement of the Company’s recorded obligation for unpaid legal services. See Note 3. Net Loss Per Share The Company calculates net losses per share by dividing losses allocated to the Company’s stockholders by the weighted average number of shares of common stock outstanding for the period. Diluted weighted average shares is computed using basic weighted average shares plus any potentially dilutive securities outstanding during the period using the treasury-stock-type method and the if-converted method, except when their effect is anti-dilutive. Because the Company incurred losses in all periods covered by the financial statements the inclusion of diluted weighted average shares would be anti-dilutive, the diluted net loss per share is the same as the basic net loss per share. Recent Accounting Pronouncements Management does not believe that there are any recently issued, but not effective, accounting standards which, if currently adopted, would have a material effect on the Company’s financial statements. Going Concern As shown in the accompanying financial statements, the Company has an accumulated deficit of approximately $25.4 million and negative working capital of approximately $8.1 million as of December 31, 2021. Because of the Company’s continuing losses, its working capital deficiency, the uncertainty of future revenue, the Company’s obligations to Intellectual Ventures, Intelligent Partners, QPRC Finance LLC (“QFL”), the Company’s low stock price and the absence of an active trading market in its common stock, the ability of the Company to raise funds in the equity market or from lenders is severely impaired. These conditions, together with the effects of the COVID-19 pandemic and the steps taken by the states to slow the spread of the virus and its effect on its business raise substantial doubt as to the Company’s ability to continue as a going concern. Although the Company may seek to raise funds and to obtain third party funding for litigation to enforce its intellectual property rights, the availability of such funds, particularly in view of the COVID-19 pandemic, is uncertain. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. |
Short Term Debt and Long-Term L
Short Term Debt and Long-Term Liabilities | 12 Months Ended |
Dec. 31, 2021 | |
Debt Disclosure [Abstract] | |
SHORT TERM DEBT AND LONG-TERM LIABILITIES | NOTE 3 – SHORT TERM DEBT AND LONG-TERM LIABILITIES On July 23, 2021, the Company paid $1,150,000 in full satisfaction of the disputed and unpaid legal services performed by the Company’s former legal counsel for services relating to the monetization of the Company’s intellectual property rights. The Company recognized a gain on settlement of accounts payable of approximately $1,726,000 in conjunction with the resolution of the dispute. The Company’s obligation to its former counsel is included under accounts payable and accrued liabilities on the Company’s December 31, 2020 balance sheet. The following table shows the Company’s debt at December 31, 2021 and 2020. December 31, December 31, 2021 2020 Short-term debt: Loans payable $ 138,000 $ 147,000 Funding liability 3,202,765 - Loan payable – related party 2,805,000 4,672,810 Purchase price of patents – current portion - 1,500,000 Unamortized discount - - Net short-term debt $ 6,145,765 $ 6,319,810 Long-term liabilities: Loans payable - SBA Gross $ 150,000 $ 170,832 Accrued interest - 3,560 Net loans payable - SBA 150,000 174,392 Purchase price of patents Gross 190,000 790,000 Unamortized discount - (131,793 ) Net purchase price of patents – long-term $ 190,000 $ 658,207 Short-term debt The loan payable – third party are demand loans made to former officers and directors, now unrelated third parties, and shareholders in the amount of $138,000 and $147,000 as of December 31, 2021 and 2020, respectively. During the years ended December 31, 2021 and 2020 the Company paid $9,000 and $0, respectively, against the loans. The loans are payable on demand plus accrued interest at 10% per annum. Funding Liability The funding liability at December 31, 2021 represents the principal amount of the Company’s obligations to QFL, a non-affiliated party, pursuant to a purchase agreement (“Purchase Agreement”) dated February 22, 2021 between the Company and QFL, as described below. The obligation to QFL is classified as a current liability as of December 31, 2021. On February 22, 2021, the Company entered into a series of agreements, all dated February 19, 2021,with QFL, including a Prepaid Forward Purchase Agreement (the “Purchase Agreement), a security agreement (the “Security Agreement”), a subsidiary security agreement (the “Subsidiary Security Agreement”), a subsidiary guaranty (the “Subsidiary Guarantee”), a warrant issue agreement (the “Warrant Issue Agreement”), a registration rights agreement (the “Registration Rights Agreement”) and a board observation rights agreement (the “Board Observation Rights Agreement” together with the Security Agreement, the Subsidiary Guaranty, the Subsidiary Security Agreement, Warrant Issuance Agreement, Registration Rights Agreement and the Purchase Agreement, the “Investment Documents”) pursuant to which, at the closing held contemporaneously with the execution of the agreements: (i) Pursuant to the Purchase Agreement, QFL agreed to make available to the Company a financing facility of: (a) up to $25,000,000 for the acquisition of mutually agreed patent rights that the Company intends to monetize; (b) up to $2,000,000 for operating expenses; and (iii) $1,750,000 to fund the cash payment portion of the restructure of the Company’s obligations to Intelligent Partners. In return the Company transferred to QFL a right to receive a portion of net proceeds generated from the monetization of those patents. (ii) The Company used $1,750,000 of proceeds from the QFL financing as the cash payment portion of the restructure of the Company’s obligations to Intelligent Partners pursuant to the Restructure Agreement executed contemporaneously with the closing of the Investment Documents. The payment was made directly from QFL to Intelligent Partners. (iii) Pursuant to the Security Agreement, the Company’s obligations under the Purchase Agreement with QFL are secured by: (a) the proceeds (as defined in the Purchase Agreement); (b) the patents (as defined in the Purchase Agreement; (c) all general intangibles now or hereafter arising from or related to the foregoing (a) and (b); and (d) proceeds (including, without limitation, cash proceeds and insurance proceeds) and products of the foregoing (a)-(c). (iv) Pursuant to the Subsidiary Guaranty, eight of the Company’s subsidiaries –QLC, NetTech, Mariner, Semcon, IC, CXT, M-Red, and AMI, collectively, the “Subsidiary Guarantors”) guaranteed the Company’s obligations to QFL under the Purchase Agreement. (v) Pursuant to the Subsidiary Security Agreement, the Subsidiary Guarantors granted QFL a security interest in the proceeds from the future monetization of their respective patent portfolios. (vi) Pursuant to the Warrant Issue Agreement, the Company granted QFL ten-year warrants to purchase a total of up to 96,246,246 shares of the Company’s common stock, at an exercise price of $0.0054 per share which may be exercised from the date of exercise through February 18, 2031 on a cash or cashless basis. Exercisability of the warrant is limited if, upon exercise, the holder or any of holder’s affiliates would beneficially own more than 4.99% (the “Maximum Percentage”) of the Company’s common stock, except that by written notice to the Company, the holder may change the Maximum Percentage to any other percentage not in excess of 9.99% provided any such change will not be effective until the 61 st (vii) The Company regained compliance with the OTCQB Eligibility Requirements on May 7, 2021, at which time the common stock recommenced trading on the OTCQB. (viii) The Company granted QFL certain registration rights with respect to the 96,246,246 shares of common stock issuable upon exercise of the warrant. See Note 5 for information on the warrant issuance. (ix) Pursuant to the Board Observation Rights Agreement, until the later of the date on which QFL or its affiliates (i) have received the entirety of their Investment Return (as defined in Purchase Agreement), and (ii) no longer hold any Securities (the “ Observation Period On February 26, 2021, the Company entered into an agreement with Peter K. Trzyna (“PKT”) pursuant to which PKT assigned to the Company all right, title, and interest in a portfolio of eight United States patents (the “Peregrin Portfolio”). Under the agreement, the Company paid PKT $350,000 at closing and agreed that upon the realization of gross proceeds, if any, the Company shall make a second installment payment or payments in the aggregate amount of $93,900 representing reimbursement to PKT, as the prosecuting attorney, for legal fees associated with prosecution of the portfolio, such reimbursement shall be due and payable to PKT from time to time as gross proceeds are realized, and paid to PKT along with and in proportion to reimbursement to other third parties of costs incurred in realizing gross proceeds from the Peregrin Portfolio. Thereafter, PKT is entitled to a percentage of gross proceeds realized, if any, from the Peregrin Portfolio. The Company requested and received a capital advance from QFL in the amount of $350,000 pursuant to the Purchase Agreement, which was used to make payment to PKT. On May 20, 2021, Taasera Licensing LLC, a wholly owned subsidiary, entered into an agreement with Taasera, Inc. to acquire all right, title, and interest in a portfolio of seven United States patents (the “Taasera Portfolio”) for $250,000. The Company requested and received a capital advance from QFL in the amount of $250,000 pursuant to the Purchase Agreement, which was used to make payment to Taasera, Inc. On October 15, 2021, the Company’s wholly owned subsidiary, Multimodal Media LLC (“MML”), acquired all right, title, and interest in a portfolio of nine United States patents (the “MML Portfolio”) for a purchase price of $550,000 pursuant to an agreement with AI, pursuant to which MML retains an amount equal to the purchase price plus any fees incurred out of net proceeds, as defined in the agreement, after which AI is entitled to a percentage of further net proceeds realized, if any. The Company requested and received a capital advance from QFL in the amount of $550,000 pursuant to the Purchase Agreement, which was used to make payment to AI. The Company requested and received operating capital advances in the amount of $1,000,000 from QFL pursuant to the Purchase Agreement during the year ended December 31, 2021. Loan Payable Related Party The loan payable – related party at December 31, 2021 represents the current amount of a non-interest bearing total monetization proceeds obligation (the “TMPO”) to Intelligent Partners, LLC (“Intelligent Partners”) of $2,805,000, pursuant to a restructure agreement (“Restructure Agreement”) dated February 22, 2021 whereby the Company and Intelligent Partners, extinguished the Company’s 10% note to Intelligent Partners as transferee of the notes issued to United Wireless Holdings, Inc. (“United Wireless”), in the amount of $4,672,810 pursuant to securities purchase agreement dated October 22, 2015 between the Company and United Wireless. The notes became due by their terms on September 30, 2020, and the Company did not make any payment on account of principal and interest on the notes. Subsequent to September 30, 2020, the Company engaged in negotiations with Intelligent Partners in parallel with the Company’s negotiations with QFL, with a view to restructuring the Company’s obligations under the United Wireless agreements, including the notes, so that the Company no longer had any obligations under the notes or the SPA. These negotiations resulted in the Restructure Agreement, described below, which provided for the payment to Intelligent Partners of $1,750,000 from the proceeds from the Company’s agreements with QFL. As part of the restructure of the Company’s agreements with Intelligent Partners, the Company amended the existing monetization proceeds agreements (“MPAs”) and granted Intelligent Partners certain rights in the monetization proceeds from any new intellectual property the Company acquires, as describe below. Under these MPAs, Intelligent Partners participates in the monetization proceeds the Company receives with respect to new patents after QFL has received its negotiated rate of return. On or prior to the date of the Restructure Agreement, Intelligent Partners transferred to Fitton and Carper $250,000 of the notes (the “Transferred Note”), thereby reducing the principal amount of the notes held by Intelligent Partners to $4,422,810. On February 22, 2021, the Company and Intelligent Partners agreed to extinguish the notes and Transferred Note, and terminate or amend and restate the SPA and Transaction Documents, pursuant to a series of agreements including: a Restructure Agreement (the “Restructure Agreement”), a Stock Purchase Agreement (the “Stock Purchase Agreement”), an Option Grant (the “Option Grant”), an Amended and Restated Pledge Agreement (the “Pledge Agreement”), an Amended and Restated Registration Rights Agreement (the “Registration Rights Agreement”), a Board Observation Agreement (the “Board Observation Agreement”), a MPA-NA Security Interest Agreement (the “MPA-NA Security Interest Agreement”), an Amended and Restated Patent Proceeds Security Agreement (the “Patent Proceeds Security Agreement”, an Amended and Restated MPA-CP (the “MPA-CP”), an Amended and Restated MPA-CXT (the “MPA-CXT”), a MPA-MR (the “MPA-MR”), a MPA-AMI (the “MPA-AMI,” and together with the MPA-CP, MPA-CXT and MPA-MR, each a Restructure MPA and together the Restructure MPAs) and a MPA-NA (the “MPA-NA”). (i) Pursuant to the Restructure Agreement, the Company paid Intelligent Partners $1,750,000 at closing, which the Company received from QFL and which QFL paid directly to Intelligent Partners, and recognized the TMPO, which shall, from and after the Restructure Date, be reduced on a dollar for dollar basis by (a) payments to Intelligent Partners pursuant to the restructure agreement, the Restructure MPAs and the MPA-NA and (b) any election by the Intelligent Partners to pay the Exercise Price of the Restructure Option, in whole or part, by means of a reduction in the then outstanding TMPO. The TMPO has been classified as a current liability as of September 30, 2021. (ii) Pursuant to the Stock Purchase Agreement, the Company issued to Fitton and Carper, as holders of the Transferred Note, a total of 46,296,296 shares of common stock at a purchase price of $0.0054 per share, which purchase price was paid by the conversion and in full satisfaction of the Transferred Note (the “Conversion Shares”). For purposes of extinguishment, the issuance of the Conversion Shares in full satisfaction of the Transferred Note balance of $250,000 is included in the reacquisition price of the debt. The Company recognized a loss on debt conversion of $305,556 which is the difference between the agreed conversion price and the fair value of the Conversion Shares at the date of conversion. See Note 5 for information on the share issue. (iii) Pursuant to the Option Grant, the Company granted Intelligent Partners an option to purchase a total of 50,000,000 shares of common stock, with an exercise price of $0.0054 per share which vests immediately and may be exercised through September 30, 2025. The Company valued the option at approximately $598,000 using the Black-Scholes pricing model. The proceeds were allocated to the repurchase price of the debt extinguishment based on its fair value. See Note 5 for information on the option grant. (iv) Pursuant to the restructured monetization proceeds agreement, Intelligent Partners has a right to receive 60% of the net monetization proceeds from the patents currently owned by the Subsidiary Guarantors. The agreement has no termination provisions, so Intelligent Partners will be entitled to its percentage interest as long as revenue is generated from the intellectual property covered by the agreement. (v) Pursuant to the MPA-NA, until the TMPO has been paid in full, Intelligent Partners is entitled to receive 10% of the net proceeds realized from new assets acquired by the Company. If, in any calendar quarter, net proceeds realized exceed $1,000,000, Intelligent Partners’ entitlement for that quarter only shall increase to 30% on the portion of net proceeds in excess of $1,000,000 but less than $3,000,000. If in the same calendar quarter, net proceeds exceed $3,000,000, Intelligent Partners’ entitlement for that quarter only shall increase to 50% on the portion of net proceeds in excess of $3,000,000. After satisfaction of the TMPO, the MPA-NA and Intelligent Partners’ interest in new asset proceeds shall terminate. (vi) The Company granted Intelligent Partners, Andrew Fitton and Michael Carper certain registration rights with respect to (i) the 50,000,000 shares currently owned by Fitton and Carper; (ii) the 46,296,296 Conversion Shares issued to Fitton and Carper, and (iii) the 50,000,000 shares of common stock issuable upon exercise of the option. See Note 5 (vii) Pursuant to the Subsidiary Security Agreement, the Company’s obligations under its agreements with Intelligent Partners, including its obligations under the Restructure Agreement and the Restructure MPAs are secured by a security interest in the net proceeds realized from the future monetization of the patents currently owned by the eight subsidiaries named above. (viii) Pursuant to the MPA-NA-Security Interest Agreement, our obligations under the MPA-NA are secured by a security interest in net proceeds realized from the future monetization of new patents acquired until the TMPO is satisfied, provided Intelligent Partners’ secured interest shall be limited to its entitlement in Net Proceeds under the MPA-NA. After satisfaction of the TMPO the security interest in proceeds from new assets shall terminate. (ix) Pursuant to the Board Observation Rights Agreement, until the Total Monetization Proceeds Obligation has been satisfied (the “ Observation Period Events of Default include (i) a Change of Control of the Company (ii) any uncured default on payment due to Intelligent Partners in an amount totaling in excess of $275,000, which is not the subject of a Dispute or other formal dispute resolution proceeding initiated in good faith pursuant to this Agreement or other Restructure Documents (iii) the filing of a voluntary petition for relief under the United States Bankruptcy Code by Company or any of its material subsidiaries, (iv) the filing of an involuntary petition for relief under the United States Bankruptcy Code against the Company, which is not stayed or dismissed within sixty (60) days of such filing, except for an involuntary petition for relief filed solely by Intelligent Partners, or any Affiliate or member of Intelligent Partners, or (v) acceleration of an obligation in excess of $1 million dollars to another provider of financing following a final determination by arbitration or other judicial proceeding that such obligation is due and owing. The Company recognized a loss on extinguishment of the note of $730,378 reflected as follows: Carrying amount as of the restructure date $ 4,672,810 Net carrying amount 4,672,810 Reacquisition Price Cash payment via QFL (1,750,000 ) Conversion of transferred note (250,000 ) Fair value of option grant (598,188 ) TMPO undiscounted future cash flows (2,805,000 ) Loss on debt extinguishment $ (730,378 ) Because of its ownership percentage, Intelligent Partners is treated as a related party. Purchase Price of Patents The purchase price of patents – current portion at December 31, 2021 represents the current portion of minimum payments due under the agreements between: ● CXT and Intellectual Ventures Assets 34, LLC and Intellectual Ventures 37, LLC (“IV 34/37”) pursuant to which at closing CXT acquired by assignment all right, title, and interest in a portfolio of thirteen United States patents (the “CXT Portfolio”). Under the agreement, CXT will distribute 50% of net recoveries, as defined, to IV 34/37. CXT advanced $25,000 to IV 34/37 at closing, and agreed, pursuant to an amendment dated January 26, 2018, that in the event that, on December 31, 2018, December 31, 2019 and December 31, 2020, cumulative distributions to IV 34/37 total less than $100,000, $375,000 and $975,000, respectively, CXT shall pay the difference necessary to achieve the applicable minimum payment amount within ten days after the applicable date; with any advances being credited toward future distributions to IV 34/36. As of December 31, 2020, cumulative distributions totaling $375,000 had been made and CXT did not pay the $600,000 difference to IV 34/37 within ten days and the remaining $600,000 of the minimum future cumulative distributions due were presented as short-term debt. On December 31, 2021 the parties amended the agreement to provide that CXT will distribute 65% of net proceeds, as defined, to IV 34/37, as long as CXT generates revenue from the CXT Portfolio and that if, on December 31, 2018 and December 31, 2019, cumulative distributions to IV 34/37 total less than $100,000 and $375,000, respectively, CXT shall pay the difference between such cumulative amounts and the amount paid to IV 34/37 within ten days after the applicable date. As of December 31, 2019 cumulative distributions to IV 34/37 totaled $375,000, no further minimum cumulative distributions are required pursuant to the agreement as amended and the Company recorded a gain on forgiveness of $600,000. No affiliate of CXT has guaranteed the minimum payments. CXT’s obligations under the agreement are secured by a security interest in the proceeds (from litigation or otherwise) from the CXT Portfolio. ● M-RED and Intellectual Ventures Assets 113 LLC and Intellectual Ventures Assets 108 LLC (“IV 113/108”) pursuant to which at closing M-RED paid IV 113/108 $75,000 and IV 113/108 transferred to M-RED all right, title and interest in a portfolio of sixty United States patents and eight foreign patents (the “M-RED Portfolio”). Under the agreement, M-RED will distribute 50% of net proceeds, as defined, to IV 113/108, as long as M_RED generates revenue from the M-RED Portfolio. The agreement with IV 113/108 provides that if, on September 30, 2020, September 30, 2021 and September 30, 2022, cumulative distributions to IV 113/108 total less than $450,000, $975,000 and $1,575,000, respectively, M-RED shall pay the difference between such cumulative amounts and the amount paid to IV 113/108 within ten days after the applicable date; with any advances being credited toward future distributions to IV 113/108. As of December 31, 2020, cumulative distributions totaling $975,000 had not been made and M-RED did not pay the $900,000 difference to IV 113/108 within ten days and the remaining $900,000 of the minimum future cumulative distributions due were presented as short-term debt. On December 31, 2021 the parties amended the agreement to provide that M-RED will distribute 100% of undistributed net proceeds, as defined, resulting from agreements signed prior to December 31, 2021 and 65% of net proceeds thereafter to IV 113/108, as long as M-RED generates revenue from the M-RED Portfolio and that if, on December 31, 2021 cumulative distributions to IV 113/108 total less than $302,113.89, M-RED shall pay the difference between such cumulative amounts and the amount paid to IV 113/108 within ten days after the applicable date. As of December 31, 2021 cumulative distributions to IV 113/108 totaled $302,113.89, no further minimum cumulative distributions are required pursuant to the agreement as amended and the Company recorded a gain on forgiveness of approximately $1,230,000. M-RED’s obligations under the agreement with IV 113/108 are secured by a security interest in the proceeds (from litigation or otherwise) from the M-RED Portfolio. The purchase price of patents at December 31, 2021 represents: The non-current portion of our obligations under the unsecured non-recourse funding agreement with a third-party funder entered into in May 2020 whereby the third-party agreed to provide acquisition funding in the amount of $95,000 for the Company’s acquisition of the audio messaging portfolio. Under the funding agreement, the third-party funder is entitled to a priority return of funds advanced from net proceeds, as defined, recovered until the funder has received $190,000. The Company has no other obligation to the third party and has no liability to the funder in the event that the Company does not generate net proceeds. Pursuant to ASC 470, the company recorded this monetization obligation as debt and the difference between the purchase price and total obligation as a discount to the debt and fully expensed to interest during the period. The balance of the purchase price of the patents is reflected as follows: December 31, December 31, Current Liabilities: Purchase price of patents, current portion $ - $ 1,500,000 Unamortized discount - - Non-current liabilities: Purchase price of patents, long term 190,000 790,000 Unamortized discount - (131,793 ) Total current and non-current $ 190,000 $ 2,158,207 Effective interest rate of Amortization over 2 years - 9.4-14.5 % Because the non-current minimum payment obligations were due over three years, the Company imputed interest of 10% which was recorded as a discount to the liabilities and amortized through the maturity date. Long term liabilities The loans payable-SBA at December 31, 2021 represents: ● An unsecured loan from JPMorgan Chase Bank, N.A. in the aggregate amount of $20,832, pursuant to the Paycheck Protection Program (the “PPP”) under Division A, Title I of the Coronavirus Aid, Relief, and Economic Security Act, also known as the CARES Act, which was enacted March 27, 2020. The loan, which was taken down on April 23, 2020, matures on April 23, 2022 and bears interest at a rate of 0.98% per annum, with interest payable monthly commencing on November 23, 2020. The loan may be prepaid by the Company at any time prior to maturity with no prepayment penalties. Funds from the loan may only be used for payroll costs, costs used to continue group health care benefits, mortgage payments, rent, utilities, and interest on other debt obligations incurred before February 15, 2020. The Company has used the entire loan amount for qualifying expenses. Under the terms of the PPP, certain amounts of the loan may be forgiven if they are used for qualifying expenses as described in the CARES Act. As of December 31, 2021 the loan has been forgiven and the Company recorded a gain on loan forgiveness of $20,832. ● A secured Economic Injury Disaster Loan from the U.S. Small Business Association (“SBA”) in the aggregate amount of $150,000, pursuant to Section 7(b) of the Small Business Act as part of the COVID-19 relief effort. The Company’s obligations on the loan are set forth in the Company’s note dated May 14, 2020 which matures on May 14, 2050 and bears interest at a rate of 3.75% per annum, payable monthly commencing on May 14, 2022. The Note may be prepaid by the Company at any time prior to maturity with no prepayment penalties. Funds from the Loan may be used solely as working capital to alleviate economic injury caused by disaster occurring in the month of January 31, 2020 and continuing thereafter and to pay Uniform Commercial Code (UCC) lien filing fees and a third-party UCC handling charge of $100 which were deducted from the loan amount stated above. In addition to the loan, as part of the COVID-19 relief effort, the Company obtained an Emergency EIDL Grant from the SBA in the amount of $1,000. The Company is not required to repay the grant. |
Warrant Liability
Warrant Liability | 12 Months Ended |
Dec. 31, 2021 | |
Warrant Liability [Abstract] | |
WARRANT LIABILITY | NOTE 4 – WARRANT LIABILITY The Company issued warrants to purchase 96,246,246 shares of common stock to QFL (see Note 3) in connection with its funding agreement. If on the date of initial exercise the aggregate number of warrant shares purchasable upon exercise of the warrant would yield less than an amount equal to 10% of the aggregate number of outstanding shares of capital stock of the Company (determined on a fully diluted basis), then the number of warrant shares shall be increased to an amount equal to 10% of the aggregate number of outstanding shares of capital stock of the Company (determined on a fully diluted basis), the number of shares underlying the warrants is not fixed until the date of the initial exercise. As such, the warrant issued to QFL requires classification as a liability pursuant to ASC Topic 480, Distinguishing Liabilities from Equity and is valued at its fair value as of the grant date and re-measured at the balance sheet date. As of December 31, 2021, and February 22, 2021, the aggregate fair value of the outstanding warrant liability was approximately $1,636,187 and $1,154,905, respectively. The Company estimated the fair value of the warrant liability using the Black-Scholes option pricing model using the following key assumptions as of December 31, 2021 and the grant date: As of December 31, February 22, 2021 2021 Volatility 373 % 252 % Exercise price 0.0054 0.0054 Risk-free interest rate 1.37 % 1.37 % Expected dividends - - % Expected term 9.4 10 The following schedule summarizes the valuation of financial instruments that are remeasured on a recurring basis at fair value in the balance sheets as of December 31, 2021 and 2020: Fair Value Measurements as of December 31, 2021 December 31, 2020 Level 1 Level 2 Level 3 Level 1 Level 2 Level 3 Assets None $ - $ - $ - $ - $ - $ - Total assets - - - - - - Liabilities Warrant liability - - 1,636,187 - - - Total liabilities $ - $ - $ 1,636,187 $ - $ - $ - The following table sets forth a reconciliation of changes in the fair value of the warrant liabilities classified as Level 3 in the fair value hierarchy: Significant Unobservable Inputs Fair value at grant date $ 1,154,905 Change in fair value 481,282 Balance - December 31, 2021 $ 1,636,187 See Notes 3 and 5 for information on the warrant issuance. |
Stockholders' Equity
Stockholders' Equity | 12 Months Ended |
Dec. 31, 2021 | |
Stockholders' Equity Note [Abstract] | |
STOCKHOLDERS’ EQUITY | NOTE 5 – STOCKHOLDERS’ EQUITY Amendment to the 2017 Equity Incentive Plan On February 19, 2021 the board of directors amended the 2017 Equity Incentive Plan (the “Plan”) increasing the shares the Company can issue under the Plan to 500,000,000 shares of common stock pursuant to non-qualified stock options, restricted stock grants and other equity-based incentives, the amendment to the Plan and the grants of awards pursuant to the Plan, became effective upon the closing of the agreements with QFL. Issuance of Common Stock and Options Issuances to Intelligent Partners On February 22, 2021, pursuant to the Restructure Agreement, Intelligent Partners and its controlling members agreed to extinguish the notes and Transferred Note, and terminate or amend and restate the SPA and Transaction Documents and the Company: (i) issued to Fitton and Carper, as holders of the Transferred Note, pursuant to the Stock Purchase Agreement a total of 46,296,296 shares of the Company’s common stock at a purchase price of $0.0054 per share, which purchase price was paid by the conversion and in full satisfaction of the Company’s obligation under the Transferred Note and included in the calculation of the repurchase price of the debt; and (ii) granted Intelligent Partners, pursuant to the Option Grant, an option to purchase a total of 50,000,000 shares of common stock, with an exercise price of $0.0054 per share which vested immediately and may be exercised through September 30, 2025. The Company valued the purchase option at approximately $598,000 using the Black-Scholes pricing model. Variables used in the valuation include (1) discount rate of 1.37%; (2) option life of 5 years; (3) computed volatility of 252% and (4) zero expected dividends. The fair market value of the options was included in the loss on extinguishment calculation (see Note 3). The Company granted Intelligent Partners, Andrew Fitton and Michael Carper certain registration rights with respect to (i) the 50,000,000 shares currently owned by Fitton and Carper; (ii) the 46,296,296 Conversion Shares issued to Fitton and Carper, and (iii) the 50,000,000 shares of common stock issuable upon exercise of the option. Commencing six months from the closing date, if the shares owned by Fitton, Carper and Intelligent Partners cannot be sold pursuant to a registration statement and cannot be sold pursuant to Rule 144 without the Company being in compliance with the current public information requirements of Rule 144, if the Company is not in compliance with the current public information requirements, the Company is required to pay damages to Intelligent Partners. Consulting Agreements On February 22, 2021, the Company entered into advisory service agreement with three consultants pursuant to which they will provide services to the Company in connection with the development of the Company’s business. The agreements have a term of ten years and may be terminated by the Company for cause or upon the death or disability of the consultants. Pursuant to the agreements with two of the consultants, the compensation payable to each of them consists of a restricted stock grant of 10,000,000 shares of Common Stock which vested immediately upon issuance and a ten-year option to purchase a total of 30,000,000 shares of Common Stock, which become exercisable cumulatively as follows: a. 10,000,000 shares at an exercise price of $0.01 per share becoming exercisable upon the commencement of trading of the Common Stock on the OTCQB. The Company regained such compliance on May 7, 2021, at which time the common stock recommenced trading on the OTCQB. b. 10,000,000 shares at an exercise price of $0.03 per share, becoming exercisable on the first day on which the Company files with the SEC a Form 10-K or Form 10-Q which stockholders’ equity of at least $5,000,000, and c. 10,000,000 shares at an exercise price of $0.05 per share becoming exercisable on the date on which the Common Stock is listed for trading on the Nasdaq Stock Market or the New York Stock Exchange. The Company recorded professional fees in the amount of $240,000 as a result the restricted stock grants to these two consultants. The Company determined the fair value of the options as of the grant date to be approximately $720,000 using the Black-Scholes pricing model. Variables used in the valuation include (1) discount rate of 1.37%; (2) term of 10 years; (3) computed volatility of 252% and (4) zero expected dividends. The Company met the first performance condition and accrued the option expense of approximately $240,000 over the period from the grant date to achievement of the performance condition. The Company recognized option expense of approximately $240,000 for the year ended December 31, 2021. Pursuant to the agreement with the third consultant, the compensation payable to the consultant consists of a restricted stock grant of 10,000,000 shares of Common Stock which immediately vests in full and a ten-year option to purchase 30,000,000 shares of Common Stock, which becomes exercisable cumulatively as follows: a. 10,000,000 shares at an exercise price of $0.01 per share became exercisable on February 22, 2022, which was the first anniversary of the date of the agreement; b. 10,000,000 shares at an exercise price of $0.03 per share upon the second anniversary of the date of the agreement; and c. 10,000,000 shares at an exercise price of $0.05 per share upon the third anniversary of the dare of the agreement. The Company recorded professional fees in the amount of $120,000 as a result the restricted stock grant to the third consultant. The Company determined the fair value of the options as of the grant date to be approximately $360,000 using the Black-Scholes pricing model. Variables used in the valuation include (1) discount rate of 1.37%; (2) term of 10 years; (3) computed volatility of 252% and (4) zero expected dividends. The Company recognized option expense of approximately $188,000 for the year ended December 31, 2021. Compensatory Arrangements of Certain Officers On February 22, 2021, the board of directors: (i) Granted restricted stock grants for services rendered and vesting in full upon grant, to: a. Jon C. Scahill – 49,000,000 shares b. Timothy J. Scahill – 10,000,000 shares c. Dr. William R. Carroll - 10,000,000 shares (ii) Granted Jon Scahill a ten-year option (the “Option”) to purchase 60,000,000 shares of Common Stock which become exercisable cumulatively as follows: a. 20,000,000 shares at an exercise price of $0.01 per share becoming exercisable upon the commencement of trading of the Common Stock on the OTCQB. The Company regained such compliance on May 7, 2021, at which time the common stock recommenced trading on the OTCQB. b. 20,000,000 shares at an exercise price of $0.03 per share, becoming exercisable on the first day on which the Company files with the SEC a Form 10-K or Form 10-Q which stockholders” equity of at least $5,000,000, and c. 20,000,000 shares at an exercise price of $0.05 per share becoming exercisable on the date on which the Common Stock is listed for trading on the Nasdaq Stock Market or the New York Stock Exchange (iii) Appointed Ryan T. Logue to the board of directors and granted Mr. Logue a restricted stock grant of 5,000,000 shares of common stock which vests upon his acceptance of his appointment as a director. The Company recognized compensation expense of $888,000 in conjunction with issuance of common stock to officers and directors. The Company determined the fair value of the options to be approximately $720,000 as of the grant date using the Black-Scholes pricing model. Variables used in the valuation include (1) discount rate of 1.37%; (2) term of 10 years; (3) computed volatility of 252% and (4) zero expected dividends. The Company recognized option expense of approximately $240,000 for the year ended December 31, 2021. A summary of the status of the Company’s stock options and changes is set forth below: Number of Weighted- Weighted- Weighted- Balance - December 31, 2019 50,000,000 $ 0.03 $ 0.004 0.75 Granted - - - - Exercised - - - - Expired 50,000,000 - - - Cancelled - - - - Balance - December 31, 2020 - $ - $ - - Granted 200,000,000 0.02 0.012 8.65 Exercised - - - - Expired - - - - Cancelled - - - - Balance – December 31, 2021 200,000,000 $ 0.02 $ - 7.80 Options exercisable at end of period 100,000,000 $ 0.0074 0.0096 6.15 The intrinsic value of the outstanding options as of December 31, 2021 is $930,000. As of December 31, 2021, there was approximately $1,132,000 of unrecognized compensation expense related to nonvested stock option awards that is expected to be recognized over a weighted average expected term of 8 years. Issuance of Warrants A summary of the status of the Company’s warrants and changes is set forth below: Number of Weighted Weighted Balance – December 31, 2019 - - - Granted - - - Exercised - - - Expired - - - Cancelled - - - Balance - December 31, 2020 - - - Granted 96,246,246 0.0054 9.89 Exercised - - - Expired - - - Cancelled - - - Balance – December 31, 2021 96,246,246 0.0054 9.14 The intrinsic value of the outstanding warrants as of December 31, 2021 is $1,116,456. |
Intangible Assets
Intangible Assets | 12 Months Ended |
Dec. 31, 2021 | |
Intangible Assets [Abstract] | |
INTANGIBLE ASSETS | NOTE 6 – INTANGIBLE ASSETS Intangible assets include patents purchased and are recorded at their acquisition cost. Intangible assets consisted of the following: Weighted December 31, period 2021 2020 (years) Patents $ 5,617,117 $ 5,690,000 4.5 Less: net monetization obligations - (509,811 ) Imputed interest - (713,073 ) Disposal (4,362,117 ) Subtotal 1,255,000 4,467,116 Less: accumulated amortization (715,519 ) (2,266,157 ) Net value of intangible assets $ 539,481 $ 2,200,959 11.02 Intangible assets are comprised of patents with estimated useful lives. The intangible assets at December 31, 2021 represent: ● patents acquired in October 2015 for a purchase price of $3,000,000, the useful lives of the patents, at the date of purchase, was 6-10 years; ● patents acquired in July 2017 pursuant to an agreement with IV 34/37, as amended on December 31, 2021, pursuant to which CXT has an obligation to pay 65% of net revenues to IV 34/37 (see Note 3); the useful lives of the patents, at the date of acquisition, was 5-6 years; ● patents (which were fully depreciated at the date of acquisition) acquired in January 2018 pursuant to an agreement with to Intellectual Ventures Assets 62 LLC and Intellectual Ventures Assets 71 LLC “(IV 62/71”), pursuant to which CXT has an obligation to distribute 50% of net revenues to IV 62/71; ● patents (which were fully depreciated at the date of acquisition) acquired in January 2018 by Photonic Imaging Solutions Inc. (“PIS”) from Intellectual Ventures Assets 64 LLC (“IV 64”) pursuant to which PIS is to pay IV 64 (a) 70% of the first $1,500,000 of net revenue, (b) 30% of the next $1,500,000 of net revenue and (c) 50% of net revenue in excess of $3,000,000; ● patents acquired in March 2019 pursuant to an agreement with IV 113/108, as amended on December 31, 2021 to an obligation to pay 65% of net revenues to IV 113/108 (see Note 3); the useful lives of the patents, at the date of acquisition, was approximately 9 years. ● patents (which were fully depreciated at the date of acquisition) acquired in May 2020 for a purchase price of $95,000 pursuant to an agreement with Texas Technology Ventures 2, LLP (“TTV”), pursuant to which of the Company retains the first $230,000 of net proceeds, as defined in the agreement, after which the company has an obligation to distribute 50% of net proceeds to TTV; ● patents (which were fully amortized at the date of acquisition) acquired in February 2021 pursuant to an agreement with PKT for a purchase price of $350,000, pursuant to which $350,000 was paid at closing, and upon the realization of gross proceeds, as defined in the agreement, the Company shall make a subsequent payments in the aggregate amount of $93,900, representing reimbursement to PKT, as the prosecuting attorney, for legal fees associated with prosecution of the portfolio, such reimbursement shall be due and payable to PKT from time to time as gross proceeds are realized, if any, and paid to PKT along with and in proportion to reimbursement to other third parties of costs incurred in realizing gross proceeds. Thereafter, PKT is entitled to a percentage of gross proceeds realized, if any. ● patents (which were fully depreciated at the date of acquisition) acquired in May 2021 for a purchase price of $250,000. ● patents acquired in October 2021 from AI for a purchase price of $550,000 pursuant to which the Company retains an amount equal to the purchase price plus any fees incurred out of net proceeds, as defined in the agreement, after which AI is entitled to a percentage of further net proceeds realized, if any; the useful lives of the patents, at the date of acquisition, was approximately 11 years. The Company amortizes the costs of patents over their estimated useful lives on a straight-line basis. Costs incurred to acquire the patents, including legal costs, are also capitalized and amortized on a straight-line basis over the life of the associated patent. Amortization of patents is included as a selling, general and administrative expense as reflected in the accompanying consolidated statements of operations. The Company assesses intangible assets for any impairment to the carrying values. For the year ended December 31, 2021, the Company recorded non-cash impairment charges of approximately $1,652,00 to write down finite lived intangible assets in the Power Management/Bus Controller, CXT and M-RED portfolios. Amortization expense for patents comprised $1,159,865 and $648,395 for the years ended December 31, 2021 and 2020, respectively. Future amortization of patents is as follows: Year ended December 31, 2022 $ 49,899 2023 49,899 2024 49,899 2025 49,899 2026 and thereafter 339,885 Total $ 539,481 At December 31, 2020, the Company had debt due to Intelligent Partners pursuant to the securities purchase agreement dated October 22, 2015 between the Company and United Wireless, and the Company was to pay 15% of the net monetization proceeds from the patents acquired in October 2015 to Intelligent Partners, as transferee of United Wireless. See the caption “Loan Payable Related Party” in Note 3 in connection with the extinguishment and restructuring of the Company’s obligations to Intelligent Partners. |
Non-Controlling Interest
Non-Controlling Interest | 12 Months Ended |
Dec. 31, 2021 | |
Noncontrolling Interest [Abstract] | |
NON-CONTROLLING INTEREST | NOTE 7 – NON-CONTROLLING INTEREST The following table reconciles equity attributable to the non-controlling interest related to Quest Packaging Solutions Corporation. December 31, 2021 2020 Balance, beginning of year $ 228 $ 239 Net loss attributable to non-controlling interest $ - $ (11 ) Balance, end of year $ 228 $ 228 |
Income taxes
Income taxes | 12 Months Ended |
Dec. 31, 2021 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | NOTE 8 – INCOME TAXES The Company uses the liability method, where deferred tax assets and liabilities are determined based on the expected future tax consequences of temporary differences between the carrying amounts of assets and liabilities for financial and income tax reporting purposes. As of December 31, 2021, the Company has generated approximately $9,965,487 and approximately $2,063,797 of federal and state net operating loss (“NOL”) carry forwards, respectively, which will begin to expire in 2024. Internal Revenue Code section 382 (“Section 382”) restricts the use of these net operating losses in future periods if the Company has a “substantial change in ownership” as defined by Section 382. The Company has had significant equity transactions in prior periods. Due to this equity activity and the restrictions resulting under Section 382, a portion of the Company’s NOLs may not be available to offset future taxable income. Therefore, the Company has fully reserved the deferred tax asset resulting from the net operating loss carry forwards. Deferred tax asset consisted primarily of the following: December 31, 2021 2020 Net operating loss carry forward $ 2,591,027 $ 2,172,545 Bad debt reserves - 17,160 Intangible assets 206,712 515,104 Valuation allowance $ (2,797,739 ) $ (2,704,809 ) Balance, end of year $ - $ - Tax expense consisted primarily of the following: December 31, 2021 2020 Federal $ - $ - State 1,806 5,108 Foreign - 60,255 Deferred - - Total $ 1,806 $ 65,363 The Company’s tax expense does not reflect the statutory rate since the Company’s deferred tax asset is fully offset by a valuation allowance. Reconciliation between the effective tax rate on income from continuing operations and the statutory rate for the year ended December 31, 2021 is as follows: Tax Percentage Book income before taxes $ (872,129 ) 21.00 % State taxes, net 1,427 (0.03 ) Tax exempt income – grant and/or SBA (4,375 ) 0.11 Meals and entertainment 873 (0.02 ) Warrant expense 242,530 (5.84 ) Stock based compensation 402,362 (9.69 ) Loss on conversion of debt 64,167 (1.55 ) Valuation allowance 75,059 (1.81 ) Derivative valuation adjustment 101,069 (2.43 ) Other (9,177 ) 0.22 Total $ 1,806 Effective tax rate (0.04 )% The statute of limitations is open for the tax years ending December 31, 2018 and thereafter. The Company’s foreign tax expense reflects the tax withheld by the foreign jurisdiction on royalty income received by the Company and not exempt under the United States tax treaty, if any, with the respective foreign jurisdiction. In 2021, the Company was not subject to foreign source withholding tax. In 2020, the Company was subject to foreign source withholding tax of 20.4% in Japan. |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Dec. 31, 2021 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | NOTE 9 – RELATED PARTY TRANSACTIONS The Company has at various times entered into transactions with related parties, including officers, directors and major shareholders, wherein these parties have provided services, advanced or loaned money, or both, to the Company needed to support its daily operations. The Company discloses all related party transactions. In prior periods, the Company incurred interest expense on the Company’s 10% notes issued to United Wireless pursuant to the securities purchase agreement dated October 22, 2015. The notes were extinguished in February 2021 and the Company did not incur interest expense on the notes for the year ended December 31, 2021. The interest expense was approximately $351,000 for the year ended December 31, 2020. See Notes 3 and 5 in connection with the extinguishment of the Company’s 10% notes issued to United Wireless and held by Intelligent Partners as the transferee of United Wireless. See Note 10 with respect to the employment agreement with the Company’s president and chief executive officer. During 2021, the Company contracted with an entity owned by the chief technology officer for the provision of information technology services to the Company. The cost of these services was approximately $434 and $464 for the year ended December 31, 2021 and 2020, respectively. During 2021, the Company contracted with a law firm more than 10 percent owned, but not controlled, by the father-in-law of the chief executive officer. The firm is engaged on a contingent fee basis and serves as escrow agent in connection with monetization of the Company’s patents in matters where the firm is serving as counsel to the Company. In connection with the engagement, the Company recorded patent service costs of approximately $763,000 and $909,000 for the years ended December 31, 2021 and 2020 respectively. The amount recorded in 2020 includes approximately $407,000 in accrued expenses and outstanding as of December 31, 2020. The accrued liability is recorded in “accounts payable and accrued liabilities.” The accrued liability was resolved as part of a resolution with the firm at which the father-in-law of the chief executive was formerly a partner. See Note 3 with respect to the resolution of the dispute with the prior firm. In prior periods, the Company engaged a firm at which the father-in-law of the chief executive was formerly a partner. Because his interest in the prior firm was less than 10%, the prior firm was not considered a related party in prior periods. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | NOTE 10 – COMMITMENTS AND CONTINGENCIES Employment Agreements Pursuant to a restated employment agreement, dated November 30, 2014, with the Company’s president and chief executive officer, the Company agreed to employ him as president and chief executive officer for a term of three years, commencing January 1, 2014, and continuing on a year-to-year basis unless terminated by either party on not less than 90 days’ notice prior to the expiration of the initial term or any one-year extension. The agreement provides for an initial annual salary of $252,000, which may be increased, but not decreased, by the board or the compensation committee. In March 2016, the Company’s board of directors increased the chief executive officer’s annual salary to $300,000, effective January 1, 2016. The chief executive officer is entitled to a bonus if the Company meets or exceeds performance criteria established by the compensation committee. In August 2016, the Company’s board of directors approved annual bonus compensation equal to 30% of the amount by which our consolidated income before income taxes exceeds $500,000, but, if the Company is subject to the limitation on deductibility of executive compensation pursuant to Section 162(m) of the Internal Revenue Code, the bonus cannot exceed the amount which would be deductible pursuant to Section 162(m). The chief executive officer is also eligible to participate in any executive incentive plans which the Company may adopt. Pension Benefits Pursuant to the SEP IRA plan adopted by the Company in March 2020 the Company deposited into a SEP IRA account of each of its participating employees a percentage of the employee’s compensation, subject to statutory limitations on the amount of the contribution all as set forth in the IRS Form 5305-SEP. For the year ending December 31, 2021 and 2020 the percentage was set at 19%, respectively. For the year ended December 31, 2021 and 2020, the Company’s president and chief executive officer is the only participant and $58,000 and $57,000, respectively, was deposited his SEP IRA account. Inventor Royalties, Contingent Litigation Funding Fees and Contingent Legal Expenses In connection with the investment in certain patents and patent rights, certain of the Company’s operating subsidiaries executed agreements which grant to the former owners of the respective patents or patent rights, the right to receive inventor royalties based on future net revenues (as defined in the respective agreements) generated as a result of licensing and otherwise enforcing the respective patents or patent portfolios. The Company’s operating subsidiaries may engage third party funding sources to provide funding for patent licensing and enforcement. The agreements with the third party funding sources may provide that the funding source receive a portion of any negotiated fees, settlements or judgments. In certain instances, these third party funding sources are entitled to receive a significant percentage of any proceeds realized until the third party funder has recouped agreed upon amounts based on formulas set forth in the underlying funding agreement, which may reduce or delay and proceeds due to the Company. The Company’s operating subsidiaries may retain the services of law firms in connection with their licensing and enforcement activities. These law firms may be retained on a contingent fee basis whereby the law firms are paid on a scaled percentage of any negotiated fees, settlements or judgments awarded based on how and when the fees, settlements or judgments are obtained. Depending on the amount of any recovery, it is possible that all the proceeds from a specific settlement may be paid to the funding source and legal counsel. The economic terms of the inventor agreements, funding agreements and contingent legal fee arrangements associated with the patent portfolios owned or controlled by the Company’s operating subsidiaries, if any, including royalty rates, proceeds sharing rates, contingent fee rates and other terms, vary across the patent portfolios owned or controlled by the operating subsidiaries. Inventor royalties, payments to noncontrolling interests, payments to third party funding providers and contingent legal fees expenses fluctuate period to period, based on the amount of revenues recognized each period, the terms and conditions of revenue agreements executed each period and the mix of specific patent portfolios with varying economic terms and obligations generating revenues each period. Inventor royalties, payments to third party funding sources and contingent legal fees expenses will continue to fluctuate and may continue to vary significantly period to period, based primarily on these factors. Patent Enforcement and Other Litigation Certain of the Company’s operating subsidiaries are engaged in litigation to enforce their patents and patent rights. In connection with these patent enforcement actions, it is possible that a defendant may request and/or a court may rule that an operating subsidiary has violated statutory authority, regulatory authority, federal rules, local court rules, or governing standards relating to the substantive or procedural aspects of such enforcement actions. In such event, a court may issue monetary sanctions against the Company or its operating subsidiaries or award attorney’s fees and/or expenses to a defendant(s), which could be material, and if required to be paid by the Company or its operating subsidiaries, could materially harm the Company’s operating results and financial position. Since the operating subsidiaries do not have any assets other than the patents, and the Company does not have any available financial resources to pay any judgment which a defendant may obtain against a subsidiary, such a judgement may result in the bankruptcy of the subsidiary and/or the loss of the patents, which are the subsidiaries’ only assets. |
Business Combinations
Business Combinations | 12 Months Ended |
Dec. 31, 2021 | |
Business Combinations [Abstract] | |
BUSINESS COMBINATIONS | NOTE 11 – BUSINESS COMBINATIONS On August 6, 2021 the Company acquired all of the issued and outstanding equity interests of STX from Soundstreak, LLC in exchange for an obligation to coordinate and launch a structured licensing program around the STX patent portfolio which consists of three United States patents and one United States patent application. Soundstreak LLC is entitled to 50% of the net proceeds, as defined in the agreement, if any, resulting from monetization of the STX patent portfolio. On November 16, 2021 the Company acquired all of the issued and outstanding equity interests of LS Cloud Storage Technologies, LLC (“LSC”) in exchange for assuming ownership and management of the entity and bearing the transaction costs. The acquisitions were accounted for in accordance with ASC 805, Business Combinations (“ASC 805”). ASC 805 provides, among other things, that the assets acquired and liabilities assumed constitute a business. If the assets acquired are not a business, the reporting entity shall account for the transaction or other event as an asset acquisition which are accounted for using a cost accumulation and allocation model under which the cost of the acquisition is allocated to the assets acquired and liabilities assumed. The STX and LSC were recorded as asset acquisitions. The cost of the LSC asset acquisition was $500 in legal fees, expensed at closing. The initial cost of the STX asset acquisition was $0 with total consideration coming in the form of contingent consideration, which will be recognized if and when it becomes payable. |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2021 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | NOTE 12 – SUBSEQUENT EVENTS On January 27, 2022, the Company acquired, via assignment from Intellectual Ventures Assets 181 LLC and Intellectual Ventures Assets 174 LLC, all right title and interest to four patent portfolios consisting of fifteen United States patents and three foreign patents for a purchase price of $1,060,000. The Company requested and received a capital advance in the amount of the $1,060,000 purchase price from the facility with QFL. On February 28, 2022, the Company filed a certificate of amendment to the certificate of incorporation of Quest Licensing Corporation, a New York corporation, changing the name of the corporation to Digital IP Advisors Incorporated. In March 2022, the Company received operating capital advances in the amount of $200,000 from QFL pursuant to the Purchase Agreement. |
Accounting Policies, by Policy
Accounting Policies, by Policy (Policies) | 12 Months Ended |
Dec. 31, 2021 | |
Accounting Policies [Abstract] | |
Principles of consolidation and financial statement presentation | Principles of consolidation and financial statement presentation The consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles (“US GAAP”) and present the consolidated financial statements of the Company and its wholly owned and majority owned subsidiaries as of December 31, 2021 and 2020. The consolidated financial statements include the accounts and operations of: Quest Patent Research Corporation (“The Company”) Quest Licensing Corporation (NY) (wholly owned) Quest Licensing Corporation (DE) (wholly owned) Quest Packaging Solutions Corporation (90% owned) Quest Nettech Corporation (65% owned) Semcon IP, Inc. (wholly owned) Mariner IC, Inc. (wholly owned) IC Kinetics, Inc. (wholly owned) CXT Systems, Inc. (wholly owned) Photonic Imaging Solutions Inc. (wholly owned) M-RED Inc. (wholly owned) Audio Messaging Inc. (wholly owned) Peregrin Licensing LLC (wholly owned) Taasera Licensing LLC (wholly owned) Soundstreak Texas, LLC (wholly owned) Multimodal Media LLC (wholly owned) LS Cloud Storage Technologies, LLC (wholly owned) Significant intercompany transaction and balances have been eliminated in consolidation. |
Use of Estimates | Use of Estimates In preparing financial statements in conformity with accounting principles generally accepted in the United States of America, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and revenue and expenses during the reporting period. On an on-going basis, management evaluates estimates including the allowance for doubtful accounts, income taxes and contingencies. The Company bases its estimates on historical experience and on other assumptions that management believes to be reasonable under the circumstances, the results of which form its basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results could differ from those estimates. |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers all highly liquid investments with original maturity dates of three months or less when purchased, to be cash equivalents. Cash equivalents were $0 as of December 31, 2021 and 2020. |
Accounts Receivable | Accounts Receivable Accounts receivable, which generally relate to licensed sales, are presented on the balance sheet net of estimated uncollectible amounts. The Company records an allowance for estimated uncollectible accounts in an amount approximating anticipated losses. Individual uncollectible accounts are written off against the allowance when collection of the individual accounts appears doubtful. The Company recorded an allowance for doubtful accounts of approximately $0 and $66,000 at December 31, 2021 and 2020, respectively. |
Intangible Assets | Intangible Assets Intangible assets consist of patents which are amortized using the straight-line method over their estimated useful lives or statutory lives whichever is shorter and are reviewed for impairment upon any triggering event that may give rise to the assets ultimate recoverability as prescribed under the guidance related to impairment of long-lived assets. Costs incurred to acquire patents, including legal costs, are also capitalized as long-lived assets and amortized on a straight-line basis with the associated patent. Patents include the cost of patents or patent rights (hereinafter, collectively “patents”) acquired from third-parties or acquired in connection with business combinations. Patent acquisition costs are amortized utilizing the straight-line method over their remaining economic useful lives, ranging from one to twenty years from the date of filing. Certain patent application and prosecution costs incurred to secure additional patent claims, that based on management’s estimates are deemed to be recoverable, are capitalized and amortized over the remaining estimated economic useful life of the related patent portfolio. |
Impairment of long-lived assets | Impairment of long-lived assets Long-lived assets, including intangible assets with a finite life, are reviewed for impairment in accordance with Accounting Standards Codification (“ASC”) 360, “ Property, Plant, and Equipment |
Warrant liability | Warrant liability The Company reflects a warrant liability with respect to warrants for which number of shares underlying the warrants is not fixed until the date of the initial exercise. The amount of the liability is determined at the end of each fiscal period and the period to period change in the amount of warrant liability is reflected as a gain or loss in warrant liability and is include under other income (expense). See Note 4. |
Fair value of financial instruments | Fair value of financial instruments Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. A fair value hierarchy is used which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. See Note 4 for information about warrant liabilities. The fair value hierarchy based on the three levels of inputs that may be used to measure fair value are as follows: Level 1 Level 2 Level 3 The carrying value reflected in the consolidated balance sheets for cash and cash equivalents, accounts receivable, accounts payable and accrued expenses and short-term borrowings approximate fair value due to the short-term nature of these items. The carrying value of long-term debt approximates fair value since the related rates of interest approximate current market rates. |
Revenue Recognition | Revenue Recognition Patent Licensing Fees Revenue is recognized upon transfer of control of promised bundled intellectual property rights and other contractual performance obligations to licensees in an amount that reflects the consideration we expect to receive in exchange for those intellectual property rights. Revenue contracts that provide promises to grant “the right” to use intellectual property rights as they exist at the point in time at which the intellectual property rights are granted, are accounted for as performance obligations satisfied at a point in time and revenue is recognized at the point in time that the applicable performance obligations are satisfied and all other revenue recognition criteria have been met. For the periods presented, revenue contracts executed by the Company primarily provided for the payment of contractually determined, one-time, paid-up license fees in consideration for the grant of certain intellectual property rights for patented technologies owned or controlled by the Company’s operating subsidiaries. Intellectual property rights granted included the following, as applicable: (i) the grant of a non-exclusive, retroactive and future license to manufacture and/or sell products covered by patented technologies, (ii) a covenant-not-to-sue, (iii) the release of the licensee from certain claims, and (iv) the dismissal of any pending litigation. The intellectual property rights granted were perpetual in nature, extending until the legal expiration date of the related patents. The individual intellectual property rights are not accounted for as separate performance obligations, as (i) the nature of the promise, within the context of the contract, is to transfer combined items to which the promised intellectual property rights are inputs and (ii) the Company’s promise to transfer each individual intellectual property right described above to the customer is not separately identifiable from other promises to transfer intellectual property rights in the contract. Since the promised intellectual property rights are not individually distinct, the Company combined each individual IP right in the contract into a bundle of IP rights that is distinct, and accounted for all of the intellectual property rights promised in the contract as a single performance obligation. The intellectual property rights granted were “functional IP rights” that have significant standalone functionality. The Company’s subsequent activities do not substantively change that functionality and do not significantly affect the utility of the IP to which the licensee has rights. The Company’s subsidiaries have no further obligation with respect to the grant of intellectual property rights, including no express or implied obligation to maintain or upgrade the technology, or provide future support or services. The contracts provide for the grant (i.e. transfer of control) of the licenses, covenants-not-to-sue, releases, and other significant deliverables upon execution of the contract. Licensees legally obtain control of the intellectual property rights upon execution of the contract. As such, the earnings process is complete and revenue is recognized upon the execution of the contract, when collectability is probable and all other revenue recognition criteria have been met. Revenue contracts generally provide for payment of contractual amounts within 30-90 days of execution of the contract. Contractual payments made by licensees are generally non-refundable. We do not have any significant payment terms, as payment is received shortly after goods are delivered or services are provided, therefore there is no significant financing component or consideration payable to the customer in these transactions. |
Cost of Revenues | Cost of Revenues Cost of revenues include the costs and expenses incurred in connection with our patent licensing and enforcement activities, including inventor royalties paid to original patent owners, contingent litigation funding fees, contingent legal fees paid to external patent counsel, other patent-related legal expenses paid to external patent counsel, licensing and enforcement related research, consulting and other expenses paid to third-parties and the amortization of patent-related investment costs. These costs are included under the caption “Cost of revenues” in the accompanying consolidated statements of operations. No such fees are recognized as cost of revenue to the extent that the Company has no obligation with respect to such fees prior to a settlement or license. Inventor Royalties, Litigation Funding Fees and Contingent Legal Expenses. In connection with the investment in certain patents and patent rights, certain of the Company’s operating subsidiaries may execute related agreements which grant to the inventors and/or former owners of the respective patents or patent rights, the right to receive a percentage of future net revenues (as defined in the respective agreements) generated as a result of licensing and otherwise enforcing the respective patents or patent portfolios. The Company’s operating subsidiaries may retain the services of law firms that specialize in patent licensing and enforcement and patent law in connection with their licensing and enforcement activities. These law firms may be retained on a contingent fee basis whereby such law firms are paid a percentage of any negotiated fees, settlements or judgments awarded. The Company’s operating subsidiaries may engage with funding sources that specialize in providing financing for patent licensing and enforcement. These litigation finance firms may be engaged on a non-recourse basis whereby such litigation finance firms are paid a percentage of any negotiated fees, settlements or judgments awarded in exchange for providing funding for legal fees and out of pocket expenses incurred as a result of the licensing and enforcement activities. The economic terms of the inventor agreements, operating agreements, contingent legal fee arrangements and litigation financing agreements associated with the patent portfolios owned or controlled by the Company’s operating subsidiaries, if any, including royalty rates, contingent fee rates and other terms, vary across the patent portfolios owned or controlled by such operating subsidiaries. Inventor/former owner royalties, payments to non-controlling interests, contingent legal fees expenses and litigation finance expenses fluctuate period to period, based on the amount of revenues recognized each period, the terms and conditions of revenue agreements executed each period and the mix of specific patent portfolios with varying economic terms and obligations generating revenues each period. Inventor/former owner royalties, contingent legal fees expenses and litigation finance expenses will continue to fluctuate and may continue to vary significantly period to period, based primarily on these factors. |
Research and development | Research and development Research and development costs are expensed as incurred. We did not incur any research and development costs in the years ended December 31, 2021 and 2020. |
Income Taxes | Income Taxes Deferred income tax assets and liabilities are recognized for the expected future income tax consequences of events that have been included in the consolidated financial statements or income tax returns. Deferred income tax assets and liabilities are determined based on differences between the financial statement and tax bases of assets and liabilities using tax rates in effect for the years in which the differences are expected to reverse. In evaluating the ultimate realization of deferred income tax assets, management considers whether it is more likely than not that the deferred income tax assets will be realized. Management establishes a valuation allowance if it is more likely than not that all or a portion of the deferred income tax assets will not be utilized. The ultimate realization of deferred income tax assets is dependent on the generation of future taxable income, which must occur prior to the expiration of the net operating loss carryforwards. The Company also follows the guidance related to accounting for income tax uncertainties. In accounting for uncertainty in income taxes, the Company recognizes the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an audit. For tax positions meeting the more likely than not threshold, the amount recognized in the consolidated financial statements is the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the relevant tax authority. No liability for unrecognized tax benefits was recorded as of December 31, 2021 and 2020. |
Stock-based compensation | Stock-based compensation The Company recognizes stock-based compensation pursuant to ASC 718, “Compensation — Stock Compensation,” which prescribes accounting and reporting standards for all stock-based payment transactions in which employee services, and non-employee services, are acquired. Transactions include incurring liabilities, or issuing or offering to issue shares, options and other equity instruments such as employee stock ownership plans and stock appreciation rights. Stock-based payments to employees, including grants of employee stock options, are recognized as compensation expense in the financial statements based on their fair values. That expense is recognized over the period during which an employee or non-employee is required to provide services in exchange for the award, known as the requisite service period (usually the vesting period). |
Leases | Leases In February 2016, the FASB issued ASU 2016-02, “Leases” (Topic 842), to provide a new comprehensive model for lease accounting under this guidance, lessees and lessors should apply a “right-of-use” model in accounting for all leases (including subleases) and eliminate the concept of operating leases and off-balance-sheet leases. Recognition, measurement and presentation of expenses will depend on classification as a finance or operating lease. Similar modifications have been made to lessor accounting in-line with revenue recognition guidance. |
Concentration of credit risk | Concentration of credit risk The Company maintains its cash in bank deposit accounts, which at times, may exceed federally insured limits. The Company has not experienced any such losses in these accounts. |
Business Acquisitions | Business Acquisitions The acquisition of STX and LS Cloud Storage Technologies, LLC (“LSC”) did not constitute acquisition of a business and therefore were accounted for as asset acquisitions in accordance with ASC 805, Business Combinations (“ASC 805”). ASC 805 provides, among other things, that asset acquisitions be accounted for using a cost accumulation and allocation model under which the cost of the acquisition is allocated to the assets acquired and liabilities assumed. See Note 11 with regarding the STX and LSC acquisitions. |
Gain from Cancelation of Indebtedness | Gain from Cancelation of Indebtedness The Company recognized a gain from the elimination of liability for minimum cumulative net proceeds distributions constituting a portion of the purchase price due to the seller of two of the Company’s patent portfolios and the reduction of liability for legal services resulting from the settlement of the Company’s recorded obligation for unpaid legal services. See Note 3. |
Net Loss Per Share | Net Loss Per Share The Company calculates net losses per share by dividing losses allocated to the Company’s stockholders by the weighted average number of shares of common stock outstanding for the period. Diluted weighted average shares is computed using basic weighted average shares plus any potentially dilutive securities outstanding during the period using the treasury-stock-type method and the if-converted method, except when their effect is anti-dilutive. Because the Company incurred losses in all periods covered by the financial statements the inclusion of diluted weighted average shares would be anti-dilutive, the diluted net loss per share is the same as the basic net loss per share. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements Management does not believe that there are any recently issued, but not effective, accounting standards which, if currently adopted, would have a material effect on the Company’s financial statements. |
Going Concern | Going Concern As shown in the accompanying financial statements, the Company has an accumulated deficit of approximately $25.4 million and negative working capital of approximately $8.1 million as of December 31, 2021. Because of the Company’s continuing losses, its working capital deficiency, the uncertainty of future revenue, the Company’s obligations to Intellectual Ventures, Intelligent Partners, QPRC Finance LLC (“QFL”), the Company’s low stock price and the absence of an active trading market in its common stock, the ability of the Company to raise funds in the equity market or from lenders is severely impaired. These conditions, together with the effects of the COVID-19 pandemic and the steps taken by the states to slow the spread of the virus and its effect on its business raise substantial doubt as to the Company’s ability to continue as a going concern. Although the Company may seek to raise funds and to obtain third party funding for litigation to enforce its intellectual property rights, the availability of such funds, particularly in view of the COVID-19 pandemic, is uncertain. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. |
Short Term Debt and Long-Term_2
Short Term Debt and Long-Term Liabilities (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Debt Disclosure [Abstract] | |
Schedule of short-term and long-term debt | December 31, December 31, 2021 2020 Short-term debt: Loans payable $ 138,000 $ 147,000 Funding liability 3,202,765 - Loan payable – related party 2,805,000 4,672,810 Purchase price of patents – current portion - 1,500,000 Unamortized discount - - Net short-term debt $ 6,145,765 $ 6,319,810 Long-term liabilities: Loans payable - SBA Gross $ 150,000 $ 170,832 Accrued interest - 3,560 Net loans payable - SBA 150,000 174,392 Purchase price of patents Gross 190,000 790,000 Unamortized discount - (131,793 ) Net purchase price of patents – long-term $ 190,000 $ 658,207 |
Schedule of recognized loss on extinguishment of note | Carrying amount as of the restructure date $ 4,672,810 Net carrying amount 4,672,810 Reacquisition Price Cash payment via QFL (1,750,000 ) Conversion of transferred note (250,000 ) Fair value of option grant (598,188 ) TMPO undiscounted future cash flows (2,805,000 ) Loss on debt extinguishment $ (730,378 ) |
Schedule of purchase price of the patents | December 31, December 31, Current Liabilities: Purchase price of patents, current portion $ - $ 1,500,000 Unamortized discount - - Non-current liabilities: Purchase price of patents, long term 190,000 790,000 Unamortized discount - (131,793 ) Total current and non-current $ 190,000 $ 2,158,207 Effective interest rate of Amortization over 2 years - 9.4-14.5 % |
Warrant Liability (Tables)
Warrant Liability (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Warrant Liability [Abstract] | |
Schedule of estimated the fair value of the warrant liability | As of December 31, February 22, 2021 2021 Volatility 373 % 252 % Exercise price 0.0054 0.0054 Risk-free interest rate 1.37 % 1.37 % Expected dividends - - % Expected term 9.4 10 |
Schedule of summarizes the valuation of financial instruments | Fair Value Measurements as of December 31, 2021 December 31, 2020 Level 1 Level 2 Level 3 Level 1 Level 2 Level 3 Assets None $ - $ - $ - $ - $ - $ - Total assets - - - - - - Liabilities Warrant liability - - 1,636,187 - - - Total liabilities $ - $ - $ 1,636,187 $ - $ - $ - |
Schedule of fair value of the warrant liabilities classified | Significant Unobservable Inputs Fair value at grant date $ 1,154,905 Change in fair value 481,282 Balance - December 31, 2021 $ 1,636,187 |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Stockholders' Equity Note [Abstract] | |
Schedule of stock options | Number of Weighted- Weighted- Weighted- Balance - December 31, 2019 50,000,000 $ 0.03 $ 0.004 0.75 Granted - - - - Exercised - - - - Expired 50,000,000 - - - Cancelled - - - - Balance - December 31, 2020 - $ - $ - - Granted 200,000,000 0.02 0.012 8.65 Exercised - - - - Expired - - - - Cancelled - - - - Balance – December 31, 2021 200,000,000 $ 0.02 $ - 7.80 Options exercisable at end of period 100,000,000 $ 0.0074 0.0096 6.15 |
Schedule of warrants | Number of Weighted Weighted Balance – December 31, 2019 - - - Granted - - - Exercised - - - Expired - - - Cancelled - - - Balance - December 31, 2020 - - - Granted 96,246,246 0.0054 9.89 Exercised - - - Expired - - - Cancelled - - - Balance – December 31, 2021 96,246,246 0.0054 9.14 |
Intangible Assets (Tables)
Intangible Assets (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Intangible Assets [Abstract] | |
Schedule of intangible assets | Weighted December 31, period 2021 2020 (years) Patents $ 5,617,117 $ 5,690,000 4.5 Less: net monetization obligations - (509,811 ) Imputed interest - (713,073 ) Disposal (4,362,117 ) Subtotal 1,255,000 4,467,116 Less: accumulated amortization (715,519 ) (2,266,157 ) Net value of intangible assets $ 539,481 $ 2,200,959 11.02 |
Schedule of annual amortization expense | Year ended December 31, 2022 $ 49,899 2023 49,899 2024 49,899 2025 49,899 2026 and thereafter 339,885 Total $ 539,481 |
Non-Controlling Interest (Table
Non-Controlling Interest (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Noncontrolling Interest [Abstract] | |
Schedule of reconciles equity attributable to the non-controlling interest | December 31, 2021 2020 Balance, beginning of year $ 228 $ 239 Net loss attributable to non-controlling interest $ - $ (11 ) Balance, end of year $ 228 $ 228 |
Income taxes (Tables)
Income taxes (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Income Tax Disclosure [Abstract] | |
Schedule of deferred tax asset | December 31, 2021 2020 Net operating loss carry forward $ 2,591,027 $ 2,172,545 Bad debt reserves - 17,160 Intangible assets 206,712 515,104 Valuation allowance $ (2,797,739 ) $ (2,704,809 ) Balance, end of year $ - $ - |
Schedule of tax expense | December 31, 2021 2020 Federal $ - $ - State 1,806 5,108 Foreign - 60,255 Deferred - - Total $ 1,806 $ 65,363 |
Schedule of company’s deferred tax asset effective tax rate | Tax Percentage Book income before taxes $ (872,129 ) 21.00 % State taxes, net 1,427 (0.03 ) Tax exempt income – grant and/or SBA (4,375 ) 0.11 Meals and entertainment 873 (0.02 ) Warrant expense 242,530 (5.84 ) Stock based compensation 402,362 (9.69 ) Loss on conversion of debt 64,167 (1.55 ) Valuation allowance 75,059 (1.81 ) Derivative valuation adjustment 101,069 (2.43 ) Other (9,177 ) 0.22 Total $ 1,806 Effective tax rate (0.04 )% |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Summary of Significant Accounting Policies (Details) [Line Items] | ||
Cash equivalents | $ 0 | $ 0 |
Allowance for doubtful accounts | 0 | 66,000 |
Income tax expense | $ 0 | |
Accumulated deficit | 25,400,000 | |
Working capital | $ 8,100,000 | |
Minimum [Member] | Patents [Member] | ||
Summary of Significant Accounting Policies (Details) [Line Items] | ||
Patents economic useful lives | 1 year | |
Maximum [Member] | Patents [Member] | ||
Summary of Significant Accounting Policies (Details) [Line Items] | ||
Patents economic useful lives | 20 years | |
Quest Packaging Solutions Corporation [Member] | ||
Summary of Significant Accounting Policies (Details) [Line Items] | ||
Ownership percentage | 90.00% | |
Quest Nettech Corporation [Member] | ||
Summary of Significant Accounting Policies (Details) [Line Items] | ||
Ownership percentage | 65.00% |
Short Term Debt and Long-Term_3
Short Term Debt and Long-Term Liabilities (Details) - USD ($) | Oct. 15, 2021 | May 14, 2020 | Apr. 23, 2022 | Jul. 23, 2021 | May 20, 2021 | Feb. 26, 2021 | May 31, 2020 | Apr. 23, 2020 | Jan. 31, 2020 | Dec. 31, 2021 | Dec. 31, 2020 |
Short Term Debt and Long-Term Liabilities (Details) [Line Items] | |||||||||||
Due payments | $ 1,150,000 | ||||||||||
Accounts payable | $ 1,726,000 | ||||||||||
Loans payable - third party | $ 138,000 | $ 147,000 | |||||||||
Loans paid | $ 9,000 | $ 0 | |||||||||
Accrued interest percentage | 10.00% | ||||||||||
Cash payments | $ 1,750,000 | ||||||||||
Warrants to purchase shares (in Shares) | 96,246,246 | ||||||||||
Percentage of affiliates | 4.99% | ||||||||||
Excess percentage | 9.99% | ||||||||||
Percentage of warrant initial exercise | 10.00% | ||||||||||
Interest in portfolio, description | the Company entered into an agreement with Peter K. Trzyna (“PKT”) pursuant to which PKT assigned to the Company all right, title, and interest in a portfolio of eight United States patents (the “Peregrin Portfolio”). Under the agreement, the Company paid PKT $350,000 at closing and agreed that upon the realization of gross proceeds, if any, the Company shall make a second installment payment or payments in the aggregate amount of $93,900 representing reimbursement to PKT, as the prosecuting attorney, for legal fees associated with prosecution of the portfolio, such reimbursement shall be due and payable to PKT from time to time as gross proceeds are realized, and paid to PKT along with and in proportion to reimbursement to other third parties of costs incurred in realizing gross proceeds from the Peregrin Portfolio. Thereafter, PKT is entitled to a percentage of gross proceeds realized, if any, from the Peregrin Portfolio. The Company requested and received a capital advance from QFL in the amount of $350,000 pursuant to the Purchase Agreement, which was used to make payment to PKT. | ||||||||||
Taasera licensing LLC, description | Taasera Licensing LLC, a wholly owned subsidiary, entered into an agreement with Taasera, Inc. to acquire all right, title, and interest in a portfolio of seven United States patents (the “Taasera Portfolio”) for $250,000. The Company requested and received a capital advance from QFL in the amount of $250,000 pursuant to the Purchase Agreement, which was used to make payment to Taasera, Inc. | ||||||||||
Purchase price | $ 550,000 | ||||||||||
Purchase agreement | $550,000 | ||||||||||
Operating capital advance | $ 1,000,000 | ||||||||||
Issued notes | 250,000 | ||||||||||
Loss on debt conversion | $ 305,556 | ||||||||||
Percentage of agreement | 60.00% | ||||||||||
Asset acquired, description | Pursuant to the MPA-NA, until the TMPO has been paid in full, Intelligent Partners is entitled to receive 10% of the net proceeds realized from new assets acquired by the Company. If, in any calendar quarter, net proceeds realized exceed $1,000,000, Intelligent Partners’ entitlement for that quarter only shall increase to 30% on the portion of net proceeds in excess of $1,000,000 but less than $3,000,000. If in the same calendar quarter, net proceeds exceed $3,000,000, Intelligent Partners’ entitlement for that quarter only shall increase to 50% on the portion of net proceeds in excess of $3,000,000. | ||||||||||
Common stock, description | The Company granted Intelligent Partners, Andrew Fitton and Michael Carper certain registration rights with respect to (i) the 50,000,000 shares currently owned by Fitton and Carper; (ii) the 46,296,296 Conversion Shares issued to Fitton and Carper, and (iii) the 50,000,000 shares of common stock issuable upon exercise of the option. See Note 5 | ||||||||||
Excess amount, description | Events of Default include (i) a Change of Control of the Company (ii) any uncured default on payment due to Intelligent Partners in an amount totaling in excess of $275,000, which is not the subject of a Dispute or other formal dispute resolution proceeding initiated in good faith pursuant to this Agreement or other Restructure Documents (iii) the filing of a voluntary petition for relief under the United States Bankruptcy Code by Company or any of its material subsidiaries, (iv) the filing of an involuntary petition for relief under the United States Bankruptcy Code against the Company, which is not stayed or dismissed within sixty (60) days of such filing, except for an involuntary petition for relief filed solely by Intelligent Partners, or any Affiliate or member of Intelligent Partners, or (v) acceleration of an obligation in excess of $1 million dollars to another provider of financing following a final determination by arbitration or other judicial proceeding that such obligation is due and owing. | ||||||||||
Obligation excess | $ 1,000,000 | ||||||||||
Loss on extinguishment note | 730,378 | ||||||||||
Acquisition funding | $ 95,000 | ||||||||||
Funder received | $ 190,000 | ||||||||||
Payment obligations | 3 years | ||||||||||
Percentage of Imputed Interest rate | 10.00% | ||||||||||
Maturity dates | May 14, 2050 | Apr. 23, 2022 | |||||||||
Loan forgiveness | $ 20,832 | ||||||||||
Deducted loan amount | $ 100 | ||||||||||
Loan origination cost | $ 1,000 | ||||||||||
CXT Systems, Inc. [Member] | |||||||||||
Short Term Debt and Long-Term Liabilities (Details) [Line Items] | |||||||||||
Description of minimum payments due under agreement | CXT and Intellectual Ventures Assets 34, LLC and Intellectual Ventures 37, LLC (“IV 34/37”) pursuant to which at closing CXT acquired by assignment all right, title, and interest in a portfolio of thirteen United States patents (the “CXT Portfolio”). Under the agreement, CXT will distribute 50% of net recoveries, as defined, to IV 34/37. CXT advanced $25,000 to IV 34/37 at closing, and agreed, pursuant to an amendment dated January 26, 2018, that in the event that, on December 31, 2018, December 31, 2019 and December 31, 2020, cumulative distributions to IV 34/37 total less than $100,000, $375,000 and $975,000, respectively, CXT shall pay the difference necessary to achieve the applicable minimum payment amount within ten days after the applicable date; with any advances being credited toward future distributions to IV 34/36. As of December 31, 2020, cumulative distributions totaling $375,000 had been made and CXT did not pay the $600,000 difference to IV 34/37 within ten days and the remaining $600,000 of the minimum future cumulative distributions due were presented as short-term debt. | ||||||||||
M-RED Inc. [Member] | |||||||||||
Short Term Debt and Long-Term Liabilities (Details) [Line Items] | |||||||||||
Description of minimum payments due under agreement | M-RED and Intellectual Ventures Assets 113 LLC and Intellectual Ventures Assets 108 LLC (“IV 113/108”) pursuant to which at closing M-RED paid IV 113/108 $75,000 and IV 113/108 transferred to M-RED all right, title and interest in a portfolio of sixty United States patents and eight foreign patents (the “M-RED Portfolio”). Under the agreement, M-RED will distribute 50% of net proceeds, as defined, to IV 113/108, as long as M_RED generates revenue from the M-RED Portfolio. The agreement with IV 113/108 provides that if, on September 30, 2020, September 30, 2021 and September 30, 2022, cumulative distributions to IV 113/108 total less than $450,000, $975,000 and $1,575,000, respectively, M-RED shall pay the difference between such cumulative amounts and the amount paid to IV 113/108 within ten days after the applicable date; with any advances being credited toward future distributions to IV 113/108. As of December 31, 2020, cumulative distributions totaling $975,000 had not been made and M-RED did not pay the $900,000 difference to IV 113/108 within ten days and the remaining $900,000 of the minimum future cumulative distributions due were presented as short-term debt. | ||||||||||
U.S. Small Business Association [Member] | |||||||||||
Short Term Debt and Long-Term Liabilities (Details) [Line Items] | |||||||||||
Accrued interest percentage | 3.75% | ||||||||||
Loan amount | $ 150,000 | ||||||||||
QFL [Member] | |||||||||||
Short Term Debt and Long-Term Liabilities (Details) [Line Items] | |||||||||||
Payments for acquisition | 25,000,000 | ||||||||||
Operating expenses | 2,000,000 | ||||||||||
Proceeds from financing | $ 1,750,000 | ||||||||||
Warrants to purchase shares (in Shares) | 96,246,246 | ||||||||||
Exercise price per share (in Dollars per share) | $ 0.0054 | ||||||||||
Intelligent Partners LLC [Member] | |||||||||||
Short Term Debt and Long-Term Liabilities (Details) [Line Items] | |||||||||||
Cash payments | $ 1,750,000 | ||||||||||
Warrants to purchase shares (in Shares) | 50,000,000 | ||||||||||
Exercise price per share (in Dollars per share) | $ 0.0054 | ||||||||||
Principal amount | $ 4,422,810 | ||||||||||
Black-Scholes pricing model | $ 598,000 | ||||||||||
CXT Systems, Inc. [Member] | |||||||||||
Short Term Debt and Long-Term Liabilities (Details) [Line Items] | |||||||||||
Agreement amended distribute description | the parties amended the agreement to provide that CXT will distribute 65% of net proceeds, as defined, to IV 34/37, as long as CXT generates revenue from the CXT Portfolio and that if, on December 31, 2018 and December 31, 2019, cumulative distributions to IV 34/37 total less than $100,000 and $375,000, respectively, CXT shall pay the difference between such cumulative amounts and the amount paid to IV 34/37 within ten days after the applicable date. As of December 31, 2019 cumulative distributions to IV 34/37 totaled $375,000, no further minimum cumulative distributions are required pursuant to the agreement as amended and the Company recorded a gain on forgiveness of $600,000. No affiliate of CXT has guaranteed the minimum payments. CXT’s obligations under the agreement are secured by a security interest in the proceeds (from litigation or otherwise) from the CXT Portfolio. | ||||||||||
M-RED Inc. [Member] | |||||||||||
Short Term Debt and Long-Term Liabilities (Details) [Line Items] | |||||||||||
Agreement amended distribute description | the parties amended the agreement to provide that M-RED will distribute 100% of undistributed net proceeds, as defined, resulting from agreements signed prior to December 31, 2021 and 65% of net proceeds thereafter to IV 113/108, as long as M-RED generates revenue from the M-RED Portfolio and that if, on December 31, 2021 cumulative distributions to IV 113/108 total less than $302,113.89, M-RED shall pay the difference between such cumulative amounts and the amount paid to IV 113/108 within ten days after the applicable date. As of December 31, 2021 cumulative distributions to IV 113/108 totaled $302,113.89, no further minimum cumulative distributions are required pursuant to the agreement as amended and the Company recorded a gain on forgiveness of approximately $1,230,000. M-RED’s obligations under the agreement with IV 113/108 are secured by a security interest in the proceeds (from litigation or otherwise) from the M-RED Portfolio. | ||||||||||
JPMORGAN CHASE BANK N.A. [Member] | |||||||||||
Short Term Debt and Long-Term Liabilities (Details) [Line Items] | |||||||||||
Unsecured loan | $ 20,832 | ||||||||||
Interest rate | 0.98% | ||||||||||
Securities Purchase Agreement [Member] | |||||||||||
Short Term Debt and Long-Term Liabilities (Details) [Line Items] | |||||||||||
Debt instrument, description | The loan payable – related party at December 31, 2021 represents the current amount of a non-interest bearing total monetization proceeds obligation (the “TMPO”) to Intelligent Partners, LLC (“Intelligent Partners”) of $2,805,000, pursuant to a restructure agreement (“Restructure Agreement”) dated February 22, 2021 whereby the Company and Intelligent Partners, extinguished the Company’s 10% note to Intelligent Partners as transferee of the notes issued to United Wireless Holdings, Inc. (“United Wireless”), in the amount of $4,672,810 pursuant to securities purchase agreement dated October 22, 2015 between the Company and United Wireless. The notes became due by their terms on September 30, 2020, and the Company did not make any payment on account of principal and interest on the notes. Subsequent to September 30, 2020, the Company engaged in negotiations with Intelligent Partners in parallel with the Company’s negotiations with QFL, with a view to restructuring the Company’s obligations under the United Wireless agreements, including the notes, so that the Company no longer had any obligations under the notes or the SPA. These negotiations resulted in the Restructure Agreement, described below, which provided for the payment to Intelligent Partners of $1,750,000 from the proceeds from the Company’s agreements with QFL. | ||||||||||
Shares of common stock (in Shares) | 46,296,296 | ||||||||||
Purchase price (in Dollars per share) | $ 0.0054 | ||||||||||
Transferred note balance | $ 250,000 |
Short Term Debt and Long-Term_4
Short Term Debt and Long-Term Liabilities (Details) - Schedule of short-term and long-term debt - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2021 | |
Short-term debt: | ||
Loans payable | $ 147,000 | $ 138,000 |
Funding liability | 3,202,765 | |
Loan payable – related party | 4,672,810 | 2,805,000 |
Purchase price of patents – current portion | 1,500,000 | |
Unamortized discount | ||
Net short-term debt | 6,319,810 | 6,145,765 |
Long-term liabilities: | ||
Gross | 170,832 | 150,000 |
Accrued interest | 3,560 | |
Net loans payable - SBA | 174,392 | 150,000 |
Gross | 790,000 | 190,000 |
Unamortized discount | (131,793) | |
Net purchase price of patents – long-term | $ 658,207 | $ 190,000 |
Short Term Debt and Long-Term_5
Short Term Debt and Long-Term Liabilities (Details) - Schedule of recognized loss on extinguishment of note | 12 Months Ended |
Dec. 31, 2021USD ($) | |
Schedule of recognized loss on extinguishment of note [Abstract] | |
Carrying amount as of the restructure date | $ 4,672,810 |
Net carrying amount | 4,672,810 |
Reacquisition Price | |
Cash payment via QFL | (1,750,000) |
Conversion of transferred note | (250,000) |
Fair value of option grant | (598,188) |
TMPO undiscounted future cash flows | (2,805,000) |
Loss on debt extinguishment | $ (730,378) |
Short Term Debt and Long-Term_6
Short Term Debt and Long-Term Liabilities (Details) - Schedule of purchase price of the patents - USD ($) | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Current Liabilities: | ||
Purchase price of patents, current portion | $ 1,500,000 | |
Unamortized discount | ||
Non-current liabilities: | ||
Purchase price of patents, long term | 190,000 | 790,000 |
Unamortized discount | (131,793) | |
Total current and non-current | $ 190,000 | $ 2,158,207 |
Effective interest rate of Amortization over 2 years | ||
Minimum [Member] | ||
Non-current liabilities: | ||
Effective interest rate of Amortization over 2 years | 9.40% | |
Maximum [Member] | ||
Non-current liabilities: | ||
Effective interest rate of Amortization over 2 years | 14.50% |
Warrant Liability (Details)
Warrant Liability (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2021 | Feb. 22, 2021 | |
Warrant Liability (Details) [Line Items] | ||
Warrant yield percentage | 10.00% | |
Aggregate number of outstanding shares percentage | 10.00% | |
Aggregate fair value of outstanding derivative liability | $ 1,636,187 | $ 1,154,905 |
Warrant [Member] | ||
Warrant Liability (Details) [Line Items] | ||
Shares issue | 96,246,246 |
Warrant Liability (Details) - S
Warrant Liability (Details) - Schedule of estimated the fair value of the warrant liability | 1 Months Ended | 12 Months Ended |
Feb. 22, 2021 | Dec. 31, 2021 | |
Schedule of estimated the fair value of the warrant liability [Abstract] | ||
Volatility | 252.00% | 373.00% |
Exercise price | 0.0054% | 0.0054% |
Risk-free interest rate | 1.37% | 1.37% |
Expected dividends | ||
Expected term | 10 years | 9 years 4 months 24 days |
Warrant Liability (Details) -_2
Warrant Liability (Details) - Schedule of summarizes the valuation of financial instruments - USD ($) | Dec. 31, 2021 | Dec. 31, 2020 |
Level 1 [Member] | ||
Assets | ||
None | ||
Total assets | ||
Liabilities | ||
Warrant liability | ||
Total liabilities | ||
Level 2 [Member] | ||
Assets | ||
None | ||
Total assets | ||
Liabilities | ||
Warrant liability | ||
Total liabilities | ||
Level 3 [Member] | ||
Assets | ||
None | ||
Total assets | ||
Liabilities | ||
Warrant liability | 1,636,187 | |
Total liabilities | $ 1,636,187 |
Warrant Liability (Details) -_3
Warrant Liability (Details) - Schedule of fair value of the warrant liabilities classified - Level 3 [Member] | 12 Months Ended |
Dec. 31, 2021USD ($) | |
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |
Fair value at grant date | $ 1,154,905 |
Change in fair value | 481,282 |
Ending balance | $ 1,636,187 |
Stockholders' Equity (Details)
Stockholders' Equity (Details) - USD ($) | 1 Months Ended | 12 Months Ended | |
Feb. 22, 2021 | Feb. 19, 2021 | Dec. 31, 2021 | |
Stockholders' Equity (Details) [Line Items] | |||
Shares of common stock | 50,000,000 | ||
Restructure agreement, description | (i) issued to Fitton and Carper, as holders of the Transferred Note, pursuant to the Stock Purchase Agreement a total of 46,296,296 shares of the Company’s common stock at a purchase price of $0.0054 per share, which purchase price was paid by the conversion and in full satisfaction of the Company’s obligation under the Transferred Note and included in the calculation of the repurchase price of the debt; and (ii) granted Intelligent Partners, pursuant to the Option Grant, an option to purchase a total of 50,000,000 shares of common stock, with an exercise price of $0.0054 per share which vested immediately and may be exercised through September 30, 2025. The Company valued the purchase option at approximately $598,000 using the Black-Scholes pricing model. | ||
Discount rate | 1.37% | ||
Option life term | 5 years | ||
Volatility | 252.00% | ||
Expected dividends | 0.00% | ||
Shares currently owned | 50,000,000 | ||
Conversion shares issued | 46,296,296 | ||
2017 Equity Incentive Plan [Member] | |||
Stockholders' Equity (Details) [Line Items] | |||
Shares of common stock | 500,000,000 | ||
Consulting Agreements [Member] | |||
Stockholders' Equity (Details) [Line Items] | |||
Agreement term | 10 years | ||
Consulting agreements, description | Pursuant to the agreements with two of the consultants, the compensation payable to each of them consists of a restricted stock grant of 10,000,000 shares of Common Stock which vested immediately upon issuance and a ten-year option to purchase a total of 30,000,000 shares of Common Stock, which become exercisable cumulatively as follows: a. 10,000,000 shares at an exercise price of $0.01 per share becoming exercisable upon the commencement of trading of the Common Stock on the OTCQB. The Company regained such compliance on May 7, 2021, at which time the common stock recommenced trading on the OTCQB. b. 10,000,000 shares at an exercise price of $0.03 per share, becoming exercisable on the first day on which the Company files with the SEC a Form 10-K or Form 10-Q which stockholders’ equity of at least $5,000,000, and c. 10,000,000 shares at an exercise price of $0.05 per share becoming exercisable on the date on which the Common Stock is listed for trading on the Nasdaq Stock Market or the New York Stock Exchange. The Company recorded professional fees in the amount of $240,000 as a result the restricted stock grants to these two consultants. The Company determined the fair value of the options as of the grant date to be approximately $720,000 using the Black-Scholes pricing model. Variables used in the valuation include (1) discount rate of 1.37%; (2) term of 10 years; (3) computed volatility of 252% and (4) zero expected dividends. The Company met the first performance condition and accrued the option expense of approximately $240,000 over the period from the grant date to achievement of the performance condition. The Company recognized option expense of approximately $240,000 for the year ended December 31, 2021. Pursuant to the agreement with the third consultant, the compensation payable to the consultant consists of a restricted stock grant of 10,000,000 shares of Common Stock which immediately vests in full and a ten-year option to purchase 30,000,000 shares of Common Stock, which becomes exercisable cumulatively as follows: a. 10,000,000 shares at an exercise price of $0.01 per share became exercisable on February 22, 2022, which was the first anniversary of the date of the agreement; b. 10,000,000 shares at an exercise price of $0.03 per share upon the second anniversary of the date of the agreement; and c. 10,000,000 shares at an exercise price of $0.05 per share upon the third anniversary of the dare of the agreement. The Company recorded professional fees in the amount of $120,000 as a result the restricted stock grant to the third consultant. The Company determined the fair value of the options as of the grant date to be approximately $360,000 using the Black-Scholes pricing model. Variables used in the valuation include (1) discount rate of 1.37%; (2) term of 10 years; (3) computed volatility of 252% and (4) zero expected dividends. The Company recognized option expense of approximately $188,000 for the year ended December 31, 2021. Compensatory Arrangements of Certain Officers On February 22, 2021, the board of directors: (i) Granted restricted stock grants for services rendered and vesting in full upon grant, to: a. Jon C. Scahill – 49,000,000 shares b. Timothy J. Scahill – 10,000,000 shares c. Dr. William R. Carroll - 10,000,000 shares (ii) Granted Jon Scahill a ten-year option (the “Option”) to purchase 60,000,000 shares of Common Stock which become exercisable cumulatively as follows: a. 20,000,000 shares at an exercise price of $0.01 per share becoming exercisable upon the commencement of trading of the Common Stock on the OTCQB. The Company regained such compliance on May 7, 2021, at which time the common stock recommenced trading on the OTCQB. b. 20,000,000 shares at an exercise price of $0.03 per share, becoming exercisable on the first day on which the Company files with the SEC a Form 10-K or Form 10-Q which stockholders” equity of at least $5,000,000, and c. 20,000,000 shares at an exercise price of $0.05 per share becoming exercisable on the date on which the Common Stock is listed for trading on the Nasdaq Stock Market or the New York Stock Exchange (iii) Appointed Ryan T. Logue to the board of directors and granted Mr. Logue a restricted stock grant of 5,000,000 shares of common stock which vests upon his acceptance of his appointment as a director. The Company recognized compensation expense of $888,000 in conjunction with issuance of common stock to officers and directors. The Company determined the fair value of the options to be approximately $720,000 as of the grant date using the Black-Scholes pricing model. Variables used in the valuation include (1) discount rate of 1.37%; (2) term of 10 years; (3) computed volatility of 252% and (4) zero expected dividends. | ||
Compensatory Arrangements of Certain Officers [Member] | |||
Stockholders' Equity (Details) [Line Items] | |||
Discount rate | 1.37% | ||
Option life term | 10 years | ||
Volatility | 252.00% | ||
Expected dividends | 0.00% | ||
Board of directors description | (i)Granted restricted stock grants for services rendered and vesting in full upon grant, to: a. Jon C. Scahill – 49,000,000 shares b. Timothy J. Scahill – 10,000,000 shares c. Dr. William R. Carroll - 10,000,000 shares (ii) Granted Jon Scahill a ten-year option (the “Option”) to purchase 60,000,000 shares of Common Stock which become exercisable cumulatively as follows: a. 20,000,000 shares at an exercise price of $0.01 per share becoming exercisable upon the commencement of trading of the Common Stock on the OTCQB. The Company regained such compliance on May 7, 2021, at which time the common stock recommenced trading on the OTCQB. b. 20,000,000 shares at an exercise price of $0.03 per share, becoming exercisable on the first day on which the Company files with the SEC a Form 10-K or Form 10-Q which stockholders” equity of at least $5,000,000, and c. 20,000,000 shares at an exercise price of $0.05 per share becoming exercisable on the date on which the Common Stock is listed for trading on the Nasdaq Stock Market or the New York Stock Exchange (iii)Appointed Ryan T. Logue to the board of directors and granted Mr. Logue a restricted stock grant of 5,000,000 shares of common stock which vests upon his acceptance of his appointment as a director. | ||
Compensation expense | $ 888,000 | ||
Fair value of options | $ 720,000 | ||
Option expense | $ 240,000 | ||
Intrinsic value of outstanding options | 930,000 | ||
Unrecognized compensation expense | $ 1,132,000 | ||
Weighted average expected term | 8 years | ||
Warrants [Member] | |||
Stockholders' Equity (Details) [Line Items] | |||
Intrinsic value of outstanding options | $ 1,116,456 |
Stockholders' Equity (Details)
Stockholders' Equity (Details) - Schedule of stock options - Stock Options [Member] - $ / shares | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Stockholders' Equity (Details) - Schedule of stock options [Line Items] | ||
Number of Options, Beginning Balance (in Shares) | 50,000,000 | |
Weighted- Average Exercise Price, Beginning Balance | $ 0.03 | |
Weighted- Average Grant Date Fair Value, Beginning Balance | $ 0.004 | |
Weighted- Average Remaining Contractual Life (years), Beginning Balance | 9 months | |
Number of Options, Ending Balance (in Shares) | 200,000,000 | |
Weighted- Average Exercise Price, Ending Balance | $ 0.02 | |
Weighted- Average Grant Date Fair Value, Ending Balance | ||
Weighted- Average Remaining Contractual Life (years), Ending Balance | 7 years 9 months 18 days | |
Number of Options, Granted (in Shares) | 200,000,000 | |
Weighted- Average Exercise Price, Granted | $ 0.02 | |
Weighted- Average Grant Date Fair Value, Granted | $ 0.012 | |
Weighted- Average Remaining Contractual Life (years), Granted | 8 years 7 months 24 days | |
Number of Options, Exercised (in Shares) | ||
Weighted- Average Exercise Price, Exercised | ||
Weighted- Average Grant Date Fair Value, Exercised | ||
Weighted- Average Remaining Contractual Life (years), Exercised | ||
Number of Options, Expired (in Shares) | 50,000,000 | |
Weighted- Average Exercise Price, Expired | ||
Weighted- Average Grant Date Fair Value, Expired | ||
Weighted- Average Remaining Contractual Life (years), Expired | ||
Number of Options, Cancelled (in Shares) | ||
Weighted- Average Exercise Price, Cancelled | ||
Weighted- Average Grant Date Fair Value, Cancelled | ||
Weighted- Average Remaining Contractual Life (years), Cancelled | ||
Number of Options, Options exercisable at end of period (in Shares) | 100,000,000 | |
Weighted- Average Exercise Price, Options exercisable at end of period | $ 0.0074 | |
Weighted- Average Grant Date Fair Value, Options exercisable at end of period | $ 0.0096 | |
Weighted- Average Remaining Contractual Life (years), Options exercisable at end of period | 6 years 1 month 24 days |
Stockholders' Equity (Details_2
Stockholders' Equity (Details) - Schedule of warrants - Warrants [Member] - $ / shares | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Class of Warrant or Right [Line Items] | ||
Warrant Number of Shares outstanding at beginning | ||
Warrant Weighted Average Exercise Price outstanding at beginning | ||
Warrant Weighted Average Remaining Contractual Term outstanding at beginning | ||
Warrant Number of Shares outstanding at ending | 96,246,246 | |
Warrant Weighted Average Exercise Price outstanding at ending | $ 0.0054 | |
Warrant Weighted Average Remaining Contractual Term outstanding at ending | 9 years 1 month 20 days | |
Granted Number of Shares | 96,246,246 | |
Granted Weighted Average Exercise Price | $ 0.0054 | |
Granted Weighted Average Remaining Contractual Term | 9 years 10 months 20 days | |
Exercised Number of Shares | ||
Exercised Weighted Average Exercise Price | ||
Exercised Weighted Average Remaining Contractual Term | ||
Expired Number of Shares | ||
Expired Weighted Average Exercise Price | ||
Expired Weighted Average Remaining Contractual Term | ||
Cancelled Number of Shares | ||
Cancelled Weighted Average Exercise Price | ||
Cancelled Weighted Average Remaining Contractual Term |
Intangible Assets (Details)
Intangible Assets (Details) - USD ($) | 1 Months Ended | 12 Months Ended | ||
Oct. 31, 2021 | Oct. 22, 2015 | Dec. 31, 2021 | Dec. 31, 2020 | |
Intangible Assets [Abstract] | ||||
Intangible assets, description | ●patents acquired in October 2015 for a purchase price of $3,000,000, the useful lives of the patents, at the date of purchase, was 6-10 years; ● patents acquired in July 2017 pursuant to an agreement with IV 34/37, as amended on December 31, 2021, pursuant to which CXT has an obligation to pay 65% of net revenues to IV 34/37 (see Note 3); the useful lives of the patents, at the date of acquisition, was 5-6 years; ● patents (which were fully depreciated at the date of acquisition) acquired in January 2018 pursuant to an agreement with to Intellectual Ventures Assets 62 LLC and Intellectual Ventures Assets 71 LLC “(IV 62/71”), pursuant to which CXT has an obligation to distribute 50% of net revenues to IV 62/71; ●patents (which were fully depreciated at the date of acquisition) acquired in January 2018 by Photonic Imaging Solutions Inc. (“PIS”) from Intellectual Ventures Assets 64 LLC (“IV 64”) pursuant to which PIS is to pay IV 64 (a) 70% of the first $1,500,000 of net revenue, (b) 30% of the next $1,500,000 of net revenue and (c) 50% of net revenue in excess of $3,000,000; ● patents acquired in March 2019 pursuant to an agreement with IV 113/108, as amended on December 31, 2021 to an obligation to pay 65% of net revenues to IV 113/108 (see Note 3); the useful lives of the patents, at the date of acquisition, was approximately 9 years. ● patents (which were fully depreciated at the date of acquisition) acquired in May 2020 for a purchase price of $95,000 pursuant to an agreement with Texas Technology Ventures 2, LLP (“TTV”), pursuant to which of the Company retains the first $230,000 of net proceeds, as defined in the agreement, after which the company has an obligation to distribute 50% of net proceeds to TTV; ● patents (which were fully amortized at the date of acquisition) acquired in February 2021 pursuant to an agreement with PKT for a purchase price of $350,000, pursuant to which $350,000 was paid at closing, and upon the realization of gross proceeds, as defined in the agreement, the Company shall make a subsequent payments in the aggregate amount of $93,900, representing reimbursement to PKT, as the prosecuting attorney, for legal fees associated with prosecution of the portfolio, such reimbursement shall be due and payable to PKT from time to time as gross proceeds are realized, if any, and paid to PKT along with and in proportion to reimbursement to other third parties of costs incurred in realizing gross proceeds. Thereafter, PKT is entitled to a percentage of gross proceeds realized, if any. ●patents (which were fully depreciated at the date of acquisition) acquired in May 2021 for a purchase price of $250,000. | |||
Purchase price | $ 550,000 | |||
Useful livers acquisition | 11 years | |||
Intangible assets | For the year ended December 31, 2021, the Company recorded non-cash impairment charges of approximately $1,652,00 to write down finite lived intangible assets in the Power Management/Bus Controller, CXT and M-RED portfolios. | |||
Amortization expense | $ 1,159,865 | $ 648,395 | ||
Net monetization proceeds | 15.00% |
Intangible Assets (Details) - S
Intangible Assets (Details) - Schedule of intangible assets - USD ($) | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Schedule of intangible assets [Abstract] | ||
Patents | $ 5,617,117 | $ 5,690,000 |
Patents, Weighted average amortization period (years) | 4 years 6 months | |
Less: net monetization obligations | (509,811) | |
Imputed interest | (713,073) | |
Disposal | (4,362,117) | |
Subtotal | 1,255,000 | 4,467,116 |
Less: accumulated amortization | (715,519) | (2,266,157) |
Net value of intangible assets | $ 539,481 | $ 2,200,959 |
Net value of intangible assets, Weighted average amortization period (years) | 11 years 7 days |
Intangible Assets (Details) -_2
Intangible Assets (Details) - Schedule of annual amortization expense | Dec. 31, 2021USD ($) |
Schedule of annual amortization expense [Abstract] | |
2022 | $ 49,899 |
2023 | 49,899 |
2024 | 49,899 |
2025 | 49,899 |
2026 and thereafter | 339,885 |
Total | $ 539,481 |
Non-Controlling Interest (Detai
Non-Controlling Interest (Details) - Schedule of reconciles equity attributable to the non-controlling interest - USD ($) | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Schedule of reconciles equity attributable to the non-controlling interest [Abstract] | ||
Balance, beginning of year | $ 228 | $ 239 |
Net loss attributable to non-controlling interest | (11) | |
Balance, end of year | $ 228 | $ 228 |
Income taxes (Details)
Income taxes (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2021 | |
Income Tax Disclosure [Abstract] | ||
Net operating loss | $ 9,965,487 | |
Net operating loss carry forwards | $ 2,063,797 | |
Descriptions of foreign source withholding tax | In 2020, the Company was subject to foreign source withholding tax of 20.4% in Japan. |
Income taxes (Details) - Schedu
Income taxes (Details) - Schedule of deferred tax asset - USD ($) | Dec. 31, 2021 | Dec. 31, 2020 |
Schedule of deferred tax asset [Abstract] | ||
Net operating loss carry forward | $ 2,591,027 | $ 2,172,545 |
Bad debt reserves | 17,160 | |
Intangible assets | 206,712 | 515,104 |
Valuation allowance | (2,797,739) | (2,704,809) |
Balance, end of year |
Income taxes (Details) - Sche_2
Income taxes (Details) - Schedule of tax expense - USD ($) | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Schedule of tax expense [Abstract] | ||
Federal | ||
State | 1,806 | 5,108 |
Foreign | 60,255 | |
Deferred | ||
Total | $ 1,806 | $ 65,363 |
Income taxes (Details) - Sche_3
Income taxes (Details) - Schedule of company’s deferred tax asset effective tax rate | 12 Months Ended |
Dec. 31, 2021USD ($) | |
Schedule of company’s deferred tax asset effective tax rate [Abstract] | |
Book income before taxes, Tax | $ (872,129) |
Book income before taxes, Percentage | 21.00% |
State taxes, net, Tax | $ 1,427 |
State taxes, net, Percentage | (0.03%) |
Tax exempt income – grant and/or SBA, Tax | $ (4,375) |
Tax exempt income – grant and/or SBA, Percentage | 0.11% |
Meals and entertainment, Tax | $ 873 |
Meals and entertainment, Percentage | (0.02%) |
Warrant expense, Tax | $ 242,530 |
Warrant expense, Percentage | (5.84%) |
Stock based compensation, Tax | $ 402,362 |
Stock based compensation, Percentage | (9.69%) |
Loss on conversion of debt, Tax | $ 64,167 |
Loss on conversion of debt, Percentage | (1.55%) |
Valuation allowance, Tax | $ 75,059 |
Valuation allowance, Percentage | (1.81%) |
Derivative valuation adjustment, Tax | $ 101,069 |
Derivative valuation adjustment, Percentage | (2.43%) |
Other, Tax | $ (9,177) |
Other, Percentage | 0.22% |
Total, Tax | $ 1,806 |
Effective tax rate, Percentage | (0.04%) |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Related Party Transactions (Details) [Line Items] | ||
Interest rate | 10.00% | |
Interest expense | $ 351,000 | |
Cost of service | $ 434 | 464 |
Patent service cost | $ 763,000 | 909,000 |
Accrued expenses and outstanding | $ 407,000 | |
Interest in prior firm | 10.00% | |
United Wireless [Member] | ||
Related Party Transactions (Details) [Line Items] | ||
Interest rate | 10.00% |
Commitments and Contingencies (
Commitments and Contingencies (Details) - USD ($) | 1 Months Ended | |||
Mar. 31, 2016 | Nov. 30, 2014 | Dec. 31, 2021 | Dec. 31, 2020 | |
Commitments and Contingencies (Details) [Line Items] | ||||
Compensation percentage | 19.00% | 19.00% | ||
Chief Executive Officer [Member] | ||||
Commitments and Contingencies (Details) [Line Items] | ||||
Term of agreement, description | Pursuant to a restated employment agreement, dated November 30, 2014, with the Company’s president and chief executive officer, the Company agreed to employ him as president and chief executive officer for a term of three years, commencing January 1, 2014, and continuing on a year-to-year basis unless terminated by either party on not less than 90 days’ notice prior to the expiration of the initial term or any one-year extension. | |||
Initial annual salary | $ 252,000 | |||
Annual bonus compensation, description | the Company’s board of directors increased the chief executive officer’s annual salary to $300,000, effective January 1, 2016. The chief executive officer is entitled to a bonus if the Company meets or exceeds performance criteria established by the compensation committee. In August 2016, the Company’s board of directors approved annual bonus compensation equal to 30% of the amount by which our consolidated income before income taxes exceeds $500,000, but, if the Company is subject to the limitation on deductibility of executive compensation pursuant to Section 162(m) of the Internal Revenue Code, the bonus cannot exceed the amount which would be deductible pursuant to Section 162(m). | |||
Deposits | $ 58,000 | $ 57,000 |
Business Combinations (Details)
Business Combinations (Details) - USD ($) | Aug. 06, 2021 | Dec. 31, 2021 |
Business Combinations [Abstract] | ||
Percentage of net proceeds | 50.00% | |
Cost of acquisition | $ 500 | |
Total consideration | $ 0 |
Subsequent Events (Details)
Subsequent Events (Details) - USD ($) | 1 Months Ended | ||
Jan. 27, 2022 | Oct. 31, 2021 | Mar. 31, 2022 | |
Subsequent Events (Details) [Line Items] | |||
Purchase price | $ 550,000 | ||
Subsequent Event [Member] | |||
Subsequent Events (Details) [Line Items] | |||
Purchase price | $ 1,060,000 | ||
Capital advance amount | $ 1,060,000 | ||
Forecast [Member] | |||
Subsequent Events (Details) [Line Items] | |||
Operating capital advances amount | $ 200,000 |