Document And Entity Information
Document And Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Mar. 30, 2023 | Jun. 30, 2022 | |
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 | 5,331,973 | ||
Entity Public Float | $ 4,266,678 | ||
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, 2022 | ||
Document Fiscal Year Focus | 2022 | ||
Document Fiscal Period Focus | FY | ||
Entity Small Business | true | ||
Entity Emerging Growth Company | false | ||
Entity Shell Company | false | ||
ICFR Auditor Attestation Flag | true | ||
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 | 89 | ||
Auditor Name | Rosenberg Rich Baker Berman, P.A. | ||
Auditor Location | Somerset, New Jersey |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Current assets | ||
Cash and cash equivalents | $ 90,601 | $ 264,840 |
Other current assets | 5,321 | 12,305 |
Total current assets | 95,922 | 277,145 |
Patents, net of accumulated amortization of $1,625,846 and $715,519, respectively | 1,131,154 | 539,481 |
Total assets | 1,227,076 | 816,626 |
Current liabilities | ||
Accounts payable and accrued liabilities | 148,533 | 129,426 |
Loans payable | 138,000 | 138,000 |
Funding liability | 5,453,204 | 3,202,765 |
Loan payable - related party | 2,796,500 | 2,805,000 |
Warrant liability | 145,428 | 1,636,187 |
Accrued interest | 904,573 | 491,971 |
Total current liabilities | 9,586,238 | 8,403,349 |
Non-current liabilities | ||
Loan payable – SBA | 150,000 | 150,000 |
Purchase price of patents | 53,665 | 190,000 |
Total liabilities | 9,789,903 | 8,743,349 |
Commitments and contingencies (Note 2) | ||
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 30,000,000 at December 31, 2022 and 2021; shares issued and outstanding 5,331,973 at December 31, 2022 and 5,333,347,at December 31, 2021 | 160 | 160 |
Additional paid-in capital | 17,626,279 | 17,508,867 |
Accumulated deficit | (26,189,494) | (25,435,978) |
Total Quest Patent Research Corporation stockholders’ deficit | (8,563,055) | (7,926,951) |
Non-controlling interest in subsidiary | 228 | 228 |
Total stockholders’ deficit | (8,562,827) | (7,926,723) |
Total liabilities and stockholders’ deficit | $ 1,227,076 | $ 816,626 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parentheticals) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Statement of Financial Position [Abstract] | ||
Patents, net of accumulated amortization (in Dollars) | $ 1,625,846 | $ 715,519 |
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 | 30,000,000 | 30,000,000 |
Common stock, shares issued | 5,331,973 | 5,333,347 |
Common stock, shares outstanding | 5,331,973 | 5,333,347 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Revenues | ||
Patent licensing fees | $ 451,194 | $ 2,050,000 |
Cost of revenue | ||
Litigation and licensing expenses | 303,671 | 1,314,928 |
Gross margin | 147,523 | 735,072 |
Operating expenses | ||
Selling, general and administrative expenses | 1,979,718 | 3,848,611 |
Total operating expenses | 1,979,718 | 3,848,611 |
Loss from operations | (1,832,195) | (3,113,539) |
Other income (expense) | ||
Gain on forgiveness of debt | 1,850,018 | |
Gain on settlement of accounts payable | 1,725,965 | |
Warrant expense | (1,154,905) | |
Change in fair market value of warrant liability | 1,490,759 | (481,282) |
Loss on conversion of debt | (305,556) | |
Loss on debt extinguishment | (730,378) | |
Loss on impairment of assets | (1,651,614) | |
Interest expense | (413,333) | (291,702) |
Total other income (expense) | 1,077,426 | (1,039,454) |
Loss before income tax | (754,769) | (4,152,993) |
Income tax benefit (expense) | 1,253 | (1,806) |
Net loss | $ (753,516) | $ (4,154,799) |
Loss per share - basic and diluted (in Dollars per share) | $ (0.14) | $ (0.81) |
Weighted average shares outstanding - basic and diluted (in Shares) | 5,332,660 | 5,118,638 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Operations (Parentheticals) - $ / shares | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Income Statement [Abstract] | ||
Loss per share - diluted | $ (0.14) | $ (0.81) |
Weighted average shares outstanding - diluted | 5,332,660 | 5,118,638 |
Consolidated Statements of Chan
Consolidated Statements of Changes in Stockholders’ Deficit - USD ($) | Common Stock | Additional Paid-in Capital | Accumulated Deficit | Non-controlling Interest in Subsidiaries | Total |
Balances at Dec. 31, 2020 | $ 115 | $ 14,439,158 | $ (21,281,179) | $ 228 | $ (6,841,678) |
Balances (in Shares) at Dec. 31, 2020 | 3,830,384 | ||||
Restricted shares issued for services | $ 31 | 1,247,969 | 1,248,000 | ||
Restricted shares issued for services (in Shares) | 1,040,000 | ||||
Shares issued for conversion of debt | $ 14 | 555,542 | 555,556 | ||
Shares issued for conversion of debt (in Shares) | 462,963 | ||||
Option issued for debt extinguishment | 598,188 | 598,188 | |||
Stock-based compensation | 668,010 | 668,010 | |||
Net loss | (4,154,799) | (4,154,799) | |||
Balances at Dec. 31, 2021 | $ 160 | 17,508,867 | (25,435,978) | 228 | (7,926,723) |
Balances (in Shares) at Dec. 31, 2021 | 5,333,347 | ||||
Stock-based compensation | 117,412 | 117,412 | |||
Effect of reverse split | |||||
Effect of reverse split (in Shares) | (1,374) | ||||
Net loss | (753,516) | (753,516) | |||
Balances at Dec. 31, 2022 | $ 160 | $ 17,626,279 | $ (26,189,494) | $ 228 | $ (8,562,827) |
Balances (in Shares) at Dec. 31, 2022 | 5,331,973 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Cash flows from operating activities: | ||
Net loss | $ (753,516) | $ (4,154,799) |
Adjustments to reconcile net loss to cash used in operating activities: | ||
Amortization of debt discount | 88,094 | |
Change in fair market value of warrant liability | (1,490,759) | 481,282 |
Stock-based compensation | 117,412 | 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 | 910,326 | 1,159,865 |
Loss on conversion of debt | 305,556 | |
Loss on debt extinguishment | 730,378 | |
Loss on impairment of assets | 1,651,614 | |
Bad debt expense | 667 | |
Change in operating assets and liabilities: | ||
Accounts receivable | 1,032,219 | |
Accrued interest | 412,602 | 203,526 |
Other current assets | 6,984 | (6,371) |
Accounts payable and accrued liabilities | 19,108 | (1,036,637) |
Patents loan payable | (136,335) | |
Net cash used in operating activities | (914,178) | (49,673) |
Cash flows from investing activities: | ||
Purchase of patents | (1,502,000) | (1,150,000) |
Net cash used in investing activities | (1,502,000) | (1,150,000) |
Cash flows from financing activities: | ||
Payments on loans - related party | (8,500) | (1,750,000) |
Payment on loan payable - third party | (9,000) | |
Proceeds from funding liability | 2,303,000 | 3,900,000 |
Payment of funding liability | (52,561) | |
Payment of purchase price of patents | (924,349) | |
Net cash provided by financing activities | 2,241,939 | 1,216,651 |
Net increase (decrease) in cash and cash equivalents | (174,239) | 16,978 |
Cash and cash equivalents at beginning of period | 264,840 | 247,862 |
Cash and cash equivalents at end of period | 90,601 | 264,840 |
Non-cash investing and financing activities: | ||
Shares issued for conversion of debt | 555,556 | |
Interest added to principal | 4,895 | 5,626 |
Options granted for settlement of debt | 598,188 | |
Cash paid during the period for: | ||
Income taxes | $ (1,253) | $ 1,806 |
Description of Business
Description of Business | 12 Months Ended |
Dec. 31, 2022 | |
Description of Business [Abstract] | |
DESCRIPTION OF BUSINESS | 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, “we”, “us”, “our”, the “Company” refer 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, 2022 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 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, 2022 and 2021. The consolidated financial statements include the accounts and operations of: Quest Patent Research Corporation (“The Company”) Digital IP Advisors Inc. (“DIPA”) (wholly owned) (formerly Quest Licensing Corporation (NY)) Quest Licensing Corporation (DE) (“QLC”) (wholly owned) Quest Packaging Solutions Corporation (90% owned) Quest Nettech Corporation (“NetTech”) (65% owned) Semcon IP, Inc. (“Semcon”) (wholly owned) Mariner IC, Inc. (“Mariner”) (wholly owned) IC Kinetics, Inc. (“IC”) (wholly owned) CXT Systems, Inc. (“CXT”) (wholly owned) Photonic Imaging Solutions Inc. (“PIS”) (wholly owned) M-Red Inc. (“M-Red”) (wholly owned) Audio Messaging Inc. (“AMI”) (wholly owned) Peregrin Licensing LLC (“PLL”) (wholly owned) Taasera Licensing LLC (“TLL”) (wholly owned) Soundstreak Texas LLC (“STX”) (wholly owned) Multimodal Media LLC (“MML”) (wholly owned) LS Cloud Storage Technologies, LLC (“LSC”) (wholly owned) Tyche Licensing LLC (“Tyche”) (wholly owned) Deepwell IP LLC (“DIP”) (wholly owned) EDI Licensing LLC (“EDI”) (wholly owned) Koyo Licensing LLC (“Koyo”) (wholly owned) In February 2022, the Company changed the name of Quest Licensing Corporation to Digital IP Advisors Incorporated. Significant intercompany transaction and balances have been eliminated in consolidation. Reverse Split, Change in Authorized Common Stock On July 27, 2022, the Company amended its amended and restated certificate of incorporation. The amendment (i) decreased the number of authorized shares of common stock from 10,000,000,000 shares to 30,000,000 shares and (ii) effected a one-for-100 reverse split whereby each share of common stock, par value $0.00003 per share, became and was converted into 0.01 shares of such common stock, with fractional shares being rounded up to the next higher whole number of shares. All authorized share and share information in these financial statements retroactively reflect the reverse split and change in authorized common stock. 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. 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. The Company had no cash equivalents as of December 31, 2022 and 2021. 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 did not record an allowance for doubtful accounts at December 31, 2022 and 2021. 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 asset’s 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 ten years. 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” whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable through the estimated undiscounted cash flows expected to result from the use and eventual disposition of the assets. Whenever any such impairment exists, an impairment loss will be recognized for the amount by which the carrying value exceeds the fair value. In the event that management decides to no longer allocate resources to a patent portfolio, an impairment loss equal to the remaining carrying value of the asset is recorded. The Company recorded a non-cash impairment charge of approximately $1,652,000 for the year ended December 31, 2021 to write down finite lived intangible assets in the Power Management/Bus Controller, CXT and M-RED portfolios. See Note 6. There were no impairments of long-lived assets for the year ended December 31, 2022. Warrant Liability The Company reflects a warrant liability with respect to warrants for which the 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 included under other income (expense) in the accompanying consolidated statements of operations. 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 our warrant liability. 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. Commitments and Contingencies 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 provide 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 and are included in cost of revenues as litigation and licensing expenses. 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. Revenue Recognition Patent Licensing Fees The Company recognizes revenue in accordance with ASC Topic 606, “Revenue from Contracts with Customers”. Revenue is recognized when control of the promised goods or services is transferred to customers at an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services. Under Topic 606, revenue is recognized when there is a contract which has commercial substance which is approved by both parties and identifies the rights of the parties and the payment terms. 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 as part of the settlement of litigation commenced by the Company’s 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 (a) 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 (b) 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 to 90 days of execution of the contract. Contractual payments made by licensees are generally non-refundable. The Company does 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 mainly includes expenses incurred in connection with our patent enforcement activities, such as legal fees, consulting costs, patent maintenance, royalty fees for acquired patents and other related expenses. Cost of revenue does not include expenses related to product development, patent amortization, integration or support, as these are included in general and administrative expenses. 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. Revenue from one customer comprised approximately 55% and approximately 82% of revenue for the years ended December 31, 2022 and 2021, respectively. 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, 2022 and 2021. 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 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 and non-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). 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 In August and November 2021, the Company acquired all of the issued and outstanding equity interests of STX and LSC, respectively. 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. Under ASC 805, the company concluded that the acquisitions did not constitute acquisition of a business and therefore were accounted for as asset acquisitions in accordance with ASC 805. See Note 11 for more information regarding the STX and LSC acquisitions. Gain from Cancellation of Indebtedness 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 as a result of the resolution of the dispute. Net Income (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, and therefore, the diluted net loss per share is the same as the basic net loss per share. The Company’s potentially dilutive securities include 962,463 potential shares of common stock issuable upon exercise of warrants granted to QFL in connection with the Purchase Agreement, 500,000 shares of common stock issuable upon exercise of stock options granted to Intelligent Partners in connection with the Restructure Agreement and 600,000 shares of common stock issuable upon exercise of stock options granted to officers and consultants. See Notes 3, 4 and 5. 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 $26,189,000 and negative working capital of approximately $9,490,000 as of December 31, 2022. Because of the Company’s continuing losses, its working capital deficiency, the uncertainty of future revenue, the Company’s obligations to Intelligent Partners, and 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 as well as any adverse consequences which would result from our failure to meet the continued listing requirements of the OTCQB (see Note 10), raise substantial doubt as to the Company’s ability to continue as a going concern. The Company’s revenue is generated almost exclusively from license fees generated from litigation seeking damages for infringement of the Company’s intellectual property rights. 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 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, 2022 | |
Short-Term Debt and Long-Term Liabilities [Abstract] | |
SHORT-TERM DEBT AND LONG-TERM LIABILITIES | 3. SHORT-TERM DEBT AND LONG-TERM LIABILITIES Short-Term Debt Loans Payable The loans payable represents demand loans made by former officers and directors, who are third parties and stockholders, whose holdings were insignificant, at December 31, 2022 and 2021, in the amount of $138,000. The loans are payable on demand plus accrued interest at 10% per annum. Accrued interest at December 31, 2022 and 2021 was approximately $296,000 and $282,000, respectively. Funding Liability The funding liability at December 31, 2022 and 2021 represents the principal amount of the Company’s obligations to QFL pursuant to a purchase agreement (“Purchase Agreement”) dated February 22, 2021 between the Company and QFL, as described below. As of December 31, 2022, the Company had made total repayments in the amount of approximately $750,000 since February 22, 2021. Approximately $53,000 was repaid during the year ended December 31, 2022. The obligation to QFL has no repayment term and has been classified as a current liability as of December 31, 2022. On February 22, 2021, the Company entered into a series of agreements, all dated February 19, 2021, with QFL, a non-affiliated party, including the “Purchase Agreement”, a security agreement (the “Security Agreement”), a subsidiary security agreement (the “Subsidiary Security Agreement”), a subsidiary guaranty (the “Subsidiary Guaranty”), 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, of which $2,653,000 has been advanced as of December 31, 2022; (b) up to $2,000,000 for operating expenses, of which the Company has requested and received $1,800,000 as of December 31, 2022; 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 962,463 shares of the Company’s common stock, at an exercise price of $0.54 per share which may be exercised from the grant date 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 61st day following notice to the Company. The warrant also contains certain minimum ownership percentage antidilution rights pursuant to which the aggregate number of shares of common stock purchasable upon the initial exercise of the warrant shall not be less than 10% of the aggregate number of outstanding shares of capital stock of the Company (determined on a fully diluted basis). Because the facility with QFL has no term the fair value of the warrants was expensed at the grant date. A portion of any gain from sale of the shares, net of taxes and costs of exercise, realized prior to the completion of all monetization activities shall be credited against the total return due to QFL pursuant to the Purchase Agreement. See Notes 4 and 5 for information on the warrant issue and associated liability. (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 962,463 shares of common stock issuable upon exercise of the warrant. See Note 5 for information on the warrant issue. (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”), the Company granted QFL the right, exercisable at any time during the Observation Period, to appoint a representative to attend meetings (including, without limitation, telephonic or other electronic meetings) of the Board or any committee thereof, including executive sessions, in an observer capacity. 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, TLL, 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, 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 Aawaaz Inc. (“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. 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 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. Two of the patents were assigned to Tyche and the balance of the patents were assigned to DIP. In June 2022, MML and AI agreed to amend the Purchase Agreement to add two additional patent families for an additional $92,000. The Company requested and received a capital advance from QFL in the amount of $92,000, which was used to make payment to AI in August 2022 pursuant to the amendment to the Purchase Agreement. In July 2022, EDI acquired, via assignment from Edward D. Ioli Trust, all right title and interest to a portfolio of five United States patents relating to a system and method for controlling vehicles and for providing assistance to operated vehicles (“EDI Portfolio”) for a purchase price consisting of 50% of the net proceeds resulting from monetization of the EDI Portfolio. In July 2022, the Company entered into a purchase agreement with Hewlett Packard Enterprise Development LP and Hewlett Packard Enterprise Company for the purchase of eight United States Patents for a purchase price of $350,000. We paid $35,000 upon execution of the agreement with the balance payable within 30 days. We requested and received a capital advance from QFL in the amount of $350,000, which was used to make payment of the balance in August 2022 pursuant to the terms of the purchase agreement. The Company requested and received operating capital advances in the amount of $800,000 and $1,000,000 from QFL pursuant to the Purchase Agreement during the years ended December 31, 2022 and 2021, respectively. Loan Payable Related Party The loan payable – related party at December 31, 2022 and 2021 represents the current amount of a non-interest bearing total monetization proceeds obligation (the “TMPO”) to Intelligent Partners, LLC (“Intelligent Partners”) of $2,796,500 and $2,805,000, respectively, 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 of 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 MPAs and granted Intelligent Partners certain rights in the monetization proceeds from any new intellectual property the Company acquires, as described 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 Andrew Fitton (“Fitton”) and Michael Carper (“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: 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 December 31, 2022. (ii) Pursuant to the Stock Purchase Agreement, the Company issued to Fitton and Carper, as holders of the Transferred Note, a total of 462,963 shares of common stock at a purchase price of $0.54 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 500,000 shares of common stock, with an exercise price of $0.54 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, Fitton and Carper certain registration rights with respect to (i) the 500,000 shares currently owned by Fitton and Carper; (ii) the 462,963 Conversion Shares issued to Fitton and Carper, and (iii) the 500,000 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”), the Company granted Intelligent Partners the option and right, exercisable at any time during the Observation Period, to appoint a representative to attend meetings of the Board or any committee thereof, including executive sessions, in an observer capacity. Intelligent Partners has no right to appoint a director to the board. 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 $1,000,000 to another provider of financing following a final determination by arbitration or other judicial proceeding that such obligation is due and owing. During the year ended December 31, 2021, 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 Less unamortized debt discount and issuance costs — 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 the beneficial ownership percentage of its principals, Intelligent Partners is treated as a related party. Long-Term Liabilities Loan Payable – SBA The loans payable – SBA balance at December 31, 2022 and 2021 of $150,000 represents the total amount due under 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 November 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. Purchase Price of Patents The purchase price of patents balance at December 31, 2022 and 2021 of $53,665 and $190,000, respectively 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 paid approximately $136,000 against the obligation in 2022. 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. |
Warrant Liability
Warrant Liability | 12 Months Ended |
Dec. 31, 2022 | |
Warrant Liability [Abstract] | |
WARRANT LIABILITY | 4. WARRANT LIABILITY On February 22, 2021 the Company issued warrants to purchase 962,463 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), and therefore 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 each balance sheet date with the period-to-period change in the fair market value of the warrant liability reflected as a gain or loss in warrant liability and included under other income (expense). As of December 31, 2022 and 2021, the aggregate fair value of the outstanding warrant liability was approximately $145,000 and $1,636,000, 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, 2022 and 2021: As of December 31, 2022 2021 Volatility 374 % 373 % Exercise price $ 0.54 $ 0.54 Risk-free interest rate 1.37 % 1.37 % Expected dividends — % — % Expected term 8.1 9.4 The following schedule summarizes the valuation of financial instruments at fair value in the balance sheets as of December 31, 2022 and 2021: Fair Value Measurements as of December 31, 2022 December 31, 2021 Level 1 Level 2 Level 3 Level 1 Level 2 Level 3 Liabilities Warrant liability — — 145,428 — — 1,636,187 Total liabilities $ — $ — $ 145,428 $ — $ — $ 1,636,187 The following table sets forth a reconciliation of changes in the fair value of warrant liabilities classified as Level 3 in the fair value hierarchy: Fair Value Fair value at grant date $ 1,154,905 Change in fair value 481,282 Balance at December 31, 2021 1,636,187 Gain on subsequent measurement (1,490,759 ) Balance at December 31, 2022 $ 145,428 See Notes 3 and 5 for information on the warrant issuance. |
Stockholders' Equity
Stockholders' Equity | 12 Months Ended |
Dec. 31, 2022 | |
Stockholders' Equity [Abstract] | |
STOCKHOLDERS’ EQUITY | 5. STOCKHOLDERS’ EQUITY Amendment to Amended and Restated Certificate of Incorporation On July 27, 2022, the Company amended its amended and restated certificate of incorporation following approval of the amendment by the stockholders at the 2022 annual meeting of stockholders. The amendment (i) decreased the number of authorized shares of common stock from 10,000,000,000 shares to 30,000,000 shares and (ii) effected a one-for-100 reverse split whereby each share of common stock became and was converted into 0.01 shares of such common stock, with fractional shares being rounded up to the next higher whole number of shares. There was no change in the par value of the common stock. All historical share and per share amounts in these financial statements have been retroactively adjusted to reflect the reverse stock split and change in authorized common stock. 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 5,000,000 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, were 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 (Fitton and Carper) 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 462,963 shares of common stock at a purchase price of $0.54 per share, which purchase price was paid by the conversion and in full satisfaction of the Company’s obligation under the Transferred Note and is 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 500,000 shares of common stock, with an exercise price of $0.54 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 Company granted Intelligent Partners, Fitton and Carper certain registration rights with respect to (i) the 500,000 shares currently owned by Fitton and Carper; (ii) the 462,963 Conversion Shares issued to Fitton and Carper, and (iii) the 500,000 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 100,000 shares of Common Stock which immediately vests in full and a ten-year option to purchase a total of 300,000 shares of Common Stock, which become exercisable cumulatively as follows: a. 100,000 shares at an exercise price of $1.00 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. 100,000 shares at an exercise price of $3.00 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 reports stockholders’ equity of at least $5,000,000, and c. 100,000 shares at an exercise price of $5.00 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 determined that the first performance condition was met and accrued the option expense of approximately $240,000 over the period from the grant date to achievement of the performance condition. The Company did not recognize any option expense for the year ended December 31, 2022. 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 100,000 shares of Common Stock which immediately vests in full and a ten-year option to purchase 300,000 shares of Common Stock, which becomes exercisable cumulatively as follows: a. 100,000 shares at an exercise price of $1.00 per share became exercisable on February 22, 2022, which was the first anniversary of the date of the agreement; b. 100,000 shares at an exercise price of $3.00 per share upon the second anniversary of the agreement; and c. 100,000 shares at an exercise price of $5.00 per share upon the third anniversary 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 $117,000 and $188,000 for the years ended December 31, 2022 and 2021, respectively. Compensatory Arrangements of Officers and Directors 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 – 490,000 shares b. Timothy J. Scahill – 100,000 shares c. Dr. William R. Carroll - 100,000 shares (ii) Granted Jon Scahill a ten-year option (the “Option”) to purchase 600,000 shares of Common Stock which become exercisable cumulatively as follows: a. 200,000 shares at an exercise price of $1.00 per share becoming exercisable upon the commencement of trading of the Common Stock on the OTCQB. b. 200,000 shares at an exercise price of $3.00 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 reports stockholders’ equity of at least $5,000,000, and c. 200,000 shares at an exercise price of $5.00 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 500,000 shares of common stock which vested 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 during the year ended December 31, 2021. 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 did not recognize any option expense for the year ended December 31, 2022. 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 Average Weighted Average Weighted Balance - December 31, 2020 — — — — Granted 2,000,000 2.00 1.20 8.65 Exercised — — — — Expired — — — — Cancelled — — — — Balance - December 31, 2021 2,000,000 2.00 1.20 7.80 Granted — — — — Exercised — — — — Expired — — — — Cancelled — — — — Balance - December 31, 2022 2,000,000 2.00 1.20 6.80 Options exercisable at end of period 1,000,000 0.77 1.20 5.45 The outstanding options do not have an intrinsic value as of December 31, 2022. As of December 31, 2021 the intrinsic value of the outstanding options was $930,000. As of December 31, 2022, there was approximately $1,014,000 of unrecognized compensation expense related to nonvested stock option awards that is expected to be recognized over a weighted average expected term of approximately 8 years. Issuance of Warrants A summary of the status of the Company’s warrants and changes is set forth below: Number of Weighted Average Weighted Average Balance - December 31, 2020 — — — Granted 962,463 0.54 9.89 Exercised — — — Expired — — — Cancelled — — — Balance - December 31, 2021 962,463 0.54 9.14 Granted — — — Exercised — — — Expired — — — Cancelled — — — Balance - December 31, 2022 962,463 0.54 8.15 The outstanding warrants do not have an intrinsic value as of December 31, 2022. The intrinsic value of the outstanding warrants as of December 31, 2021 was $1,116,456. |
Intangible Assets
Intangible Assets | 12 Months Ended |
Dec. 31, 2022 | |
Intangible Assets [Abstract] | |
INTANGIBLE ASSETS | 6. INTANGIBLE ASSETS Intangible assets include patents purchased and are recorded based at their acquisition cost. Intangible assets consisted of the following: December 31, 2022 2021 Patents $ 2,757,000 $ 5,617,117 Disposal — (4,362,117 ) Subtotal 2,757,000 1,255,000 Less: accumulated amortization (1,625,846 ) (715,519 ) Net value of intangible assets $ 1,131,154 $ 539,481 Weighted Average Amortization Period (Years) 2.48 11.02 Intangible assets are comprised of patents with estimated useful lives. The intangible assets at December 31, 2022 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; these patents were disposed of as of December 31, 2021 ● patents acquired in July 2017 pursuant to an obligation to pay 50% 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; these patents were disposed of as of December 31, 2021. ● patents (which were fully amortized 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 amortized 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 obligation to pay 50% 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, these patents were disposed of as of December 31, 2021. ● patents (which were fully amortized 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 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, 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. ● patents acquired in January 2022 for a purchase price of $1,060,000, the useful lives of the patents, at the date of purchase, was approximately 1-2 years. ● patents acquired in July 2022 via assignment from AI for a purchase price of $92,000, the useful lives of the patents, at the date of purchase, was approximately 2-4 years. ● patents acquired July 2022 pursuant to an agreement with Hewlett Packard Enterprise Development LP and Hewlett Packard Enterprise Company for a purchase price of $350,000. The useful lives of the patents, at the date of purchase, was approximately 2-9 years. The Company amortizes the costs of intangible assets over their estimated useful lives on a straight-line basis. 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. The Company assesses intangible assets for any impairment to the carrying values. As of December 31, 2022, management concluded that there was no impairment to the intangible assets. For the year ended December 31, 2021, the Company recorded non-cash impairment charges of approximately $1,652,000 to write down finite lived intangible assets in the Power Management/Bus Controller, CXT and M-RED portfolios. Amortization expense for patents was approximately $910,000 and $1,159,865 for the years ended December 31, 2022 and 2021, respectively. Amortization expense is included in selling, general, and administration expenses in the accompanying consolidated statement of operations. Future amortization of intangible assets is as follows: Year Ended December 31, 2023 $ 457,894 2024 218,352 2025 123,730 2026 83,205 2027 47,927 Thereafter 200,046 Total $ 1,131,154 |
Non-Controlling Interest
Non-Controlling Interest | 12 Months Ended |
Dec. 31, 2022 | |
Non-Controlling Interest [Abstract] | |
NON-CONTROLLING INTEREST | 7. NON-CONTROLLING INTEREST The following table reconciles equity attributable to the non-controlling interest related to Quest Packaging Solutions Corporation. December 31, 2022 2021 Balance, beginning of year $ 228 $ 228 Net loss attributable to non-controlling interest — — Balance, end of year $ 228 $ 228 |
Income taxes
Income taxes | 12 Months Ended |
Dec. 31, 2022 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | 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, 2022, the Company has approximately $11,635,198 of net operating loss (“NOL”) carry forwards which will begin to expire in 2024. Net operating loss carryovers may be subject to a limitation on their usage in future periods if the Company experiences a change in ownership as defined in Internal Revenue Code Section 382. In assessing the realizability of deferred tax assets, Company’s management considers whether it is more likely than not that all or a portion of the Company’s deferred tax assets will be realized. The Company’s management considers all available evidence, both positive and negative, in making this assessment. Due to the Company’s history of generating losses in recent years, and the lack of objectively verifiable evidence that it will be able to generate taxable income in future years, the Company’s management has determined that a valuation allowance against the Company’s deferred tax assets is necessary. The change in the valuation allowance for the year ended December 31, 2022 is $77,946 and is recorded as a component of income tax expense. The Company’s deferred tax assets consist of the following: December 31, 2022 2021 Net operating loss carry forward $ 2,713,220 $ 2,591,027 Intangible assets 162,465 206,712 Valuation allowance $ (2,875,685 ) $ (2,797,739 ) Balance, end of year $ — $ — Tax (benefit) expense consisted primarily of the following: December 31, 2022 2021 Federal $ — $ — State (1,253 ) 1,806 Foreign — — Deferred — — Total $ (1,253 ) $ 1,806 The reconciliation between the effective tax rate on loss before income taxes and the statutory rate for the year ended December 31, 2022 is as follows: Tax Percentage Book income before taxes $ (158,501 ) 21.00 % State taxes, net — — % Meals and entertainment 560 (0.07 )% Warrant income (313,059 ) 41.48 % Interest expense 82,720 (10.96 )% Change in tax rate 39,752 (5.27 )% Change in valuation allowance 77,946 (10.33 )% Change in estimate for prior year taxes 269,329 (35.68 )% Total $ (1,253 ) Effective tax rate 0.17 % The reconciliation between the effective tax rate on loss before income taxes 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 )% As of December 31, 2022, the Company’s management believes that it has adequately provided for its tax-related liabilities, and that no liability for unrecognized tax benefits is necessary. No significant change in the total amount of unrecognized tax benefits is expected within the next twelve months. The Company recognizes accrued interest and penalties related to unrecognized tax benefits (if any) in tax expenses, as applicable. At December 31, 2022 and 2021, the Company had no accrual for the payment of interest and penalties. The statute of limitations for assessment of income taxes is open for tax years ending December 31, 2019 and later. |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Dec. 31, 2022 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | 9. RELATED PARTY TRANSACTIONS The Company has at various times entered into transactions with related parties, including officers, directors and major stockholders, wherein these parties have provided services, advanced or loaned money, or both, to the Company which was needed to support its daily operations. The Company discloses all related party transactions. See Notes 3 and 5 in connection with the Restructure Agreement dated February 22, 2021 with Intelligent Partners. Because of its ownership percentage, Intelligent Partners is treated as a related party. See Note 5 with respect to share-based compensation to officers and directors. See Note 10 with respect to the employment agreement with the Company’s president and chief executive officer. During the year ended December 31, 2021, the Company contracted with an entity owned by the chief technology officer for the provision of information technology services to the Company. In June 2022 the chief technology officer sold his interest in the entity. The cost of such services was approximately $205 and $434 for the years ended December 31, 2022 and 2021, respectively. During the year ended December 31, 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. For the years ended December 31, 2022 and 2021, the cost of these services was approximately $85,000 and $763,000, respectively. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2022 | |
Commitments and Contingencies [Abstract] | |
COMMITMENTS AND CONTINGENCIES | 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 the Company’s 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. SEP IRA Plan 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 years ending December 31, 2022 and 2021, the percentage was set at 20% and 19%, respectively. The Company’s president and chief executive officer is the only participant and during the years ended December 31, 2022 and 2021, $61,000 and $58,000 was deposited into his SEP IRA account, respectively. 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 impair the Company’s operating results and financial position and could result in a default under the Company’s obligations to QFL. 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 judgment may result in the bankruptcy of the subsidiary and/or the loss of the patents, which are the subsidiaries’ only assets. Effects of possible delisting of common stock on OTCQB On May 23, 2022, the Company received notice from OTC Markets Group, that, because the bid price for its common stock had closed below $0.01 per share for more than 30 consecutive days, the Company no longer meets the Standards for Continued Eligibility under the OTC listing standards and, if this deficiency is not met by August 21, 2022, the Company’s common stock will be removed from the OTCQB marketplace, in which event the common stock will be traded on the OTC Pink market. Our registration rights agreement with QFL provides that, in the event of a failure to comply with certain covenants, which includes the failure of our common stock to be traded on the OTCQB, in addition to any other remedies available to QFL, we are to pay to QFL an amount in cash equal to 2.0% of the aggregate value of QFL’s Registrable Securities, as defined in the Registration Rights Agreement, whether or not included in such registration statement, on each of the following dates: (i) the initial day of a maintenance failure; (ii) on the 30th day after the date of such a failure and (iii) every 30th day thereafter (prorated for periods totaling less than thirty (30) days) until such failure is cured. In July 2022 the Company amended its Certificate of Incorporation to effect a one-for-100 reverse split of its common stock (see Note 5). The OTC Markets Group confirmed to the Company that the deficiency has been cured. |
Business Combinations
Business Combinations | 12 Months Ended |
Dec. 31, 2022 | |
Business Combination [Abstract] | |
BUSINESS COMBINATIONS | 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, 2022 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | 12. SUBSEQUENT EVENTS Summary of Agreements with QPRC Finance III LLC (“QF3”) On March 12, 2023, the Company and its newly formed wholly-owned subsidiary, Harbor Island Dynamic LLC (“Harbor”), entered into a series of agreements, all dated March 12, 2023, with QF3, a non-affiliated party, including a prepaid forward purchase agreement (the “Purchase Agreement”), a security agreement (the “Security Agreement”), a patent security agreement (the “Patent Security Agreement” together with the Security Agreement, the Patent Security 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, QF3 agreed to make available to the Company a financing facility of: (a) up to $4,000,000 for operating expenses; (b) $3,300,000 to fund the cash payment portion of the purchase of a patent portfolio from Tower Semiconductor Ltd.; and (c) up to an additional $25,000,000 for the acquisition of mutually agreed patent rights that the Company intends to monetize. In return the Company transferred to QF3 a right to receive a portion of net proceeds generated from the monetization of those patents. (ii) On March 17, 2023, the Company used $3,300,000 of proceeds from the QF3 financing as the cash payment portion of the purchase of a ten-patent portfolio from Tower Semiconductor Ltd. (the “HID Portfolio”). (iii) Pursuant to the Security Agreement and Patent Security Agreement, payment of our obligations under the Purchase Agreement with QF3 are secured by (a) the value of anything received from the monetization of the intellectual property rights covered by the Security Agreement; (b) the patents (as defined in the Security 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). In connection with the agreements with QF3 the Company, Harbor and the Subsidiary Guarantors entered into an intercreditor agreement with QF3 and Intelligent Partners which sets forth the priority of QF3 in the collateral under the Investment Documents. |
Accounting Policies, by Policy
Accounting Policies, by Policy (Policies) | 12 Months Ended |
Dec. 31, 2022 | |
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, 2022 and 2021. The consolidated financial statements include the accounts and operations of: Quest Patent Research Corporation (“The Company”) Digital IP Advisors Inc. (“DIPA”) (wholly owned) (formerly Quest Licensing Corporation (NY)) Quest Licensing Corporation (DE) (“QLC”) (wholly owned) Quest Packaging Solutions Corporation (90% owned) Quest Nettech Corporation (“NetTech”) (65% owned) Semcon IP, Inc. (“Semcon”) (wholly owned) Mariner IC, Inc. (“Mariner”) (wholly owned) IC Kinetics, Inc. (“IC”) (wholly owned) CXT Systems, Inc. (“CXT”) (wholly owned) Photonic Imaging Solutions Inc. (“PIS”) (wholly owned) M-Red Inc. (“M-Red”) (wholly owned) Audio Messaging Inc. (“AMI”) (wholly owned) Peregrin Licensing LLC (“PLL”) (wholly owned) Taasera Licensing LLC (“TLL”) (wholly owned) Soundstreak Texas LLC (“STX”) (wholly owned) Multimodal Media LLC (“MML”) (wholly owned) LS Cloud Storage Technologies, LLC (“LSC”) (wholly owned) Tyche Licensing LLC (“Tyche”) (wholly owned) Deepwell IP LLC (“DIP”) (wholly owned) EDI Licensing LLC (“EDI”) (wholly owned) Koyo Licensing LLC (“Koyo”) (wholly owned) In February 2022, the Company changed the name of Quest Licensing Corporation to Digital IP Advisors Incorporated. Significant intercompany transaction and balances have been eliminated in consolidation. |
Reverse Split, Change in Authorized Common Stock | Reverse Split, Change in Authorized Common Stock On July 27, 2022, the Company amended its amended and restated certificate of incorporation. The amendment (i) decreased the number of authorized shares of common stock from 10,000,000,000 shares to 30,000,000 shares and (ii) effected a one-for-100 reverse split whereby each share of common stock, par value $0.00003 per share, became and was converted into 0.01 shares of such common stock, with fractional shares being rounded up to the next higher whole number of shares. All authorized share and share information in these financial statements retroactively reflect the reverse split and change in authorized common stock. |
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. 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. The Company had no cash equivalents as of December 31, 2022 and 2021. |
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 did not record an allowance for doubtful accounts at December 31, 2022 and 2021. |
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 asset’s 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 ten years. 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” whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable through the estimated undiscounted cash flows expected to result from the use and eventual disposition of the assets. Whenever any such impairment exists, an impairment loss will be recognized for the amount by which the carrying value exceeds the fair value. In the event that management decides to no longer allocate resources to a patent portfolio, an impairment loss equal to the remaining carrying value of the asset is recorded. The Company recorded a non-cash impairment charge of approximately $1,652,000 for the year ended December 31, 2021 to write down finite lived intangible assets in the Power Management/Bus Controller, CXT and M-RED portfolios. See Note 6. There were no impairments of long-lived assets for the year ended December 31, 2022. |
Warrant Liability | Warrant Liability The Company reflects a warrant liability with respect to warrants for which the 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 included under other income (expense) in the accompanying consolidated statements of operations. |
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 our warrant liability. 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. |
Commitments and Contingencies | Commitments and Contingencies 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 provide 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 and are included in cost of revenues as litigation and licensing expenses. 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. |
Revenue Recognition | Revenue Recognition Patent Licensing Fees The Company recognizes revenue in accordance with ASC Topic 606, “Revenue from Contracts with Customers”. Revenue is recognized when control of the promised goods or services is transferred to customers at an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services. Under Topic 606, revenue is recognized when there is a contract which has commercial substance which is approved by both parties and identifies the rights of the parties and the payment terms. 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 as part of the settlement of litigation commenced by the Company’s 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 (a) 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 (b) 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 to 90 days of execution of the contract. Contractual payments made by licensees are generally non-refundable. The Company does 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 mainly includes expenses incurred in connection with our patent enforcement activities, such as legal fees, consulting costs, patent maintenance, royalty fees for acquired patents and other related expenses. Cost of revenue does not include expenses related to product development, patent amortization, integration or support, as these are included in general and administrative expenses. 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. Revenue from one customer comprised approximately 55% and approximately 82% of revenue for the years ended December 31, 2022 and 2021, respectively. |
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, 2022 and 2021. |
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 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 and non-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). |
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 In August and November 2021, the Company acquired all of the issued and outstanding equity interests of STX and LSC, respectively. 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. Under ASC 805, the company concluded that the acquisitions did not constitute acquisition of a business and therefore were accounted for as asset acquisitions in accordance with ASC 805. See Note 11 for more information regarding the STX and LSC acquisitions. |
Gain from Cancellation of Indebtedness | Gain from Cancellation of Indebtedness 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 as a result of the resolution of the dispute. |
Net Income (Loss) Per Share | Net Income (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, and therefore, the diluted net loss per share is the same as the basic net loss per share. The Company’s potentially dilutive securities include 962,463 potential shares of common stock issuable upon exercise of warrants granted to QFL in connection with the Purchase Agreement, 500,000 shares of common stock issuable upon exercise of stock options granted to Intelligent Partners in connection with the Restructure Agreement and 600,000 shares of common stock issuable upon exercise of stock options granted to officers and consultants. See Notes 3, 4 and 5. |
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 $26,189,000 and negative working capital of approximately $9,490,000 as of December 31, 2022. Because of the Company’s continuing losses, its working capital deficiency, the uncertainty of future revenue, the Company’s obligations to Intelligent Partners, and 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 as well as any adverse consequences which would result from our failure to meet the continued listing requirements of the OTCQB (see Note 10), raise substantial doubt as to the Company’s ability to continue as a going concern. The Company’s revenue is generated almost exclusively from license fees generated from litigation seeking damages for infringement of the Company’s intellectual property rights. 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 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, 2022 | |
Short-Term Debt and Long-Term Liabilities [Abstract] | |
Schedule of recognized a loss on extinguishment of note | Carrying amount as of the restructure date $ 4,672,810 Less unamortized debt discount and issuance costs — 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 ) |
Warrant Liability (Tables)
Warrant Liability (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Warrant Liability [Abstract] | |
Schedule of fair value of the warrant liabilities classified | As of December 31, 2022 2021 Volatility 374 % 373 % Exercise price $ 0.54 $ 0.54 Risk-free interest rate 1.37 % 1.37 % Expected dividends — % — % Expected term 8.1 9.4 |
Schedule of summarizes the valuation of financial instruments | Fair Value Measurements as of December 31, 2022 December 31, 2021 Level 1 Level 2 Level 3 Level 1 Level 2 Level 3 Liabilities Warrant liability — — 145,428 — — 1,636,187 Total liabilities $ — $ — $ 145,428 $ — $ — $ 1,636,187 |
Schedule of fair value of the warrant liabilities classified | Fair Value Fair value at grant date $ 1,154,905 Change in fair value 481,282 Balance at December 31, 2021 1,636,187 Gain on subsequent measurement (1,490,759 ) Balance at December 31, 2022 $ 145,428 |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Stockholders' Equity [Abstract] | |
Schedule of stock options | Number of Weighted Average Weighted Average Weighted Balance - December 31, 2020 — — — — Granted 2,000,000 2.00 1.20 8.65 Exercised — — — — Expired — — — — Cancelled — — — — Balance - December 31, 2021 2,000,000 2.00 1.20 7.80 Granted — — — — Exercised — — — — Expired — — — — Cancelled — — — — Balance - December 31, 2022 2,000,000 2.00 1.20 6.80 Options exercisable at end of period 1,000,000 0.77 1.20 5.45 |
Schedule of warrants | Number of Weighted Average Weighted Average Balance - December 31, 2020 — — — Granted 962,463 0.54 9.89 Exercised — — — Expired — — — Cancelled — — — Balance - December 31, 2021 962,463 0.54 9.14 Granted — — — Exercised — — — Expired — — — Cancelled — — — Balance - December 31, 2022 962,463 0.54 8.15 |
Intangible Assets (Tables)
Intangible Assets (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Intangible Assets [Abstract] | |
Schedule of intangible assets | December 31, 2022 2021 Patents $ 2,757,000 $ 5,617,117 Disposal — (4,362,117 ) Subtotal 2,757,000 1,255,000 Less: accumulated amortization (1,625,846 ) (715,519 ) Net value of intangible assets $ 1,131,154 $ 539,481 Weighted Average Amortization Period (Years) 2.48 11.02 |
Schedule of future amortization of intangible assets | Year Ended December 31, 2023 $ 457,894 2024 218,352 2025 123,730 2026 83,205 2027 47,927 Thereafter 200,046 Total $ 1,131,154 |
Non-Controlling Interest (Table
Non-Controlling Interest (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Non-Controlling Interest [Abstract] | |
Schedule of equity attributable to the non-controlling interest | December 31, 2022 2021 Balance, beginning of year $ 228 $ 228 Net loss attributable to non-controlling interest — — Balance, end of year $ 228 $ 228 |
Income taxes (Tables)
Income taxes (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Income Tax Disclosure [Abstract] | |
Schedule of deferred tax asset | December 31, 2022 2021 Net operating loss carry forward $ 2,713,220 $ 2,591,027 Intangible assets 162,465 206,712 Valuation allowance $ (2,875,685 ) $ (2,797,739 ) Balance, end of year $ — $ — |
Schedule of tax expense | December 31, 2022 2021 Federal $ — $ — State (1,253 ) 1,806 Foreign — — Deferred — — Total $ (1,253 ) $ 1,806 |
Schedule of company’s deferred tax asset effective tax rate | Tax Percentage Book income before taxes $ (158,501 ) 21.00 % State taxes, net — — % Meals and entertainment 560 (0.07 )% Warrant income (313,059 ) 41.48 % Interest expense 82,720 (10.96 )% Change in tax rate 39,752 (5.27 )% Change in valuation allowance 77,946 (10.33 )% Change in estimate for prior year taxes 269,329 (35.68 )% Total $ (1,253 ) Effective tax rate 0.17 % 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) | 1 Months Ended | 12 Months Ended | |||
Jul. 27, 2022 $ / shares shares | Jul. 23, 2021 USD ($) | Dec. 31, 2022 USD ($) $ / shares shares | Dec. 31, 2021 USD ($) $ / shares shares | Jul. 31, 2022 USD ($) | |
Summary of Significant Accounting Policies (Details) [Line Items] | |||||
Common stock, share authorized (in Shares) | shares | 30,000,000 | 30,000,000 | |||
Common stock, par value (in Dollars per share) | $ / shares | $ 0.00003 | $ 0.00003 | |||
Current Income Tax Expense (Benefit) | $ 1,652,000 | ||||
Number of customer | 1 | ||||
Revenue percentage | 55% | 82% | |||
Due payments | $ 1,150,000 | $ 35,000 | |||
Forgiveness of debt | $ 1,726,000 | ||||
Warrants granted (in Shares) | shares | 962,463 | ||||
Purchase agreement stock options (in Shares) | shares | 500,000 | ||||
Stock options granted to officers and consultants | $ 600,000 | ||||
Accumulated deficit | 26,189,000 | ||||
Working capital | $ 9,490,000 | ||||
Reverse Split [Member] | |||||
Summary of Significant Accounting Policies (Details) [Line Items] | |||||
Stock split, description | effected a one-for-100 reverse split | ||||
Common stock, par value (in Dollars per share) | $ / shares | $ 0.00003 | ||||
Common Stock [Member] | |||||
Summary of Significant Accounting Policies (Details) [Line Items] | |||||
Common stock, par value (in Dollars per share) | $ / shares | $ 0.01 | ||||
Quest Packaging Solutions Corporation [Member] | |||||
Summary of Significant Accounting Policies (Details) [Line Items] | |||||
Ownership percentage | 90% | ||||
Quest Nettech Corporation [Member] | |||||
Summary of Significant Accounting Policies (Details) [Line Items] | |||||
Ownership percentage | 65% | ||||
Maximum [Member] | Reverse Split [Member] | |||||
Summary of Significant Accounting Policies (Details) [Line Items] | |||||
Common stock, share authorized (in Shares) | shares | 10,000,000,000 | ||||
Minimum [Member] | Reverse Split [Member] | |||||
Summary of Significant Accounting Policies (Details) [Line Items] | |||||
Common stock, share authorized (in Shares) | shares | 30,000,000 | ||||
Patents [Member] | Maximum [Member] | |||||
Summary of Significant Accounting Policies (Details) [Line Items] | |||||
Patents economic useful lives | 10 years | ||||
Patents [Member] | Minimum [Member] | |||||
Summary of Significant Accounting Policies (Details) [Line Items] | |||||
Patents economic useful lives | 1 year |
Short-Term Debt and Long-Term_3
Short-Term Debt and Long-Term Liabilities (Details) - USD ($) | 1 Months Ended | 6 Months Ended | 12 Months Ended | |||||||||
Oct. 15, 2021 | May 14, 2020 | Jul. 31, 2022 | Jan. 27, 2022 | May 20, 2021 | Feb. 22, 2021 | Jan. 31, 2020 | Oct. 22, 2015 | Jun. 30, 2022 | Dec. 31, 2022 | Dec. 31, 2021 | Jul. 23, 2021 | |
Short-Term Debt and Long-Term Liabilities (Details) [Line Items] | ||||||||||||
Loans payable - third party | $ 138,000 | $ 138,000 | ||||||||||
Interest percentage | 10% | |||||||||||
Accrued interest | $ 296,000 | 282,000 | ||||||||||
Repayment amount | 750,000 | |||||||||||
Cash payments | $ 1,750,000 | |||||||||||
Warrants to purchase shares (in Shares) | 962,463 | |||||||||||
Initial exercise warrants percentage | 10% | |||||||||||
Legal fees | $ 500 | |||||||||||
Purchase price | $ 350,000 | |||||||||||
Purchase agreement | $ 4,672,810 | $ 92,000 | ||||||||||
Purchase price percentage | 50% | |||||||||||
Due payments | $ 35,000 | $ 1,150,000 | ||||||||||
Loan payable related party | 2,796,500 | $ 2,805,000 | ||||||||||
Payment loans | 275,000 | |||||||||||
Transferred notes | 250,000 | |||||||||||
Loss on debt conversion | $ 305,556 | |||||||||||
Asset acquired, description | (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. | |||||||||||
Conversion shares (in Shares) | 462,963 | |||||||||||
Common Stock, Shares, Issued (in Shares) | 5,331,973 | 5,333,347 | ||||||||||
Obligation excess | $ 1,000,000 | |||||||||||
Loss on extinguishment note | $ 730,378 | |||||||||||
Maturity dates | May 14, 2050 | |||||||||||
Deducted loan amount | $ 100 | |||||||||||
SBA amount | $ 1,000 | |||||||||||
Purchase agreement | $53,665 | $190,000 | ||||||||||
Acquisition funding | $ 95,000 | |||||||||||
Funder received | 190,000 | |||||||||||
Obligation | $ 136,000 | |||||||||||
Minimum [Member] | ||||||||||||
Short-Term Debt and Long-Term Liabilities (Details) [Line Items] | ||||||||||||
Warrants percentage | 4.99% | |||||||||||
Maximum [Member] | ||||||||||||
Short-Term Debt and Long-Term Liabilities (Details) [Line Items] | ||||||||||||
Warrants percentage | 9.99% | |||||||||||
Stock Purchase Agreement [Member] | ||||||||||||
Short-Term Debt and Long-Term Liabilities (Details) [Line Items] | ||||||||||||
Shares of common stock (in Shares) | 462,963 | |||||||||||
Purchase price (in Dollars per share) | $ 0.54 | |||||||||||
Transferred note balance | $ 250,000 | |||||||||||
U.S. Small Business Association [Member] | ||||||||||||
Short-Term Debt and Long-Term Liabilities (Details) [Line Items] | ||||||||||||
Interest percentage | 3.75% | |||||||||||
Loan amount | 150,000 | $ 150,000 | ||||||||||
QFL [Member] | ||||||||||||
Short-Term Debt and Long-Term Liabilities (Details) [Line Items] | ||||||||||||
Repayment amount | 53,000 | |||||||||||
Payments for acquisition | 25,000,000 | |||||||||||
Company intends to monetize advanced | 2,653,000 | |||||||||||
Operating expenses | 2,000,000 | |||||||||||
Requested and received | $ 350,000 | 1,800,000 | ||||||||||
Cash payments | 1,750,000 | |||||||||||
Proceeds from financing | $ 1,750,000 | |||||||||||
Warrants to purchase shares (in Shares) | 962,463 | |||||||||||
Exercise price per share (in Dollars per share) | $ 0.54 | |||||||||||
Advanced capital | $ 92,000 | |||||||||||
Purchase price | $ 1,060,000 | |||||||||||
Operating capital advance | $ 800,000 | $ 1,000,000 | ||||||||||
PKT [Member] | ||||||||||||
Short-Term Debt and Long-Term Liabilities (Details) [Line Items] | ||||||||||||
Gross proceeds | 350,000 | |||||||||||
Legal fees | 93,900 | |||||||||||
Advanced capital | $ 350,000 | |||||||||||
Taasera [Member] | ||||||||||||
Short-Term Debt and Long-Term Liabilities (Details) [Line Items] | ||||||||||||
Advanced capital | $ 250,000 | |||||||||||
Rights, title and interest of agreements | $ 250,000 | |||||||||||
MML Portfolio [Member] | ||||||||||||
Short-Term Debt and Long-Term Liabilities (Details) [Line Items] | ||||||||||||
Advanced capital | $ 550,000 | |||||||||||
Purchase price | $ 550,000 | |||||||||||
LLC [Member] | ||||||||||||
Short-Term Debt and Long-Term Liabilities (Details) [Line Items] | ||||||||||||
Purchase price | $ 1,060,000 | |||||||||||
Intelligent Partners LLC [Member] | ||||||||||||
Short-Term Debt and Long-Term Liabilities (Details) [Line Items] | ||||||||||||
Warrants to purchase shares (in Shares) | 500,000 | |||||||||||
Exercise price per share (in Dollars per share) | $ 0.54 | |||||||||||
Percentage of agreement | 10% | 60% | ||||||||||
Payment loans | $ 1,750,000 | |||||||||||
Principal amount | 4,422,810 | |||||||||||
Black-Scholes pricing model | $ 598,000 | |||||||||||
Common Stock, Shares, Issued (in Shares) | 500,000 | |||||||||||
Fitton and Carper [Member] | ||||||||||||
Short-Term Debt and Long-Term Liabilities (Details) [Line Items] | ||||||||||||
Shares owned (in Shares) | 500,000 | |||||||||||
Conversion shares (in Shares) | 462,963 | |||||||||||
Common Stock, Shares, Issued (in Shares) | 462,963 | 500,000 |
Short-Term Debt and Long-Term_4
Short-Term Debt and Long-Term Liabilities (Details) - Schedule of recognized a loss on extinguishment of note | 12 Months Ended |
Dec. 31, 2022 USD ($) | |
Schedule of Recognized a Loss on Extinguishment of Note [Abstract] | |
Carrying amount as of the restructure date | $ 4,672,810 |
Less unamortized debt discount and issuance costs | |
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) |
Warrant Liability (Details)
Warrant Liability (Details) - USD ($) | Feb. 22, 2021 | Dec. 31, 2022 | Dec. 31, 2021 |
Warrant Liability [Abstract] | |||
Shares of common stock | 962,463 | ||
Warrant yield percentage | 10% | ||
Aggregate number of outstanding shares percentage | 10% | ||
Aggregate fair value of the outstanding warrant liability | $ 145,000 | $ 1,636,000 |
Warrant Liability (Details) - S
Warrant Liability (Details) - Schedule of estimated the fair value of the warrant liability | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Schedule of estimated the fair value of the warrant liability [Abstract] | ||
Volatility | 374% | 373% |
Exercise price | 0.54% | 0.54% |
Risk-free interest rate | 1.37% | 1.37% |
Expected dividends | ||
Expected term | 8 years 1 month 6 days | 9 years 4 months 24 days |
Warrant Liability (Details) -_2
Warrant Liability (Details) - Schedule of summarizes the valuation of financial instruments - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Level 1 [Member] | ||
Liabilities | ||
Warrant liability | ||
Total liabilities | ||
Level 2 [Member] | ||
Liabilities | ||
Warrant liability | ||
Total liabilities | ||
Level 3 [Member] | ||
Liabilities | ||
Warrant liability | 145,428 | 1,636,187 |
Total liabilities | $ 145,428 | $ 1,636,187 |
Warrant Liability (Details) -_3
Warrant Liability (Details) - Schedule of fair value of the warrant liabilities classified - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Schedule Of Fair Value Of The Warrant Liabilities Classified Abstract | ||
Fair value at grant date | $ 1,154,905 | |
Change in fair value | 481,282 | |
Balance at December 31, 2021 | $ 1,636,187 | |
Gain on subsequent measurement | $ (1,490,759) | |
Balance at December 31, 2022 | $ 145,428 |
Stockholders' Equity (Details)
Stockholders' Equity (Details) - USD ($) | 1 Months Ended | 12 Months Ended | |||
Jul. 27, 2022 | Feb. 22, 2021 | Feb. 19, 2021 | Dec. 31, 2022 | Dec. 31, 2021 | |
Stockholders' Equity (Details) [Line Items] | |||||
Common stock, share authorized | 30,000,000 | 30,000,000 | |||
Shares of common stock | 500,000 | ||||
Shares issued | 5,331,973 | 5,333,347 | |||
Purchase price per share (in Dollars per share) | $ 0.00003 | $ 0.00003 | |||
Purchase value (in Dollars) | $ 598,000 | ||||
Discount rate | 1.37% | ||||
Option life term | 5 years | ||||
Volatility | 252% | ||||
Shares currently owned | 500,000 | ||||
Conversion shares issued | 462,963 | ||||
Restricted stock | 100,000 | ||||
Total purchase share | 300,000 | ||||
Restricted stock, description | 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 determined that the first performance condition was met and accrued the option expense of approximately $240,000 over the period from the grant date to achievement of the performance condition. | ||||
Stock expense (in Dollars) | $ 240,000 | ||||
Restricted stock, description | the board of directors:(i) Granted restricted stock grants for services rendered and vesting in full upon grant, to: a.Jon C. Scahill – 490,000 shares b.Timothy J. Scahill – 100,000 shares c.Dr. William R. Carroll - 100,000 shares (ii) Granted Jon Scahill a ten-year option (the “Option”) to purchase 600,000 shares of Common Stock which become exercisable cumulatively as follows: a.200,000 shares at an exercise price of $1.00 per share becoming exercisable upon the commencement of trading of the Common Stock on the OTCQB. b.200,000 shares at an exercise price of $3.00 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 reports stockholders’ equity of at least $5,000,000, and c.200,000 shares at an exercise price of $5.00 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 500,000 shares of common stock which vested 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 during the year ended December 31, 2021. 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. | ||||
Option expense (in Dollars) | 240,000 | ||||
Intrinsic value of the outstanding options (in Dollars) | 930,000 | ||||
Intrinsic value of the outstanding warrants (in Dollars) | $ 1,116,456 | ||||
Reverse Split [Member] | |||||
Stockholders' Equity (Details) [Line Items] | |||||
Stock split, description | effected a one-for-100 reverse split | ||||
Purchase price per share (in Dollars per share) | $ 0.00003 | ||||
Maximum [Member] | Reverse Split [Member] | |||||
Stockholders' Equity (Details) [Line Items] | |||||
Common stock, share authorized | 10,000,000,000 | ||||
Minimum [Member] | Reverse Split [Member] | |||||
Stockholders' Equity (Details) [Line Items] | |||||
Common stock, share authorized | 30,000,000 | ||||
Restricted Stock One [Member] | |||||
Stockholders' Equity (Details) [Line Items] | |||||
Exercise price share | 100,000 | ||||
Price per share (in Dollars per share) | $ 1 | ||||
Restricted Stock Two [Member] | |||||
Stockholders' Equity (Details) [Line Items] | |||||
Exercise price share | 100,000 | ||||
Price per share (in Dollars per share) | $ 3 | ||||
Stockholders equity (in Dollars) | $ 5,000,000 | ||||
Restricted Stock Three [Member] | |||||
Stockholders' Equity (Details) [Line Items] | |||||
Exercise price share | 100,000 | ||||
Price per share (in Dollars per share) | $ 5 | ||||
Restricted Stock [Member] | |||||
Stockholders' Equity (Details) [Line Items] | |||||
Restricted stock | 100,000 | ||||
Total purchase share | 300,000 | ||||
Restricted Stock Four [Member] | |||||
Stockholders' Equity (Details) [Line Items] | |||||
Exercise price share | 100,000 | ||||
Price per share (in Dollars per share) | $ 1 | ||||
Restricted Stock Five [Member] | |||||
Stockholders' Equity (Details) [Line Items] | |||||
Exercise price share | 100,000 | ||||
Price per share (in Dollars per share) | $ 3 | ||||
Restricted Stock 6 [Member] | |||||
Stockholders' Equity (Details) [Line Items] | |||||
Exercise price share | 100,000 | ||||
Price per share (in Dollars per share) | $ 5 | ||||
2017 Equity Incentive Plan [Member] | |||||
Stockholders' Equity (Details) [Line Items] | |||||
Shares of common stock | 5,000,000 | ||||
Consulting Agreements [Member] | |||||
Stockholders' Equity (Details) [Line Items] | |||||
Agreement term | 10 years | ||||
Consulting agreements, description | 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 $117,000 and $188,000 for the years ended December 31, 2022 and 2021, respectively. | ||||
Compensatory Arrangements of Certain Officers [Member] | |||||
Stockholders' Equity (Details) [Line Items] | |||||
Unrecognized compensation expense (in Dollars) | $ 1,014,000 | ||||
Weighted average expected term | 8 years | ||||
Fitton and Carper [Member] | |||||
Stockholders' Equity (Details) [Line Items] | |||||
Shares issued | 462,963 | 500,000 | |||
Purchase price per share (in Dollars per share) | $ 0.54 | ||||
Conversion shares issued | 462,963 | ||||
Intelligent Partners LLC [Member] | |||||
Stockholders' Equity (Details) [Line Items] | |||||
Shares issued | 500,000 | ||||
Purchase price per share (in Dollars per share) | $ 0.54 |
Stockholders' Equity (Details)
Stockholders' Equity (Details) - Schedule of stock options - $ / shares | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Schedule of Stock Options [Abstract] | ||
Weighted Average Remaining Contractual Life (Years), Beginning Balance | ||
Weighted Average Remaining Contractual Life (Years), Ending Balance | 6 years 9 months 18 days | 7 years 9 months 18 days |
Weighted Average Remaining Contractual Life (Years), Granted | 8 years 7 months 24 days | |
Weighted Average Remaining Contractual Life (Years), Exercised | ||
Weighted Average Remaining Contractual Life (Years), Expired | ||
Weighted Average Remaining Contractual Life (Years), Cancelled | ||
Weighted Average Remaining Contractual Life (Years),Options exercisable at end of period | 5 years 5 months 12 days | |
Stock Options [Member] | ||
Schedule of Stock Options [Abstract] | ||
Number of Options, Beginning Balance (in Shares) | 2,000,000 | |
Weighted- Average Exercise Price, Beginning Balance | $ 2 | |
Weighted- Average Grant Date Fair Value, Beginning Balance | $ 1.2 | |
Number of Options, Ending Balance (in Shares) | 2,000,000 | 2,000,000 |
Weighted- Average Exercise Price, Ending Balance | $ 2 | $ 2 |
Weighted- Average Grant Date Fair Value, Ending Balance | $ 1.2 | $ 1.2 |
Number of Options, Granted (in Shares) | 2,000,000 | |
Weighted- Average Exercise Price, Granted | $ 2 | |
Weighted- Average Grant Date Fair Value, Granted | $ 1.2 | |
Number of Options, Exercised (in Shares) | ||
Weighted- Average Exercise Price, Exercised | ||
Weighted- Average Grant Date Fair Value, Exercised | ||
Number of Options, Expired (in Shares) | ||
Weighted- Average Exercise Price, Expired | ||
Weighted- Average Grant Date Fair Value, Expired | ||
Number of Options, Cancelled (in Shares) | ||
Weighted- Average Exercise Price, Cancelled | ||
Weighted- Average Grant Date Fair Value, Cancelled | ||
Number of Options, Options exercisable at end of period (in Shares) | 1,000,000 | |
Weighted- Average Exercise Price, Options exercisable at end of period | $ 0.77 | |
Weighted- Average Grant Date Fair Value, Options exercisable at end of period | $ 1.2 |
Stockholders' Equity (Details_2
Stockholders' Equity (Details) - Schedule of warrants - Warrants [Member] - $ / shares | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Schedule of Warrants [Abstract] | ||
Number of Warrants, Beginning Balance | 962,463 | |
Weighted Average Exercise Price, Beginning Balance | $ 0.54 | |
Weighted Average Remaining Contractual Life (Years), Beginning Balance | ||
Number of Warrants, Ending Balance | 962,463 | 962,463 |
Weighted Average Exercise Price, Ending Balance | $ 0.54 | $ 0.54 |
Weighted Average Remaining Contractual Life (Years), Ending Balance | 8 years 1 month 24 days | 9 years 1 month 20 days |
Number of Warrants, Granted | 962,463 | |
Weighted Average Exercise Price, Granted | $ 0.54 | |
Weighted Average Remaining Contractual Life (Years), Granted | 9 years 10 months 20 days | |
Number of Warrants, Exercised | ||
Weighted Average Exercise Price, Exercised | ||
Weighted Average Remaining Contractual Life (Years), Exercised | ||
Number of Warrants, Expired | ||
Weighted Average Exercise Price, Expired | ||
Weighted Average Remaining Contractual Life (Years), Expired | ||
Number of Warrants, Cancelled | ||
Weighted Average Exercise Price, Cancelled | ||
Weighted Average Remaining Contractual Life (Years), Cancelled |
Intangible Assets (Details)
Intangible Assets (Details) - USD ($) | 1 Months Ended | 12 Months Ended | |
Oct. 31, 2021 | Dec. 31, 2022 | Dec. 31, 2021 | |
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; these patents were disposed of as of December 31, 2021 ●patents acquired in July 2017 pursuant to an obligation to pay 50% 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; these patents were disposed of as of December 31, 2021. ●patents (which were fully amortized 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 amortized 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 obligation to pay 50% 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, these patents were disposed of as of December 31, 2021. ●patents (which were fully amortized 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 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, 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. ●patents acquired in January 2022 for a purchase price of $1,060,000, the useful lives of the patents, at the date of purchase, was approximately 1-2 years. ●patents acquired in July 2022 via assignment from AI for a purchase price of $92,000, the useful lives of the patents, at the date of purchase, was approximately 2-4 years. ●patents acquired July 2022 pursuant to an agreement with Hewlett Packard Enterprise Development LP and Hewlett Packard Enterprise Company for a purchase price of $350,000. The useful lives of the patents, at the date of purchase, was approximately 2-9 years. | ||
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 $1,652,000 to write down finite lived intangible assets in the Power Management/Bus Controller, CXT and M-RED portfolios. | ||
Amortization expense | $ 910,000 | $ 1,159,865 |
Intangible Assets (Details) - S
Intangible Assets (Details) - Schedule of intangible assets - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Schedule of intangible assets [Abstract] | ||
Patents | $ 2,757,000 | $ 5,617,117 |
Disposal | (4,362,117) | |
Subtotal | 2,757,000 | 1,255,000 |
Less: accumulated amortization | (1,625,846) | (715,519) |
Net value of intangible assets | $ 1,131,154 | $ 539,481 |
Weighted Average Amortization Period (Years) | 2 years 5 months 23 days | 11 years 7 days |
Intangible Assets (Details) -_2
Intangible Assets (Details) - Schedule of future amortization of intangible assets | Dec. 31, 2022 USD ($) |
Schedule of future amortization of intangible assets [Abstract] | |
2023 | $ 457,894 |
2024 | 218,352 |
2025 | 123,730 |
2026 | 83,205 |
2027 | 47,927 |
Thereafter | 200,046 |
Total | $ 1,131,154 |
Non-Controlling Interest (Detai
Non-Controlling Interest (Details) - Schedule of equity attributable to the non-controlling interest - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Schedule of Equity Attributable to the Non-Controlling Interest [Abstract] | ||
Balance, beginning of year | $ 228 | $ 228 |
Net loss attributable to non-controlling interest | ||
Balance, end of year | $ 228 | $ 228 |
Income taxes (Details)
Income taxes (Details) | 12 Months Ended |
Dec. 31, 2022 USD ($) | |
Income Tax Disclosure [Abstract] | |
Net operating loss | $ 11,635,198 |
Valuation Allowance, Commentary | $77,946 |
Income taxes (Details) - Schedu
Income taxes (Details) - Schedule of deferred tax asset - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Schedule of Deferred Tax Asset [Abstract] | ||
Net operating loss carry forward | $ 2,713,220 | $ 2,591,027 |
Intangible assets | 162,465 | 206,712 |
Valuation allowance | (2,875,685) | (2,797,739) |
Balance, end of year |
Income taxes (Details) - Sche_2
Income taxes (Details) - Schedule of tax expense - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Schedule of Tax Expense [Abstract] | ||
Federal | ||
State | (1,253) | 1,806 |
Foreign | ||
Deferred | ||
Total | $ (1,253) | $ 1,806 |
Income taxes (Details) - Sche_3
Income taxes (Details) - Schedule of company’s deferred tax asset effective tax rate - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Schedule of Company's Deferred Tax Asset Effective Tax Rate [Abstract] | ||
Book income before taxes, Tax | $ (158,501) | $ (872,129) |
Book income before taxes, Percentage | 21% | 21% |
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 | $ 560 | $ 873 |
Meals and entertainment, Percentage | (0.07%) | (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%) | |
Warrant income, Tax | $ (313,059) | |
Warrant income, Percentage | 41.48% | |
Interest expense, Tax | $ 82,720 | |
Interest expense, Percentage | (10.96%) | |
Change in tax rate, Tax | $ 39,752 | |
Change in tax rate, Percentage | (5.27%) | |
Change in valuation allowance, Tax | $ 77,946 | $ 75,059 |
Change in valuation allowance, Percentage | (10.33%) | (1.81%) |
Derivative valuation adjustment, Tax | $ 101,069 | |
Derivative valuation adjustment, Percentage | (2.43%) | |
Other, Tax | $ (9,177) | |
Other, Percentage | 0.22% | |
Change in estimate for prior year taxes, Tax | $ 269,329 | |
Change in estimate for prior year taxes, Percentage | (35.68%) | |
Total, Tax | $ (1,253) | $ 1,806 |
Effective tax rate, Percentage | 0.17% | (0.04%) |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Related Party Transactions (Details) [Line Items] | ||
Interest rate | 10% | |
Chief Technology Officer [Member] | ||
Related Party Transactions (Details) [Line Items] | ||
Cost of services | $ 205 | $ 434 |
Chief Executive Officer [Member] | ||
Related Party Transactions (Details) [Line Items] | ||
Cost of services | $ 85,000 | $ 763,000 |
Commitments and Contingencies (
Commitments and Contingencies (Details) - USD ($) | 12 Months Ended | |||
Jan. 01, 2016 | Dec. 31, 2022 | May 23, 2022 | Dec. 31, 2021 | |
Commitments and Contingencies (Details) [Line Items] | ||||
Compensation, percentage | 20% | 19% | ||
Common Stock [Member] | ||||
Commitments and Contingencies (Details) [Line Items] | ||||
Common stock per share | $ 0.01 | |||
Registrable securities percentage | 2% | |||
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 salary | $ 300,000 | |||
Annual bonus compensation, description | 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 the Company’s 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 | $ 61,000 |
Business Combinations (Details)
Business Combinations (Details) - USD ($) | 12 Months Ended | |
Aug. 06, 2021 | Dec. 31, 2022 | |
Business Combinations [Abstract] | ||
Net proceeds rate | 50% | |
Legal fees | $ 500 | |
Total Consideration | $ 0 |
Subsequent Events (Details)
Subsequent Events (Details) - USD ($) | 1 Months Ended | 12 Months Ended |
Mar. 17, 2023 | Dec. 31, 2022 | |
Subsequent Events (Details) [Line Items] | ||
Operating expenses | $ 4,000,000 | |
Cash payments | 3,300,000 | |
Acquisitions | $ 25,000,000 | |
Subsequent Event [Member] | ||
Subsequent Events (Details) [Line Items] | ||
Cash payments | $ 3,300,000 |