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Item 7. Management’s Discussion and Analysis

2025-03-26 compared with 2024-03-28 · 194 added, 267 removed, 271 unchanged (63% of the section changed)

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of financial

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in the forward-looking statements.

Our principal operations include the development, acquisition, licensing

and enforcement of intellectual property rights that are either owned or controlled by us or one of our wholly owned subsidiaries.

currently own, control or manage twenty-two intellectual property portfolios, of which we are currently seeking or may seek monetization

with respect to 12, which principally consist of patent rights.

As part of our intellectual property asset management activities and in

the ordinary course of our business, it has been necessary for either us or the intellectual property owner who we represent to initiate,

and it is likely to continue to be necessary to initiate patent infringement lawsuits and engage in patent infringement litigation.

anticipate that our primary source of revenue will come from the grant of licenses to use our intellectual property, including licenses

Our principal operations include the development,

acquisition, licensing and enforcement of intellectual property rights that are either owned or controlled by us or one of our wholly

owned subsidiaries.

We currently own, control or manage twenty-two intellectual property portfolios, of which we are currently seeking

or may seek monetization with respect to six, which principally consist of patent rights.

As part of our intellectual property asset management

activities and in the ordinary course of our business, it has been necessary for either us or the intellectual property owner who we represent

to initiate, and it is likely to continue to be necessary to initiate patent infringement lawsuits and engage in patent infringement litigation.

We anticipate that our primary source of revenue will come from the grant of licenses to use our intellectual property, including licenses

granted as part of the settlement of patent infringement lawsuits.

Market and Economic Conditions

In recent years, the United States and other markets

have experienced cyclical or episodic downturns, and worldwide economic conditions remain uncertain, including, as a result of the COVID-19

pandemic, supply chain disruptions, the Russian invasion of Ukraine, recent attacks by Hamas on Israel from the Gaza Strip and the resultant

action by Israel against Hamas in the Gaza Strip and the potential for broader conflict in the Middle East, instability in the U.S.

global banking systems, rising fuel prices, increasing interest rates or foreign exchange rates and increased inflation and the possibility

of a recession.

We cannot predict the timing, strength, or duration of any future economic slowdown or any subsequent recovery generally,

or in any industry.

A significant downturn in economic conditions may adversely affect the intellectual property licensing market including

the financial condition of financing sources and the willingness of potential financing sources to provide funding for our litigation;

a law firms’ ability and willingness to provide us with legal services on acceptable contingent fee terms;

and the financial condition

and prospects of defendants and potential defendants, which could make it less likely that they would be willing to settle our claim.

Macroeconomic trends may result in adverse impacts

on our business, and we continue to monitor these potential impacts, including potential economic recession, the effects of tariffs by

the United States and counter-tariffs by other countries;

changes in the Federal Reserve’s monetary policy, as well as geopolitical

risks, including the Ukraine-Russia war and the potential resolution of the war and its effect on Europe;

the continuing war between Israel

and Hamas and any further intensification of hostilities with others, including Iran and Hezbollah.

We cannot predict the timing,

strength, or duration of any future economic slowdown or any subsequent recovery generally, or in any industry.

A significant downturn

in economic conditions may adversely affect the intellectual property licensing market including the financial condition of financing

sources and the willingness of potential financing sources to provide funding for our litigation;

a law firms’ ability and willingness

to provide us with legal services on acceptable contingent fee terms;

and the financial condition and prospects of defendants and potential

defendants, which could make it less likely that they would be willing to settle our claim.

Further, to the extent that holders of intellectual

property rights see these and other macroeconomic factors, they may be reluctant to sell intellectual property to us on terms which are

acceptable to us, if at all.

property rights consider these and other macroeconomic factors, they may be reluctant to sell intellectual property to us on terms which

are acceptable to us, if at all.

We seek to generate revenue from patent licensing

fees relating to our intellectual property portfolio, which includes fees from the licensing of our intellectual property, primarily from

litigation relating to enforcement of our intellectual property rights.

All of the revenue for the years ended December 31, 2023 and 2022

was from patent licensing fees, of which approximately 100% was paid to the patent seller, funding sources and legal counsel pursuant

to our agreements with patent sellers, funding sources and legal counsel.

fees from the licensing of our intellectual property, primarily from litigation relating to enforcement of our intellectual property rights.

All of the revenue for the years ended December 31, 2024 and 2023 was from patent licensing fees, of which approximately 84% and 100%,

respectively, was paid to the patent seller, funding sources and legal counsel pursuant to our agreements with patent sellers, funding

sources and legal counsel.

Because of the nature of our business transactions

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Thus, we would recognize revenue when we receive the license fee or settlement payment.

Although we intend to seek

to develop portfolios of intellectual property rights that provide us a continuing stream of revenue, to date we have not been successful

Although we would prefer to

develop portfolios of intellectual property rights that provide us a continuing stream of revenue, to date we have not been successful

in doing so, and we do not anticipate that we will be able to generate any significant revenue from licenses that provide a continuing

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Our gross profit from license fees reflects the payment of any royalties due in connection with our license.

It is generally necessary to commence litigation

in order to obtain a recovery for past infringement of, or to license the use of, our intellectual property rights.

It has been necessary to commence litigation in

order to obtain a recovery for past infringement of, or to license the use of, our intellectual property rights.

Intellectual property

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of the foregoing.

Business – Agreements with QF3 for a description of the agreements with QF3.

On February 22, 2021, we entered into a funding

agreement with QFL and a restructure agreement with Intelligent Partners.

On February 22, 2021, we entered into a funding agreement with QFL

which was amended and restated on May 2, 2024 to terminate QFL’s funding obligation, and a restructure agreement with Intelligent

Pursuant to the Purchase Agreement with QFL, QFL

agreed to make available to us a financing facility of:

(a) up to $25,000,000 for the acquisition of mutually agreed patent rights that

we intend to monetize, of which $2,653,000 has been advanced as of December 31, 2023;

(b) up to $2,000,000 for operating expenses,

of which the we have requested and received $2,000,000 as of December 31, 2023;

and (iii) $1,750,000 to fund the cash payment portion

of the restructure of our obligations to Intelligent Partners.

In return we transferred to QFL a right to receive a portion of net proceeds

generated from the monetization of those patents.

We used $1,750,000 of proceeds from the QFL financing as the cash payment portion of

the restructure of our obligations to Intelligent Partners.

Our obligations to QFL are secured by the proceeds from the patents acquired

with their funding, the patents and all general intangibles now or hereafter arising from or related to the foregoing and the proceeds

and products of the foregoing.

We also granted QFL a ten-year warrant to purchase a total of up to 962,463 shares of our common stock,

with an exercise price of $0.54 per share which may be exercised through February 18, 2031 on a cash or cashless basis, subject to certain

limitations on exercisability.

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 our capital stock (determined on a fully diluted basis).

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.

We also agreed to take all commercially reasonable steps necessary to regain compliance

with the OTCQB eligibility standards as soon as practicable, but in no event later than 12 months from the closing date, and regained

compliance on May 7, 2021 and we granted QFL registration rights with respect to the common stock issuable upon exercise of the warrants.

made available to us a total of $6,402,000, consisting of (a) $2,653,000 for the acquisition of mutually agreed patent rights that we

intended to monetize;

(b) $2,000,000 for operating expenses;

and (iii) $1,750,000 to fund the cash payment portion of the restructure

of our obligations to Intelligent Partners.

In return we transferred to QFL a right to receive a portion of net proceeds generated from

the monetization of those patents.

During the year ended December 31, 2024 we repaid the full outstanding principal balance of $1,525,502.

No further advances are to be made pursuant to the Purchase Agreement.

We also granted QFL a ten-year warrant to purchase a total of up

to 962,463 shares of our common stock, with an exercise price of $0.54 per share which may be exercised through February 18, 2031 on a

cash or cashless basis, subject to certain limitations on exercisability.

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 our capital stock (determined on a fully diluted basis).

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.

We also agreed to take all commercially

reasonable steps necessary to regain compliance with the OTCQB eligibility standards as soon as practicable, but in no event later than

12 months from the closing date, and we regained compliance on May 7, 2021.

We granted QFL registration rights with respect to the common

stock issuable upon exercise of the warrants.

We also granted QFL certain board observation rights.

Pursuant to the Purchase Agreement, all of the net proceeds from the monetization

of the intellectual property acquired with funds from QFL are paid directly to QFL.

After QFL has received a negotiated rate of return,

we and QFL share net proceeds equally until QFL achieves its investment return, as defined in the agreement.

Thereafter, we retain 100%

of all net proceeds.

Except in an Event of Default, as defined therein, all payments by us to QFL pursuant to the Purchase Agreement are

non-recourse and shall be paid only if and after net proceeds from monetization of the patent rights owned or acquire by us are received,

or to be received.

Pursuant to the Purchase Agreement,

all of the net proceeds from the monetization of the intellectual property acquired with funds from QFL are paid directly to QFL.

QFL has received a negotiated rate of return, we and QFL share net proceeds equally until QFL achieves its investment return, as defined

in the agreement.

Thereafter, we retain 100% of all net proceeds.

Except in an Event of Default, as defined therein, all payments by us

to QFL pursuant to the Purchase Agreement are non-recourse and shall be paid only if and after net proceeds from monetization of the patent

rights owned or acquire by us are received, or to be received.

Contemporaneously with the execution of the agreements

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The payments to Intellectual Partners with respect new patents are payable from the proceeds which are allocated to

us under the QFL agreements, which start after QFL has received a negotiated rate of return.

See Item 1 Business – Agreements for

Intelligent Partners for a description of the agreements with Intellectual Partners.

Effects of Possible Delisting of Common Stock

On May 23, 2022, we received notice from OTC Markets

Group, that, because the bid price for our common stock had closed below $0.01 per share for more than 30 consecutive days, we no longer

met the Standards for Continued Eligibility under the OTC listing standards and, if this deficiency was not cured by August 21, 2022,

our stock would be removed from the OTCQB marketplace, in which event our 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, we amended our certificate of incorporation to effect a one-for-100 reverse split of our common stock.

The OTC Markets Group confirmed to us that the deficiency has been cured.

We cannot assure you that we will continue to meet the requirements

for continued listing on the OTCQB, including the maintenance of a bid price of at least $0.01 per share.

In August 2021, STX brought a patent infringement

suit in the U.S.

District for the Eastern District of Texas against Yamaha Corporation and Steinberg Media Technologies GMBH.

2022, STX brought a patent infringement suit in the U.S.

District for the Eastern District of Texas against Parrot SA, Delair SAS, Drone

Volt, SA, EHang Holdings Limited and Flyability SA.

us under the QFL and QF3 agreements, which start after QFL and QF3 have received a negotiated rate of return.

Current Litigation and Settlements

In July 2022, STX brought a patent infringement suit in the U.S.

District for the

Eastern District of Texas against FUJIFILM Holdings Corporation et al.

The actions against Yamaha Corporation, Steinberg Media Technologies

GMBH, Parrot SA, Drone Volt, SA, Delair SAS and Flyability SA have been resolved, and revenue for the year ended December 31, 2022 includes

revenue from the related settlements.

As of December 31, 2023, the matter against FUJIFILM Holdings Corporation et al has been resolved

and revenue for the year ended December 31, 2023 includes revenue from the settlement.

In September 2021, M-RED Inc.

brought patent infringement

suits in the U.S.

District for the Eastern District of Texas against Xiaomi Corporation et.

al., OnePlus Technology (Shenzhen) Co., Ltd.,

Biostar Microtech International Corp.

and Giga-Byte Technology Co., Ltd.

All matters were resolved in 2022 and our revenue for the year

ended December 31, 2022 includes revenue from the related settlements.

We did not generate revenue from the M-RED Portfolio in 2023 and

do not anticipate allocating further resources to monetization of the M-RED Portfolio.

In October 2021, AMI brought patent infringement

suits in the U.S.

District for the Eastern District of Texas against ZTE Corporation, Guangdong OPPO Mobile Telecommunications Corp.,

and Beijing Xiaomi Software Co., Ltd.

Those actions were resolved in 2022, and our revenue for the year ended December 31, 2022 includes

revenue from related settlements.

We did not generate revenue from the Audio Messaging Portfolio in 2023.

for the Eastern District of Texas against FUJIFILM Holdings Corporation et al.

As of December 31, 2023, the matter against FUJIFILM

was resolved and revenue for the year ended December 31, 2023 includes revenue from the settlement.

In November 2021, TLL brought patent infringement

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et.al., and Musarubra US, LLC.

As of December 31, 2023, the action against

Fortinet, Inc.

has been stayed pending settlement.

The actions against Trend Micro Incorporated, Checkpoint Software Technologies Ltd,

Palo Alto Networks, Inc.

The actions against Trend Micro Incorporated,

Checkpoint Software Technologies Ltd, Palo Alto Networks, Inc.

and Crowdstrike, Inc.

were resolved in 2023 and our revenue for the year ended December 31, 2023 includes revenue

from the related settlements.

were resolved in 2023 and our revenue for the year

ended December 31, 2023 includes revenue from the related settlements.

In February 2024, TLL brought patent infringement suits in the

District for the Eastern District of Texas against Sonicwall, Inc.

The actions against Fortinet, Inc., Musarubra US LLC, and Sonicwall

have been resolved and revenue for the year ended December 31, 2024 includes revenue from the related settlements.

In November 2021, MML brought patent infringement

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revenue from the related settlements.

In January 2022, the we acquired, via assignment

from Intellectual Ventures Assets 181 LLC and Intellectual Ventures Assets 174 LLC, all right title and interest to four patent portfolios

consisting of fifteen United States patents and three foreign patents for a purchase price of $1,060,000.

We requested and received a

capital advance in the amount of the $1,060,000 purchase price from the facility with QFL.

The patents were assigned to our wholly owned

subsidiaries Tyche Licensing LLC and Deepwell IP LLC.

In March 2022, LSC brought patent infringement

suits in the U.S.

District for the Eastern District of Texas against Microsoft Corporation, Google LLC, Cisco Systems, Inc.

and Amazon.com,

In November 2022, Google LLC filed a petition before the patent trial and appeal board for inter partes review of US Patent

In March 2023 Cisco Systems, Inc, Microsoft Corporation and Google LLC filed petitions before the patent trial and appeal

board for inter partes review of LSC Portfolio patents.

As of December 31, 2023, all actions had been resolved.

The actions against Samsung Electronics Co., Ltd.

Et al were resolved in 2024 and revenue for the

year ended December 31, 2024 includes revenue from the related settlement.

In May 2022, Tyche brought patent infringement

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and revenue for the year ended December 31, 2023 includes revenue from the settlements.

In July 2022, we 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.

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 HPE Portfolio was subsequently assigned to our wholly owned subsidiary, Flash Uplink LLC.

In July 2022, EDI acquired, via assignment from

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 March 2023, we entered into a purchase agreement

with Tower for the purchase of seven United States Patents for a purchase price of $3,300,000.

We requested and received a capital advance

from QF3 in the amount of $3,300,000 to fund the cash payment portion of the purchase price.

Pursuant to the purchase agreement, after

recovery of the purchase price and a negotiated return, Tower is entitled to a portion of net proceeds, if any, as defined in the purchase

In August 2023, we entered into a purchase agreement

with Koji Yoden for the purchase of two United States Patents for a purchase price of $30,000.

Pursuant to the purchase agreement, after

recovery of the purchase price Mr.

Yoden is entitled to a portion of net proceeds, if any, as defined in the purchase agreement.

In September 2023, Deepwell brought a patent infringement

suit in the U.S.

In September 2023, Deepwell brought a patent

infringement suit in the U.S.

District for the Eastern District of Texas against MediaTek Inc.

The action against MediaTek, Inc.

resolved and revenue for the year ended December 31, 2024 includes revenue from the related settlement.

In February 2024, Harbor Island Dynamic brought

a patent infringement suit in the U.S.

District for the Eastern District of Texas against Samsung Electronics Co., Ltd.

In August 2024, Harbor Island Dynamic brought a patent infringement suit in the U.S.

District for the Eastern District of Texas against

NXP Semiconductors NV et.

In September 2024, Samsung filed four petitions with the patent trial an appeal board for inter partes review

of the Harbor Island Dynamic patents asserted against Samsung These actions are pending.

Results of Operations

The years ended December 31, 2024 and 2023:

Year Ended December 31,

Revenues (patent licensing fees)

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Selling, general and administrative expenses

Income (loss) from operations

(Loss) income from operations

Other income (expense)

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Total other income (expense)

Income (loss) before income tax

Income tax benefit (expense)

Net income (loss)

We generated revenues of approximately $13,153,000 for the year ended

December 31, 2023 as compared to approximately $451,000 for the year ended December 31, 2022.

Our revenue for the year ended December 31,

2023 was generated from licenses pursuant to the settlement of patent infringement lawsuits in the Tyche, STX, MML and TLL portfolios.

Revenue for the year ended December 31, 2022 was generated from licenses pursuant to the settlement of patent infringement lawsuits in

the M-RED, AMI and STX portfolios.

Cost of revenue for the years ended December 31, 2023 and 2022 was approximately $5,535,000 and $304,000,

respectively.

The increase in cost of revenues is primarily due to increased litigation and licensing expenses associated with contingent

fees incurred in generating revenues.

The timing and amount of our revenue is dependent upon the results of litigation seeking to enforce

our intellectual property rights, and we cannot predict when or whether we will have a recovery and how much of the recovery will be received

by us after payments to legal counsel, to our funding sources, to inventors/former patent owners and to Intelligent Partners who have

an interest in our share of the recovery from certain patent portfolios after deducting payments due to counsel and the litigation funding

(Loss) income before income tax

Income tax expense

Net (loss) income

$ (2,471,651 )

We generated revenues of $2,795,000 for the year

ended December 31, 2024 as compared to approximately $13,152,000 for the year ended December 31, 2023.

Our revenue for the year ended

December 31, 2024 was generated from licenses pursuant to the settlement of patent infringement lawsuits in the TLL, Deepwell, and

Multimodal Media portfolios.

Revenue for the year ended December 31, 2023 was generated from licenses pursuant to the settlement of patent

infringement lawsuits in the Tyche, STX, MML and TLL portfolios.

Cost of revenue for the years ended December 31, 2024 and 2023 was approximately

$1,844,000 and $6,906,000, respectively.

The decrease in cost of revenues is primarily due to decreased litigation and licensing expenses

associated with contingent fees incurred in generating revenues resulting from a lower level of revenues in 2024.

The timing and amount

of our revenue is dependent upon the results of litigation seeking to enforce our intellectual property rights, and we cannot predict

when or whether we will have a recovery and how much of the recovery will be received by us after payments to legal counsel, to our funding

sources, to inventors/former patent owners and to Intelligent Partners who have an interest in our share of the recovery from certain

patent portfolios after deducting payments due to counsel and the litigation funding source.

Selling, general, and administrative expenses

for the year ended December 31, 2024 increased by approximately $57,000, or approximately 2%, compared to the year ended December 31,

The increase is primarily due to an increase in compensation expense to the chief executive officer of $660,000.

The increase is primarily due to an increase in compensation and retirement expense as well as increases and travel costs, office

supplies and advertising.

These increases were offset by decreases in patent amortization and professional fees.

Our principal operating

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fees of approximately $696,000.

We had stock-based compensation costs of approximately $49,000 and $117,000 for the years ended December

31, 2023 and 2022, respectively.

Other income and expense for the year ended December

31, 2023 included a loss on change in fair value of warrant liability of approximately $136,000.

We realized a gain on change in fair

31, 2024 included a gain on change in fair value of warrant liability of approximately $165,000.

We realized a loss on change in fair

value of warrant liability of approximately $136,000 for the year ended December 31, 2023.

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$690,000 for the year ended December 31, 2024 and approximately $1,061,000 for the year ended December 31, 2023.

The increase in interest

The decrease in interest

expense reflects the accrued interest payable on the principal amount of QFL and QF3 facilities.

We incurred income tax benefit (expense) of approximately

$(30,000) and $1,000 for the years ended December 31, 2023 and 2022, respectively.

We incurred income tax expense of $100,000 and

$30,000 for the years ended December 31, 2024 and 2023, respectively.

As a result of the foregoing, we realized net

income of approximately $3,650,000, or $0.68 per share (basic and diluted), for the year ended December 31, 2023, compared to net loss

loss of approximately $2,472,000, or ($0.46) per share (basic and diluted), for the year ended December 31, 2024, compared to net income

of approximately $2,278,000, or $0.43 per share (basic and diluted), for the year ended December 31, 2023.

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of approximately $502,000, and current liabilities of approximately $12,038,000.

Our current liabilities include funding liabilities

of approximately $7,326,000 payable to QFL and QF3, a non-interest bearing total monetization proceeds obligation (the “TMPO”)

to Intelligent Partners in the amount of approximately $2,797,000 under the Restructure Agreement, both of which are only payable from

money generated from the monetization of intellectual property, loans payable of approximately $138,000, accounts payable and accrued

liabilities of approximately $297,000, warrant liability of approximately $282,000, and accrued interest of approximately $1,097,000.

As of December 31, 2023, we have an accumulated deficit of approximately $22,540,000 and a negative working capital of approximately $8,335,000.

Other than salary and pension benefits to our chief executive officer, we do not contemplate any other material operating expense requiring

cash in the near future other than normal general and administrative expenses and legal fees, including expenses relating to our status

as a public company filing reports with the SEC.

Our current liabilities include funding liabilities of

approximately $7,634,000 payable to QF3, a non-interest bearing total monetization proceeds obligation (the “TMPO”) to Intelligent

Partners in the amount of approximately $2,797,000 under the Restructure Agreement, both of which are only payable from money generated

from the monetization of intellectual property, loans payable of approximately $138,000, accounts payable and accrued liabilities of approximately

$156,000, warrant liability of approximately $117,000, and accrued interest of approximately $1,196,000.

As of December 31, 2024, we have

an accumulated deficit of $26,382,672 and a negative working capital of approximately $11,536,000.

Other than salary and pension benefits

to our chief executive officer, we do not contemplate any other material operating expense requiring cash in the near future other than

normal general and administrative expenses and legal fees, including expenses relating to our status as a public company filing reports

with the SEC.

The following table shows the summary cash flows

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For the Year Ended

Cash flows provided by (used in) operating activities

Cash flows (used in) provided by operating activities

Cash flows used in investing activities

Cash flows from financing activities

Net increase (decrease) in cash

Net (decrease) increase in cash

Cash at beginning of year

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For the year ended December 31, 2024, cash

flows provided by operating activities was approximately $1,931,000 compared to cash flows used in operating activities of approximately

$914,000 during the year ended December 31, 2022.

The increase in cash flows provided by operations of approximately $2,845,000 is

primarily attributable to net income during the year ended December 31, 2023 of approximately $3,650,000, a change in fair market

value of the warrant liability of approximately $136,000 and an increase in accounts receivable of approximately $3,008,000.

The outstanding

account receivable of $3,008,250 at December 31, 2023 has been paid in full during the first quarter of 2024.

During the years ended December 31, 2023 and 2022,

cash flows used in investing activities consisted of $3,330,000 and $1,502,000, respectively for the purchase of patents from third parties.

The increase in cash used in investing activities of $1,828,000 is attributable to additional patents purchased during the year ended

December 31, 2023.

Cash flows from financing activities for the year

ended December 31, 2023 was approximately $1,872,000 compared to cash flows from financing activities for the year ended December 31,

2022 of approximately $2,242,000.

The cash flows from financing activities during the year ended December 31, 2023 includes proceeds

from the funding liability of approximately $6,000,000 offset by the payment of the funding liability of approximately $4,128,000.

cash flows from financing activities during the year ended December 31, 2022 includes proceeds from the funding liability of approximately

$2,303,000 offset by the payment of the funding liability of approximately $53,000 as well as the payment on related party loans of approximately

flows used in operating activities primarily reflects the net loss of $2,471,651, increased by a reduction in accounts receivable of $3,007,044

and amortization of intangible assets of $636,353, offset by a decrease in accounts payable and accrued liabilities of $1,518,662.

the year ended December 31, 2023, cash flows provided by operating activities primarily reflects net income of $2,278,473, reduced by

an increase accounts receivable of $3,015,295, offset by amortization of intangible assets of $786,552 and an increase in accounts payable

and accrued liabilities of $1,526,153.

During the year ended December 31, 2024 there

were no cash flows from investing activities.

During the year ended December 31, 2023, investing activities consisted of $3,330,000 to

fund the cash payment portion of the purchase of a patent portfolio from Tower.

Cash flows provided by financing activities for

the year ended December 31, 2024 were approximately $309,000 representing approximately $1,834,000 from funding by QF3, offset by

payment of a funding liability of approximately $1,526,000 to QFL.

Cash flows provided by financing activities for the year ended December 31,

2023 were $6,000,000 from funding advances by QFL and QF3 offset by a payment of a funding liability of approximately $4,128,000 representing

payments of funding liability to QFL.

We cannot assure you that we will be successful

in generating future revenues, in obtaining additional debt or equity financing or that such additional debt or equity financing will

be available on terms acceptable to us, if at all, or that we will be able to obtain any third-party funding in connection with any of

our intellectual property portfolios or that we will receive any of the proceeds of any litigation settlements after making all required

payments to counsel and funding sources and payments to Intelligent Partners.

in generating future revenues, in obtaining any third-party funding in connection with any of our intellectual property portfolios or

operating expenses or that we will receive any of the proceeds of any litigation settlements after making all required payments to counsel

and funding sources and payments to Intelligent Partners, operating expenses, debt or equity financing or that and debt or equity financing

will be available on terms acceptable to us.

We have no credit facilities.

Although our agreement provides

for QFL and QF3 to provide us with funding to acquire intellectual property rights, subject to QFL’s and QF3’s approval, it

does not provide for financing the litigation necessary for the monetization of the intellectual property rights.

We do not have any credit

facilities or any arrangements for us to finance the litigation necessary to monetize our intellectual property rights other than contingent

fee arrangements with counsel with respect to our pending litigation.

If we do not secure contingent representation or obtain litigation

financing, we may be unable to monetize our intellectual property.

Although our agreement with QF3 provides for QF3 to provide

us with funding to acquire intellectual property rights, subject to QF3's approval, it does not provide for financing the litigation necessary

for the monetization of the intellectual property rights.

We do not have any credit facilities or any arrangements for us to finance the

litigation necessary to monetize our intellectual property rights other than contingent fee arrangements with counsel with respect to

our pending litigation.

If we do not secure contingent representation or obtain litigation financing, we may be unable to monetize our

intellectual property.

We cannot predict the success of any pending or

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Intangible Assets

Intangible assets consist of patents which are amortized using the

straight-line method over their estimated useful lives or statutory lives whichever is shorter and are reviewed for impairment upon any

triggering event that may give rise to the assets ultimate recoverability as prescribed under the guidance related to impairment of long-lived

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.

Intangible assets consist of patents which are

amortized using the straight-line method over their estimated useful lives or statutory lives whichever is shorter and are reviewed for

impairment upon any triggering event that may give rise to the assets ultimate recoverability as prescribed under the guidance related

to impairment of long-lived assets.

Costs incurred to acquire patents, including legal costs, are also capitalized as long-lived assets

and amortized on a straight-line basis with the associated patent.

Patents include the cost of patents or patent

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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.

Since the 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

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component or consideration payable to the customer in these transactions.

The Company’s revenue for the year ended December 31, 2023 was

generated from licenses pursuant to the settlement of patent infringement lawsuits in the Tyche, STX, MML and TLL portfolios.

for the year ended December 31, 2022 was generated from licenses pursuant to the settlement of patent infringement lawsuits in the M-RED,

AMI and STX portfolios.

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 our financial statements.

See Note 2 of the Consolidated Financial

Statements in Item 8, Financial Statements and Supplementary Data, of this report.

Going Concern

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$26,382,000 and negative working capital of approximately $11,536,000 as of December 31, 2024.

Although we generated net income in

2023, because of our history of losses, our working capital deficiency, the uncertainty of future revenue, our obligations to Intelligent

Partners, QF3, and QFL, our low stock price and the absence of an active trading market in our common stock, our ability to raise funds

in the equity market or from lenders is severely impaired.

These conditions, as well as any adverse consequences which would result if

we fail to meet the continued listing requirements of the OTCQB, raise substantial doubt as to our ability to continue as a going concern.

Our revenue is generated exclusively from license fees generated from litigation seeking damages for infringement of our intellectual

property rights.

Although we 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.

Due to our history of losses, which

are continuing, our working capital deficiency, the uncertainty of future revenue, our obligations to QF3 and Intelligent Partners, our

low stock price and the absence of an active trading market in our common stock and our failure to have effective internal controls over

financial reporting, as reflected in the restatement of our financial statements for the year ended December 31, 2023, our ability to

raise funds in the equity market or from lenders is severely impaired.

These conditions, as well as any adverse consequences which would

result if we fail to meet the continued listing requirements of the OTCQB, raise substantial doubt as to our ability to continue as a

going concern.

Our revenue is generated exclusively from license fees generated from litigation seeking damages for infringement of our

intellectual property rights.

Although we 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.

Off-Balance Sheet Arrangements

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis