What changed in this filing

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Item 9A. Controls and Procedures

2025-03-26 compared with 2024-03-28 · 538 added, 780 removed, 919 unchanged (59% of the section changed)

34 unchanged sentences

reliance on third-party consultants for accounting, financial reporting and related activities.

The lack of any separation of duties,

with the same person, who is our only full time employee, serving as both chief executive officer and acting chief financial officer,

and who does not have an accounting background, makes it unlikely that we will be able to implement effective internal controls over financial

reporting in the near future.

The material weaknesses were a root cause

of our need to restate our financial statements for the year ended December 31, 2023.

The lack of any separation of duties, with the same

person, who is our only full time employee, serving as both chief executive officer and acting chief financial officer, and who does not

have an accounting background, makes it unlikely that we will be able to implement effective internal controls over financial reporting

in the near future.

Due to our size and nature, segregation of all

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degree of internal controls over financial reporting.

Due to the nature of this material weakness in our internal control over financial

reporting, there is more than a remote likelihood that misstatements which could be material to our annual or interim financial statements

could not be prevented or detected.

A material weakness (within the meaning of PCAOB

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director since October 2014 and our chief technology officer since 2007.

As chief technology officer, Mr Scahill is responsible for our

As chief technology officer, Mr.

Scahill is responsible for our

cybersecurity protection.

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Name & Principal Position

Options/Warrant

CEO and President

(1) Represents the payments made by the Company under the SEP IRA.

Chief Technology Officer

(1) Represents the payments made by

the Company under the SEP IRA.

Employment Agreements

Pursuant to the restated employment agreement, dated November 30, 2014,

we agreed to employ Jon C.

Scahill 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 annual salary of $252,000, which may be increased, but not decreased,

by the board or the compensation committee.

Pursuant to the restated employment agreement,

dated November 30, 2014, we agreed to employ Jon C.

Scahill 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 annual salary of $252,000, which may be

increased, but not decreased, by the board or the compensation committee.

In March 2023, the board of directors increased Mr.

Scahill’s annual salary to $600,000,

effective January 1, 2023.

Scahill is entitled to a bonus if we meet or exceed performance criteria established by the compensation

committee, or by the board in the absence of a compensation committee.

In August 2016, the board of directors approved annual bonus compensation

Scahill equal to 30% of the amount by which our consolidated income before income taxes exceeds $500,000, but, if we are 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).

Scahill is also eligible to participate in any executive incentive

plans which we may adopt.

annual salary to $600,000, effective January 1, 2023.

Scahill is entitled to a bonus if we meet or exceed performance criteria established

by the compensation committee, or by the board in the absence of a compensation committee.

In August 2016, the board of directors approved

annual bonus compensation to Mr.

Scahill equal to 30% of the amount by which our consolidated income before income taxes exceeds $500,000,

but, if we are 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).

Scahill is also eligible to participate

in any executive incentive plans which we may adopt.

Pursuant to the agreement, we issued to Mr.

Scahill warrants to purchase 600,000 shares, representing the warrants

that had been previously covered in his prior employment agreement, but which had never been issued, and we issued to Mr.

Scahill a restricted

stock grant for 300,000 shares which vested on January 15, 2015.

In the event that we terminate Mr.

Scahill’s employment other than

for cause or as a result of his death or disability, we will pay him severance equal to his salary for the balance of the term and, if

he received a bonus for the previous year, an amount equal to that bonus, as well as continuation of his insurance benefits.

also waived accrued compensation of $1,167,705, representing his accrued salary for periods prior to January 1, 2014.

The restated employment

agreement also includes mutual general releases between Mr.

Scahill warrants to purchase 600,000

shares, representing the warrants that had been previously covered in his prior employment agreement, but which had never been issued,

and we issued to Mr.

Scahill a restricted stock grant for 300,000 shares which vested on January 15, 2015.

In the event that we terminate

Scahill’s employment other than for cause or as a result of his death or disability, we will pay him severance equal to his

salary for the balance of the term and, if he received a bonus for the previous year, an amount equal to that bonus, as well as continuation

of his insurance benefits.

Scahill also waived accrued compensation of $1,167,705, representing his accrued salary for periods prior

to January 1, 2014.

The restated employment agreement also includes mutual general releases between Mr.

Scahill and us.

In March 2020, the Company adopted a SEP IRA plan for its

In March 2020,

the Company adopted a SEP IRA plan for its employees.

Scahill is our only employee covered by the plan.

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summary of the Plan is qualified in its entirety by reference to the plan, a copy of which is filed as an exhibit to this annual report.

As of December 31, 2023, there were outstanding

options to purchase a total of 2,000,000 shares of common stock, of which options to purchase 600,000 shares were held by Jon Scahill,

our chief executive officer.

Of the options held by Mr.

Scahill, options to purchase 200,000 shares at an exercise price of $1.00 per

share are currently exercisable, and options to purchase 200,000 shares become exercisable upon each of the following events -- the first

day on which we file a Form 10-K or Form 10-Q which reflects stockholders’ equity of at least $5,000,000, and on the date on which

The Company’s chairman of the board holds outstanding options

to purchase 600,000 shares which options expire February 22, 2031.

An option to purchase 200,000 shares of common stock at an exercise

price of $1.00 per share is currently exercisable.

An options to purchase 200,000 shares of common stock at $3.00 per share becomes exercisable

on the first day on which we file with the SEC a Form 10-K or Form 10-Q which reports stockholders’ equity of at least $5,000,000,

and an options to purchase 200,000 shares of common stock at an exercise price of $5.00 per share becomes exercisable on the date on which

our common stock is listed for trading on the Nasdaq Stock Market or the New York Stock Exchange.

Also outstanding on December 31, 2023 were options granted to two consultants

at prices from $1.00 to $5.00 which become exercisable as follows:

● 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 which occurred on May 7, 2021.

● 100,000 shares at an exercise price of $3.00 per share, becoming exercisable

on the first day on which the Company files a Form 10-K or Form 10-Q which stockholders’ equity of at least $5,000,000, and

● 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.

Also outstanding on December 31, 2023 were options granted to one consultant

at prices from $1.00 to $5.00 which become exercisable as follows:

● 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.

● 100,000 shares at an exercise price of $3.00 per share became

exercisable on February 22, 2023, which was the second anniversary of the date of the agreement;

● 100,000 shares at an exercise price of $5.00 per share will

become exercisable on February 22, 2024, which will be the third anniversary of the date of the agreement.

We did not recognize an option expense

with respect to these options during the year ended December 31, 2024 or 2023.

Pursuant to consulting agreements, we granted options to purchase a

total of 900,000 shares of common stock which expire on February 21, 2031.

Option to purchase 300,000 shares of common stock at $1.00

per share, 100,000 shares at $3.00 per share and 100,000 shares at $5.00 per share are currently exercisable.

Option to purchase 200,000

shares at an exercise price of $3.00 per share, become exercisable on the first day on which we file with the SEC a Form 10-K or Form

10-Q which reports stockholders’ equity of at least $5,000,000 and options to purchase 200,000 shares at an exercise price of $5.00

per share become exercisable on the date on which the common stock is listed for trading on the Nasdaq Stock Market or the New York Stock

The Company recognized option expense of approximately $6,000 and $49,000 for the years ended December 31, 2024 and 2023, respectively,

with respect to these options.

Outstanding Equity Awards at Fiscal Year-End

2 unchanged sentences

Option awards

Number of securities

underlying unexercised

options (#) exercisable

Number of securities

underlying unexercised

options (#) unexercisable

Equity incentive plan

securities underlying

unexercised unearned

Option exercise

Option expiration date

(1) This option becomes exercisable on the first day on which we

file a Form 10-K or Form 10-Q which reflects stockholders’ equity of at least $5,000,000.

(2) This option becomes exercisable on the date on which the common

stock is listed for trading on the Nasdaq Stock Market or the New York Stock Exchange.

unexercisable

(1) This option becomes exercisable

on the first day on which we file a Form 10-K or Form 10-Q which reflects stockholders’ equity of at least $5,000,000.

(2) This option becomes exercisable

on the date on which the common stock is listed for trading on the Nasdaq Stock Market or the New York Stock Exchange.

Directors’ Compensation

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Each current officer named in the summary compensation table;

● Each person owning of record or known by us, based on information

provided to us by the persons named below, at least 5% of our common stock;

Each person owning of record or known by us, based on information provided to us by the persons named below, at least 5% of our common stock;

All directors and officers as a group.

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Name and Address (1) of Beneficial Owner

Amount and Nature

of Beneficial

Intelligent Partners, LLC (4)

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Carroll, Timothy J.

Scahill and Ryan T.

Logue is c/o Quest Patent Research Corporation, 411 Theodore Fremd Ave., Suite 206S, Rye, New York 10580-1411.

Represents (a) 1,400,000 shares owned by Mr.

Scahill and (b)

200,000 shares issuable upon exercise of options held by Mr.

Scahill and (b) 200,000 shares issuable upon exercise of options held by Mr.

Represents (a) 674,074 shares owned by Mr.

Fitton and (b) 500,000

shares issuable upon exercise of an option held by Intelligent Partners.

Fitton and (b) 500,000 shares issuable upon exercise of an option held by Intelligent Partners.

The address for Mr.

Fitton and Intelligent Partners is 300 Bowie

Fitton and Intelligent Partners is 300 Bowie St., Apt.

2803 Austin, TX 78703.

(4) Represents 500,000 shares of common stock issuable upon exercise

of options held by Intelligent Partners.

Represents 500,000 shares of common stock issuable upon exercise of options held by Intelligent Partners.

Fitton and Michael R.

Carper, as the members of Intelligent Partners, have the joint

right to vote and dispose of the shares owned by Intelligent Partners.

Carper, as the members of Intelligent Partners, have the joint right to vote and dispose of the shares owned by Intelligent Partners.

The address for Mr.

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Represents (a) 288,889 shares of common stock owned by Mr.

and (b) 500,000 shares of common stock issuable upon exercise of an option held by Intelligent Partners.

Carper and (b) 500,000 shares of common stock issuable upon exercise of an option held by Intelligent Partners.

CERTAIN RELATIONSHIPS AND RELATED

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Business – Agreements with Intelligent Partners.”

Managed Services Team LLC, an entity for which

Timothy Scahill, our chief technology officer and a director, is a managing partner, provides information technology services to us.

pay for these services at usual and customary rates.

The cost of these services was approximately $0 and $205 for the years ended December

31, 2023 and 2022, respectively.

During 2023, we contracted with a law firm more

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approximately $131,000 and $50,000 for the years ended December 31, 2024 and 2023, respectively.

During 2023 and 2022, we contracted with a law firm more than 10% 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 our patents in matters where the firm is serving as counsel to us.

In connection with the engagement,

we recorded litigation and licensing expenses of approximately $5,316,000 and $85,000 for the years ended December 31, 2023 and 2022,

respectively.

Since the services are on a contingent fee basis, no fees are incurred unless there is a recovery.

In prior periods, we

engaged a firm at which the father-in-law of the chief executive was formerly a partner.

Because his interest in the prior firm was less

than 10%, the prior firm was not considered a related party in prior periods.

During 2024 and 2023, we contracted with a law

firm more than 10% 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 our patents in matters where the firm is serving as counsel to

In connection with the engagement, we recorded litigation and licensing expenses of approximately $1,163,000 and $5,316,000 for the

years ended December 31, 2024 and 2023, respectively.

Since the services are on a contingent fee basis, no fees are incurred unless there

is a recovery.

In prior periods, we engaged a firm at which the father-in-law of the chief executive was formerly a partner.

interest in the prior firm was less than 10%, the prior firm was not considered a related party in prior periods.

Director Independence

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(“RRBB”) for 2024 and 2023 for the categories of services

Fiscal Year Ended

Audit fees – MaloneBailey

Audit fees – RRBB

Audit – related fees

All other fees – MaloneBailey

Audit fees consist of fees related to professional

services rendered in connection with the audit of our annual financial statements and the review of our quarterly financial statements.

All other fees relate to professional services

rendered in connection with our registration statement.

Our policy is to pre-approve all audit and permissible

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Purchase Agreement dated March 12, 2023 among the Company and QPRC Finance III LLC (9) †

Amended and Restated Prepaid Forward Purchase Agreement among the Company, certain subsidiaries and QPRC Finance LLC (11)

Certification of Chief Executive Officer and Acting Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.(11).

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Inline XBRL Taxonomy Extension Schema Document.

Inline XBRL Taxonomy Extension Calculation Linkbase

Inline XBRL Taxonomy Extension Definition Linkbase

Inline XBRL Taxonomy Extension Calculation Linkbase Document.

Inline XBRL Taxonomy Extension Definition Linkbase Document.

Inline XBRL Taxonomy Extension Label Linkbase Document.

Inline XBRL Taxonomy Extension Presentation Linkbase

Cover Page Interactive Data File (formatted as Inline

XBRL and contained in Exhibit 101).

Inline XBRL Taxonomy Extension Presentation Linkbase Document.

Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

Incorporated by reference to the Form 10-K for the year ended December 31, 2012, which was filed by the Company on December 15, 2014.

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Filed as an exhibit to the Company’s Form 8-K, which was filed with the SEC on March 16, 2023 and incorporated herein by reference.

Incorporated by reference to the Form 10-K for the year ended December

31, 2022 which was filed on March 31, 2023.

† Certain confidential information

has been deleted from this Exhibit.

Incorporated by reference to the Form 10-K for the year ended December 31, 2022 which was filed on March 31, 2023.

Filed herewith.

Certain confidential information has been deleted from this Exhibit.

FORM 10-K SUMMARY

Not applicable.

Pursuant to the requirements of the Securities Exchange Act of 1934,

the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Pursuant to the requirements of the Securities

Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

March 26, 2025

QUEST PATENT RESEARCH CORPORATION

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Scahill as his true and lawful attorney-in-fact

and agent, with full power of substitution and resubstitution for him or her and in his or her name, place and stead, in any and all

capacities to sign any and all amendments to this report, and to file the same, with all exhibits thereto and other documents in connection

therewith, with the Securities and Exchange Commission.

Director, Chief Executive Officer, Acting Chief

Financial Officer, and President (Principal Executive,

Financial and Accounting Officer)

and agent, with full power of substitution and resubstitution for him or her and in his or her name, place and stead, in any and all capacities

to sign any and all amendments to this report, and to file the same, with all exhibits thereto and other documents in connection therewith,

with the Securities and Exchange Commission.

Director, Chief Executive Officer,

March 26, 2025

Acting Chief Financial Officer, and President

(Principal Executive, Financial and Accounting Officer)

/s/ Timothy J.

March 26, 2025

William Ryall Carroll

March 26, 2025

William Ryall Carroll

March 26, 2025

QUEST PATENT RESEARCH CORPORATION

DECEMBER 31, 2024

Index to Consolidated Financial Statements

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Notes to Consolidated Financial Statements F-7

REPORT OF INDEPENDENT

REGISTERED PUBLIC ACCOUNTING FIRM

of Independent Registered Public Accounting Firm

To the Board of Directors and

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We have audited the accompanying consolidated

balance sheets of Quest Patent Research Corporation and its subsidiaries (the “Company”) as of December 31, 2023 and 2022,

and the related consolidated statements of operations, changes in stockholders’ deficit, and cash flows for the years then ended,

and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated

financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022,

and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted

in the United States of America.

Substantial Doubt about the Company’s Ability to Continue

as a Going Concern

balance sheets of Quest Patent Research Corporation and its subsidiaries (the Company) as of December 31, 2024 and 2023, and the related

consolidated statements of operations, comprehensive income, consolidated statement of changes in stockholders’ deficit, and cash

flows for the years then ended, and the related notes (collectively referred to as the consolidated financial statements).

In our opinion,

the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December,

2024 and 2023, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles

generally accepted in the United States of America.

Substantial Doubt about the Company’s

Ability to Continue as a Going Concern

The accompanying consolidated financial statements

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Current liabilities

Accounts payable and accrued liabilities

Accounts payable and accrued liabilities ($ 11,041 and $ 1,378,154 due to related parties, respectively)

Loans payable

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authorized 30,000,000 at December 31, 2024 and 2023;

5,331,973 shares issued and outstanding at December 31, 2023 and December 31, 2022

5,331,973 shares issued and outstanding at December 31, 2024 and 2023

Additional paid-in capital

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Total liabilities and stockholders’ deficit

See the accompanying notes to the consolidated financial statements.

See the accompanying notes to the consolidated

financial statements.

QUEST PATENT RESEARCH CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED

STATEMENTS OF OPERATIONS

CONSOLIDATED STATEMENTS OF OPERATIONS

Year Ended December 31,

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Total operating expenses

Income (loss) from operations

(Loss) income from operations

( 1,846,469 )

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( 1,197,768 )

Income (loss) before income tax

Income tax benefit (expense)

Net income (loss)

(Loss) income before income tax

( 2,371,651 )

Income (loss) per share - basic and diluted

Income tax expense

Net (loss) income

$ ( 2,471,651 )

(Loss) income per share - basic and diluted

Weighted average shares outstanding - basic and diluted

See the accompanying notes to the consolidated financial statements.

See the accompanying notes to the consolidated

financial statements.

QUEST PATENT RESEARCH CORPORATION AND SUBSIDIARIES

STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT

Non-controlling

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’

Stockholders’

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Stock-based compensation

Effect of reverse split

Balances as of December 31, 2023

2 unchanged sentences

Stock-based compensation

( 2,471,651 )

Balances as of December 31, 2024

1 unchanged sentence

$ ( 8,701,491 )

See the accompanying notes to the consolidated financial statements.

See the accompanying notes to the consolidated

financial statements.

QUEST PATENT RESEARCH CORPORATION AND SUBSIDIARIES

STATEMENTS OF CASH FLOWS

CONSOLIDATED STATEMENTS OF CASH FLOWS

Year Ended December 31,

Cash flows from operating activities:

Net income (loss)

Net (loss) income

$ ( 2,471,651 )

Adjustments to reconcile net income (loss) to cash provided by (used in) operating activities:

Adjustments to reconcile net (loss) income to cash (used in) provided by operating activities:

Change in fair market value of warrant liability

( 1,490,759 )

Stock-based compensation

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Accounts payable and accrued liabilities

Patents loan payable

Net cash provided by (used in) operating activities

( 1,518,662 )

Net cash (used in) provided by operating activities

Cash flows from investing activities:

1 unchanged sentence

( 3,330,000 )

( 1,502,000 )

Net cash used in investing activities

( 3,330,000 )

( 1,502,000 )

Cash flows from financing activities:

Payments on loans - related party

Proceeds from funding liability

1 unchanged sentence

( 1,525,502 )

( 4,127,702 )

Net cash provided by financing activities

Net increase (decrease) in cash and cash equivalents

Cash and cash equivalents at beginning of period

Cash and cash equivalents at end of period

Net (decrease) increase in cash and cash equivalents

Cash and cash equivalents at beginning of year

Cash and cash equivalents at end of year

Non-cash investing and financing activities:

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Cash paid during the period for:

See the accompanying notes to the consolidated financial statements.

QUEST PATENT RESEARCH CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DESCRIPTION OF BUSINESS

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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, 2023 and 2022.

Principles of Consolidation and Financial Statement

The consolidated financial statements are prepared in accordance with

generally accepted accounting principles (“US GAAP”) and present the consolidated financial statements of the Company

and its wholly owned and majority owned subsidiaries, a number of which are inactive, as of December 31, 2024 and 2023.

The consolidated financial statements include

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Digital IP Advisors Inc.

(“DIPA”) (wholly owned) (formerly Quest Licensing Corporation (NY))

(wholly owned) (formerly Quest Licensing Corporation (NY)) (inactive)

Quest Licensing Corporation

(DE) (“QLC”) (wholly owned)

(DE) (“QLC”) (wholly owned) (inactive)

Quest Packaging Solutions

Corporation ( 90 % owned)

Corporation ( 90 % owned) (inactive)

Quest Nettech Corporation

(“NetTech”) ( 65 % owned)

(“NetTech”) ( 65 % owned) (inactive)

Semcon IP, Inc.

(wholly owned)

(wholly owned) (inactive)

Mariner IC, Inc.

(wholly owned)

(wholly owned) (inactive)

IC Kinetics, Inc.

(wholly owned)

(wholly owned) (inactive)

CXT Systems, Inc.

(wholly owned)

(wholly owned) (inactive)

Photonic Imaging Solutions

(“PIS”) (wholly owned)

(wholly owned)

(“PIS”) (wholly owned) (inactive)

(wholly owned) (inactive)

Audio Messaging Inc.

(wholly owned)

(wholly owned) (inactive)

Peregrin Licensing LLC (“PLL”)

(wholly owned)

(wholly owned) (inactive)

Taasera Licensing LLC (“TLL”)

1 unchanged sentence

Soundstreak Texas LLC (“STX”)

(wholly owned)

(wholly owned) (inactive)

Multimodal Media LLC (“MML”)

1 unchanged sentence

LS Cloud Storage Technologies,

LLC (“LSC”) (wholly owned)

LLC (“LSC”) (wholly owned) (inactive)

Tyche Licensing LLC (“Tyche”)

(wholly owned)

(wholly owned) (inactive)

Deepwell IP LLC (“DIP”)

(wholly owned)

(wholly owned) (inactive)

EDI Licensing LLC (“EDI”)

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(wholly owned)

MR Licensing LLC (“MRL”)

(wholly owned)

Significant intercompany transactions and balances

4 unchanged sentences

December 31, 2024 and 2023, none of the Company’s net income or loss was attributable to non-controlling interests.

Reverse Split, Change in Authorized Common

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 share 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

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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 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, 2024

2023 and 2022.

Accounts Receivable

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2024 and 2023.

The accounts receivable balance at December 31,

2023 of approximately $ 3,008,000 represents amounts due and payable in connection with the settlement of patent infringement lawsuits.

The amounts were fully guaranteed by the licensee pursuant to the license agreement.

The full balance was collected in February 2024.

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

rights (collectively “patents”) acquired from third-parties or acquired in connection with business combinations.

acquisition costs are allocated equally across the patents in force at the time of acquisition.

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.

Patent acquisition

costs are allocated equally across the patents in force at the time of acquisition.

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

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an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

for information about our warrant liability.

See Note 5 for

information about our warrant liability.

The fair value hierarchy based on the three levels

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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.

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.

retain the services of law firms that specialize in patent licensing and enforcement and patent law in connection with its 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

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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

on a non-recourse basis whereby the litigation finance firms are paid from any settlement in accordance with a payment schedule set forth

in the agreement for providing funding for legal fees and out of pocket expenses incurred as a result of the licensing and enforcement

The economic terms of the inventor agreements,

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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

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 acquired 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,

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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

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.

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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.

The Company’s revenue for the years ended

December 31, 2024 and 2023 was generated from licenses pursuant to the settlement of patent infringement lawsuits..

Cost of Revenues

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The Company has not experienced any such losses in these accounts.

Net Income (Loss) Per Share

The Company calculates net income (loss) per

share by dividing income or 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.

Potentially dilutive securities are out of the money and therefore excluded from the computation of diluted earnings per

share for the year ended December 31, 2023.

Because the Company incurred losses for the year ended December 31, 2022, potentially dilutive

securities would be anti-dilutive, and therefore, the diluted net loss per share is the same as the basic net loss per share.

Net (Loss) Income Per Share

The Company calculates net (loss) income per share

by dividing income or 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 for the year ended December 31, 2024, potentially dilutive securities would be anti-dilutive, and

therefore, the diluted net loss per share is the same as the basic net loss per share..

Potentially dilutive securities are out of the

money and therefore excluded from the computation of diluted earnings per share for the year ended December 31, 2023.

The Company’s

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LLC (“QFL”) in connection with the Purchase Agreement, described in Note 4, 500,000 shares of common stock issuable upon exercise

of stock options granted to Intelligent Partners in connection with the Restructure Agreement described in Note 4 and 600,000 shares

of common stock issuable upon exercise of stock options granted to officers and consultants.

See Notes 4, 5 and 6.

Recent Accounting Pronouncements

Accounting Pronouncements Recently Adopted

In June 2016, the FASB issued ASU No.

Financial Instruments:

Credit Losses (Topic 326) (“ASU 2016-13”), which requires measurement and recognition of expected losses

for financial assets held.

The new standard changes the impairment model for most financial instruments, including trade receivables,

from an incurred loss method to a new forward looking approach, based on expected losses.

The estimate of expected credit losses will

require organizations to incorporate considerations of historical information, current conditions, and reasonable and supportable forecasts.

The standards update is effective prospectively for annual and interim periods beginning after December 15, 2022 for private and smaller

reporting companies.

The Company adopted ASU 2016-13 on January 1, 2023.

The adoption of this standard did not have any impact on these

consolidated financial statements.

of stock options granted to Intelligent Partners, LLC (“Intelligent Partners”) in connection with the Restructure Agreement

described in Note 4 and 700,000 shares of common stock issuable upon exercise of stock options granted to officers and consultants.

Notes 4, 5 and 6.

Recently Adopted Accounting Pronouncements

In November 2023, the Financial Accounting

Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07, Segment Reporting (Topic

Improvements to Reportable Segment Disclosures (“ASU 2023-07”), which requires all public entities, including

public entities with a single reportable segment, to provide in interim and annual periods one or more measures of segment profit or loss

used by the chief operating decision maker to allocate resources and assess performance.

Additionally, the standard requires disclosures

of significant segment expenses and other segment items as well as incremental qualitative disclosures.

The Company adopted ASU 2023-07 effective December

31, 2024, on a retrospective basis.

The adoption of 2023-07 did not change the way that the Company identifies its reportable segments

and, as a result, did not have a material impact on the Company’s segment-related disclosures.

Refer to Note 10 for further information

on the Company’s reportable segment.

Recently Issued Accounting Pronouncements

In December 2023, the FASB issued ASU 2023-09, Income

Taxes (Topic 740):

Improvements to Income Tax Disclosures (“ASU 2023-09”), which requires enhanced income tax disclosures,

including specific categories and disaggregation of information in the effective tax rate reconciliation, disaggregated information related

to income taxes paid, income or loss from continuing operations before income tax expense or benefit, and income tax expense or benefit

from continuing operations.

The requirements of the ASU are effective for annual periods beginning after December 15, 2024, with early

adoption permitted.

The Company is currently in the process of evaluating the impact of this pronouncement on our related disclosures.

In November 2024, the FASB issued ASU 2024-03, Income

Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement

Expenses (“ASU 2024-03”), which requires disclosure about the types of costs and expenses included in certain expense

captions presented on the income statement.

The new disclosure requirements are effective for the Company’s annual periods beginning

after December 15, 2026, and interim periods beginning after December 15, 2027, with early adoption permitted.

The Company is currently

in the process of evaluating the impact of this pronouncement on our related disclosures.

Going Concern

The Company has an accumulated deficit of approximately

$ 22,540,000 and negative working capital of approximately $ 8,335,000 as of December 31, 2023.

Although the Company generated income

in 2023, the Company has a history of losses and can give no assurance that it will generate income in the future.

Because of the Company’s

history of losses, its working capital deficiency, the uncertainty of future revenue, the Company’s obligations to Intelligent

Partners, QF3, and 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, as well as any adverse consequences

which would result from the Company’s 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 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.

The Company has an accumulated deficit of $ 26,382,672 and negative

working capital of approximately $ 11,536,076 as of December 31, 2024.

The Company has a history of losses, including a loss of $ 2.5

million on revenues of $ 2.8 million for the year ended December 31, 2024, and the Company can give no assurance that it will generate

income in the future.

Because of the Company’s history of losses, its working capital deficiency, the uncertainty of future revenue,

the Company’s obligations to QF3 and Intelligent Partners, the Company’s low stock price and the absence of an active trading

market in its common stock and the failure of the Company to have effective internal controls over financial reporting, as reflected in

the restatement of its financial statements for the year ended December 31, 2023, the ability of the Company 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 the Company fails

to meet the continued listing requirements of the OTCQB , raise substantial doubt as to the Company’s ability to continue as a going

The Company’s revenue is generated 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.

INTANGIBLE ASSETS

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Intangible assets consisted of the following:

Patents $ 6,087,000 $ 6,087,000

Subtotal 6,087,000 6,087,000

accumulated amortization ( 3,048,750 ) ( 2,412,397 )

( 2,412,397 )

( 1,625,846 )

Net value of intangible assets $ 3,038,250 $ 3,674,603

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The intangible assets at December 31, 2024 represent:

● patents (which were fully amortized at the date of acquisition)

acquired in January 2018 pursuant to an agreement with 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

● 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.

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

● 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 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.

● 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.

● patents acquired March 2023 from Tower for a purchase price

of $ 3,300,000 pursuant to which the Company retains an amount equal to the purchase price plus a negotiated return and any fees out of

net proceeds, as defined in the agreement, after which Tower in entitled to a percentage of further net proceeds realized, if any.

useful lives of the patents, at the date of purchase, was approximately 5 - 15 years.

● patents acquired in August 2023 pursuant to an agreement

with Koji Yoden for a purchase price of $ 30,000 .

● patents acquired March 2023 from Tower for a purchase price of $ 3,300,000 pursuant to which the Company retains an amount equal to the purchase price plus a negotiated return and any fees out of net proceeds, as defined in the agreement, after which Tower in entitled to a percentage of further net proceeds realized, if any.

The useful lives of the patents, at the date of purchase, was approximately 5 - 15 years.

● patents acquired in August 2023 pursuant to an agreement with Koji Yoden for a purchase price of $ 30,000 .

The useful lives of the patents, at the date of purchase, was approximately 9 - 10 years.

The Company amortizes the costs of intangible

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impairment to the carrying values.

As of December 31, 2023, management concluded that there was no impairment to the intangible

As of December 31, 2024, management concluded that there was no impairment to the intangible assets.

Amortization expense for patents was approximately

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and administration expenses in the accompanying consolidated statement of operations.

Future amortization of intangible assets is as

Future amortization of intangible assets is as follows:

Year Ended December 31,

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and 2023, in the amount of $ 138,000 .

The loans are payable on demand plus accrued interest at 10 % per annum.

The loans which bear interest at 10 % per annum, and are payable on demand.

Accrued interest on these

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Funding Liabilities

The following table shows the Company’s funding liabilities

to QFL and QF3 at December 31, 2023 and 2022:

The following table shows the Company’s funding liabilities to

QFL and QF3 at December 31, 2024 and 2023:

Funding liability – QFL

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Funding Liabilities - QFL

The QFL funding liabilities at December 31, 2023

and 2022 of $ 1,525,502 and $ 5,453,204 , respectively, represent 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.

of December 31, 2023, the Company had made total repayments in the amount of approximately $ 4,877,000 since February 22, 2021.

Approximately

$ 4,128,000 was repaid during the year ended December 31, 2023.

The obligation to QFL has no repayment term since payment is due solely

from a portion of net proceeds generated from the monetization of the Company’s intellectual property and has been classified as a current

liability as of December 31, 2023 and 2022.

Accrued interest related to this funding liability as of December 31, 2023 and 2022, was

approximately $ 478,000 and $ 600,000 , respectively.

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 “QFL Investment Documents”) pursuant to which, at

the closing on February 22, 2021 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, 2023;

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

the Company has 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 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

(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);

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 61 st 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 5 and 6 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 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 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

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 .

The Company paid $ 35,000 upon execution of the agreement with the balance payable within 30

The Company 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 an operating

capital advance in the amount of $ 200,000 and $ 800,000 from QFL pursuant to the Purchase Agreement during the years ended December 31,

2023 and 2022, respectively.

The QFL funding liability at December 31, 2023

of $ 1,525,502 represented the principal amount of the Company’s obligations to QFL pursuant to a purchase agreement (“Purchase

Agreement”) dated February 22, 2021 and amended and restated on May 2, 2024, between the Company and QFL, as described below.

of December 31, 2024, the Company had made total repayments in the amount of approximately $ 6,402,000 since February 22, 2021 and the

full outstanding principal balance has been repaid.

The obligation to QFL had no repayment term since payment was due solely from a portion

of net proceeds generated from the monetization of the Company’s intellectual property and has been classified as a current liability

as of December 31, 2023.

Accrued interest related to this funding liability as of December 31, 2023 was approximately $ 478,000 .

The Company did not request an operating capital

advance from QFL during the year ended December 31, 2024 and no further advances are to be made pursuant to the Purchase Agreement.

the year ended December 31, 2023 the Company requested and received from QFL an operating capital advance in the amount of $ 200,000 .

Pursuant to the Purchase Agreement with QFL, QFL made available to

the Company a total of $ 6,402,000 , consisting of (a) $ 2,653,000 for the acquisition of mutually agreed patent rights that we intended

(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 the Company transferred to QFL a right to receive a portion of net proceeds generated from the monetization

of those patents.

The Company 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 (Note 5), and, pursuant to a registration rights agreement, the Company granted QFL certain registration

rights to the shares of common stock issuable upon exercise of the warrant.

The covenants in the registration rights agreement include

a continued listing on the OTCQB.

In 2022, the bid price for the Company’s common stock had closed below $ 0.01 per share for more

than 30 consecutive days, as a result of which the Company did not meet the Standards for Continued Eligibility under the OTC listing

Although the Company has regained compliance, in the event that in the future the Company fails to be in compliance or otherwise

breaches the covenants in the agreements with QFL, the Company may have significant financial obligations to QLF.

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.

The Company also granted QFL certain board observation

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, the Company and QFL share net proceeds equally

until QFL achieves its investment return, as defined in the agreement.

Thereafter, the Company retains 100 % of all net proceeds.

in an Event of Default, as defined therein, all payments by the Company 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

with QFL, the Company entered into a Restructure Agreement with Intelligent Partners to eliminate any obligations the Company had with

respect to the outstanding notes and the securities purchase agreement.

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 we acquire.

Under these MPAs, Intelligent Partners receives a 60 % interest in the proceeds from our

intellectual property owned by the eight Subsidiary Guarantors.

Intelligent Partners also participates in the monetization proceeds from

new intellectual property that we acquire until the total payments under all the monetization participation agreements equal $ 2,805,000 ,

for net proceeds between $ 0 and $ 1,000,000 , Intelligent Partners receives 10 % of the net proceeds realized from new patents,

except that if, in any calendar quarter, net proceeds realized by us exceed $ 1,000,000 , Intelligent Partners’ entitlement for that

quarter only increases 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 .

The payments with respect to the new patents terminate once total payments to Intelligent Partners

under all monetization participation agreements reach $ 2,805,000 .

The payments to Intellectual Partners with respect new patents are payable

from the proceeds which are allocated to us under the QFL and QF3 agreements, which start after QFL and QF3 have received a negotiated

rate of return.

Funding Liabilities - QF3

The QF3 funding liabilities at December 31,

2023 of $ 5,800,000 represents the principal amount of the Company’s obligations to QF3 pursuant to a purchase agreement (“QF3

Purchase Agreement”) dated March 12, 2023 between the Company and QF3, as described below.

As of December 31, 2023, the Company

has made no repayments on this funding liability.

The obligation to QF3 has no repayment term since the payment is due from net proceeds

generated from the monetization of the Company’s intellectual property and has been classified as a current liability as of December 31,

Accrued interest related to this funding liability as of December 31, 2023, was approximately $ 299,000 .

2024 and 2023 of $ 7,634,381 and $ 5,800,000 , respectively, represents the principal amount of the Company’s obligations to QF3 pursuant

to a purchase agreement (“QF3 Purchase Agreement”) dated March 12, 2023 between the Company and QF3, as described below.

of December 31, 2024, the Company has made no repayments on this funding liability.

The obligation to QF3 has no repayment term since

the payment is due from net proceeds generated from the monetization of the Company’s intellectual property and has been classified

as a current liability as of December 31, 2024 and 2023.

Accrued interest related to this funding liability as of December 31,

2024 and 2023, was approximately $ 865,000 and $ 299,000 , respectively.

On March 12, 2023, the Company and HID, entered

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(the “QF3 Patent Security Agreement” together with the QF3 Security Agreement, the QF3 Patent Security Agreement, and the

QF3 Purchase Agreement, the “QF3 Investment Documents”) pursuant to which, at the closing held contemporaneously with the

execution of the agreements on March 12, 2023:

QF3 Purchase Agreement, the “QF3 Investment Documents”):

(i) Pursuant to the QF3 Purchase Agreement, QF3 agreed to make

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(iii) Pursuant to the QF3 Security Agreement and QF3 Patent Security

Agreement, payment of the Company’s obligations under the QF3 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, payment of the Company’s obligations under the QF3 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);

and (d) proceeds (including,

without limitation, cash proceeds and insurance proceeds) and products of the foregoing (a)-(c).

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

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2024 and 2023 represents the current amount of a non-interest bearing total monetization proceeds obligation (the “TMPO”)

due to Intelligent Partners, LLC (“Intelligent Partners”) of $ 2,796,500 at December 31, 2023 and 2022, 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

due to Intelligent Partners of $ 2,769,500 at December 31, 2024 and 2023, pursuant to an original agreement dated February 22, 2021.

Restructure Agreement provided for the payment to Intelligent Partners of $ 1,750,000 from the proceeds from the Company’s agreements

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.

as described above.

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, 2023.

(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”).

See Note 6 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.

See Note 6 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.

(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

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.

to new patents after QFL and QF3 have received a negotiated rate of return.

Because of the beneficial ownership percentage

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2024 and 2023 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.

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.

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

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.

As of December 31, 2024, the Company had not made any principal

payments on the loan payable.

During the year ended December 31, 2024, the Company incurred $ 5,640 of interest expense and has accrued

interest of approximately $ 7,800 at December 31, 2024.

Purchase Price of Patents

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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 $ 53,665 .

The Company did not make any payments with respect to this obligation in 2023.

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 sufficient 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.

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 $ 53,665 .

The Company did not make any payments with respect to this obligation in 2024 or 2023.

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 sufficient net proceeds.

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

On February 22, 2021, the Company issued warrants

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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 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, 2024 and 2023, the aggregate

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liability using the Black-Scholes option pricing model using the following key assumptions as of December 31, 2024 and 2023:

As of December 31,

Exercise price

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Balance at December 31, 2022

Gain on subsequent measurement

( 1,490,759 )

Balance at December 31, 2022

Loss on subsequent measurement

Balance at December 31, 2023

See Notes 3 and 5 for information on the warrant

STOCKHOLDERS’

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 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.

At December 31,

2023, 1,760,000 shares are available under the plan.

Gain on subsequent measurement

Balance at December 31, 2024

STOCKHOLDERS’ EQUITY

2017 Equity Incentive Plan

Under the 2017 Equity Incentive Plan (the “Plan”)

the Company can issue up to 5,000,000 shares of common stock pursuant to non-qualified stock options, restricted stock grants and other

equity-based incentives.

At December 31, 2024, 1,760,000 shares are available under the plan.

Issuance of Common Stock and Options

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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

Agreement (Note 4), 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

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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:

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.

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

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.

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 years ended December 31, 2023 and 2022.

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:

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;

100,000 shares at an exercise price of $ 3.00 per share upon the second anniversary of the agreement;

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.

The Company recognized option expense of approximately

$ 49,000 and $ 117,000 for the years ended December 31, 2023 and 2022, respectively.

Compensatory Arrangements of Officers and

On February 22, 2021, the board of directors:

(i) Granted restricted stock grants for services rendered and

vesting in full upon grant, to:

Scahill – 490,000 shares

Scahill – 100,000 shares

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:

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.

200,000 shares at an exercise price of $ 3.00 per share, becoming

Option Grants Pursuant to Consulting Agreements

Pursuant to a consulting agreement, the Company granted options to

purchase a total of 900,000 shares of common stock of which options to purchase a total of 900,000 shares of common stock which expire

on February 21, 2031.

Option to purchase 300,000 shares of common stock at $ 1.00 per share, 100,000 shares at $ 3.00 per share and 100,000

shares at $ 5.00 per share are currently exercisable.

Option to purchase 200,000 shares at an exercise price of $ 3.00 per share, become

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

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

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.

determined the fair value of the options to be approximately $ 720,000 as of the grant date using the Black-Scholes pricing model.

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

The Company did not recognize any option expense for the years ended December 31, 2023 and 2022.

of at least $ 5,000,000 and options to purchase 200,000 shares at an exercise price of $ 5.00 per share become 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 recognized option expense of approximately

$ 6,000 and $ 49,000 for the years ended December 31, 2024 and 2023, respectively, with respect to these options.

Option Grants to the Chief Executive Officer

The Company’s chairman of the board holds an outstanding options

to purchase 600,000 shares which options expire February 22, 2031.

An option to purchase 200,000 shares of common stock at an exercise

price of $ 1.00 per share is currently exercisable.

An options to purchase 200,000 shares of common stock at $ 3.00 becomes 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 an options to purchase 200,000 shares of Common Stock at an exercise price of $ 5.00 per share becomes 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 did not recognize

an option expense with respect to these options during the year ended December 31, 2024 or 2023.

A summary of the status of the Company’s

stock options and changes is set forth below:

Weighted Average

Exercise Price ($)

Weighted Average

Grant Date Fair

Weighted Average

Contractual Life

Number of Options (#) Weighted

Price ($) Weighted

Fair Value ($) Weighted

Balance - December 31, 2022 2,000,000 2.39 1.20 6.80

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warrants and changes is set forth below:

Weighted Average

Exercise Price ($)

Weighted Average

Contractual Life

Warrants (#) Weighted

Price ($) Weighted

Balance - December 31, 2022 962,463 0.54 8.15

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Balance, end of year

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, 2023, the Company

has approximately $ 7,151,711 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.

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, 2024, the Company has approximately

$ 10,583,000 of net operating loss (“NOL”) carry forwards which will begin to expire in 2035.

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.

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, 2023 is $( 873,118 ) and is recorded as

a component of income tax expense.

The Company’s deferred tax assets consist of

the following:

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

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, 2024 is $ 413,104

and is recorded as a component of income tax expense.

The Company’s deferred tax assets consist

of the following:

Net operating loss carry forward

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Balance, end of year

Tax (benefit) expense consisted primarily of

the following:

The reconciliation between the effective tax

rate on income before income taxes and the statutory rate for the year ended December 31, 2023 is as follows:

Book income before taxes

Tax expense consisted primarily of the following:

The reconciliation between the effective tax rate

on loss before income taxes and the statutory rate for the year ended December 31, 2024 is as follows:

Book loss before taxes

$ ( 498,047 )

State taxes, net

Foreign taxes, net

Meals and entertainment

Warrant expense

Warrant income

Interest expense

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Effective tax rate

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:

The reconciliation between the effective tax rate

on loss before income taxes and the statutory rate for the year ended December 31, 2023 is as follows:

Book income before taxes

$ ( 158,501 )

State taxes, net

Meals and entertainment

Warrant income

Warrant expense

Interest expense

Change in tax rate

Change in valuation allowance

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Effective tax rate

As of December 31, 2023, 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.

As of December 31, 2024, 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.

recognizes accrued interest and penalties related to unrecognized tax benefits (if any) in tax expenses, as applicable.

At December 31,

2024 and 2023, 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, 2020 and later.

The statute of limitations for assessment of income

taxes is open for tax years ending December 31, 2021 and later.

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 4 and 6 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 6 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, 2022, 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 $ 0 and $ 205 for

the years ended December 31, 2023 and 2022, respectively.

During 2023, the Company contracted with a law firm more than 10 percent

owned by the chief executive officer.

The firm is engaged as counsel in connection with general corporate matters, diligence and maintenance

of the Company’s patent portfolio.

In connection with the engagement, the Company recorded patent service costs of approximately

$ 50,000 and $ 0 for the years ended December 31, 2023 and 2022, respectively, and these were recorded as part of sales, general and administrative

expenses, per the Consolidated Statements of Operations.

During 2023, the Company contracted with a law

firm more than 10 percent owned by the chief executive officer.

The firm is engaged as counsel in connection with general corporate matters,

diligence and maintenance of the Company’s patent portfolio.

In connection with the engagement, the Company recorded patent service

costs of approximately $ 139,000 and $ 50,000 for the years ended December 31, 2024 and 2023, respectively, and these were recorded as part

of sales, general and administrative expenses in the accompanying Consolidated Statements of Operations.

As of December 31, 2024, approximately

$ 11,000 of such costs were payable to the related party.

During the years ended December 31, 2024 and 2023, the Company

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For the years ended December 31, 2024 and 2023, the cost of these services was approximately

$ 5,316,000 and $ 85,000 , respectively, and these were recorded as part of litigation and licensing expenses, per the Consolidated Statements

of Operations.

Since the services are on a contingent fee basis, no fees are incurred unless there is a recovery.

AND CONTINGENCIES

$ 1,163,000 and $ 5,316,000 , respectively, and these are included in litigation and licensing expenses, in the Consolidated Statements of

As of December 31, 2023, approximately $ 1,379,000 of such costs were payable to the related party.

There were no amounts payable

to this related party at December 31, 2024 since the services are on a contingent fee basis and no fees are incurred unless there is a

See Note 6 with respect to an option held by the

chief executive officer.

SEGMENT INFORMATION

The Company manages its business activities on

a consolidated basis and operates as a single reporting segment:

Intellectual Property Management.

The Company derives all of its revenue

from the licensing of its patents resulting from litigation commenced by the Company.

The accounting policies of the Intellectual Property

Management segment are the same as described in Note 2 – Summary of Significant Accounting Policies.

The Company’s Chief Executive Officer is

the Chief Operating Decision Maker (“CODM”).

The CODM uses Net Income, as reported on the Consolidated Statements of Operations,

in evaluating performance of the Intellectual Property Management segment and determining how to allocate resources of the Company as

a whole, including investing in future patent portfolios.

Significant expenses within income (loss) from

operations, as well as within net income, include litigation and licensing expenses and selling, general and administrative expenses,

which are each presented separately on the accompanying Consolidated Statements of Operations.

Other segment items within net (loss) income

include change in fair value of warrant liability, interest expense, net, and income tax expense.

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,

which was increased in 2016 to $ 300,000 and to $ 600,000 , effective January 1, 2023.

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).

executive’s bonus for 2023 was approximately $ 334,000 .

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, which

was increased to $ 600,000 , effective January 1, 2023.

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’s bonus for 2024

and 2023 was approximately $ 334,000 , respectively.

The chief executive officer is also eligible to participate in any executive incentive

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and chief technology officer are the only participants and during the years ended December 31, 2024 and 2023, $ 69,000 and $ 66,000

was deposited into the chief executive officer’s SEP IRA account, respectively and $ 6,600 and $ 0 was deposited into the chief technology

officer’s 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.

was deposited into the chief executive officer’s SEP IRA account, respectively and $ 14,000 and $ 6,600 was deposited into the chief

technology officer’s 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

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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.

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

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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 and QF3.

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 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:

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 6).

The OTC Markets Group confirmed to the Company that the deficiency

has been cured.

The Company cannot assure it 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 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

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.

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 9A. Controls and Procedures