QUEST PATENT RESEARCH CORP 10-K

ITEM 1. BUSINESS Overview We are an intellectual property asset management company. Our principal operations include the acquisition, licensing and enforcement of intellectual property rights that are either owned or controlled by us or one of our wholly-owned subsidiaries. We currently own, control or manage twelve intellectual property portfolios, which principally consist of patent rights. Our twelve intellectual property portfolios include the portfolios which we acquired from Intellectual Ventures Assets 16, LLC (“Intellectual Ventures”) and seven of its affiliates. As part of our intellectual property asset management activities and in the ordinary course of our business, it has been necessary for us or the intellectual property owner who we represent to initiate, and it is likely to continue to be necessary to initiate, patent infringement lawsuits and engage in patent infringement litigation. We anticipate that our primary source of revenue will come from the grant of licenses to use our intellectual property, including licenses granted as part of the settlement of patent infringement lawsuits. We generate revenue from two sources: ● Patent licensing fees relating to our intellectual property portfolio, which includes fees from the licensing of our intellectual property, primarily from litigation relating to enforcement of our intellectual property rights. ● Licensed packaging sales, which relate to the sale of licensed products, which have not constituted a significant source of revenue and was not a source of revenue in 2020. We previously received management fees for managing litigation related to our intellectual property rights. We do not currently receive these fees; we do not have any agreements that provide for such payments and we cannot assure you that we will generate revenue from such fees in the future. Our agreement with QFL does not provide for any payment to us of management fees. Intellectual property monetization includes the generation of revenue and proceeds from the licensing of patents, patented technologies and other intellectual property rights. Patent litigation is often a necessary element of intellectual property monetization where a patent owner, or a representative of the patent owner, seeks to protect its patent rights against the unlicensed manufacture, sale, and use of the owner’s patent rights or products which incorporate the owner’s patent rights. In general, we seek to monetize the bundle of rights granted by the patents through structured licensing and when necessary enforcement of those rights through litigation, although to date all of our patent license revenues have resulted from litigation. We intend to develop our business by acquiring intellectual property rights, either in the form of ownership of or an exclusive license to the underlying intellectual property. Our goal is to enter into agreements with inventors of innovative technologies for which there may be a significant market for products which use or incorporate the intellectual property. We seek to purchase all of, or interests in, intellectual property in exchange for cash, securities of our company, the formation or a joint venture or separate subsidiary in which the owner has an equity interest, and/or interests in the monetization of those assets. Our revenue from this aspect of our business can be generated through licensing and, when necessary, which is typically the case, litigation. We engage in due diligence and a principled risk underwriting process to evaluate the merits and potential value of any acquisition, partnership or joint venture. We seek to structure the terms of our acquisitions in a manner that will achieve the highest risk-adjusted returns possible, in the context of our financial condition. In connection with the acquisition of intellectual property portfolios, we have granted the party providing the financing an interest in any recovery we have with respect to the intellectual property purchased with the financing, and we expect that we will have to continue to grant such interests until and unless we have generated sufficient cash from licensing our intellectual property to enable us to acquire additional intellectual property portfolios without outside financing. However, we cannot assure you that we will ever generate sufficient revenues to enable us to purchase additional intellectual property without third-party financing. We employ a due diligence process before completing the acquisition of an intellectual property interest. We begin with an investment thesis supporting the potential transaction and then proceed to test the thesis through an examination of the critical drivers of the value of the underlying intellectual property asset. Such an examination focuses on areas such as title and inventorship issues, the quality of the drafting and prosecution of the intellectual property assets, legal risks inherent in licensing programs generally, the applicability of the invention to the relevant marketplace and other issues such as the effects of venue and other procedural issues. However, our financial position may affect our ability to conduct adequate due diligence with respect to intellectual property rights. This due diligence effort is conducted by our chief executive officer. 1 It is frequently necessary to commence litigation in order to obtain a recovery for past infringement of, or to license the use of, our intellectual property rights. Intellectual property litigation is very expensive, with no certainty of any recovery. To the extent possible we seek to engage counsel on a contingent fee or partial contingent fee basis, which significantly reduces our litigation cost, but which also reduces the value of the recovery to us. We do not have the resources to enable us to fund the cost of litigation. To the extent that we cannot fund litigation ourselves, we may enter into an agreement with a third party, which may be the patent owner or the former patent owner who transferred the patent rights to us, or an independent third party. In view of our limited cash and our working capital deficiency, we are not able to institute any monetization program that may require litigation unless we engage counsel on a fully contingent basis or we obtain funding from third party funding sources. In these cases, counsel may be afforded a greater participation in the recovery and the third party that funds the litigation would be entitled to participate in any recovery. Recent Development Set forth below is a discussion of recent agreements which we entered into with QFL to provide us with a financing facility, funds to make a payment due to Intellectual Partners and for working capital and an agreement with Intellectual Partners to restructure our loan agreement and related agreements. The agreement with Intellectual Partners restated our agreements with United Wireless Holdings, Inc. (“United Wireless”) which had been assigned to Intellectual Partners, an affiliate of United Wireless. The descriptions below and elsewhere in this Form 10-K relating to our agreements with QFL and Intelligent Partners are summaries only and are qualified in their entirety by reference to those agreements which are filed as exhibits to this Form 10-K Summary of Agreements with QPRC Finance LLC On February 22, 2021, we entered into a series of agreements, all dated February 19, 2021,with QFL, including a prepaid forward purchase agreement (the “Purchase Agreement”), a security agreement (the “Security Agreement”), a subsidiary security agreement (the “Subsidiary Security Agreement”), a subsidiary guaranty (the “Subsidiary Guarantee”), a warrant issue agreement (the “Warrant Issue Agreement”), a registration rights agreement (the “Registration Rights Agreement”) and a board observation rights agreement (the “Board Observation Rights Agreement” together with the Security Agreement, the Subsidiary Guaranty, the Subsidiary Security Agreement, Warrant Issuance Agreement, Registration Rights Agreement and the Purchase Agreement, the “Investment Documents”) pursuant to which, at the closing held contemporaneously with the execution of the agreements: (i) Pursuant to the Purchase Agreement, QFL agreed to make available to us a financing facility of: (a) up to $25,000,000 for the acquisition of mutually agreed patent rights that we intend to monetize; (b) up to $2,000,000 for operating expenses; and (iii) $1,750,000 to fund the cash payment portion of the restructure of our obligations to Intelligent Partners. In return we transferred to QFL a right to receive a portion of net proceeds generated from the monetization of those patents. The terms of the Purchase Agreement are described under “Purchase Agreement.” (ii) We used $1,750,000 of proceeds from the QFL financing as the cash payment portion of the restructure of our obligations to Intelligent Partners as transferee of United Wireless Holdings, Inc. (“United Wireless”) pursuant to a restructure agreement (the “Restructure Agreement”) between us and the Company and Intelligent Partners executed contemporaneously with the closing of the Investment Documents. The payment was made directly from QFL to Intelligent Partners. The terms of the Restructure Agreement are described under “Restructure Agreement.” We also requested and received in March 2021 $400,000 for working capital. (iii) Pursuant to the Security Agreement, our obligations under the Purchase Agreement with QFL are secured by: (a) the proceeds (as defined in the Purchase Agreement); (b) the patents (as defined in the Purchase Agreement; (c) all general intangibles now or hereafter arising from or related to the foregoing (a) and (b); and (d) proceeds (including, without limitation, cash proceeds and insurance proceeds) and products of the foregoing (a)-(c). (iv) Pursuant to the Subsidiary Guaranty, eight of our subsidiaries – Quest Licensing Corporation (“QLC”), Quest NetTech Corporation (“NetTech”), Mariner IC Inc. (“Mariner”), Semcon IP Inc. (“Semcon”), IC Kinetics Inc. (“IC”), CXT Systems Inc. (“CXT”), M-Red Inc. (“MRED”), and Audio Messaging Inc.(“AMI”), collectively, the “Subsidiary Guarantors”) guaranteed our obligations to QFL under the Purchase Agreement. 2 (v) Pursuant to the Subsidiary Security Agreement, the Subsidiary Guarantors grant QFL a security interest in the proceeds from the future monetization of their respective patent portfolios. (vi) Pursuant to the Warrant Issue Agreement, we granted QFL ten-year warrants to purchase a total of up to 96,246,246 shares of our common stock, with an exercise price of $0.0054 per share which may be exercised from February 19, 2021 through February 18, 2031on a cash or cashless basis. Exercisability of the Warrant is limited if, upon exercise, the holder would beneficially own more than 4.99% (the “Maximum Percentage”) of our common stock, except that by written notice to us, 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 us. 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). 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. (vii) We agreed to take all commercially reasonable steps necessary to regain compliance with the OTCQB eligibility standards as soon as practicable, but in no event later than 12 months from the closing date. (viii) We granted QFL certain registration rights with respect to the 96,246,246 shares of common stock issuable upon exercise of the warrant. (ix) Commencing six months from the closing date, if the shares owned by QFL cannot be sold pursuant to a registration statement and cannot be sold pursuant to Rule 144 without the Company being in compliance with the current public information requirements of Rule 144, if the Company is not in compliance with the current public information requirements, the Company is required to pay damages to QFL. (x) 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 ”), we 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. Purchase Agreement Pursuant to the Purchase Agreement, QFL agreed to make available to us a financing facility of: (i) up to $25,000,000 for the acquisition of mutually agreed patent rights that we intend to monetize; (ii) up to $2,000,000 for operating expenses from which we may, at our discretion, draw up to $200,000 per calendar quarter; and (iii) $1,750,000 to fund the cash payment portion of the restructure of our obligations to Intelligent Partners. In return we transferred to QFL the right to receive a portion of net proceeds generated from the monetization of those patents. After QFL has a negotiated rate of return, we and QFL shall share net proceeds equally until QFL shall have achieved its Investment Return (as defined therein). Thereafter, we shall retain 100% of all net proceeds. Except 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 the Company are received, or to be received. Events of Default include any breach of the Investment Documents, including non-payment, material misrepresentation, security interest compromise, criminal indictment or felony conviction of one or our officers or directors, our current chief executive no longer serving as our chief executive or as a director, the occurrence of any Event of Default under the Restructure Agreement with Intelligent Partners, as defined therein, and our insolvency. In addition to all rights and remedies available under law and the Investment Documents, upon and Event of Default, QFL may: (i) declare the Investment Return immediately due and payable, (ii) except in the event of our insolvency, declare an amount equal to the aggregate amount of the capital provided pursuant to the Purchase Agreement, plus a late charge, immediately due and payable, or (iii) cease making capital available to us. 3 Under the agreement, QFL may terminate capital advances other than in an Event of Default by giving written notice to us in which case QFL’s interest in Net Proceeds shall be an amount equal to the greater of (i) the capital advanced to the Company plus interest at the prime rate, on the one hand, and (ii) Net Proceeds received by the QFL prior to the date of such termination. Grant of Security Interests Pursuant to the Security Agreement and Subsidiary Security Agreement, payment of the obligations of the Company under the Purchase Agreement with QFL are secured by (i) the Proceeds (as defined in the Purchase Agreement); (ii) the Patents; (iii) all General Intangibles now or hereafter arising from or related to the foregoing; (iv) Proceeds (including, without limitation, Cash Proceeds and insurance proceeds) and products of the foregoing and (v) the proceeds realized by the relative patent portfolios of the Subsidiary Guarantors. The security interest in proceeds from the CXT and M-Red patents granted to QFL is junior to the security interest held by the respective affiliates of Intellectual Ventures granted to secure the obligations of CXT and MRED pursuant to their applicable patent purchase agreements. Registration Rights Agreement Pursuant to the Registration Rights Agreement, we agreed to file a registration statement with the SEC covering 50,000,000 of the 96,246,246 shares of common stock issuable upon exercise of the Warrant. We are required to file the registration statement by the second business day following the earlier of (x) the date on which the Company is next required to file its financial statements on Form 10-K or Form 10-Q under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and (y) the date on which the Company actually files its financial statements on Form 10-K or Form 10-Q under the Exchange Act, in each case without regard to any extension pursuant to Rule 12b-25 under the Exchange Act (the “Initial Filing Deadline”); provided, that, if our common stock is not quoted on an existing trading market for the purpose of conducting an at the market offering under Rule 415 of the Securities Act of 1933, as amended, the Initial Filing Deadline shall be no earlier than the second business day following the date on which the QFL provides the Company with written information as to the fixed price at which it plans to offer and sell the Registrable Securities (as defined in the Registration Rights Agreement) pursuant to the registration statement. We are also required to file additional Registration Statements (as defined in the Registration Rights Agreement) on the date 60 days after the date that we receive written notice from any Investor (as defined in the Registration Rights Agreement) that 60% of the Registrable Securities held by all Investors registered under the immediately preceding registration statement have been sold. The Registration Rights Agreement provides for us to pay damages in the event that we do not meet the required deadlines. Intercreditor Agreement In connection with the agreements with QFL and the agreements with Intelligent Partners described below, we and our Subsidiaries entered into an intercreditor agreement with QFL and Intelligent Partners which sets forth the priority of QFL in the collateral under the Investment Documents. Summary of Agreements with Intelligent Partners Securities Purchase Agreement and Related Agreements with United Wireless We, together with certain of our subsidiaries, and United Wireless, entered into a Securities Purchase Agreement dated October 22, 2015 (the “SPA”) and related Transaction Documents, as defined therein, pursuant to which the Company sold 50,000,000 shares (the “Shares”) of our common stock, par value $0.00003 per share (the “Common Stock”) at $0.05 per share, or an aggregate of $250,000; we issued our 10% secured convertible promissory notes due September 30, 2020 to United, and granted United an option (the “2015 Purchase Option”) to purchase up to an additional 50,000,000 shares of Common Stock in three tranches at the prices as set forth therein. The 2015 Purchase Option expired unexercised on September 30, 2020. The Shares are currently owned by Andrew C. Fitton (“Fitton”) and Michael Carper (“Carper”) and United Wireless subsequently transferred its note and assigned all of its remaining rights under the agreements to Intelligent Partners, which is an affiliate of United Wireless and is owned by Fitton and Carper. Our agreements with United Wireless, also included various monetization proceeds agreements, which we refer to as MPAs, pursuant to which we granted to Intelligent Partners, as the assignee of United Wireless, rights to the monetization proceeds from revenue generated from certain of our intellectual property, a security agreement and a registration rights agreement. 4 At September 30, 2020, promissory notes in the aggregate principal amount of $4,672,810 were outstanding. The notes became due by their terms on September 30, 2020, and we did not make any payment on account of principal of and interest on the notes. As a result, Intelligent Partners had the right to declare a default under the Notes, and, if Intelligent Partners had taken such action, it would have been necessary for us to seek protection under the Bankruptcy Act. Subsequent to September 30, 2020, we engaged in negotiations with Intelligent Partners in parallel with our negotiations with QFL, with a view to restructuring our obligations under the United Wireless agreements, including the Notes, so that we 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 our agreements with QFL. We also made interest payments totaling $117,780 between September 30, 2020 and February 22, 2021, the date we signed the Restructure Agreement with Intelligent Partners. One of QFL’s requirements to provide us with a funding facility was the restructure of our obligations to Intelligent Partners so that we no longer had any debt obligations to Intelligent Partners. Neither QFL nor any other financing source, would provide us with funding while Intelligent Partners had a right to call a default under our notes to Intelligent Partners. As part of the restructure of our agreements with Intelligent Partners, we amended the existing MPAs and granted Intelligent Partners certain rights in the monetization proceeds from any new intellectual property we acquire, as describe below. Under these MPAs, Intelligent Partners participates in the monetization proceeds we receive with respect to new patents after QFL has received its negotiated rate of return. On or prior to the date of the Restructure Agreement, Intelligent Partners transferred to Fitton and Carper $250,000 of the Notes (the “Transferred Note”), thereby reducing the principal amount of the Notes held by Intelligent Partners to $4,422,810. On February 22, 2021, we and Intelligent Partners agreed to extinguish the Note and Transferred Note, and terminate or amend and restate the SPA and Transaction Documents, pursuant to a series of agreements including: a Restructure Agreement (the “Restructure Agreement”), a Stock Purchase Agreement (the “Stock Purchase Agreement”), an Option Grant (the “Option Grant”), an Amended and Restated Pledge Agreement (the “Pledge Agreement”), an Amended and Restated Registration Rights Agreement (the “Registration Rights Agreement”), a Board Observation Agreement (the “Board Observation Agreement”), a MPA-NA Security Interest Agreement (the “MPA-NA Security Interest Agreement”), an Amended and Restated Patent Proceeds Security Agreement (the “Patent Proceeds Security Agreement”, an Amended and Restated MPA-CP (the “MPA-CP”), an Amended and Restated MPA-CXT (the “MPA-CXT”), a MPA-MR (the “MPA-MR”), a MPA-AMI (the “MPA-AMI,” and together with the MPA-CP, MPA-CXT and MPA-MR, each a Restructure MPA and together the Restructure MPAs) and a MPA-NA (the “MPA-NA”). (i) Pursuant to the Restructure Agreement, we paid Intelligent Partners $1,750,000 at closing, which we received from QFL and which QFL paid directly to Intelligent Partners, and recognized a further non-interest bearing total monetization proceeds obligation (the “TMPO”) of $2,805,000, 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. Further details regarding the TMPO are provided under “TMPO”; (ii) Pursuant to the Stock Purchase Agreement, we issued to Fitton and Carper, as holders of the Transferred Note, a total of 46,296,296 shares of our restricted common stock at a purchase price of $0.0054 per share, which purchase price was paid by the conversion and in full satisfaction of the Transferred Note (the “Conversion Shares”). (iii) Pursuant to the Option Grant, we granted Intelligent Partners an option to purchase a total of 50,000,000 shares of common stock, with an exercise price of $0.0054 per share which vests immediately and may be exercised through February 9, 2026. (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 can be generated from the intellectual property covered by the agreement. (v) Pursuant to the Subsidiary Security Agreement, our obligations under our 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. 5 (vi) Pursuant to the MPA-NA-Security Interest Agreement, our obligations under the MPA-NA are secured by a security interest in net proceeds realized from the future monetization of new patents acquired until the TMPO is satisfied, provided Intelligent Partners’ secured interest shall be limited to its entitlement in Net Proceeds under the MPA-NA. After satisfaction of the TMPO the security interest in proceeds from new assets shall terminate. (vii) We granted Intelligent Partners, Andrew Fitton and Michael Carper certain registration rights with respect to (i) the 50,000,000 Shares currently owned by Fitton and Carper; (ii) the 46,296,296 Conversion Shares being issued to Fitton and Carper, and (iii) the 50,000,000 shares of common stock issuable upon exercise of the Restructure Option; (viii) Commencing six months from the closing date, if the shares owned by Intelligent Partners cannot be sold pursuant to a registration statement and cannot be sold pursuant to Rule 144 without the Company being in compliance with the current public information requirements of Rule 144, if the Company is not in compliance with the current public information requirements, the Company is required to pay damages to Intelligent Partners. (ix) Pursuant to the Board Observation Rights Agreement, until the Total Monetization Proceeds Obligation has been satisfied (the “ Observation Period ”), we 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. Events of Default include (i) a Change of Control of the Company (ii) any uncured default on payment due to Intelligent Partners in an amount totaling in excess of $275,000, which is not the subject of a Dispute or other formal dispute resolution proceeding initiated in good faith pursuant to this Agreement or other Restructure Documents (iii) the filing of a voluntary petition for relief under the United States Bankruptcy Code by Company or any of its material subsidiaries, (iv) the filing of an involuntary petition for relief under the United States Bankruptcy Code against the Company, which is not stayed or dismissed within sixty (60) days of such filing, except for an involuntary petition for relief filed solely by Intelligent Partners, or any Affiliate or member of Intelligent Partners, or (v) acceleration of an obligation in excess of $1 million dollars to another provider of financing following a final determination by arbitration or other judicial proceeding that such obligation is due and owing. Registration Rights Agreement Pursuant to a registration rights agreement, we granted Intelligent Partners, Andrew Fitton and Michael Carper certain registration rights with respect to (i) the 50,000,000 Shares currently owned by Fitton and Carper; (ii) the 46,296,296 Conversion Shares issued to Fitton and Carper, and (iii) the 50,000,000 shares of common stock issuable upon exercise of the Restructure Option. We agreed to file a registration statement with the SEC covering up to a maximum of 50,000,000 of the Shares, Conversion Shares and Options Shares. We are required to file the registration statement by the earlier of the 2nd Business Day following the date on which we (x) are next required to file our financial statements on Form 10-K or Form 10-Q under the Exchange Act, and (y) actually files its financial statements on Form 10-K or Form 10-Q under the Exchange Act, in each case without regard to any extension pursuant to Rule 12b-25 under the Exchange Act. We are required to have the registration statement declared effective by the SEC within 120 days of the closing if the registration statement is not subject to a full review by the SEC and 180 days if the registration statement is subject to a full review. The registration rights agreements provides for us to pay damages in the event that we do not meet the required deadlines. Effects of the COVID-19 Pandemic on our Business Although we do not manufacture or sell products, the COVID-19 pandemic and the work shutdown imposed in the United States and other countries to limit the spread of the virus can have a negative impact on our business. Our revenue is generated almost exclusively from license fees generated from litigation seeking damages for infringement of our intellectual property rights. The work shutdown has affected the court system, with courts operating on a reduced schedule. As a result, patent infringement actions are likely to be lower priority items in allocation of court resources, with the effect that deadlines are likely to be postponed which delays may give defendants an incentive to delay negotiations or offer a lower amount than they might otherwise accept. In addition, the effect of the COVID-19 and the public response may adversely affect the financial condition and prospects of defendants and potential defendants, which would make it less likely that they would be willing to settle our claim or which may result in a defendant or potential defendant reducing or discontinuing its operations or taking advantage of the Bankruptcy Act. 6 The COVID-19 pandemic and the response to limit the spread of the infection may affect the financial condition of financing sources and the willingness of potential financing sources to provide funding for our litigation. In addition, these factors may affect a law firms’ ability and willingness to provide us with legal services on a contingent or partial contingent. Further, to the extent that holders of intellectual property rights see these factors impacting our ability to generate revenue from their intellectual property, they may be reluctant to sell intellectual property to us on terms which are acceptable to us, if at all. Purchase of Intellectual Property from Intellectual Ventures Entities On October 22, 2015, pursuant to an agreement with an effective date of July 8, 2015, as amended, between us and Intellectual Ventures, we purchased three groups of patents from Intellectual Ventures for a purchase price of $3,000,000, which was paid in three annual installments of $1,000,000 from the proceeds of our loans from United Wireless. The patent portfolios which we acquired from Intellectual Ventures are the anchor structure portfolio, the power management/bus control portfolio and the diode on chip portfolio, which are described under “Business – Our Intellectual Property Portfolios.” On January 26, 2018, Photonic Imaging Solutions Inc. (“PIS”), a wholly-owned subsidiary, entered into an agreement with Intellectual Ventures Assets 64 LLC (“IV 64”) pursuant to which PIS advanced $10,000 to IV 64 at closing and IV 64 assigned to PIS all right, title, and interest in a portfolio of eleven United States patents and sixteen foreign patents (the “CMOS Portfolio”). Under the agreement, PIS will distribute to IV 64 70% of the first $1,500,000 of revenue, as defined in the agreement, 30% of the next $1,500,000 of revenue and 50% of revenue over $3,000,000; with the $10,000 advance being treated as an advance against the first distributions of net proceeds payable to IV 64. PIS’ obligations under the monetization proceeds agreement are secured by a security interest in the proceeds (from litigation or otherwise) from the portfolio. The patent portfolio which we acquired from IV 64 is the CMOS portfolio which is described under “Business – Our Intellectual Property Portfolios.” On July 28, 2017, CXT, a wholly-owned subsidiary, entered into an agreement with Intellectual Ventures Assets 34 LLC and Intellectual Ventures Assets 37 LLC (“IV 34/37”) pursuant to which CTX paid IV 34/37 $25,000 and IV34/37 transferred to CXT all right, title and interest in a portfolio of thirteen United States patents (the “CXT Portfolio”). Under the agreement, CXT will distribute 50% of net proceeds, as defined, to IV 34/37, as long as we generate revenue from the CXT Portfolio. The $25,000 payment to IV 34/37 was made from a loan from United Wireless and was paid directly by United Wireless to IV 34/37. The agreement with IV 34/37, as amended on January 26, 2018, provides that if, on December 31, 2018, December 31, 2019 and December 31, 2020, cumulative distributions to IV 34/37 total less than $100,000, $375,000 and $975,000, respectively, CXT shall pay the difference between such cumulative amounts and the amount paid to IV 34/37 within ten days after the applicable date. The $25,000 advance is treated as an advance against distributions of net proceeds payable to IV 34/37. The useful lives of the patents, at the date of acquisition, was 5-6 years. Neither we nor any affiliate of CXT has guaranteed the minimum payments. As of December 31, 2020, cumulative distributions did not total $975,000 and CXT did not pay the difference to IV 34/37 within ten days. Non-payment which is not cured within 30 days after written notice from IV 34/37 would constitute an Acceleration Event under the agreement, following which, in addition to any other remedies available under the agreement, all outstanding minimum cumulative distributions would become due and payable within thirty days. As of the date of filing, no such written notice of non-payment has been given by IV 34/37. CXT’s obligations under the agreement with IV 34/37 are secured by a security interest in the proceeds (from litigation or otherwise) from the CXT Portfolio. The patent portfolio which we acquired from IV 34/37 is the CXT portfolio which is described under “Business – Our Intellectual Property Portfolios.” On January 26, 2018, CXT entered into an agreement with Intellectual Ventures Assets 62 LLC and Intellectual Ventures Assets 71 LLC “(IV 62/71”) pursuant to which CXT advanced IV 62/71 $10,000 at closing and IV 62/71 assigned to CXT all right, title, and interest in a portfolio of sixteen United States patents and three pending applications. Under the agreement, CXT will distribute 50% of net proceeds, as defined, to IV 62/71, as long as we generate net proceeds from this portfolio. The initial $10,000 advance is treated as an advance toward our future distributions of net proceeds payable to IV 62/71. CXT’s obligations under the agreement are secured by a security interest in the proceeds (from litigation or otherwise) from the CXT Portfolio. In March 2021, we made a payment to IV 62/71 in the amount of $64,238. We agreed to modify the monetization proceeds agreement between CXT and United Wireless to include the patents acquired from IV 62/71. The monetization proceeds amendment was further amended by the MPA-CXT Agreement in connection with the restructure of our agreements with Intelligent Partners. 7 On March 15, 2019, M-RED Inc. (“M-RED”), a wholly-owned subsidiary, entered into an agreement with Intellectual Ventures Assets 113 LLC and Intellectual Ventures Assets 108 LLC (“IV 113/108”) pursuant to which M-RED paid IV 113/108 $75,000 and IV 113/108 transferred to M-RED all right, title and interest in a portfolio of sixty United States patents and eight foreign patents (the “M-RED Portfolio”). Under the agreement, M-RED will distribute 50% of net proceeds, as defined, to IV 113/108, as long as we generate revenue from the M-RED Portfolio. The agreement with IV 113/108 provides that if, on September 30, 2020, September 30, 2021 and September 30, 2022, cumulative distributions to IV 113/108 total less than $450,000, $975,000 and $1,575,000, respectively, M-RED shall pay the difference between such cumulative amounts and the amount paid to IV 113/108 within ten days after the applicable date. The $75,000 advance is treated as an advance against the first distributions of net proceeds payable to IV 113/108. On September 30, 2020 cumulative distributions to IV 113/108 totaled less than $450,000 and M-RED did not pay the difference to IV 113/108 within ten days. In March 2021, M-RED paid IV 113/108 $114,952 in cumulative distributions Non-payment which is not cured within 30 days after written notice from IV 113/108 would constitute an Acceleration Event under the agreement, following which, in addition to any other remedies available under the agreement, all outstanding minimum cumulative distributions would become due and payable within thirty days. As of the date of filing, no such written notice of non-payment has been given by IV 113/108. The useful lives of the patents, at the date of acquisition, was approximately nine years. Neither we nor any affiliate of M-RED has guaranteed the minimum payments. M-RED’s obligations under the agreement with IV 113/108 are secured by a security interest in the proceeds (from litigation or otherwise) from the M-RED Portfolio. The patent portfolio which we acquired from IV 113/108 is the M-RED portfolio which is described under “Business – Our Intellectual Property Portfolios.” Pursuant to the MPA-MR, Intelligent Partners is entitled to receive 60% of the net proceeds as defined in the agreement. A default under the agreements with the Intellectual Ventures affiliates could result in a default under our agreements with QFL, and, even if it does not declare a default, QFL may be reluctant to finance our intellectual property acquisition if we are in default under any of our patent acquisition agreements with Intellectual Venture affiliates. Further, it may be necessary for any defaulting subsidiary to seek protection under the Bankruptcy Act if we are not able to enter into modification agreements with the Intellectual Ventures affiliates. Our Organization We were incorporated in Delaware on July 17, 1987 under the name Phase Out of America. On September 21, 1997, we changed our name to Quest Products Corporation, and, on June 6, 2007, we changed our name to Quest Patent Research Corporation. We have been engaged in the intellectual property monetization business since 2008. Our executive principal office is located at 411 Theodore Fremd Ave., Suite 206S, Rye, New York 10580-1411, telephone (888) 743-7577. Our website is www.qprc.com. Information contained on or derived from our website or any other website does not constitute a part of this annual report. Our Intellectual Property Portfolios Mobile Data The real-time mobile data portfolio relates to the automatic update of information delivered to a mobile device without the need for a manual refreshing. The portfolio is comprised of U.S. Patent No. 7,194,468 “Apparatus and Method for Supplying Information” and all related patents, patent applications, and all continuations, continuations-in-part, divisions, extensions, renewals, reissues and re-examinations relating to all inventions thereof (the “Mobile Data Portfolio”). Through December 31, 2020, we did not receive any proceeds from the Mobile Data Portfolio. Flexible Packaging - Turtle Pak TM In March 2008, we entered into an agreement with Emerging Technologies Trust whereby our majority-owned subsidiary, Quest Packaging Solutions Corporation, acquired the exclusive license to make, use, sell, offer for sale or sublicense the intellectual property of Emerging Technologies Trust (the “Turtle Pak™ Portfolio”). The Turtle Pak portfolio relates to a cost effective, high-protection packaging system recommended for fragile items weighing less than ten pounds. The intellectual property consists of two U.S. patents, U.S. Patent No. RE36,412 and U.S. Patent No.6,490,844, and the Turtle Pak TM trademark. Turtle Pak™ brand packaging is suited for such uses as electrical and electronic components, medical, dental, and diagnostic equipment, instrumentation products, and control components. Turtle Pak™ brand packaging materials are 100% curbside recyclable. 8 As the exclusive licensee and manager of the manufacture and sale of licensed product, we coordinate the manufacture and sale of licensed products to end users; we contract for the manufacture and assembly of the product components, and we coordinate order receipt, fulfillment and invoicing. Revenues from the TurtlePak TM product sales were approximately $0 and $25,000 for the years ended December 31, 2020 and 2019, respectively. Universal Financial Data System The invention describes a universal financial data system which allows its holder to use the device to access one or more accounts stored in the memory of the device as a cash payment substitute as well as to keep track of financial and transaction records and data, such as transaction receipts, in a highly portable package, such as a cellular device (the “Financial Data Portfolio”). The inventive universal data system is capable of supporting multiple accounts of various types, including but not limited to credit card accounts, checking/debit accounts, and loyalty accounts. Our wholly-owned subsidiary, Wynn Technologies Inc., acquired US Patent No. 5,859,419, from the owner, Sol Wynn. In January 2001, we filed a reissue application for the patent, and the United States Patent and Trademark Office issued patent RE38,137. This reissued patent, which contains 35 separate claims, replaces the original patent, which had seven claims. In February 2011, we entered into a new agreement with Sol Li (formerly Sol Wynn), pursuant to which we issued to Mr. Li a 35% interest in Wynn Technologies and warrants to purchase up to 5,000,000 shares of our common stock at an exercise price of $0.001 per share. These warrants expired unexercised. We also agreed that Mr. Li would receive 40% of the net licensing revenues generated by Wynn Technologies with respect to this patent, which is the only patent owned by Wynn Technologies. On December 17, 2018, Wynn Technologies, Inc. granted an exclusive license to the Financial Data Portfolio, including the right to enforce, to our wholly owned subsidiary, Quest NetTech. Under the agreement, Quest NetTech receives 100% of the net proceeds, as defined by the agreement. On April 11, 2019 Quest NetTech Corporation merged with Wynn Technologies, Inc. with Quest NetTech Corporation being the surviving entity with Mr. Li having a 35% interest. On April 12, 2019, Quest NetTech brought a patent infringement suit in the U.S. District for the Eastern District of Texas against Apple, Inc. The case was dismissed in May 2020. Our revenue for the year ended December 31, 2020 includes revenue from the Financial Data Portfolio. Rich Media The rich media portfolio is directed to methods, systems, and processes that permit typical Internet users to design rich-media production content ( i.e. , rich-media applications), such as websites. The portfolio consists of U.S. Patent No. 7,000,180, “Methods, Systems, and Processes for the Design and Creation of Rich Media Applications via the Internet” and all related patents, patent applications, corresponding foreign patents and foreign patent applications and foreign counterparts, and all continuations, continuations-in-part, divisions, extensions, renewals, reissues and re-examinations relating to all inventions thereof (the “Rich Media Portfolio”). In July 2008, we entered into a consulting and licensing program management agreement with Balthaser Online, Inc., the patent owner, pursuant to which we performed services related to the establishment and management of a licensing program to evaluate and analyze the relevant market and to obtain licenses for the Rich Media Portfolio in exchange for management fees as well as an irrevocable entitlement to a distribution of 15% of all proceeds generated by the Rich Media Portfolio for the remaining life of the portfolio regardless of whether those proceeds are derived from litigation, settlement, licensing or otherwise. Our 15% distribution right is subject to reduction to 7.5% in the event that we refuse or are unable to perform the services detailed in the agreement. Through December 31, 2020, we did not generate any revenue from the rich media patents. Anchor Structure Portfolio This portfolio, which we acquired from Intellectual Ventures in October 2015 and transferred to a newly formed subsidiary, Mariner IC Inc., consists of two United States patents which relate to technology for incorporating metal structures in the corners and edges of semiconductor dies to prevent cracking from stresses. In March 2016, we entered into a funding agreement whereby a third party agreed to provide funds to us to enable us to implement a structured licensing program, including litigation if necessary, for the Anchor Structure Portfolio and engaged counsel on a partial contingency basis in connection with a proposed patent infringement action relating to the Anchor Structure Portfolio. Under the funding agreement, the third party receives an interest in the proceeds from the program, and we have no other obligation to the third party. 9 In March 2018, Mariner IC brought patent infringement suits in the United States District Court for the Eastern District of Texas against Acer Inc., Schneider Electric, Sharp Corporation, AsusTek Computer Inc., and Bose Corporation. In April 2018, the actions against Acer Inc., Schneider Electric and Bose Corporation were dismissed. In April 2018, Mariner IC brought patent infringement actions in the United States District Court for the Eastern District of Texas against TiVo Corporation and Huawei Device Co., Ltd et.al. In August 2018, the action against Huawei Device Co., Ltd et. al. was voluntarily dismissed. In September 2018, Mariner IC brought a patent infringement action in the United States District Court for the Eastern District of Texas against Huawei Device Co., Ltd et. al. All suits were settled and dismissed in 2019 and our revenue for the year ended December 31, 2019 includes revenue from these settlements. We did not generate license fees from the Anchor Structure Portfolio in 2020. Power Management/Bus Control Portfolio This portfolio, which is the second portfolio which we acquired from Intellectual Ventures and transferred to a newly-formed subsidiary, Semcon IP Inc., consists of four United States patents that cover fundamental technology for adjusting the processor clock and voltage to save power based on the operating characteristics of the processor and one United States patent that relates to coordinating direct bus communications between subsystems in an assigned channel. In March 2016, we entered into a funding agreement whereby a third party agreed to provide funds to us to enable us to implement a structured licensing program, including litigation if necessary, for the Power Management/Bus Control Portfolio and engaged counsel on a partial contingency basis in connection with a proposed patent infringement action relating to the Power Management/Bus Control. Under the funding agreement, the third party receives an interest in the proceeds from the program, and we have no other obligation to the third party. Pursuant to the terms of the funding agreement and the partial contingency agreement with counsel, we do not have any liability or obligations with respect to the costs associated with prosecuting the actions, and we do not receive any payments for any assistance which we may provide in connection with the litigation. Both the funding source and counsel will participate in any recovery in these lawsuits. Following the execution of the funding agreement and partial contingency agreement with counsel, in April 2016, Semcon IP Inc. brought patent infringement suits in the United States District Court for the Eastern District of Texas against Huawei Technologies, MediaTek Inc., STMicroelectronics Inc., Texas Instruments Incorporated and ZTE Corporation. As of December 31, 2018, these actions had been settled and dismissed. In May 2018, Semcon brought patent infringement actions in the United States District Court for the Eastern District of Texas against Amazon.com, Inc., AsusTeK Computer Inc., TCT Mobile International Limited et. al., Kyocera Corporation, LVMH Moet Hennessy Louis Vuitton, SE, Shenzhen OnePlus Science & Technology Co., Ltd., and Michael Kors Holdings Ltd. The Michael Kors, Kyocera and Amazon actions were settled in 2019, and our revenue for the year ended December 31, 2019 includes revenue from these settlements. The AsusTeK Computer Inc., TCT Mobile International Limited et. al., LVMH Moet Hennessy Louis Vuitton, SE, and Shenzhen OnePlus Science & Technology Co., Ltd., actions were settled in 2020 and our revenue for the year ended December 31, 2020 includes revenue from these settlements. Diode on Chip Portfolio This portfolio, which is the third portfolio which we acquired from Intellectual Ventures and transferred to a newly-formed subsidiary, IC Kinetics Inc., consists of three United States patents and one pending continuation application which cover technology relating to on-chip temperature measurement for semiconductors. As of December 31, 2020, we did not generate any revenue from this portfolio. CXT Portfolio This portfolio consists of thirty United States patents and three pending continuation applications which cover technology relating to systems and methods of operating an accessible information database which provides for inventory evaluation, filtering according to preferences, alternative product recommendations, and access to a database of consumer feedback/evaluation. 10 In April 2018 CXT brought patent infringement suits in the United States District Court for the Eastern District of Texas against Academy Ltd., The Container Store Group, Inc. and Pier 1 Imports, Inc. In May 2018 CXT brought patent infringement suits in the United States District Court for the Eastern District of Texas against Conn’s, Inc., Fossil Group, Inc., JC Penney Company, Inc., Stage Stores, Inc. and Tailored Brands, Inc. In May 2019, CXT brought patent infringement actions in the United States District Court for the Eastern District of Texas against Harbor Freight Tools USA, Inc., Hallmark.com, LLC, Retail Concepts, Inc. and CC Filson Co. In August 2019, CXT brought patent infringement suits in the United States District Court for the Eastern District of Texas against Neiman Marcus Group Ltd., General Nutrition Corporation and Steve Madden, Ltd. In March 2021 CXT brought patent infringement suits in the United States District Court for the Eastern District of Texas against Advanced Auto Parts, Inc., Costco Wholesale Corporation, The Sherwin-Williams Company, V.F. Corporation and IKEA North America Services, LLC. The actions against The Container Store, Pier 1 Imports and Stage Stores were settled in 2019 and revenue for the year ended December 31, 2019 included revenue from these settlements. The actions against Conn’s, Inc., Academy Ltd., Fossil Group, Inc., JC Penney Company, Inc., Tailored Brands, Inc., Harbor Freight Tools USA, Inc., Hallmark, CC Filson, General Nutrition, Steve Madden, Ltd. and Neiman Marcus Group Ltd. were resolved in 2020 and revenue for the year ended December 31, 2020 includes revenue from any related settlements. CMOS Portfolio This portfolio consists of eleven United States patents and sixteen foreign patents which cover technology relating to digital image sensor technology systems and methods which PIS acquired on January 26, 2018. In April 2018 PIS brought patent infringement actions in the United States District Court for the District of Delaware against Lenovo Group Ltd., AsusTek Computer Inc., Lorex Technology Inc., and NETGEAR, Inc. As of December 31, 2019, all actions had been settled and revenue for the year ended December 31, 2019 incudes revenue from these settlements. We did not generate revenue from the CMOS Portfolio in 2020. M-RED Portfolio This portfolio consists of sixty United States patents and eight foreign patents which cover technology relating to processor and power management which M-RED acquired on March 15, 2019. On April 29, 2019, M-Red brought patent infringement suits in the U.S. District for the Eastern District of Texas against MediaTek Inc. and Acer Inc. On July 16, 2019, M-Red Inc. brought patent infringement suits in the U.S. District for the Eastern District of Texas against Panasonic Corporation. As of December 31, 2020, all actions were settled and dismissed and revenue for the year ended December 31, 2020 incudes revenue from settlements. We did not generate revenue from the M-RED Portfolio in 2019. In March 2021, M-Red brought patent infringement suits in the U.S. District for the Eastern District of Texas against Nintendo CO., Ltd., Mitsubishi Electric Corporation and Xiaomi Corporation et. al. Audio Messaging Portfolio This portfolio consists of five issued United States patents and one pending application which generally relate to systems and methods for associating an audio clip with an object which our wholly-owned subsidiary, Audio Messaging Inc. (“AMI”), acquired in May of 2020. Peregrin Portfolio Acquired in February 2021, this portfolio consists of eight issued United States patents which generally relate to systems and methods for processing inbound and outbound communications, for example, determining the location of a caller and routing the inbound communication to an entity in the caller’s location. 11 Competition We encounter and expect to continue to encounter competition in the areas of intellectual property acquisitions for the sake of licensure from both private and publicly traded companies that engage in intellectual property monetization activities. Such competitors and potential competitors include companies seeking to acquire the same intellectual property assets and intellectual property rights that we may seek to acquire. Entities such as Acacia Research Corporation, Document Security Systems, Inc., Intellectual Ventures, Quarterhill Inc., Conversant Intellectual Property Management Inc., VirnetX Holding Corporation, Network-1 Security Solutions, Interdigital, Inc., IPValue Management Inc., Pendrell Corporation , Inventergy Global, Inc., Netlist Inc., Parkervision Inc., , Walker Innovation, Inc., Daedalus Group LLC and others derive all or a substantial portion of their revenue from intellectual property monetization activities, and we expect more entities to enter the market. Most of our competitors have longer operating histories and significantly greater financial resources and personnel than we have. We also compete with venture capital firms, strategic corporate buyers and various industry leaders for intellectual property and technology acquisitions and licensing opportunities. Many of these competitors have more financial and human resources than our company. In seeking to obtain intellectual property assets or intellectual property rights, we seek to both demonstrate our understanding of the intellectual property that we are seeking to acquire or license and our ability to monetize their intellectual property rights. Our weak cash position and history of losses, together with our low stock price, may impair our ability to negotiate successfully with the intellectual property owners. Other companies may develop competing technologies that offer better or less expensive alternatives to intellectual property rights that we may acquire and/or out-license. Many potential competitors may have significantly greater resources than we do. The development of technological advances or entirely different approaches could render certain of the technologies owned or controlled by our operating subsidiaries obsolete and/or uneconomical. Intellectual Property Rights We have twelve intellectual property portfolios: financial data, mobile data, Turtle Pak, anchor structure, power management/bus control, diode on chip, rich media, CXT, CMOS, M-RED, Audio Messaging and Peregrin. The following table sets forth information concerning our patents and other intellectual property. Each patent or other intellectual property right listed in the table below that has been granted is publicly accessible on the Internet website of the U.S. Patent and Trademark Office at www.uspto.gov. In the table below, the anchor structure portfolio is referred to as Mariner, the power management/bus control portfolio is referred to as Semcom, the diode on chip portfolio is referred to as IC and the Audio Messaging is referred to as AMI. Segment Type Number Title File Date Issue / Publication Date Expiration Financial Data US Patent RE38,137 Programmable multiple company credit card system 1/11/2001 6/10/2003 9/28/2015 Mobile Data US Patent 7,194,468 Apparatus and method for supplying information 4/13/2000 3/20/2007 4/13/2020 Mobile Data US Patent 9,288,605 Apparatus and method for supplying information 11/12/2009 3/15/2016 4/13/2020 Mobile Data US Patent 9,913,068 Apparatus and method for supplying information 3/15/2013 3/6/2018 7/20/2021 Mobile Data US Application 15/877,820 Apparatus and method for supplying information 1/23/2018 5/31/2018 N/A Turtle Pak US Patent 6,490,844 Film wrap packaging apparatus and method 6/21/2001 12/10/2002 7/10/2021 Turtle Pak US Trademark 74709827 Turtle pak - design plus words, letters, and/or numbers 8/1/1995 6/4/1996 N/A Mariner US Patent 5,650,666 Method and apparatus for preventing cracks in semiconductor die 11/22/1995 7/22/1997 11/22/2015 Mariner US Patent 5,846,874 Method and apparatus for preventing cracks in semiconductor die 2/28/1997 12/8/1998 11/22/2015 Semcon US Patent 7,100,061 Adaptive power control 1/18/2000 8/29/2006 1/18/2020 12 Segment Type Number Title File Date Issue / Publication Date Expiration Semcon US Patent 7,596,708 Adaptive power control 4/25/2006 9/29/2009 1/18/2020 Semcon US Patent 8,566,627 Adaptive power control 7/14/2009 10/22/2013 1/18/2020 Semcon US Patent 8,806,247 Adaptive power control 12/21/2012 8/12/2014 1/18/2020 Semcon PCT Application PCT/US2001/001684 Adaptive power control 1/16/2001 7/26/2001 N/A Semcon Reexam Certificate 7,100,061C1 Adaptive power control 6/13/2007 8/4/2009 N/A Semcon US Patent 5,978,876 System and method for controlling communications between subsystems 4/14/1997 11/2/1999 4/14/2017 IC US Patent 7,118,273 System for on-chip temperature measurement in integrated circuits 4/10/2003 10/10/2006 4/10/2023 IC US Patent 7,108,420 System for on-chip temperature measurement in integrated circuits 10/7/2004 9/19/2006 4/10/2023 IC US Patent 9,222,843 System for on-chip temperature measurement in integrated circuits 9/23/2011 12/29/2015 4/10/2023 IC US Application 16/537,200 System for on-chip temperature measurement in integrated circuits 8/9/2019 11/28/2019 N/A Rich Media Patent Proceeds Interest 7,000,180 Methods, systems, and processes for the design and creation of rich media applications via the internet 02/09/2001 02/14/2006 10/16/2023 CXT US Patent 7,103,568 Online product exchange system 2/23/2004 9/5/2006 8/8/2015 CXT US Patent 7,933,806 Online product exchange system with price-sorted matching products 9/11/2006 4/26/2011 8/8/2015 CXT US Patent 8,024,226 Product exchange system 11/6/2006 4/26/2011 8/8/2015 CXT US Patent 5,983,220 Suppporting intuitive decision in complex multi-attributive domains using fuzzy, hierarchial expert models 11/14/1996 11/9/1999 11/14/2016 CXT US Patent 6,463,431 Database evaluation system suppporting intuitive decision in complex multi-attributive domains using fuzzy, hierarchial expert models 6/25/1999 10/8/2002 11/14/2016 CXT US Patent 5,940,807 Automated and independently accessible inventory information exchange system 5/28/1997 8/17/1999 5/23/17 CXT US Patent 6,081,789 Automated and independently accessible inventory information exchange system 1/8/1999 6/27/2000 5/23/17 CXT US Patent 6,601,043 Automated and independently accessible inventory information exchange system 6/26/2000 7/29/2003 5/23/17 CXT US Patent 6,011,537 System for delivering and simultaneously displaying primary and secondary information, and for displaying only the secondary information during interstitial space 1/27/1998 1/4/2000 1/27/2018 13 Segment Type Number Title File Date Issue / Publication Date Expiration CXT US Patent 7,133,835 Online exchange market system with a buyer auction and a seller auction 10/30/1995 11/7/2006 5/27/2018 CXT US Patent 6,412,012 System, method, and article of manufacture for making a compatibility aware recommendation to a user 12/23/1998 6/25/2002 12/23/2018 CXT US Patent 6,493,703 System and method for implementing intelligent online community message board 5/11/1999 12/10/2002 5/11/2019 CXT US Patent 6,571,234 System and method for managing online message board 5/11/1999 5/27/2003 5/11/2019 CXT US Patent 6,721,748 Online content provider system and method 5/13/2002 4/13/2004 5/11/2019 CXT US Patent 6,778,982 Online content provider system and method 2/20/2003 8/17/2004 5/11/2019 CXT US Patent 6,804,675 Online content provider system and method 3/17/2003 10/12/2004 5/11/2019 CXT US Patent 7,159,011 System and method for managing an online messaging board 8/16/2004 1/2/2007 5/11/2019 CXT US Patent 7,162,471 Content query system and method 8/16/2004 1/9/2007 5/11/2019 CXT US Patent RE43,835 Online content tabulating system and method 2/22/2007 11/27/2012 5/11/2019 CXT US Patent RE45,661 Online content tabulating system and method 11/20/2012 9/1/2015 5/11/2019 CXT US Patent 7,065,494 Electronic customer service and rating system and method 6/25/1999 6/20/2006 6/25/2019 CXT US Patent 7,340,411 System and method for generating, capturing, and managing customer lead information over a computer network 10/20/2003 3/4/2008 8/2/2021 CXT US Patent 8,260,806 Storage, management and distribution of consumer information 6/29/2007 9/4/2012 10/17/2021 CXT US Patent 7,487,130 Consumer-controlled limited and constrained access to a centrally stored information account 1/6/2006 2/3/2009 11/7/2021 CXT US Patent 7,016,877 Consumer-controlled limited and constrained access to a centrally stored information account 11/7/2001 3/21/2006 2/22/2023 CXT US Patent 7,257,581 Storage, management and distribution of consumer information 8/6/2001 8/14/2007 6/2/2023 CXT US Patent 7,467,141 Branding and revenue sharing models for facilitating storage, management and distribution of consumer information 8/20/2001 12/16/2008 8/11/2023 CXT US Patent 7,016,875 Single sign-on for access to a central data repository 10/9/2001 3/21/2006 8/19/2023 CXT US Patent 8,566,248 Initiation of an information transaction over a network via a wireless device 11/20/2001 10/22/2013 6/17/2026 14 Segment Type Number Title File Date Issue / Publication Date Expiration CXT US Patent 9,928,508 Single sign-on for access to a central data repository 1/6/2006 3/27/18 5/22/2027 CMOS US Patent 6,624,404 CMOS image sensor having enhanced photosensitivity and method for fabricating the same 11/26/2001 9/23/2003 12/30/2019 CMOS Korean Patent KR10-0303774 Method for fabricating cmos image sensor 12/30/1998 7/13/2001 12/30/2018 CMOS US Patent 6,348,361 CMOS image sensor having enhanced photosensitivity and method for fabricating the same 12/30/1999 2/19/2002 12/30/2019 CMOS US Patent 6,184,055 CMOS image sensor with equivalent potential diode and method for fabricating the same 2/26/1999 2/6/2001 2/26/2019 CMOS Chinese Patent CNZL99105588.8 Complementary mos image sensor and making method thereof 2/28/1999 10/13/2004 2/27/2019 CMOS Chinese Patent CNZL200310104488.4 Image sensing device and its manufacturing method 2/28/1999 3/26/2008 2/27/2019 CMOS German Patent DE19908457.2 Photodiode used in cmos image sensing device 2/26/1999 11/28/2013 2/26/2019 CMOS French Patent FR2775541 Photodiode for use in a cmos image sensor and method for fabricating the same 3/1/1999 8/2/2002 3/1/2019 CMOS French Patent FR2779870 Photodiodes for image sensors 3/1/1999 5/13/2005 3/1/2019 CMOS United Kingdom Patent GB2334817 Photodiode for use in a cmos image sensor and method for fabricating the same 3/1/1999 7/1/2003 3/1/2019 CMOS United Kingdom Patent GB2383900 CMOS image sensor and method for fabricating the same 3/1/1999 8/20/2003 3/1/2019 CMOS Japanese Patent JP4390896 CMOS image sensor and manufacture thereof 3/1/1999 10/16/2009 3/1/2019 CMOS Korean Patent KR10-0278285 CMOS image sensor and manufacturing method thereof 2/24/1999 10/18/2000 2/24/2019 CMOS Taiwanese Patent TWI141677 CMOS image sensor with equivalent potential diode 3/22/1999 10/1/2001 3/21/2019 CMOS US Patent 6,180,969 CMOS image sensor with equivalent potential diode 2/26/1999 1/30/2001 2/26/2019 CMOS US Patent 6,563,187 CMOS image sensor integrated together with memory device 6/29/1999 5/13/2003 6/29/2019 CMOS US Patent 6,949,388 CMOS image sensor integrated together with memory device 5/12/2003 9/27/2005 11/9/2019 CMOS Korean Patent KR10-0464955 CMOS image sensor integrated with memory device 6/29/1998 12/24/2004 6/29/2018 CMOS US Patent 6,627,929 Solid state ccd image sensor having a light shielding layer 6/13/2001 9/30/2003 10/13/2018 15 Segment Type Number Title File Date Issue / Publication Date Expiration CMOS Korean Patent KR10-0263473 Solid state image device and fabrication method thereof 2/16/1998 5/17/2000 2/16/2018 CMOS US Patent 6,300,157 Solid state image sensor and method for fabricating the same 10/13/1998 10/9/2001 10/13/2018 CMOS US Patent 7,113,203 Method and system for single-chip camera 5/7/2002 9/26/2006 5/13/2022 CMOS US Patent 6,706,550 Photodiode having a plurality of PN junctions and image sensor having the same 10/16/2002 3/16/2004 2/26/2019 CMOS Japanese Patent JP4139931 Pinned photodiode of image sensor, and its manufacture 6/28/1999 6/20/2008 6/28/2019 CMOS Korean Patent KR10-0275123 Pinned photodiode of image sensor and manufacturing method thereof 6/29/1998 9/19/2000 6/29/2018 CMOS Taiwanese Patent TWI133257 Photodiode having a plurality of PN junctions and image sensor having the same 6/30/1999 5/28/2001 6/29/2019 CMOS US Patent 6,489,643 Photodiode having a plurality of PN junctions and image sensor having the same 6/28/1999 12/3/2002 6/28/2019 M-RED US Patent 6,853,259 Ring oscillator dynamic adjustments for auto calibration 8/15/2001 2/8/2005 8/15/2021 M-RED US Patent 7,068,557 Ring oscillator dynamic adjustments for auto calibration 1/25/2005 6/27/2006 8/15/2021 M-RED US Patent 7,209,401 Ring oscillator dynamic adjustments for auto calibration 5/2/2006 4/24/2007 8/15/2021 M-RED US Patent 6,221,682 Method and apparatus for evaluating a known good die using both wire bond and flip-chip interconnects 5/28/1999 4/24/2001 5/28/2019 M-RED US Patent RE43,607 Method and apparatus for evaluating a known good die using both wire bond and flip-chip interconnects 5/31/2007 8/28/2012 12/31/2019 M-RED US Patent 6,177,843 Oscillator circuit controlled by programmable logic 5/26/1999 1/23/2001 5/26/2019 M-RED US Patent 6,628,171 Method, architecture and circuit for controlling and/or operating an oscillator 1/23/2001 9/30/2003 5/26/2019 M-RED US Patent 6,831,690 Electrical sensing apparatus and method utilizing an array of transducer elements 12/7/1999 12/14/2004 12/7/2019 M-RED US Patent 7,511,754 Electrical sensing apparatus and method utilizing an array of transducer elements 10/26/2004 3/31/2009 2/7/2022 M-RED US Patent 6,498,399 Low dielectric-constant dielectric for etchstop in dual damascene backend of integrated circuits 9/8/1999 12/24/2002 9/8/2019 M-RED US Patent 6,744,311 Switching amplifier with voltage-multiplying output stage 4/23/2002 6/1/2004 4/23/2022 M-RED US Patent 6,646,465 Programmable Logic Device Including Bi-Directional Shift Register 2/7/2002 11/11/2003 2/7/2022 16 Segment Type Number Title File Date Issue / Publication Date Expiration M-RED US Patent 6,721,310 Multiport non-blocking high capacity atm and packet switch 11/2/2001 4/13/2004 11/2/2021 M-RED US Patent 6,456,183 Inductor for Integrated Circuit 2/24/2000 9/24/2002 2/24/2020 M-RED US Patent 6,838,970 Inductor for Integrated Circuit 7/26/2002 1/4/2005 9/30/2020 M-RED US Patent 6,459,135 Monolithic Integrated Circuit Incorporating An Inductive Component And Process For Fabricating Such An Integrated Circuit 3/15/2000 10/1/2002 3/15/2020 M-RED US Patent 6,388,322 Article comprising a mechanically compliant bump 1/17/2001 5/14/2002 1/17/2021 M-RED US Patent 6,458,411 Method of making a mechanically compliant bump 10/5/2001 10/1/2002 1/17/2021 M-RED US Patent 6,506,648 Method of fabricating a high power RF field effect transistor with reduced hot electron injection and resulting structure 9/2/1998 1/14/2003 6/27/2019 M-RED US Patent 6,735,422 Calibrated DC compensation system for a wireless communication device configured in a zero intermediate frequency architecture 10/2/2000 5/11/2004 10/2/2020 M-RED US Patent 6,674,998 System and method for detecting and correcting phase error between differential signals 12/21/2000 1/6/2004 10/2/2020 M-RED US Patent 6,891,440 Quadrature oscillator with phase error correction 12/21/2000 1/6/2004 8/8/2022 M-RED US Patent 6,763,228 Precision automatic gain control circuit 12/21/2001 7/13/2004 10/3/2021 M-RED US Patent 6,748,200 Automatic gain control system and method for a ZIF architecture 4/4/2003 6/8/2004 10/2/2020 M-RED US Patent RE42,799 Packet acquisition and channel tracking for a wireless communication device configured in a zero intermediate frequency architecture 6/27/2008 10/4/2011 1/22/2023 M-RED US Patent 6,560,448 DC compensation system for a wireless communication device configured in a zero intermediate frequency architecture 10/2/2000 5/6/2003 8/29/2021 M-RED US Patent 6,448,910 Method and apparatus for convolution encoding and viterbi decoding of data that utilize a configurable processor to configure a plurality of re-configurable processing elements 3/26/2001 9/10/2002 3/26/2021 M-RED US Patent 7,127,588 Apparatus and method for an improved performance VLIW processor 12/5/2000 10/24/2006 3/17/2022 M-RED US Patent 6,757,752 Micro Controller Development System 1/14/2002 6/29/2004 1/14/2022 M-RED US Patent 6,509,646 Apparatus For Reducing An Electrical Noise Inside A Ball Grid Array Package 5/22/2000 1/21/2003 5/22/2020 M-RED US Patent 6,365,970 Bond Pad Structure And Its Method Of Fabricating 12/10/1999 4/2/2002 12/10/2019 17 Segment Type Number Title File Date Issue / Publication Date Expiration M-RED US Patent 6,912,601 Method of programming PLDs using a wireless link 6/28/2000 6/28/2005 5/11/2022 M-RED US Patent 6,496,054 Control signal generator for an overvoltage-tolerant interface circuit on a low voltage process 5/9/2001 12/17/2002 5/9/2021 M-RED US Patent 6,194,279 Fabrication method for gate spacer 6/28/1999 2/27/2001 6/28/2019 M-RED US Patent 6,281,554 Electrostatic discharge protection circuit 3/20/2000 8/28/2001 3/20/2020 M-RED US Patent 6,657,263 MOS transistors having dual gates and self-aligned interconnect contact windows 6/28/2001 12/2/2003 3/24/2020 M-RED US Patent 6,461,908 Method of manufacturing a semiconductor device 4/10/2001 10/8/2002 4/10/2021 M-RED US Patent 6,737,995 Clock and data recovery with a feedback loop to adjust the slice level of an input sampling circuit 4/10/2002 5/18/2004 4/18/2022 M-RED US Patent 6,747,522 Digitally controlled crystal oscillator with integrated coarse and fine control 5/3/2002 6/8/2004 5/17/2022 M-RED US Patent 6,275,116 Method, circuit and/or architecture to improve the frequency range of a voltage controlled oscillator 6/8/1999 8/14/2001 6/8/2019 M-RED US Patent 6,608,763 Stacking system and method 9/15/2000 8/19/2003 5/24/2021 M-RED US Patent 6,404,043 Panel stacking of BGA devices to form three-dimensional modules 6/21/2000 6/11/2002 6/21/2020 M-RED US Patent 6,472,735 Three-dimensional memory stacking using anisotropic epoxy interconnections 4/5/2001 10/29/2002 6/27/2020 M-RED US Patent 6,544,815 Panel stacking of BGA devices to form three-dimensional modules 8/6/2001 4/8/2003 6/21/2020 M-RED US Patent 6,566,746 Panel stacking of BGA devices to form three-dimensional modules 12/14/2001 5/20/2003 6/21/2020 M-RED US Patent 6,878,571 Panel stacking of BGA devices to form three-dimensional modules 12/11/2002 4/12/2005 4/30/2021 M-RED US Patent 6,627,984 Chip stack with differing chip package types 7/24/2001 9/30/2003 7/24/2021 M-RED US Patent 6,908,792 Chip stack with differing chip package types 10/3/2002 6/21/2005 2/21/2022 M-RED US Patent 6,205,524 Multimedia arbiter and method using fixed round-robin slots for real-time agents and a timed priority slot for non-real-time agents 9/16/1998 3/20/2001 9/16/2018 M-RED US Patent 6,157,978 Multimedia round-robin arbitration with phantom slots for super-priority real-time agent 1/6/1999 12/5/2000 9/16/2018 M-RED US Patent 6,117,750 Process for obtaining a layer of single-crystal germanium or silicon on a substrate of single-crystal silicon or germanium, respectively 12/21/1998 9/12/2000 12/21/2018 18 Segment Type Number Title File Date Issue / Publication Date Expiration M-RED US Patent 6,429,098 Process for obtaining a layer of single-crystal germanium or silicon on a substrate of single-crystal silicon or germanium, respectively, and multilayer products obtained 9/11/2000 8/6/2002 12/21/2018 M-RED US Patent 6,134,176 Disabling a defective element in an integrated circuit device having redundant elements 11/24/1998 10/17/2000 11/24/2018 M-RED US Patent 6,366,998 Reconfigurable functional units for implementing a hybrid vliw-simd programming model 10/14/1998 4/2/2002 10/14/2018 M-RED US Patent 6,401,217 Method For Error Recognition In A Processor System 7/22/1998 6/4/2002 7/22/2018 M-RED US Patent 6,169,028 Method for fabricating metal interconnected structure 1/26/1999 1/2/2001 1/26/2019 M-RED US Patent 6,190,981 Method for fabricating metal oxide semiconductor 2/3/1999 2/20/2001 2/3/2019 M-RED US Patent 6,130,823 Stackable ball grid array module and method 2/1/1999 10/10/2000 2/1/2019 M-RED US Patent 6,208,004 Semiconductor device with high-temperature-stable gate electrode for sub-micron applications and fabrication thereof 8/19/1998 3/27/2001 8/19/2018 M-RED US Patent 6,479,362 Semiconductor device with high-temperature-stable gate electrode for sub-micron applications and fabrication thereof 2/14/2001 11/12/2002 8/19/2018 M-RED Korean Patent KR10-0796825 Method of manufacturing a semiconductor device 4/3/2001 6/24/2009 4/3/2021 M-RED British Patent GB0930382 Process for obtaining a layer of single crystal germanium or silicon on single crystal silicon or germanium substrate respectively, and multilayer products thus obtained 12/9/1998 8/21/2002 12/9/2018 M-RED Italian Patent IT0930382 Process for obtaining a layer of single crystal germanium or silicon on single crystal silicon or germanium substrate respectively, and multilayer products thus obtained 12/9/1998 8/21/2002 12/9/2018 M-RED Korean Patent KR10-0633947 Method of fabricating a high power rf field effect transistor with reduced hot electron injection and resulting structure 8/17/1999 10/4/2006 8/17/2019 M-RED French Patent FR2791470 Monolithic Integrated Circuit Comprising An Inductor And A Method Of Fabricating The Same 3/23/1999 6/1/2001 3/23/2019 M-RED French Patent FR2790328 Inductive Component, Integrated Transformer, In Particular For A Radio Frequency Circuit, And Associated Integrated Circuit With Such Inductive Component Or Integrated Transformer 2/26/1999 4/20/2001 2/26/2019 19 Segment Type Number Title File Date Issue / Publication Date Expiration* M-RED Japanese Patent JP4846167 Method of manufacturing a semiconductor device 4/3/2001 10/21/2011 4/3/2021 M-RED Japanese Patent JP5051939 Electric sensor device, method for generating electric signal from array of converter element 12/5/2000 8/3/2012 12/5/2020 AMI US Patent 8,280,014 System and method for associating audio clips with objects 11/29/2006 10/02/2012 11/08/2030 AMI US Patent 9,088,667 System and method for associating audio clips with objects 09/06/2012 07/21/2015 06/30/2027 AMI US Patent 10,033,876 System and method for associating audio clips with objects 06/02/2015 07/24/2018 11/29/2026 AMI US Patent 10,348,909 System and method for associating audio clips with objects 06/18/2018 07/09/2019 11/29/2026 AMI US Patent 10,938,995 System and method for associating audio clips with objects 05/23/2019 03/02/2021 11/29/2026 AMI US Patent Application 17/162,354 System and method for associating audio clips with objects 01/29/2021 n/a n/a Peregrin US Patent 7,761,371 Analyzing a credit counseling agency 07/19/2007 07/20/2010 10/19/2020 Peregrin US Patent 7,827,097 System for transferring an inbound communication to one of a plurality of credit-counseling agencies 10/19/2000 11/02/2010 10/23/2024 Peregrin US Patent 7,860,785 Communication system to automatically refer an inbound communication 07/19/2007 12/28/2010 10/19/2020 Peregrin US Patent 8,209,257 System for transferring an inbound communication to one of a plurality of credit-counseling agencies 11/01/2010 06/26/2012 11/27/2020 Peregrin US Patent 8,725,630 Method of processing a phone call 06/25/2012 05/13/2014 10/19/2020 Peregrin US Patent 9,948,771 Using an interactive voice response apparatus 05/12/2014 04/17/2018 12/23/2022 Peregrin US Patent 10,230,840 Method of using an apparatus processing phone call routing 05/12/2014 03/12/2019 01/05/2022 Peregrin US Patent 10,735,582 Apparatus processing phone calls 03/11/2019 08/04/2020 10/19/2020 * Subject to any terminal disclaimer or patent term extension 20 Research and Development Research and development expense are incurred by us in connection with the evaluation of patents. We did not incur research and development expenses during 2020 or 2019. Consulting Contracts On February 22, 2021, we entered into advisory service agreement with three consultants – William Gates, Crystal Nicolson and Jeff Toler pursuant to which they will provide services to us in connection with the development of our business. The agreements have a term of ten years and may be terminated by us for cause or upon the death or disability of the consultants. Pursuant to the agreements with Mr. Gates and Ms. Nicolson, the compensation payable to each of them consists of a restricted stock grant of 10,000,000 shares of Common Stock which immediately vests in full and a ten-year option to purchase a total of 30,000,000 shares of Common Stock, which become exercisable cumulatively as follows: ● 10,000,000 shares at an exercise price of $0.01 per share becoming exercisable upon the commencement of trading of our common stock on the OTCQB. ● 10,000,000 shares at an exercise price of $0.03 per share, becoming exercisable on the first day on which we file with the SEC a Form 10-K or Form 10-Q which stockholders’ equity of at least $5,000,000, and ● 10,000,000 shares at an exercise price of $0.05/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. Pursuant to the agreement with Mr. Toler, the compensation payable to him consists of a restricted stock grant of 10,000,000 shares of Common Stock which immediately vests in full and a ten-year option to purchase 30,000,000 shares of Common Stock, which becomes exercisable cumulatively as follows: ● 10,000,000 shares at an exercise price of $0.01 per share upon the first anniversary of the agreement; ● 10,000,000 shares at an exercise price of $0.03 per share upon the second anniversary of the agreement; and ● 10,000,000 shares at an exercise price of $0.05 per share upon the third anniversary of the agreement. Employees As of March 27, 2021, we have no employees other than our two officers, only one of whom, Mr. Jon Scahill, our chief executive officer and president, is full time. Our employees are not represented by a labor union, and we consider our employee relations to be good. 21