What changed in this filing

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Item 2. Management’s Discussion and Analysis

2022-08-15 compared with 2022-05-16 · 447 added, 378 removed, 88 unchanged (90% of the section changed)

Management’s Discussion and Analysis of Financial

Condition and Results of Operations

The following discussion and analysis of financial condition and

results of operations should be read in conjunction with our consolidated unaudited financial statements and related notes included elsewhere

in this report.

Management’s Discussion and Analysis

of Financial Condition and Results of Operations

The following discussion and analysis of financial

condition and results of operations should be read in conjunction with our consolidated unaudited financial statements and related notes

included elsewhere in this report.

This discussion contains forward-looking statements that involve risks, uncertainties and assumptions.

See “Forward-Looking

Statements.” Our actual results could differ materially from those anticipated in the forward-looking statements.

Our principal operations include the development, acquisition, licensing

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

currently own, control or manage eighteen intellectual property portfolios, which principally consist of patent rights.

As part of our

intellectual property asset management activities and in the ordinary course of our business, it has been necessary for either us or the

intellectual property owner who we represent to initiate, and it is likely to continue to be necessary to initiate patent infringement

lawsuits and engage in patent infringement litigation.

We anticipate that our primary source of revenue will come from the grant of licenses

to use our intellectual property, including licenses granted as part of the settlement of patent infringement lawsuits.

Our business, like all businesses at the present time, are affected

by the COVID-19 pandemic and the steps taken by states to seek to reduce the spread of the virus.

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

A number of defendants and potential defendants have filed to take advantage of the Bankruptcy Act or have announced that they

may consider such action.

If any defendant filed for protection under the Bankruptcy Act, the action would be stayed and we may not be

able to obtain a judgment or recover on any judgment.

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

In addition, these factors may affect a law firms’ ability and willingness to provide us with legal services on a contingent

or partial contingent.

The possibility that a defendant may seek protection under the Bankruptcy Act may make it less likely that a financing

source would finance the litigation or that a law firm would work on a contingency or modified contingency basis.

Further, as the population

of the United States becomes vaccinated and restrictions that had been imposed to address the pandemic are lifted, we cannot assure you

that our revenue will increase as a result of the reduction of such restrictions, including courts being open for longer hours and for

in person hearings.

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.

We seek to generate revenue from patent licensing fees relating to

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

to enforcement of our intellectual property rights.

All of the revenue for the three months ended March 31, 2022 were from patent licensing

fees, of which approximately 100% was paid to the patent seller, funding sources and legal counsel pursuant to our agreements with patent

sellers, funding sources and legal counsel.

We did not generate revenue for the three months ended March 31, 2021.

Because of the nature of our business transactions to date, we recognize

revenues from licensing upon execution of a license agreement following settlement of litigation and not over the life of the patent.

See “Forward-Looking Statements.” Our actual results could differ materially from those anticipated in the forward-looking

Our principal operations include the development,

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

owned subsidiaries.

We currently own, control or manage eighteen intellectual property portfolios, which principally consist of patent

As part of our intellectual property asset management activities and in the ordinary course of our business, it has been necessary

for either us or the intellectual property owner who we represent to initiate, and it is likely to continue to be necessary to initiate

patent infringement lawsuits and engage in patent infringement litigation.

We anticipate that our primary source of revenue will come

from the grant of licenses to use our intellectual property, including licenses granted as part of the settlement of patent infringement

Our business, like all businesses at the present

time, are affected by the COVID-19 pandemic and the steps taken by states to seek to reduce the spread of the virus.

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.

A number of defendants and potential defendants have filed to take advantage of the Bankruptcy Act or have

announced that they may consider such action.

If any defendant filed for protection under the Bankruptcy Act, the action would be stayed

and we may not be able to obtain a judgment or recover on any judgment.

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.

The possibility that a defendant may seek protection under the Bankruptcy Act

may make it less likely that a financing source would finance the litigation or that a law firm would work on a contingency or modified

contingency basis.

Further, as the population of the United States becomes vaccinated and restrictions that had been imposed to address

the pandemic are lifted, we cannot assure you that our revenue will increase as a result of the reduction of such restrictions, including

courts being open for longer hours and for in person hearings.

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.

We seek to generate revenue from patent licensing

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

litigation relating to enforcement of our intellectual property rights.

All of the revenue for the three and six months ended June 30,

2022 were from patent licensing fees, of which approximately 100% was paid to the patent seller, funding sources and legal counsel pursuant

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

We did not generate revenue for the three and six months ended

June 30, 2021.

Because of the nature of our business transactions

to date, we recognize revenues from licensing upon execution of a license agreement following settlement of litigation and not over the

life of the patent.

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

Although we intend to seek to develop portfolios

of intellectual property rights that provide us for a continuing stream of revenue, to date we have not been successful in doing so, and

we do not anticipate that we will be able to generate any significant revenue from licenses that provide a continuing stream of revenue.

Thus, to the extent that we continue to generate cash from single payment licenses, our revenue can, and is likely to, vary significantly

from quarter to quarter and year to year.

Our gross profit from license fees reflects any royalties which we pay in connection with our

It is generally necessary to commence litigation in order to obtain

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

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 funding source.

Our agreements with the funding sources typically provide that the funding source pays the litigation

costs and that the funding source receives a percentage of the recovery, thus reducing our recovery in connection with any settlement

of the litigation.

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.

To the extent that we have agreements with counsel and/or litigation funding sources pursuant

to which payments made to them represent a portion of the gross recovery, and such payment is contingent upon a recovery, our revenue

from litigation reflects the gross recovery from litigation as licensing fees, and payments to counsel and/or litigation funding sources

are reflected as cost of revenue.

Because we were in default under our loans to Intelligent Partners

(as successor to United Wireless), with Intelligent Partners having the ability to declare a default on our notes in the principal amount

of $4,672,810, and with the possibility of our seeking protection under the Bankruptcy Act, we ceased our monetization activities, since

no counsel would represent us on a contingent basis and no potential funding source would provide us with funding in view of the default

and possible bankruptcy, and we devoted our efforts in negotiating the agreements with QFL and Intelligent Partners.

We resumed our monetization

activities in February 2021 after we entered into our agreements with QFL and Intelligent Partners.

However, the intellectual property

monetization cycle is lengthy and may ultimately be unsuccessful.

Accordingly, we did not generate revenues during the three months ended

March 31, 2021.

Although we intend to seek

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

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

stream of revenue.

Thus, to the extent that we continue to generate cash from single payment licenses, our revenue can, and is likely

to, vary significantly from quarter to quarter and year to year.

Our gross profit from license fees reflects any royalties which we pay

in connection with our license.

It is generally necessary to commence litigation

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

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

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 funding source.

Our agreements with the funding sources typically provide that the funding

source pays the litigation costs and that the funding source receives a percentage of the recovery, thus reducing our recovery in connection

with any settlement of the litigation.

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.

To the extent that we have agreements with counsel and/or litigation

funding sources pursuant to which payments made to them represent a portion of the gross recovery, and such payment is contingent upon

a recovery, our revenue from litigation reflects the gross recovery from litigation as licensing fees, and payments to counsel and/or

litigation funding sources are reflected as cost of revenue.

Because we were in default under our loans to

Intelligent Partners (as successor to United Wireless), with Intelligent Partners having the ability to declare a default on our notes

in the principal amount of $4,672,810, and with the possibility of our seeking protection under the Bankruptcy Act, we ceased our monetization

activities, since no counsel would represent us on a contingent basis and no potential funding source would provide us with funding in

view of the default and possible bankruptcy, and we devoted our efforts in negotiating the agreements with QFL and Intelligent Partners.

We resumed our monetization activities in February 2021 after we entered into our agreements with QFL and Intelligent Partners.

the intellectual property monetization cycle is lengthy and may ultimately be unsuccessful.

Accordingly, we did not generate revenues

during the three and six months ended June 30, 2021.

Agreements with QFL and Intelligent Partners

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

and a restructure agreement with Intelligent Partners.

Pursuant to the Purchase Agreement with QFL, QFL agreed to make available

to us a financing facility of:

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

of which $2,210,000 has been advanced as of March 31, 2022;

(b) up to $2,000,000 for operating expenses, of which the we have requested

and received $1,200,000 as of March 31, 2022;

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

to Intelligent Partners.

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

of those patents.

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

to Intelligent Partners.

Our obligations to QFL are secured by the proceeds from the patents acquired with their funding, the patents

and all general intangibles now or hereafter arising from or related to the foregoing and the proceeds and products of the foregoing.

We also granted QFL a ten-year warrant to purchase a total of up to 96,246,246 shares of our common stock, with an exercise price of $0.0054

per share which may be exercised through February 18, 2031on a cash or cashless basis, subject to certain limitations on exercisability.

On February 22, 2021, we entered into a funding

agreement with QFL and a restructure agreement with Intelligent Partners.

Pursuant to the Purchase Agreement with QFL, QFL

agreed to make available to us a financing facility of:

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

we intend to monetize, of which $2,210,000 has been advanced as of March 31, 2022;

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

the we have requested and received $1,200,000 as of March 31, 2022;

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

of our obligations to Intelligent Partners.

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

the monetization of those patents.

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

of our obligations to Intelligent Partners.

Our obligations to QFL are secured by the proceeds from the patents acquired with their funding,

the patents and all general intangibles now or hereafter arising from or related to the foregoing and the proceeds and products of the

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

of $0.54 per share which may be exercised through February 18, 2031 on a cash or cashless basis, subject to certain limitations on exercisability.

The warrant also contains certain minimum ownership percentage antidilution rights pursuant to which the aggregate number of shares of

16 unchanged sentences

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 agreement with QFL, we

entered into a restructure agreement with Intelligent Partners to eliminate any obligations we had with respect to the outstanding

Contemporaneously with the execution of the agreement

with QFL, we entered into a restructure agreement with Intelligent Partners to eliminate any obligations we had with respect to the outstanding

notes and the securities purchase agreement.

14 unchanged sentences

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

In August 2021, STX brought a patent infringement suit in the U.S.

On May 23, 2022, we received notice from OTC Markets Group, that, because

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

for Continued Eligibility under the OTC listing standards and, if this deficiency is not met by August 21, 2022, we will be removed from

the OTCQB marketplace, in which event our common stock will be traded on the OTC Pink market.

Our registration rights agreement with QFL

provides that, in the event of a failure to comply with certain covenants, which includes the failure of our common stock to be traded

on the OTCQB, in additional to any other remedies available to QFL, we are to pay to QFL an amount in cash equal to 2.0% of the aggregate

value of QFL’s Registrable Securities, as defined in the Registration Rights Agreement, whether or not included in such registration

statement, on each of the following dates:

(i) the initial day of a maintenance failure;

(ii) on the 30th day after the date of such a

failure and (iii) every 30th day thereafter (prorated for periods totaling less than thirty (30) days) until such failure is cured.

may not have the funds to make the payment pursuant to the registration rights agreement, and, if QFL seeks to enforce its rights to the

damages, we may seek protection under the Bankruptcy Act.

Further, even if QFL does not seek to enforce it right to damages, it may not

make advances to us until and unless our common stock meets the OTCQB trading requirements.

We cannot assure you that our common stock

will continue to be traded on the OTCQB or that if ceases to be traded on the OTCQB and is moved to the OTC Pink, that it will be relisted

on the OTCQB.

In August 2021, STX brought a patent infringement

suit in the U.S.

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

As of March 31, 2022, the

matters have been resolved and revenue for the three months ended March 31, 2022 includes revenue from the settlement.

As of June 30,

2022, the matters have been resolved and revenue for the six months ended June 30, 2022 includes revenue from the settlement.

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

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

Volt, SA, EHang Holdings Limited and Flyability SA.

In September 2021, M-RED Inc.

brought patent infringement suits in

brought patent infringement

suits in the U.S.

District for the Eastern District of Texas against Biostar Microtech International Corp.

and Giga-Byte Technology Co., Ltd.

of March 31, 2022, those matters have been resolved and revenue for the three months ended March 31, 2022 includes revenue from those

In November 2021, TLL brought patent infringement suits in the U.S.

and Giga-Byte Technology Co.,

As of June 30, 2022, those matters have been resolved and revenue for the six months ended June 30, 2022 includes revenue from

those settlements.

In November 2021, TLL brought patent infringement

suits in the U.S.

District for the Eastern District of Texas against Trend Micro Incorporated.

In March 2022, Trend Micro, Inc.

filed a complaint against

TLL in the U.S.

District for the Western District of Texas seeking declaratory judgement of non-infringement of the patents in suit.

February 2022, TLL brought patent infringement suits in the U.S.

District for the Eastern District of Texas against Checkpoint Software

Technologies Ltd.

a complaint against TLL in the U.S.

District for the Western District of Texas seeking declaratory judgement of non-infringement of the

patents in suit.

In February 2022, TLL brought patent infringement suits in the U.S.

District for the Eastern District of Texas against

Checkpoint Software Technologies Ltd.

and Palo Alto Networks, Inc.

In March 2022, TLL voluntarily dismissed, without prejudice, the action against Palo Alto

Networks, Inc.

In March 2022, TLL voluntarily dismissed, without prejudice, the action

against Palo Alto Networks, Inc.

In March 2022, Palo Alto Networks, Inc.

filed a complaint against TLL and the Company in the U.S.

District for the Southern

District of New York seeking declaratory judgement of non-infringement of the patents in suit.

In March 2022, LSC brought patent infringement suits in the U.S.

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

and Amazon.com, Inc.

On January 27, 2022, the Company acquired, via assignment from Intellectual

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

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

The Company requested and received a capital

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

The patents were assigned to our wholly owned subsidiaries

Tyche Licensing LLC and Deepwell IP LLC.

for the Southern District of New York seeking declaratory judgement of non-infringement of the patents in suit.

In May 2022, Trend Micro

filed a motion with the Panel on Multidistrict Litigation seeking to have the pending actions consolidated into a centralized multidistrict

litigation for pretrial proceedings.

In August 2022, the Judicial Panel on Multidistrict Litigation consolidated all actions in the U.S.

District for the Eastern District of Texas.

In March 2022, LSC brought patent infringement

suits in the U.S.

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

and Amazon.com,

On January 27, 2022, the Company acquired, via

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

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

The Company requested

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

The patents were assigned to

our wholly owned subsidiaries Tyche Licensing LLC and Deepwell IP LLC.

In May 2022, Tyche brought patent infringement suits in the U.S.

District for the Eastern District of Texas against MediaTek Inc., Realtek Semiconductor Corporation, Texas Instruments Incorporated, Infineon

Technologies AG and STMicroelectronics NV et.

In May 2022, Tyche voluntarily dismissed, without prejudice, the action against STMicroelectronics

In May 2022, STMicroelectronics, Inc.

filed an action for declaratory judgement of non-infringement in the U.S.

the Northern District of Texas, the action was dismissed without prejudice in July 2022.

In June 2022, MML and AI agreed to amend the Purchase

Agreement to add two additional patent families for an additional $93,000.

We requested and received a capital advance from QFL in the

amount of $93,000, which will be used to make payment to AI pending final documentation of the amendment.

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, we entered into a purchase agreement

with Hewlett Packard Enterprise Development LP and Hewlett Packard Enterprise Company for the purchase of eight United States Patents

for a purchase price of $350,000.

We paid $35,000 upon execution of the agreement with the balance payable within 30 days.

a capital advance from QFL in the amount of $350,000, which will be used to make payment of the balance pursuant to the terms of the purchase

Results of Operations

Three months ended March 31, 2022 and 2021

Three months ended March 31,

Three and six months ended June 30, 2022 and

For the Three Months Ended June 30,

For the Six Months Ended June 30,

Revenues (patent licensing fees)

1 unchanged sentence

Selling, general and administrative expenses

Total operating expenses

Loss from operations

We generated revenues of $122,000 for the three months ended March

31, 2022, as compared with no revenues for the three months ended March 31, 2021.

Our revenue for the quarter was generated from settlements

We generated no revenues for the three months

ended June 30, 2022.

We generated revenues of approximately $122,000 for the six months ended June 30, 2022, as compared to no revenues

for the three and six months ended June 30, 2021.

Our revenue for the six months ended June 30, 2022 was generated from settlements

in the M-RED and STX portfolios.

The failure to generate revenue for the three months ended March 31, 2021 resulted from our inability

to engage counsel or secure financing for licensing programs on our intellectual property as a result of our default under the notes to

Intelligent Partners.

Our revenue, in the near future if not longer, is likely to be affected by factors relating to the COVID-19 pandemic

as described under “Overview”.

The total settlement recovery is included in revenue and the associated costs are deducted

as cost of revenue.

As discussed above, the timing and amount of our revenue is dependent upon the results of litigation seeking to enforce

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

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

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

Operating expenses for the three months ended March 31, 2022 decreased

by approximately $1,636,000, or approximately 71%, compared to the three months ended March 31, 2021.

Our principal operating expense

for the three months ended March 31, 2022 was amortization of intangible assets of approximately $308,000 compared to approximately $488,000

for the three months ended March 31, 2021, which is included in our selling, general and administrative expenses.

Our principal operating

expense for the three months ended March 31, 2021 was stock based compensation of approximately $1,510,000 to officers, directors and

We had stock-based compensation costs of approximately $42,000 for the three months ended March 31, 2022.

As discussed above,

the timing and amount of revenue is dependent upon the results of litigation seeking to enforce our intellectual property rights.

on the terms of the engagement with counsel, total fees payable across all our portfolio enforcement actions may exceed total settlement

recoveries as of a specific date as the settlements do not occur simultaneously.

Other expense for the three months ended March 31, 2022 included a

gain on change in fair value of warrant liability of approximately $472,000.

We realized a loss on change in fair value of warrant liability

of approximately $664,000 in the comparable period of 2021.

Other expense for the three months ended March 31, 2021 also included an approximately

$730,000 loss on the extinguishment of our obligation to Intelligent Partners, an approximately $306,000 loss on conversion of debt, warrant

expense of approximately $1,819,000 and income of approximately $21,000 on the forgiveness of our Paycheck Protection Program loan from

Other expense reflects interest expense of approximately $86,000 for the three months ended March 31, 2022 and approximately

$29,000 for the three months ended March 31, 2021.

The increase in interest expense reflects the accrued interest payable on the principal

amount of QFL facility.

During the period we incurred income tax expense of approximately $13,000

and $225 for the three months March 31, 2022 and 2021.

The increase in income tax expense primarily reflects foreign income taxes related

to foreign source patent licensing fees.

We did not incur foreign income tax expenses in the three months ended March 31, 2021.

As a result of the foregoing, we realized net loss of approximately

$163,000, or $0.00 per share (basic and diluted), for the three months ended March 31, 2022, compared to net loss of approximately $5,157,000,

or $0.01 per share (basic and diluted), for the three months ended March 31, 2021.

The failure to generate revenue for the six months ended June 30, 2021 resulted from our inability to

engage counsel or secure financing for licensing programs on our intellectual property as a result of our default under the notes to Intelligent

Our revenue, in the near future if not longer, is likely to be affected by factors relating to the COVID-19 pandemic as described

under “Overview”.

The total settlement recovery is included in revenue and the associated costs are deducted as cost of revenue.

During the three months ended June 30, 2022, we reversed an accrual, resulting in a reduction to cost of revenue.

Cost of revenue for

the six months ended June 30, 2022 and 2021 relating to patent service costs was approximately $90,000 and $64,000, respectively.

above, the timing and amount of our revenue is dependent upon the results of litigation seeking to enforce our intellectual property rights,

and we cannot predict when or whether we will have a recovery and how much of the recovery will be received by us after payments to legal

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

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

Operating expenses for the three months ended

June 30, 2022 decreased by approximately $352,000, or approximately 40%, compared to the three months ended June 30, 2021.

expenses for the six months ended June 30, 2022 decreased by approximately $2,034,000, or approximately 65%, compared to the six

months ended June 30, 2021.

Our principal operating expense for the three and six months ended June 30, 2022 was amortization of intangible

assets of approximately $205,000 and $514,000, respectively.

We had stock-based compensation costs of approximately $25,000 and $67,000

for the three and six months ended June 30, 2022, respectively.

Our principal operating expense for the three months ended June 30, 2021

was amortization expense of approximately $388,000 and was stockbased compensation expense of approximately $1,805,000 for the six months

ended June 30, 2021.

As discussed above, the timing and amount of revenue is dependent upon the results of litigation seeking to enforce

our intellectual property rights.

Depending on the terms of the engagement with counsel, total fees payable across all our portfolio enforcement

actions may exceed total settlement recoveries as of a specific date as the settlements do not occur simultaneously.

Other expense for the three and six months ended

June 30, 2022 included a gain on change in fair value of warrant liability of approximately $395,000 and $866,000, respectively.

a gain on change in fair value of warrant liability of approximately $279,000 for the three months ended June 30, 2021 and a loss on change

in fair value of $385,000 for the six months ended June 30, 2021.

Other expense also reflects interest expense of approximately $97,000

and $183,000 for the three and six months ended June 30, 2022, respectively and approximately $97,000 and $126,000 for the three and six

months ended June 30, 2021, respectively.

The increase in interest expense reflects the accrued interest payable on the principal amount

of QFL facility.

We incurred income tax expense of approximately

$0 and $13,000 for the three and six months ended June 30, 2022, respectively, compared to approximately $2,000 for the three and six

months ended June 30, 2021.

The increase in income tax expense for the six months ended June 30, 2022 primarily reflects foreign

income taxes related to foreign source patent licensing fees.

We did not incur any foreign income tax expense for the three months ended

June 30, 2022, but incurred foreign income tax expense of $13,000 for the six months ended June 30, 2022.

As a result of the foregoing, we realized net

loss of approximately $220,000, or $0.04 per share (basic and diluted) and approximately $383,000, or $0.07 per share (basic and diluted),

for the three and six months ended June 30, 2022, respectively, compared to net loss of approximately $693,000, or $0.13 per share (basic

and diluted), and approximately $5,849,000, or $1.19 per share (basic and diluted) for the three and six months ended June 30, 2021, respectively.

Liquidity and Capital Resources

At March 31, 2022, we had current assets of approximately $297,000,

and current liabilities of approximately $9,296,000.

Our current liabilities include funding liabilities of approximately $4,463,000 payable

to QFL, a non-interest bearing total monetization proceeds obligation (the “TMPO”) to Intelligent Partners in the amount of

$2,805,000 under the Restructure Agreement, both of which are only payable from money generated from the monetization of intellectual

property, and loans payable of $138,000 and accrued interest of approximately $578,000.

As of March 31, 2022, we have an accumulated deficit

of approximately $25,599,000 and a negative working capital of approximately $8,899,000.

Other than salary and pension benefits to our

chief executive officer, we do not contemplate any other material operating expense in the near future other than normal general and administrative

expenses, including expenses relating to our status as a public company filing reports with the SEC.

We cannot assure you that we will be successful in generating future

revenues, in obtaining additional debt or equity financing or that such additional debt or equity financing will be available on terms

acceptable to us, if at all, or that we will be able to obtain any third-party funding in connection with any of our intellectual property

We have no credit facilities.

Although our agreement provides for QFL to provide us with funding to acquire intellectual property

rights, subject to QFL’s approval, it does not provide for financing the litigation necessary for the monetization of the intellectual

property rights.

We do not have any credit facilities or any arrangements for us to finance the litigation necessary to monetize our intellectual

property rights other than contingent fee arrangements with counsel with respect to our pending litigation.

If we do not secure contingent

representation or obtain litigation financing, we may be unable to monetize our intellectual property.

We cannot assure you that we will be successful in generating future

revenues, in obtaining additional debt or equity financing or that such additional debt or equity financing will be available on terms

acceptable to us, if at all, or that we will be able to obtain any third-party funding in connection with any of our intellectual property

At June 30, 2022, we had current assets of

approximately $258,000, and current liabilities of approximately $9,248,000.

Our current liabilities include funding liabilities of approximately

$4,734,000 payable to QFL, a non-interest bearing total monetization proceeds obligation (the “TMPO”) to Intelligent Partners

in the amount of $2,801,000 under the Restructure Agreement, both of which are only payable from money generated from the monetization

of intellectual property, and loans payable of $138,000 and accrued interest of approximately $675,000.

As of June 30, 2022, we have an

accumulated deficit of approximately $25,819,000 and a negative working capital of approximately $8,990,000.

Other than salary and pension

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

general and administrative expenses, including expenses relating to our status as a public company filing reports with the SEC.

The following table shows the summary cash flows

for the six months ended June 30, 2022 and 2021:

For the Six Months Ended June 30,

Cash flows from operating activities

Cash flows from investing activities

Cash flows from financing activities

Net decrease in cash

Cash at beginning of year

Cash at end of year

We cannot assure you that we will be successful

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

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

our intellectual property portfolios.

We have no credit facilities.

We cannot predict the success of any pending or future litigation.

Typically, our agreements with the funding sources provide that the funding sources will participate in any recovery which is generated.

We believe that our financial condition, our history of losses and negative cash flow from operations, and our low stock price make it

difficult for us to raise funds in the debt or equity markets.

As noted below, there is a substantial doubt about our ability to continue

as a going concern.

Significant Accounting Policies and Estimates

The discussion and analysis of our financial condition and results

of operations is based upon our financial statements that have been prepared in accordance with accounting principles generally accepted

in the United States of America.

The preparation of these financial statements requires us to make estimates and judgments that affect

the reported amounts of assets and liabilities.

On an on-going basis, we evaluate our estimates including the allowance for doubtful accounts,

income taxes and contingencies.

We base our estimates on historical experience and on other assumptions that we believe to be reasonable

under the circumstances, the results of which form our basis for making judgments about the carrying values of assets and liabilities

Although our agreement provides for QFL to provide us with funding

to acquire intellectual property rights, subject to QFL’s approval, it does not provide for financing the litigation necessary for

the monetization of the intellectual property rights.

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

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

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

We cannot predict the success of any pending or

future litigation.

Typically, our agreements with the funding sources provide that the funding sources will participate in any recovery

which is generated.

We believe that our financial condition, our history of losses and negative cash flow from operations, and our low

stock price make it difficult for us to raise funds in the debt or equity markets.

As noted below, there is a substantial doubt about

our ability to continue as a going concern.

Critical Accounting Policies

The discussion and analysis of our financial condition

and results of operations is based upon our financial statements that have been prepared in accordance with accounting principles generally

accepted in the United States of America.

The preparation of these financial statements requires us to make estimates and judgments that

affect the reported amounts of assets and liabilities.

On an on-going basis, we evaluate our estimates including the allowance for doubtful

accounts, income taxes and contingencies.

We base our estimates on historical experience and on other assumptions that we believe to be

reasonable under the circumstances, the results of which form our basis for making judgments about the carrying values of assets and liabilities

that are not readily apparent from other sources.

Actual results may differ from these estimates under different assumptions or conditions.

Management believes the following critical accounting policies affect

the significant judgments and estimates used in the preparation of the financial statements.

Management believes the following critical accounting

policies affect the significant judgments and estimates used in the preparation of the financial statements.

Principles of Consolidation

The consolidated financial statements are prepared in accordance with

US GAAP and Rule 8-03 of Regulation S-X of the SEC, and present the financial statements of the Company and our wholly-owned subsidiary.

The consolidated financial statements are prepared

in accordance with US GAAP and Rule 8-03 of Regulation S-X of the SEC, and present the financial statements of the Company and our wholly-owned

In the preparation of our consolidated financial statements, intercompany transactions and balances are eliminated.

Use of Estimates and Assumptions

The preparation of financial statements in conformity with generally

accepted accounting principles in the United States of America requires management to make estimates and assumptions that affect the reported

amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the

reported amounts of revenues and expenses during the reporting period.

The preparation of financial statements in conformity

with generally accepted accounting principles in the United States of America requires management to make estimates and assumptions that

affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial

statements and the reported amounts of revenues and expenses during the reporting period.

Actual results could differ from those estimates.

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.

Patents include the cost of patents or patent rights (collectively

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

Patent acquisition costs are

amortized utilizing the straight-line method over their remaining economic useful lives, ranging from one to ten years.

Certain patent

application and prosecution costs incurred to secure additional patent claims, that based on management’s estimates are deemed to

be recoverable, are capitalized and amortized over the remaining estimated economic useful life of the related patent portfolio.

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.

Patent acquisition

costs are amortized utilizing the straight-line method over their remaining economic useful lives, ranging from one to ten years.

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.

Warrant Liability

We reflect a warrant liability with respect to warrants for which the

number of shares underlying the warrants is not fixed until the date of the initial exercise.

The amount of the liability is determined

at the end of each fiscal period and the period to period change in the amount of warrant liability is reflected as a gain or loss in

warrant liability and is included under other income (expense).

We reflect a warrant liability with respect to

warrants for which the number of shares underlying the warrants is not fixed until the date of the initial exercise.

The amount of the

liability is determined at the end of each fiscal period and the period to period change in the amount of warrant liability is reflected

as a gain or loss in warrant liability and is included under other income (expense).

Fair Value of Financial Instruments

We adopted Financial Accounting Standards Board (“FASB”)

ASC 820, “Fair Value Measurements and Disclosures”, for assets and liabilities measured at fair value on a recurring basis.

ASC 820 establishes a common definition for fair value to be applied to existing US GAAP that require the use of fair value measurements

which establishes a framework for measuring fair value and expands disclosure about such fair value measurements.

ASC 820 defines fair value as the price that would be received

to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

Additionally,

ASC 820 requires the use of valuation techniques that maximize the use of observable inputs and minimize the use of unobservable

We adopted Financial Accounting Standards Board

(“FASB”) ASC 820, “Fair Value Measurements and Disclosures”, for assets and liabilities measured at fair value

on a recurring basis.

ASC 820 establishes a common definition for fair value to be applied to existing US GAAP that require the use of

fair value measurements which establishes a framework for measuring fair value and expands disclosure about such fair value measurements.

ASC 820 defines fair value as the price that would

be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement

Additionally, ASC 820 requires the use of valuation techniques that maximize the use of observable inputs and minimize the use of

unobservable inputs.

These inputs are prioritized below:

Observable inputs such as quoted market prices in active markets for identical assets or liabilities

Observable market-based inputs or unobservable inputs that are corroborated by market data

Unobservable inputs for which there is little or no market data, which require the use of the reporting entity’s own assumptions.

In addition, FASB ASC 825-10-25 “Fair Value Option” was

effective for January 1, 2008.

ASC 825-10-25 expands opportunities to use fair value measurements in financial reporting and permits

entities to choose to measure many financial instruments and certain other items at fair value.

We incurred foreign income tax expenses of approximately $13,000 and

$0 for the three-months ended March 31, 2022 and 2021, respectively.

Observable inputs such as quoted market prices in active

markets for identical assets or liabilities

Observable market-based inputs or unobservable inputs

that are corroborated by market data

Unobservable inputs for which there is little or no market

data, which require the use of the reporting entity’s own assumptions.

In addition, FASB ASC 825-10-25 “Fair Value

Option” was effective for January 1, 2008.

ASC 825-10-25 expands opportunities to use fair value measurements in financial reporting

and permits entities to choose to measure many financial instruments and certain other items at fair value.

Stock-Based Compensation

We account for stock-based compensation pursuant to ASC 718, “Compensation

— Stock Compensation,” which prescribes accounting and reporting standards for all stock-based payment transactions in which

employee and non-employee services, are acquired.

Transactions include incurring liabilities, or issuing or offering to issue shares,

options and other equity instruments such as employee stock ownership plans and stock appreciation rights.

Stock-based payments to employees,

including grants of employee stock options, are recognized as compensation expense in the financial statements based on their fair values.

That expense is recognized over the period during which an employee is required to provide services in exchange for the award, known as

the requisite service period (usually the vesting period).

We account for stock-based compensation pursuant

to ASC 718, “Compensation — Stock Compensation,” which prescribes accounting and reporting standards for all stock-based

payment transactions in which employee and non-employee services, are acquired.

Transactions include incurring liabilities, or issuing

or offering to issue shares, options and other equity instruments such as employee stock ownership plans and stock appreciation rights.

Stock-based payments to employees, including grants of employee stock options, are recognized as compensation expense in the financial

statements based on their fair values.

That expense is recognized over the period during which an employee is required to provide services

in exchange for the award, known as the requisite service period (usually the vesting period).

Long-Lived Assets

We review for impairment whenever events or circumstances indicate

that the carrying amount of assets may not be recoverable, pursuant to guidance established in ASC 360-10-35-15, “Impairment or

Disposal of Long-Lived Assets”.

We review for impairment whenever events or circumstances

indicate that the carrying amount of assets may not be recoverable, pursuant to guidance established in ASC 360-10-35-15, “Impairment

or Disposal of Long-Lived Assets”.

We recognize an impairment loss when the sum of expected undiscounted future cash flows is less

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Revenue Recognition

We recognize 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.

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.

We adopted Topic 606 as of January 1, 2018 using the modified retrospective transition

method, with no impact on the consolidated financial position or results of operations.

We recognize 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

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.

We adopted Topic 606 as of January 1, 2018 using the modified retrospective

transition method, with no impact on the consolidated financial position or results of operations.

Patent Licensing Fees

Revenue is recognized upon transfer of control of promised bundled

intellectual property rights and other contractual performance obligations to licensees in an amount that reflects the consideration we

expect to receive in exchange for those intellectual property rights.

Revenue contracts that provide promises to grant “the right”

to use intellectual property rights as they exist at the point in time at which the intellectual property rights are granted, are accounted

for as performance obligations satisfied at a point in time and revenue is recognized at the point in time that the applicable performance

obligations are satisfied and all other revenue recognition criteria have been met.

For the periods presented, revenue contracts executed by us 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 our operating subsidiaries.

Intellectual property rights granted included

the following, as applicable:

(i) the grant of a non-exclusive, retroactive and future license to manufacture and/or sell products

covered by patented technologies, (ii) a covenant-not-to-sue, (iii) the release of the licensee from certain claims, and (iv) the dismissal

of any pending litigation.

The intellectual property rights granted were perpetual in nature, extending until the legal expiration

date of the related patents.

The individual intellectual property rights are not accounted for as separate performance obligations, as

(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) our promise to transfer each individual intellectual property right described above to the customer is not separately

identifiable from other promises to transfer intellectual property rights in the contract.

Since the promised intellectual property rights are not individually

distinct, we combined each individual IP right in the contract into a bundle of IP rights that is distinct, and accounted for all of the

intellectual property rights promised in the contract as a single performance obligation.

The intellectual property rights granted were

“functional IP rights” that have significant standalone functionality.

Our subsequent activities do not substantively change

that functionality and do not significantly affect the utility of the IP to which the licensee has rights.

Our subsidiaries have no further

obligation with respect to the grant of intellectual property rights, including no express or implied obligation to maintain or upgrade

the technology, or provide future support or services.

Revenue is recognized upon transfer of control

of promised bundled intellectual property rights and other contractual performance obligations to licensees in an amount that reflects

the consideration we expect to receive in exchange for those intellectual property rights.

Revenue contracts that provide promises to

grant “the right” to use intellectual property rights as they exist at the point in time at which the intellectual property

rights are granted, are accounted for as performance obligations satisfied at a point in time and revenue is recognized at the point in

time that the applicable performance obligations are satisfied and all other revenue recognition criteria have been met.

For the periods presented, revenue contracts executed

by us 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 our operating subsidiaries.

Intellectual property

rights granted included the following, as applicable:

(i) the grant of a non-exclusive, retroactive and future license to manufacture

and/or sell products covered by patented technologies, (ii) a covenant-not-to-sue, (iii) the release of the licensee from certain claims,

and (iv) the dismissal of any pending litigation.

The intellectual property rights granted were perpetual in nature, extending until the

legal expiration date of the related patents.

The individual intellectual property rights are not accounted for as separate performance

obligations, as (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) our promise to transfer each individual intellectual property right described above to

the customer is not separately identifiable from other promises to transfer intellectual property rights in the contract.

Since the promised intellectual property rights

are not individually distinct, we combined each individual IP right in the contract into a bundle of IP rights that is distinct, and accounted

for all of the intellectual property rights promised in the contract as a single performance obligation.

The intellectual property rights

granted were “functional IP rights” that have significant standalone functionality.

Our subsequent activities do not substantively

change that functionality and do not significantly affect the utility of the IP to which the licensee has rights.

Our subsidiaries have

no further obligation with respect to the grant of intellectual property rights, including no express or implied obligation to maintain

or upgrade the technology, or provide future support or services.

The contracts provide for the grant (i.e.

transfer of control) of the licenses,

covenants-not-to-sue, releases, and other significant deliverables upon execution of the contract.

Licensees legally obtain control

of the intellectual property rights upon execution of the contract.

transfer of control) of the

licenses, covenants-not-to-sue, releases, and other significant deliverables upon execution of the contract.

Licensees legally obtain

control of the intellectual property rights upon execution of the contract.

As such, the earnings process is complete and revenue is recognized

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Cost of Revenue

Cost of revenues mainly includes expenses incurred in connection with

our patent enforcement activities, such as legal fees, consulting costs, patent maintenance, royalty fees for acquired patents and other

related expenses.

Cost of revenue does not include expenses related to product development, patent amortization, integration or support,

as these are included in general and administrative expenses.

Inventor/Former Owner Royalties and Contingent Legal/Litigation

Finance Expenses

In connection with the investment in certain patents and patent rights,

certain of our 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.

Our 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.

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.

Our operating subsidiaries may engage with funding sources that specialize

in providing financing for patent licensing and enforcement.

These litigation finance firms may be engaged on a non-recourse basis

whereby such litigation finance firms are paid a percentage of any negotiated fees, settlements or judgments awarded in exchange for providing

funding for legal fees and out of pocket expenses incurred as a result of the licensing and enforcement activities.

The economic terms of the inventor agreements, operating agreements,

contingent legal fee arrangements and litigation financing agreements associated with the patent portfolios owned or controlled by our

operating subsidiaries, if any, including royalty rates, contingent fee rates and other terms, vary across the patent portfolios owned

or controlled by such operating subsidiaries and are included in cost of revenues as litigation and licensing expenses.

Inventor/former

owner royalties, payments to non-controlling interests, contingent legal fees expenses and litigation finance expenses fluctuate period

to period, based on the amount of revenues recognized each period, the terms and conditions of revenue agreements executed each period

and the mix of specific patent portfolios with varying economic terms and obligations generating revenues each period.

Cost of revenues mainly includes expenses incurred

in connection with our patent enforcement activities, such as legal fees, consulting costs, patent maintenance, royalty fees for acquired

patents and other related expenses.

Cost of revenue does not include expenses related to product development, patent amortization, integration

or support, as these are included in general and administrative expenses.

Inventor/Former Owner Royalties and Contingent

Legal/Litigation Finance Expenses

In connection with the investment in certain patents

and patent rights, certain of our 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.

Our 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.

Our operating subsidiaries may engage with funding

sources that specialize in providing financing for patent licensing and enforcement.

These litigation finance firms may be engaged on

a non-recourse basis whereby such litigation finance firms are paid a percentage of any negotiated fees, settlements or judgments awarded

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

The economic terms of the inventor agreements,

operating agreements, contingent legal fee arrangements and litigation financing agreements associated with the patent portfolios owned

or controlled by our operating subsidiaries, if any, including royalty rates, contingent fee rates and other terms, vary across the patent

portfolios owned or controlled by such operating subsidiaries and are included in cost of revenues as litigation and licensing expenses.

Inventor/former owner royalties, payments to non-controlling interests, contingent legal fees expenses and litigation finance expenses

fluctuate period to period, based on the amount of revenues recognized each period, the terms and conditions of revenue agreements executed

each period and the mix of specific patent portfolios with varying economic terms and obligations generating revenues each period.

Inventor/former

2 unchanged sentences

Recent Accounting Pronouncements

Management does not believe that there are any recently issued, but

not effective, accounting standards which, if currently adopted, would have a material effect on our financial statements.

Management does not believe that there are any

recently issued, but not effective, accounting standards which, if currently adopted, would have a material effect on our financial statements.

Going Concern

We have an accumulated deficit of approximately $25,599,000 and negative

working capital of approximately $8,999,000 as of March 31, 2022.

Because of our continuing losses, our working capital deficiency, the

uncertainty of future revenue, our obligations to QFL, Intelligent Partners, our low stock price and the absence of a trading market in

our common stock, our ability to raise funds in equity market or from lenders is severely impaired.

These conditions, together with the

effects of the COVID-19 pandemic and the steps taken by the states to slow the spread of the virus and its effect on our business raise

substantial doubt as to our ability to continue as a going concern.

Although we may seek to raise funds and to obtain third-party funding

for litigation to enforce our intellectual property rights, the availability of such funds, particularly in view of the COVID-19 pandemic,

is uncertain.

We have an accumulated deficit of approximately

$25,819,000 and negative working capital of approximately $8,990,000 as of June 30, 2022.

Because of our continuing losses, our working

capital deficiency, the uncertainty of future revenue, our obligations to QFL, Intelligent Partners, our low stock price and the absence

of a trading market in our common stock, our ability to raise funds in equity market or from lenders is severely impaired.

These conditions,

together with the effects of the COVID-19 pandemic and the steps taken by the states to slow the spread of the virus and its effect on

our business as well as any adverse consequences which would result from our failure to remain listed on the OTCQB, raise substantial

doubt as to our ability to continue as a going concern.

Although we may seek to raise funds and to obtain third-party funding for litigation

to enforce our intellectual property rights, the availability of such funds, particularly in view of the COVID-19 pandemic, is uncertain.

The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Off-Balance Sheet Arrangements

We have not entered into any other financial guarantees or other commitments

to guarantee the payment obligations of any third parties.

We have not entered into any derivative contracts that are indexed to our shares

and classified as stockholder’s equity or that are not reflected in our consolidated financial statements.

Furthermore, we do not

have any retained or contingent interest in assets transferred to an unconsolidated entity that serves as credit, liquidity or market

risk support to such entity.

Quantitative and Qualitative Disclosures About Market Risk.

We are a smaller reporting company as defined by Rule 12b-2 of the

Securities Exchange Act of 1934 and are not required to provide the information under this item.

We have not entered into any other financial guarantees

or other commitments to guarantee the payment obligations of any third parties.

We have not entered into any derivative contracts that

are indexed to our shares and classified as stockholder’s equity or that are not reflected in our consolidated financial statements.

Furthermore, we do not have any retained or contingent interest in assets transferred to an unconsolidated entity that serves as credit,

liquidity or market risk support to such entity.

Quantitative and Qualitative Disclosures

About Market Risk.

We are a smaller reporting company as defined

by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

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-Q

Item 2. Management’s Discussion and Analysis