What changed in this filing

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Item 9A. Controls and Procedures

2023-03-31 compared with 2022-04-01 · 952 added, 824 removed, 853 unchanged (68% of the section changed)

6 unchanged sentences

by this Annual Report on Form 10-K.

The Disclosure Controls evaluation was done under the supervision and with the participation

of management, including our chief executive officer and chief financial officer, who is the same person and our sole full-time employee.

There are inherent limitations to the effectiveness of any system of disclosure controls and procedures.

The Disclosure Controls evaluation was done under the supervision and with the participation of management,

including our chief executive officer and acting chief financial officer, who is the same person and our sole full-time employee.

are inherent limitations to the effectiveness of any system of disclosure controls and procedures.

Accordingly, even effective disclosure

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Based upon this evaluation, our chief

executive officer and chief financial officer concluded that, due to our limited internal audit function and our very limited staff, our

disclosure controls were not effective as of December 31, 2021, such that the information required to be disclosed by us in reports filed

under the Securities Exchange Act of 1934 is (i) recorded, processed, summarized and reported within the time periods specified in the

SEC’s rules and forms and (ii) accumulated and communicated to the chief executive officer/chief financial officer, as appropriate

to allow timely decisions regarding disclosure.

executive officer and acting chief financial officer concluded that, due to our limited internal audit function and our very limited staff,

our disclosure controls were not effective as of December 31, 2022, such that the information required to be disclosed by us in reports

filed under the Securities Exchange Act of 1934 is (i) recorded, processed, summarized and reported within the time periods specified

in the SEC’s rules and forms and (ii) accumulated and communicated to the chief executive officer and acting chief financial officer,

as appropriate to allow timely decisions regarding disclosure.

Management’s Report on Internal Control

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The lack of any separation of duties,

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

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

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

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

reporting in the near future.

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OTHER INFORMATION

DISCLOSURE REGARDING FOREIGN JURISDICTIONS

THAT PREVENT INSPECTIONS.

DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT

Not applicable.

DIRECTORS, EXECUTIVE OFFICERS AND

CORPORATE GOVERNANCE

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

The following table presents information with

respect to our officers, directors:

respect to our officers and directors:

Chief executive officer, president, acting chief financial officer, secretary and director

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Class II directors and Class III directors.

The Class I director has a term of which expired in 2020, the Class II director has a term

which expired in 2018, and the Class III director has a term which expired in 2019.

Directors are elected for a term of three years.

we did not have an annual meeting of stockholders in 2018, 2019 and 2020, the Class I, Class II and Class III directors continue in office

until the next meeting of stockholders, at which all directors will be elected.

On July 27, 2022, the Company held its 2022 annual meeting of stockholders.

At the meeting,

the stockholders voted on the election of two Class I directors, one Class II director and one Class III director.

Scahill, a Class I director, has been president

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and 10% stockholders are not required to make such filings.

EXECUTIVE COMPENSATION

The following summary compensation table sets

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by or paid to our executive officers.

Name and Principal Position

Options/ Warrant

Non-Equity Plan

Deferred Earnings

Compensation (3)

Name & Principal Position

Warrant Awards

Non-Equity Plan Compensation

Nonqualified Deferred Earnings

All Other Compensation (3)

CEO and President

$ 588,000 (1)

$ 240,000 (2)

(1) Represents the value of 490,000 shares granted Mr.

Scahill in 2021

Represents the value of an option to purchase 20,000,000 shares of

Represents the payments made by the Company under the SEP IRA adopted in March 2020

(2) Represents the value of an option to purchase 200,000 shares

of common stock

(3) Represents the payments made by the Company under the SEP

IRA adopted in March 2020

Employment Agreements

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to the agreement, we issued to Mr.

Scahill warrants to purchase 60,000,000 shares, representing the warrants that had been previously

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

Scahill warrants to purchase 600,000 shares, representing the warrants that had been previously covered

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

Scahill a restricted stock grant for 300,000

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2021, the board amended the Plan to increase the number of shares subject to the plan to 5,000,000.

Set forth below is a summary of

the plan, as amended, but this summary is qualified in its entirety by reference to the full text of the plan, a copy of which is included

Set forth below is a summary of the

plan, as amended, but this summary is qualified in its entirety by reference to the full text of the plan, a copy of which is included

as an exhibit to this annual report.

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On February 19, 2021, the board of directors:

granted restricted stock grants for 10,000,000 shares, which vested in full immediately upon issuance, to each of three consultants pursuant to agreements with the consultants;

granted restricted stock grants for a total of 69,000,000 shares, which vested in full immediately upon issuance, to our directors, Jon C.

● granted restricted stock grants for 100,000 shares, which

vested in full immediately upon issuance, to each of three consultants pursuant to agreements with the consultants;

● granted restricted stock grants for a total of 690,000 shares,

which vested in full immediately upon issuance, to our directors, Jon C.

Scahill (490,000 shares), Timothy J.

Scahill (10,000,000 shares) and Dr.

Scahill (100,000 shares)

Carroll (100,000 shares) as compensation for services rendered;

● granted a restricted stock grant to Ryan T.

Logue for 5,000,000 shares upon his acceptance of his appointment as a director;

granted non-qualified ten-year stock options to purchase 30,000,000 shares to each of three consultants pursuant to agreements with the consultants, the options to vest as provided in their agreements.

granted a non-qualified ten-year stock option to purchase 60,000,000 shares to Jon C.

Logue for 50,000

shares upon his acceptance of his appointment as a director;

● granted non-qualified ten-year stock options to purchase

300,000 shares to each of three consultants pursuant to agreements with the consultants, the options to vest as provided in their agreements.

● granted a non-qualified ten-year stock option to purchase

600,000 shares to Jon C.

Scahill, which vest in installments as described under Item 11.

Executive Compensation.

The options granted to two of the consultants become exercisable as

10,000,000 shares at an exercise price of $0.01 per share becoming exercisable upon the commencement of trading of the Common Stock on the OTCQB which occurred on May 7, 2021.

10,000,000 shares at an exercise price of $0.03 per share, becoming exercisable on the first day on which the Company files with the SEC a Form 10-K or Form 10-Q which stockholders’ equity of at least $5,000,000, and

10,000,000 shares at an exercise price of $0.05 per share becoming exercisable on the date on which the Common Stock is listed for trading on the Nasdaq Stock Market or the New York Stock Exchange.

The options granted the third consultant become exercisable as follows:

10,000,000 shares at an exercise price of $0.01 per share became exercisable

on February 22, 2022, which was the first anniversary of the date of the agreement.

10,000,000 shares at an exercise price of $0.03 per share upon the second anniversary of the date of the agreement;

10,000,000 shares at an exercise price of $0.05 per share upon the third anniversary of the date of the agreement.

The options granted to two of the consultants

become exercisable as follows:

● 100,000 shares at an exercise price of $1.00 per share becoming

exercisable upon the commencement of trading of the Common Stock on the OTCQB which occurred on May 7, 2021.

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

exercisable on the first day on which the Company files with the SEC a Form 10-K or Form 10-Q which stockholders’ equity of at

least $5,000,000, and

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

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

The options granted the third consultant become

exercisable as follows:

● 100,000 shares at an exercise price of $1.00 per share became

exercisable on February 22, 2022, which was the first anniversary of the date of the agreement.

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

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

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

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

The options granted to Jon C.

Scahill become exercisable

20,000,000 shares at an exercise price of $0.01 per share becoming exercisable upon the commencement of trading of the Common Stock on the OTCQB, which occurred on May 7, 2021.

20,000,000 shares at an exercise price of $0.03 per share, becoming exercisable on the first day on which the Company files with the SEC a Form 10-K or Form 10-Q which stockholders’ equity of at least $5,000,000, and

20,000,000 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.

● 200,000 shares at an exercise price of $1.00 per share becoming

exercisable upon the commencement of trading of the Common Stock on the OTCQB, which occurred on May 7, 2021.

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

exercisable on the first day on which the Company files with the SEC a Form 10-K or Form 10-Q which stockholders’ equity of at

least $5,000,000, and

● 200,000 shares at an exercise price of $5.00 per share becoming

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

Outstanding Equity Awards at Fiscal Year-End

The following table sets forth information as to the outstanding equity

awards granted to and held by the officers named in the Summary Compensation Table as of December 31, 2021.

The following table sets forth information as

to the outstanding equity awards granted to and held by the officers named in the Summary Compensation Table as of December 31, 2022.

Option awards

unexercisable

20,000,000 (1)

20,000,000 (2)

20,000,000 (3)

underlying unexercised

options (#) exercisable

underlying unexercised

options (#) unexercisable

incentive plan

securities underlying

unexercised unearned

(1) Represents 200,000 shares granted to Mr.

Scahill on February 22, 2021 at an exercise price of $0.01 per share becoming exercisable upon the commencement of trading of the Common Stock on the OTCQB.

Scahill on February

22, 2021 at an exercise price of $1.00 per share becoming exercisable upon the commencement of trading of the Common Stock on the OTCQB.

The Company regained such compliance on May 7, 2021, at which time the common stock recommenced trading on the OTCQB.

(2) Represents 200,000 shares granted to Mr.

Scahill on February 22, 2021 at an exercise price of $0.03 per share, becoming exercisable on the first day on which the Company files with the SEC a Form 10-K or Form 10-Q which stockholders” equity of at least $5,000,000

Scahill on February

22, 2021 at an exercise price of $3.00 per share, becoming exercisable on the first day on which the Company files with the SEC a Form

10-K or Form 10-Q which stockholders” equity of at least $5,000,000

(3) Represents 200,000 shares granted to Mr.

Scahill on February 22, 2021 at an exercise price of $0.05 per share becoming exercisable on the date on which the Common Stock is listed for trading on the Nasdaq Stock Market or the New York Stock Exchange

Scahill on February

22, 2021 at an exercise price of $5.00 per share becoming exercisable on the date on which the Common Stock is listed for trading on

the Nasdaq Stock Market or the New York Stock Exchange

Directors’ Compensation

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grants or options to purchase shares of common stock to our directors.

The following table provides information concerning

the compensation of each member of our board of directors whose compensation is not included in the Summary Compensation Table for his

services as a director for 2020.

William Ryall Carroll

The amount under Stock Awards reflects the value

of the stock issued to the named directors.

SECURITY OWNERSHIP OF CERTAIN

BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

None of our directors received compensation during 2022.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

AND RELATED STOCKHOLDER MATTERS

The following table provides information as to

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● Each current officer named in the summary compensation table;

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

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

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

● All directors and officers as a group.

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Name and Address (1) of Beneficial Owner

300 Bowie St., Apt.

Austin, TX 78703

Intelligent Partners, LLC (3)

300 Bowie St., Apt.

Amount and Nature

of Beneficial

Fitton (2) 300 Bowie St., Apt.

2803 Austin, TX 78703

13218 Tamayo Drive

Intelligent Partners, LLC (3) 300 Bowie St., Apt.

2803 Austin, TX 78703

Carper (4) 13218 Tamayo Drive Austin, TX 78729

William Ryall Carroll

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Carroll, Timothy J.

Scahill and Ryan T.

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

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

Fitton and (b) 50,000,000 shares issuable upon exercise of an option held by Intelligent Partners.

Represents 50,000,000 shares of common stock issuable upon exercise of options held by Intelligent Partners.

Fitton and (b)

500,000 shares issuable upon exercise of an option held by Intelligent Partners.

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

of options held by Intelligent Partners.

Fitton and Michael R.

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

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

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

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

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The notes were extinguished in February 2021, and we did not incur

interest expense on the notes for the year ended December 31, 2021.

The interest expense was approximately $351,000 for the year ended

December 31, 2020.

interest expense on the notes for the years ended December 31, 2022 and 2021.

Reference is made to the discussion of our agreements

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Carper under “Item 1.

Business – Summary of Agreements with Intelligent Partners”

and “Agreements with QFL and Intelligent Partners” in Item 7.

Business – Agreements with Intelligent Partners.”

Managed Services Team LLC, an entity for which

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2021 respectively.

The amount recorded in 2020 includes approximately $407,000 in accrued expenses and outstanding as of December 31,

The accrued liability is recorded in “accounts payable and accrued liabilities.” The accrued liability was resolved

as part of a resolution with the firm at which the father-in-law of the chief executive was formerly a partner.

In prior periods, we engaged

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

Because his interest in the prior firm was less than

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

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

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

Director Independence

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PRINCIPAL ACCOUNTING FEES AND SERVICES

The following table sets forth the fees billed by our independent accountants,

MaloneBailey for 2020 and the first quarter of 2021, and Rosenberg Rich Baker Berman P.A.

(“RRBB”) for the remainder of 2021

for the categories of services indicated.

The following table sets forth the fees billed

by our independent accountants, Rosenberg Rich Baker Berman P.A.

(“RRBB”) and MaloneBailey for 2022 and 2021 for the categories

of services indicated.

Fiscal Year Ended

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Audit – related fees

All other fees – Malone Bailey

All other fees – MaloneBailey

Audit fees consist of fees related to professional

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

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

All other fees relate to professional services

rendered in connection our registration statement.

rendered in connection with our registration statement.

Our policy is to pre-approve all audit and permissible

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Restricted Stock Grant dated October 30, 2014 between the Company and Jon C.

License Agreement dated March 26, 2008 between the Company and Emerging Technologies Trust.

Licensing Services Agreement dated July 10, 2008 between the Company and Balthaser Online, Inc.

Patent Purchase Agreement dated December 21, 2009 between Company and Intertech Holdings, LLC.

Consulting Agreement dated August 11, 2010 between the Company and Alex W.

Agreement dated February 8, 2011 between the Company and Sol Li.

Agreement dated June 26, 2013 between the Company and The Betting Service Ltd.

and Neil Riches.(1)

Funding Agreement dated March 13, 2014 between the Company and Longford Capital Fund I, LP, (subject to order granting confidential treatment (1))#

Agreement dated April 1, 2014 between the Company and Allied Standard Limited.

Form of warrant issued to former officers and directors.

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William Ryall Carroll.

Indemnification

agreement, dated February 19, 2021 between the Company and Ryan T.

Patent Sale Agreement, effective July 8, 2015 between Intellectual Ventures Assets 16 LLC and the Company.(2)

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Form of Option Agreement (8)

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

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

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Inline XBRL Taxonomy Extension Schema Document.

Inline XBRL Taxonomy Extension Calculation Linkbase Document.

Inline XBRL Taxonomy Extension Definition Linkbase Document.

Inline XBRL Taxonomy Extension Calculation Linkbase

Inline XBRL Taxonomy Extension Definition Linkbase

Inline XBRL Taxonomy Extension Label Linkbase Document.

Inline XBRL Taxonomy Extension Presentation Linkbase Document.

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

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

Inline XBRL Taxonomy Extension Presentation Linkbase

Cover Page Interactive Data File (formatted as Inline

XBRL and contained in Exhibit 101).

(1) Incorporated by reference to

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

Filed as an exhibit to the Company’s Form 8-K, which was filed with the SEC on October 28, 2015 and incorporated herein by reference.

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Incorporated by reference to the Form 10-K for the year ended December 31, 2020, which was filed by the Company on April 15, 2021.

Certain portions of this exhibit are omitted pursuant to an order granting confidential treatment.

The omitted information has been filed separately with the SEC.

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

Filed herewith

Certain confidential information has been deleted from this Exhibit.

1 unchanged sentence

Not applicable.

Pursuant to the requirements of the Securities

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

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

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

March 31, 2023

QUEST PATENT RESEARCH CORPORATION

Chief Executive Officer and President

Chief Executive Officer and

Acting Chief Financial Officer

Pursuant to the requirements of the Securities

6 unchanged sentences

with the Securities and Exchange Commission.

Director, chief executive officer,

Director, Chief Executive Officer, Acting Chief Financial Officer, and President (Principal Executive, Financial and Accounting Officer)

March 31, 2023

acting chief financial officer and president

(principal executive, financial and accounting officer)

/s/ Timothy J.

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Report of Independent Registered Public Accounting Firm (Rosenberg Rich Baker Berman P.A.

Report of Independent Registered Public Accounting Firm (MaloneBailey, LLP - PCAOB ID:

Consolidated Balance Sheets as of December 31, 2022 and 2021 F-3

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING

To the Stockholders and Board of Directors

of Quest Patent Research Corporation

To the Board of Directors and

Stockholders of Quest Patent Research Corporation

Opinion on the Financial Statements

We have audited the accompanying consolidated

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

2021, and the related consolidated statement of operations, changes in stockholders’ deficit, and cash flows for the year then ended,

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

In our opinion, the financial statements present

fairly, in all material respects, the financial position of the Company as of December 31, 2021, and the results of their operations and

their cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America.

balance sheets of Quest Patent Research Corporation and its subsidiaries (the “Company”) as of December 31, 2022 and 2021,

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

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

In our opinion, the consolidated

financial statements present fairly, in all material respects, the financial position of the Company at December, 2022 and 2021, and the

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

the United States of America.

Basis for Opinion

These financial statements are the responsibility

of the Company’s management.

Our responsibility is to express an opinion on the Company’s financial statements based on our

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB")

and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable

rules and regulations of the Securities and Exchange Commission and the PCAOB.

These consolidated financial statements are the

responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s consolidated financial

statements based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United

States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and

the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the

standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial

statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged

to perform, an audit of its internal control over financial reporting.

As part of our audit, we are required to obtain an understanding

of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal

control over financial reporting.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated

financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we

engaged to perform, an audit of its internal control over financial reporting.

As part of our audits, we are required to obtain an understanding

of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s

internal control over financial reporting.

Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material

misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures

included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audits also included

evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation

of the financial statements.

We believe that our audits provide a reasonable basis for our opinion.

Our audits included performing procedures to assess

the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures

that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the

consolidated financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by

management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that our audits provide

a reasonable basis for our opinion.

Emphasis of Matter

The accompanying financial statements have been

prepared assuming that the Company will continue as a going concern.

As discussed in Note 2 to the financial statements, the Company has

suffered recurring losses from operations and has a net capital deficiency that raises substantial doubt about its ability to continue

as a going concern.

The accompanying consolidated financial statements

have been prepared assuming that the Company will continue as a going concern.

As discussed in Note 2 to the consolidated financial statements,

the Company has suffered recurring losses from operations and has a net capital deficiency that raises substantial doubt about its ability

to continue as a going concern.

Management’s plans in regard to these matters are also described in Note 2.

The financial statements do not include

any adjustments that might result from the outcome of this uncertainty.

Our opinion is not modified with respect to that matter.

The consolidated financial

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

Our opinion is not modified with respect

to that matter.

Critical Audit Matters

Critical audit matters are matters arising from

the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and

(1) relate to accounts or disclosures that are material the financial statements and (2) involved our especially challenging, subjective,

or complex judgments.

We determined that there were no critical audit matters.

The critical audit matters communicated below

are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated

to the audit committee and that:

(1) relate to accounts or disclosures that are material to the consolidated financial statements and

(2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter

in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit

matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

We determined

that there were no critical audit matters.

/s/ Rosenberg Rich Baker Berman, P.A.

2 unchanged sentences

March 31, 2023

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING

To the Stockholders and Board of Directors of

Quest Patent Research Corporation

Opinion on the Financial Statements

We have audited the accompanying consolidated

balance sheet of Quest Patent Research Corporation and its subsidiaries (collectively, the “Company”) as of December 31, 2020,

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

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

In our opinion, the financial statements present

fairly, in all material respects, the financial position of the Company as of December 31, 2020, and the results of their operations and

their cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America.

Going Concern Matter

The accompanying financial statements have been

prepared assuming that the Company will continue as a going concern.

As discussed in Note 2 to the financial statements, the Company has

suffered recurring losses from operations and has a net capital deficiency that raises substantial doubt about its ability to continue

as a going concern.

Management’s plans in regard to these matters are also described in Note 2.

The financial statements do not include

any adjustments that might result from the outcome of this uncertainty.

Basis for Opinion

These financial statements are the responsibility

of the Company’s management.

Our responsibility is to express an opinion on the Company’s financial statements based on our

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”)

and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable

rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the

standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial

statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged

to perform, an audit of its internal control over financial reporting.

As part of our audit we are required to obtain an understanding

of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal

control over financial reporting.

Accordingly, we express no such opinion.

Our audit included performing procedures to assess

the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond

to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating

the overall presentation of the financial statements.

We believe that our audit provides a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matter communicated below is

a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the

audit committee and that:

(1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially

challenging, subjective, or complex judgments.

The communication of critical audit matter does not alter in any way our opinion on the

financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion

on the critical audit matter or on the accounts or disclosures to which they relate.

Impairment of Intangible Assets

Description of the Matter

As discussed in Note 2 to the financial statements,

the Company’s intangible assets consist of patents which are amortized using the straight-line method over the estimated useful

lives and are reviewed for impairment upon any triggering event that may give rise to the assets ultimate recoverability.

We identified

the impairment assessment of the intangible assets as a critical audit matter due to its materiality to the financial statements and the

significant estimates involved, the audit of which required a high degree of auditor judgment.

How We Addressed the Matter in Our Audit

We tested the Company’s determination of

the carrying value of the intangible assets by comparing the year-end balances to the undiscounted future cash flows and evaluated the

reasonableness of the inputs of the future cash flows to verifiable data.

/s/ MaloneBailey, LLP

www.malonebailey.com

We have served as the Company’s auditor since

Houston, Texas

April 15, 2021

QUEST PATENT RESEARCH CORPORATION AND SUBSIDIARIES

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Current assets

Accounts receivable, net of allowance for doubtful accounts of $ 0 and $ 66,000 , respectively

Cash and cash equivalents

Other current assets

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Loans payable

Purchase price of patents, current portion

Funding liability

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Loan payable – SBA

Purchase price of patents, net of unamortized discount of $ 0 and $ 131,793 , respectively

Purchase price of patents

Total liabilities

Commitments and contingencies (Note 2)

Stockholders’ deficit:

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authorized 30,000,000 at December 31, 2022 and 2021;

shares issued and outstanding 533,334,630 and 383,038,334 at December 31, 2021 and 2020, respectively

shares issued and outstanding 5,331,973 at December 31, 2022 and 5,333,347 ,at December 31, 2021

Additional paid-in capital

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Total liabilities and stockholders’ deficit

See accompanying notes to consolidated financial

See the accompanying notes to the consolidated

financial statements.

QUEST PATENT RESEARCH CORPORATION AND SUBSIDIARIES

Consolidated Statements of Operations

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Patent licensing fees

Operating expenses

Cost of revenues:

Cost of revenue

Litigation and licensing expenses

Operating expenses

Selling, general and administrative expenses

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( 1,832,195 )

Other expense

( 3,113,539 )

Other income (expense)

Gain on forgiveness of debt

Gain on settlement of accounts payable and accrued expenses

Gain on settlement of accounts payable

Warrant expense

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Change in fair market value of warrant liability

Change in fair market value of derivative liability

Loss on conversion of debt

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Interest expense

Total other expense

( 1,039,454 )

Net loss before income tax

( 4,152,993 )

( 1,247,159 )

Provision for income taxes

Total other income (expense)

( 1,039,454 )

Loss before income tax

( 4,152,993 )

Net income attributable to non-controlling interest in subsidiary

Net Loss Attributable to Quest Patent Research Corporation

Income tax benefit (expense)

$ ( 753,516 )

$ ( 4,154,799 )

Net loss per share – Basic and Diluted

Weighted average shares outstanding – basic

Weighted average shares outstanding - diluted

See accompanying notes to consolidated financial

Loss per share - basic and diluted

Weighted average shares outstanding - basic and diluted

See the accompanying notes to the consolidated

financial statements.

QUEST PATENT RESEARCH CORPORATION AND SUBSIDIARIES

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$ ( 6,841,678 )

Resolution of derivative liability

( 1,312,511 )

( 1,312,522 )

Balances as of December 31, 2020

( 21,281,179 )

( 6,841,678 )

Restricted shares issued for services

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Option issued for debt extinguishment

Options granted for compensation

Stock-based compensation

( 4,154,799 )

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( 7,926,723 )

Stock-based compensation

Effect of reverse split

Balances as of December 31, 2022

$ ( 26,189,494 )

$ ( 8,562,827 )

See the accompanying notes to the consolidated

financial statements.

QUEST PATENT RESEARCH CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

Year Ended December 31,

Cash flows from operating activities:

Adjustments to reconcile net loss to net cash used in operating activities:

$ ( 753,516 )

$ ( 4,154,799 )

Adjustments to reconcile net loss to cash used in operating activities:

Amortization of debt discount

Change in fair market value of warrant liability

Change in fair market value of derivative liability

( 1,490,759 )

Stock-based compensation

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Gain on settlement of accounts payable

( 1,725,965 )

Gain on forgiveness of debt

( 1,850,018 )

Amortization of intangible assets

Loss on conversion of debt

Loss on debt extinguishment

Loss on impairment of assets

Bad debt expense

Changes in operating assets and liabilities

Change in operating assets and liabilities:

Accounts receivable

Accrued interest

Accounts payable and accrued expenses

Other current asses

Net cash provided by/(used in) operating activities

Other current assets

Accounts payable and accrued liabilities

( 1,036,637 )

Patents loan payable

Net cash used in operating activities

Cash flows from investing activities:

Purchase of patents

( 1,502,000 )

( 1,150,000 )

Net cash used in investing activities

( 1,502,000 )

( 1,150,000 )

Cash flows from financing activities:

Proceeds from sale of future revenues

Proceeds from SBA loans

Payment on loan – related party

Loan payable – third party

Proceeds from third party loan

Repayment of purchase price of patents

Repayment from sale of future revenues

Net cash from/(used in) financing activities

Net increase (decrease) in cash

Cash at beginning of year

Cash at end of year

Payments on loans - related party

( 1,750,000 )

Payment on loan payable - third party

Proceeds from funding liability

Payment of funding liability

Payment of purchase price of patents

Net cash provided by financing activities

Net increase (decrease) in cash and cash equivalents

Cash and cash equivalents at beginning of period

Cash and cash equivalents at end of period

Non-cash investing and financing activities:

Shares issued for conversion of debt

Resolution of derivative liability

Interest added to principal

Options granted for settlement of debt

Accrued interest added to principal

Supplemental disclosure of cash flow information:

Cash paid during the year for:

Income taxes, including foreign taxing authorities withheld taxes of $ 0 and $ 60,255 during the years ended December 31, 2021, and 2020 respectively.

See accompanying notes to consolidated financial

Cash paid during the period for:

See the accompanying notes to the consolidated

financial statements.

QUEST PATENT RESEARCH CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 – DESCRIPTION OF BUSINESS

DESCRIPTION OF BUSINESS

The Company is a Delaware corporation, incorporated

on July 17, 1987 and has been engaged in the intellectual property monetization business since 2008.

As used herein, the “Company”, “we”,

“us” or “our” refers to Quest Patent Research Corporation and its wholly and majority-owned and controlled operating

subsidiaries unless the context indicates otherwise.

All intellectual property acquisition, development, licensing and enforcement activities

are conducted by the Company’s wholly and majority-owned and controlled operating subsidiaries.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING

As used herein, “we”, “us”,

“our”, the “Company” refer to Quest Patent Research Corporation and its wholly and majority-owned and controlled

operating subsidiaries unless the context indicates otherwise.

All intellectual property acquisition, development, licensing and enforcement

activities are conducted by the Company’s wholly and majority-owned and controlled operating subsidiaries.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation and Financial Statement

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the accounts and operations of:

Quest Patent Research Corporation (“The

Quest Licensing Corporation (NY) (wholly owned)

Quest Licensing Corporation (DE) (wholly owned)

Quest Packaging Solutions Corporation ( 90 % owned)

Quest Nettech Corporation ( 65 % owned)

Quest Patent Research Corporation

(“The Company”)

Digital IP Advisors Inc.

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

Quest Licensing Corporation

(DE) (“QLC”) (wholly owned)

Quest Packaging Solutions

Corporation ( 90 % owned)

Quest Nettech Corporation

(“NetTech”) ( 65 % owned)

Semcon IP, Inc.

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(wholly owned)

Photonic Imaging Solutions Inc.

(wholly owned)

Photonic Imaging Solutions

(“PIS”) (wholly owned)

(wholly owned)

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(wholly owned)

Peregrin Licensing LLC (wholly owned)

Taasera Licensing LLC (wholly owned)

Soundstreak Texas, LLC (wholly owned)

Multimodal Media LLC (wholly owned)

LS Cloud Storage Technologies, LLC (wholly owned)

Significant intercompany transaction and balances have been eliminated

in consolidation.

Peregrin Licensing LLC (“PLL”)

(wholly owned)

Taasera Licensing LLC (“TLL”)

(wholly owned)

Soundstreak Texas LLC (“STX”)

(wholly owned)

Multimodal Media LLC (“MML”)

(wholly owned)

LS Cloud Storage Technologies,

LLC (“LSC”) (wholly owned)

Tyche Licensing LLC (“Tyche”)

(wholly owned)

Deepwell IP LLC (“DIP”)

(wholly owned)

EDI Licensing LLC (“EDI”)

(wholly owned)

Koyo Licensing LLC (“Koyo”)

(wholly owned)

In February 2022, the Company changed the name

of Quest Licensing Corporation to Digital IP Advisors Incorporated.

Significant intercompany transaction and balances

have been eliminated in consolidation.

Reverse Split, Change in Authorized Common

On July 27, 2022, the Company amended its amended

and restated certificate of incorporation.

The amendment (i) decreased the number of authorized shares of common stock from 10,000,000,000

shares to 30,000,000 shares and (ii) effected a one-for-100 reverse split whereby each share of common stock, par value $ 0.00003 per share,

became and was converted into 0.01 shares of such common stock, with fractional shares being rounded up to the next higher whole number

All authorized share and share information in these financial statements retroactively reflect the reverse split and change

in authorized common stock.

Use of Estimates

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financial statements and revenue and expenses during the reporting period.

On an on-going basis, management evaluates estimates including

the allowance for doubtful accounts, income taxes and contingencies.

The Company bases its estimates on historical experience and on other

assumptions that management believes to be reasonable under the circumstances, the results of which form its basis for making judgments

about the carrying values of assets and liabilities that are not readily apparent from other sources.

Actual results could differ from

those estimates.

Actual results could differ from those estimates.

Cash and Cash Equivalents

The Company considers all highly liquid investments

with original maturity dates of three months or less when purchased, to be cash equivalents.

Cash equivalents were $ 0 as of December

31, 2021 and 2020.

The Company considers all highly liquid investments with original maturity

dates of three months or less when purchased, to be cash equivalents.

The Company had no cash equivalents as of December 31, 2022

Accounts Receivable

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when collection of the individual accounts appears doubtful.

The Company recorded an allowance for doubtful accounts of approximately

$ 0 and $ 66,000 at December 31, 2021 and 2020, respectively.

The Company did not record an allowance for doubtful accounts at December 31,

2022 and 2021.

Intangible Assets

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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

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

to impairment of long-lived assets.

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Patent acquisition costs are amortized utilizing the straight-line method over their remaining economic useful lives, ranging from one

to twenty years from the date of filing.

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.

to ten years .

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

estimates are deemed to be recoverable, are capitalized and amortized over the remaining estimated economic useful life of the related

patent portfolio.

Impairment of Long-Lived Assets

Long-lived assets, including intangible assets with a finite life,

are reviewed for impairment in accordance with Accounting Standards Codification (“ASC”) 360, “ Property, Plant, and

Equipment ” whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable

Long-lived assets, including intangible assets

with a finite life, are reviewed for impairment in accordance with Accounting Standards Codification (“ASC”) 360, “Property,

Plant, and Equipment” whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable

through the estimated undiscounted cash flows expected to result from the use and eventual disposition of the assets.

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of the asset is recorded.

The Company recorded non-cash impairment charges of approximately $1,652,000 and $ 0 at December 31, 2021 and

2020, respectively, to write down finite lived intangible assets in the Power Management/Bus Controller, CXT and M-RED portfolios.

The Company recorded a non-cash impairment charge of approximately $ 1,652,000 for the year ended December 31,

2021 to write down finite lived intangible assets in the Power Management/Bus Controller, CXT and M-RED portfolios.

There were no impairments of long-lived assets

for the year ended December 31, 2022.

Warrant Liability

The Company reflects a warrant liability with

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

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

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 include under other income (expense).

reflected as a gain or loss in warrant liability and is included under other income (expense) in the accompanying consolidated statements

of operations.

Fair Value of Financial Instruments

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

4 for information about warrant liabilities.

See Note 4 for

information about our warrant liability.

The fair value hierarchy based on the three levels

of inputs that may be used to measure fair value are as follows:

Level 1 – Quoted prices in active

markets for identical assets or liabilities.

Level 2 – Observable inputs other

than Level 1 prices, such as quoted prices for similar assets or liabilities;

Level 1 – Quoted

prices in active markets for identical assets or liabilities.

Level 2 – Observable inputs

other than Level 1 prices, such as quoted prices for similar assets or liabilities;

or other inputs that are observable or can be corroborated

by observable market data for substantially the full term of the assets or liabilities.

Level 3 – Unobservable inputs that

are supported by little or no market activity and that are financial instruments whose values are determined using pricing models, discounted

cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant

judgment or estimation.

Level 3 – Unobservable

inputs that are supported by little or no market activity and that are financial instruments whose values are determined using pricing

models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires

significant judgment or estimation.

The carrying value reflected in the consolidated

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rates of interest approximate current market rates.

Commitments and Contingencies

In connection with the investment in certain patents

and patent rights, certain of the Company’s operating subsidiaries may execute related agreements which grant to the inventors and/or

former owners of the respective patents or patent rights, the right to receive a percentage of future net revenues (as defined in the

respective agreements) generated as a result of licensing and otherwise enforcing the respective patents or patent portfolios.

The Company’s operating subsidiaries may

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

and enforcement activities.

These law firms may be retained on a contingent fee basis whereby such law firms are paid a percentage of

any negotiated fees, settlements or judgments awarded.

The Company’s operating subsidiaries may

engage with funding sources that provide financing for patent licensing and enforcement.

These litigation finance firms may be engaged

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

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

The economic terms of the inventor agreements,

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

or controlled by the Company’s operating subsidiaries, if any, including royalty rates, contingent fee rates and other terms, vary

across the patent portfolios owned or controlled by such operating subsidiaries and are included in cost of revenues as litigation and

licensing expenses.

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

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

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

Inventor/former owner royalties, contingent legal fees expenses and litigation finance expenses will continue to fluctuate

and may continue to vary significantly period to period, based primarily on these factors.

Revenue Recognition

Patent Licensing Fees

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.

The Company recognizes revenue in accordance with

ASC Topic 606, “Revenue from Contracts with Customers”.

Revenue is recognized when control of the promised goods or services

is transferred to customers at an amount that reflects the consideration to which the entity expects to be entitled to in exchange for

those goods or services.

Under Topic 606, revenue is recognized when there is a contract which has commercial substance which is approved

by both parties and identifies the rights of the parties and the payment terms.

For the periods presented, revenue contracts executed

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grant of certain intellectual property rights for patented technologies owned or controlled by the Company’s 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 (i) 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 (ii) the Company’s promise to transfer each individual intellectual

property right described above to the customer is not separately identifiable from other promises to transfer intellectual property rights

in the contract.

as part of the settlement of litigation commenced by the Company’s subsidiaries.

Intellectual property rights granted included the

following, as applicable:

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

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

any pending litigation.

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

the related patents.

The individual intellectual property rights are not accounted for as separate performance obligations, as (a) the

nature of the promise, within the context of the contract, is to transfer combined items to which the promised intellectual property rights

are inputs and (b) the Company’s promise to transfer each individual intellectual property right described above to the customer

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

Since the promised intellectual property rights

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The contracts provide for

the grant (i.e.

transfer of control) of the licenses, covenants-not-to-sue, releases, and other significant deliverables upon execution

the 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.

earnings process is complete and revenue is recognized upon the execution of the contract, when collectability is probable and all other

revenue recognition criteria have been met.

Revenue contracts generally provide for payment of contractual amounts within 30-90 days of

execution of the contract.

As such, the earnings

process is complete and revenue is recognized upon the execution of the contract, when collectability is probable and all other revenue

recognition criteria have been met.

Revenue contracts generally provide for payment of contractual amounts within 30 to 90 days of execution

of the contract.

Contractual payments made by licensees are generally non-refundable.

We do not have any significant payment

The Company does not have any significant payment

terms, as payment is received shortly after goods are delivered or services are provided, therefore there is no significant financing

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Cost of Revenues

Cost of revenues include the costs and expenses

incurred in connection with our patent licensing and enforcement activities, including inventor royalties paid to original patent owners,

contingent litigation funding fees, contingent legal fees paid to external patent counsel, other patent-related legal expenses paid to

external patent counsel, licensing and enforcement related research, consulting and other expenses paid to third-parties and the amortization

of patent-related investment costs.

These costs are included under the caption “Cost of revenues” in the accompanying consolidated

statements of operations.

No such fees are recognized as cost of revenue to the extent that the Company has no obligation with respect

to such fees prior to a settlement or license.

Cost of revenues mainly includes expenses incurred

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

patents and other related expenses.

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

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

Inventor Royalties, Litigation Funding Fees

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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.

These law firms may be retained on a contingent fee basis whereby such law firms are paid a percentage of

any negotiated fees, settlements or judgments awarded.

The Company’s operating subsidiaries may

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

These litigation finance

firms may be engaged on a non-recourse basis whereby such litigation finance firms are paid a percentage of any negotiated fees, settlements

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

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these factors.

Research and development

Research and development costs are expensed as

We did not incur any research and development costs in the years ended December 31, 2021 and 2020.

Revenue from one customer comprised approximately 55 % and approximately 82 % of revenue for the years ended December 31, 2022 and 2021,

respectively.

Deferred income tax assets and liabilities are

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Stock-Based Compensation

The Company recognizes stock-based compensation pursuant to ASC 718,

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

transactions in which employee services, 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 or non-employee is required

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

In February 2016, the FASB issued ASU 2016-02,

“Leases” (Topic 842), to provide a new comprehensive model for lease accounting under this guidance, lessees and lessors should

apply a “right-of-use” model in accounting for all leases (including subleases) and eliminate the concept of operating leases

and off-balance-sheet leases.

Recognition, measurement and presentation of expenses will depend on classification as a finance or operating

Similar modifications have been made to lessor accounting in-line with revenue recognition guidance.

The Company recognizes stock-based compensation

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

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

Transactions include incurring liabilities,

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

Stock-based payments to employees and non-employees, including grants of employee stock options, are recognized as compensation

expense in the financial statements based on their fair values.

That expense is recognized over the period during which an employee or

non-employee is required to provide services in exchange for the award, known as the requisite service period (usually the vesting period).

Concentration of Credit Risk

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Business Acquisitions

The acquisition of STX and LS Cloud Storage Technologies, LLC (“LSC”)

did not constitute acquisition of a business and therefore were accounted for as asset acquisitions in accordance with ASC 805, Business

Combinations (“ASC 805”).

ASC 805 provides, among other things, that asset acquisitions be accounted for using a cost accumulation

and allocation model under which the cost of the acquisition is allocated to the assets acquired and liabilities assumed.

with regarding the STX and LSC acquisitions.

Gain from Cancelation of Indebtedness

The Company recognized a gain from the elimination

of liability for minimum cumulative net proceeds distributions constituting a portion of the purchase price due to the seller of two of

the Company’s patent portfolios and the reduction of liability for legal services resulting from the settlement of the Company’s

recorded obligation for unpaid legal services.

Net Loss Per Share

In August and November 2021, the Company acquired

all of the issued and outstanding equity interests of STX and LSC, respectively.

The acquisitions were accounted for in accordance

with ASC 805, Business Combinations (“ASC 805”).

ASC 805 provides, among other things, that the assets acquired and liabilities

assumed constitute a business.

If the assets acquired are not a business, the reporting entity shall account for the transaction or other

event as an asset acquisition which are accounted for using a cost accumulation and allocation model under which the cost of the acquisition

is allocated to the assets acquired and liabilities assumed.

Under ASC 805, the company concluded that the acquisitions did not constitute

acquisition of a business and therefore were accounted for as asset acquisitions in accordance with ASC 805.

See Note 11 for more information

regarding the STX and LSC acquisitions.

Gain from Cancellation of Indebtedness

On July 23, 2021, the Company paid $ 1,150,000

in full satisfaction of the disputed and unpaid legal services performed by the Company’s former legal counsel for services relating

to the monetization of the Company’s intellectual property rights.

The Company recognized a gain on settlement of accounts payable

of approximately $ 1,726,000 as a result of the resolution of the dispute.

Net Income (Loss) Per Share

The Company calculates net losses per share by

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the Company incurred losses in all periods covered by the financial statements the inclusion of diluted weighted average shares would

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

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

The Company’s potentially

dilutive securities include 962,463 potential shares of common stock issuable upon exercise of warrants granted to QFL in connection with

the Purchase Agreement, 500,000 shares of common stock issuable upon exercise of stock options granted to Intelligent Partners in connection

with the Restructure Agreement and 600,000 shares of common stock issuable upon exercise of stock options granted to officers and consultants.

See Notes 3, 4 and 5.

Recent Accounting Pronouncements

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As shown in the accompanying financial statements,

the Company has an accumulated deficit of approximately $ 25.4 million and negative working capital of approximately $ 8.1 million as of

December 31, 2021.

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

the Company’s obligations to Intellectual Ventures, Intelligent Partners, QPRC Finance LLC (“QFL”), the Company’s

low stock price and the absence of an active trading market in its common stock, the ability of the Company to raise funds in the equity

market or from lenders is severely impaired.

These conditions, together with the effects of the COVID-19 pandemic and the steps taken

by the states to slow the spread of the virus and its effect on its business raise substantial doubt as to the Company’s ability

to continue as a going concern.

Although the Company may seek to raise funds and to obtain third party funding for litigation to enforce

its intellectual property rights, the availability of such funds, 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.

NOTE 3 – SHORT TERM DEBT AND LONG-TERM

On July 23, 2021, the Company paid $ 1,150,000

in full satisfaction of the disputed and unpaid legal services performed by the Company’s former legal counsel for services relating

to the monetization of the Company’s intellectual property rights.

The Company recognized a gain on settlement of accounts payable

of approximately $ 1,726,000 in conjunction with the resolution of the dispute.

The Company’s obligation to its former counsel is

included under accounts payable and accrued liabilities on the Company’s December 31, 2020 balance sheet.

The following table shows the Company’s

debt at December 31, 2021 and 2020.

the Company has an accumulated deficit of approximately $ 26,189,000 and negative working capital of approximately $ 9,490,000 as of December 31,

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

obligations to Intelligent Partners, and QPRC Finance LLC (“QFL”), the Company’s low stock price and the absence of

an active trading market in its common stock, the ability of the Company to raise funds in the equity market or from lenders is severely

These conditions, together with the effects of the COVID-19 pandemic and the steps taken by the states to slow the spread of

the virus and its effect on its business as well as any adverse consequences which would result from our failure to meet the continued

listing requirements of the OTCQB (see Note 10), raise substantial doubt as to the Company’s ability to continue as a going concern.

The Company’s revenue is generated almost exclusively from license fees generated from litigation seeking damages for infringement

of the Company’s intellectual property rights.

Although the Company may seek to raise funds and to obtain third-party funding for

litigation to enforce its intellectual property rights, the availability of such funds is uncertain.

The financial statements do not include

any adjustments that might result from the outcome of this uncertainty.

SHORT-TERM DEBT AND LONG-TERM

Short-Term Debt

Loans Payable

Funding liability

Loan payable – related party

Purchase price of patents – current portion

Unamortized discount

Net short-term debt

Long-term liabilities:

Loans payable - SBA

Accrued interest

Net loans payable - SBA

Purchase price of patents

Unamortized discount

Net purchase price of patents – long-term

Short-term debt

The loan payable – third party are demand

loans made to former officers and directors, now unrelated third parties, and shareholders in the amount of $ 138,000 and $ 147,000 as of

December 31, 2021 and 2020, respectively.

During the years ended December 31, 2021 and 2020 the Company paid $ 9,000 and $ 0 , respectively,

against the loans.

The loans payable represents demand loans made

by former officers and directors, who are third parties and stockholders, whose holdings were insignificant, at December 31, 2022

and 2021, in the amount of $ 138,000 .

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

Accrued interest at December

31, 2022 and 2021 was approximately $ 296,000 and $ 282,000 , respectively.

Funding Liability

The funding liability at December 31, 2021 represents

the principal amount of the Company’s obligations to QFL, a non-affiliated party, pursuant to a purchase agreement (“Purchase

Agreement”) dated February 22, 2021 between the Company and QFL, as described below.

The obligation to QFL is classified as a current

liability as of December 31, 2021.

The funding liability at December 31, 2022

and 2021 represents the principal amount of the Company’s obligations to QFL pursuant to a purchase agreement (“Purchase Agreement”)

dated February 22, 2021 between the Company and QFL, as described below.

As of December 31, 2022, the Company had made total repayments

in the amount of approximately $ 750,000 since February 22, 2021.

Approximately $ 53,000 was repaid during the year ended December 31, 2022.

The obligation to QFL has no repayment term and has been classified as a current liability as of December 31, 2022.

On February 22, 2021, the Company entered into

a series of agreements, all dated February 19, 2021,with QFL, including a Prepaid Forward Purchase Agreement (the “Purchase Agreement),

a series of agreements, all dated February 19, 2021, with QFL, a non-affiliated party, including the “Purchase Agreement”,

a security agreement (the “Security Agreement”), a subsidiary security agreement (the “Subsidiary Security Agreement”),

a subsidiary guaranty (the “Subsidiary Guarantee”), a warrant issue agreement (the “Warrant Issue Agreement”),

a subsidiary guaranty (the “Subsidiary Guaranty”), a warrant issue agreement (the “Warrant Issue Agreement”),

a registration rights agreement (the “Registration Rights Agreement”) and a board observation rights agreement (the “Board

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to which, at the closing held contemporaneously with the execution of the agreements:

(i) Pursuant to the Purchase Agreement, QFL agreed to make available to the Company a financing facility of:

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

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

and (iii) $ 1,750,000 to fund the cash payment portion of the restructure of the Company’s obligations to Intelligent Partners.

In return the Company transferred to QFL a right to receive a portion of net proceeds generated from the monetization of those patents.

(ii) The Company used $ 1,750,000 of proceeds from the QFL financing as the cash payment portion of the restructure of the Company’s obligations to Intelligent Partners pursuant to the Restructure Agreement executed contemporaneously with the closing of the Investment Documents.

The payment was made directly from QFL to Intelligent Partners.

Pursuant to the Security Agreement, the Company’s obligations under the Purchase Agreement with QFL are secured by:

(i) Pursuant to the Purchase Agreement,

QFL agreed to make available to the Company a financing facility of:

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

rights that the Company intends to monetize, of which $ 2,653,000 has been advanced as of December 31, 2022;

(b) up to $ 2,000,000

for operating expenses, of which the Company has requested and received $ 1,800,000 as of December 31, 2022;

and (iii) $ 1,750,000

to fund the cash payment portion of the restructure of the Company’s obligations to Intelligent Partners.

In return the Company

transferred to QFL a right to receive a portion of net proceeds generated from the monetization of those patents.

(ii) The Company used $ 1,750,000 of

proceeds from the QFL financing as the cash payment portion of the restructure of the Company’s obligations to Intelligent Partners

pursuant to the Restructure Agreement executed contemporaneously with the closing of the Investment Documents.

The payment was made directly

from QFL to Intelligent Partners.

(iii) Pursuant to the Security Agreement,

the Company’s obligations under the Purchase Agreement with QFL are secured by:

(a) the proceeds (as defined in the Purchase Agreement);

(b) the patents (as defined in the Purchase Agreement;

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

Pursuant to the Subsidiary Guaranty, eight of the Company’s subsidiaries –QLC, NetTech, Mariner, Semcon, IC, CXT, M-Red, and AMI, collectively, the “Subsidiary Guarantors”) guaranteed the Company’s obligations to QFL under the Purchase Agreement.

Pursuant to the Subsidiary Security Agreement, the Subsidiary Guarantors granted QFL a security interest in the proceeds from the future monetization of their respective patent portfolios.

(vi) Pursuant to the Warrant Issue Agreement, the Company granted QFL ten-year warrants to purchase a total of up to 96,246,246 shares of the Company’s common stock, at an exercise price of $ 0.0054 per share which may be exercised from the date of exercise through February 18, 2031 on a cash or cashless basis.

Exercisability of the warrant is limited if, upon exercise, the holder or any of holder’s affiliates would beneficially own more than 4.99 % (the “Maximum Percentage”) of the Company’s common stock, except that by written notice to the Company, the holder may change the Maximum Percentage to any other percentage not in excess of 9.99 % provided any such change will not be effective until the 61 st day following notice to the Company.

The warrant also contains certain minimum ownership percentage antidilution rights pursuant to which the aggregate number of shares of common stock purchasable upon the initial exercise of the warrant shall not be less than 10 % of the aggregate number of outstanding shares of capital stock of the Company (determined on a fully diluted basis).

A portion of any gain from sale of the shares, net of taxes and costs of exercise, realized prior to the completion of all monetization activities shall be credited against the total return due to QFL pursuant to the Purchase Agreement.

See Notes 4 and 5 for information on the warrant issuance and associated liability.

The Company regained compliance with the OTCQB Eligibility Requirements on May 7, 2021, at which time the common stock recommenced trading on the OTCQB.

(viii) The Company granted QFL certain registration rights with respect to the 96,246,246 shares of common stock issuable upon exercise of the warrant.

See Note 5 for information on the warrant issuance.

Pursuant to the Board Observation Rights Agreement, until the later of the date on which QFL or its affiliates (i) have received the entirety of their Investment Return (as defined in Purchase Agreement), and (ii) no longer hold any Securities (the “ Observation Period ”), the Company granted QFL the right, exercisable at any time during the Observation Period, to appoint a representative to attend meetings (including, without limitation, telephonic or other electronic meetings) of the Board or any committee thereof, including executive sessions, in an observer capacity.

(iv) Pursuant to the Subsidiary Guaranty,

eight of the Company’s subsidiaries – QLC, NetTech, Mariner, Semcon, IC, CXT, M-Red, and AMI, collectively, the “Subsidiary

Guarantors”) guaranteed the Company’s obligations to QFL under the Purchase Agreement.

(v) Pursuant to the Subsidiary Security

Agreement, the Subsidiary Guarantors granted QFL a security interest in the proceeds from the future monetization of their respective

patent portfolios.

(vi) Pursuant to the Warrant Issue Agreement,

the Company granted QFL ten-year warrants to purchase a total of up to 962,463 shares of the Company’s common stock, at an exercise

price of $ 0.54 per share which may be exercised from the grant date through February 18, 2031 on a cash or cashless basis.

Exercisability

of the warrant is limited if, upon exercise, the holder or any of holder’s affiliates would beneficially own more than 4.99 % (the

“Maximum Percentage”) of the Company’s common stock, except that by written notice to the Company, the holder may change

the Maximum Percentage to any other percentage not in excess of 9.99 % provided any such change will not be effective until the 61st day

following notice to the Company.

The warrant also contains certain minimum ownership percentage antidilution rights pursuant to which

the aggregate number of shares of common stock purchasable upon the initial exercise of the warrant shall not be less than 10 % of the

aggregate number of outstanding shares of capital stock of the Company (determined on a fully diluted basis).

Because the facility with

QFL has no term the fair value of the warrants was expensed at the grant date.

A portion of any gain from sale of the shares, net of taxes

and costs of exercise, realized prior to the completion of all monetization activities shall be credited against the total return due

to QFL pursuant to the Purchase Agreement.

See Notes 4 and 5 for information on the warrant issue and associated liability.

(vii) The Company regained compliance

with the OTCQB Eligibility Requirements on May 7, 2021, at which time the common stock recommenced trading on the OTCQB.

(viii) The Company granted QFL certain

registration rights with respect to the 962,463 shares of common stock issuable upon exercise of the warrant.

See Note 5 for information

on the warrant issue.

(ix) Pursuant to the Board Observation

Rights Agreement, until the later of the date on which QFL or its affiliates (i) have received the entirety of their Investment Return

(as defined in Purchase Agreement), and (ii) no longer hold any Securities (the “Observation Period”), the Company granted

QFL the right, exercisable at any time during the Observation Period, to appoint a representative to attend meetings (including, without

limitation, telephonic or other electronic meetings) of the Board or any committee thereof, including executive sessions, in an observer

On February 26, 2021, the Company entered into

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received a capital advance from QFL in the amount of $ 350,000 pursuant to the Purchase Agreement, which was used to make payment to PKT.

On May 20, 2021, Taasera Licensing LLC, a wholly

owned subsidiary, entered into an agreement with Taasera, Inc.

to acquire all right, title, and interest in a portfolio of seven United

States patents (the “Taasera Portfolio”) for $250,000.

The Company requested and received a capital advance from QFL in the

amount of $250,000 pursuant to the Purchase Agreement, which was used to make payment to Taasera, Inc.

On October 15, 2021, the Company’s wholly

owned subsidiary, Multimodal Media LLC (“MML”), acquired all right, title, and interest in a portfolio of nine United States

patents (the “MML Portfolio”) for a purchase price of $ 550,000 pursuant to an agreement with AI, pursuant to which MML retains

an amount equal to the purchase price plus any fees incurred out of net proceeds, as defined in the agreement, after which AI is entitled

to a percentage of further net proceeds realized, if any.

The Company requested and received a capital advance from QFL in the amount

of $550,000 pursuant to the Purchase Agreement, which was used to make payment to AI.

On May 20, 2021, TLL, entered into an agreement

with Taasera, Inc.

to acquire all right, title, and interest in a portfolio of seven United States patents (the “Taasera Portfolio”)

for $ 250,000 .

The Company requested and received a capital advance from QFL in the amount of $ 250,000 pursuant to the Purchase Agreement,

which was used to make payment to Taasera, Inc.

On October 15, 2021, MML, acquired all right,

title, and interest in a portfolio of nine United States patents (the “MML Portfolio”) for a purchase price of $ 550,000 pursuant

to an agreement with Aawaaz Inc.

(“AI”), pursuant to which MML retains an amount equal to the purchase price plus any fees

incurred out of net proceeds, as defined in the agreement, after which AI is entitled to a percentage of further net proceeds realized,

The Company requested and received a capital advance from QFL in the amount of $ 550,000 pursuant to the Purchase Agreement, which

was used to make payment to AI.

On January 27, 2022, the Company acquired, via

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

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

The Company requested and received a capital advance

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

Two of the patents were assigned to Tyche and the balance of

the patents were assigned to DIP.

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

Agreement to add two additional patent families for an additional $ 92,000 .

The Company requested and received a capital advance from QFL

in the amount of $ 92,000 , which was used to make payment to AI in August 2022 pursuant to the amendment to the Purchase Agreement.

In July 2022, EDI acquired, via assignment from

Ioli Trust, all right title and interest to a portfolio of five United States patents relating to a system and method for controlling

vehicles and for providing assistance to operated vehicles (“EDI Portfolio”) for a purchase price consisting of 50 % of the

net proceeds resulting from monetization of the EDI Portfolio.

In July 2022, the Company entered into a purchase

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

Patents for a purchase price of $ 350,000 .

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

requested and received a capital advance from QFL in the amount of $ 350,000 , which was used to make payment of the balance in August 2022

pursuant to the terms of the purchase agreement.

The Company requested and received operating capital

advances in the amount of $ 1,000,000 from QFL pursuant to the Purchase Agreement during the year ended December 31, 2021.

advances in the amount of $ 800,000 and $ 1,000,000 from QFL pursuant to the Purchase Agreement during the years ended December 31, 2022

and 2021, respectively.

Loan Payable Related Party

The loan payable – related party at December 31,

31, 2021 represents the current amount of a non-interest bearing total monetization proceeds obligation (the “TMPO”) to Intelligent

Partners, LLC (“Intelligent Partners”) of $2,805,000, pursuant to a restructure agreement (“Restructure Agreement”)

dated February 22, 2021 whereby the Company and Intelligent Partners, extinguished the Company’s 10% note to Intelligent Partners

as transferee of the notes issued to United Wireless Holdings, Inc.

(“United Wireless”), in the amount of $4,672,810 pursuant

to securities purchase agreement dated October 22, 2015 between the Company and United Wireless.

The notes became due by their terms on

September 30, 2020, and the Company did not make any payment on account of principal and interest on the notes.

Subsequent to September

30, 2020, the Company engaged in negotiations with Intelligent Partners in parallel with the Company’s negotiations with QFL, with

a view to restructuring the Company’s obligations under the United Wireless agreements, including the notes, so that the Company

no longer had any obligations under the notes or the SPA.

These negotiations resulted in the Restructure Agreement, described below, which

provided for the payment to Intelligent Partners of $1,750,000 from the proceeds from the Company’s agreements with QFL.

of the restructure of the Company’s agreements with Intelligent Partners, the Company amended the existing monetization proceeds

agreements (“MPAs”) and granted Intelligent Partners certain rights in the monetization proceeds from any new intellectual

property the Company acquires, as describe below.

Under these MPAs, Intelligent Partners participates in the monetization proceeds the

Company receives with respect to new patents after QFL has received its negotiated rate of return.

2022 and 2021 represents the current amount of a non-interest bearing total monetization proceeds obligation (the “TMPO”)

to Intelligent Partners, LLC (“Intelligent Partners”) of $ 2,796,500 and $ 2,805,000 , respectively, pursuant to a restructure

agreement (“Restructure Agreement”) dated February 22, 2021 whereby the Company and Intelligent Partners, extinguished the

Company’s 10 % Note to Intelligent Partners as transferee of the notes issued to United Wireless Holdings, Inc.

(“United Wireless”),

in the amount of $ 4,672,810 pursuant to securities purchase agreement dated October 22, 2015 between the Company and United Wireless.

The notes became due by their terms on September 30, 2020, and the Company did not make any payment on account of principal of and interest

on the notes.

Subsequent to September 30, 2020, the Company engaged in negotiations with Intelligent Partners in parallel with the Company’s

negotiations with QFL, with a view to restructuring the Company’s obligations under the United Wireless agreements, including the

notes, so that the Company no longer had any obligations under the notes or the SPA.

These negotiations resulted in the Restructure Agreement,

described below, which provided for the payment to Intelligent Partners of $ 1,750,000 from the proceeds from the Company’s agreements

As part of the restructure of the Company’s agreements with Intelligent Partners, the Company amended the existing MPAs

and granted Intelligent Partners certain rights in the monetization proceeds from any new intellectual property the Company acquires,

as described below.

Under these MPAs, Intelligent Partners participates in the monetization proceeds the Company receives with respect

to new patents after QFL has received its negotiated rate of return.

On or prior to the date of the Restructure Agreement,

Intelligent Partners transferred to 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 .

Intelligent Partners transferred to Andrew Fitton (“Fitton”) and Michael Carper (“Carper”) $ 250,000 of the notes

(the “Transferred Note”), thereby reducing the principal amount of the notes held by Intelligent Partners to $ 4,422,810 .

On February 22, 2021, the Company and Intelligent

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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, the Company paid Intelligent Partners $ 1,750,000 at closing, which the Company received from QFL and which QFL paid directly to Intelligent Partners, and recognized the TMPO, which shall, from and after the Restructure Date, be reduced on a dollar for dollar basis by (a) payments to Intelligent Partners pursuant to the restructure agreement, the Restructure MPAs and the MPA-NA and (b) any election by the Intelligent Partners to pay the Exercise Price of the Restructure Option, in whole or part, by means of a reduction in the then outstanding TMPO.

The TMPO has been classified as a current liability as of September 30, 2021.

(ii) Pursuant to the Stock Purchase Agreement, the Company issued to Fitton and Carper, as holders of the Transferred Note, a total of 46,296,296 shares of 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”).

For purposes of extinguishment, the issuance of the Conversion Shares in full satisfaction of the Transferred Note balance of $ 250,000 is included in the reacquisition price of the debt.

The Company recognized a loss on debt conversion of $ 305,556 which is the difference between the agreed conversion price and the fair value of the Conversion Shares at the date of conversion.

See Note 5 for information on the share issue.

(iii) Pursuant to the Option Grant, the Company granted Intelligent Partners an option to purchase a total of 50,000,000 shares of common stock, with an exercise price of $ 0.0054 per share which vests immediately and may be exercised through September 30, 2025.

The Company valued the option at approximately $ 598,000 using the Black-Scholes pricing model.

The proceeds were allocated to the repurchase price of the debt extinguishment based on its fair value.

the Restructure Agreement, a Stock Purchase Agreement (the “Stock Purchase Agreement”),

an Option Grant (the “Option Grant”), an Amended and Restated Pledge Agreement (the “Pledge Agreement”), an Amended

and Restated Registration Rights Agreement (the “Registration Rights Agreement”), a Board Observation Agreement (the “Board

Observation Agreement”), a MPA-NA Security Interest Agreement (the “MPA-NA Security Interest Agreement”), an Amended

and Restated Patent Proceeds Security Agreement (the “Patent Proceeds Security Agreement”, an Amended and Restated MPA-CP

(the “MPA-CP”), an Amended and Restated MPA-CXT (the “MPA-CXT”), a MPA-MR (the “MPA-MR”), a MPA-AMI

(the “MPA-AMI,” and together with the MPA-CP, MPA-CXT and MPA-MR, each a Restructure MPA and together the Restructure MPAs)

and a MPA-NA (the “MPA-NA”).

(i) Pursuant to the Restructure Agreement,

the Company paid Intelligent Partners $ 1,750,000 at closing, which the Company received from QFL and which QFL paid directly to Intelligent

Partners, and recognized the TMPO, which shall, from and after the Restructure Date, be reduced on a dollar for dollar basis by (a) payments

to Intelligent Partners pursuant to the Restructure Agreement, the Restructure MPAs and the MPA-NA and (b) any election by the Intelligent

Partners to pay the Exercise Price of the Restructure Option, in whole or part, by means of a reduction in the then outstanding TMPO.

The TMPO has been classified as a current liability as of December 31, 2022.

(ii) Pursuant to the Stock Purchase

Agreement, the Company issued to Fitton and Carper, as holders of the Transferred Note, a total of 462,963 shares of common stock at a

purchase price of $ 0.54 per share, which purchase price was paid by the conversion and in full satisfaction of the Transferred Note (the

“Conversion Shares”).

For purposes of extinguishment, the issuance of the Conversion Shares in full satisfaction of the Transferred

Note balance of $ 250,000 is included in the reacquisition price of the debt.

The Company recognized a loss on debt conversion of $ 305,556

which is the difference between the agreed conversion price and the fair value of the Conversion Shares at the date of conversion.

Note 5 for information on the share issue.

(iii) Pursuant to the Option Grant,

the Company granted Intelligent Partners an option to purchase a total of 500,000 shares of common stock, with an exercise price of $ 0.54

per share which vests immediately and may be exercised through September 30, 2025.

The Company valued the option at approximately $ 598,000

using the Black-Scholes pricing model.

The proceeds were allocated to the repurchase price of the debt extinguishment based on its fair

See Note 5 for information on the option grant.

(iv) Pursuant to the restructured monetization proceeds agreement, Intelligent Partners has a right to receive 60 % of the net monetization proceeds from the patents currently owned by the Subsidiary Guarantors.

The agreement has no termination provisions, so Intelligent Partners will be entitled to its percentage interest as long as revenue is generated from the intellectual property covered by the agreement.

(v) Pursuant to the MPA-NA, until the TMPO has been paid in full, Intelligent Partners is entitled to receive 10% of the net proceeds realized from new assets acquired by the Company.

If, in any calendar quarter, net proceeds realized exceed $1,000,000, Intelligent Partners’ entitlement for that quarter only shall increase to 30% on the portion of net proceeds in excess of $1,000,000 but less than $3,000,000.

If in the same calendar quarter, net proceeds exceed $3,000,000, Intelligent Partners’ entitlement for that quarter only shall increase to 50% on the portion of net proceeds in excess of $3,000,000.

After satisfaction of the TMPO, the MPA-NA and Intelligent Partners’ interest in new asset proceeds shall terminate.

(vi) The Company granted Intelligent Partners, 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 option.

Pursuant to the Subsidiary Security Agreement, the Company’s obligations under its agreements with Intelligent Partners, including its obligations under the Restructure Agreement and the Restructure MPAs are secured by a security interest in the net proceeds realized from the future monetization of the patents currently owned by the eight subsidiaries named above.

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.

(iv) Pursuant to the restructured monetization

proceeds agreement, Intelligent Partners has a right to receive 60 % of the net monetization proceeds from the patents currently owned

by the Subsidiary Guarantors.

The agreement has no termination provisions, so Intelligent Partners will be entitled to its percentage

interest as long as revenue is generated from the intellectual property covered by the agreement.

(v) Pursuant to the MPA-NA, until the

TMPO has been paid in full, Intelligent Partners is entitled to receive 10% of the net proceeds realized from new assets acquired by the

If, in any calendar quarter, net proceeds realized exceed $1,000,000, Intelligent Partners’ entitlement for that quarter

only shall increase to 30% on the portion of net proceeds in excess of $1,000,000 but less than $3,000,000.

If in the same calendar quarter,

net proceeds exceed $3,000,000, Intelligent Partners’ entitlement for that quarter only shall increase to 50% on the portion of

net proceeds in excess of $3,000,000.

After satisfaction of the TMPO, the MPA-NA and Intelligent Partners’ interest in new asset

proceeds shall terminate.

(vi) The Company granted Intelligent

Partners, Fitton and Carper certain registration rights with respect to (i) the 500,000 shares currently owned by Fitton and Carper;

the 462,963 Conversion Shares issued to Fitton and Carper, and (iii) the 500,000 shares of common stock issuable upon exercise of the

(vii) Pursuant to the Subsidiary Security

Agreement, the Company’s obligations under its agreements with Intelligent Partners, including its obligations under the Restructure

Agreement and the Restructure MPAs are secured by a security interest in the net proceeds realized from the future monetization of the

patents currently owned by the eight subsidiaries named above.

(viii) Pursuant to the MPA-NA-Security

Interest Agreement, our obligations under the MPA-NA are secured by a security interest in net proceeds realized from the future monetization

of new patents acquired until the TMPO is satisfied, provided Intelligent Partners’ secured interest shall be limited to its entitlement

in Net Proceeds under the MPA-NA.

After satisfaction of the TMPO the security interest in proceeds from new assets shall terminate.

Pursuant to the Board Observation Rights Agreement, until the Total Monetization Proceeds Obligation has been satisfied (the “ Observation Period ”), the Company granted Intelligent Partners the option and right, exercisable at any time during the Observation Period, to appoint a representative to attend meetings of the Board or any committee thereof, including executive sessions, in an observer capacity.

Intelligent Partners has no right to appoint a director to the board.

(ix) Pursuant to the Board Observation

Rights Agreement, until the Total Monetization Proceeds Obligation has been satisfied (the “Observation Period”), the Company

granted Intelligent Partners the option and right, exercisable at any time during the Observation Period, to appoint a representative

to attend meetings of the Board or any committee thereof, including executive sessions, in an observer capacity.

Intelligent Partners

has no right to appoint a director to the board.

Events of Default include (i) a Change of Control

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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

The Company recognized a loss on extinguishment

of the note of $ 730,378 reflected as follows:

Partners, or any Affiliate or member of Intelligent Partners, or (v) acceleration of an obligation in excess of $ 1,000,000 to another

provider of financing following a final determination by arbitration or other judicial proceeding that such obligation is due and owing.

During the year ended December 31, 2021, the Company

recognized a loss on extinguishment of the note of $ 730,378 reflected as follows:

Carrying amount as of the restructure date

Less unamortized debt discount and issuance costs

Net carrying amount

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$ ( 730,378 )

Because of its ownership percentage, Intelligent

Partners is treated as a related party.

Because of the beneficial ownership percentage

of its principals, Intelligent Partners is treated as a related party.

Long-Term Liabilities

Loan Payable – SBA

The loans payable – SBA balance at December 31,

2022 and 2021 of $ 150,000 represents the total amount due under a secured Economic Injury Disaster Loan from the U.S.

Small Business Association

(“SBA”) in the aggregate amount of $ 150,000 , pursuant to Section 7(b) of the Small Business Act as part of the COVID-19 relief

The Company’s obligations on the loan are set forth in the Company’s note dated May 14, 2020 which matures on May

14, 2050 and bears interest at a rate of 3.75 % per annum, payable monthly commencing on November 14, 2022.

The Note may be prepaid by

the Company at any time prior to maturity with no prepayment penalties.

Funds from the Loan may be used solely as working capital to alleviate

economic injury caused by disaster occurring in the month of January 31, 2020 and continuing thereafter and to pay Uniform Commercial

Code (UCC) lien filing fees and a third-party UCC handling charge of $ 100 which were deducted from the loan amount stated above.

to the loan, as part of the COVID-19 relief effort, the Company obtained an Emergency EIDL Grant from the SBA in the amount of $ 1,000 .

The Company is not required to repay the grant.

Purchase Price of Patents

The purchase price of patents – current

portion at December 31, 2021 represents the current portion of minimum payments due under the agreements between:

● CXT and Intellectual Ventures Assets 34, LLC and Intellectual Ventures 37, LLC (“IV 34/37”) pursuant to which at closing CXT acquired by assignment 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 recoveries, as defined, to IV 34/37.

CXT advanced $25,000 to IV 34/37 at closing, and agreed, pursuant to an amendment dated January 26, 2018, that in the event that, 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 necessary to achieve the applicable minimum payment amount within ten days after the applicable date;

with any advances being credited toward future distributions to IV 34/36.

As of December 31, 2020, cumulative distributions totaling $375,000 had been made and CXT did not pay the $600,000 difference to IV 34/37 within ten days and the remaining $600,000 of the minimum future cumulative distributions due were presented as short-term debt.

On December 31, 2021 the parties amended the agreement to provide that CXT will distribute 65% of net proceeds, as defined, to IV 34/37, as long as CXT generates revenue from the CXT Portfolio and that if, on December 31, 2018 and December 31, 2019, cumulative distributions to IV 34/37 total less than $100,000 and $375,000, 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.

As of December 31, 2019 cumulative distributions to IV 34/37 totaled $375,000, no further minimum cumulative distributions are required pursuant to the agreement as amended and the Company recorded a gain on forgiveness of $600,000.

No affiliate of CXT has guaranteed the minimum payments.

CXT’s obligations under the agreement are secured by a security interest in the proceeds (from litigation or otherwise) from the CXT Portfolio.

● M-RED and Intellectual Ventures Assets 113 LLC and Intellectual Ventures Assets 108 LLC (“IV 113/108”) pursuant to which at closing 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 M_RED generates 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;

with any advances being credited toward future distributions to IV 113/108.

As of December 31, 2020, cumulative distributions totaling $975,000 had not been made and M-RED did not pay the $900,000 difference to IV 113/108 within ten days and the remaining $900,000 of the minimum future cumulative distributions due were presented as short-term debt.

On December 31, 2021 the parties amended the agreement to provide that M-RED will distribute 100% of undistributed net proceeds, as defined, resulting from agreements signed prior to December 31, 2021 and 65% of net proceeds thereafter to IV 113/108, as long as M-RED generates revenue from the M-RED Portfolio and that if, on December 31, 2021 cumulative distributions to IV 113/108 total less than $302,113.89, 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.

As of December 31, 2021 cumulative distributions to IV 113/108 totaled $302,113.89, no further minimum cumulative distributions are required pursuant to the agreement as amended and the Company recorded a gain on forgiveness of approximately $1,230,000.

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 purchase price of patents at December 31,

2021 represents:

The purchase price of patents balance at December 31,

2022 and 2021 of $53,665 and $190,000 , respectively represents:

The non-current portion of our obligations under

4 unchanged sentences

received $ 190,000 .

The Company has no other obligation to the third party and has no liability to the funder in the event that the Company

does not generate net proceeds.

Pursuant to ASC 470, the company recorded this monetization obligation as debt and the difference between

the purchase price and total obligation as a discount to the debt and fully expensed to interest during the period.

The balance of the purchase price of the patents

is reflected as follows:

Current Liabilities:

Purchase price of patents, current portion

Unamortized discount

Non-current liabilities:

Purchase price of patents, long term

Unamortized discount

Total current and non-current

Effective interest rate of Amortization over 2 years

Because the non-current minimum payment obligations

were due over three years , the Company imputed interest of 10 % which was recorded as a discount to the liabilities and amortized through

the maturity date.

Long term liabilities

The loans payable-SBA at December 31, 2021 represents:

● An unsecured loan from JPMorgan Chase Bank, N.A.

in the aggregate amount of $ 20,832 , pursuant to the Paycheck Protection Program (the “PPP”) under Division A, Title I of the Coronavirus Aid, Relief, and Economic Security Act, also known as the CARES Act, which was enacted March 27, 2020.

The loan, which was taken down on April 23, 2020, matures on April 23, 2022 and bears interest at a rate of 0.98 % per annum, with interest payable monthly commencing on November 23, 2020.

The loan may be prepaid by the Company at any time prior to maturity with no prepayment penalties.

Funds from the loan may only be used for payroll costs, costs used to continue group health care benefits, mortgage payments, rent, utilities, and interest on other debt obligations incurred before February 15, 2020.

The Company has used the entire loan amount for qualifying expenses.

Under the terms of the PPP, certain amounts of the loan may be forgiven if they are used for qualifying expenses as described in the CARES Act.

As of December 31, 2021 the loan has been forgiven and the Company recorded a gain on loan forgiveness of $ 20,832 .

● A secured Economic Injury Disaster Loan from the U.S.

Small Business Association (“SBA”) in the aggregate amount of $ 150,000 , pursuant to Section 7(b) of the Small Business Act as part of the COVID-19 relief effort.

The Company’s obligations on the loan are set forth in the Company’s note dated May 14, 2020 which matures on May 14, 2050 and bears interest at a rate of 3.75 % per annum, payable monthly commencing on May 14, 2022.

The Note may be prepaid by the Company at any time prior to maturity with no prepayment penalties.

Funds from the Loan may be used solely as working capital to alleviate economic injury caused by disaster occurring in the month of January 31, 2020 and continuing thereafter and to pay Uniform Commercial Code (UCC) lien filing fees and a third-party UCC handling charge of $ 100 which were deducted from the loan amount stated above.

In addition to the loan, as part of the COVID-19 relief effort, the Company obtained an Emergency EIDL Grant from the SBA in the amount of $ 1,000 .

The Company is not required to repay the grant.

NOTE 4 – WARRANT LIABILITY

The Company issued warrants to purchase 96,246,246 shares of common

stock to QFL (see Note 3) in connection with its funding agreement.

If on the date of initial exercise the aggregate number of warrant

shares purchasable upon exercise of the warrant would yield less than an amount equal to 10 % of the aggregate number of outstanding shares

of capital stock of the Company (determined on a fully diluted basis), then the number of warrant shares shall be increased to an amount

equal to 10 % of the aggregate number of outstanding shares of capital stock of the Company (determined on a fully diluted basis), the

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

As such, the warrant issued to QFL requires

classification as a liability pursuant to ASC Topic 480, Distinguishing Liabilities from Equity and is valued at its fair value as of

the grant date and re-measured at the balance sheet date.

As of December 31, 2021, and February 22, 2021,

the aggregate fair value of the outstanding warrant liability was approximately $ 1,636,187 and $ 1,154,905 , respectively.

The Company paid approximately $ 136,000 against the obligation in 2022.

The Company has no other obligation to the

third-party and has no liability to the funder in the event that the Company does not generate net proceeds.

Pursuant to ASC 470, the

company recorded this monetization obligation as debt and the difference between the purchase price and total obligation as a discount

to the debt and fully expensed to interest during the period.

On February 22, 2021 the Company issued warrants

to purchase 962,463 shares of common stock to QFL (see Note 3) in connection with its funding agreement.

If on the date of initial exercise

the aggregate number of warrant shares purchasable upon exercise of the warrant would yield less than an amount equal to 10 % of the aggregate

number of outstanding shares of capital stock of the Company (determined on a fully diluted basis), then the number of warrant shares

shall be increased to an amount equal to 10 % of the aggregate number of outstanding shares of capital stock of the Company (determined

on a fully diluted basis), and therefore the number of shares underlying the warrants is not fixed until the date of the initial exercise.

As such, the warrant issued to QFL requires classification as a liability pursuant to ASC Topic 480, Distinguishing Liabilities from Equity

and is valued at its fair value as of the grant date and re-measured at each balance sheet date with the period-to-period change in the

fair market value of the warrant liability reflected as a gain or loss in warrant liability and included under other income (expense).

As of December 31, 2022 and 2021, the aggregate

fair value of the outstanding warrant liability was approximately $ 145,000 and $ 1,636,000 , respectively.

The Company estimated the fair value of the warrant

liability using the Black-Scholes option pricing model using the following key assumptions as of December 31, 2021 and the grant date:

liability using the Black-Scholes option pricing model using the following key assumptions as of December 31, 2022 and 2021:

Exercise price

3 unchanged sentences

The following schedule summarizes the valuation

of financial instruments that are remeasured on a recurring basis at fair value in the balance sheets as of December 31, 2021 and

of financial instruments at fair value in the balance sheets as of December 31, 2022 and 2021:

Fair Value Measurements as of

4 unchanged sentences

The following table sets forth a reconciliation

of changes in the fair value of the warrant liabilities classified as Level 3 in the fair value hierarchy:

Significant Unobservable Inputs

of changes in the fair value of warrant liabilities classified as Level 3 in the fair value hierarchy:

Fair value at grant date

Change in fair value

Balance - December 31, 2021

Balance at December 31, 2021

Gain on subsequent measurement

( 1,490,759 )

Balance at December 31, 2022

See Notes 3 and 5 for information on the warrant

NOTE 5 – STOCKHOLDERS’ EQUITY

STOCKHOLDERS’

Amendment to Amended and Restated Certificate

of Incorporation

On July 27, 2022, the Company amended its amended

and restated certificate of incorporation following approval of the amendment by the stockholders at the 2022 annual meeting of stockholders.

The amendment (i) decreased the number of authorized

shares of common stock from 10,000,000,000 shares to 30,000,000 shares and (ii) effected a one-for-100 reverse split whereby each share

of common stock became and was converted into 0.01 shares of such common stock, with fractional shares being rounded up to the next higher

whole number of shares.

There was no change in the par value of the common stock.

All historical share and per share amounts in

these financial statements have been retroactively adjusted to reflect the reverse stock split and change in authorized common stock.

Amendment to the 2017 Equity Incentive Plan

1 unchanged sentence

the 2017 Equity Incentive Plan (the “Plan”) increasing the shares the Company can issue under the Plan to 5,000,000 shares

of common stock pursuant to non-qualified stock options, restricted stock grants and other equity-based incentives, the amendment to the

Plan and the grants of awards pursuant to the Plan, became effective upon the closing of the agreements with QFL.

of common stock pursuant to non-qualified stock options, restricted stock grants and other equity-based incentives.

The amendment to the

Plan and the grants of awards pursuant to the Plan, were effective upon the closing of the agreements with QFL.

Issuance of Common Stock and Options

1 unchanged sentence

On February 22, 2021, pursuant to the Restructure

Agreement, Intelligent Partners and its controlling members agreed to extinguish the notes and Transferred Note, and terminate or amend

and restate the SPA and Transaction Documents and the Company:

(i) issued to Fitton and Carper, as holders of the Transferred Note, pursuant

to the Stock Purchase Agreement a total of 46,296,296 shares of the Company’s 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 Company’s obligation under the Transferred Note

and included in the calculation of the repurchase price of the debt;

Agreement, Intelligent Partners and its controlling members (Fitton and Carper) agreed to extinguish the notes and Transferred Note, and

terminate or amend and restate the SPA and Transaction Documents and the Company:

(i) issued to Fitton and Carper, as holders of the Transferred

Note, pursuant to the Stock Purchase Agreement a total of 462,963 shares of common stock at a purchase price of $ 0.54 per share, which

purchase price was paid by the conversion and in full satisfaction of the Company’s obligation under the Transferred Note and is

included in the calculation of the repurchase price of the debt;

and (ii) granted Intelligent Partners, pursuant to the Option Grant,

an option to purchase a total of 50,000,000 shares of common stock, with an exercise price of $0.0054 per share which vested immediately

and may be exercised through September 30, 2025.

an option to purchase a total of 500,000 shares of common stock, with an exercise price of $ 0.54 per share which vested immediately and

may be exercised through September 30, 2025.

The Company valued the purchase option at approximately $ 598,000 using the Black-Scholes

4 unchanged sentences

of 252 % and (4) zero expected dividends.

The fair market value of the options was included in the loss on extinguishment calculation (see

The Company 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 option.

Commencing six months from the closing date, if the shares owned

by Fitton, Carper and Intelligent Partners cannot be sold pursuant to a registration statement and cannot be sold pursuant to Rule 144

without the Company being in compliance with the current public information requirements of Rule 144, if the Company is not in compliance

with the current public information requirements, the Company is required to pay damages to Intelligent Partners.

The Company granted Intelligent Partners, Fitton and Carper certain registration rights with

respect to (i) the 500,000 shares currently owned by Fitton and Carper;

(ii) the 462,963 Conversion Shares issued to Fitton and Carper,

and (iii) the 500,000 shares of common stock issuable upon exercise of the option.

Commencing six months from the closing date, if the

shares owned by Fitton, Carper and Intelligent Partners cannot be sold pursuant to a registration statement and cannot be sold pursuant

to Rule 144 without the Company being in compliance with the current public information requirements of Rule 144, if the Company is not

in compliance with the current public information requirements, the Company is required to pay damages to Intelligent Partners.

Consulting Agreements

5 unchanged sentences

Pursuant to the agreements with two of the consultants,

the compensation payable to each of them consists of a restricted stock grant of 10,000,000 shares of Common Stock which vested immediately

upon issuance and a ten-year option to purchase a total of 30,000,000 shares of Common Stock, which become exercisable cumulatively as

10,000,000 shares at an exercise price of $0.01 per share becoming exercisable upon the commencement of trading of the Common Stock on the OTCQB.

The Company regained such compliance on May 7, 2021, at which time the common stock recommenced trading on the OTCQB.

10,000,000 shares at an exercise price of $0.05 per share becoming exercisable on the date on which the Common Stock is listed for trading on the Nasdaq Stock Market or the New York Stock Exchange.

the compensation payable to each of them consists of a restricted stock grant of 100,000 shares of Common Stock which immediately vests

in full and a ten-year option to purchase a total of 300,000 shares of Common Stock, which become exercisable cumulatively as follows:

100,000 shares at an exercise price of $ 1.00 per share becoming

exercisable upon the commencement of trading of the Common Stock on the OTCQB.

The Company regained such compliance on May 7, 2021, at

which time the common stock recommenced trading on the OTCQB.

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

exercisable on the first day on which the Company files with the SEC a Form 10-K or Form 10-Q which reports stockholders’ equity

of at least $ 5,000,000 , and

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

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

The Company recorded professional fees in the

6 unchanged sentences

(3) computed volatility of 252% and (4) zero expected dividends.

The Company met the first performance

condition and accrued the option expense of approximately $240,000 over the period from the grant date to achievement of the performance

The Company recognized option expense of approximately $240,000 for the year ended December 31, 2021.

Pursuant to the agreement with the third consultant, the compensation

payable to the consultant consists of a restricted stock grant of 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 became exercisable on February 22, 2022, which was the first anniversary of the date of the agreement;

10,000,000 shares at an exercise price of $0.03 per share upon the second anniversary of the date of the agreement;

10,000,000 shares at an exercise price of $0.05 per share upon the third anniversary of the dare of the agreement.

The Company recorded professional fees in the amount of $120,000 as

a result the restricted stock grant to the third consultant.

The Company determined the fair value of the options as of the grant date

to be approximately $360,000 using the Black-Scholes pricing model.

Variables used in the valuation include (1) discount rate of 1.37%;

The Company determined that the

first performance condition was met and accrued the option expense of approximately $240,000 over the period from the grant date to achievement

of the performance condition.

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

The Company recognized

option expense of approximately $ 240,000 for the year ended December 31, 2021.

Pursuant to the agreement with the third consultant,

the compensation payable to the consultant consists of a restricted stock grant of 100,000 shares of Common Stock which immediately vests

in full and a ten-year option to purchase 300,000 shares of Common Stock, which becomes exercisable cumulatively as follows:

100,000 shares at an exercise price of $ 1.00 per share became

exercisable on February 22, 2022, which was the first anniversary of the date of the agreement;

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

the second anniversary of the agreement;

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

the third anniversary of the agreement.

The Company recorded professional fees in the

amount of $120,000 as a result the restricted stock grant to the third consultant.

The Company determined the fair value of the options

as of the grant date to be approximately $360,000 using the Black-Scholes pricing model.

Variables used in the valuation include (1) discount

rate of 1.37%;

(2) term of 10 years;

(3) computed volatility of 252% and (4) zero expected dividends.

The Company recognized option expense of approximately

$188,000 for the year ended December 31, 2021.

Compensatory Arrangements of Certain Officers

The Company recognized option expense

of approximately $117,000 and $188,000 for the years ended December 31, 2022 and 2021, respectively.

Compensatory Arrangements of Officers and Directors

On February 22, 2021, the board of directors:

(i) Granted restricted stock grants for services rendered and vesting in full upon grant, to:

(i) Granted restricted stock grants

for services rendered and vesting in full upon grant, to:

Scahill – 490,000 shares

1 unchanged sentence

Carroll - 100,000 shares

Granted Jon Scahill a ten-year option (the “Option”) to purchase 60,000,000 shares of Common Stock which become exercisable cumulatively as follows:

20,000,000 shares at an exercise price of $0.01 per share becoming exercisable upon the commencement of trading of the Common Stock on the OTCQB.

The Company regained such compliance on May 7, 2021, at which time the common stock recommenced trading on the OTCQB.

20,000,000 shares at an exercise price of $0.03 per share, becoming exercisable on the first day on which the Company files with the SEC a Form 10-K or Form 10-Q which stockholders” equity of at least $5,000,000, and

20,000,000 shares at an exercise price of $0.05 per share becoming exercisable on the date on which the Common Stock is listed for trading on the Nasdaq Stock Market or the New York Stock Exchange

(ii) Granted Jon Scahill a ten-year

option (the “Option”) to purchase 600,000 shares of Common Stock which become exercisable cumulatively as follows:

200,000 shares at an exercise price of $1.00 per share becoming exercisable upon the commencement of trading

of the Common Stock on the OTCQB.

200,000 shares at an exercise price of $3.00 per share, becoming exercisable on the first day on which

the Company files with the SEC a Form 10-K or Form 10-Q which reports stockholders’ equity of at least $5,000,000, and

200,000 shares at an exercise price of $5.00 per share becoming exercisable on the date on which the Common

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

(iii) Appointed Ryan T.

Logue to the board of directors and granted Mr.

Logue a restricted stock grant of 5,000,000 shares of common stock which vests upon his acceptance of his appointment as a director.

board of directors and granted Mr.

Logue a restricted stock grant of 500,000 shares of common stock which vested upon his acceptance of

his appointment as a director.

The Company recognized compensation expense of

$ 888,000 in conjunction with issuance of common stock to officers and directors.

The Company determined the fair value of the options

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

Variables used in the valuation include (1) discount

rate of 1.37 %;

$888,000 in conjunction with issuance of common stock to officers and directors during the year ended December 31, 2021.

The Company determined

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

Variables used

in the valuation include (1) discount rate of 1.37%;

(2) term of 10 years;

(3) computed volatility of 252% and (4) zero expected dividends.

The Company recognized option expense

of approximately $ 240,000 for the year ended December 31, 2021.

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

The Company recognized option expense of approximately

$ 240,000 for the year ended December 31, 2021.

A summary of the status of the Company’s

stock options and changes is set forth below:

Weighted Average

Grant Date Fair

Balance - December 31, 2020

2 unchanged sentences

Options exercisable at end of period

The intrinsic value of the outstanding options as of December 31, 2021

is $ 930,000 .

As of December 31, 2021, there was approximately $ 1,132,000 of unrecognized

compensation expense related to nonvested stock option awards that is expected to be recognized over a weighted average expected term

The outstanding options do not have an intrinsic

value as of December 31, 2022.

As of December 31, 2021 the intrinsic value of the outstanding options was $ 930,000 .

As of December 31, 2022, there was approximately

$ 1,014,000 of unrecognized compensation expense related to nonvested stock option awards that is expected to be recognized over a weighted

average expected term of approximately 8 years.

Issuance of Warrants

A summary of the status of the Company’s warrants and changes

is set forth below:

A summary of the status of the Company’s

warrants and changes is set forth below:

Weighted Average

Contractual Life

Balance - December 31, 2020

1 unchanged sentence

Balance - December 31, 2022

The intrinsic value of the outstanding warrants

as of December 31, 2021 is $ 1,116,456 .

NOTE 6 – INTANGIBLE ASSETS

The outstanding warrants do not have an intrinsic

value as of December 31, 2022.

The intrinsic value of the outstanding warrants as of December 31, 2021 was $ 1,116,456 .

Intangible assets include patents purchased and

are recorded at their acquisition cost.

are recorded based at their acquisition cost.

Intangible assets consisted of the following:

net monetization obligations

Imputed interest

( 4,362,117 )

2 unchanged sentences

Net value of intangible assets

Weighted Average Amortization Period (Years)

Intangible assets are comprised of patents with

1 unchanged sentence

The intangible assets at December 31, 2022 represent:

● patents acquired in October 2015 for a purchase price of $3,000,000, the useful lives of the patents, at the date of purchase, was 6-10 years;

patents acquired in July 2017 pursuant to an agreement with IV 34/37, as amended on December 31, 2021, pursuant to which CXT has an obligation to pay 65% of net revenues to IV 34/37 (see Note 3);

● patents acquired in October 2015 for a purchase price of

$3,000,000, the useful lives of the patents, at the date of purchase, was 6-10 years;

these patents were disposed of as of December 31,

● patents acquired in July 2017 pursuant to an obligation to

pay 50% of net revenues to IV 34/37 (see Note 3);

the useful lives of the patents, at the date of acquisition, was 5-6 years;

patents (which were fully depreciated at the date of acquisition) acquired in January 2018 pursuant to an agreement with to Intellectual Ventures Assets 62 LLC and Intellectual Ventures Assets 71 LLC “(IV 62/71”), pursuant to which CXT has an obligation to distribute 50% of net revenues to IV 62/71;

(which were fully depreciated at the date of acquisition) acquired in January 2018 by Photonic Imaging Solutions Inc.

from Intellectual Ventures Assets 64 LLC (“IV 64”) pursuant to which PIS is to pay IV 64 (a) 70% of the first $1,500,000

of net revenue, (b) 30% of the next $1,500,000 of net revenue and (c) 50% of net revenue in excess of $3,000,000;

patents acquired in March 2019 pursuant to an agreement with IV 113/108, as amended on December 31, 2021 to an obligation to pay 65% of net revenues to IV 113/108 (see Note 3);

the useful lives of the patents, at the date of acquisition, was approximately 9 years.

patents (which were fully depreciated at the date of acquisition) acquired in May 2020 for a purchase price of $95,000 pursuant to an agreement with Texas Technology Ventures 2, LLP (“TTV”), pursuant to which of the Company retains the first $230,000 of net proceeds, as defined in the agreement, after which the company has an obligation to distribute 50% of net proceeds to TTV;

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

in February 2021 pursuant to an agreement with PKT for a purchase price of $350,000, pursuant to which $350,000 was paid at closing, and

upon the realization of gross proceeds, as defined in the agreement, the Company shall make a subsequent payments in the aggregate amount

of $93,900, representing reimbursement to PKT, as the prosecuting attorney, for legal fees associated with prosecution of the portfolio,

such reimbursement shall be due and payable to PKT from time to time as gross proceeds are realized, if any, and paid to PKT along with

and in proportion to reimbursement to other third parties of costs incurred in realizing gross proceeds.

Thereafter, PKT is entitled to

a percentage of gross proceeds realized, if any.

● patents (which were fully depreciated at the date of acquisition) acquired in May 2021 for a purchase price of $250,000.

● patents acquired in October 2021 from AI for a purchase price of $ 550,000

pursuant to which the Company retains an amount equal to the purchase price plus any fees incurred out of net proceeds, as defined in

the agreement, after which AI is entitled to a percentage of further net proceeds realized, if any;

the useful lives of the patents, at

the date of acquisition, was approximately 11 years.

The Company amortizes the costs of patents over their estimated useful

lives on a straight-line basis.

Costs incurred to acquire the patents, including legal costs, are also capitalized and amortized

on a straight-line basis over the life of the associated patent.

Amortization of patents is included as a selling, general and administrative

expense as reflected in the accompanying consolidated statements of operations.

these patents

were disposed of as of December 31, 2021.

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

acquired in January 2018 pursuant to an agreement with to Intellectual Ventures Assets 62 LLC and Intellectual Ventures Assets 71 LLC

“(IV 62/71”), pursuant to which CXT has an obligation to distribute 50% of net revenues to IV 62/71;

● patents (which were fully amortized at the date of acquisition) acquired in January 2018 by Photonic Imaging

Solutions Inc.

(“PIS”) from Intellectual Ventures Assets 64 LLC (“IV 64”) pursuant to which PIS is to pay IV 64

(a) 70% of the first $1,500,000 of net revenue, (b) 30% of the next $1,500,000 of net revenue and (c) 50% of net revenue in excess of

● patents acquired in March 2019 pursuant to an obligation to pay 50% of net revenues to IV 113/108 (see

the useful lives of the patents, at the date of acquisition, was approximately 9 years, these patents were disposed of as of

December 31, 2021.

● patents (which were fully amortized at the date of acquisition) acquired in May 2020 for a purchase price

of $95,000 pursuant to an agreement with Texas Technology Ventures 2, LLP (“TTV”), pursuant to which of the Company retains

the first $230,000 of net proceeds, as defined in the agreement, after which the company has an obligation to distribute 50% of net proceeds

● patents (which were fully amortized at the date of acquisition) acquired in February 2021 pursuant to

an agreement with PKT for a purchase price of $350,000, pursuant to which $350,000 was paid at closing, and upon the realization of gross

proceeds, as defined in the agreement, the Company shall make a subsequent or payments in the aggregate amount of $93,900, representing

reimbursement to PKT, as the prosecuting attorney, for legal fees associated with prosecution of the portfolio, such reimbursement shall

be due and payable to PKT from time to time as gross proceeds are realized, if any, and paid to PKT along with and in proportion to reimbursement

to other third parties of costs incurred in realizing gross proceeds.

Thereafter, PKT is entitled to a percentage of gross proceeds realized,

● patents (which were fully depreciated at the date of acquisition) acquired in May 2021 for a purchase

price of $250,000.

● patents acquired in October 2021 from AI for a purchase price of $ 550,000 pursuant to which the Company

retains an amount equal to the purchase price plus any fees incurred out of net proceeds, as defined in the agreement, after which AI

is entitled to a percentage of further net proceeds realized, if any;

the useful lives of the patents, at the date of acquisition, was

approximately 11 years.

● patents acquired in January 2022 for a purchase price of $1,060,000, the useful lives of the patents,

at the date of purchase, was approximately 1-2 years.

● patents acquired in July 2022 via assignment from AI for a purchase price of $92,000, the useful lives

of the patents, at the date of purchase, was approximately 2-4 years.

● patents acquired July 2022 pursuant to an agreement with Hewlett Packard Enterprise Development LP and

Hewlett Packard Enterprise Company for a purchase price of $350,000.

The useful lives of the patents, at the date of purchase, was approximately

The Company amortizes the costs of intangible

assets over their estimated useful lives on a straight-line basis.

Costs incurred to acquire patents, including legal costs, are also

capitalized as long-lived assets and amortized on a straight-line basis with the associated patent.

The Company assesses intangible assets for any

impairment to the carrying values.

For the year ended December 31, 2021, the Company recorded non-cash impairment charges of approximately

$1,652,00 to write down finite lived intangible assets in the Power Management/Bus Controller, CXT and M-RED portfolios.

Amortization expense for patents comprised $ 1,159,865

As of December 31, 2022, management concluded that there was no impairment to the intangible assets.

For the year ended December 31, 2021, the Company recorded non-cash impairment charges of approximately $1,652,000 to write down finite

lived intangible assets in the Power Management/Bus Controller, CXT and M-RED portfolios.

Amortization expense for patents was approximately

$ 910,000 and $ 1,159,865 for the years ended December 31, 2022 and 2021, respectively.

Future amortization of patents is as follows:

Amortization expense is included in selling, general,

and administration expenses in the accompanying consolidated statement of operations.

Future amortization of intangible assets is as follows:

Year Ended December 31,

2026 and thereafter

At December 31, 2020, the Company had debt due

to Intelligent Partners pursuant to the securities purchase agreement dated October 22, 2015 between the Company and United Wireless,

and the Company was to pay 15 % of the net monetization proceeds from the patents acquired in October 2015 to Intelligent Partners, as

transferee of United Wireless.

See the caption “Loan Payable Related Party” in Note 3 in connection with the extinguishment

and restructuring of the Company’s obligations to Intelligent Partners.

NOTE 7 – NON-CONTROLLING INTEREST

NON-CONTROLLING INTEREST

The following table reconciles equity attributable

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Balance, end of year

NOTE 8 – INCOME TAXES

The Company uses the liability method, where deferred

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amounts of assets and liabilities for financial and income tax reporting purposes.

As of December 31, 2021, the Company has generated

approximately $ 9,965,487 and approximately $ 2,063,797 of federal and state net operating loss (“NOL”) carry forwards, respectively,

which will begin to expire in 2024.

Internal Revenue Code section 382 (“Section 382”) restricts the use of these net operating

losses in future periods if the Company has a “substantial change in ownership” as defined by Section 382.

The Company has

had significant equity transactions in prior periods.

Due to this equity activity and the restrictions resulting under Section 382, a

portion of the Company’s NOLs may not be available to offset future taxable income.

Therefore, the Company has fully reserved the

deferred tax asset resulting from the net operating loss carry forwards.

Deferred tax asset consisted primarily of the

As of December 31, 2022, the Company has approximately

$ 11,635,198 of net operating loss (“NOL”) carry forwards which will begin to expire in 2024.

Net operating loss carryovers

may be subject to a limitation on their usage in future periods if the Company experiences a change in ownership as defined in Internal

Revenue Code Section 382.

In assessing the realizability of deferred tax

assets, Company’s management considers whether it is more likely than not that all or a portion of the Company’s deferred tax assets will

The Company’s management considers all available evidence, both positive and negative, in making this assessment.

the Company’s history of generating losses in recent years, and the lack of objectively verifiable evidence that it will be able to generate

taxable income in future years, the Company’s management has determined that a valuation allowance against the Company’s deferred tax

assets is necessary.

The change in the valuation allowance for the year ended December 31, 2022 is $77,946 and is recorded as a component

of income tax expense.

The Company’s deferred tax assets consist of the

Net operating loss carry forward

Bad debt reserves

Intangible assets

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Balance, end of year

Tax expense consisted primarily of the following:

The Company’s tax expense does not reflect

the statutory rate since the Company’s deferred tax asset is fully offset by a valuation allowance.

Reconciliation between the effective

tax rate on income from continuing operations and the statutory rate for the year ended December 31, 2021 is as follows:

Tax (benefit) expense consisted primarily of the

The reconciliation between the effective tax rate

on loss before income taxes and the statutory rate for the year ended December 31, 2022 is as follows:

Book income before taxes

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State taxes, net

Meals and entertainment

Warrant income

Interest expense

Change in tax rate

Change in valuation allowance

Change in estimate for prior year taxes

Effective tax rate

The reconciliation between the effective tax rate

on loss before income taxes and the statutory rate for the year ended December 31, 2021 is as follows:

Book income before taxes

$ ( 872,129 )

State taxes, net

Tax exempt income - grant and/or SBA

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Effective tax rate

The statute of limitations is

open for the tax years ending December 31, 2018 and thereafter.

The Company’s foreign tax expense reflects the tax withheld by

the foreign jurisdiction on royalty income received by the Company and not exempt under the United States tax treaty, if any, with the

respective foreign jurisdiction.

In 2021, the Company was not subject to foreign source withholding tax.

In 2020, the Company was subject

to foreign source withholding tax of 20.4% in Japan.

NOTE 9 – RELATED PARTY TRANSACTIONS

As of December 31, 2022, the Company’s management

believes that it has adequately provided for its tax-related liabilities, and that no liability for unrecognized tax benefits is necessary.

No significant change in the total amount of unrecognized tax benefits is expected within the next twelve months.

The Company recognizes

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

At December 31, 2022

and 2021, the Company had no accrual for the payment of interest and penalties.

The statute of limitations for assessment of income

taxes is open for tax years ending December 31, 2019 and later.

RELATED PARTY TRANSACTIONS

The Company has at various times entered into

transactions with related parties, including officers, directors and major shareholders, wherein these parties have provided services,

advanced or loaned money, or both, to the Company needed to support its daily operations.

The Company discloses all related party transactions.

In prior periods, the Company incurred interest

expense on the Company’s 10 % notes issued to United Wireless pursuant to the securities purchase agreement dated October 22, 2015.

The notes were extinguished in February 2021 and the Company did not incur interest expense on the notes for the year ended December 31,

The interest expense was approximately $ 351,000 for the year ended December 31, 2020.

See Notes 3 and 5 in connection with the extinguishment

of the Company’s 10 % notes issued to United Wireless and held by Intelligent Partners as the transferee of United Wireless.

transactions with related parties, including officers, directors and major stockholders, wherein these parties have provided services,

advanced or loaned money, or both, to the Company which was needed to support its daily operations.

The Company discloses all related

party transactions.

See Notes 3 and 5 in connection with the Restructure

Agreement dated February 22, 2021 with Intelligent Partners.

Because of its ownership percentage, Intelligent Partners is treated as a

related party.

See Note 5 with respect to share-based compensation

to officers and directors.

See Note 10 with respect to the employment agreement

with the Company’s president and chief executive officer.

During 2021, the Company contracted with an entity

owned by the chief technology officer for the provision of information technology services to the Company.

The cost of these services

was approximately $ 434 and $ 464 for the year ended December 31, 2021 and 2020, respectively.

During 2021, the Company contracted with a law

firm more than 10 percent owned, but not controlled, by the father-in-law of the chief executive officer.

The firm is engaged on a contingent

fee basis and serves as escrow agent in connection with monetization of the Company’s patents in matters where the firm is serving

as counsel to the Company.

In connection with the engagement, the Company recorded patent service costs of approximately $ 763,000 and

During the year ended December 31, 2021,

the Company contracted with an entity owned by the chief technology officer for the provision of information technology services to the

In June 2022 the chief technology officer sold his interest in the entity.

The cost of such services was approximately $ 205 and

$ 434 for the years ended December 31, 2022 and 2021, respectively.

The amount recorded in 2020 includes approximately $ 407,000 in accrued

expenses and outstanding as of December 31, 2020.

The accrued liability is recorded in “accounts payable and accrued liabilities.”

The accrued liability was resolved as part of a resolution with the firm at which the father-in-law of the chief executive was formerly

See Note 3 with respect to the resolution of the dispute with the prior firm.

In prior periods, the Company engaged a firm

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

Because his interest in the prior firm was less than 10 %, the

prior firm was not considered a related party in prior periods.

NOTE 10 – COMMITMENTS AND CONTINGENCIES

During the year ended December 31, 2021,

the Company contracted with a law firm more than 10 percent owned, but not controlled, by the father-in-law of the chief executive officer.

The firm is engaged on a contingent fee basis and serves as escrow agent in connection with monetization of the Company’s patents

in matters where the firm is serving as counsel to the Company.

For the years ended December 31, 2022 and 2021, the cost of these services

was approximately $ 85,000 and $ 763,000 , respectively.

AND CONTINGENCIES

Employment Agreements

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In August 2016, the Company’s board of directors approved annual bonus compensation equal to 30% of the amount by which

our consolidated income before income taxes exceeds $500,000, but, if the Company is subject to the limitation on deductibility of executive

compensation pursuant to Section 162(m) of the Internal Revenue Code, the bonus cannot exceed the amount which would be deductible pursuant

to Section 162(m).

The chief executive officer is also eligible to participate in any executive incentive plans which the Company may

Pension Benefits

Pursuant to the SEP IRA plan adopted by the Company in March 2020 the

Company deposited into a SEP IRA account of each of its participating employees a percentage of the employee’s compensation, subject

to statutory limitations on the amount of the contribution all as set forth in the IRS Form 5305-SEP.

For the year ending December 31,

2021 and 2020 the percentage was set at 19 %, respectively.

For the year ended December 31, 2021 and 2020, the Company’s president

and chief executive officer is the only participant and $ 58,000 and $ 57,000 , respectively, was deposited his SEP IRA account.

the Company’s consolidated income before income taxes exceeds $500,000, but, if the Company is subject to the limitation on deductibility

of executive compensation pursuant to Section 162(m) of the Internal Revenue Code, the bonus cannot exceed the amount which would be deductible

pursuant to Section 162(m).

The chief executive officer is also eligible to participate in any executive incentive plans which the Company

Pursuant to the SEP IRA plan adopted by the Company

in March 2020, the Company deposited into a SEP IRA account of each of its participating employees a percentage of the employee’s

compensation, subject to statutory limitations on the amount of the contribution all as set forth in the IRS Form 5305-SEP.

For the years

ending December 31, 2022 and 2021, the percentage was set at 20 % and 19 %, respectively.

The Company’s president and chief executive

officer is the only participant and during the years ended December 31, 2022 and 2021, $ 61,000 and $58,000 was deposited into his

SEP IRA account, respectively.

Inventor Royalties, Contingent Litigation Funding

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retain the services of law firms in connection with their licensing and enforcement activities.

These law firms may be retained on

a contingent fee basis whereby the law firms are paid on a scaled percentage of any negotiated fees, settlements or judgments awarded

based on how and when the fees, settlements or judgments are obtained.

These law firms may be retained on a contingent

fee basis whereby the law firms are paid on a scaled percentage of any negotiated fees, settlements or judgments awarded based on how

and when the fees, settlements or judgments are obtained.

Depending on the amount of any recovery, it is

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are engaged in litigation to enforce their patents and patent rights.

In connection with these patent enforcement actions, it is

possible that a defendant may request and/or a court may rule that an operating subsidiary has violated statutory authority, regulatory

authority, federal rules, local court rules, or governing standards relating to the substantive or procedural aspects of such enforcement

In such event, a court may issue monetary sanctions against the Company or its operating subsidiaries or award attorney’s

fees and/or expenses to a defendant(s), which could be material, and if required to be paid by the Company or its operating subsidiaries,

could materially harm the Company’s operating results and financial position.

Since the operating subsidiaries do not have any assets

other than the patents, and the Company does not have any available financial resources to pay any judgment which a defendant may obtain

against a subsidiary, such a judgement may result in the bankruptcy of the subsidiary and/or the loss of the patents, which are the subsidiaries’

NOTE 11 – BUSINESS COMBINATIONS

In connection with these patent enforcement actions, it is possible

that a defendant may request and/or a court may rule that an operating subsidiary has violated statutory authority, regulatory authority,

federal rules, local court rules, or governing standards relating to the substantive or procedural aspects of such enforcement actions.

In such event, a court may issue monetary sanctions against the Company or its operating subsidiaries or award attorney’s fees and/or

expenses to a defendant(s), which could be material, and if required to be paid by the Company or its operating subsidiaries, could materially

impair the Company’s operating results and financial position and could result in a default under the Company’s obligations

Since the operating subsidiaries do not have any assets other than the patents, and the Company does not have any available financial

resources to pay any judgment which a defendant may obtain against a subsidiary, such a judgment may result in the bankruptcy of the subsidiary

and/or the loss of the patents, which are the subsidiaries’ only assets.

Effects of possible delisting of common stock

On May 23, 2022, the Company received notice from

OTC Markets Group, that, because the bid price for its common stock had closed below $ 0.01 per share for more than 30 consecutive days,

the Company no longer meets the Standards for Continued Eligibility under the OTC listing standards and, if this deficiency is not met

by August 21, 2022, the Company’s common stock will be removed from the OTCQB marketplace, in which event the common stock will be traded

on the OTC Pink market.

Our registration rights agreement with QFL provides that, in the event of a failure to comply with certain covenants,

which includes the failure of our common stock to be traded on the OTCQB, in addition to any other remedies available to QFL, we are to

pay to QFL an amount in cash equal to 2.0 % of the aggregate value of QFL’s Registrable Securities, as defined in the Registration

Rights Agreement, whether or not included in such registration statement, on each of the following dates:

(i) the initial day of a maintenance

(ii) on the 30th day after the date of such a failure and (iii) every 30th day thereafter (prorated for periods totaling less

than thirty (30) days) until such failure is cured.

In July 2022 the Company amended its Certificate of Incorporation to effect a one-for-100

reverse split of its common stock (see Note 5).

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

BUSINESS COMBINATIONS

On August 6, 2021 the Company acquired all of

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contingent consideration, which will be recognized if and when it becomes payable.

NOTE 12 – SUBSEQUENT EVENTS

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.

On February 28, 2022, the Company filed a certificate

of amendment to the certificate of incorporation of Quest Licensing Corporation, a New York corporation, changing the name of the corporation

to Digital IP Advisors Incorporated.

In March 2022, the Company received operating

capital advances in the amount of $ 200,000 from QFL pursuant to the Purchase Agreement.

SUBSEQUENT EVENTS

Summary of Agreements with QPRC Finance III

On March 12, 2023, the Company and its newly formed

wholly-owned subsidiary, Harbor Island Dynamic LLC (“Harbor”), entered into a series of agreements, all dated March 12, 2023,

with QF3, a non-affiliated party, including a prepaid forward purchase agreement (the “Purchase Agreement”), a security agreement

(the “Security Agreement”), a patent security agreement (the “Patent Security Agreement” together with the Security

Agreement, the Patent Security Agreement, and the Purchase Agreement, the “Investment Documents”) pursuant to which, at the

closing held contemporaneously with the execution of the agreements:

(i) Pursuant to the Purchase Agreement,

QF3 agreed to make available to the Company a financing facility of:

(a) up to $ 4,000,000 for operating expenses;

(b) $ 3,300,000 to fund

the cash payment portion of the purchase of a patent portfolio from Tower Semiconductor Ltd.;

and (c) up to an additional $ 25,000,000

for the acquisition of mutually agreed patent rights that the Company intends to monetize.

In return the Company transferred to QF3 a

right to receive a portion of net proceeds generated from the monetization of those patents.

(ii) On March 17, 2023, the Company

used $ 3,300,000 of proceeds from the QF3 financing as the cash payment portion of the purchase of a ten-patent portfolio from Tower Semiconductor

(the “HID Portfolio”).

(iii) Pursuant to the Security Agreement

and Patent Security Agreement, payment of our obligations under the Purchase Agreement with QF3 are secured by (a) the value of anything

received from the monetization of the intellectual property rights covered by the Security Agreement;

(b) the patents (as defined in the

Security Agreement);

and (d) proceeds

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

In connection with the agreements with QF3 the

Company, Harbor and the Subsidiary Guarantors entered into an intercreditor agreement with QF3 and Intelligent Partners which sets forth

the priority of QF3 in the collateral under the Investment Documents.

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

What changed 10-K

Item 9A. Controls and Procedures