What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-08-12 compared with 2024-05-15 · 229 added, 205 removed, 173 unchanged (71% of the section changed)

34 unchanged sentences

acceptable to us, if at all.

We seek to generate revenue from patent

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

primarily from litigation relating to enforcement of our intellectual property rights.

All of the revenue for the three months ended

March 31, 2024 and 2023 was from patent licensing fees, of which approximately 100% was paid or is payable to the patent seller,

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

We seek to generate revenue from patent licensing

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

litigation relating to enforcement of our intellectual property rights.

All of the revenue for the six months ended June 30, 2024 and

2023 was from patent licensing fees, of which approximately 85% and 100%, respectively, was paid or is payable to the patent seller, funding

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

Because of the nature of our business transactions

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

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

stream of revenue.

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

to, vary significantly from quarter to quarter and year to year and the net income we generated during the year ended December 31,

2023 may prove to be an aberration.

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

It is generally necessary to commence litigation in

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

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

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

from quarter to quarter and year to year and the net income we generated during the year ended December 31, 2023 may prove to be an aberration.

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

It is generally necessary to commence litigation

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

Intellectual property

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On March 12, 2023, we entered into a funding agreement

Pursuant to the QF3 Purchase Agreement, QF3 agreed to make available

to us a financing facility of:

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

of which no amounts have been received as of March 31, 2024;

(b) up to $4,000,000 for operating expenses, of which the we have requested

and received $3,334,381 as of March 31, 2024;

and (iii) $3,300,000 to fund the cash payment portion of the purchase price of a patent

portfolio acquired from Tower.

In return we transferred to QF3 a right to receive a portion of net proceeds generated from the monetization

of those patents.

We used $3,300,000 proceeds from the QF3 financing as the cash payment portion of the purchase price of a portfolio

acquired from Tower.

Our obligations to QF3 are secured by the proceeds from the patents acquired with their funding, the patents and

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

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

with QFL and a restructure agreement with Intelligent Partners.

Pursuant to the Purchase Agreement with QFL, QFL agreed

Pursuant to the QF3 Purchase Agreement, QF3 agreed

to make available to us a financing facility of:

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

to monetize, of which $2,653,000 has been advanced as of March 31, 2024;

to monetize, of which no amounts have been received as of June 30, 2024;

(b) up to $4,000,000 for operating expenses, of which the

we have requested and received $2,000,000 as of March 31, 2024;

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

of our obligations to Intelligent Partners.

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

the monetization of those patents.

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

of our obligations to Intelligent Partners.

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

we have requested and received $3,334,381 as of June 30, 2024;

and (iii) $3,300,000 to fund the cash payment portion of the purchase

price of a patent portfolio acquired from Tower.

In return we transferred to QF3 a right to receive a portion of net proceeds generated

from the monetization of those patents.

We used $3,300,000 proceeds from the QF3 financing as the cash payment portion of the purchase

price of a portfolio acquired from Tower.

Our obligations to QF3 are secured by the proceeds from the patents acquired with their funding,

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

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

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

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

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

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

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

realized prior to the completion of all monetization activities shall be credited against the total return due to QFL pursuant to the

On February 22, 2021, we entered into a funding

agreement with QFL which was amended and restated on May 2, 2024 and a restructure agreement with Intelligent Partners.

Pursuant to the Purchase Agreement with QFL,

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

that we intended to monetize;

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

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

restructure of our obligations to Intelligent Partners.

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

generated from the monetization of those patents.

During the six months ended June 30, 2024 we repaid the full outstanding principal

balance of $1,525,502.

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

Our obligations to QFL are secured by

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

related to the foregoing and the proceeds and products of the foregoing.

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

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

2031 on a cash or cashless basis, subject to certain limitations on exercisability.

The warrant also contains certain minimum

ownership percentage antidilution rights pursuant to which the aggregate number of shares of common stock purchasable upon the

initial exercise of the Warrant shall not be less than 10% of the aggregate number of outstanding shares of our capital stock

(determined on a fully diluted basis).

A portion of any gain from sale of the shares, net of taxes and costs of exercise, realized

prior to the completion of all monetization activities shall be credited against the total return due to QFL pursuant to the

Purchase Agreement.

We also agreed to take all commercially reasonable steps necessary to regain compliance with the OTCQB eligibility

standards as soon as practicable, but in no event later than 12 months from the closing date, and regained compliance on May 7, 2021 and

we granted QFL registration rights with respect to the common stock issuable upon exercise of the warrants.

We also granted QFL certain

board observation rights.

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

acquired with funds from QFL are paid directly to QFL.

After QFL has received a negotiated rate of return, we and QFL share net proceeds

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

Thereafter, we retain 100% of all net proceeds.

in an Event of Default, as defined therein, all payments by us to QFL pursuant to the Purchase Agreement are non-recourse and shall be

paid only if and after net proceeds from monetization of the patent rights owned or acquire by us are received, or to be received.

Contemporaneously with the execution of the agreements

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

notes and the securities purchase agreement.

As part of the restructure of our agreements with Intelligent Partners, we amended the existing

MPAs and granted Intelligent Partners certain rights in the monetization proceeds from any new intellectual property we acquire.

these MPAs, Intelligent Partners receives a 60% interest in the proceeds from our intellectual property owned by the eight Subsidiary

Intelligent Partners also participates in the monetization proceeds from new intellectual property that we acquire until the

total payments under all the monetization participation agreements equal $2,805,000, as follows:

for net proceeds between $0 and $1,000,000,

Intelligent Partners receives 10% of the net proceeds realized from new patents, except that if, in any calendar quarter, net proceeds

realized by us exceed $1,000,000, Intelligent Partners’ entitlement for that quarter only 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.

with respect to the new patents terminate once total payments to Intelligent Partners under all monetization participation agreements

reach $2,805,000.

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

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

In October 2022, TLL brought patent infringement suits

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

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

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

granted QFL certain board observation rights.

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

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

After QFL has received a negotiated rate of return,

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

Thereafter, we retain

100% of all net proceeds.

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

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

by us are received, or to be received.

Contemporaneously with the execution of the agreements with QFL, we entered

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

securities purchase agreement.

As part of the restructure of our agreements with Intelligent Partners, we amended the existing MPAs and

granted Intelligent Partners certain rights in the monetization proceeds from any new intellectual property we acquire.

Under these MPAs,

Intelligent Partners receives a 60% interest in the proceeds from our intellectual property owned by the eight Subsidiary Guarantors.

Intelligent Partners also participates in the monetization proceeds from new intellectual property that we acquire until the total payments

under all the monetization participation agreements equal $2,805,000, as follows:

for net proceeds between $0 and $1,000,000, Intelligent

Partners receives 10% of the net proceeds realized from new patents, except that if, in any calendar quarter, net proceeds realized by

us exceed $1,000,000, Intelligent Partners’ entitlement for that quarter only 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.

The payments with respect

to the new patents terminate once total payments to Intelligent Partners under all monetization participation agreements reach $2,805,000.

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

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

Recent Litigation

In October 2022, TLL brought patent infringement

suits in the U.S.

District for the Eastern District of Texas against Fortinet, Inc., and Musarubra US, LLC.

The actions against Fortinet, Inc.

and Musarubra US LLC have been resolved and revenue for the three months ended March 31, 2024 includes revenue from the related settlements.

In February 2024, TLL brought

patent infringement suits in the U.S.

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

The actions against Fortinet,

Inc., Musarubra US LLC, and Sonicwall Inc.

have been resolved and revenue for the six months ended June 30, 2024 includes revenue from

the related settlements.

In September 2023, DIP brought a patent

infringement action in the U.S.

District for the Eastern District of Texas against MediaTek Inc.

The action against MediaTek, Inc.

has been resolved and revenue for the six months ended June 30, 2024 includes revenue from the related settlement.

In February 2024, Harbor Island Dynamic brought

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

action is pending.

Results of Operations

Three Months Ended March 31, 2024 and 2023

Three Months Ended March 31,

Three and Six months ended June 30, 2024 and

Three Months Ended June 30,

Six Months Ended June 30,

Revenues (patent licensing fees)

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Selling, general and administrative expenses

Income (loss) from operations

Other expenses

Loss from operations

Other income (expenses)

Change in fair market value of warrant liability

Interest expense

Total other expenses

Interest expense, net

Total other income (expenses)

Loss before income tax

Income tax expense

$ (1,169,646 )

$ (2,109,011 )

We generated revenues of approximately $850,000

for the three months ended March 31, 2024 as compared to approximately $203,000 for the three months ended March 31, 2023.

for the three months ended March 31, 2024 was generated from licenses pursuant to the settlement of patent infringement lawsuits in the

TLL portfolio.

Our revenue for the three months ended March 31, 2023 was generated from licenses pursuant to the settlement of patent

infringement lawsuits in the Tyche and STX portfolios.

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

deducted as cost of revenue.

Cost of revenue for the three months ended March 31, 2024 and 2023 relating to patent service costs was approximately

$562,000 and $188,000, respectively.

During the three months ended March 31, 2024, the Company received a reimbursement for costs expensed

in prior periods in the amount of approximately $334,000, resulting in a reduction of litigation and licensing expenses.

The timing and

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

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

sources, to inventors/former patent owners and to Intelligent Partners, all of whom or may have an interest in our share of the recovery

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

Selling, general, and administrative expenses for

the three months ended March 31, 2024 decreased by approximately $201,000, or approximately 26%, compared to the three months ended March

31, 2023, primarily due to compensation expense.

Our principal operating expenses for the three months ended March 31, 2024 were amortization

of intangible assets of approximately $167,000 and compensation expenses of approximately $165,000.

Our principal operating expenses for

the three months ended March 31, 2023 were amortization of intangible assets of approximately $159,000 and compensation expenses of approximately

We had stock-based compensation costs of approximately $6,000 and $19,000 for the three months ended March 31, 2024 and 2023,

respectively.

We anticipate increased administrative expenses in the second quarter of 2024 as a result of the restatement of our financial statements

for the year ended December 31, 2023 and the filing of an amendment to our 10-K annual report.

Other income and expense for the three months

ended March 31, 2024 included a loss on change in fair value of warrant liability of approximately $199,000.

We realized a loss on change

in fair value of warrant liability of approximately $9,000 for the three months ended March 31, 2023.

The fair value of the warrant liability

is affected by the price of our common stock, so the liability increases as the stock price goes up, resulting in an expense, and decreases

as the stock price goes down resulting in income from change in warrant liability.

Other expense also reflects interest expense of approximately

$138,000 for the three months ended March 31, 2024 and approximately $137,000 for the three months ended March 31, 2023.

for the three months ended June 30, 2024 as compared to $0 for the three months ended June 30, 2023.

We generated revenues of approximately

$1,895,000 for the six months ended June 30, 2024 as compared to approximately $203,000 for the six months ended June 30, 2023.

for the three and six months ended June 30, 2024 was generated from licenses pursuant to the settlement of patent infringement lawsuits

in the TLL and DIP portfolios.

Our revenue for the six months ended June 30, 2023 was generated from licenses pursuant to the settlement

of patent infringement lawsuits in the Tyche and STX portfolios.

The total settlement recovery is included in revenue and the associated

costs are deducted as cost of revenue.

Cost of revenue for the three months ended June 30, 2024 and 2023 relating to patent service costs

was approximately $387,000 and $98,000, respectively.

Cost of revenue for the six months ended June 30, 2024 and 2023 relating to patent

service costs was approximately $948,000 and $285,000, respectively.

During the six months ended June 30, 2024 the Company received a

reimbursement for costs expensed in prior periods in the amount of approximately $334,000, resulting in a reduction of litigation and

licensing expenses.

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

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

payments to legal counsel, to our funding sources, to inventors/former patent owners and to Intelligent Partners, all of whom or may have

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

Selling, general, and administrative expenses

for the three months ended June 30, 2024 increased by approximately $167,000, or approximately 26%, compared to the three months ended

June 30, 2023, primarily due to compensation expense.

Selling, general, and administrative expenses for the six months ended June 30,

2024 decreased by approximately $34,000, or approximately 2% compared to the six months ended June 30, 2023, primarily due to compensation

Our principal operating expenses for the three and six months ended June 30, 2024 were amortization of intangible assets of approximately

$164,000 and $331,000, respectively, as well as compensation expense of approximately $322,000 and $497,000, respectively.

We had stock-based

compensation costs of approximately $0 and $6,000 for the three and six months ended June 30, 2024, respectively.

Our principal operating

expenses for the three and six months ended June 30, 2023 were amortization of intangible assets of approximately $230,000 and $389,000,

respectively, as well as compensation expense of approximately $180,000 and $630,000, respectively.

We had stock-based compensation costs

of approximately $10,000 and $29,000 for the three and six months ended June 30, 2023.

Other income and expense for the three and six

months ended June 30, 2024 included a gain on change in fair value of warrant liability of approximately $241,000 and $41,000, respectively.

We recognized a loss on change in fair value of warrant liability of approximately $205,000 and $214,000 for the three and six months

ended June 30, 2023, respectively.

The fair value of the warrant liability is affected by the price of our common stock, so the liability

increases as the stock price goes up, resulting in an expense, and decreases as the stock price goes down resulting in income from change

in warrant liability.

Other expense also reflects interest expense of approximately $230,000 and $368,000, respectively for the three

and six months ended June 30, 2024 and approximately $217,000 and $354,000 for the three and six months ended June 30, 2023, respectively.

We incurred income tax expense of approximately

and $30,000 for foreign income taxes for the three months ended March 31, 2024 and 2023, respectively.

As a result of the foregoing, we realized a net

loss of approximately $431,000, or $0.08 per share (basic and diluted) and net loss of approximately $939,000, or $0.17 per share (basic

and diluted), for the three months ended March 31, 2024 and 2023, respectively.

$105,000 for foreign income taxes for the three and six months ended June 30, 2024.

The foreign income tax expense incurred during the

three and six months ended June 30, 2024 primarily relates to the withholding tax in connection with settlements of patent infringement

We incurred income tax expense of approximately $0 and $30,000 for the three and six months ended June 30, 2023, respectively.

As a result of the foregoing, we incurred net

loss of approximately $447,000, or $0.08 per share (basic and diluted) for the three months ended June 30, 2024 and net loss of approximately

$879,000 or $0.16 per share (basic and diluted) for the six months ended June 30, 2024 compared to net loss of approximately $1,170,000,

or $0.22 per share (basic and diluted) for the three months ended June 30, 2023 and net loss of approximately $2,109,000, or $0.40 per

share (basic and diluted) for the six months ended June 30, 2023.

Liquidity and Capital Resources

At March 31, 2024, we had current assets of approximately $4,844,000

and current liabilities of approximately $14,809,000.

At June 30, 2024, we had current assets of

approximately $979,000 and current liabilities of approximately $11,227,000.

Our current liabilities include funding liabilities of approximately

payable to QFL and QF3, a non-interest bearing total monetization proceeds obligation (the “TMPO”) to Intelligent Partners

$6,634,000 payable to QF3, a non-interest bearing total monetization proceeds obligation (the “TMPO”) to Intelligent Partners

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

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payable and accrued liabilities of approximately $539,000, and accrued interest of approximately $879,000.

As of March 31, 2024,

we have an accumulated deficit of approximately $24,342,000 and a negative working capital of approximately $9,965,000.

As of June 30, 2024, we

have an accumulated deficit of approximately $24,790,000 and a negative working capital of approximately $10,248,000.

Other than salary

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company filing reports with the SEC.

The following table shows the summary cash flows for

the three months ended March 31, 2024 and 2023:

Three Months Ended

Cash flows used in operating activities

Cash flows used in investing activities

Cash flows from financing activities

Net increase in cash

The following table shows the summary cash flows

for the six months ended June 30, 2024 and 2023:

Six Months Ended June 30,

Cash flows provided by (used in) operating activities

$ (1,097,994 )

Cash flows provided by (used in) investing activities

Cash flows provided by (used in) financing activities

Net increase (decrease) in cash

Cash at beginning of year

Cash at end of year

We cannot assure you that we will be successful in

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

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

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

to counsel and funding sources and payments to Intelligent Partners.

We cannot assure you that we will be successful

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

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

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

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

We have no credit facilities.

Although our agreement provides for

QFL and QF3 to provide us with funding to acquire intellectual property rights, subject to QFL’s and QF3’s approval, it does not

provide for financing the litigation necessary for the monetization of the intellectual property rights.

We do not have any credit facilities

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

arrangements with counsel with respect to our pending litigation.

If we do not secure contingent representation or obtain litigation financing,

we may be unable to monetize our intellectual property.

We cannot predict the success of any pending or future

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

is generated.

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

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

Although our agreement provides

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

the litigation necessary for the monetization of the intellectual property rights.

We do not have any credit facilities or any arrangements

for us to finance the litigation necessary to monetize our intellectual property rights other than contingent fee arrangements with counsel

with respect to our pending litigation.

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

to monetize our intellectual property.

We cannot predict the success of any pending or

future litigation.

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

which is generated.

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

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

As noted below, there is a substantial doubt about

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Intangible Assets

Intangible assets consist of patents which are amortized

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

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

of long-lived assets.

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

on a straight-line basis with the associated patent.

Patents include the cost of patents or patent rights

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

Intangible assets consist of patents which are

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

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

to impairment of long-lived assets.

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

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

Patents include the cost of patents or patent

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

Patent acquisition

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Warrant Liability

We reflect a warrant liability with respect to warrants

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

The amount of the liability

is determined at the end of each fiscal period by using a Black-Scholes option pricing model to estimate the fair value.

The period to

period change in the amount of warrant liability is reflected as a gain or loss in warrant liability and is included under other expenses.

We reflect a warrant liability with respect to

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

The amount of the

liability is determined at the end of each fiscal period by using a Black-Scholes option pricing model to estimate the fair value.

period to period change in the amount of warrant liability is reflected as a gain or loss in warrant liability and is included under other

Stock-Based Compensation

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to transfer intellectual property rights in the contract.

Since the promised intellectual property rights are

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

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

The intellectual property rights

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

Our subsequent activities do not substantively

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

Our subsidiaries have

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

Since the promised intellectual property rights

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

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

The intellectual property

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

Our subsequent activities do not

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

Our subsidiaries

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

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

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in these transactions.

Our revenue for the three months ended March 31, 2024

was generated from licenses pursuant to the settlement of patent infringement lawsuits in the TLL portfolio.

Our revenue for the three

months ended March 31, 2023 was generated from licenses pursuant to the settlement of patent infringement lawsuits in the Tyche and STX

Recent Accounting Pronouncements

Management does not believe that there are any recently

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

Management does not believe that there are any

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

Going Concern

We have an accumulated deficit of approximately $24,342,000 and negative

working capital of approximately $9,965,000 as of March 31, 2024.

Although we generated income in 2023, we incurred a loss for the

three months ended March 31, 2024 and we have a history of losses and can give no assurance that we will generate income in the future.

Because of our history of losses, our working capital deficiency, the uncertainty of future revenue, our obligations to Intelligent Partners,

QF3, and QFL, the low stock price of our common stock and the absence of an active trading market in our common stock and our failure

to have effective internal controls over financial reporting, as reflected in the restatement of its financial statements for the year

ended December 31, 2023, our ability to raise funds in the equity market or from lenders is severely impaired.

These conditions, as well

as any adverse consequences which would result from our failure to meet the continued listing requirements of the OTCQB, raise substantial

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

Our revenue is generated exclusively from license fees generated from litigation

seeking damages for infringement of our intellectual property rights.

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

for litigation to enforce our 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.

We have an accumulated deficit of approximately

$24,790,000 and negative working capital of approximately $10,248,000 as of June 30, 2024.

Because of our history of losses, our

working capital deficiency, the uncertainty of future revenue, our obligations to QF3 and Intelligent Partners, the low stock price of

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

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

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

These conditions, as well as any adverse consequences which would

result from our failure to meet the continued listing requirements of the OTCQB, raise substantial doubt as to our ability to continue

as a going concern.

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

of our intellectual property rights.

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

intellectual property rights, the availability of such funds is uncertain.

The financial statements do not include any adjustments that

might result from the outcome of this uncertainty.

Off-Balance Sheet Arrangements

7 unchanged sentences

About Market Risk.

We are a smaller reporting company as defined by Rule

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

We are a smaller reporting company as defined

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

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis