What changed in this filing

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Item 9A. Controls and Procedures

2026-03-30 compared with 2025-03-26 · 645 added, 631 removed, 826 unchanged (61% of the section changed)

11 unchanged sentences

controls and procedures can only provide reasonable assurance of achieving their control objectives.

Based upon this evaluation, our chief

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, 2024, 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.

Based upon this evaluation, our

chief executive officer and acting chief financial officer concluded that, due to our very limited staff, our disclosure controls were

not effective as of December 31, 2025, 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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control over financial reporting as of December 31, 2024.

In making this assessment, we used the criteria set forth by the Committee of

Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control - Integrated Framework.

During our assessment of the effectiveness

of internal control over financial reporting as of December 31, 2024, management identified material weaknesses related to (i) our internal

audit functions (ii) inadequate levels of review of the financial statements and (iii) a lack of segregation of duties within accounting

In making this assessment, we used the criteria set forth by the Committee

of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control - Integrated Framework.

During our assessment of the

effectiveness of internal control over financial reporting as of December 31, 2025, management identified material weaknesses related

to (i) inadequate levels of review of the financial statements and (ii) a lack of segregation of duties within accounting functions.

Therefore, our internal controls over financial reporting were not effective as of December 31, 2025.

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

The material weaknesses were a root cause

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

The lack of any separation of duties, with the same

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

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

in the near future.

The lack of any separation of duties,

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

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

financial reporting in the near future.

Due to our size and nature, segregation of all

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income to enable us to hire such individuals, and we cannot give any assurance that we will be able to hire such personnel.

Since we became

engaged in the intellectual property management business in 2008, we have not had the financial resources to develop or implement systems

that would provide us with the necessary information on a timely basis so as to be able to implement financial controls.

Our financial

condition makes it difficult for us to implement a system of internal controls over financial reporting.

became engaged in the intellectual property management business in 2008, we have not had the financial resources to develop or implement

systems that would provide us with the necessary information on a timely basis so as to be able to implement financial controls.

financial condition makes it difficult for us to implement a system of internal controls over financial reporting.

Unless we generate significantly greater revenues

on an ongoing basis and employ accounting personnel, it is doubtful that we will be able implement any system which provides us with any

degree of internal controls over financial reporting.

on an ongoing basis and employ accounting personnel, it is doubtful that we will be able implement any system which provides us with

any degree of internal controls over financial reporting.

A material weakness (within the meaning of PCAOB

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respect to our officers and directors:

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

Chief executive officer,

president, acting chief financial officer, secretary and director

Chief technology officer and director

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– Class I directors, Class II directors and Class III directors.

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

and chief executive officer since January 2014 and a director since 2007.

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

Scahill, a Class I director, has been

president and chief executive officer since January 2014 and a director since 2007.

He was appointed secretary in April 2014.

He also served as

president and chief operating officer from May 2007 to December 2013.

served as president and chief operating officer from May 2007 to December 2013.

From December 2006 to May 2007, Mr.

Scahill was founder and managing

director of the Urban-Rigney Group, LLC, a private consultancy specializing in new business/new venture development, operations optimization,

and strategic analysis.

Scahill was founder

and managing director of the Urban-Rigney Group, LLC, a private consultancy specializing in new business/new venture development, operations

optimization, and strategic analysis.

Prior to launching his consultancy business, Mr.

Scahill held numerous positions in sales and marketing, technical

management, and product development in the consumer products/flexible packaging arena.

Scahill held numerous positions in sales and marketing,

technical management, and product development in the consumer products/flexible packaging arena.

Scahill holds a B.S.

in chemical engineering

from the University of Rochester, an MBA in finance, strategy and operations from Rochester’s Simon Graduate School of Business

and a JD from Pace Law School.

Scahill is admitted to practice in New York, Florida and the District of Columbia, and he is a registered

patent attorney admitted to practice before the United States Patent and Trademark Office.

Scahill, a Class II director, has a

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

engineering from the University of Rochester, an MBA in finance, strategy and operations from Rochester’s Simon Graduate School

of Business and a JD from Pace Law School.

Scahill is admitted to practice in New York, Florida and the District of Columbia, and

he is a registered patent attorney admitted to practice before the United States Patent and Trademark Office.

Scahill, a Class II director, has

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

As chief technology officer, Mr.

Scahill is responsible for our

cybersecurity protection.

Scahill is responsible for

our cybersecurity protection.

Scahill is also currently a managing partner of Managed Services Team LLC, an IT services provider.

to Managed Services Team, he was president of Layer 8 Group, Inc.

from August 2005 to December 2012, at which time Layer 8 merged with

Structured Technologies Inc.

Prior to Managed Services Team, he was president of Layer 8 Group, Inc.

from August 2005 to December 2012, at which time Layer 8 merged

with Structured Technologies Inc.

to form Managed Services Team LLC.

In his roles he has taken the responsibility for business strategy, acquisition,

execution, as well as financial management.

His entrepreneurial acumen and proven record of successful management with sole discretionary

responsibility, demonstrate the scope of his capability and his value to delivering results.

He serves on the boards of the Upstate New

York Technology Council, is an investor in Greater Rochester Enterprise, Pariemus Rochester and also serves on the Corporate Advisory

Board for Habitat for Humanity.

In his roles he has taken the responsibility for business strategy,

acquisition, execution, as well as financial management.

His entrepreneurial acumen and proven record of successful management with sole

discretionary responsibility, demonstrate the scope of his capability and his value to delivering results.

He serves on the boards of

the Upstate New York Technology Council, is an investor in Greater Rochester Enterprise, Pariemus Rochester and also serves on the Corporate

Advisory Board for Habitat for Humanity.

He is a member of Greater Rochester Enterprise and CEO Roundtable Chair.

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John’s University College of Business.

Carroll is founder, chief executive officer and owner of Raiserve Inc.,

a web-based platform for monetizing non-profit programmatic work in the area of service formed in October 2014.

Carroll’s research

focuses on consumer behavior and behavioral decision theory.

Carroll’s work has been published in top academic journals including

the Journal of Advertising, Marketing Letters, as well in books such as Psycholinguistic Phenomena in Marketing Communications.

to his research Dr.

Carroll has taught Marketing at the executive, graduate and undergraduate level across in the United States, Europe

Carroll is founder, chief executive officer and owner of Raiserve

Inc., a web-based platform for monetizing non-profit programmatic work in the area of service formed in October 2014.

research focuses on consumer behavior and behavioral decision theory.

Carroll’s work has been published in top academic journals

including the Journal of Advertising, Marketing Letters, as well in books such as Psycholinguistic Phenomena in Marketing Communications.

In addition to his research Dr.

Carroll has taught Marketing at the executive, graduate and undergraduate level across in the United

States, Europe and Asia.

Prior to pursuing his academic career, Dr.

Carroll held various marketing positions at NOP Worldwide Marketing Research Company

and Ralston Purina Company.

Carroll earned his BA in Economics from the University of Rochester, his MS in Marketing Research from

the University of Texas in Arlington, and his PhD from City University of New York – Baruch College.

Logue, a Class I director, is an investment

advisory representative Lincoln Investment, a position he has held since 2019.

Prior to joining Lincoln Investment, he spent 16 years

with Morgan Stanley in the private wealth management department.

Logue has spent the majority of his career focused on investing in

both public and private opportunities department.

Logue graduated with a BA from Colgate University and an MBA from Columbia University

and has previously served on the board of the Columbia Alumni Association of Fairfield County.

Carroll held various marketing positions at NOP Worldwide Marketing

Research Company and Ralston Purina Company.

Carroll earned his BA in Economics from the University of Rochester, his MS in Marketing

Research from the University of Texas in Arlington, and his PhD from City University of New York – Baruch College.

Scahill and Jon C.

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Director Independence

Carroll and Mr.

Logue are “independent”

directors based on the definition of independence in the listing standards of the NYSE.

Carroll is an “independent” director

based on the definition of independence in the listing standards of the NYSE.

Code of Ethics

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Exchange Act of 1934

Section 16(a) of the Securities Exchange Act of

1934, as amended, requires executive officers and directors of issuers whose securities are registered pursuant to the Securities Exchange

Act and persons who own more than 10% of a registered class of our equity securities to file with the SEC initial statements of beneficial

ownership, reports of changes in ownership and annual reports concerning their ownership of the our common stock and other equity securities,

on Form 3, 4 and 5 respectively.

Because our common stock is not registered pursuant to the Securities Exchange Act, our officers, directors

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

Section 16(a) of the Securities Exchange Act

of 1934, as amended, requires executive officers and directors of issuers whose securities are registered pursuant to the Securities

Exchange Act and persons who own more than 10% of a registered class of our equity securities to file with the SEC initial statements

of beneficial ownership, reports of changes in ownership and annual reports concerning their ownership of the our common stock and other

equity securities, on Form 3, 4 and 5 respectively.

Because our common stock is not registered pursuant to the Securities Exchange Act,

our officers, directors and 10% stockholders are not required to make such filings.

EXECUTIVE COMPENSATION

The following summary compensation table sets

forth information concerning compensation for services rendered in all capacities during the years ended December 31, 2024 and 2023, earned

by or paid to our executive officers.

forth information concerning compensation for services rendered in all capacities during the years ended December 31, 2025 and 2024,

earned by or paid to our executive officers.

Name & Principal Position

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Chief Technology Officer

(1) Represents the payments made by

the Company under the SEP IRA.

(1) Represents

the payments made by the Company under the SEP IRA.

Employment Agreements

Pursuant to the restated employment agreement,

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

Scahill as president and chief executive officer for a term of three years, commencing

January 1, 2014, and continuing on a year-to-year basis unless terminated by either party on not less than 90 days’ notice prior

to the expiration of the initial term or any one-year extension.

The agreement provides for an annual salary of $252,000, which may be

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

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

we agreed to employ Jon C.

Scahill as president and chief executive officer for a term of three years, commencing January 1, 2014, and

continuing on a year-to-year basis unless terminated by either party on not less than 90 days’ notice prior to the expiration of

the initial term or any one-year extension.

The agreement provides for an annual salary of $252,000, which may be increased, but not decreased,

by the board or the compensation committee.

In March 2023, the board of directors increased Mr.

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

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

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

In August 2016, the board of directors approved

annual bonus compensation to Mr.

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

but, if we are subject to the limitation on deductibility of executive compensation pursuant to Section 162(m) of the Internal Revenue

Code, the bonus cannot exceed the amount which would be deductible pursuant to Section 162(m).

Scahill is also eligible to participate

in any executive incentive plans which we may adopt.

Scahill’s annual salary to $600,000,

effective January 1, 2023.

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

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

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

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

to the limitation on deductibility of executive compensation pursuant to Section 162(m) of the Internal Revenue Code, the bonus cannot

exceed the amount which would be deductible pursuant to Section 162(m).

Scahill is also eligible to participate in any executive incentive

plans which we may adopt.

Pursuant to the agreement, we issued to Mr.

Scahill warrants to purchase 600,000

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

and we issued to Mr.

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

In the event that we terminate

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

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

of his insurance benefits.

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

to January 1, 2014.

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

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

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

Scahill a restricted

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

In the event that we terminate Mr.

Scahill’s employment other than

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

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

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

The restated employment

agreement also includes mutual general releases between Mr.

Scahill and us.

In March 2020,

the Company adopted a SEP IRA plan for its employees.

Scahill is our only employee covered by the plan.

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

Our Chief Executive Officer and Chief Technology Officer, who are our only employees, are covered by the plan.

Pension Benefits

In March 2020, we adopted a SEP IRA plan for our

employees pursuant to which we deposit into a SEP IRA account of each of our 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 presented to

and reviewed by the directors of this Corporation.

In March 2020, we adopted a SEP IRA plan for

our employees pursuant to which we deposit into a SEP IRA account of each of our 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 presented

to and reviewed by the directors of this Corporation.

For the year ending December 31, 2025 the percentage was set at 12%.

Our Chief Executive

Officer and Chief Technology Officer, who are our only employees, are covered by the plan.

Executive Officer and Chief Technology Officer, who are our only employees, are covered by the plan.

2017 Equity Incentive Plan

On November 10, 2017, the board of directors adopted

the 2017 Equity Incentive Plan (the “Plan”) pursuant to which 1,500,000 shares of common stock may be issued.

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

The plan provides for the grant of

non-qualified options, stock grants and other equity-based incentives to employees, including officers, directors and consultants.

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

The Company’s chairman of the board holds outstanding options

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

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

price of $1.00 per share is currently exercisable.

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

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

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

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

We did not recognize an option expense

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

Pursuant to consulting agreements, we granted options to purchase a

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

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

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

Option to purchase 200,000

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

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

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

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

with respect to these options.

On November 10, 2017, the board of directors

adopted the 2017 Equity Incentive Plan (the “Plan”) pursuant to which 1,500,000 shares of common stock may be issued.

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

The plan provides for the

grant of non-qualified options, stock grants and other equity-based incentives to employees, including officers, directors and consultants.

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

The Company’s chairman of the board holds

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

An option to purchase 200,000 shares of common

stock at an exercise price of $1.00 per share is currently exercisable.

An options to purchase 200,000 shares of common stock at $3.00

per share becomes exercisable on the first day on which we file with the SEC a Form 10-K or Form 10-Q which reports stockholders’

equity of at least $5,000,000, and an options to purchase 200,000 shares of common stock at an exercise price of $5.00 per share becomes

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

did not recognize an option expense with respect to these options during the year ended December 31, 2025 or 2024.

Pursuant to consulting agreements, we granted

options to purchase a total of 900,000 shares of common stock which expire on February 21, 2031.

Option to purchase 300,000 shares of

common stock at $1.00 per share, 100,000 shares at $3.00 per share and 100,000 shares at $5.00 per share are currently exercisable.

to purchase 200,000 shares at an exercise price of $3.00 per share, become exercisable on the first day on which we file with the SEC

a Form 10-K or Form 10-Q which reports stockholders’ equity of at least $5,000,000 and options to purchase 200,000 shares at an

exercise price of $5.00 per share become exercisable on the date on which the common stock is listed for trading on the Nasdaq Stock

Market or the New York Stock Exchange.

The Company recognized option expense of approximately $0 and $6,000 for the years ended December

31, 2025 and 2024, respectively, with respect to these options.

Outstanding Equity Awards at Fiscal Year-End

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to the outstanding equity awards granted to and held by the officers named in the Summary Compensation Table as of December 31, 2025.

Option awards

unexercisable

4 unchanged sentences

Directors’ Compensation

We do not have any agreements or formal plan for

compensating our directors for their service in their capacity as directors, although our board has, and may in the future, award stock

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

We do not have any agreements or formal plan

for compensating our directors for their service in their capacity as directors, although our board has, and may in the future, award

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

None of our directors received compensation during 2025.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

AND RELATED STOCKHOLDER MATTERS

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL

OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The following table provides information as to

shares of common stock beneficially owned as of March 15, 2026 by:

Each director;

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;

All directors and officers as a group.

current officer named in the summary compensation table;

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;

directors and officers as a group.

For purposes of the following table, “beneficial

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Name and Address (1) of Beneficial Owner

Intelligent Partners, LLC (4)

William Ryall Carroll

All officers and directors as a group (four individuals)

The address of Jon C.

address of Jon C.

Carroll, Timothy J.

Scahill and Ryan T.

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

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

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

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

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

The address for Mr.

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

2803 Austin, TX 78703.

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

Fitton and Michael R.

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

The address for Mr.

Carper is 13218 Tamayo Drive Austin, TX 78729.

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

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

Logue is c/o Quest

Patent Research Corporation, 411 Theodore Fremd Ave., Suite 206S, Rye, New York 10580-1411.

(2) Represents

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

Scahill and (b) 200,000 shares issuable upon exercise of

options held by Mr.

(3) Represents

(a) 674,074 shares of common stock owned by Mr.

(4) Represents

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

CERTAIN RELATIONSHIPS AND RELATED

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approximately $198,000 and $131,000 for the years ended December 31, 2025 and 2024, respectively.

During 2024 and 2023, we contracted with a law

firm more than 10% owned, but not controlled, by the father-in-law of the chief executive officer.

The firm is engaged on a contingent

fee basis and serves as escrow agent in connection with monetization of our patents in matters where the firm is serving as counsel to

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

years ended December 31, 2024 and 2023, respectively.

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

is a recovery.

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

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

During 2025 and 2024, we contracted with a

law firm more than 10% owned, but not controlled, by the father-in-law of the chief executive officer.

The firm is engaged on a

contingent fee basis and serves as escrow agent in connection with monetization of our patents in matters where the firm is serving

as counsel to us.

In connection with the engagement, we recorded litigation and licensing expenses of approximately $4,054,000 and

$1,163,000 for the years ended December 31, 2025 and 2024, respectively.

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

are incurred unless there is a recovery.

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

officer 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.

Director Independence

Carroll and Mr.

Logue are “independent”

directors based on the definition of independence in the listing standards of the NYSE.

Carroll is an “independent” director

based on the definition of independence in the listing standards of the NYSE.

PRINCIPAL ACCOUNTING FEES AND SERVICES

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(“RRBB”) for 2025 and 2024 for the categories of services

Fiscal Year Ended

Audit fees – RRBB

9 unchanged sentences

services that our independent accountants provided to us in the past two fiscal years.

Amended and Restated Articles of Incorporation of the Company.(5)

Bylaws of the Company.

Restated Employment Agreement dated as of November 30, 2014 between the Company and Jon C.

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

Form of warrant issued to former officers and directors.

Form of warrant issued to Mr.

Indemnification agreement, dated December 8, 2014 between the Company and Jon C.

Indemnification agreement, dated December 8, 2014 between the Company and Timothy J.

Indemnification agreement, dated December 8, 2014 between the Company and Dr.

and Restated Articles of Incorporation of the Company.(5)

of the Company.

Description of Securities

Employment Agreement dated as of November 30, 2014 between the Company and Jon C.

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

of warrant issued to former officers and directors.

of warrant issued to Mr.

Indemnification

agreement, dated December 8, 2014 between the Company and Jon C.

Indemnification

agreement, dated December 8, 2014 between the Company and Timothy J.

Indemnification

agreement, dated December 8, 2014 between the Company and Dr.

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)

Indemnification

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

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

Equity Incentive Plan(6)

Purchase Agreement dated February 19, 2021 among the Company and QPRC Finance LLC (7) †

Agreement dated February 19, 2021 among the Company and QPRC Finance LLC (7) †

A to Purchase Agreement – Security Agreement dated February 19, 2021 among the Company and QPRC Finance LLC.

B to Purchase Agreement – Subsidiary Continuing Guaranty Agreement dated February 19, 2021 among Quest Licensing Corporation, Mariner IC Inc., Semcon IP Inc., IC Kinetics Inc., Quest NetTech Corporation, CXT Systems, Inc., M-Red Inc., Audio Messaging Inc.

B to Purchase Agreement – Subsidiary Continuing Guaranty Agreement dated February 19, 2021 among Quest Licensing Corporation,

Mariner IC Inc., Semcon IP Inc., IC Kinetics Inc., Quest NetTech Corporation, CXT Systems, Inc., M-Red Inc., Audio Messaging Inc.

and QPRC Finance LLC.

C to Purchase Agreement – Subsidiary Patent Proceeds Security Agreement dated February 19, 2021 among the Company, Quest Licensing Corporation, Mariner IC Inc., Semcon IP Inc., IC Kinetics Inc., Quest NetTech Corporation, CXT Systems, Inc., M-Red Inc., Audio Messaging Inc.

C to Purchase Agreement – Subsidiary Patent Proceeds Security Agreement dated February 19, 2021 among the Company, Quest Licensing

Corporation, Mariner IC Inc., Semcon IP Inc., IC Kinetics Inc., Quest NetTech Corporation, CXT Systems, Inc., M-Red Inc., Audio Messaging

and QPRC Finance LLC.

1 unchanged sentence

E to Purchase Agreement – Board Observation Rights Agreement dated February 19, 2021 among the Company and QPRC Finance LLC.

Registration Rights Agreement – dated February 19, 2021 among the Company and QPRC Finance LLC.

Form of Warrant – dated February 19, 2021 among the Company and QPRC Finance LLC (7)

Restructure Agreement dated February 19, 2021 among the Company, Quest Licensing Corporation, Mariner IC Inc., Semcon IP Inc., IC Kinetics Inc., Quest NetTech Corporation, CXT Systems, Inc., M-Red Inc., Audio Messaging Inc.

Intelligent Partners LLC, Andrew Fitton and Michael Carper.

A to Restructure Agreement - Stock Purchase Agreement dated February 19, 2021 among the Company, Intelligent Partners LLC, Andrew Fitton and Michael Carper.

Rights Agreement – dated February 19, 2021 among the Company and QPRC Finance LLC.

of Warrant – dated February 19, 2021 among the Company and QPRC Finance LLC (7)

Agreement dated February 19, 2021 among the Company, Quest Licensing Corporation, Mariner IC Inc., Semcon IP Inc., IC Kinetics Inc.,

Quest NetTech Corporation, CXT Systems, Inc., M-Red Inc., Audio Messaging Inc.

Intelligent Partners LLC, Andrew Fitton and Michael

A to Restructure Agreement - Stock Purchase Agreement dated February 19, 2021 among the Company, Intelligent Partners LLC, Andrew

Fitton and Michael Carper.

B to Restructure Agreement - Option Grant dated February 19, 2021 among the Company and Intelligent Partners LLC.

C to Restructure Agreement - Amended and Restated Pledge Agreement dated February 19, 2021 among the Company and Intelligent Partners LLC.

D to Restructure Agreement - Amended and Restated Registration Rights Agreement dated February 19, 2021 among the Company, Intelligent Partners LLC, Andrew Fitton and Michael Carper.

C to Restructure Agreement - Amended and Restated Pledge Agreement dated February 19, 2021 among the Company and Intelligent Partners

D to Restructure Agreement - Amended and Restated Registration Rights Agreement dated February 19, 2021 among the Company, Intelligent

Partners LLC, Andrew Fitton and Michael Carper.

E to Restructure Agreement - Board Observation Agreement dated February 19, 2021 among the Company and Intelligent Partners LLC.

F to Restructure Agreement - Amended and Restated MPA-CP dated February 19, 2021 among the Company, Quest Licensing Corporation, Mariner IC Inc., Semcon IP Inc., IC Kinetics Inc., Quest NetTech Corporation and Intelligent Partners LLC.

F to Restructure Agreement - Amended and Restated MPA-CP dated February 19, 2021 among the Company, Quest Licensing Corporation,

Mariner IC Inc., Semcon IP Inc., IC Kinetics Inc., Quest NetTech Corporation and Intelligent Partners LLC.

G to Restructure Agreement - Amended and Restated MPA-CXT dated February 19, 2021 among CXT Systems, Inc.

and Intelligent Partners LLC.

and Intelligent Partners

H to Restructure Agreement - Monetization Proceeds Agreement dated February 19, 2021 among M-RED Inc.

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I to Restructure Agreement - Monetization Proceeds Agreement dated February 19, 2021 among Audio Messaging Inc.

and Intelligent Partners LLC.

J to Restructure Agreement - Amended and Restated 2015 Patent Proceeds Security Agreement dated February 19, 2021 among the Company, Quest Licensing Corporation, Mariner IC Inc., Semcon IP Inc., IC Kinetics Inc., Quest NetTech Corporation, CXT Systems, Inc., M-Red Inc., Audio Messaging Inc.

and Intelligent Partners

J to Restructure Agreement - Amended and Restated 2015 Patent Proceeds Security Agreement dated February 19, 2021 among the Company,

Quest Licensing Corporation, Mariner IC Inc., Semcon IP Inc., IC Kinetics Inc., Quest NetTech Corporation, CXT Systems, Inc., M-Red

Inc., Audio Messaging Inc.

and Intelligent Partners LLC.

K to Restructure Agreement - MPA-NA dated February 19, 2021 among the Company and Intelligent Partners LLC.

L to Restructure Agreement - MPA-NA Security Interest Agreement dated February 19, 2021 among the Company and Intelligent Partners LLC.

Form of Consulting Agreement (8)

Form of Restricted Stock Agreement (8)

Form of Option Agreement (8)

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

L to Restructure Agreement - MPA-NA Security Interest Agreement dated February 19, 2021 among the Company and Intelligent Partners

of Consulting Agreement (8)

of Restricted Stock Agreement (8)

of Option Agreement (8)

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

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

forward purchase agreement dated April 11, 2025, by and among the Company, MR Licensing LLC (“MR”), QPRC Corporate Finance

Alpha LLC and QPRC Corporate Finance Bravo LLC (collectively, “QPRC Finance”), including as exhibits, the Security Agreement

between the Company, MR and QPRC Finance, the Patent Security Agreement between the Company, MR and QPRC Finance, the Irrevocable

Letter of Instructions from the Company and MR;

and the Waterfall Agreement among the Company, MR, QPRC Finance and Fabricant LLP.(12)

Certification of Chief Executive Officer and Acting Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.(13).

Section 1350 Certification of the Chief Executive Officer and Acting Chief Financial Officer.(13).

Inline XBRL Instance Document.

Inline XBRL Taxonomy Extension Schema Document.

Inline XBRL Taxonomy Extension Calculation Linkbase Document.

Inline XBRL Taxonomy Extension Definition Linkbase Document.

Inline XBRL Taxonomy Extension Label Linkbase Document.

Inline XBRL Taxonomy Extension Presentation Linkbase 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.

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.

Filed as an exhibit to the Company’s Form 10-K, for the year ended December 31, 2013, which was filed with the SEC on April 10, 2015.

Filed as exhibit to Amendment No.

1 to the Company’s registration statement on Form S-1, which was filed with the SEC on February 3, 2016, and incorporated herein by reference.

Filed as an exhibit to the Company’s Form 8-K, which was filed with the SEC on January 26, 2016 and incorporated herein by reference.

Incorporated by reference to the Form 10-K for the year ended December 31, 2017, which was filed by the Company on April 2, 2018.

Filed as an exhibit to the Company’s Form 8-K, which was filed with the SEC on February 24, 2021 and incorporated herein by reference.

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.

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

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

XBRL Instance Document.

XBRL Taxonomy Extension Schema Document.

XBRL Taxonomy Extension Calculation Linkbase Document.

XBRL Taxonomy Extension Definition Linkbase Document.

XBRL Taxonomy Extension Label Linkbase Document.

XBRL Taxonomy Extension Presentation Linkbase Document.

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.

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.

Filed as an exhibit to

the Company’s Form 10-K, for the year ended December 31, 2013, which was filed with the SEC on April 10, 2015.

Filed as exhibit to Amendment

1 to the Company’s registration statement on Form S-1, which was filed with the SEC on February 3, 2016, and incorporated

herein by reference.

Filed as an exhibit to

the Company’s Form 8-K, which was filed with the SEC on January 26, 2016 and incorporated herein by reference.

Incorporated by reference

to the Form 10-K for the year ended December 31, 2017, which was filed by the Company on April 2, 2018.

Filed as an exhibit to

the Company’s Form 8-K, which was filed with the SEC on February 24, 2021 and incorporated herein by reference.

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.

Filed as an exhibit to

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

Incorporated by reference

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

Incorporated by reference

to the Form 10-K for the year ended December 31, 2024 which was filed with the SEC on March 25, 2025.

Incorporated by reference

to the Form 8-K which was filed with the SEC on April 23, 2025

Filed herewith

Certain confidential information has been deleted from this Exhibit.

confidential information has been deleted from this Exhibit.

FORM 10-K SUMMARY

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March 30, 2026

QUEST PATENT RESEARCH CORPORATION

Chief Executive Officer and

RESEARCH CORPORATION

Chief Executive Officer

Acting Chief Financial Officer

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Scahill as his true and lawful attorney-in-fact

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

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

with the Securities and Exchange Commission.

Director, Chief Executive Officer,

March 26, 2025

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

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

therewith, with the Securities and Exchange Commission.

Director, Chief Executive

Acting Chief Financial Officer, and President

(Principal Executive, Financial and Accounting Officer)

/s/ Timothy J.

March 26, 2025

William Ryall Carroll

March 26, 2025

William Ryall Carroll

March 26, 2025

QUEST PATENT RESEARCH CORPORATION

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Opinion on the Financial Statements

We have audited the accompanying consolidated

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

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

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

In our opinion,

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

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

generally accepted in the United States of America.

We have audited the accompanying consolidated balance sheets of Quest

Patent Research Corporation and its subsidiaries (the Company) as of December 31, 2025 and 2024, and the related consolidated statements

of operations, changes in stockholders’ deficit, and cash flows for the years then ended, and the related notes (collectively referred

to as the consolidated financial statements).

In our opinion, the consolidated financial statements present fairly, in all material respects,

the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for the years

then ended, in conformity with accounting principles generally accepted in the United States of America.

Substantial Doubt about the Company’s

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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.

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

(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 .

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Litigation and licensing expenses

Gross (loss) margin

( 4,071,216 )

Operating expenses

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Total operating expenses

(Loss) income from operations

Loss from operations

( 7,689,284 )

( 1,846,469 )

Other income (expense)

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Interest expense

( 1,061,387 )

Total other income (expense)

Loss before income tax

( 8,491,508 )

(Loss) income before income tax

( 2,371,651 )

Income tax expense

Net (loss) income

$ ( 8,491,508 )

(Loss) income per share - basic and diluted

$ ( 2,471,651 )

Loss per share - basic and diluted

Weighted average shares outstanding - basic and diluted

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Stock-based compensation

( 2,471,651 )

Balances as of December 31, 2024

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$ ( 8,701,491 )

Stock-based compensation

( 8,491,508 )

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Cash flows from operating activities:

Net (loss) income

$ ( 8,491,508 )

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

$ ( 2,471,651 )

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

Change in fair market value of warrant liability

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Accounts receivable

( 3,015,295 )

Accrued interest

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( 1,518,662 )

Net cash (used in) provided by operating activities

Net cash used in operating activities

( 5,918,552 )

Cash flows from investing activities:

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( 1,525,502 )

( 4,127,702 )

Net cash provided by financing activities

Net (decrease) increase in cash and cash equivalents

Net decrease in cash and cash equivalents

Cash and cash equivalents at beginning of year

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Cash paid during the period for:

See the accompanying notes to the consolidated

financial statements.

QUEST PATENT RESEARCH CORPORATION AND SUBSIDIARIES

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation and Financial Statement

The consolidated financial statements are prepared in accordance with

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

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

Principles of Consolidation and Financial

Statement Presentation

The consolidated financial statements are prepared

in accordance with U.S.

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

of the Company and its wholly owned and majority owned subsidiaries, a number of which are inactive, as of December 31, 2025 and

The consolidated financial statements include

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Digital IP Advisors Inc.

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

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

Quest Licensing Corporation

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(wholly owned)

Echo Bay LLC (“Echo”)

(wholly owned)

Significant intercompany transactions and balances

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Cash and Cash Equivalents

The Company considers all highly liquid investments with original maturity

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

The Company had no cash equivalents as of December 31, 2024

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, 2025 and 2024.

Accounts Receivable

Accounts receivable, which generally relate to

licensed sales, are presented on the balance sheet net of estimated uncollectible amounts.

The Company records an allowance for estimated

uncollectible accounts in an amount approximating anticipated losses.

Individual uncollectible accounts are written off against the allowance

when collection of the individual accounts appears doubtful.

The Company did not record an allowance for credit losses at December 31,

2024 and 2023.

licensed sales, are presented on the balance sheet net of estimated credit losses.

The Company records an allowance for credit losses

in an amount approximating anticipated losses.

Individual uncollectible accounts are written off against the allowance when collection

of the individual accounts appears doubtful.

The Company did not record an allowance for credit losses at December 31, 2025 and

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.

amortized using the straight-line method over their estimated useful lives or statutory lives whichever is shorter.

In determining the

relevant useful lives the Company considers several factors including the age of the acquired patent portfolio, the statutory lives of

the patents acquired, whether the Company has already identified potential litigation under the patent portfolio, and the expected timeline

to monetize the asset.

Intangible assets 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.

In determining whether a trigger event has occurred, the Company contemplates several factors including the status and stage of litigation,

whether a portfolio has received any unfavorable litigation outcomes determined to final and non-appealable, changes in legal factors

or market conditions for patent assets, and whether the ultimate costs to continue to litigate a patent would exceed potential returns.

In the event that management decides to no longer allocate resources to a patent portfolio, an impairment loss equal to the remaining

carrying value of the asset is recorded.

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

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

Patents include the cost of patents or patent

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

Patent acquisition

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

Patent acquisition costs are amortized utilizing the

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

Certain patent application and prosecution

costs incurred to secure additional patent claims that, based on management’s estimates, are deemed to be recoverable, are capitalized

and amortized over the remaining estimated economic useful life of the related patent portfolio.

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

Patent acquisition costs are amortized

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

Certain patent application

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

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

Impairment of Long-Lived Assets

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impairment exists, an impairment loss will be recognized for the amount by which the carrying value exceeds the fair value.

that management decides to no longer allocate resources to a patent portfolio, an impairment loss equal to the remaining carrying value

of the asset is recorded.

There were no impairments of long-lived assets

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

See Note 5 for

information about our warrant liability.

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;

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 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

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Commitments and Contingencies

In connection with the investment in certain patents

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

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

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

In connection with the investment in certain

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

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

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

The Company’s operating subsidiaries may

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

enforcement activities.

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

negotiated fees, settlements or judgments awarded.

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

and enforcement activities.

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

any negotiated fees, settlements or judgments awarded.

The Company’s operating subsidiaries may

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Patent Licensing Fees

The Company recognizes revenue in accordance with

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

Revenue is recognized when control of the promised goods or services

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

those goods or services.

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

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

For the periods presented, revenue contracts executed

by the Company primarily provided for the payment of contractually determined, one-time, paid-up license fees in consideration for the

grant of certain intellectual property rights for patented technologies owned or controlled by the Company’s operating subsidiaries

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

Intellectual property rights granted included the

following, as applicable:

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

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

any pending litigation.

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

the related patents.

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

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

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

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

The Company recognizes revenue in accordance

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

Revenue is recognized when control of the promised goods or

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

for those goods or services.

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

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

For the periods presented, revenue contracts

executed by the Company primarily provided for the payment of contractually determined, one-time, paid-up license fees in consideration

for the grant of certain intellectual property rights for patented technologies owned or controlled by the Company’s operating

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

Intellectual property rights granted

included the following, as applicable:

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

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

of any pending litigation.

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

of the related patents.

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

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

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

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

Since the acquired intellectual property rights

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no express or implied obligation to maintain or upgrade the technology, or provide future support or services.

The contracts provide for

the grant (i.e., transfer of control) of the licenses, covenants-not-to-sue, releases, and other significant deliverables upon execution

The contracts provide

for the grant (i.e., transfer of control) of the licenses, covenants-not-to-sue, releases, and other significant deliverables upon execution

of the contract.

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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.

process is complete and revenue is recognized, at a point in time, 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.

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

component or consideration payable to the customer in these transactions.

The Company’s revenue for the years ended

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

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 component or consideration payable to the customer in these transactions.

The Company’s revenue for the year ended

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

Cost of Revenues

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

Net (Loss) Income Per Share

The Company calculates net (loss) income per share

by dividing income or losses allocated to the Company’s stockholders by the weighted average number of shares of common stock outstanding

Net Loss Per Share

The Company calculates net loss per share by

dividing income or losses allocated to the Company’s stockholders by the weighted average number of shares of common stock outstanding

for the period.

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

Potentially dilutive securities are out of the

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

The Company’s

potentially dilutive securities include 962,463 potential shares of common stock issuable upon exercise of warrants granted to QPRC Finance

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

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

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

Notes 4, 5 and 6.

The Company’s potentially dilutive securities

include 962,463 potential shares of common stock issuable upon exercise of warrants granted to QPRC Finance LLC (“QFL”) in

connection with the Purchase Agreement, described in Note 4 and 700,000 shares of common stock issuable upon exercise of stock options

granted to officers and consultants.

See Notes 4, 5 and 6.

Recently Adopted Accounting Pronouncements

In November 2023, the Financial Accounting

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

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

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

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

Additionally, the standard requires disclosures

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

The Company adopted ASU 2023-07 effective December

31, 2024, on a retrospective basis.

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

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

Refer to Note 10 for further information

on the Company’s reportable segment.

Recently Issued Accounting Pronouncements

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

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from continuing operations.

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

adoption permitted.

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

The Company adopted ASU 2023-09 for its financial

statements for the year ended December 31, 2025 using a prospective transition method.

Recently Issued Accounting Pronouncements

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

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Going Concern

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

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

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

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

income in the future.

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

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

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

the restatement of its financial statements for the year ended December 31, 2023, the ability of the Company to raise funds in the equity

market or from lenders is severely impaired.

These conditions, as well as any adverse consequences which would result if the Company fails

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

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

of the Company’s intellectual property rights.

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

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

The financial statements do not include

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

The Company has an accumulated deficit of approximately

$ 34,874,000 and negative working capital of approximately $ 27,220,000 as of December 31, 2025.

The Company has a history of losses,

including a loss of $ 8.5 million on no revenues for the year ended December 31, 2025, and the Company can give no assurance that it will

generate revenue or net income in the future.

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

of future revenue and the absence of revenues for 2025, its obligations to QPRC Finance, Intelligent Partners and QF3, the low stock

price of the Company’s common stock and the absence of an active trading market in its common stock, the Company’s 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 the Company’s failure to meet the continued listing requirements of the OTCQB, raise substantial doubt as to

the Company’s ability to continue as a going concern.

The Company’s revenue is generated exclusively from license fees generated

from litigation seeking damages for infringement of its intellectual property rights and the amount and timing of revenue is dependent

upon the success of litigation seeking to enforce 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 terms and availability

of such funds is uncertain.

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

INTANGIBLE ASSETS

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Patents $ 15,087,000 $ 6,087,000

Subtotal 6,087,000 6,087,000

accumulated amortization ( 4,856,737 ) ( 3,048,750 )

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The intangible assets at December 31, 2025 represent:

● 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;

acquired in October 2021 from AI for a purchase price of $ 550,000 pursuant to which the Company retains an amount equal to the purchase

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

net proceeds realized, if any;

the useful lives of the patents, at the date of acquisition, was approximately 11 years.

● patents acquired in July 2022 via assignment from AI for a purchase price of $ 92,000 , the useful lives of the patents, at the date of purchase, was approximately 2 - 4 years.

● patents acquired July 2022 pursuant to an agreement with Hewlett Packard Enterprise Development LP and Hewlett Packard Enterprise Company for a purchase price of $ 350,000 .

The useful lives of the patents, at the date of purchase, was approximately 2 - 9 years.

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

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.

acquired July 2022 pursuant to an agreement with Hewlett Packard Enterprise Development LP and Hewlett Packard Enterprise Company for

a purchase price of $ 350,000 .

The useful lives of the patents, at the date of purchase, was approximately 2 - 9 years.

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

acquired March 2023 from Tower for a purchase price of $ 3,300,000 pursuant to which the Company retains an amount equal to the purchase

price plus a negotiated return and any fees out of net proceeds, as defined in the agreement, after which Tower in entitled to a percentage

of further net proceeds realized, if any.

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

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

The useful lives of the patents, at

the date of purchase, was approximately 9 - 10 years.

acquired in April 2025 from Monterey Research LLC for a purchase price of $ 9,000,000 .

The useful lives of the patents, at the date of

purchase, was approximately 5 years .

The Company amortizes the costs of intangible

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impairment to the carrying values.

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

As of December 31, 2025, management concluded that there was no impairment to the intangible

Amortization expense for patents was approximately

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and administration expenses in the accompanying consolidated statement of operations.

Future amortization of intangible assets is as follows:

Future amortization of intangible assets is as

Year Ended December 31,

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Funding Liabilities

The following table shows the Company’s funding liabilities to

QFL and QF3 at December 31, 2024 and 2023:

Funding liability – QFL

The following table shows the Company’s funding liabilities

to QF3and QPRC Finance at December 31, 2025 and 2024:

Funding liability – QF3

Funding liability – QPRC Finance

Funding liabilities

Funding Liabilities - QFL

The QFL funding liability at December 31, 2023

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

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

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

full outstanding principal balance has been repaid.

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

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

as of December 31, 2023.

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

The Company did not request an operating capital

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

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

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

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

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

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

to Intelligent Partners.

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

of those patents.

The Company also granted QFL a ten-year warrant to purchase a total of up to 962,463 shares of our common stock, with

an exercise price of $ 0.54 per share (Note 5), and, pursuant to a registration rights agreement, the Company granted QFL certain registration

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

The covenants in the registration rights agreement include

a continued listing on the OTCQB.

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

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

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

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

A portion of any gain

from sale of the shares, net of taxes and costs of exercise, realized prior to the completion of all monetization activities shall be

credited against the total return due to QFL pursuant to the Purchase Agreement.

The Company also granted QFL certain board observation

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

from QFL are paid directly to QFL.

After QFL has received a negotiated rate of return, the Company and QFL share net proceeds equally

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

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

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

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

Contemporaneously with the execution of the agreements

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

respect to the outstanding notes and the securities purchase agreement.

As part of the restructure of the Company’s agreements with

Intelligent Partners, the Company amended the existing MPAs and granted Intelligent Partners certain rights in the monetization proceeds

from any new intellectual property we acquire.

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

intellectual property owned by the eight Subsidiary Guarantors.

Intelligent Partners also participates in the monetization proceeds from

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

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

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

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

If in the same calendar

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

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

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

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

The payments to Intellectual Partners with respect new patents are payable

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

rate of return.

Funding Liabilities - QF3

The QF3 funding liabilities at December 31,

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

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

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

The obligation to QF3 has no repayment term since

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

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

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

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

2025 and 2024 of $ 7,634,381 , respectively, represents the principal amount of the Company’s obligations to QF3 pursuant to a purchase

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

As of December 31,

2025, the Company has made no repayments on this funding liability.

The obligation to QF3 has no repayment term since the payment is

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

liability as of December 31, 2025 and 2024.

Accrued interest related to this funding liability as of December 31, 2025 and

2024, was approximately $ 1,545,000 and $ 865,000 , respectively.

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

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

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

available to the Company a financing facility of:

(a) up to $ 4,334,000 for operating expenses, of which the Company has requested and

to the QF3 Purchase Agreement, QF3 agreed to make available to the Company a financing facility of:

(a) up to $ 4,334,000 for operating

expenses, of which the Company has requested and received $ 4,334,000 as of December 31, 2025;

(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, of which no amounts have been requested or

received as of December 31, 2025.

(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, of which no amounts have been requested or received as of December 31, 2024.

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 seven-patent portfolio from Tower (the “HID Portfolio”).

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

Agreement, payment of the Company’s obligations under the QF3 Purchase Agreement with QF3 are secured by (a) the value of anything

received from the monetization of the intellectual property rights covered by the Security Agreement;

(b) the patents (as defined in

the Security Agreement);

and (d) proceeds

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

In return, the Company transferred to QF3 a right to receive a portion of net proceeds generated

from the monetization of those patents.

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 seven-patent

portfolio from Tower (the “HID Portfolio”).

(iii) Pursuant

to the QF3 Security Agreement and QF3 Patent Security Agreement, payment of the Company’s obligations under the QF3 Purchase Agreement

with QF3 are secured by (a) the value of anything received from the monetization of the intellectual property rights covered by the Security

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

to the foregoing (a) and (b);

and (d) proceeds (including, without limitation, cash proceeds and insurance proceeds) and products of

the foregoing (a)-(c).

In connection with the agreements with QF3, the

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the priority of QF3 in the collateral under the Investment Documents.

Funding Liabilities – QPRC Finance

On April 11, 2025, the Company and its newly-formed

wholly-owned subsidiary, MR Licensing LLC, a Texas limited liability company (“MR”), entered into a series of agreements,

all dated April 11, 2025, with QPRC Corporate Finance Alpha LLC and QPRC Corporate Finance Bravo LLC, both of which are not affiliated

with the Company and who are collectively referred to as “QPRC Finance.” The agreements are (i) a prepaid forward purchase

agreement (the “QPRC Finance Purchase Agreement”), (ii) a security agreement (the “QPRC Finance Security Agreement”),

(iii) a patent security agreement (the “QPRC Finance Patent Security Agreement”), (iv) an intercreditor agreement and subordination

agreement (the “Subordination Agreement”) among the Company, MR, other subsidiaries of the Company and Intelligent Partners,

(v) an irrevocable letter of instructions to Fabricant LLP, the law firm that is to represent MR in the litigation relating to the monetization

of the patents to be purchased with the proceeds of the financing from QPRC Finance (the “Law Firm”) as to the disposition

of any funds generated from the proceeds of the financing, (the “Letter of Instructions”), (vi) a waterfall agreement among

the Company, MR, QPRC Finance and the Law Firm as to allocation of proceeds of such monetization (the “Waterfall Agreement”

and, together with the QPRC Finance Purchase Agreement, the QPRC Finance Security Agreement, the QPRC Finance Patent Security Agreement,

the Subordination Agreement and the Letter of Instructions, the “QPRC Finance Investment Documents”).

On April 17, 2025,

Intelligent Partners executed the Subordination Agreement.

Pursuant to the Purchase Agreement, QPRC Finance

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

(a) up to $ 3,000,000 for operating expenses of which approximately

$ 1,500,000 has been provided as of December 31, 2025;

(b) up to $ 9,000,000 to fund the purchase by MR of certain patent assets

from Monterey Research LLC (“Monterey”) pursuant to the agreement between MR and Monterey (the “Monterey Agreement”)

and (c) up to $ 7,500,000 for patent enforcement costs, including legal fees subject to budget limitations to be agreed upon, of

which approximately $ 4,054,000 was drawn down during the year ended December 31, 2025.

In return, the Company transferred to QPRC Finance

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

On April 18, 2025, MR took down $ 9,000,000 of

proceeds from the QPRC Finance financing to purchase the patent portfolio from Monterey, which consisted of more than 2,500 United States

patents, foreign patents and patent applications, pursuant to the Monterey Agreement.

These patents relate to data storage device security

and semiconductor circuitry.

The payment was made directly from QPRC Finance to Monterey in accordance with instructions from the Company

The Monterey Agreement provides that after MR has received an amount equal to 200 % of the sum of the purchase price plus

other money deployed to the monetization of the assigned patents, the next $ 7,000,000 is paid to Monterey and thereafter Monterey

is to receive 20 % of net licensing revenues.

Pursuant to the Purchase Agreement, the Company

and MR transferred to QPRC Finance the right to receive a portion of net proceeds generated from the monetization of those patents covered

by the Security Agreement, during which time the Company and MR do not receive any portion of the net proceeds.

The Waterfall Agreement

sets forth the details of the order of payment.

Pursuant to the Waterfall Agreement, (i) 100 % of the net proceeds is paid to QPRC

Finance until QPRC Finance has received its initial recovery amount;

(ii) 90 % of the net proceeds are distributed to QPRC Finance

and 10 % to the Company and MR until QPRC Finance has received an amount determined pursuant to the Purchase Agreement, and (iii)

any net proceeds remaining after the foregoing distributions are paid to the Company and MR and the Law Firm in accordance with the Waterfall

Agreement, in view of the plan to pay the Law Firm pursuant to a budget from the distribution allocated to patent enforcement costs.

Any contingent payments due Monterey in addition to the $ 9,000,000 paid from the initial distribution from QPRC Finance shall be

paid from the funds paid to the Company and MR pursuant to the Waterfall Agreement.

Except in an Event of Default, as defined therein,

all payment obligations by the Company and MR to QPRC Finance pursuant to the Purchase Agreement are non-recourse and shall be paid only

from net proceeds from monetization, if any, of the patent rights owned or acquired by the Company or MR utilizing the QPRC Finance facility.

Loan Payable Related Party

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2025 and 2024 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.

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

payments on the loan payable.

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

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

Small Business

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

COVID-19 relief effort.

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

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

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

As of December 31, 2025, the Company had not made

any principal payments on the loan payable.

During the year ended December 31, 2025, the Company incurred $ 5,625 of interest expense

and has accrued interest of approximately $ 4,700 at December 31, 2025.

Purchase Price of Patents

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acquisition funding in the amount of $ 95,000 for the Company’s acquisition of the audio messaging portfolio.

Under the funding agreement,

the third-party funder is entitled to a priority return of funds advanced from net proceeds, as defined, recovered until the funder has

received $ 53,665 .

Under the funding

agreement, the third-party funder is entitled to a priority return of funds advanced from net proceeds, as defined, recovered until the

funder has received $ 53,665 .

The Company did not make any payments with respect to this obligation in 2025 or 2024.

The Company has no other obligation

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

to ASC 470, the Company recorded this monetization obligation as debt and the difference between the purchase price and total obligation

as a discount to the debt and fully expensed to interest during the period.

The Company has no

other obligation to the third-party and has no liability to the funder in the event that the Company does not generate sufficient net

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 was fully expensed to interest in prior periods.

WARRANT LIABILITY

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

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

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

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

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

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

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

As of December 31, 2025 and 2024, the aggregate

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Balance at December 31, 2023

Loss on subsequent measurement

Balance at December 31, 2023

Gain on subsequent measurement

Balance at December 31, 2024

Loss on subsequent measurement

Balance at December 31, 2025

STOCKHOLDERS’ EQUITY

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Grant, 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.

and expired unexercised on September 30, 2025.

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

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Option Grants Pursuant to Consulting Agreements

Pursuant to a consulting agreement, the Company granted options to

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

on February 21, 2031.

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

shares at $ 5.00 per share are currently exercisable.

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

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

of at least $ 5,000,000 and options to purchase 200,000 shares at an exercise price of $ 5.00 per share become exercisable on the date on

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

Pursuant to consulting agreements, the

Company granted options to purchase a total of 900,000 shares of common stock of which options expire on February 21, 2031 .

purchase 300,000 shares of common stock at $ 1.00 per share, 100,000 shares at $ 3.00 per share and 100,000 shares at $ 5.00 per share are

currently exercisable.

Option to purchase 200,000 shares at an exercise price of $ 3.00 per share, become exercisable on the first day

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

options to purchase 200,000 shares at an exercise price of $ 5.00 per share become exercisable on the date on which the Common Stock is

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

The Company recognized option expense of approximately

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Option Grants to the Chief Executive Officer

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

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

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

price of $ 1.00 per share is currently exercisable.

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

The Company’s chairman of the board holds

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

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

an exercise price of $ 1.00 per share is currently exercisable.

Options to purchase 200,000 shares of common stock at $ 3.00 becomes exercisable

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

$ 5,000,000 , and an options to purchase 200,000 shares of Common Stock at an exercise price of $ 5.00 per share becomes exercisable on the

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

The Company did not recognize

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

$ 5,000,000 , and an options to purchase 200,000 shares of Common Stock at an exercise price of $ 5.00 per share becomes exercisable on

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

The Company did not

recognize an option expense with respect to these options during the year ended December 31, 2025 or 2024.

A summary of the status of the Company’s

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Balance - December 31, 2024 2,000,000 2.39 1.20 4.80

Expired ( 500,000 ) 0.54 1.20 —

Balance - December 31, 2025 1,500,000 3.00 1.20 5.15

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Balance, end of year

The Company uses the liability method, where deferred

tax assets and liabilities are determined based on the expected future tax consequences of temporary differences between the carrying

amounts of assets and liabilities for financial and income tax reporting purposes.

As of December 31, 2024, the Company has approximately

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

Net operating loss carryovers

may be subject to a limitation on their usage in future periods if the Company experiences a change in ownership as defined in Internal

Revenue Code Section 382.

The Company uses the liability method, where

deferred tax assets and liabilities are determined based on the expected future tax consequences of temporary differences between the

carrying amounts of assets and liabilities for financial and income tax reporting purposes.

As of December 31, 2025, the Company

has approximately $ 18,271,321 of federal and $ 5,254,691 of state loss carryforwards, which will begin to expire in 2035.

Net operating

loss carryovers may be subject to a limitation on their usage in future periods if the Company experiences a change in ownership as defined

in Internal Revenue Code Section 382.

In assessing the realizability of deferred tax

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The Company’s management considers all available evidence, both positive and negative, in making this

Due to the Company’s history of generating losses in recent years, and the lack of objectively verifiable evidence that

it will be able to generate taxable income in future years, the Company’s management has determined that a valuation allowance against

the Company’s deferred tax assets is necessary.

The change in the valuation allowance for the year ended December 31, 2024 is $ 413,104

and is recorded as a component of income tax expense.

The Company’s deferred tax assets consist

of the following:

Due to the Company’s history of generating losses in recent years, and the lack of objectively verifiable evidence

that it will be able to generate taxable income in future years, the Company’s management has determined that a valuation allowance

against the Company’s deferred tax assets is necessary.

The change in the valuation allowance for the year ended December 31, 2025

is $ 1,458,025 and is recorded as a component of income from continuing operations.

The Company’s deferred tax assets consist of the following:

Net operating loss carry forward

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Tax expense consisted primarily of the following:

The reconciliation between the effective tax rate

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

The reconciliation between the effective tax

rate on loss from continuing operations and the statutory rate for the year ended December 31, 2025 is as follows:

federal statutory rate

$ ( 1,783,333 )

State and local income taxes, net of federal income tax effect

Foreign tax effects

Effect of changes in tax laws or rates enacted in the current period

Effect of cross-border tax laws

Change in valuation allowance

Interest expense

Nontaxable or nondeductible items - other

Changes in unrecognized tax benefits

Deferred tax adjustment for expired stock-based compensation awards

Other adjustments

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, 2024 is as follows:

Book loss before taxes

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Effective tax rate

The reconciliation between the effective tax rate

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

Book income before taxes

State taxes, net

Meals and entertainment

Warrant expense

Interest expense

Change in valuation allowance

Change in estimate for prior year taxes

Effective tax rate

As of December 31, 2025, the Company’s

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2025 and 2024, 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, 2021 and later.

The statute of limitations for assessment

of income taxes is open for tax years ending December 31, 2022 and later.

RELATED PARTY TRANSACTIONS

During 2023, the Company contracted with a law

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

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

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

1 unchanged sentence

In connection with the engagement, the Company recorded patent service

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

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

As of December 31, 2024, approximately

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

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

contracted with a law firm more than 10 percent owned, but not controlled, by the father-in-law of the chief executive officer.

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, 2024 and 2023, the cost of these services was approximately

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

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

There were no amounts payable

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

See Note 6 with respect to an option held by the

chief executive officer.

costs of approximately $ 198,000 and $ 139,000 for the years ended December 31, 2025 and 2024, respectively, and these were recorded as

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

As of December 31, 2025,

approximately $ 10,000 of such costs were payable to the related party.

During the years ended December 31, 2025

and 2024, the Company contracted with a law firm more than 10 percent owned, but not controlled, by the father-in-law of the chief executive

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, 2025 and 2024, the cost of these

services was approximately $ 4,054,000 and $ 1,163,000 , respectively, and these are included in litigation and licensing expenses, in the

Consolidated Statements of Operations.

There were no amounts payable to this related party at December 31, 2025 and 2024.

See Note 6 with respect to an option held by

the chief executive officer.

SEGMENT INFORMATION

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

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

Other segment items within net (loss) income

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

which are each presented separately on the accompanying Consolidated Statements of Operations and are provided to the CODM on a regular

The CODM regularly reviews these expenses to ensure costs are aligned with all agreements and to manage and maintain all contractual

Other segment items within net (loss) income include change in fair value of warrant liability, interest expense, net, and

income tax expense.

The CODM reviews the position of total assets

available to assess if the Company has sufficient resources available to discharge its liabilities.

The CODM regularly reviews details

of cash and liquid resources available to the Company.

Additionally, the CODM reviews the status of the funding liability to assess if

these are in line with expected amounts owed under any potential settlements.

COMMITMENTS AND CONTINGENCIES

Employment Agreements

Pursuant to a restated employment agreement, dated

November 30, 2014, with the Company’s president and chief executive officer, the Company agreed to employ him as president and chief

executive officer for a term of three years, commencing January 1, 2014, and continuing on a year-to-year basis unless terminated by either

party on not less than 90 days’ notice prior to the expiration of the initial term or any one-year extension.

The agreement provides

for an initial annual salary of $ 252,000 , which may be increased, but not decreased, by the board or the compensation committee, which

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

The chief executive officer is entitled to a bonus if the Company meets or exceeds

performance criteria established by the compensation committee.

In August 2016, the Company’s board of directors approved annual

bonus compensation equal to 30 % of the amount by which the Company’s consolidated income before income taxes exceeds $ 500,000 , but,

if the Company is subject to the limitation on deductibility of executive compensation pursuant to Section 162(m) of the Internal Revenue

Code, the bonus cannot exceed the amount which would be deductible pursuant to Section 162(m).

The chief executive’s bonus for 2024

and 2023 was approximately $ 334,000 , respectively.

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

plans which the Company may adopt.

Pursuant to a restated employment agreement,

dated November 30, 2014, with the Company’s president and chief executive officer, the Company agreed to employ him as president

and chief executive officer for a term of three years, commencing January 1, 2014, and continuing on a year-to-year basis unless terminated

by either party on not less than 90 days’ notice prior to the expiration of the initial term or any one-year extension.

The agreement

provides for an initial annual salary of $ 252,000 , which may be increased, but not decreased, by the board or the compensation committee,

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

The chief executive officer is entitled to a bonus if the Company meets or

exceeds performance criteria established by the compensation committee.

In August 2016, the Company’s board of directors approved

annual bonus compensation equal to 30 % of the amount by which the Company’s consolidated income before income taxes exceeds $ 500,000 ,

but, if the Company is subject to the limitation on deductibility of executive compensation pursuant to Section 162(m) of the Internal

Revenue Code, the bonus cannot exceed the amount which would be deductible pursuant to Section 162(m).

The chief executive’s bonus

for 2025 and 2024 was approximately $ 0 and $ 334,000 , respectively.

The chief executive officer is also eligible to participate in any

executive incentive plans which the Company may adopt.

Pursuant to the SEP IRA plan adopted by the Company

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For the years

ending December 31, 2024 and 2023, the percentage was set at 12 % and 11 %, respectively.

The Company’s chief executive officer

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

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

technology officer’s SEP IRA account, respectively.

Inventor Royalties, Contingent Litigation Funding

Fees and Contingent Legal Expenses

In connection with the investment in certain patents

and patent rights, certain of the Company’s operating subsidiaries executed agreements which grant to the former owners of the respective

patents or patent rights, the right to receive inventor royalties based on future net revenues (as defined in the respective agreements)

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

ending December 31, 2025 and 2024, the percentage was set at 12 %.

The Company’s chief executive officer and chief technology

officer are the only participants and during the years ended December 31, 2025 and 2024, $ 70,000 and $ 69,000 was deposited into

the chief executive officer’s SEP IRA account, respectively and $ 7,000 and $ 6,900 was deposited into the chief technology officer’s

SEP IRA account, respectively.

Inventor Royalties, Contingent Litigation

Funding Fees and Contingent Legal Expenses

In connection with the investment in certain

patents and patent rights, certain of the Company’s operating subsidiaries executed agreements which grant to the former owners

of the respective patents or patent rights, the right to receive inventor royalties based on future net revenues (as defined in the respective

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

The Company’s operating subsidiaries may

8 unchanged sentences

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

16 unchanged sentences

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.

In such event, a court may issue monetary sanctions against the Company or its operating subsidiaries or award attorney’s fees

and/or expenses to a defendant(s), which could be material, and if required to be paid by the Company or its operating subsidiaries,

could materially impair the Company’s operating results and financial position and could result in a default under the Company’s

obligations to QPRC Finance and QF3.

Since the operating subsidiaries do not have any assets other than the patents, and the Company

does not have any available financial resources to pay any judgment which a defendant may obtain against a subsidiary, such a judgment

may result in the bankruptcy of the subsidiary and/or the loss of the patents, which are the subsidiaries’ only assets.

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