Document And Entity Information
Document And Entity Information - shares | 3 Months Ended | |
Mar. 31, 2021 | May 21, 2021 | |
Document Information Line Items | ||
Entity Registrant Name | QUEST PATENT RESEARCH CORP | |
Document Type | 10-Q | |
Current Fiscal Year End Date | --12-31 | |
Entity Common Stock, Shares Outstanding | 533,334,630 | |
Amendment Flag | false | |
Entity Central Index Key | 0000824416 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Document Period End Date | Mar. 31, 2021 | |
Document Fiscal Year Focus | 2021 | |
Document Fiscal Period Focus | Q1 | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity File Number | 33-18099 | |
Entity Incorporation, State or Country Code | DE | |
Entity Interactive Data Current | Yes |
Unaudited Consolidated Balance
Unaudited Consolidated Balance Sheets - USD ($) | Mar. 31, 2021 | Dec. 31, 2020 |
ASSETS | ||
Cash and cash equivalents | $ 227,015 | $ 247,862 |
Accounts receivable | 653,590 | 1,032,886 |
Other current assets | 2,425 | 5,934 |
Total current assets | 883,030 | 1,286,682 |
Patents, net of accumulated amortization of $2,754,046 and $2,266,158, respectively | 2,063,071 | 2,200,959 |
Total assets | 2,946,101 | 3,487,641 |
LIABILITIES AND STOCKHOLDERS’ DEFICIT | ||
Accounts payable and accrued liabilities | 2,498,705 | 2,892,025 |
Loans payable – third party | 147,000 | 147,000 |
Purchase price of patents, current portion | 1,385,049 | 1,500,000 |
QFL funding liability | 2,500,000 | |
Loan payable – related party | 2,805,000 | 4,672,810 |
Warrant liability | 1,819,054 | |
Accrued interest - third party | 288,561 | 284,885 |
Total current liabilities | 11,443,369 | 9,496,720 |
Non-current liabilities | ||
Loan Payable - SBA | 154,947 | 174,392 |
Purchase price of patents, net of unamortized discount of $107,774 and $131,793, respectively, net of current portion | 682,226 | 658,207 |
Total liabilities | 12,280,542 | 10,329,319 |
Preferred stock, par value $.00003 per share, authorized 10,000,000 shares, no shares issued and outstanding | ||
Common stock, par value $0.00003 per share; authorized 10,000,000,000 shares at March 31, 2021 and December 31, 2020; shares issued and outstanding 533,334,630 and 383,038,334 at March 31, 2021 and December 31, 2020, respectively | 16,000 | 11,491 |
Additional paid-in capital | 17,087,302 | 14,427,782 |
Accumulated deficit | (26,437,971) | (21,281,179) |
Total Quest Patent Research Corporation deficit | (9,334,669) | (6,841,906) |
Non-controlling interest in subsidiary | 228 | 228 |
Total stockholders’ deficit | (9,334,441) | (6,841,678) |
Total liabilities and stockholders’ deficit | $ 2,946,101 | $ 3,487,641 |
Unaudited Consolidated Balanc_2
Unaudited Consolidated Balance Sheets (Parentheticals) - USD ($) | Mar. 31, 2021 | Dec. 31, 2020 |
Statement of Financial Position [Abstract] | ||
Patents, net of accumulated amortization (in Dollars) | $ 2,754,046 | $ 2,266,158 |
Purchase price of patents unamortized discount (in Dollars) | $ 107,774 | $ 131,793 |
Preferred stock, par value (in Dollars per share) | $ 0.00003 | $ 0.00003 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, shares issued | ||
Preferred stock, shares outstanding | ||
Common stock, par value (in Dollars per share) | $ 0.00003 | $ 0.00003 |
Common stock, shares authorized | 10,000,000,000 | 10,000,000,000 |
Common stock, shares issued | 533,334,630 | 383,038,334 |
Common stock, shares outstanding | 533,334,630 | 383,038,334 |
Unaudited Consolidated Statemen
Unaudited Consolidated Statements of Operations - USD ($) | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Revenues | ||
Patent licensing fees | $ 870,103 | |
Operating expenses | ||
Litigation and licensing expenses | 64,238 | 910,126 |
Selling, general and administrative expenses | 2,229,092 | 381,609 |
Total operating expenses | 2,293,330 | 1,291,735 |
Loss from operations | (2,293,330) | (421,632) |
Other income/(expense) | ||
Other income | 20,832 | |
Warrant expense | (1,819,054) | |
Loss on derivative liability | (40,000) | |
Loss on conversion of debt | (305,556) | |
Loss on debt extinguishment | (730,378) | |
Interest expense | (29,081) | (220,941) |
Total other expenses | (2,863,237) | (260,941) |
Net loss before income tax | (5,156,567) | (682,573) |
Income tax | (225) | (225) |
Net loss | $ (5,156,792) | $ (682,798) |
Net loss per share – basic and diluted (in Dollars per share) | $ (0.01) | $ 0 |
Weighted average shares outstanding – basic and diluted (in Shares) | 446,370,021 | 383,038,334 |
Consolidated Statements of Chan
Consolidated Statements of Changes in Stockholders' Deficit - USD ($) | Common Stock | Additional Paid-in Capital | Deficit | Non-controlling Interest in Subsidiaries | Total |
Balance at Dec. 31, 2019 | $ 11,491 | $ 14,107,782 | $ (19,968,668) | $ 239 | $ (5,849,156) |
Balance (in Shares) at Dec. 31, 2019 | 383,038,334 | ||||
Net loss | (682,798) | (682,798) | |||
Balance at Mar. 31, 2020 | $ 11,491 | 14,107,782 | (20,651,466) | 239 | (6,531,954) |
Balance (in Shares) at Mar. 31, 2020 | 383,038,334 | ||||
Balance at Dec. 31, 2020 | $ 11,491 | 14,427,782 | (21,281,179) | 228 | (6,841,678) |
Balance (in Shares) at Dec. 31, 2020 | 383,038,334 | ||||
Restricted shares issued for services | $ 3,120 | 1,244,880 | 1,248,000 | ||
Restricted shares issued for services (in Shares) | 104,000,000 | ||||
Shares issued for conversion of debt | $ 1,389 | 554,167 | 555,556 | ||
Shares issued for conversion of debt (in Shares) | 46,296,296 | ||||
Option issued for debt extinguishment | 598,188 | 598,188 | |||
Option expense | 262,285 | 262,285 | |||
Net loss | (5,156,792) | (5,156,792) | |||
Balance at Mar. 31, 2021 | $ 16,000 | $ 17,087,302 | $ (26,437,971) | $ 228 | $ (9,334,441) |
Balance (in Shares) at Mar. 31, 2021 | 533,334,630 |
Unaudited Consolidated Statem_2
Unaudited Consolidated Statement of Cash Flows - USD ($) | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Cash flows from operating activities: | ||
Net loss | $ (5,156,792) | $ (682,798) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Amortization of debt discount | 24,019 | 100,766 |
Loss on derivative liability | 40,000 | |
Stock based compensation | 1,510,285 | |
Warrant expense | 1,819,054 | |
(Gain) on forgiveness of SBA loan | (20,832) | |
Amortization of intangible assets | 487,888 | 138,256 |
Loss on conversion of debt | 305,556 | |
Loss on debt extinguishment | 730,378 | |
Changes in operating assets and liabilities: | ||
Accounts receivable | 379,296 | 1,850,375 |
Accrued interest – related party | (1,280) | |
Accrued interest – third party | 5,063 | 3,675 |
Other current assets | 3,509 | 2,399 |
Accounts payable and accrued expenses | (393,320) | 1,242,569 |
Net cash provided (used) by operating activities | (305,896) | 208,824 |
Cash used from investing activities: | ||
Purchase of patents | (350,000) | |
Net cash used in investing activities | (350,000) | |
Cash used from financing activities: | ||
Payment on loans – related party | (1,750,000) | |
Proceeds from third party loan | 2,500,000 | |
Repayment of purchase price of patents | (114,951) | (194,386) |
Net cash provided by financing activities | 635,049 | (194,386) |
Net increase (decrease) in cash and cash equivalents | (20,847) | 14,438 |
Cash and cash equivalents at beginning of period | 247,862 | 537,198 |
Cash and cash equivalents at end of period | 227,015 | 551,636 |
Supplemental disclosure of cash flow information: | ||
Income taxes | 225 | 225 |
Interest | 117,780 | |
Non-cash investing and financing activities | ||
Shares issued for conversion of debt | 250,000 | |
Interest added to principal | $ 1,387 |
Description of Business and Bas
Description of Business and Basis of Presentation | 3 Months Ended |
Mar. 31, 2021 | |
Description of Business and Basis of Presentation | |
DESCRIPTION OF BUSINESS | NOTE 1 – DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION The Company is a Delaware corporation, incorporated on July 17, 1987 and has been engaged in the intellectual property monetization business since 2008. As used herein, “we”, “us”, “our”, the “Company” refer to Quest Patent Research Corporation and its wholly and majority-owned and controlled operating subsidiaries unless the context indicates otherwise. All intellectual property acquisition, development, licensing and enforcement activities are conducted by the Company’s wholly and majority-owned and controlled operating subsidiaries. The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the U.S. (GAAP) for interim financial information and with the instructions to Form 10-Q and Rule 8-03 of Regulation S-X. Accordingly, these interim financial statements do not include all of the information and notes required by GAAP for complete financial statements. All adjustments (consisting of normal recurring items) necessary to present fairly the Company’s consolidated financial position have been included. These interim financial statements should be read in conjunction with the consolidated financial statements and accompanying notes included in our annual report on Form 10-K for the year ended December 31, 2020. Operating results for the interim periods presented herein are not necessarily indicative of the results that may be expected for any other interim period or for the entire year. Reclassifications have been made to conform with the current year presentation. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2021 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 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 as of March 31, 2021. The consolidated financial statements include the accounts and operations of: Quest Patent Research Corporation (“The Company”) Quest Licensing Corporation (NY) (wholly owned) Quest Licensing Corporation (DE) (wholly owned) Quest Packaging Solutions Corporation (90% owned) Quest Nettech Corporation (65% owned) Semcon IP, Inc. (wholly owned) Mariner IC, Inc. (wholly owned) IC Kinetics, Inc. (wholly owned) CXT Systems, Inc. (wholly owned) Photonic Imaging Solutions Inc. (wholly owned) M-RED Inc. (wholly owned) Audio Messaging Inc. (wholly owned) Peregrin Licensing LLC (wholly owned) Taasera Licensing LLC (wholly owned) (formed May 12, 2021) Significant intercompany transaction and balances have been eliminated in consolidation. Use of Estimates In preparing financial statements in conformity with accounting principles generally accepted in the United States of America, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and revenue and expenses during the reporting period. Actual results could differ from those estimates. Intangible Assets Intangible assets consist of patents which are amortized using the straight-line method over their estimated useful lives or statutory lives whichever is shorter and are reviewed for impairment upon any triggering event that may give rise to the assets ultimate recoverability as prescribed under the guidance related to impairment of long-lived assets. Costs incurred to acquire patents, including legal costs, are also capitalized as long-lived assets and amortized on a straight-line basis with the associated patent. Patents include the cost of patents or patent rights (hereinafter, collectively “patents”) acquired from third-parties or acquired in connection with business combinations. Patent acquisition costs are amortized utilizing the straight-line method over their remaining economic useful lives, ranging from one to ten years. Certain patent application and prosecution costs incurred to secure additional patent claims that, based on management’s estimates are deemed to be recoverable, are capitalized and amortized over the remaining estimated economic useful life of the related patent portfolio. Fair value of financial instruments Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. A fair value hierarchy is used which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. See Note 4 for information about our warrant liability. The fair value hierarchy based on the three levels of inputs that may be used to measure fair value are as follows: Level 1 Level 2 Level 3 The carrying value reflected in the consolidated balance sheets for cash and cash equivalents, accounts receivable, accounts payable and accrued expenses and short-term borrowings approximate fair value due to the short-term nature of these items. The carrying value of long-term debt approximates fair value since the related rates of interest approximate current market rates. Inventor/Former Owner Royalties and Contingent Legal/Litigation Finance Expenses In connection with the investment in certain patents and patent rights, certain of the Company’s operating subsidiaries may execute related agreements which grant to the inventors and/or former owners of the respective patents or patent rights, the right to receive a percentage of future net revenues (as defined in the respective agreements) generated as a result of licensing and otherwise enforcing the respective patents or patent portfolios. The Company’s operating subsidiaries may retain the services of law firms that specialize in patent licensing and enforcement and patent law in connection with their licensing and enforcement activities. These law firms may be retained on a contingent fee basis whereby such law firms are paid a percentage of any negotiated fees, settlements or judgments awarded. The Company’s operating subsidiaries may engage with funding sources that provide financing for patent licensing and enforcement. These litigation finance firms may be engaged on a non-recourse basis whereby such litigation finance firms are paid a percentage of any negotiated fees, settlements or judgments awarded in exchange for providing funding for legal fees and out of pocket expenses incurred as a result of the licensing and enforcement activities. The economic terms of the inventor agreements, operating agreements, contingent legal fee arrangements and litigation financing agreements associated with the patent portfolios owned or controlled by the Company’s operating subsidiaries, if any, including royalty rates, contingent fee rates and other terms, vary across the patent portfolios owned or controlled by such operating subsidiaries. Inventor/former owner royalties, payments to non-controlling interests, contingent legal fees expenses and litigation finance expenses fluctuate period to period, based on the amount of revenues recognized each period, the terms and conditions of revenue agreements executed each period and the mix of specific patent portfolios with varying economic terms and obligations generating revenues each period. Inventor/former owner royalties, contingent legal fees expenses and litigation finance expenses will continue to fluctuate and may continue to vary significantly period to period, based primarily on these factors. Revenue Recognition 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. Stock-based compensation The Company recognizes stock-based compensation pursuant to ASC 718, “Compensation — Stock Compensation,” which prescribes accounting and reporting standards for all stock-based payment transactions in which employee services, and, since January 1, 2019, non-employee services, are acquired. Transactions include incurring liabilities, or issuing or offering to issue shares, options and other equity instruments such as employee stock ownership plans and stock appreciation rights. Stock-based payments to employees and non-employees, including grants of employee stock options, are recognized as compensation expense in the financial statements based on their fair values. That expense is recognized over the period during which an employee or non-employee is required to provide services in exchange for the award, known as the requisite service period (usually the vesting period). Recent Accounting Pronouncements Management does not believe that there are any recently issued, but not effective, accounting standards which, if currently adopted, would have a material effect on the Company’s financial statements. Going Concern As shown in the accompanying financial statements, the Company has an accumulated deficit of approximately $26,438,000 and negative working capital of approximately $10,560,000 as of March 31, 2021. Because of the Company’s continuing losses, its working capital deficiency, the uncertainty of future revenue, the Company’s obligations to Intellectual Ventures, Intelligent Partners, QPRC Finance LLC (“QFL”), the Company’s low stock price and the absence of a trading market in its common stock, the ability of the Company to raise funds in the equity market or from lenders is severely impaired. These conditions, together with the effects of the COVID-19 pandemic and the steps taken by the states to slow the spread of the virus and its effect on its business raise substantial doubt as to the Company’s ability to continue as a going concern. Although the Company may seek to raise funds and to obtain third party funding for litigation to enforce its intellectual property rights, the availability of such funds, particularly in view of the COVID-19 pandemic, is uncertain. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. |
Short Term Debt and Long-term L
Short Term Debt and Long-term Liabilities | 3 Months Ended |
Mar. 31, 2021 | |
Debt Disclosure [Abstract] | |
SHORT-TERM DEBT AND LONG-TERM LIABILITIES | NOTE 3 – SHORT-TERM DEBT AND LONG-TERM LIABILITIES The following table shows the Company’s short-term and long-term debt at March 31, 2021 and December 31, 2020. March 31, December 31, 2021 2020 Short-term debt: Loans payable – third party $ 147,000 $ 147,000 QFL funding liability 2,500,000 - Loan payable – related party 2,805,000 4,672,810 Purchase price of patents – current portion 1,385,049 1,500,000 Net short-term debt 6,837,049 6,319,810 Long-term liabilities: Loans payable - SBA Gross $ 150,000 170,832 Accrued Interest 4,947 3,560 Net loans payable - SBA 154,947 174,392 Purchase price of patents Gross 790,000 790,000 Unamortized discount (107,774 ) (131,793 ) Net purchase price of patents – long-term $ 682,226 $ 658,207 The loans payable – third party represents demand loans made by former officers and directors, who are unrelated third parties at March 31, 2021, and December 31, 2020, in the amount of $147,000. The loans are payable on demand plus accrued interest at 10% per annum. These third parties are also stockholders, but their stockholdings are not significant. The QFL funding liability at March 31, 2021 represents the principal amount of the Company’s obligations to QPRC Finance LLC (“QFL”) pursuant to a purchase agreement (“Purchase Agreement”) dated February 22, 2021 between the Company and QFL, as described below. The obligation to QFL has been classified as a current liability as of March 31, 2021. On February 22, 2021, we entered into a series of agreements, all dated February 19, 2021,with QFL, a non-affiliated party, including the “Purchase Agreement, a security agreement (the “Security Agreement”), a subsidiary security agreement (the “Subsidiary Security Agreement”), a subsidiary guaranty (the “Subsidiary Guarantee”), a warrant issue agreement (the “Warrant Issue Agreement”), a registration rights agreement (the “Registration Rights Agreement”) and a board observation rights agreement (the “Board Observation Rights Agreement” together with the Security Agreement, the Subsidiary Guaranty, the Subsidiary Security Agreement, Warrant Issuance Agreement, Registration Rights Agreement and the Purchase Agreement, the “Investment Documents”) pursuant to which, at the closing held contemporaneously with the execution of the agreements: (i) Pursuant to the Purchase Agreement, QFL agreed to make available to the Company a financing facility of: (a) up to $25,000,000 for the acquisition of mutually agreed patent rights that the Company intends to monetize; (b) up to $2,000,000 for operating expenses; and (iii) $1,750,000 to fund the cash payment portion of the restructure of the Company’s obligations to Intelligent Partners. In return the Company transferred to QFL a right to receive a portion of net proceeds generated from the monetization of those patents. (ii) The Company used $1,750,000 of proceeds from the QFL financing as the cash payment portion of the restructure of the Company’s obligations to Intelligent Partners pursuant to the Restructure Agreement executed contemporaneously with the closing of the Investment Documents. The payment was made directly from QFL to Intelligent Partners. (iii) Pursuant to the Security Agreement, the Company’s obligations under the Purchase Agreement with QFL are secured by: (a) the proceeds (as defined in the Purchase Agreement); (b) the patents (as defined in the Purchase Agreement; (c) all general intangibles now or hereafter arising from or related to the foregoing (a) and (b); and (d) proceeds (including, without limitation, cash proceeds and insurance proceeds) and products of the foregoing (a)-(c). (iv) Pursuant to the Subsidiary Guaranty, eight of the Company’s subsidiaries – Quest Licensing Corporation (“QLC”), Quest NetTech Corporation (“NetTech”), Mariner IC Inc. (“Mariner”), Semcon IP Inc. (“Semcon”), IC Kinetics Inc. (“IC”), CXT Systems Inc. (“CXT”), M-Red Inc. (“M-RED”), and Audio Messaging Inc.(“AMI”), collectively, the “Subsidiary Guarantors”) guaranteed the Company’s obligations to QFL under the Purchase Agreement. (v) Pursuant to the Subsidiary Security Agreement, the Subsidiary Guarantors granted QFL a security interest in the proceeds from the future monetization of their respective patent portfolios. (vi) Pursuant to the Warrant Issue Agreement, the Company granted QFL ten-year warrants to purchase a total of up to 96,246,246 shares of the Company’s common stock, at an exercise price of $0.0054 per share which may be exercised from the date of exercise through February 18, 2031 on a cash or cashless basis. Exercisability of the warrant is limited if, upon exercise, the holder or any of holder’s affiliates would beneficially own more than 4.99% (the “Maximum Percentage”) of the Company’s common stock, except that by written notice to the Company, the holder may change the Maximum Percentage to any other percentage not in excess of 9.99% provided any such change will not be effective until the 61 st (vii) The Company agreed to take all commercially reasonable steps necessary to regain compliance with the OTCQB eligibility standards as soon as practicable, but in no event later than 12 months from the closing date. The Company regained such compliance on on May 7, 2021, at which time the common stock recommenced trading on the OTCQB. (viii) The Company granted QFL certain registration rights with respect to the 96,246,246 shares of common stock issuable upon exercise of the warrant. See Note 5 for information on the warrant issue. (ix) Pursuant to the Board Observation Rights Agreement, until the later of the date on which QFL or its affiliates (i) have received the entirety of their Investment Return (as defined in Purchase Agreement), and (ii) no longer hold any Securities (the “ Observation Period On February 26, 2021, the Company entered into an agreement with Peter K. Trzyna (“PKT”) pursuant to which PKT assigned to the Company all right, title, and interest in a portfolio of eight United States patents (the “Peregrin Portfolio”). Under the agreement, the Company paid PKT $350,000 at closing and agreed that upon the realization of gross proceeds, if any, the Company shall make a second installment payment or payments in the aggregate amount of $93,900 representing reimbursement to PKT, as the prosecuting attorney, for legal fees associated with prosecution of the portfolio, such reimbursement shall be due and payable to PKT from time to time as gross proceeds are realized, and paid to PKT along with and in proportion to reimbursement to other third parties of costs incurred in realizing gross proceeds from the Peregrin Portfolio. Thereafter, PKT is entitled to a percentage of gross proceeds realized, if any, from the Peregrin Portfolio. The Company requested and received a capital advance from QFL in the amount of $350,000 pursuant to the Purchase Agreement, which was used to make payment to PKT. The Company requested and received an operating capital advance in the amount of $400,000 from QFL pursuant to the Purchase Agreement during the period ended March 31, 2021. The loan payable – related party at March 31, 2021 represents the current amount of a non-interest bearing total monetization proceeds obligation (the “TMPO”) to Intelligent Partners, LLC (“Intelligent Partners”) of $2,805,000, pursuant to a restructure agreement (“Restructure Agreement”) dated February 22, 2021 whereby the Company and Intelligent Partners, extinguished the Company’s 10% note to Intelligent Partners as transferee of the notes issued to United Wireless Holdings, Inc. (“United Wireless”), in the amount of $4,672,810 pursuant to securities purchase agreement dated October 22, 2015 between the Company and United Wireless, as more fully described in the Company’s annual report on Form 10-K for the year ended December 31, 2020. The notes became due by their terms on September 30, 2020, and the Company did not make any payment on account of principal of and interest on the notes. Subsequent to September 30, 2020, the Company engaged in negotiations with Intelligent Partners in parallel with the Company’s negotiations with QFL, with a view to restructuring the Company’s obligations under the United Wireless agreements, including the notes, so that the Company no longer had any obligations under the notes or the SPA. These negotiations resulted in the Restructure Agreement, described below, which provided for the payment to Intelligent Partners of $1,750,000 from the proceeds from the Company’s agreements with QFL. As part of the restructure of the Company’s agreements with Intelligent Partners, the Company amended the existing MPAs and granted Intelligent Partners certain rights in the monetization proceeds from any new intellectual property the Company acquires, as describe below. Under these MPAs, Intelligent Partners participates in the monetization proceeds the Company receives with respect to new patents after QFL has received its negotiated rate of return. On or prior to the date of the Restructure Agreement, Intelligent Partners transferred to Fitton and Carper $250,000 of the notes (the “Transferred Note”), thereby reducing the principal amount of the notes held by Intelligent Partners to $4,422,810. On February 22, 2021, the Company and Intelligent Partners agreed to extinguish the notes and Transferred Note, and terminate or amend and restate the SPA and Transaction Documents, pursuant to a series of agreements including: a Restructure Agreement (the “Restructure Agreement”), a Stock Purchase Agreement (the “Stock Purchase Agreement”), an Option Grant (the “Option Grant”), an Amended and Restated Pledge Agreement (the “Pledge Agreement”), an Amended and Restated Registration Rights Agreement (the “Registration Rights Agreement”), a Board Observation Agreement (the “Board Observation Agreement”), a MPA-NA Security Interest Agreement (the “MPA-NA Security Interest Agreement”), an Amended and Restated Patent Proceeds Security Agreement (the “Patent Proceeds Security Agreement”, an Amended and Restated MPA-CP (the “MPA-CP”), an Amended and Restated MPA-CXT (the “MPA-CXT”), a MPA-MR (the “MPA-MR”), a MPA-AMI (the “MPA-AMI,” and together with the MPA-CP, MPA-CXT and MPA-MR, each a Restructure MPA and together the Restructure MPAs) and a MPA-NA (the “MPA-NA”). (i) Pursuant to the Restructure Agreement, the Company paid Intelligent Partners $1,750,000 at closing, which the Company received from QFL and which QFL paid directly to Intelligent Partners, and recognized the TMPO, which shall, from and after the Restructure Date, be reduced on a dollar for dollar basis by (a) payments to Intelligent Partners pursuant to the restructure agreement, the Restructure MPAs and the MPA-NA and (b) any election by the Intelligent Partners to pay the Exercise Price of the Restructure Option, in whole or part, by means of a reduction in the then outstanding TMPO. The TMPO has been classified as a current liability as of March 31, 2021. (ii) Pursuant to the Stock Purchase Agreement, the Company issued to Fitton and Carper, as holders of the Transferred Note, a total of 46,296,296 shares of common stock at a purchase price of $0.0054 per share, which purchase price was paid by the conversion and in full satisfaction of the Transferred Note (the “Conversion Shares”). For purposes of extinguishment, the issuance of the Conversion Shares in full satisfaction of the Transferred Note balance of $250,000 is included in the reacquisition price of the debt. The Company recognized a loss on debt conversion of $305,556 which is the difference between the agreed conversion price and the fair value of the Conversion Shares at the date of conversion. See Note 5 for information on the share issue. (iii) Pursuant to the Option Grant, we granted Intelligent Partners an option to purchase a total of 50,000,000 shares of common stock, with an exercise price of $0.0054 per share which vests immediately and may be exercised through September 30, 2025. The Company valued the option at approximately $598,000 using the Black-Scholes pricing model. The proceeds were allocated to the repurchase price of the debt extinguishment based on its fair value. See Note 5 for information on the option grant. (iv) Pursuant to the restructured monetization proceeds agreement, Intelligent Partners has a right to receive 60% of the net monetization proceeds from the patents currently owned by the Subsidiary Guarantors. The agreement has no termination provisions, so Intelligent Partners will be entitled to its percentage interest as long as revenue is generated from the intellectual property covered by the agreement. (v) Pursuant to the MPA-NA, until the TMPO has been paid in full, Intelligent Partners is entitled to receive 10% of the net proceeds realized from new assets acquired by the Company. If, in any calendar quarter, net proceeds realized exceed $1,000,000, Intelligent Partners’ entitlement for that quarter only shall increase to 30% on the portion of net proceeds in excess of $1,000,000 but less than $3,000,000. If in the same calendar quarter, net proceeds exceed $3,000,000, Intelligent Partners’ entitlement for that quarter only shall increase to 50% on the portion of net proceeds in excess of $3,000,000. After satisfaction of the TMPO, the MPA-NA and Intelligent Partners’ interest in new asset proceeds shall terminate. (vi) The Company granted Intelligent Partners, Andrew Fitton and Michael Carper certain registration rights with respect to (i) the 50,000,000 shares currently owned by Fitton and Carper; (ii) the 46,296,296 Conversion Shares issued to Fitton and Carper, and (iii) the 50,000,000 shares of common stock issuable upon exercise of the option. See Note 5 (vii) Pursuant to the Subsidiary Security Agreement, the Company’s obligations under its agreements with Intelligent Partners, including its obligations under the Restructure Agreement and the Restructure MPAs are secured by a security interest in the net proceeds realized from the future monetization of the patents currently owned by the eight subsidiaries named above. (viii) Pursuant to the MPA-NA-Security Interest Agreement, our obligations under the MPA-NA are secured by a security interest in net proceeds realized from the future monetization of new patents acquired until the TMPO is satisfied, provided Intelligent Partners’ secured interest shall be limited to its entitlement in Net Proceeds under the MPA-NA. After satisfaction of the TMPO the security interest in proceeds from new assets shall terminate. (ix) Pursuant to the Board Observation Rights Agreement, until the Total Monetization Proceeds Obligation has been satisfied (the “ Observation Period Events of Default include (i) a Change of Control of the Company (ii) any uncured default on payment due to Intelligent Partners in an amount totaling in excess of $275,000, which is not the subject of a Dispute or other formal dispute resolution proceeding initiated in good faith pursuant to this Agreement or other Restructure Documents (iii) the filing of a voluntary petition for relief under the United States Bankruptcy Code by Company or any of its material subsidiaries, (iv) the filing of an involuntary petition for relief under the United States Bankruptcy Code against the Company, which is not stayed or dismissed within sixty (60) days of such filing, except for an involuntary petition for relief filed solely by Intelligent Partners, or any Affiliate or member of Intelligent Partners, or (v) acceleration of an obligation in excess of $1 million dollars to another provider of financing following a final determination by arbitration or other judicial proceeding that such obligation is due and owing. The Company recognized a loss on extinguishment of the note of $730,378 reflected as follows: Carrying amount as of the restructure date $ 4,672,810 Less unamortized debt discount and issuance costs - Net carrying amount 4,672,810 Reacquisition Price Cash payment via QFL (1,750,000 ) Conversion of transferred note (250,000 ) Fair value of option grant (598,188 ) TMPO undiscounted future cash flows (2,805,000 ) Loss on debt extinguishment $ (730,378 ) Because of its ownership percentage, Intelligent Partners is treated as a related party. The purchase price of patents – current portion at March 31, 2021 represents the current portion of minimum payments due under the agreements between: ● CXT and Intellectual Ventures Assets 34, LLC and Intellectual Ventures 37, LLC (“IV 34/37”) pursuant to which at closing CXT acquired by assignment all right, title, and interest in a portfolio of thirteen United States patents (the “CXT Portfolio”). Under the agreement, CXT will distribute 50% of net recoveries, as defined, to IV 34/37. CXT advanced $25,000 to IV 34/37 at closing, and agreed, pursuant to an amendment dated January 26, 2018, that in the event that, on December 31, 2018, December 31, 2019 and December 31, 2020, cumulative distributions to IV 34/37 total less than $100,000, $375,000 and $975,000, respectively, CXT shall pay the difference necessary to achieve the applicable minimum payment amount within ten days after the applicable date; with any advances being credited toward future distributions to IV 34/36. As of March 31, 2021, $600,000 of the minimum future cumulative distributions were presented as short-term debt based on payment due date. As of March 31, 2021, cumulative distributions did not total $975,000 and CXT did not pay the difference to IV 34/37 within ten days. Non-payment which is not cured within 30 days after written notice from IV 34/37 would constitute an Acceleration Event under the agreement, following which, in addition to any other remedies available under the agreement, all outstanding minimum cumulative distributions would become due and payable within thirty days. As of the date of filing, no such written notice of non-payment has been given by IV 34/37. No affiliate of CXT has guaranteed the minimum payments. CXT’s obligations under the agreement are secured by a security interest in the proceeds (from litigation or otherwise) from the CXT Portfolio. ● M-RED and Intellectual Ventures Assets 113 LLC and Intellectual Ventures Assets 108 LLC (“IV 113/108”) pursuant to which at closing M-RED paid IV 113/108 $75,000 and IV 113/108 transferred to M-RED all right, title and interest in a portfolio of sixty United States patents and eight foreign patents (the “M-RED Portfolio”). Under the agreement, M-RED will distribute 50% of net proceeds, as defined, to IV 113/108, as long as we generate revenue from the M-RED Portfolio. The agreement with IV 113/108 provides that if, on September 30, 2020, September 30, 2021 and September 30, 2022, cumulative distributions to IV 113/108 total less than $450,000, $975,000 and $1,575,000, respectively, M-RED shall pay the difference between such cumulative amounts and the amount paid to IV 113/108 within ten days after the applicable date; with any advances being credited toward future distributions to IV 113/108. On September 30, 2020 cumulative distributions to IV 113/108 totaled less than $450,000 and M-RED did not pay the difference to IV 113/108 within ten days. For the period ended March 31, 2021 the Company made payment in the amount of $114,951. Non-payment which is not cured within 30 days after written notice from IV 113/108 would constitute an Acceleration Event under the agreement, following which, in addition to any other remedies available under the agreement, all outstanding minimum cumulative distributions would become due and payable within thirty days. As of the date of filing, no such written notice of non-payment has been given by IV 113/108. As of March 31, 2021, approximately $785,000 and $600,000 of the minimum future cumulative distributions were presented as short-term and long-term debt, respectively, based on payment due dates. No affiliate of M-RED has guaranteed the minimum payments. M-RED’s obligations under the agreement with IV 113/108 are secured by a security interest in the proceeds (from litigation or otherwise) from the M-RED Portfolio. Long term liabilities The loans payable-SBA at March 31, 2021 represents: ● An unsecured loan from JPMorgan Chase Bank, N.A. in the aggregate amount of $20,832, pursuant to the Paycheck Protection Program (the “PPP”) under Division A, Title I of the Coronavirus Aid, Relief, and Economic Security Act, also known as the CARES Act, which was enacted March 27, 2020. The loan, which was taken down on April 23, 2020, matures on April 23, 2022 and bears interest at a rate of 0.98% per annum, with interest payable monthly commencing on November 23, 2020. The loan may be prepaid by the Company at any time prior to maturity with no prepayment penalties. Funds from the loan may only be used for payroll costs, costs used to continue group health care benefits, mortgage payments, rent, utilities, and interest on other debt obligations incurred before February 15, 2020. The Company has used the entire loan amount for qualifying expenses. Under the terms of the PPP, certain amounts of the loan may be forgiven if they are used for qualifying expenses as described in the CARES Act. As of March 31, 2021 the loan has been forgiven and the Company recorded a gain on loan forgiveness of $20,832. ● A secured Economic Injury Disaster Loan from the U.S. Small Business Association (“SBA”) in the aggregate amount of $150,000, pursuant to Section 7(b) of the Small Business Act as part of the COVID-19 relief effort. The Company’s obligations on the loan are set forth in the Company’s note dated May 14, 2020 which matures on May 14, 2050 and bears interest at a rate of 3.75% per annum, payable monthly commencing on May 14, 2021. The Note may be prepaid by the Company at any time prior to maturity with no prepayment penalties. Funds from the Loan may be used solely as working capital to alleviate economic injury caused by disaster occurring in the month of January 31, 2020 and continuing thereafter and to pay Uniform Commercial Code (UCC) lien filing fees and a third-party UCC handling charge of $100 which were deducted from the loan amount stated above. In addition to the loan, as part of the COVID-19 relief effort, the Company obtained an Emergency EIDL Grant from the SBA in the amount of $1,000. The Company is not required to repay the grant. The purchase price of patents at March 31, 2021 represents: The non-current portion of minimum payments due under the agreement between M-RED and IV 113/108 described above. The balance of the purchase price of the patents is reflected as follows: March 31, December 31, Current Liabilities: Purchase price of patents, current portion 1,385,049 $ 1,500,000 Unamortized discount - - Non-current liabilities: Purchase price of patents, long term 790,000 $ 790,000 Unamortized discount (107,774 ) (131,793 ) Total current and non-current 2,067,275 2,158,207 Effective interest rate of Amortization over 2 years 9.4-14.5 % 9.4-14.5 % Because the non-current minimum payment obligations are due over a period of two years, the Company imputed interest of 10% per annum and the interest will be accreted up to the maturity date. |
Warrant Liability
Warrant Liability | 3 Months Ended |
Mar. 31, 2021 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
WARRANT LIABILITY | NOTE 4 – WARRANT LIABILITY The Company granted 96,246,246 warrants to QFL (see Note 3) in connection with its funding agreement. The number of shares underlying the warrants is not fixed until the date of the initial exercise. As such, the warrant issued to QFL requires classification as a liability pursuant to ASC Topic 480, Distinguishing Liabilities from Equity and is valued at its fair value as of the grant date and re-measured at the balance sheet date. As of March 31, 2021, and February 22, 2021, the date of issuance of the warrant, the aggregate fair value of the outstanding warrant liability was approximately $1,819,054 and $1,154,905, respectively. The Company estimated the fair value of the derivative liability using the Black-Scholes option pricing model using the following key assumptions as of March 31, 2021 and as of the grant date: As of March 31, February 22, 2021 2021 Volatility 421 % 252 % Risk-free interest rate 1.37 % 1.37 % Expected dividends - - % Expected term 9.9 10 The following schedule summarizes the valuation of financial instruments at fair value in the balance sheets as of March 31, 2021 and the grant date: Fair Value Measurements as of March 31, 2021 Level 1 Level 2 Level 3 Assets None - - - Total assets - - - Liabilities Option derivative liability - - 1,819,054 Total liabilities $ - $ - $ 1,819,054 The following table sets forth a reconciliation of changes in the fair value of derivative liabilities classified as Level 3 in the fair value hierarchy: Significant Unobservable Inputs (Level 3) Fair value at grant date $ 1,154,905 Change in fair value 664,149 Ending balance $ 1,819,054 See Notes 3 and 5 for information on the warrant issuance. |
Stockholders' Equity
Stockholders' Equity | 3 Months Ended |
Mar. 31, 2021 | |
Stockholders' Equity Note [Abstract] | |
STOCKHOLDERS’ EQUITY | NOTE 5 – STOCKHOLDERS’ EQUITY Amendment to the 2017 Equity Incentive Plan On February 19, 2021 the board of directors amended the 2017 Equity Incentive Plan (the “Plan”) increasing the shares the Company can issue under the Plan to 500,000,000 shares of common stock pursuant to non-qualified stock options, restricted stock grants and other equity-based incentives, the amendment to the Plan and the grants of awards pursuant to the Plan, to be effective upon the closing of the agreements with QFL. Issuance of Common Stock and Options Issuances to Intelligent Partners On February 22, 2021, pursuant to the Restructure Agreement, Intelligent Partners and its controlling members agreed to extinguish the notes and Transferred Note, and terminate or amend and restate the SPA and Transaction Documents and the Company: (i) issued to Fitton and Carper, as holders of the Transferred Note, pursuant to the Stock Purchase Agreement a total of 46,296,296 shares of the Company’s common stock at a purchase price of $0.0054 per share, which purchase price was paid by the conversion and in full satisfaction of the Company’s obligation under the Transferred Note and included in the calculation of the repurchase price of the debt; and (ii) granted Intelligent Partners, pursuant to the Option Grant, an option to purchase a total of 50,000,000 shares of common stock, with an exercise price of $0.0054 per share which vested immediately and may be exercised through September 30, 2025. The Company valued the purchase option at approximately $598,000 using the Black-Scholes pricing model. Variables used in the valuation include (1) discount rate of 1.37%; (2) option life of 5 years; (3) computed volatility of 252% and (4) zero expected dividends. The Company granted Intelligent Partners, Andrew Fitton and Michael Carper certain registration rights with respect to (i) the 50,000,000 shares currently owned by Fitton and Carper; (ii) the 46,296,296 Conversion Shares issued to Fitton and Carper, and (iii) the 50,000,000 shares of common stock issuable upon exercise of the option. Commencing six months from the closing date, if the shares owned by Fitton, Carper and Intelligent Partners cannot be sold pursuant to a registration statement and cannot be sold pursuant to Rule 144 without the Company being in compliance with the current public information requirements of Rule 144, if the Company is not in compliance with the current public information requirements, the Company is required to pay damages to Intelligent Partners. Consulting Agreements On February 22, 2021, the Company entered into advisory service agreement with three consultants – William Gates, Crystal Nicolson and Jeff Toler pursuant to which they will provide services to the Company in connection with the development of the Company’s business. The agreements have a term of ten years and may be terminated by the Company for cause or upon the death or disability of the consultants. Pursuant to the agreements with Mr. Gates and Ms. Nicolson, the compensation payable to each of them consists of a restricted stock grant of 10,000,000 shares of Common Stock which immediately vests in full and a ten-year option to purchase a total of 30,000,000 shares of Common Stock, which become exercisable cumulatively as follows: a. 10,000,000 shares at an exercise price of $0.01 per share becoming exercisable upon the commencement of trading of the Common Stock on the OTCQB. b. 10,000,000 shares at an exercise price of $0.03 per share, becoming exercisable on the first day on which the Company files with the SEC a Form 10-K or Form 10-Q which stockholders’ equity of at least $5,000,000, and c. 10,000,000 shares at an exercise price of $0.05 per share becoming exercisable on the date on which the Common Stock is listed for trading on the Nasdaq Stock Market or the New York Stock Exchange. The Company recorded professional fees in the amount of $240,000 as a result the restricted stock grants to Mr. Gates and Ms. Nicolson. The Company determined the fair value of the options as of the grant date to be approximately $720,000 using the Black-Scholes pricing model. Variables used in the valuation include (1) discount rate of 1.37%; (2) term of 10 years; (3) computed volatility of 252% and (4) zero expected dividends. The Company determined that the first performance condition will be met and accrued the option expense of approximately $240,000 over the period from the grant date to achievement of the performance condition. The Company recognized option expense of approximately $120,000 for the three months ended March 31, 2021. Pursuant to the agreement with Mr. Toler, the compensation payable to him consists of a restricted stock grant of 10,000,000 shares of Common Stock which immediately vests in full and a ten-year option to purchase 30,000,000 shares of Common Stock, which becomes exercisable cumulatively as follows: a. 10,000,000 shares at an exercise price of $0.01 per share upon the first anniversary of the agreement. b. 10,000,000 shares at an exercise price of $0.03 per share upon the second anniversary of the agreement; and c. 10,000,000 shares at an exercise price of $0.05 per share upon the third anniversary of the agreement. The Company recorded professional fees in the amount of $120,000 as a result the restricted stock grant to Mr. Toler. The Company determined the fair value of the options as of the grant date to be approximately $360,000 using the Black-Scholes pricing model. Variables used in the valuation include (1) discount rate of 1.37%; (2) term of 10 years; (3) computed volatility of 252% and (4) zero expected dividends. The Company recognized option expense of approximately $22,300 for the three months ended March 31, 2021. Compensatory Arrangements of Certain Officers On February 22, 2021, the board of directors: (i) Granted restricted stock grants for services rendered and vesting in full upon grant, to: a. Jon C. Scahill – 49,000,000 shares b. Timothy J. Scahill – 10,000,000 shares c. Dr. William R. Carroll - 10,000,000 shares (ii) Granted Jon Scahill a ten-year option (the “Option”) to purchase 60,000,000 shares of Common Stock which become exercisable cumulatively as follows: a. 20,000,000 shares at an exercise price of $0.01 per share becoming exercisable upon the commencement of trading of the Common Stock on the OTCQB. b. 20,000,000 shares at an exercise price of $0.03 per share, becoming exercisable on the first day on which the Company files with the SEC a Form 10-K or Form 10-Q which stockholders’ equity of at least $5,000,000, and c. 20,000,000 shares at an exercise price of $0.05 per share becoming exercisable on the date on which the Common Stock is listed for trading on the Nasdaq Stock Market or the New York Stock Exchange (iii) Appointed Ryan T. Logue to the board of directors and granted Mr. Logue a restricted stock grant of 5,000,000 shares of common stock which vests upon his acceptance of his appointment as a director. The Company recognized compensation expense of $888,000 in conjunction with issuance of common stock to officers and directors. The Company determined the fair value of the options to be approximately $720,000 as of the grant date using the Black-Scholes pricing model. Variables used in the valuation include (1) discount rate of 1.37%; (2) term of 10 years; (3) computed volatility of 252% and (4) zero expected dividends. The Company recognized option expense of approximately $120,000 for the three months ended March 31, 2021. A summary of the status of the Company’s stock options and changes is set forth below: Number of Weighted Weighted Balance - December 31, 2020 - - - Granted 200,000,000 0.02 8.65 Exercised - - - Expired - - - Cancelled - - - Balance - March 31, 2021 200,000,000 0.02 8.55 Options exercisable at end of period 50,000,000 0.0054 4.5 The intrinsic value of the outstanding options as of March 31, 2021 is $1,120,000. Issuance of Warrants A summary of the status of the Company’s warrants and changes is set forth below: Number of Weighted Weighted Balance - December 31, 2020 - - - Granted 96,246,246 0.0054 9.89 Exercised - - - Expired - - - Cancelled - - - Balance - March 31, 2021 96,246,246 0.0054 9.89 The intrinsic value of the outstanding warrants as of March 31, 2021 is $1,299,324. |
Intangible Assets
Intangible Assets | 3 Months Ended |
Mar. 31, 2021 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
NTANGIBLE ASSETS | NOTE 6 – INTANGIBLE ASSETS Intangible assets include patents purchased and are recorded based at their acquisition cost. Intangible assets consisted of the following: Weighted March 31, December 31, amortization 2021 2020 (years) Patents $ 6,040,000 $ 5,690,000 4.45 Less: net monetization obligations (509,811 ) (509,811 ) Imputed interest (713,073 ) (713,073 ) Subtotal 4,817,116 4,467,116 Less: accumulated amortization (2,754,045 ) (2,266,157 ) Net value of intangible assets $ 2,063,071 $ 2,200,959 3.96 Intangible assets are comprised of patents with estimated useful lives. The intangible assets at March 31, 2021 represent: ● patents acquired in October 2015 for a purchase price of $3,000,000, the useful lives of the patents, at the date of purchase, was 6-10 years; ● patents acquired in July 2017 pursuant to an obligation to pay 50% of net revenues to IV 34/37 (see Note 3); the useful lives of the patents, at the date of acquisition, was 5-6 years; ● patents (which were fully amortized at the date of acquisition) acquired in January 2018 pursuant to an agreement with to Intellectual Ventures Assets 62 LLC and Intellectual Ventures Assets 71 LLC “(IV 62/71”), pursuant to which CXT has an obligation to distribute 50% of net revenues to IV 62/71; ● patents (which were fully amortized at the date of acquisition) acquired in January 2018 by Photonic Imaging Solutions Inc. (“PIS”) from Intellectual Ventures Assets 64 LLC (“IV 64”) pursuant to which PIS is to pay IV 64 (a) 70% of the first $1,500,000 of net revenue, (b) 30% of the next $1,500,000 of net revenue and (c) 50% of net revenue in excess of $3,000,000; ● patents acquired in March 2019 pursuant to an obligation to pay 50% of net revenues to IV 113/108 (see Note 3); the useful lives of the patents, at the date of acquisition, was approximately 9 years. ● patents (which were fully amortized at the date of acquisition) acquired in May 2020 for a purchase price of $95,000 pursuant to an agreement with Texas Technology Ventures 2, LLP (“TTV”), pursuant to which of the Company retains the first $230,000 of net proceeds, as defined in the agreement, after which the company has an obligation to distribute 50% of net proceeds to TTV. ● patents (which were fully amortized at the date of acquisition) acquired in February 2021 pursuant to an agreement with PKT for a purchase price of $350,000, pursuant to which $350,000 was paid at closing, and upon the realization of gross proceeds, as defined in the agreement, the Company shall make a subsequent or payments in the aggregate amount of $93,900, representing reimbursement to PKT, as the prosecuting attorney, for legal fees associated with prosecution of the portfolio, such reimbursement shall be due and payable to PKT from time to time as gross proceeds are realized, if any, and paid to PKT along with and in proportion to reimbursement to other third parties of costs incurred in realizing gross proceeds. Thereafter, PKT is entitled to a percentage of gross proceeds realized, if any. The Company amortizes the costs of intangible assets over their estimated useful lives on a straight-line basis. Costs incurred to acquire patents, including legal costs, are also capitalized as long-lived assets and amortized on a straight-line basis with the associated patent. Amortization of patents is included as a selling, general and administrative expense in the accompanying consolidated statements of operations. The Company assesses intangible assets for any impairment to the carrying values. As of March 31, 2021, and December 31, 2020, management concluded that there was no impairment to the intangible assets. Amortization expense for patents comprised $487,888 and $648,395 for the three months ended March 31, 2021 and the year ended December 31, 2020, respectively. Future amortization of intangible assets is as follows: Year ended December 31, Remainder of 2021 $ 411,457 2022 495,742 2023 323,071 2024 306,776 2025 and thereafter 526,025 Total $ 2,063,071 The Company granted Intellectual Ventures a security interest in the patents assigned to the Company as security for the payment of the balance of the purchase price. The security interest of Intellectual Ventures is senior to the security interest of United Wireless in the proceeds derived from such patents. |
Related Party Transactions
Related Party Transactions | 3 Months Ended |
Mar. 31, 2021 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | NOTE 7 – RELATED PARTY TRANSACTIONS The Company has at various times entered into transactions with related parties, including officers, directors and major stockholders, wherein these parties have provided services, advanced or loaned money, or both, to the Company which was needed to support its daily operations. The Company discloses all related party transactions. The Company incurred interest expense on the Company’s 10% notes issued to United Wireless pursuant to the securities purchase agreement dated October 22, 2015 more fully described in the Company’s annual report on Form 10-K for the year ended December 31, 2020 of approximately $0 and $117,780 for the three months ended March 31, 2021 and 2020, respectively. See Notes 3 and 5 in connection with the extinguishment of the Company’s 10% notes issued to United Wireless and held by Intelligent Partners as the transferee of United Wireless. See Note 8 with respect to the employment agreement with the Company’s president and chief executive officer. During the three months ended March 31, 2021 and 2020, the Company contracted with an entity owned by the chief technology officer for the provision of information technology services to the Company. For the three months ended March 31, 2021 and 2020, the cost of these services was approximately $115 and $145, respectively. During the three months ended March 31, 2021, the Company contracted with a law firm more than 10 percent owned, but not controlled, by the father-in-law of the chief executive officer. The firm is engaged on a contingent fee basis and serves as escrow agent in connection with monetization of the Company’s patents in matters where the firm is serving as counsel to the Company. In connection with the engagement, the Company recorded patent service costs of $0 for the three months ended March 31, 2021 and an outstanding liability of $407,000 reported in “accounts payable and accrued liabilities” in the consolidated balance sheets as of March 31, 2021 and December 31, 2020. See Note 5 with respect to share based compensation to officers and directors. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | NOTE 8 – 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. In March 2016, the Company’s board of directors increased the chief executive officer’s annual salary to $300,000, effective January 1, 2016. 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 officer is also eligible to participate in any executive incentive plans which the Company may adopt. Pension Benefits Pursuant to the SEP IRA plan adopted by the Company in March 2020 the Company deposited into a SEP IRA account of each of its participating employees a percentage of the employee’s compensation, subject to statutory limitations on the amount of the contribution all as set forth in the IRS Form 5305-SEP. For the year ending December 31, 2021 the percentage is set at 19%. The Company’s president and chief executive officer is the only participant and for the three months ended March 31, 2021 $14,500 was deposited into his SEP IRA account. Patent Enforcement and Other Litigation Certain of the Company’s operating subsidiaries are engaged in litigation to enforce their patents and patent rights. In connection with these patent enforcement actions, it is possible that a defendant may request and/or a court may rule that an operating subsidiary has violated statutory authority, regulatory authority, federal rules, local court rules, or governing standards relating to the substantive or procedural aspects of such enforcement 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 harm the Company’s operating results and financial position and could result in a default under the Company’s notes to Intelligent Partners. 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. |
Subsequent Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2021 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | NOTE 9 – SUBSEQUENT EVENTS On May 20, 2021, Taasera Licensing LLC, a wholly owned subsidiary, entered into an agreement with Taasera, Inc. to acquire all right, title, and interest in a portfolio of seven United States patents (the “Taasera Portfolio”) for $250,000, payable at the closing to be held within 30 days of execution. |
Accounting Policies, by Policy
Accounting Policies, by Policy (Policies) | 3 Months Ended |
Mar. 31, 2021 | |
Accounting Policies [Abstract] | |
Principles of consolidation and financial statement presentation | 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 as of March 31, 2021. The consolidated financial statements include the accounts and operations of: Quest Patent Research Corporation (“The Company”) Quest Licensing Corporation (NY) (wholly owned) Quest Licensing Corporation (DE) (wholly owned) Quest Packaging Solutions Corporation (90% owned) Quest Nettech Corporation (65% owned) Semcon IP, Inc. (wholly owned) Mariner IC, Inc. (wholly owned) IC Kinetics, Inc. (wholly owned) CXT Systems, Inc. (wholly owned) Photonic Imaging Solutions Inc. (wholly owned) M-RED Inc. (wholly owned) Audio Messaging Inc. (wholly owned) Peregrin Licensing LLC (wholly owned) Taasera Licensing LLC (wholly owned) (formed May 12, 2021) Significant intercompany transaction and balances have been eliminated in consolidation. |
Use of Estimates | Use of Estimates In preparing financial statements in conformity with accounting principles generally accepted in the United States of America, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and revenue and expenses during the reporting period. Actual results could differ from those estimates. |
Intangible Assets | Intangible Assets Intangible assets consist of patents which are amortized using the straight-line method over their estimated useful lives or statutory lives whichever is shorter and are reviewed for impairment upon any triggering event that may give rise to the assets ultimate recoverability as prescribed under the guidance related to impairment of long-lived assets. Costs incurred to acquire patents, including legal costs, are also capitalized as long-lived assets and amortized on a straight-line basis with the associated patent. Patents include the cost of patents or patent rights (hereinafter, collectively “patents”) acquired from third-parties or acquired in connection with business combinations. Patent acquisition costs are amortized utilizing the straight-line method over their remaining economic useful lives, ranging from one to ten years. Certain patent application and prosecution costs incurred to secure additional patent claims that, based on management’s estimates are deemed to be recoverable, are capitalized and amortized over the remaining estimated economic useful life of the related patent portfolio. |
Fair value of financial instruments | Fair value of financial instruments Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. A fair value hierarchy is used which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. See Note 4 for information about our warrant liability. The fair value hierarchy based on the three levels of inputs that may be used to measure fair value are as follows: Level 1 Level 2 Level 3 The carrying value reflected in the consolidated balance sheets for cash and cash equivalents, accounts receivable, accounts payable and accrued expenses and short-term borrowings approximate fair value due to the short-term nature of these items. The carrying value of long-term debt approximates fair value since the related rates of interest approximate current market rates. |
Inventor/Former Owner Royalties and Contingent Legal/Litigation Finance Expenses | Inventor/Former Owner Royalties and Contingent Legal/Litigation Finance Expenses In connection with the investment in certain patents and patent rights, certain of the Company’s operating subsidiaries may execute related agreements which grant to the inventors and/or former owners of the respective patents or patent rights, the right to receive a percentage of future net revenues (as defined in the respective agreements) generated as a result of licensing and otherwise enforcing the respective patents or patent portfolios. The Company’s operating subsidiaries may retain the services of law firms that specialize in patent licensing and enforcement and patent law in connection with their licensing and enforcement activities. These law firms may be retained on a contingent fee basis whereby such law firms are paid a percentage of any negotiated fees, settlements or judgments awarded. The Company’s operating subsidiaries may engage with funding sources that provide financing for patent licensing and enforcement. These litigation finance firms may be engaged on a non-recourse basis whereby such litigation finance firms are paid a percentage of any negotiated fees, settlements or judgments awarded in exchange for providing funding for legal fees and out of pocket expenses incurred as a result of the licensing and enforcement activities. The economic terms of the inventor agreements, operating agreements, contingent legal fee arrangements and litigation financing agreements associated with the patent portfolios owned or controlled by the Company’s operating subsidiaries, if any, including royalty rates, contingent fee rates and other terms, vary across the patent portfolios owned or controlled by such operating subsidiaries. Inventor/former owner royalties, payments to non-controlling interests, contingent legal fees expenses and litigation finance expenses fluctuate period to period, based on the amount of revenues recognized each period, the terms and conditions of revenue agreements executed each period and the mix of specific patent portfolios with varying economic terms and obligations generating revenues each period. Inventor/former owner royalties, contingent legal fees expenses and litigation finance expenses will continue to fluctuate and may continue to vary significantly period to period, based primarily on these factors. |
Revenue Recognition | Revenue Recognition 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. |
Stock-based compensation | Stock-based compensation The Company recognizes stock-based compensation pursuant to ASC 718, “Compensation — Stock Compensation,” which prescribes accounting and reporting standards for all stock-based payment transactions in which employee services, and, since January 1, 2019, non-employee services, are acquired. Transactions include incurring liabilities, or issuing or offering to issue shares, options and other equity instruments such as employee stock ownership plans and stock appreciation rights. Stock-based payments to employees and non-employees, including grants of employee stock options, are recognized as compensation expense in the financial statements based on their fair values. That expense is recognized over the period during which an employee or non-employee is required to provide services in exchange for the award, known as the requisite service period (usually the vesting period). |
Recent Accounting Pronouncements | Recent Accounting Pronouncements Management does not believe that there are any recently issued, but not effective, accounting standards which, if currently adopted, would have a material effect on the Company’s financial statements. |
Going Concern | Going Concern As shown in the accompanying financial statements, the Company has an accumulated deficit of approximately $26,438,000 and negative working capital of approximately $10,560,000 as of March 31, 2021. Because of the Company’s continuing losses, its working capital deficiency, the uncertainty of future revenue, the Company’s obligations to Intellectual Ventures, Intelligent Partners, QPRC Finance LLC (“QFL”), the Company’s low stock price and the absence of a trading market in its common stock, the ability of the Company to raise funds in the equity market or from lenders is severely impaired. These conditions, together with the effects of the COVID-19 pandemic and the steps taken by the states to slow the spread of the virus and its effect on its business raise substantial doubt as to the Company’s ability to continue as a going concern. Although the Company may seek to raise funds and to obtain third party funding for litigation to enforce its intellectual property rights, the availability of such funds, particularly in view of the COVID-19 pandemic, is uncertain. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. |
Short Term Debt and Long-term_2
Short Term Debt and Long-term Liabilities (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Debt Disclosure [Abstract] | |
Schedule of short-term and long-term debt | March 31, December 31, 2021 2020 Short-term debt: Loans payable – third party $ 147,000 $ 147,000 QFL funding liability 2,500,000 - Loan payable – related party 2,805,000 4,672,810 Purchase price of patents – current portion 1,385,049 1,500,000 Net short-term debt 6,837,049 6,319,810 Long-term liabilities: Loans payable - SBA Gross $ 150,000 170,832 Accrued Interest 4,947 3,560 Net loans payable - SBA 154,947 174,392 Purchase price of patents Gross 790,000 790,000 Unamortized discount (107,774 ) (131,793 ) Net purchase price of patents – long-term $ 682,226 $ 658,207 |
Schedule of recognized loss on extinguishment of note | Carrying amount as of the restructure date $ 4,672,810 Less unamortized debt discount and issuance costs - Net carrying amount 4,672,810 Reacquisition Price Cash payment via QFL (1,750,000 ) Conversion of transferred note (250,000 ) Fair value of option grant (598,188 ) TMPO undiscounted future cash flows (2,805,000 ) Loss on debt extinguishment $ (730,378 ) |
Schedule of purchase price of the patents | March 31, December 31, Current Liabilities: Purchase price of patents, current portion 1,385,049 $ 1,500,000 Unamortized discount - - Non-current liabilities: Purchase price of patents, long term 790,000 $ 790,000 Unamortized discount (107,774 ) (131,793 ) Total current and non-current 2,067,275 2,158,207 Effective interest rate of Amortization over 2 years 9.4-14.5 % 9.4-14.5 % |
Warrant Liability (Tables)
Warrant Liability (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of fair value of derivative liability using black-scholes option pricing model | As of March 31, February 22, 2021 2021 Volatility 421 % 252 % Risk-free interest rate 1.37 % 1.37 % Expected dividends - - % Expected term 9.9 10 |
Schedule of valuation of financial instruments | Fair Value Measurements as of March 31, 2021 Level 1 Level 2 Level 3 Assets None - - - Total assets - - - Liabilities Option derivative liability - - 1,819,054 Total liabilities $ - $ - $ 1,819,054 |
Schedule of reconciliation of changes in fair value of derivative liabilities classified as Level 3 | Significant Unobservable Inputs (Level 3) Fair value at grant date $ 1,154,905 Change in fair value 664,149 Ending balance $ 1,819,054 |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Stockholders' Equity Note [Abstract] | |
Schedule of warrants | Number of Weighted Weighted Balance - December 31, 2020 - - - Granted 200,000,000 0.02 8.65 Exercised - - - Expired - - - Cancelled - - - Balance - March 31, 2021 200,000,000 0.02 8.55 Options exercisable at end of period 50,000,000 0.0054 4.5 |
Schedule of warrant activity | Number of Weighted Weighted Balance - December 31, 2020 - - - Granted 96,246,246 0.0054 9.89 Exercised - - - Expired - - - Cancelled - - - Balance - March 31, 2021 96,246,246 0.0054 9.89 |
Intangible Assets (Tables)
Intangible Assets (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of intangible assets | Weighted March 31, December 31, amortization 2021 2020 (years) Patents $ 6,040,000 $ 5,690,000 4.45 Less: net monetization obligations (509,811 ) (509,811 ) Imputed interest (713,073 ) (713,073 ) Subtotal 4,817,116 4,467,116 Less: accumulated amortization (2,754,045 ) (2,266,157 ) Net value of intangible assets $ 2,063,071 $ 2,200,959 3.96 |
Schedule of annual amortization expense | Year ended December 31, Remainder of 2021 $ 411,457 2022 495,742 2023 323,071 2024 306,776 2025 and thereafter 526,025 Total $ 2,063,071 |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Details) - USD ($) | Apr. 11, 2019 | Mar. 31, 2021 |
Summary of Significant Accounting Policies (Details) [Line Items] | ||
Accumulated deficit | $ 26,438,000 | |
Working capital | $ 10,560,000 | |
Patents [Member] | Minimum [Member] | ||
Summary of Significant Accounting Policies (Details) [Line Items] | ||
Patents economic useful lives | 1 year | |
Patents [Member] | Maximum [Member] | ||
Summary of Significant Accounting Policies (Details) [Line Items] | ||
Patents economic useful lives | 10 years | |
Quest Packaging Solutions Corporation [Member] | ||
Summary of Significant Accounting Policies (Details) [Line Items] | ||
Ownership percentage | 90.00% | |
Quest Nettech Corporation [Member] | ||
Summary of Significant Accounting Policies (Details) [Line Items] | ||
Ownership percentage | 65.00% | |
Wynn Technologies Inc. [Member] | ||
Summary of Significant Accounting Policies (Details) [Line Items] | ||
Ownership interest, description | Significant intercompany transaction and balances have been eliminated in consolidation. |
Short Term Debt and Long-term_3
Short Term Debt and Long-term Liabilities (Details) - USD ($) | 3 Months Ended | ||
Mar. 31, 2021 | Mar. 31, 2020 | Dec. 31, 2020 | |
Short Term Debt and Long-term Liabilities (Details) [Line Items] | |||
Loans payable - third party | $ 147,000 | ||
Accrued interest percentage | 10.00% | 10.00% | |
Operating expenses | $ 2,293,330 | $ 1,291,735 | |
Cash payments | $ 1,750,000 | ||
Warrants, description | the warrant is limited if, upon exercise, the holder or any of holder’s affiliates would beneficially own more than 4.99% (the “Maximum Percentage”) of the Company’s common stock, except that by written notice to the Company, the holder may change the Maximum Percentage to any other percentage not in excess of 9.99% provided any such change will not be effective until the 61st day following notice to the Company. The warrant also contains certain minimum ownership percentage antidilution rights pursuant to which the aggregate number of shares of common stock purchasable upon the initial exercise of the warrant shall not be less than 10% of the aggregate number of outstanding shares of capital stock of the Company (determined on a fully diluted basis). | ||
Shares of common stock issuable upon exercises (in Shares) | 96,246,246 | ||
Interest in portfolio, description | the Company entered into an agreement with Peter K. Trzyna (“PKT”) pursuant to which PKT assigned to the Company all right, title, and interest in a portfolio of eight United States patents (the “Peregrin Portfolio”). Under the agreement, the Company paid PKT $350,000 at closing and agreed that upon the realization of gross proceeds, if any, the Company shall make a second installment payment or payments in the aggregate amount of $93,900 representing reimbursement to PKT, as the prosecuting attorney, for legal fees associated with prosecution of the portfolio, such reimbursement shall be due and payable to PKT from time to time as gross proceeds are realized, and paid to PKT along with and in proportion to reimbursement to other third parties of costs incurred in realizing gross proceeds from the Peregrin Portfolio. Thereafter, PKT is entitled to a percentage of gross proceeds realized, if any, from the Peregrin Portfolio. The Company requested and received a capital advance from QFL in the amount of $350,000 pursuant to the Purchase Agreement, which was used to make payment to PKT. | ||
Operating capital advance | $ 400,000 | ||
Issued notes | 250,000 | ||
Loss on debt conversion | $ 305,556 | ||
Assets acquired, deescripton | Pursuant to the MPA-NA, until the TMPO has been paid in full, Intelligent Partners is entitled to receive 10% of the net proceeds realized from new assets acquired by the Company. If, in any calendar quarter, net proceeds realized exceed $1,000,000, Intelligent Partners’ entitlement for that quarter only shall increase to 30% on the portion of net proceeds in excess of $1,000,000 but less than $3,000,000. If in the same calendar quarter, net proceeds exceed $3,000,000, Intelligent Partners’ entitlement for that quarter only shall increase to 50% on the portion of net proceeds in excess of $3,000,000. | ||
Common stock description | The Company granted Intelligent Partners, Andrew Fitton and Michael Carper certain registration rights with respect to (i) the 50,000,000 shares currently owned by Fitton and Carper; (ii) the 46,296,296 Conversion Shares issued to Fitton and Carper, and (iii) the 50,000,000 shares of common stock issuable upon exercise of the option. See Note 5 | ||
Change of control, description | Events of Default include (i) a Change of Control of the Company (ii) any uncured default on payment due to Intelligent Partners in an amount totaling in excess of $275,000, which is not the subject of a Dispute or other formal dispute resolution proceeding initiated in good faith pursuant to this Agreement or other Restructure Documents (iii) the filing of a voluntary petition for relief under the United States Bankruptcy Code by Company or any of its material subsidiaries, (iv) the filing of an involuntary petition for relief under the United States Bankruptcy Code against the Company, which is not stayed or dismissed within sixty (60) days of such filing, except for an involuntary petition for relief filed solely by Intelligent Partners, or any Affiliate or member of Intelligent Partners, or (v) acceleration of an obligation in excess of $1 million dollars to another provider of financing following a final determination by arbitration or other judicial proceeding that such obligation is due and owing. | ||
Loss on extinguishment note | $ 730,378 | ||
Percentage of Imputed Interest rate | 10.00% | ||
CXT Systems, Inc. [Member] | |||
Short Term Debt and Long-term Liabilities (Details) [Line Items] | |||
Description of minimum payments due under agreement | CXT and Intellectual Ventures Assets 34, LLC and Intellectual Ventures 37, LLC (“IV 34/37”) pursuant to which at closing CXT acquired by assignment all right, title, and interest in a portfolio of thirteen United States patents (the “CXT Portfolio”). Under the agreement, CXT will distribute 50% of net recoveries, as defined, to IV 34/37. CXT advanced $25,000 to IV 34/37 at closing, and agreed, pursuant to an amendment dated January 26, 2018, that in the event that, on December 31, 2018, December 31, 2019 and December 31, 2020, cumulative distributions to IV 34/37 total less than $100,000, $375,000 and $975,000, respectively, CXT shall pay the difference necessary to achieve the applicable minimum payment amount within ten days after the applicable date; with any advances being credited toward future distributions to IV 34/36. As of March 31, 2021, $600,000 of the minimum future cumulative distributions were presented as short-term debt based on payment due date. As of March 31, 2021, cumulative distributions did not total $975,000 and CXT did not pay the difference to IV 34/37 within ten days. Non-payment which is not cured within 30 days after written notice from IV 34/37 would constitute an Acceleration Event under the agreement, following which, in addition to any other remedies available under the agreement, all outstanding minimum cumulative distributions would become due and payable within thirty days | ||
M-RED Inc. [Member] | |||
Short Term Debt and Long-term Liabilities (Details) [Line Items] | |||
Description of minimum payments due under agreement | M-RED and Intellectual Ventures Assets 113 LLC and Intellectual Ventures Assets 108 LLC (“IV 113/108”) pursuant to which at closing M-RED paid IV 113/108 $75,000 and IV 113/108 transferred to M-RED all right, title and interest in a portfolio of sixty United States patents and eight foreign patents (the “M-RED Portfolio”). Under the agreement, M-RED will distribute 50% of net proceeds, as defined, to IV 113/108, as long as we generate revenue from the M-RED Portfolio. The agreement with IV 113/108 provides that if, on September 30, 2020, September 30, 2021 and September 30, 2022, cumulative distributions to IV 113/108 total less than $450,000, $975,000 and $1,575,000, respectively, M-RED shall pay the difference between such cumulative amounts and the amount paid to IV 113/108 within ten days after the applicable date; with any advances being credited toward future distributions to IV 113/108. On September 30, 2020 cumulative distributions to IV 113/108 totaled less than $450,000 and M-RED did not pay the difference to IV 113/108 within ten days. For the period ended March 31, 2021 the Company made payment in the amount of $114,951. Non-payment which is not cured within 30 days after written notice from IV 113/108 would constitute an Acceleration Event under the agreement, following which, in addition to any other remedies available under the agreement, all outstanding minimum cumulative distributions would become due and payable within thirty days. As of the date of filing, no such written notice of non-payment has been given by IV 113/108. As of March 31, 2021, approximately $785,000 and $600,000 of the minimum future cumulative distributions were presented as short-term and long-term debt, respectively, based on payment due dates. | ||
U.S. Small Business Association [Member] | |||
Short Term Debt and Long-term Liabilities (Details) [Line Items] | |||
Accrued interest percentage | 3.75% | ||
Payment terms, description | The loan may be prepaid by the Company at any time prior to maturity with no prepayment penalties. Funds from the loan may only be used for payroll costs, costs used to continue group health care benefits, mortgage payments, rent, utilities, and interest on other debt obligations incurred before February 15, 2020. The Company has used the entire loan amount for qualifying expenses. Under the terms of the PPP, certain amounts of the loan may be forgiven if they are used for qualifying expenses as described in the CARES Act. As of March 31, 2021 the loan has been forgiven and the Company recorded a gain on loan forgiveness of $20,832. ● A secured Economic Injury Disaster Loan from the U.S. Small Business Association (“SBA”) in the aggregate amount of $150,000, pursuant to Section 7(b) of the Small Business Act as part of the COVID-19 relief effort. The Company’s obligations on the loan are set forth in the Company’s note dated May 14, 2020 which matures on May 14, 2050 and bears interest at a rate of 3.75% per annum, payable monthly commencing on May 14, 2021. The Note may be prepaid by the Company at any time prior to maturity with no prepayment penalties. Funds from the Loan may be used solely as working capital to alleviate economic injury caused by disaster occurring in the month of January 31, 2020 and continuing thereafter and to pay Uniform Commercial Code (UCC) lien filing fees and a third-party UCC handling charge of $100 which were deducted from the loan amount stated above. In addition to the loan, as part of the COVID-19 relief effort, the Company obtained an Emergency EIDL Grant from the SBA in the amount of $1,000. | ||
Loan amount | $ 150,000 | ||
QPRC Finance LLC [Member] | |||
Short Term Debt and Long-term Liabilities (Details) [Line Items] | |||
Payments for acquisition | 25,000,000 | ||
Operating expenses | 2,000,000 | ||
Proceeds from financing | $ 1,750,000 | ||
warrants to purchase shares (in Shares) | 96,246,246 | ||
Exercise price per share (in Dollars per share) | $ 0.0054 | ||
Intelligent Partners LLC [Member] | |||
Short Term Debt and Long-term Liabilities (Details) [Line Items] | |||
Cash payments | $ 1,750,000 | ||
warrants to purchase shares (in Shares) | 50,000,000 | ||
Exercise price per share (in Dollars per share) | $ 0.0054 | ||
Principal amount | $ 4,422,810 | ||
Proceeds from Stock Options Exercised | 598,000 | ||
JPMORGAN CHASE BANK N.A. [Member] | |||
Short Term Debt and Long-term Liabilities (Details) [Line Items] | |||
unsecured loan | $ 20,832 | ||
Maturity date | Apr. 23, 2022 | ||
Interest rate | 0.98% | ||
Securities Purchase Agreement [Member] | |||
Short Term Debt and Long-term Liabilities (Details) [Line Items] | |||
Debt instrument, description | The loan payable – related party at March 31, 2021 represents the current amount of a non-interest bearing total monetization proceeds obligation (the “TMPO”) to Intelligent Partners, LLC (“Intelligent Partners”) of $2,805,000, pursuant to a restructure agreement (“Restructure Agreement”) dated February 22, 2021 whereby the Company and Intelligent Partners, extinguished the Company’s 10% note to Intelligent Partners as transferee of the notes issued to United Wireless Holdings, Inc. (“United Wireless”), in the amount of $4,672,810 pursuant to securities purchase agreement dated October 22, 2015 between the Company and United Wireless, as more fully described in the Company’s annual report on Form 10-K for the year ended December 31, 2020. The notes became due by their terms on September 30, 2020, and the Company did not make any payment on account of principal of and interest on the notes. Subsequent to September 30, 2020, the Company engaged in negotiations with Intelligent Partners in parallel with the Company’s negotiations with QFL, with a view to restructuring the Company’s obligations under the United Wireless agreements, including the notes, so that the Company no longer had any obligations under the notes or the SPA. These negotiations resulted in the Restructure Agreement, described below, which provided for the payment to Intelligent Partners of $1,750,000 from the proceeds from the Company’s agreements with QFL. | ||
Shares of restricted coon stock (in Shares) | 46,296,296 | ||
Purchase price (in Dollars per share) | $ 0.0054 | ||
transferred note balance | $ 250,000 |
Short Term Debt and Long-term_4
Short Term Debt and Long-term Liabilities (Details) - Schedule of short-term and long-term debt - USD ($) | Mar. 31, 2021 | Dec. 31, 2020 |
Short-term debt: | ||
Loans payable – third party | $ 147,000 | $ 147,000 |
QFL funding liability | 2,500,000 | |
Loan payable – related party | 2,805,000 | 4,672,810 |
Purchase price of patents – current portion | 1,385,049 | 1,500,000 |
Net short-term debt | 6,837,049 | 6,319,810 |
Long-term liabilities: | ||
Gross | 150,000 | 170,832 |
Accrued Interest | 4,947 | 3,560 |
Net loans payable - SBA | 154,947 | 174,392 |
Purchase price of patents | ||
Gross | 790,000 | 790,000 |
Unamortized discount | (107,774) | (131,793) |
Net purchase price of patents – long-term | $ 682,226 | $ 658,207 |
Short Term Debt and Long-term_5
Short Term Debt and Long-term Liabilities (Details) - Schedule of recognized loss on extinguishment of note | 3 Months Ended |
Mar. 31, 2021USD ($) | |
Schedule of recognized loss on extinguishment of note [Abstract] | |
Carrying amount as of the restructure date | $ 4,672,810 |
Less unamortized debt discount and issuance costs | |
Net carrying amount | 4,672,810 |
Reacquisition Price | |
Cash payment via QFL | (1,750,000) |
Conversion of transferred note | (250,000) |
Fair value of option grant | (598,188) |
TMPO undiscounted future cash flows | (2,805,000) |
Loss on debt extinguishment | $ (730,378) |
Short Term Debt and Long-term_6
Short Term Debt and Long-term Liabilities (Details) - Schedule of purchase price of the patents - USD ($) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2021 | Dec. 31, 2020 | |
Current Liabilities: | ||
Purchase price of patents, current portion | $ 1,385,049 | $ 1,500,000 |
Unamortized discount | ||
Non-current liabilities: | ||
Purchase price of patents, long term | 790,000 | 790,000 |
Unamortized discount | (107,774) | (131,793) |
Total current and non-current | $ 2,067,275 | $ 2,158,207 |
Patents [Member] | Minimum [Member] | ||
Non-current liabilities: | ||
Effective interest rate of Amortization over 2 years | 9.40% | 9.40% |
Patents [Member] | Maximum [Member] | ||
Non-current liabilities: | ||
Effective interest rate of Amortization over 2 years | 14.50% | 14.50% |
Warrant Liability (Details)
Warrant Liability (Details) - USD ($) | Mar. 31, 2021 | Feb. 22, 2021 |
Warrant Liability (Details) [Line Items] | ||
Aggregate fair value of outstanding derivative liability | $ 1,819,054 | $ 1,154,905 |
Warrant [Member] | ||
Warrant Liability (Details) [Line Items] | ||
Shares issue (in Shares) | 96,246,246 |
Warrant Liability (Details) - S
Warrant Liability (Details) - Schedule of fair value of derivative liability using black-scholes option pricing model | 1 Months Ended | 3 Months Ended |
Feb. 22, 2021 | Mar. 31, 2021 | |
Schedule of fair value of derivative liability using black-scholes option pricing model [Abstract] | ||
Volatility | 252.00% | 421.00% |
Risk-free interest rate | 1.37% | 1.37% |
Expected dividends | ||
Expected term | 10 years | 9 years 328 days |
Warrant Liability (Details) -_2
Warrant Liability (Details) - Schedule of valuation of financial instruments | Mar. 31, 2021USD ($) |
Level 1 [Member] | |
Assets | |
None | |
Total assets | |
Liabilities | |
Option derivative liability | |
Total liabilities | |
Level 2 [Member] | |
Assets | |
None | |
Total assets | |
Liabilities | |
Option derivative liability | |
Total liabilities | |
Level 3 [Member] | |
Assets | |
None | |
Total assets | |
Liabilities | |
Option derivative liability | 1,819,054 |
Total liabilities | $ 1,819,054 |
Warrant Liability (Details) -_3
Warrant Liability (Details) - Schedule of reconciliation of changes in fair value of derivative liabilities classified as Level 3 - Level 3 [Member] | 3 Months Ended |
Mar. 31, 2021USD ($) | |
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |
Fair value at grant date | $ 1,154,905 |
Change in fair value | 664,149 |
Ending balance | $ 1,819,054 |
Stockholders' Equity (Details)
Stockholders' Equity (Details) | 1 Months Ended | 3 Months Ended | ||
Feb. 22, 2021USD ($)W | Feb. 19, 2021shares | Mar. 31, 2021USD ($) | May 07, 2021USD ($) | |
Stockholders' Equity (Details) [Line Items] | ||||
Restructure agreement, description | (i) issued to Fitton and Carper, as holders of the Transferred Note, pursuant to the Stock Purchase Agreement a total of 46,296,296 shares of the Company’s common stock at a purchase price of $0.0054 per share, which purchase price was paid by the conversion and in full satisfaction of the Company’s obligation under the Transferred Note and included in the calculation of the repurchase price of the debt; and (ii) granted Intelligent Partners, pursuant to the Option Grant, an option to purchase a total of 50,000,000 shares of common stock, with an exercise price of $0.0054 per share which vested immediately and may be exercised through September 30, 2025. The Company valued the purchase option at approximately $598,000 using the Black-Scholes pricing model. | |||
Discount rate (in Watts) | W | 0.0137 | |||
Term years | 5 years | |||
Volatility | 252.00% | |||
Expected dividends | 0.00% | |||
Granted intelligent partners, description | (i) the 50,000,000 shares currently owned by Fitton and Carper; (ii) the 46,296,296 Conversion Shares issued to Fitton and Carper, and (iii) the 50,000,000 shares of common stock issuable upon exercise of the option. Commencing six months from the closing date, if the shares owned by Fitton, Carper and Intelligent Partners cannot be sold pursuant to a registration statement and cannot be sold pursuant to Rule 144 without the Company being in compliance with the current public information requirements of Rule 144, if the Company is not in compliance with the current public information requirements, the Company is required to pay damages to Intelligent Partners. | |||
Professional fees | $ 120,000 | |||
Options [Member] | ||||
Stockholders' Equity (Details) [Line Items] | ||||
Intrinsic value of outstanding | 1,120,000 | |||
Subsequent Event [Member] | ||||
Stockholders' Equity (Details) [Line Items] | ||||
Accrued option expense | $ 120,000 | |||
Warrant [Member] | ||||
Stockholders' Equity (Details) [Line Items] | ||||
Intrinsic value of outstanding | 1,299,324 | |||
2017 Equity Incentive Plan [Member] | ||||
Stockholders' Equity (Details) [Line Items] | ||||
Option granted to purchase shares of common stock (in Shares) | shares | 500,000,000 | |||
Compensatory Arrangements of Certain Officers [Member] | ||||
Stockholders' Equity (Details) [Line Items] | ||||
Discount rate (in Watts) | W | 0.0137 | |||
Term years | 10 years | |||
Volatility | 252.00% | |||
Expected dividends | 0.00% | |||
Board of directors, description | (i) Granted restricted stock grants for services rendered and vesting in full upon grant, to: a. Jon C. Scahill – 49,000,000 shares b. Timothy J. Scahill – 10,000,000 shares c. Dr. William R. Carroll - 10,000,000 shares (ii) Granted Jon Scahill a ten-year option (the “Option”) to purchase 60,000,000 shares of Common Stock which become exercisable cumulatively as follows: a. 20,000,000 shares at an exercise price of $0.01 per share becoming exercisable upon the commencement of trading of the Common Stock on the OTCQB. b. 20,000,000 shares at an exercise price of $0.03 per share, becoming exercisable on the first day on which the Company files with the SEC a Form 10-K or Form 10-Q which stockholders’ equity of at least $5,000,000, and c. 20,000,000 shares at an exercise price of $0.05 per share becoming exercisable on the date on which the Common Stock is listed for trading on the Nasdaq Stock Market or the New York Stock Exchange (iii) Appointed Ryan T. Logue to the board of directors and granted Mr. Logue a restricted stock grant of 5,000,000 shares of common stock which vests upon his acceptance of his appointment as a director. | |||
Compensation expense | $ 888,000 | |||
Mr. Gate [Member] | Consulting Agreements [Member] | ||||
Stockholders' Equity (Details) [Line Items] | ||||
Discount rate (in Watts) | W | 0.0137 | |||
Term years | 10 years | |||
Volatility | 252.00% | |||
Expected dividends | 0.00% | |||
Pursuant agreements, description | Pursuant to the agreements with Mr. Gates and Ms. Nicolson, the compensation payable to each of them consists of a restricted stock grant of 10,000,000 shares of Common Stock which immediately vests in full and a ten-year option to purchase a total of 30,000,000 shares of Common Stock, which become exercisable cumulatively as follows: a. 10,000,000 shares at an exercise price of $0.01 per share becoming exercisable upon the commencement of trading of the Common Stock on the OTCQB. b. 10,000,000 shares at an exercise price of $0.03 per share, becoming exercisable on the first day on which the Company files with the SEC a Form 10-K or Form 10-Q which stockholders’ equity of at least $5,000,000, and c. 10,000,000 shares at an exercise price of $0.05 per share becoming exercisable on the date on which the Common Stock is listed for trading on the Nasdaq Stock Market or the New York Stock Exchange. The Company recorded professional fees in the amount of $240,000 as a result the restricted stock grants to Mr. Gates and Ms. Nicolson. The Company determined the fair value of the options as of the grant date to be approximately $720,000 using the Black-Scholes pricing model. Variables used in the valuation include (1) discount rate of 1.37%; (2) term of 10 years; (3) computed volatility of 252% and (4) zero expected dividends. The Company determined that the first performance condition will be met and accrued the option expense of approximately $240,000 over the period from the grant date to achievement of the performance condition. The Company recognized option expense of approximately $120,000 for the three months ended March 31, 2021. | |||
Professional fees | $ 240,000 | |||
Accrued option expense | $ 240,000 | |||
Mr. Tole [Member] | Consulting Agreements [Member] | ||||
Stockholders' Equity (Details) [Line Items] | ||||
Discount rate (in Watts) | W | 0.0137 | |||
Term years | 10 years | |||
Volatility | 252.00% | |||
Expected dividends | 0.00% | |||
Pursuant agreements, description | Pursuant to the agreement with Mr. Toler, the compensation payable to him consists of a restricted stock grant of 10,000,000 shares of Common Stock which immediately vests in full and a ten-year option to purchase 30,000,000 shares of Common Stock, which becomes exercisable cumulatively as follows: a. 10,000,000 shares at an exercise price of $0.01 per share upon the first anniversary of the agreement. b. 10,000,000 shares at an exercise price of $0.03 per share upon the second anniversary of the agreement; and c. 10,000,000 shares at an exercise price of $0.05 per share upon the third anniversary of the agreement. The Company recorded professional fees in the amount of $120,000 as a result the restricted stock grant to Mr. Toler. The Company determined the fair value of the options as of the grant date to be approximately $360,000 using the Black-Scholes pricing model. Variables used in the valuation include (1) discount rate of 1.37%; (2) term of 10 years; (3) computed volatility of 252% and (4) zero expected dividends. The Company recognized option expense of approximately $22,300 for the three months ended March 31, 2021. Compensatory Arrangements of Certain Officers On February 22, 2021, the board of directors: (i) Granted restricted stock grants for services rendered and vesting in full upon grant, to: a. Jon C. Scahill – 49,000,000 shares b. Timothy J. Scahill – 10,000,000 shares c. Dr. William R. Carroll - 10,000,000 shares (ii) Granted Jon Scahill a ten-year option (the “Option”) to purchase 60,000,000 shares of Common Stock which become exercisable cumulatively as follows: a. 20,000,000 shares at an exercise price of $0.01 per share becoming exercisable upon the commencement of trading of the Common Stock on the OTCQB. b. 20,000,000 shares at an exercise price of $0.03 per share, becoming exercisable on the first day on which the Company files with the SEC a Form 10-K or Form 10-Q which stockholders’ equity of at least $5,000,000, and c. 20,000,000 shares at an exercise price of $0.05 per share becoming exercisable on the date on which the Common Stock is listed for trading on the Nasdaq Stock Market or the New York Stock Exchange (iii) Appointed Ryan T. Logue to the board of directors and granted Mr. Logue a restricted stock grant of 5,000,000 shares of common stock which vests upon his acceptance of his appointment as a director. The Company recognized compensation expense of $888,000 in conjunction with issuance of common stock to officers and directors. The Company determined the fair value of the options to be approximately $720,000 as of the grant date using the Black-Scholes pricing model. Variables used in the valuation include (1) discount rate of 1.37%; (2) term of 10 years; (3) computed volatility of 252% and (4) zero expected dividends. The Company recognized option expense of approximately $120,000 for the three months ended March 31, 2021. | |||
Professional fees | $ 120,000 | $ 22,300 |
Stockholders' Equity (Details)
Stockholders' Equity (Details) - Schedule of stock options - Equity Option [Member] | 3 Months Ended |
Mar. 31, 2021$ / sharesshares | |
Stockholders' Equity (Details) - Schedule of stock options [Line Items] | |
Option Number of Shares outstanding at beginning | shares | |
Option Weighted Average Exercise Price outstanding at beginning | $ / shares | |
Option Weighted Average Remaining Contractual Term outstanding at beginning | |
Granted Number of Shares | shares | 200,000,000 |
Granted Weighted Average Exercise Price | $ / shares | $ 0.02 |
Granted Weighted Average Remaining Contractual Term | 8 years 237 days |
Exercised Number of Shares | shares | |
Exercised Weighted Average Exercise Price | $ / shares | |
Expired Number of Shares | shares | |
Expired Weighted Average Exercise Price | $ / shares | |
Cancelled Number of Shares | shares | |
Cancelled Weighted Average Exercise Price | $ / shares | |
Option Number of Shares outstanding at ending | shares | 200,000,000 |
Option Weighted Average Exercise Price outstanding at ending | $ / shares | $ 0.02 |
Option Weighted Average Remaining Contractual Term outstanding at ending | 8 years 200 days |
Options exercisable at end of period | shares | 50,000,000 |
Options exercisable at end of period | $ / shares | $ 0.0054 |
Options exercisable at end of period | 4 years 6 months |
Stockholders' Equity (Details_2
Stockholders' Equity (Details) - Schedule of warrant activity - Warrant [Member] | 3 Months Ended |
Mar. 31, 2021$ / sharesshares | |
Class of Warrant or Right [Line Items] | |
Warrant Number of Shares outstanding at beginning | shares | |
Warrant Weighted Average Exercise Price outstanding at beginning | $ / shares | |
Warrant Weighted Average Remaining Contractual Term outstanding at beginning | |
Granted Number of Shares | shares | 96,246,246 |
Granted Weighted Average Exercise Price | $ / shares | $ 0.0054 |
Granted Weighted Average Remaining Contractual Term | 9 years 324 days |
Exercised Number of Shares | shares | |
Exercised Weighted Average Exercise Price | $ / shares | |
Expired Number of Shares | shares | |
Expired Weighted Average Exercise Price | $ / shares | |
Cancelled Number of Shares | shares | |
Cancelled Weighted Average Exercise Price | $ / shares | |
Warrant Number of Shares outstanding at ending | shares | 96,246,246 |
Warrant Weighted Average Exercise Price outstanding at ending | $ / shares | $ 0.0054 |
Warrant Weighted Average Remaining Contractual Term outstanding at ending | 9 years 324 days |
Intangible Assets (Details)
Intangible Assets (Details) - USD ($) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2021 | Dec. 31, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Intangible assets, description | ● patents acquired in October 2015 for a purchase price of $3,000,000, the useful lives of the patents, at the date of purchase, was 6-10 years; ● patents acquired in July 2017 pursuant to an obligation to pay 50% of net revenues to IV 34/37 (see Note 3); the useful lives of the patents, at the date of acquisition, was 5-6 years; ● patents (which were fully amortized at the date of acquisition) acquired in January 2018 pursuant to an agreement with to Intellectual Ventures Assets 62 LLC and Intellectual Ventures Assets 71 LLC “(IV 62/71”), pursuant to which CXT has an obligation to distribute 50% of net revenues to IV 62/71; ● patents (which were fully amortized at the date of acquisition) acquired in January 2018 by Photonic Imaging Solutions Inc. (“PIS”) from Intellectual Ventures Assets 64 LLC (“IV 64”) pursuant to which PIS is to pay IV 64 (a) 70% of the first $1,500,000 of net revenue, (b) 30% of the next $1,500,000 of net revenue and (c) 50% of net revenue in excess of $3,000,000; ● patents acquired in March 2019 pursuant to an obligation to pay 50% of net revenues to IV 113/108 (see Note 3); the useful lives of the patents, at the date of acquisition, was approximately 9 years. ● patents (which were fully amortized at the date of acquisition) acquired in May 2020 for a purchase price of $95,000 pursuant to an agreement with Texas Technology Ventures 2, LLP (“TTV”), pursuant to which of the Company retains the first $230,000 of net proceeds, as defined in the agreement, after which the company has an obligation to distribute 50% of net proceeds to TTV. ● patents (which were fully amortized at the date of acquisition) acquired in February 2021 pursuant to an agreement with PKT for a purchase price of $350,000, pursuant to which $350,000 was paid at closing, and upon the realization of gross proceeds, as defined in the agreement, the Company shall make a subsequent or payments in the aggregate amount of $93,900, representing reimbursement to PKT, as the prosecuting attorney, for legal fees associated with prosecution of the portfolio, such reimbursement shall be due and payable to PKT from time to time as gross proceeds are realized, if any, and paid to PKT along with and in proportion to reimbursement to other third parties of costs incurred in realizing gross proceeds. Thereafter, PKT is entitled to a percentage of gross proceeds realized, if any. | |
Amortization expense | $ 487,888 | $ 648,395 |
Intangible Assets (Details) - S
Intangible Assets (Details) - Schedule of intangible assets - USD ($) | 3 Months Ended | |
Mar. 31, 2021 | Dec. 31, 2020 | |
Schedule of intangible assets [Abstract] | ||
Patents | $ 6,040,000 | $ 5,690,000 |
Weighted average amortization period | 4 years 164 days | |
Less: net monetization obligations | $ (509,811) | (509,811) |
Imputed interest | (713,073) | (713,073) |
Subtotal | 4,817,116 | 4,467,116 |
Less: accumulated amortization | (2,754,045) | (2,266,157) |
Net value of intangible assets | $ 2,063,071 | $ 2,200,959 |
Weighted average amortization period | 3 years 350 days |
Intangible Assets (Details) -_2
Intangible Assets (Details) - Schedule of annual amortization expense | Mar. 31, 2021USD ($) |
Schedule of annual amortization expense [Abstract] | |
Remainder of 2021 | $ 411,457 |
2022 | 495,742 |
2023 | 323,071 |
2024 | 306,776 |
2025 and thereafter | 526,025 |
Total | $ 2,063,071 |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Related Party Transactions (Details) [Line Items] | ||
Interest rate | 10.00% | |
Interest expense | $ 0 | $ 117,780 |
Cost of patent service | 115 | $ 145 |
Accrued expenses and outstanding | 407,000 | |
Patents [Member] | ||
Related Party Transactions (Details) [Line Items] | ||
Cost of patent service | $ 0 | |
United Wireless [Member] | ||
Related Party Transactions (Details) [Line Items] | ||
Interest rate | 10.00% |
Commitments and Contingencies (
Commitments and Contingencies (Details) - USD ($) | 1 Months Ended | |||
Mar. 31, 2016 | Nov. 30, 2014 | Dec. 31, 2020 | Dec. 31, 2019 | |
Commitments and Contingencies (Details) [Line Items] | ||||
Compensation percentage | 19.00% | |||
Chief Executive Officer [Member] | ||||
Commitments and Contingencies (Details) [Line Items] | ||||
Term of agreement, description | 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. | |||
Initial annual salary | $ 252,000 | |||
Annual bonus compensation, description | the Company’s board of directors increased the chief executive officer’s annual salary to $300,000, effective January 1, 2016. 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). | |||
Officer's annual salary | $ 300,000 | |||
Deposits | $ 14,500 |
Subsequent Events (Details)
Subsequent Events (Details) | 1 Months Ended |
May 20, 2021USD ($) | |
Subsequent Event [Member] | |
Subsequent Events (Details) [Line Items] | |
Interest Portfolio Payable | $ 250,000 |