Quarterly report pursuant to Section 13 or 15(d)

INTANGIBLE ASSETS

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INTANGIBLE ASSETS
6 Months Ended
Jun. 30, 2014
Goodwill and Intangible Assets Disclosure [Abstract]  
INTANGIBLE ASSETS

Intangible assets consisted of the following:

   

June 30,

2014

   

December 31,

2013

 
      (unaudited)        (audited)  
Patent Rights   $ 21,973,127     $ 7,204,937  
Accumulated Amortization     (2,439,610 )     (1,047,278 )
Intangible assets, net   $ 19,533,517     $ 6,157,659  

 

Intangible assets are comprised of patents with estimated useful lives ranging between approximately 1 to 11 years. Once placed in service, the Company will amortize the costs of intangible assets over their estimated useful lives on a straight-line basis.  For asset acquisitions, 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. For acquisitions deemed to be a business combination, costs incurred to acquire patents are not capitalized. Amortization of patents is included in operating expenses as reflected in the accompanying consolidated statements of operations. The Company assesses fair market value for any impairment to the carrying values.  As of June 30, 2014 and December 31, 2013 management concluded that there was no impairment to the acquired assets.

 

Amortization expense for the three and six months ended June 30, 2014 and 2013 was $939,781 and $1,392,326, and $475,680 and $475,680, respectively. Future amortization of intangible assets, net is as follows:

 

2014   $ 2,419,478  
2015     4,640,599  
2016     3,899,823  
2017     2,373,742  
2018     1,870,125  
2019 and thereafter     4,329,750  
Total   $ 19,533,517  

  

As of June 30, 2014, the Company’s patent portfolios consists of 128 U.S. and foreign patents, five open patent applications and contract rights to 10 patents. During the second quarter of 2013, the Company began to generate revenue from its patent portfolio.  In the aggregate, the earliest date for expiration of a patent in the Company’s patent portfolio is past (the patent is expired, but patent rules allow for six year look-back for royalties), the median expiration date for patents in the Company’s portfolio is October 30, 2016, and the latest expiration date for a patent in any of the Company’s patent portfolios is July 18, 2024.  A summary of the Company’s patent portfolios is as follows:

 

Subsidiary   Number of Patents   Earliest Expiration Date   Median Expiration Date   Latest Expiration Date   Subject Matter
Bismarck     14   09/15/15   09/15/15   01/22/18   Communication and PBX equipment
CRFD Research     4   09/17/21   08/11/22   08/19/23   Web page content translator and device-to-device transfer system
CyberFone     38   Expired   09/15/15   06/07/20   Telephony and data transactions
Dynamic Advances     4   Expired   10/02/17   03/06/23   Natural language interface
E2E     4   04/27/20   11/17/23   07/18/24   Manufacturing schedules using adaptive learning
Loopback     10   Expired   09/25/17   08/27/22   Automotive
Hybrid     2   11/14/15   09/09/16   07/17/17   Asynchronous communications
IP Liquidity     6   Expired   06/06/15   07/26/20   Pharmaceuticals / tire pressure systems
Relay     1   Expired   Expired   Expired   Multicasting
Sampo     3   03/13/18   03/13/18   11/13/20   Centrifugal communications
Sarif Biomedical     5   09/07/13   09/07/13   09/07/13   Microsurgery equipment
Selene     3   05/05/18   11/23/20   11/28/21   Communications
Signal     7   03/10/14   12/01/15   08/06/22   Automotive
Vantage Point     37   Expired   12/21/16   03/09/18   Computer networking and operations