Quarterly report pursuant to Section 13 or 15(d)


3 Months Ended
Mar. 31, 2015
Goodwill and Intangible Assets Disclosure [Abstract]  

Intangible assets of the Company, including adjustments for currency translation adjustments, consisted of the following:


    March 31, 2015     December 31, 2014  
Intangible Assets   $ 43,363,832     $ 49,914,360  
Accumulated Amortization     (3,206,747 )     (6,550,528 )
Intangible assets, net   $ 40,157,085     $ 43,363,832  


Other than the website as set forth in the table above, intangible assets are comprised of patents with estimated useful lives between approximately 1 to 15 years. The website was determined to have an estimated useful life of 3 years. Once placed in service, the Company will amortize 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 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 March 31, 2015 and December 31, 2014 management concluded that there was no impairment to the acquired assets.


Patent amortization expense for the three months ended March 31, 2015 and March 31, 2014 was $2,598,461 and $453,647, respectively. Future amortization of intangible assets, net of foreign currency translation adjustments is as follows:


2015   $ 7,351,255  
2016     8,893,334  
2017     6,477,020  
2018     4,865,208  
2019     3,959,391  
2020 and thereafter     8,610,877  
Total   $ 40,157,085  


The Company made the following patent purchases:


In April 2013, the Company through its subsidiary, Relay IP, Inc. acquired a US patent for $350,000;
In April 2013, the Company acquired 10 US patents, 27 foreign patents and 1 patent pending from CyberFone Systems valued at $1,135,512;


In June 2013, in connection with the closing of a licensing agreement with Siemens Technology, we acquired a patent portfolio from that company valued at $1,000,000;
In September 2013, the Company acquired 14 US patents for a total purchase price of $1,100,000;


In November 2013, the Company acquired four patents for 150,000 shares of the Company’s Common Stock, which the Company valued at $718,500 based on the fair market value of the stock issued;
In December 2013, the Company acquired certain patents from Delphi Technologies, Inc. for $1,700,000 pursuant to a Patent Purchase Agreement entered into on October 31, 2013 and Amended on December 16, 2013;


In December 2013, in connection with a licensing agreement with Zhone, the Company acquired a portfolio of patents from Zhone;
In December 2013, in connection with a settlement and license agreement, we agreed to settle and release another defendant for past and future use of our patents, whereby the defendant agreed to assign and transfer 2 U.S. patents and rights to the Company;


In May 2014, we acquired ownership rights of Dynamic Advances, LLC, a Texas limited liability company, IP Liquidity Ventures, LLC, a Delaware limited liability company, and Sarif Biomedical, LLC, a Delaware limited liability company, all of which hold patent portfolios or contract rights to the revenue generated from the patent portfolios;
In June 2014, we acquired Selene Communication Technologies, LLC, which holds multiple patents in the search and network intrusion field;


In August 2014, we acquired patents from Clouding IP LLC, with such patents related to network and data management technology;
In September 2014, we acquired TLI Communications, which owns a single patent in the telecommunication field;


In October 2014, we acquired three patent portfolios from MedTech Development, LLC, which owns medical technology patents.



As of March 31, 2015, the Company’s patent portfolios consist of 360 U.S. and foreign patents, twenty-three patent applications and contract rights to ten patents. 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 June 17, 2017, and the latest expiration date for a patent in any of the Company’s patent portfolios is July 29, 2029.  A summary of the Company’s patent portfolios is as follows:


Number of Patents   Earliest Expiration Date    Median Expiration Date   Latest Expiration Date   Subject Matter
17   09/15/16   09/15/15   01/22/18   Communication and PBX equipment
60   Expired   10/05/21   03/29/29   Network and data management
5   09/17/21   08/11/22   08/19/23   Web page content translator and device-to-device transfer system
37   Expired   09/15/15   11/11/17   Telephony and data transactions
4   Expired   10/02/17   03/06/23   Natural language interface
4   04/27/20   11/17/23   07/18/24   Manufacturing schedules using adaptive learning
2   11/14/15   09/09/16   07/17/17   Asynchronous communications
6   Expired   06/06/15   07/26/20   Pharmaceuticals / tire pressure systems
10   Expired   09/25/17   08/27/22   Automotive
167   Expired   06/01/18   07/29/29   Medical technology
1   Expired   Expired   Expired   Multicasting
3   03/13/18   03/13/18   11/16/23   Centrifugal communications
5   Expired   Expired   Expired   Microsurgery equipment
3   05/05/18   11/23/20   11/28/21   Communications
7   03/10/14   12/01/15   08/06/22   Automotive
6   06/17/17   06/17/17   06/17/17   Telecommunications
33   Expired   12/21/16   03/09/18   Computer networking and operations