Quarterly report pursuant to Section 13 or 15(d)

INTANGIBLE ASSETS

v3.5.0.2
INTANGIBLE ASSETS
9 Months Ended
Sep. 30, 2016
INTANGIBLE ASSETS  
INTANGIBLE ASSETS

NOTE 4 – INTANGIBLE ASSETS

 

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

 

 

 

 

September 30, 2016

 

December 31, 2015

 

 

 

 

 

 

 

Intangible Assets

 

  $

35,990,321

 

  $

41,014,992

 

Accumulated Amortization & Impairment

 

(16,438,643)

 

(15,557,353)

 

 

 

 

 

 

 

 

Intangible assets, net

 

  $

19,551,678

 

  $

25,457,639

 

 

 

 

 

 

 

 

 

 

Other than the Company’s 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 recorded impairment charges to its intangible assets during the three and nine months ended September 30, 2016 in the amounts of $5,531,383 and 6,525,273, respectively, associated with the end of life of a number of the Company’s portfolios, compared to an impairment charge in the amount of $0 and $766,498, respectively, during the three and nine months ended September 30, 2015 associated with the reduction in the carrying value of one the Company’s portfolios.

 

Patent and website amortization expense for the three and nine months ended September 30, 2016 was $2,030,886 and $6,018,196, respectively and patent and website amortization expense for the three and nine months ended September 30, 2015 was $2,884,269 and $8,511,730, respectively, net of foreign currency translation adjustments. Future amortization of intangible assets, net of foreign currency translation adjustments is as follows:

 

2016

 

  $

1,466,249

 

2017

 

4,614,613

 

2018

 

3,251,099

 

2019

 

2,551,034

 

2020

 

1,902,950

 

2021 and thereafter

 

5,765,733

 

 

 

 

 

Total

 

  $

19,551,678

 

 

 

 

 

 

 

 

 

 

 

 

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;

-      In June 2016, we acquired two patent portfolios from Siemens covering W-CDMA and GSM cellular technology;

-      In July 2016, we acquired a patent portfolio from Siemens covering internet-of-things technology;

-      In August 2016, we acquired a patent portfolio from CPT IP Holdings, LLC covering battery technology;

-      In August 2016, we entered into a Patent Funding and Exclusive License Agreement with a Fortune 50 company to monetize more than 10,000 patents in a single industry vertical;

-      In September 2016, we acquired a patent from Cirrex Systems, LLC covering LED technology.

 

As of September 30, 2016, the Company’s patent portfolios consist of 519 U.S. and foreign patents and patent rights. In the aggregate, the earliest date for expiration of a patent in the Company’s patent portfolio has passed (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 August 15, 2018, and the latest expiration date for a patent in any of the Company’s patent portfolios is July 29, 2033.  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 IP Inc.

 

17 

 

09/15/16

 

08/02/16

 

01/22/18

 

Communication and PBX equipment

Clouding Corp.

 

59 

 

Expired

 

08/06/21

 

03/29/29

 

Network and data management

CRFD Research, Inc.

 

 

05/25/21

 

09/17/21

 

08/19/23

 

Web page content translator and device-to-device transfer system

Cyberfone Systems, LLC

 

30 

 

Expired

 

09/15/15

 

06/07/20

 

Telephony and data transactions

Dynamic Advances, LLC

 

 

Expired

 

10/02/17

 

03/06/23

 

Natural language interface

E2E Processing, Inc.

 

 

04/27/20

 

11/17/23

 

07/18/24

 

Manufacturing schedules using adaptive learning

Hybrid Sequence IP, Inc.

 

 

Expired

 

09/09/16

 

07/17/17

 

Asynchronous communications

IP Liquidity Ventures, LLC

 

 

Expired

 

06/06/15

 

06/06/15

 

Pharmaceuticals / tire pressure systems

Loopback Technologies, Inc.

 

 

Expired

 

08/05/16

 

08/27/22

 

Automotive

Magnus IP

 

62 

 

10/28/29

 

09/29/24

 

10/15/30

 

Network Management/Connected Home Devices

Medtech Group Acquisition Corp.

 

86 

 

Expired

 

06/28/19

 

08/09/29

 

Medical technology

Motheye Technologies

 

 

06/07/21

 

06/07/21

 

06/07/21

 

Optical Networking

Munitch IP

 

173 

 

9/16/18

 

6/21/26

 

5/29/32

 

W-CDMA and GSM cellular technology

Relay IP, Inc.

 

 

Expired

 

Expired

 

Expired

 

Multicasting

Sampo IP, LLC

 

 

03/13/18

 

12/01/19

 

11/16/23

 

Centrifugal communications

Sarif Biomedical LLC

 

 

Expired

 

Expired

 

Expired

 

Microsurgery equipment

Signal IP, Inc.

 

 

Expired

 

12/01/15

 

08/06/22

 

Automotive

TLI Communications, LLC

 

 

06/17/17

 

06/17/17

 

06/17/17

 

Telecommunications

Traverse Technologies

 

12 

 

02/25/29

 

06/05/29

 

07/29/33

 

Li-Ion Battery/High Capacity Electrodes

Vantage Point Technology, Inc.

 

31 

 

Expired

 

05/31/16

 

03/09/18

 

Computer networking and operations

 

 

 

 

Median

 

08/15/18