Quarterly report pursuant to Section 13 or 15(d)

INTANGIBLE ASSETS

v3.7.0.1
INTANGIBLE ASSETS
3 Months Ended
Mar. 31, 2017
INTANGIBLE ASSETS  
INTANGIBLE ASSETS

NOTE 4 – INTANGIBLE ASSETS

 

Intangible assets include patents purchased and patents acquired in lieu of cash in licensing transactions. Patents purchased are recorded based at their acquisition cost and patents acquired in lieu of cash are recorded at their fair market value. Intangible assets consisted of the following:

 

 

 

March 31, 2017

 

December 31, 2016

 

 

 

 

 

 

 

Intangible Assets

 

  $

23,711,923

 

  $

23,637,813

 

Accumulated Amortization & Impairment

 

(12,028,753)

 

(11,323,185)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Intangible assets, net

 

  $

11,683,170

 

  $

12,314,628

 

 

 

 

 

 

 

 

 

 

Intangible assets are comprised of patents with estimated useful lives between approximately 1 to 16 years. Once placed in service, the Company will amortize the costs of intangible assets over their estimated useful lives on a straight-line basis. During the three months ended March 31, 2017 and 2016, respectively, the Company capitalized a total of $0 and $0 in patent acquisition costs. 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 an operating expense as reflected in the accompanying consolidated condensed statements of operations. The Company assesses fair market value for any impairment to the carrying values.  Management concluded that there was no impairment to the carrying value for the three months ended March 31, 2017, compared to an impairment to the carrying value in the amount of $373,195 for the three months ended March 31, 2016. The Company determined the fair value using a Level 3 fair value category of unobservable inputs and concluded that the fair value on these intangibles was zero.

 

Patent amortization expense for the three months ended March 31, 2017 and March 31, 2016 was $705,958 and $2,025,899, respectively, net of foreign currency translation adjustments. Future amortization of intangible assets, net of foreign currency translation adjustments is as follows:

 

2017

 

  $

1,629,337

 

2018

 

1,893,164

 

2019

 

1,809,705

 

2020

 

1,500,241

 

2021

 

1,331,822

 

2022 and thereafter

 

3,518,901

 

 

 

 

 

Total

 

  $

11,683,170

 

 

 

 

 

 

 

 

 

 

 

 

As of March 31, 2017, our operating subsidiaries owned 345 patents, as set forth below, and had economic rights to over 10,000 additional patents, both of which include U.S. patents and certain foreign counterparts, covering technologies used in a wide variety of industries. 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 28, 2020, 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.

 

2

 

1/21/18

 

1/21/18

 

1/22/18

 

Communication and PBX equipment

Clouding Corp.

 

30

 

3/19/17

 

3/6/21

 

5/29/29

 

Network and data management

CRFD Research, Inc.

 

5

 

5/25/21

 

9/17/21

 

8/19/23

 

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

Cyberfone Systems, LLC

 

3

 

11/11/17

 

6/7/19

 

6/7/20

 

Telephony and data transactions

Dynamic Advances, LLC

 

2

 

11/6/21

 

3/4/24

 

7/1/26

 

Natural language interface

E2E Processing, Inc.

 

4

 

4/27/20

 

11/17/23

 

7/18/24

 

Manufacturing schedules using adaptive learning

Hybrid Sequence IP, Inc.

 

1

 

7/7/17

 

7/7/17

 

7/7/17

 

Asynchronous communications

Loopback Technologies, Inc.

 

5

 

7/9/17

 

5/11/19

 

8/27/22

 

Automotive

Magnus IP

 

50

 

1/27/23

 

9/27/25

 

12/9/31

 

Network Management/Connected Home Devices

Medtech Group Acquisition Corp.

 

54

 

Expired

 

7/30/18

 

8/9/29

 

Medical technology

Motheye Technologies

 

1

 

6/7/21

 

6/7/21

 

6/7/21

 

Optical Networking

Munitech IP

 

150

 

9/24/17

 

6/26/21

 

4/5/27

 

W-CDMA and GSM cellular technology

Sampo IP, LLC

 

3

 

3/13/18

 

12/1/19

 

11/16/23

 

Centrifugal communications

Signal IP, Inc.

 

3

 

2/5/17

 

8/28/20

 

8/6/22

 

Automotive

TLI Communications, LLC

 

6

 

6/17/17

 

6/17/17

 

6/17/17

 

Telecommunications

Traverse Technologies

 

19

 

2/27/22

 

2/25/29

 

7/29/33

 

Li-Ion Battery/High Capacity Electrodes

Vantage Point Technology, Inc.

 

7

 

2/19/17

 

11/12/17

 

3/2/19

 

Computer networking and operations

 

 

 

 

Median

 

08/28/20