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Intangible Assets

12 Months Ended

Dec. 31, 2021

NOTE 6 – INTANGIBLE ASSETS

Intangible assets include patents purchased and are recorded at their acquisition cost. Intangible assets consisted of the following:

							Weighted average amortization
	December 31,						period
	2021			2020			(years)
Patents	$	5,617,117		$	5,690,000			4.5
Less: net monetization obligations		-			(509,811	)
Imputed interest		-			(713,073	)
Disposal		(4,362,117	)
Subtotal		1,255,000			4,467,116
Less: accumulated amortization		(715,519	)		(2,266,157	)
Net value of intangible assets	$	539,481		$	2,200,959			11.02

Intangible assets are comprised of patents with estimated useful lives. The intangible assets at December 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 agreement with IV 34/37, as amended on December 31, 2021, pursuant to which CXT has an obligation to pay 65% 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 depreciated 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 depreciated 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 agreement with IV 113/108, as amended on December 31, 2021 to an obligation to pay 65% 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 depreciated 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 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.

	●	patents (which were fully depreciated at the date of acquisition) acquired in May 2021 for a purchase price of $250,000.
	●	patents acquired in October 2021 from AI for a purchase price of $550,000 pursuant to which the Company retains an amount equal to the purchase price plus any fees incurred out of net proceeds, as defined in the agreement, after which AI is entitled to a percentage of further net proceeds realized, if any; the useful lives of the patents, at the date of acquisition, was approximately 11 years.

The Company amortizes the costs of patents over their estimated useful lives on a straight-line basis. Costs incurred to acquire the patents, including legal costs, are also capitalized and amortized on a straight-line basis over the life of the associated patent. Amortization of patents is included as a selling, general and administrative expense as reflected in the accompanying consolidated statements of operations.

The Company assesses intangible assets for any impairment to the carrying values. For the year ended December 31, 2021, the Company recorded non-cash impairment charges of approximately $1,652,00 to write down finite lived intangible assets in the Power Management/Bus Controller, CXT and M-RED portfolios.

Amortization expense for patents comprised $1,159,865 and $648,395 for the years ended December 31, 2021 and 2020, respectively. Future amortization of patents is as follows:

Year ended December 31,
2022	$	49,899
2023		49,899
2024		49,899
2025		49,899
2026 and thereafter		339,885
Total	$	539,481

At December 31, 2020, the Company had debt due to Intelligent Partners pursuant to the securities purchase agreement dated October 22, 2015 between the Company and United Wireless, and the Company was to pay 15% of the net monetization proceeds from the patents acquired in October 2015 to Intelligent Partners, as transferee of United Wireless. See the caption “Loan Payable Related Party” in Note 3 in connection with the extinguishment and restructuring of the Company’s obligations to Intelligent Partners.