Investment in Affiliated Companies

12 Months Ended

Dec. 31, 2022

Investments in and Advances to Affiliates [Abstract]

Investment in Affiliated Companies

4.        Investment in Affiliated Companies

Holocom, Inc.

In February 2007, we invested an aggregate of $370,000 in Holocom in exchange for 2,100,000 shares of Series A Preferred Stock, which represented an approximate 46% ownership interest in Holocom, on an as-converted basis. Pursuant to the articles of incorporation of Holocom, the Series A Preferred Stock is convertible at our option into shares of Holocom’s common stock on a one-to-one basis or is redeemable at any time after May 31, 2007 at a redemption price equal to $0.40 per share or $840,000 in aggregate, provided Holocom has sufficient funding to redeem our shares of Series A Preferred Stock.

On July 6, 2022, we entered into the Redemption Agreement with Holocom, pursuant to which we requested full redemption of our Series A Preferred Stock. Pursuant to the Redemption Agreement, we received cash proceeds in the amount of $336,000 upon the redemption of 840,000 shares of Series A Preferred Stock, which amount is included in other income in the accompanying consolidated statements of operations for the year ended December 31, 2022. The remaining shares of Series A Preferred Stock are expected to be redeemed over a period of thirty (30) months beginning August 1, 2022 based on the following redemption schedule: 

Period	Shares of Series A Preferred Stock to be Redeemed each Month	Monthly Redemption Proceeds to the Company
Months 1-12	35,000	$14,000
Months 13-24	43,750	$17,500
Months 25-30	52,500	$21,000

We will recognize the initial and monthly redemption of shares of Series A Preferred Stock using a cash basis of accounting rather than an accrual method as we are unable to assert that collection of amounts due under the redemption agreement is probable, regardless of the terms of the Redemption Agreement. As a result, the remaining redemption amount receivable has been fully reserved and other income will be recognized once payments are received. We will remove the cash basis of accounting designation at such time we believe collection from Holocom is probable based upon sufficient liquidity or a demonstrated payment history.

As of December 31, 2022, of the 175,000 shares of Series A Preferred Stock to be redeemed under the aforementioned redemption schedule covering the five months ended December 31, 2022, Holocom has redeemed 17,500 shares of Series A Preferred Stock in exchange for $7,000. Any amounts not paid within fifteen (15) days of its respective due date shall accrue interest at a rate of 8% per annum until fully paid and retroactively adjusted to 12% per annum from its original due date for amounts not paid within 90 days of its original due date.

Notwithstanding the foregoing, Holocom also agreed to expedite the redemption of the Series A Preferred Stock in the event that Holocom has excess cash on hand, which amount shall be calculated at each calendar month end period date (“Month End Date”), equal to an amount of (i) total cash on hand of Holocom and Scripps Ventures, Inc. (a related party entity of Holocom) (ii) less $200,000 (“Excess Capital”). Holocom agreed to redeem a number of shares of Series A Preferred Stock equal to the amount of Excess Capital divided by $0.40 per share no later than ten (10) business days following the Month End Date. There were no additional redemptions of Series A Preferred Stock during the year ended December 31, 2022.

As of December 31, 2022 and 2021, our investment in Holocom was valued at $0 based on various indicators of impairment, including Holocom’s inability to meet its business plan and raise sufficient capital, in addition to the general economic environment.

Phoenix Digital Solutions LLC (“PDS”)

PDS was previously formed by PTSC to pursue licensing of its intellectual property. We owned 50% of the membership interests of PDS, representing $27,637 as of December 31, 2020. On September 29, 2020, the members of PDS agreed to wind up and dissolve PDS as the underlying intellectual property was deemed no longer enforceable. In January 2021, the remaining cash on hand of $55,274 was equally distributed to its two members according to the dissolution plan.