1.	Please provide the duration of your patents or patent portfolios in future filings. Alternatively, provide your analysis of why this information is not required.

 

 

 

2.

We note that two customers accounted for approximately 55% of your revenue for the year ended December 31, 2013. In this section and in a prominently-positioned risk factor in future filings, please ensure that you discuss your past revenue concentration and highlight that a small number of customers have historically accounted for a large portion of your revenues.

 

3.

Please tell us what consideration you have given to providing a description of the material terms of any agreement with IP Navigation Group LLC, a key supplier of your patent opportunities, including any revenue-sharing arrangements. Further, tell us what consideration you have given to filing the agreements as exhibits pursuant to Item 601 (b)(10) of Regulation S-K. In this respect, tell us whether you believe these are related party agreements given the relationship between IP Navigation Group LLC, which was founded by Erich Spangenberg, and TechDev Holdings, LLC, a principal shareholder whose shares are beneficially held by Audrey Spangenberg. For additional guidance, please consider Question 105.05 of our Exchange Act Sections 13(d) and 13(g) and Regulation 13D-G Beneficial Ownership Reporting Compliance and Disclosure Interpretations.

 

 

 

 

4.	In future filings please ensure that you discuss all of the material terms of your patent acquisition agreements including, but not limited to, a discussion of the types of patents acquired and the types and amounts of consideration remitted.

 

 

 

 

 

5.

Please briefly describe the nature of the payments from your customers that contributed approximately 55% of your revenue. To provide context concerning the activities that resulted in this portion of your revenue, explain in each instance the extent to which the revenue was from recurring or non-recurring licensing fees, exclusive or non-exclusive licenses, litigation settlement payments, sales of technology or other transactions that you concisely summarize. Additionally, please provide your analysis of whether agreements related to these transactions are required to be filed by Item 601(b)(10) of Regulation S-K. Lastly, please include this type of discussion in future filings.

 

 

The Company has added the following disclosure in the Results of Operations section on page 25 of the Amended 10-K:

 

“As of December 31, 2013, two customers accounted for 100% of the Company's net accounts receivable.  Revenues from two customers accounted for approximately 55% of the Company's revenue for the year ended December 31, 2013.  There were no revenues in 2012.  The Company derived these revenues from the one-time issuance of non-recurring, non-exclusive, non-assignable licenses to two different entities and their affiliates for certain of the Company’s patents.  While the Company has a growing portfolio of patents, at this time, the Company expects that a significant portion of its future revenues will be based on one-time grants of similar non-recurring, non-exclusive, non-assignable licenses to a relatively small number of entities and their affiliates.  Further, with the expected small number of firms with which the Company enters into license agreements, and the amount and timing of such license agreements, the Company  also expects that its  revenues may be highly variable from one period to the next.”

 

The Company enters into confidential settlement agreements with third party defendants. Accordingly, the Company believes that it is not industry norm to publicly file such agreements in its public filings and that the public disclosure of such settlement agreements would adversely affect the Company and its shareholders since third party defendants would be reluctant to settle with the Company if the terms of such settlement agreements were publicly disclosed.

 

6.

Please tell us what consideration you have given to filing or incorporating by reference your patent purchase agreements with TeleCommunication Systems, Inc. and Intergraph Corporation from whom you acquired patent portfolios in September 2013. For additional guidance, refer to Question 146.02 of our Regulation S-K Compliance and Disclosure Interpretations.

 

 

 

7.	Please tell us who served as your controller or principal accounting officer at the time of the filing. Be advised that any person who occupies more than one position should indicate each capacity in which he or she signs. See General Instruction D.2 to Form 10-K.

 

 

 

8.

We note that the investor presentation dated January 2014 filed in a Form 8-K on January 22, 2014 states that you "believe that over the next 3 to 5 years [y]our current patent asset base may generate aggregate revenue in excess of $100 million." Please tell us the basis for your statement, whether you have independent support for your projection, and the underlying assumptions. Tell us also the uncertainties and limitations of your projection and how you intend to update investors on the progress of your goal.

 

 

 

1)	Understand the claimed invention that the patent(s) cover.

 

2)	Find evidence of use of the claimed invention by third party products.

 

3)	Analyze the use of the Company’s claimed invention within the potential infringing products.

 

4)	Analyze and document the value of the infringing products to the companies that make, use, sell or offer for sale the infringing products.

 

5)	Calculate the apportioned value of the Company’s invention to the overall value of the infringing product to the market and the companies that are making, using, selling or offering for sale the infringing product.

 

6)	Calculate a reasonable royalty rate that would have likely been negotiated at the time that infringement commenced between the patent owner and infringing companies.

 

7)	Model the potential licensing revenue for each infringing company over the period of the remaining life of the infringed patent as well as a six-year look back from potential date of notice.

 

8)	Provide appropriate discounts based on timing of potential settlements with universe of infringing companies, as well as potential work-around product that could be used by infringing companies in lieu of the current infringing products.

 

9)	For each potential infringing company, the Company models the revenue across a period of time relating to the expected litigation time frame (usually 2-5 years).

 

10)	Each subsidiary is then rolled into a comprehensive set of integrated financial projections.

 

 

 

 

 

 

 

Yours truly,