QPRC's Patent Licensing Dries Up, Net Loss Widens 155%

TL;DR

**QPRC is burning cash with no revenue, and its patent acquisition spree looks like a desperate gamble that's failing.**

AI Summary

QUEST PATENT RESEARCH CORP (QPRC) reported a significant decline in revenue and a widening net loss for the three and six months ended June 30, 2025. The company generated no patent licensing fees in Q2 2025, a sharp drop from $850,000 in Q2 2024 and $1,895,000 for the six months ended June 30, 2024. This led to a gross loss of $4,789 in Q2 2025, compared to a gross profit of $463,369 in the prior year. The net loss for Q2 2025 widened to $1,139,791, an increase of 155% from a net loss of $447,110 in Q2 2024. For the six-month period, the net loss grew to $1,966,176 from $878,552 in the same period last year. Total assets increased substantially to $11,684,771 as of June 30, 2025, from $3,540,535 at December 31, 2024, primarily due to a $9,000,000 purchase of patents. This patent acquisition was largely funded by a $9,750,000 increase in funding liability, which surged to $17,384,381 from $7,634,381. Cash and cash equivalents decreased by $227,364 to $254,659 during the six months ended June 30, 2025.

Why It Matters

This filing reveals a critical downturn for QPRC, with zero patent licensing revenue in the latest quarter, signaling a potential failure in their core intellectual property monetization strategy. For investors, this raises serious questions about the company's ability to generate future income and service its rapidly increasing liabilities, including a funding liability that nearly doubled to $17.38 million. Employees may face job insecurity if the company cannot reverse its financial trajectory. Customers, primarily licensees, might see reduced enforcement activity if QPRC's financial woes continue. In the competitive landscape of patent monetization, QPRC's struggles could allow more financially stable competitors to gain market share.

Risk Assessment

Risk Level: high — The company reported zero patent licensing fees for the three and six months ended June 30, 2025, a drastic decline from $850,000 and $1,895,000 respectively in the prior year periods. This complete lack of revenue, coupled with a net loss of $1,139,791 in Q2 2025 and a total stockholders' deficit of $10,667,667, indicates severe operational and financial distress. The significant increase in funding liability to $17,384,381, used to acquire $9,000,000 in patents, without corresponding revenue generation, exacerbates the risk.

Analyst Insight

Investors should avoid QPRC given the complete absence of revenue from its core business and the substantial increase in liabilities. The company's strategy of acquiring more patents while failing to monetize existing ones appears unsustainable. Current shareholders should consider divesting, as the financial outlook is extremely challenging without a clear path to revenue generation.

Financial Highlights

debt To Equity

N/A

revenue

$0

operating Margin

N/A

total Assets

$11,684,771

total Debt

$22,352,438

net Income

$(1,139,791)

eps

N/A

gross Margin

N/A

cash Position

$254,659

revenue Growth

-100.0%

Revenue Breakdown

Key Numbers

• $0 — Patent Licensing Fees (for three and six months ended June 30, 2025, down from $850,000 and $1,895,000 respectively in prior year)
• $(1,139,791) — Net Loss (for three months ended June 30, 2025, widened from $(447,110) in Q2 2024)
• $(1,966,176) — Net Loss (for six months ended June 30, 2025, widened from $(878,552) in prior year)
• $11,684,771 — Total Assets (as of June 30, 2025, up from $3,540,535 at December 31, 2024)
• $17,384,381 — Funding Liability (as of June 30, 2025, up from $7,634,381 at December 31, 2024)
• $9,000,000 — Purchase of Patents (during the six months ended June 30, 2025)
• $254,659 — Cash and Cash Equivalents (as of June 30, 2025, down from $482,023 at December 31, 2024)
• $(10,667,667) — Total Stockholders' Deficit (as of June 30, 2025, worsened from $(8,701,491) at December 31, 2024)
• 5,331,973 — Shares Outstanding (as of August 14, 2025)

Key Players & Entities

• QUEST PATENT RESEARCH CORPORATION (company) — registrant
• SEC (regulator) — filing oversight
• $850,000 (dollar_amount) — patent licensing fees in Q2 2024
• $1,895,000 (dollar_amount) — patent licensing fees for six months ended June 30, 2024
• $1,139,791 (dollar_amount) — net loss for Q2 2025
• $447,110 (dollar_amount) — net loss for Q2 2024
• $1,966,176 (dollar_amount) — net loss for six months ended June 30, 2025
• $9,000,000 (dollar_amount) — purchase of patents in six months ended June 30, 2025
• $9,750,000 (dollar_amount) — proceeds from funding liability in six months ended June 30, 2025
• $17,384,381 (dollar_amount) — funding liability as of June 30, 2025

FAQ

Risk Factors

• Deteriorating Revenue and Widening Losses [high — financial]: The company experienced a complete cessation of patent licensing fees in Q2 2025, leading to a gross loss of $4,789 compared to a gross profit of $463,369 in the prior year. The net loss for Q2 2025 widened by 155% to $1,139,791 from $447,110 in Q2 2024.
• Increased Debt Burden [high — financial]: The company's funding liability surged by $9,750,000 to $17,384,381 as of June 30, 2025, to finance a $9,000,000 patent acquisition. This significant increase in liabilities, coupled with declining revenue, raises concerns about the company's ability to service its debt.
• Declining Cash Reserves [medium — financial]: Cash and cash equivalents decreased by $227,364 to $254,659 during the first six months of 2025. This dwindling cash position, amidst increasing operational expenses and debt, poses a liquidity risk.
• Dependence on Patent Monetization [high — operational]: The company's business model is heavily reliant on patent licensing fees. The complete absence of such revenue in the latest quarter highlights the volatility and risk associated with this revenue stream.
• Negative Stockholders' Deficit [medium — financial]: The total stockholders' deficit worsened to $10,667,667 as of June 30, 2025, from $8,701,491 at December 31, 2024. This indicates a substantial negative equity position.

Industry Context

The intellectual property monetization industry, particularly patent licensing, is highly dependent on the strength and enforceability of patents, as well as the ability to negotiate favorable licensing agreements. Companies in this sector face risks related to patent validity challenges, market adoption of licensed technologies, and the competitive landscape of patent holders and potential licensees. The current environment for patent licensing can be volatile, influenced by economic conditions and evolving legal frameworks.

Regulatory Implications

As a company operating in the financial reporting space, QPRC is subject to SEC regulations and GAAP. Any misrepresentation or failure to disclose material information could lead to regulatory scrutiny and penalties. The significant increase in liabilities and the drastic decline in revenue may attract attention from regulators regarding the company's financial health and disclosure practices.

What Investors Should Do

1. Review the terms and covenants of the increased funding liability ($17,384,381) to understand repayment obligations and potential risks.
2. Investigate the strategy behind the $9,000,000 patent acquisition and the expected return on investment, given the current revenue collapse.
3. Assess the company's cash burn rate and runway, considering the declining cash reserves ($254,659) and widening net losses.
4. Seek clarification on the sustainability of the business model in the absence of patent licensing revenue and explore potential alternative revenue streams.
5. Monitor future filings for any signs of revenue recovery or changes in the company's ability to manage its substantial debt.

Key Dates

• 2025-06-30: End of Q2 2025 — Reported zero patent licensing fees, a gross loss of $4,789, and a net loss of $1,139,791, indicating a severe downturn in revenue generation.
• 2025-06-30: Balance Sheet Date — Total assets increased to $11,684,771, primarily due to a $9,000,000 patent purchase, while funding liabilities rose to $17,384,381.
• 2024-06-30: End of Q2 2024 — Generated $850,000 in patent licensing fees and reported a net loss of $447,110, providing a stark contrast to the current period's performance.
• 2024-12-31: Year-End Balance Sheet Date — Total assets were $3,540,535 and funding liabilities were $7,634,381, showing significant changes in the company's financial structure in the subsequent six months.

Glossary

Patent licensing fees

Revenue generated from granting others the right to use a company's patented technology or intellectual property. (This is the primary revenue source for QPRC, and its complete absence in the current quarter is a critical indicator of financial distress.)

Gross profit (loss)

Revenue minus the cost of revenue. A loss indicates that the direct costs of generating revenue exceeded the revenue itself. (QPRC reported a gross loss of $4,789 in Q2 2025, directly resulting from the lack of licensing revenue to cover litigation and licensing expenses.)

Funding liability

An obligation to provide funds or services, often related to financing arrangements or agreements where future funding is committed. (This liability significantly increased to $17,384,381, indicating substantial new financing or debt taken on, largely to fund patent acquisitions.)

Stockholders' deficit

The total amount by which liabilities exceed assets attributable to stockholders; essentially negative equity. (QPRC has a substantial and growing stockholders' deficit of $10,667,667, signaling a precarious financial position.)

Intangible Assets (Patents)

Non-physical assets that have value, such as patents, copyrights, and trademarks. In this case, patents are acquired and amortized. (The company significantly increased its investment in patents, acquiring $9,000,000 worth, which now form the largest component of its assets.)

Year-Over-Year Comparison

Compared to the prior year's filing, Quest Patent Research Corp. has seen a dramatic deterioration in its financial performance. Patent licensing fees have plummeted from $850,000 in Q2 2024 to $0 in Q2 2025, resulting in a shift from a gross profit of $463,369 to a gross loss of $4,789. This revenue collapse has significantly widened the net loss from $447,110 to $1,139,791 for the quarter. While total assets have surged due to a large patent acquisition, this was financed by a substantial increase in funding liabilities, leading to a worsening stockholders' deficit and a concerning decline in cash reserves.

Filing Documents

• ea0252887-10q_quest.htm (10-Q) — 493KB
• ea025288701ex31-1_quest.htm (EX-31.1) — 10KB
• ea025288701ex32-1_quest.htm (EX-32.1) — 4KB
• 0001213900-25-076734.txt ( ) — 3813KB
• qprc-20250630.xsd (EX-101.SCH) — 38KB
• qprc-20250630_cal.xml (EX-101.CAL) — 27KB
• qprc-20250630_def.xml (EX-101.DEF) — 186KB
• qprc-20250630_lab.xml (EX-101.LAB) — 346KB
• qprc-20250630_pre.xml (EX-101.PRE) — 197KB
• ea0252887-10q_quest_htm.xml (XML) — 353KB

– FINANCIAL INFORMATION

PART I – FINANCIAL INFORMATION Item 1.

Financial Statements

Financial Statements. 1 Condensed Consolidated Balance Sheets as of June 30, 2025 (Unaudited) and December 31, 2024 1 Unaudited Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2025 and 2024 2 Unaudited Condensed Consolidated Statements of Changes in Stockholders' Deficit for the three and six months ended June 30, 2025 and 2024 3 Unaudited Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2025 and 2024 4 Notes to Unaudited Condensed Consolidated Financial Statements. 5 Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations. 17 Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk. 24 Item 4.

Controls and Procedures

Controls and Procedures. 24

– OTHER INFORMATION

PART II – OTHER INFORMATION Item 5. Other Information 25 Item 6. Exhibits 25

FORWARD-LOOKING STATEMENTS

FORWARD-LOOKING STATEMENTS This report contains forward-looking statements regarding our business, financial condition, results of operations and prospects. Words such as "expects," "anticipates," "intends," "plans," "believes," "seeks," "estimates" and similar expressions or variations of such words are intended to identify forward-looking statements, but are not deemed to represent an all-inclusive means of identifying forward-looking statements as denoted in this report. Additionally, statements concerning future matters are forward-looking Although forward-looking statements in this report reflect the good faith judgment of our management, such statements can only be based on facts and factors currently known by us. Consequently, forward-looking statements are inherently subject to risks and uncertainties and actual results and outcomes may differ materially from the results and outcomes discussed in or anticipated by the forward-looking statements. Factors that could cause or contribute to such differences in results and outcomes include, without limitation, those specifically addressed under the headings "Risks Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our report on Form 10-K for the year ended December 31, 2024, in "Management's Discussion and Analysis of Financial Condition and Results of Operations" in this Form 10-Q and in other reports that we file with the SEC. You are urged not to place undue reliance on these forward-looking statements, which speak only as of the date of this report. We file reports with the SEC. The SEC maintains a website (www.sec.gov) that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC, including us. You can also read and copy any materials we file with the SEC at the SEC's Public Reference Room at 100 F Street, NE, Washington, DC 20549. You can obtain additional information

– FINANCIAL INFORMATION

PART I – FINANCIAL INFORMATION

Financial Statements

Item 1. Financial Statements QUEST PATENT RESEARCH CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS June 30, 2025 December 31, 2024 (unaudited) ASSETS Current assets Cash and cash equivalents $ 254,659 $ 482,023 Accounts receivable, net of allowance for credit losses of $ 0 and $ 0 , respectively 8,251 8,251 Other current assets 15,869 12,011 Total current assets 278,779 502,285 Patents, net of accumulated amortization of $ 3,681,008 and $ 3,048,750 , respectively 11,405,992 3,038,250 Total assets $ 11,684,771 $ 3,540,535 LIABILITIES AND STOCKHOLDERS' DEFICIT Current liabilities Accounts payable and accrued liabilities ($ 16,454 and $ 11,041 due to related parties, respectively) $ 206,096 $ 156,033 Loans payable 138,000 138,000 Funding liability 17,384,381 7,634,381 Loan payable - related party 2,796,500 2,796,500 Warrant liability 90,951 117,130 Accrued interest 1,532,845 1,196,317 Total current liabilities 22,148,773 12,038,361 Non-current liabilities Loan payable – SBA 150,000 150,000 Purchase price of patents 53,665 53,665 Total liabilities $ 22,352,438 $ 12,242,026 Commitments and contingencies (Note 9) Stockholders' deficit: Preferred stock, par value $ 0.00003 per share - authorized 10,000,000 shares - no shares issued and outstanding — — Common stock, par value $ 0.00003 per share; authorized 30,000,000 at June 30, 2025 and December 31, 2024; 5,331,973 shares issued and outstanding at June 30, 2025 and December 31, 2024 160 160 Additional paid-in capital 17,680,793 17,680,793 Accumulated deficit ( 28,348,848 ) ( 26,382,672 ) Total Quest Patent Research Corporation stockholders' deficit ( 10,667,895 ) ( 8,701,719 ) Non-controlling interest in subsidiary 228 228 Total stockholders' deficit ( 10,667,667 ) ( 8,701,491 ) Total liabilities and stockholders' deficit $ 11,684,771 $ 3,540,535 See the accompanying notes to the unau

FINANCIAL STATEMENTS

FINANCIAL STATEMENTS 1. DESCRIPTION OF BUSINESS The Company is a Delaware corporation, incorporated on July 17, 1987 and has been engaged in the intellectual property monetization business since 2008. As used herein, "we", "us", "our", the "Company" refer to Quest Patent Research Corporation and its wholly and majority-owned operating subsidiaries unless the context indicates otherwise. All intellectual property acquisition, development, licensing and enforcement activities are conducted by the Company's wholly and majority-owned and controlled operating subsidiaries. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the U.S. (GAAP) for interim financial information and with the instructions to Form 10-Q and Rule 8-03 of Regulation S-X. Accordingly, these interim financial statements do not include all of the information and notes required by GAAP for complete financial statements. All adjustments (consisting of normal recurring items) necessary to present fairly the Company's consolidated financial position have been included. These interim financial report on Form 10-K for the year ended December 31, 2024. Operating results for the interim periods presented herein are not necessarily indicative of the results that may be expected for any other interim period or for the entire year. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Principles of Consolidation and Financial Statement Presentation The condensed consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles ("US GAAP") and present the condensed consolidated

financial statements of the Company and its wholly owned and majority owned subsidiaries as of June 30, 2025

financial statements of the Company and its wholly owned and majority owned subsidiaries as of June 30, 2025. The condensed consolidated financial statements include the Company and 24 subsidiaries of which seven are active and 17 are inactive. All of the active subsidiaries are wholly owned. Significant intercompany transactions and balances have been eliminated in consolidation. The non-controlling interests are presented in the unaudited condensed consolidated balance sheets, separately from equity attributable to the stockholders of the Company. During the three and six months ended June 30, 2025 and 2024, none of the Company's net loss was attributable to non-controlling interests. Use of Estimates In preparing financial statements in conformity with accounting principles generally accepted in the United States of America, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and revenue and expenses during the reporting period. Actual results could differ from those estimates. Cash and Cash Equivalents The Company considers all highly liquid investments with original maturity dates of three months or less when purchased, to be cash equivalents. The Company had no cash equivalents as of June 30, 2025 and December 31, 2024. 5 Accounts Receivable Accounts receivable, which generally relate to licensed sales, are presented on the balance sheet net of estimated uncollectible amounts. The Company records an allowance for estimated uncollectible accounts in an amount approximating anticipated losses. Individual uncollectible accounts are written off against the allowance when collection of the individual accounts appears doubtful. The Company did not record an allowance for credit losses at June 30, 2025 and December 31, 2024. Intangible Assets Intangible assets consist of patents which are amorti

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