Quest Patent Research Corp (QPRC)

[CorporateDick]

As shown in the accompanying financial statements, the Company has an accumulated deficit of approximately $20,974,000 and negative working capital of approximately $7,520,000 as of September 30, 2020. Because of the Company’s continuing losses, its working capital deficiency, the uncertainty of future revenue, the Company’s obligations to Intellectual Ventures and Intelligent Partners, as transferee of United Wireless, the Company’s low stock price and the absence of a trading market in its common stock, the ability of the Company to raise funds in equity market or from lenders is severely impaired. These conditions, together with the effects of the COVID-19 pandemic and the steps taken by the states to slow the spread of the virus and its effect on its business raise substantial doubt as to the Company’s ability to continue as a going concern. Although the Company may seek to raise funds and to obtain third party funding for litigation to enforce its intellectual property rights, the availability of such funds, particularly in view of the COVID-19 pandemic, is uncertain. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. The Company is in default on payment of principal and interest on its convertible notes due September 30, 2020 in the principal amount of $4,672,812. Accrued interest on the notes was $117,780. The Company has obtained a standstill agreement of the noteholder until November 13, 2020. In connection with the standstill agreement, the Company paid the $117,780 interest accrued at September 30, 2020, and, in connection with an extension of the standstill to November 13, 2020, the Company paid additional interest through the standstill period of $20,000. Although the Company is in negotiations with the noteholder with respect to a restructure of the note and other payment agreements between the noteholder and the Company, it can give no assurance that the negotiations will result in a revised agreement. The failure of the Company to negotiate an acceptable restructure of the agreement could materially and adversely affect the ability of the Company to continue in business, and it may be necessary for the Company to seek protection under the Bankruptcy Act.