UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended ~~March~~June 3130, 2018

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______________ to _______________

Commission file number: 000-54638

WALKER INNOVATION INC.

(Exact name of registrant as specified in its charter)

Delaware		30-0342273
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)

Two High Ridge Park, Stamford, Connecticut		06905
(Address of Principal Executive Offices)		(Zip Code)

(203) 263-9362

(Registrant’s telephone number, including area code)

(Former name and former address, if changed since last report)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definitions of “large accelerated filer”, “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐		Accelerated filer	☐
Non-accelerated filer	☐	(Do not check if a smaller reporting company)	Smaller reporting company	☒
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act): Yes ☐ ☒ No ☒☐

As of ~~May~~August 46, 2018, there were 20,094,314 shares of the issuer’s common stock outstanding.

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WALKER INNOVATION INC. AND SUBSIDIARIES

Form 10-Q

Table of Contents

	Page
Part I. Financial Information
Item 1. Financial Statements
Condensed Consolidated Balance Sheets as of March 31, 2018 (unaudited) and December 31, 2017	3
Unaudited Condensed Consolidated Statement of Net Assets as of June 30, 2018 (Liquidation Basis)	3
Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2018 and 2017 (unaudited)	4
Unaudited Condensed Consolidated Statement of Changes in Net Assets from June 28, 2018 to June 30, 2018 (Liquidation Basis)	4
Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2018 and 2017 (unaudited)	5
Consolidated Balance Sheet December 31, 2017 (Going Concern Basis)	5
Notes to Condensed Consolidated Financial Statements (unaudited)	6
Unaudited Condensed Consolidated Statements of Operations for the Three Months Ended June 30, 2018 and 2017 (Going Concern Basis)	6
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	12
Unaudited Condensed Consolidated Statements of Operations for the Six Months Ended June 30, 2018 and 2017 (Going Concern Basis)	7
Item 3. Quantitative and Qualitative Disclosures about Market Risk	15
Unaudited Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2018 and 2017 (Going Concern Basis)	8
Item 4. Controls and Procedures	15
Notes to Condensed Consolidated Financial Statements (unaudited)	9
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	14
Item 3. Quantitative and Qualitative Disclosures about Market Risk	18
Item 4. Controls and Procedures	18
Part II. Other Information
Item 1. Legal Proceedings	1618
Item 1A. Risk Factors	1619
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	1619
Item 3. Defaults upon Senior Securities	1619
Item 4. Mine Safety Disclosures	1619
Item 5. Other Information	1619
Item 6. Exhibits	1719
Signatures	1820

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WALKER INNOVATION INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED ~~BALANCE~~STATEMENT ~~SHEETS~~OF NET ASSETS

(inLiquidation ~~thousands except share and per share amounts~~Basis)

	March 31, 2018			December 31, 2017
ASSETS	(Unaudited)
Current Assets:
Cash and cash equivalents	$	3,313		$	24,041
Short-term investment		20,000			25
Prepaid expenses and other current assets		92			73
Total current assets		23,405			24,139
TOTAL ASSETS	$	23,405		$	24,139
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable	$	66		$	121
Accrued expenses		134			229
Total current liabilities		200			350
TOTAL LIABILITIES		200			350
COMMITMENTS AND CONTINGENCIES (NOTE 7)
STOCKHOLDERS' EQUITY
Preferred stock, $0.001 par value, 15,000,000 shares authorized		--			--
Series B Convertible Preferred stock, $0.001 par value, 14,999,000 shares designated, issued and outstanding, as of March 31, 2018 and December 31, 2017 respectively		15			15
Common stock, $0.001 par value, 100,000,000 shares authorized; 21,184,744 shares issued and 20,094,314 shares outstanding as of March 31, 2018 and December 31, 2017 respectively		21			21
Treasury stock, 1,090,430 shares, at cost		(1,122	)		(1,122	)
Additional paid-in capital		47,381			47,350
Accumulated deficit		(23,090	)		(22,475	)
TOTAL STOCKHOLDERS' EQUITY		23,205			23,789
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	23,405		$	24,139

(in thousands)

	June 30, 2018
	(Unaudited)
Cash and cash equivalents	$	2,764
Short-term investment		20,010
Accounts payable		(54	)
Accrued expenses		(42	)
Liability for estimated costs during liquidation		(1,027	)
Liability for compensation and related benefits resulting from the liquidation		(886	)
Liability for in the money options outstanding resulting from liquidation		(550	)
Commitments and contingencies (Note 6)		--
Net Assets in Liquidation ⁽¹⁾	$	20,215

(1)

The net assets in liquidation amount may not equal the aggregate amount of cash available to stockholders for distribution in liquidation. Certain amounts reflected above are estimates and the amounts that are currently reserved may be more or less than the amounts ultimately required to be paid in cash.

The accompanying unaudited notes are an integral part of these condensed consolidated financial statements.

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WALKER INNOVATION INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED ~~STATEMENTS~~STATEMENT OF ~~OPERATIONS~~CHANGES IN NET ASSETS

(Liquidation Basis)

(in thousands except per share amounts)

(Unaudited)

Stockholders’ equity as of June 28, 2018 (Going Concern Basis)	$	22,751
Effects of adopting liquidation basis of accounting:
Change in net realizable value of prepaid assets		(73	)
Liability for in the money options outstanding resulting from liquidation		(550	)
Liability for compensation and related benefits resulting from the liquidation		(886	)
Liability for estimated costs during liquidation		(1,027	)
Total effects of adopting liquidation basis of accounting at June 30, 2018	$	20,215

	Three Months Ended March 31,
	2018			2017
Revenues:
Licensing fees	$	--		$	--
Total revenues		--			--
Cost of Revenue:
Legal and consulting contingency fees		--			--
Total Cost of Revenue		--			--
Net revenue		--			--
Operating expenses:
Other legal and consulting fees		2			100
Patent prosecution and maintenance fees		14			33
Compensation and benefits (includes non-cash stock based compensation of $32 and $248 for the three months ended March 31, 2018 and 2017, respectively)		301			679
Professional fees		216			278
General and administrative		123			194
Total operating expenses		656			1,284
Operating net loss		(656	)		(1,284	)
Other income
Other income		--			120
Interest income		41			4
Net loss	$	(615	)	$	(1,160	)
Net loss per common share:
Basic	$	(0.03	)	$	(0.06	)
Diluted	$	(0.03	)	$	(0.06	)
Weighted average common shares outstanding:
Basic		20,094			20,742
Diluted		20,094			20,742

The accompanying unaudited notes are an integral part of these condensed consolidated financial statements.

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WALKER INNOVATION INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED ~~STATEMENTS~~BALANCE ~~OF CASH FLOWS~~SHEETS

(Going Concern Basis)

(in thousands except share and per share amounts)

(Unaudited)

	December 31, 2017
ASSETS
Current Assets:
Cash and cash equivalents	$	24,041
Short-term investment		25
Prepaid expenses and other current assets		73
Total current assets		24,139

TOTAL ASSETS	$	24,139

LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable	$	121
Accrued expenses		229
Total current liabilities		350

TOTAL LIABILITIES		350

COMMITMENTS AND CONTINGENCIES (NOTE 6)

STOCKHOLDERS' EQUITY

Preferred stock, $0.001 par value, 15,000,000 shares authorized		--
Series B Convertible Preferred stock, $0.001 par value, 14,999,000 shares designated, issued and outstanding, as of December 31, 2017 respectively		15
Common stock, $0.001 par value, 100,000,000 shares authorized; 21,184,744 shares issued and 20,094,314 shares outstanding		21
Treasury stock, 1,090,430 shares, at cost		(1,122	)
Additional paid-in capital		47,350
Accumulated deficit		(22,475	)
TOTAL STOCKHOLDERS' EQUITY		23,789
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	24,139

	Three Months Ended March 31,
	2018			2017
Cash Flows from Operating Activities:
Net loss	$	(615	)	$	(1,160	)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation		32			248
Depreciation and amortization		--			3
Changes in operating assets and liabilities:
Decrease (increase) in:
Other receivable		(21	)		--
Prepaid and other current assets		--			(10	)
Increase (decrease) in:
Accounts payable		(54	)		(66	)
Accrued expenses		(95	)		(33	)
Deferred liabilities		--			(84	)
Net cash used in operating activities		(753	)		(1,102	)
Cash Flows from Investing Activities:
Purchase of short-term investment		(20,000	)		--
Sale of short-term investment		25			--
Net cash used in investing activities		(19,975	)		--
Cash Flows from Financing Activities:
		--			--
Net cash provided by financing activities		--			--
Net change in cash and cash equivalents		(20,728	)		(1,102	)
Cash and cash equivalents:
Beginning	$	24,041		$	10,285
Ending	$	3,313		$	9,183

The accompanying unaudited notes are an integral part of these condensed consolidated financial statements.

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WALKER INNOVATION INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Going Concern Basis)

(in thousands except per share amounts)

	Three Months Ended June 30, 2018			Three Months Ended June 30, 2017
Net revenue		--			--

Operating expenses:
Other legal and consulting fees		--			151
Patent prosecution and maintenance fees		10			36
Compensation and benefits (includes non-cash stock based compensation of $19 and $46 for the three months ended June 30, 2018 and June 30, 2017, respectively)		236			377
Professional fees		209			168
General and administrative		98			132
Total operating expenses		553			864

Operating net loss		(553	)		(864	)

Other income
Change in fair value of investment		--			2,189
Other income		--			109
Interest income		79			7

Net (loss) income	$	(474	)	$	1,441

Net (loss) income per common share:
Basic	$	(0.02	)	$	0.07
Diluted	$	(0.02	)	$	0.04

Weighted average common shares outstanding:
Basic		20,094			20,603
Diluted		20,094			35,743

The accompanying unaudited notes are an integral part of these condensed consolidated financial statements.

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WALKER INNOVATION INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Going Concern Basis)

(in thousands except per share amounts)

	Six Months Ended June 30, 2018			Six Months Ended June 30, 2017
Net revenue		--			--

Operating expenses:
Other legal and consulting fees		2			252
Patent prosecution and maintenance fees		24			68
Compensation and benefits (includes non-cash stock based compensation of $51 and $294 for the six months ended June 30, 2018 and June 30, 2017, respectively)		537			1,056
Professional fees		425			446
General and administrative		220			326
Total operating expenses		1,208			2,148

Operating net loss		(1,208	)		(2,148	)

Other income:
Change in fair value of investment		--			2,189
Other income		--			229
Interest income		120			11

Net (loss) income	$	(1,088	)	$	281

Net (loss) income per common share:
Basic	$	(0.05	)	$	0.01
Diluted	$	(0.05	)	$	0.00

Weighted average common shares outstanding:
Basic		20,094			20,672
Diluted		20,094			35,812

The accompanying unaudited notes are an integral part of these condensed consolidated financial statements.

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WALKER INNOVATION INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Going Concern Basis)

(in thousands except share and per share amounts)

	Six Months Ended
	June 30, 2018			June 30, 2017
Cash Flows from Operating Activities:
Net (loss) income	$	(1,088	)	$	281
Adjustments to reconcile net (loss) income to net cash used in operating activities:
Stock-based compensation		51			294
Depreciation and amortization		--			5
Change in fair value of investment		--			(2,189	)
Changes in operating assets and liabilities:
Other receivable		(17	)		(8	)
Prepaid and other current assets		17			30
Accounts payable		(67	)		(9	)
Accrued expenses		(188	)		(246	)
Deferred liabilities		--			(168	)
Net cash used in operating activities		(1,292	)		(2,010	)

Cash Flows from Investing Activities:
Net change in short-term investment		(19,985	)		--
Proceeds from sale of investments		--			18,362
Commission in connection with sale of investment		--			(543	)
Exercise of Upside warrant		--			(759	)
Net cash (used in) provided by investing activities		(19,985	)		17,060

Net change in cash and cash equivalents		(21,277	)		15,050
Cash and cash equivalents:
Beginning	$	24,041		$	10,285
Ending	$	2,764		$	25,335
Non-cash Investing and Financing Activities
Reclassification as treasury stock of shares received in connection with settlement of related party matter	$	--		$	125

The accompanying unaudited notes are an integral part of these condensed consolidated financial statements.

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WALKER INNOVATION INC.

Unaudited Notes to Condensed Consolidated Financial Statements ~~(Unaudited)~~

~~March~~(Liquidation ~~31, 2018~~Basis)

June 30, 2018

(in thousands except share and per share amounts)

NOTE 1. - THE COMPANY

Walker Innovation Inc., a Delaware corporation (collectively, with its subsidiaries, the “Company” or “Walker Innovation”), seeks to develop and commercialize its unique portfolio of intellectual property assets through licensing and enforcement operations (“Licensing and Enforcement”). In response to challenging developments in the patent licensing and enforcement environment and the cessation of the Company’s custom innovation work, the Company’s current plan of operations includes a carefully focused Licensing and Enforcement program, and an effort to acquire, through merger, share exchange, asset acquisition, plan of arrangement, recapitalization, reorganization or similar business combination, one or more operating businesses, either within its current verticals or in new industry segments, or control of such operating businesses through contractual arrangements. ~~An investment bank has been retained to advise the Company on its acquisition process.~~

~~Walker~~After ~~Digital,~~an ~~LLC~~extended ~~(“Walker~~period ~~Digital”)~~of evaluation, and in consultation with a ~~related~~financial ~~party~~advisor engaged to provide guidance in this regard, isthe Board concluded that none of the ~~owner~~viable acquisition targets presented characteristics that fulfilled our criteria of ~~approximately~~increasing ~~82%~~shareholder value and creating opportunity for the Company’s investors. As a result, on June 28, 2018, the Board of Directors of Walker Innovation approved the ~~voting~~liquidation ~~interest~~and indissolution of the Company pursuant to a Plan of Complete Liquidation and ~~owns~~Dissolution ~~approximately~~(“Plan ~~48%~~of Complete Liquidation and Dissolution” or the “Plan”), subject to stockholder approval. The Company has filed a preliminary proxy statement with respect to a special meeting of the ~~economic~~Company’s ~~interest~~stockholders into seek stockholder approval for the dissolution of the Company ~~(approximately~~pursuant ~~42%~~to onthe Plan of Complete Liquidation and Dissolution and as soon as practicable intends to file a ~~fully~~definitive ~~diluted~~proxy ~~basis).~~statement and arrange the mailing thereof to the Company’s stockholders.

~~NOTE~~Walker 2.Digital, ~~NATURE~~LLC OF(“Walker ~~BUSINESS~~Digital”), the owner of approximately 82% of the voting interest in the Company and approximately 48% of the economic interest (approximately 42% on a fully diluted basis), has indicated its intention to vote for the Plan of Complete Liquidation and Dissolution.

~~Licensing~~NOTE ~~and~~2. ~~Enforcement~~- PLAN OF COMPLETE LIQUIDATION AND DISSOLUTION

The Plan of Complete Liquidation and Dissolution contemplates an orderly wind up of the Company’s ~~seeks~~business affairs, which will include the sale, transfer or other disposition of the Company’s patent portfolio to ~~develop~~the extent those assets are not sold, ~~license~~transferred ~~and~~or otherwise ~~enforce~~disposed ~~patented~~of ~~technologies~~prior ~~through~~to ~~its~~the ~~wholly~~filing ~~owned~~of ~~subsidiaries~~the certificate of dissolution. ~~Historically,~~The Plan further contemplates the sale or monetization of the Company’s ~~generated~~other ~~revenues~~remaining ~~from~~non-cash assets, the ~~granting~~satisfaction or settlement of ~~intellectual~~its ~~property~~liabilities ~~rights~~and ~~for~~obligations, including contingent liabilities and claims, and additional distributions of any remaining cash to the ~~use~~Company’s stockholders. If the dissolution of the Company is approved, orthe ~~pertaining~~Company toalso intends, following the filing of a certificate of dissolution, to close its ~~patented~~stock ~~technologies~~transfer books and to discontinue recording transfers of its common stock. The Company ~~may~~ ~~also~~currently ~~monetize~~estimates ~~its~~that ~~intellectual~~the ~~property~~initial ~~through~~distribution to stockholders will occur in September 2018 and will be net of the ~~sale~~Company’s operating expenses as well as a contingency reserve of between ~~patent~~$1.5 ~~assets~~- $2.5 ~~Patent~~million ~~protection~~for isknown aand ~~key~~potential ~~part~~liabilities and other obligations of the Company’s ~~business~~during ~~model,~~the ~~because~~wind itup ~~provides~~period following the initial distribution. The Company ~~with~~anticipates that unused contingency reserve, if any, will be the subject of one or more future distributions. The amount and timing of the distributions to stockholders will be determined by the Board in its discretion, subject to the provisions of the Plan of Complete Liquidation and Dissolution. The amount ultimately distributed to stockholders may be less than anticipated as a ~~period~~result of ~~exclusive~~unforeseen ~~ownership~~circumstances. ~~during~~There can be no guarantee as to the timing and amount of distributions to stockholders, even if all of the remaining assets are sold, because there are many factors, some of which are outside of the Company’s ~~has~~control, which could affect the ~~opportunity~~timing toof ~~recoup~~such ~~risk~~distributions. ~~capital~~Only ~~and~~stockholders ~~generate~~of record as of the record date for a ~~profit~~distribution ~~from~~as ~~inventions~~determined by the Board will be entitled to receive that distribution.

~~NOTE~~Although 3the –Company ~~SUMMARY~~does OFnot ~~SIGNIFICANT~~believe ~~ACCOUNTING~~that ~~POLICIES~~a precise estimate of those expenses can currently be made, the Company believes that available cash is adequate to provide for its obligations, liabilities, operating costs and claims, and to make cash distributions to our stockholders. If available cash is not adequate to provide for its obligations, liabilities, operating costs and claims, estimated liquidating distributions to its stockholders will be reduced.

~~Basis~~Sale of ~~Presentation~~Remaining Assets

The ~~accompanying~~Plan ~~unaudited condensed consolidated financial statements~~ of ~~the~~Complete ~~Company~~Liquidation ~~have been prepared on a going concern basis in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial reporting~~ and ~~pursuant~~Dissolution toif ~~the~~approved ~~instructions on Form 10Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required~~ by ~~GAAP for complete financial statements. In~~ the ~~opinion of management~~stockholders, ~~all~~gives ~~adjustments (including those which are normal and recurring) considered necessary for a fair presentation of~~ the ~~interim~~Board ~~financial information have been included. Additionally, operating results for~~ the ~~three~~authority ~~months~~to ~~ended March~~dispose ~~31,~~of ~~2018~~all ~~are not necessarily indicative~~ of ~~the~~our ~~results~~remaining ~~that may~~property beand ~~expected~~assets ~~for~~without ~~any other interim period or for the fiscal year ending December 31, 2018. For~~ further ~~information,~~stockholder refer to the financial statements and footnotes included in the Company’s annual financial statements for the year ended December 31, 2017, which are included in the Company’s annual report on Form 10-K filed with the SEC on February 2, 2018approval.

The accompanying unaudited condensed consolidated financial statements of the Company were prepared in accordance with GAAP and include the assets, liabilities, revenues and expenses of the Company’s wholly-owned subsidiaries over which the Company exercises control. Intercompany transactions and balances were eliminated in consolidation.9

Use of Estimates

The preparation of unaudited condensed financial statements in conformity with US GAAP requires management of the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the Condensed Financial Statements. Actual results could differ from these estimates. The Company’s significant estimates and assumptions include stock-based compensation and the valuation allowance related to the Company’s deferred tax assets, revenue recognition and establishing the fair value of its investments. Certain of the Company’s estimates could be affected by external conditions, including those unique to the Company and general economic conditions. It is reasonably possible that these external factors could have an effect on the Company’s estimates and could cause actual results to differ from those estimates and assumptions.

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We have received a valuation analysis of one of the patent families in the Company’s portfolio which estimates the residual value of such patents as below the continued required maintenance fees, which taken together with the recent financial results of the Licensing and Enforcement business is indicative of the likelihood that any additional distributions to stockholders resulting from the disposition of our remaining non-cash assets are highly unlikely and, if made, will be de minimis. Management believes that any non-cash assets are not material to the financial position of the Company, and amounts realized with respect to such non-cash assets will not have a material impact on the ultimate distribution to stockholders.

Contingency Reserve

Under the Delaware General Corporation Law, the Company is required, in connection with the Plan, to satisfy or make reasonable provision for the satisfaction of all claims and liabilities. Following the Effective Date – the date that the Certificate of Dissolution is filed with the Delaware Secretary of State, the Company will pay all expenses and other known liabilities and establish a contingency reserve, consisting of cash or other assets, that the Board believes will be adequate for the satisfaction of all current, contingent or conditional claims and liabilities. The Company will also seek to acquire insurance coverage and take other steps the Board determines are reasonably calculated to provide for the satisfaction of the reasonably estimated amount of such liabilities. The Company estimates the amount of the contingency reserve or the cost of insurance or other steps that may be undertaken to make provision for the satisfaction of liabilities and claims, but any such amount will be deducted before the determination of amounts available for distribution to stockholders.

The actual amount of the contingency reserve may vary from time to time and will be based upon estimates and opinions of the Board, derived from consultations with management and outside experts, if the Board determines that it is advisable to retain such experts, and a review of our estimated contingent liabilities and estimated ongoing expenses, including, without limitation: anticipated salary, retention, compensation and benefits payments; estimated legal and accounting fees; rent; payroll and other taxes; miscellaneous office expenses; facilities costs; expenses accrued in connection with the preparation of our financial statements; and costs related to public company reporting matters. We anticipate that expenses for professional fees and other expenses of liquidation may be significant. Our established contingency reserve may not be sufficient to satisfy all of our obligations, expenses and liabilities, in which case a creditor could bring a claim against our stockholders for the total amount distributed by us to such stockholders pursuant to the Plan of Dissolution. From time to time, we may distribute to stockholders on a pro rata basis any portions of the contingency reserve that the Board deems no longer necessary to reserve for unknown claims.

Liquidation Basis of Accounting

As a result of the approval of the Plan of Complete Liquidation and Dissolution by the Board, the Company adopted the Liquidation Basis of Accounting, effective June 28, 2018. This basis of accounting is considered appropriate when, among other things, liquidation of the Company is imminent, as defined in ASC 205-30 “Presentation of Financial Statements - Liquidation Basis of Accounting.” Under the Liquidation Basis of Accounting, the following financial statements are no longer presented (except for periods prior to the adoption of the Liquidation Basis of Accounting): a condensed consolidated balance sheet, a condensed consolidated statement of operations and comprehensive loss and a condensed consolidated statement of cash flows. The condensed consolidated statement of net assets and the condensed consolidated statement of changes in net assets are the principal financial statements presented under the Liquidation Basis of Accounting. Although the Plan of Complete Liquidation was approved by the Board on June 28, 2018, the Company is using the liquidation basis of accounting effective June 30, 2018 as a convenience date. Any activity between June 28 and June 30 would not be materially different under the going concern basis.

Under the Liquidation Basis of Accounting, all of the Company’s assets have been stated at their estimated net realizable value and are based on current contracts, estimates and other indications of sales value net of estimated selling costs. All liabilities of the Company have been stated at contractual amounts and estimated liabilities are at their estimated settlement amounts, including those estimated costs associated with implementing the Plan of Dissolution. These amounts are presented in the accompanying condensed consolidated statement of net assets. These estimates will be periodically reviewed and adjusted as appropriate. There can be no assurance that these estimated values will be realized. Such amounts should not be taken as an indication of the timing or amount of future distributions or our actual dissolution. The valuation of assets at their net realizable value and liabilities at their anticipated settlement amount represent estimates, based on present facts and circumstances, of the net realizable value of the assets and the costs associated with carrying out the Plan of Liquidation and Dissolution. The actual values and costs associated with carrying out the Plan of Dissolution are expected to differ from amounts reflected in the accompanying financial statements because of the plan’s inherent uncertainty. These differences may be material. In particular, the estimates of our costs will vary with the length of time necessary to complete the Plan of Dissolution. Accordingly, it is not possible to predict with certainty the timing or aggregate amount which may ultimately be distributed to stockholders and no assurance can be given that the possible future distributions will reflect the estimate presented in the accompanying consolidated condensed statement of net assets.

Assessment of Assets

As of June 30, 2018 no value was recorded in the accompanying condensed consolidated statement of Net Assets (Liquidation Basis) with respect to the Company’s patent portfolio. We have received a valuation analysis of one of the patent families in the Company’s portfolio which estimates the residual value of such patent as below the continued required maintenance fees, which taken together with the recent financial results of the Licensing and Enforcement business is indicative of the likelihood that any additional distributions to stockholders following the disposition of our remaining non-cash assets are highly unlikely and, if made, will be de minimis. We believe that based on these factors, the cost of maintaining the patents, including current maintenance costs, likely exceed their future cash value.

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NOTE 3. - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying interim unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial reporting and pursuant to the instructions on Form 10Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. The results for such interim periods are not necessarily indicative of the results to be expected for the year. In the opinion of management, all adjustments considered necessary for a fair presentation of the results for the respective periods have been reflected. Intercompany transactions and balances were eliminated in consolidation. These condensed consolidated financial statements and accompanying notes should be read in conjunction with the Company’s Form 10-K for the year ended December 31, 2017.

Cash and Cash Equivalents

The Company maintains its cash in bank deposit and money market accounts that, at times, may exceed federally insured limits. The Company considers money market accounts that have maturity dates of three months or less from the purchase date to be cash equivalents.

Short term Investment

The Company classifies its investment consisting of certificates of deposit with a maturity greater than ~~thirty~~ninety days but less than one year as a short-term investment.

Earnings (Loss) per Share

Basic earnings (loss) per share (“EPS”) is computed by dividing net income (loss) applicable to common stock by the weighted-average number of shares of common stock outstanding. Diluted EPS reflects the potential dilution that could occur if securities or other instruments that are convertible into common stock were exercised/converted or could result in the issuance of common stock. As of ~~March~~ 31June 30, 2018 and 2017, the following common stock equivalents were outstanding but excluded from the calculation as their effect would have been antidilutive:

	2018		2017
Common Stock options		4,~~875~~705,~~498~~497		4,~~795~~883,~~500~~832
Convertible Preferred Stock		14,999,000		14,999,000
Potentially dilutive securities		19,874,498		19,794,500
Total Common Stock Equivalents		19,704,497		19,882,832

~~Revenue~~Use ~~Recognition~~of Estimates

~~The Company derives its revenue from patent licensing and enforcement.~~ In ~~general,~~preparing ~~these revenue arrangements provide for~~ the ~~payment~~condensed ofconsolidated ~~contractually~~financial ~~determined~~statements ~~fees~~ in ~~consideration~~conformity ~~for~~with ~~the~~GAAP ~~grant~~including ~~of certain intellectual property rights for patented technologies owned or controlled by~~ the ~~Company.~~Liquidation ABasis ~~significant number~~ of ~~the~~Accounting, ~~patent~~management ~~licenses~~is ~~are~~required ~~granted~~to onmake ~~the~~estimates ~~entire~~and ~~portfolio~~assumptions ~~rather~~that ~~than~~affect ~~individual~~the ~~patents.~~reported ~~Most~~amounts of ~~the~~assets, ~~intellectual~~including ~~property~~net ~~rights~~assets ~~granted are perpetual~~ in ~~nature~~liquidation, ~~extending~~and ~~until~~liabilities ~~the~~and ~~expiration~~disclosure of ~~the~~contingent ~~related~~assets ~~patents,~~and ~~although~~liabilities ~~they~~as ~~can be granted for a defined, relatively short period~~ of ~~time.~~the ~~Revenue~~date ~~will be recognized when control~~ of the ~~promised~~condensed ~~goods~~consolidated orfinancial ~~services~~statements isand ~~transferred~~the toreported ~~customers,~~amounts inof anincome ~~amount~~and ~~that~~expense ~~reflects~~for the ~~consideration~~reporting ~~the~~period. ~~Company~~Actual ~~expects~~results tocould bediffer ~~entitled~~from ~~to in exchange for~~ those ~~goods or services~~estimates.

Costs Associated with Revenue

Contingent legal and consulting fees are expensed in the Unaudited Condensed Consolidated Statements of Operations in the period that the related revenues are recognized. In instances where there are no recoveries from potential infringers, no contingent legal and consulting fees are required to be paid; however, the Company may be liable for certain out of pocket legal and consulting costs incurred pursuant to the underlying legal and consulting services agreement. Legal fees advanced to contingent law firms, if any, that are required to be paid in the event that no license recoveries are obtained are expensed as incurred and included in liabilities in the accompanying Unaudited Condensed Consolidated Balance Sheets.

Fair Value Measurements

The carrying amounts of cash and cash equivalents, short term investment, accounts receivable, accounts payable and other current liabilities, approximate fair value due to the short-term nature of these instruments.

Fair value is defined as an exit price, representing the amount that would be received upon the sale of an asset or payment to transfer a liability in an orderly transaction between market participants. Fair value is a market-based measurement that is determined based on assumptions that market participants would use in pricing an asset or liability. A three-tier fair value hierarchy is used to prioritize the inputs in measuring fair value as follows:

Level 1. Quoted prices in active markets for identical assets or liabilities.

Level 2. Quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable, either directly or indirectly.

Level 3. Significant unobservable inputs that cannot be corroborated by market data.

These valuation techniques involve some level of management estimation and judgment, the degree of which is dependent on the price transparency of the asset, liability or market and the nature of the asset or liability.

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Investment

In cases where the Company’s investment is less than 20% of the outstanding voting stock and significant influence does not exist, the investment is carried at cost, and evaluated for impairment at each reporting period.

The Company elected the fair value option for its investment in The Upside Commerce Group, LLC formerly known as Flexible Travel Company, LLC (“Upside”).

While the Company believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different estimate of fair value at the reporting date.

The decision to elect the fair value option, which is irrevocable once elected, is determined on an instrument by instrument basis and applied to an entire instrument. The net gains or losses, if any, on an investment for which the fair value option has been elected, are recognized as an unrealized gain on investment in the Unaudited Condensed Consolidated Statements of Operations.

Stock Based Compensation

The Company measures the cost of services received in exchange for an award of equity instruments based on the fair value of the award. For employees and directors, the fair value of the award is measured on the grant date and for non-employees, the fair value of the award is generally measured on the measurement date and re-measured on each financial reporting date and vesting date until the service period is complete. The fair value amount is then recognized over the period services are required to be provided in exchange for the award, usually the vesting period. The Company recognizes employee stock-based compensation expense on a straight-line basis over the requisite service period for each separately vesting tranche of each award. Stock-based compensation expense is reflected within operating expenses in the Unaudited Condensed Consolidated Statements of Operations.

Income Taxes

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in operations in the period that includes the enactment date. A valuation allowance is provided when it is more likely than not that some portion or all of a deferred tax asset will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income and the reversal of deferred tax liabilities during the period in which related temporary differences become deductible. The benefit of tax positions taken or expected to be taken in the Company’s income tax returns are recognized in the Consolidated Financial Statements if such positions are more likely than not of being sustained.

~~Recent Accounting Pronouncements~~ 11

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses: Measurement of Credit Losses on Financial Instruments (“ASU No. 2016-13”). ASU 2016-13 requires that expected credit losses relating to financial assets measured on an amortized cost basis and available-for-sale debt securities be recorded through an allowance for credit losses. ASU No. 2016-13 limits the amount of credit losses to be recognized for available-for-sale debt securities to the amount by which carrying value exceeds fair value and also requires the reversal of previously recognized credit losses if fair value increases. The new standard will be effective for the Company on January 1, 2020. Early adoption will be available on January 1, 2019. The Company is currently evaluating the effect that the updated standard will have on its Consolidated Financial Statements and related disclosures.

In July 2017, the FASB issued ASU 2017-11, Earnings per Share (Topic 260), Distinguishing Liabilities from Equity (Topic 480), Derivatives and Hedging (Topic 815). ASU 2017-11 consists of two parts. The amendments in Part I of this Update change the classification analysis of certain equity-linked financial instruments (or embedded features) with down round features. When determining whether certain financial instruments should be classified as liabilities or equity instruments, a down round feature no longer precludes equity classification when assessing whether the instrument is indexed to an entity’s own stock. The amendments also clarify existing disclosure requirements for equity-classified instruments. As a result, a freestanding equity-linked financial instrument (or embedded conversion option) no longer would be accounted for as a derivative liability at fair value as a result of the existence of a down round feature. For freestanding equity classified financial instruments, the amendments require entities that present earnings per share (EPS) in accordance with Topic 260 to recognize the effect of the down round feature when it is triggered. That effect is treated as a dividend and as a reduction of income available to common shareholders in basic EPS. Convertible instruments with embedded conversion options that have down round features are now subject to the specialized guidance for contingent beneficial conversion features (in Subtopic 470-20, Debt—Debt with Conversion and Other Options), including related EPS guidance (in Topic 260). The amendments in Part II of this Update re-characterize the indefinite deferral of certain provisions of Topic 480 that now are presented as pending content in the Codification, to a scope exception. Those amendments do not have an accounting effect. For public business entities, the amendments in Part I of this Update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. For all other entities, the amendments in Part I of this Update are effective for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020. Early adoption is permitted for all entities, including adoption in an interim period. If an entity early adopts the amendments in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period. The amendments in Part II of this Update do not require any transition guidance because those amendments do not have an accounting effect. The adoption of this ASU is not expected to have a material impact on the Company’s consolidated financial position and results of operations.

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~~NOTE~~New 4Accounting ~~– PREPAID EXPENSES AND OTHER CURRENT ASSETS~~Pronouncements

As a result of ~~March~~ ~~31,~~adopting ~~2018~~the ~~and December~~Liquidation 31Basis of Accounting, ~~2017~~we ~~prepaid~~believe ~~expenses~~no ~~and~~new ~~other~~accounting ~~current~~pronouncements will have a material impact on our net assets ~~consist~~in ofliquidation ~~the~~or ~~following:~~changes in net assets in liquidation.

	2018 (Unaudited)		2017
Prepaid insurance	$	39	$	42
Prepaid patent costs		3		3
Due from Walker Digital		--		1
Other prepaid expenses and receivables		50		27
Total prepaid expenses and other current assets	$	92	$	73

NOTE 4. - LIABILITY FOR ESTIMATED COSTS DURING LIQUIDATION

~~NOTE~~The 5Liquidation Basis of Accounting requires the Company to estimate net cash flows from operations and to accrue all costs associated with implementing and completing the Plan of Complete Liquidation and Dissolution. These amounts can vary significantly due to, among other things, the costs of retaining personnel and others to oversee the liquidation, the cost of insurance, the timing and amounts associated with discharging known and contingent liabilities and the costs associated with cessation of the Company’s operations, including an estimate of costs subsequent to that date. As a result, the Company has accrued the projected costs, including corporate overhead and specific liquidation costs of severance, professional fees, and other miscellaneous wind-up ~~INVESTMENTS~~costs expected to be incurred during the projected period and required to complete the liquidation of the Company’s remaining assets.

~~Investment~~These inaccruals ~~The~~will ~~Upside~~be ~~Commerce~~adjusted ~~Group~~from time to time as projections and assumptions change. These costs are anticipated to be paid throughout the liquidation period. Based on the transition to the Liquidation Basis of Accounting on June 28, ~~LLC~~2018, the Company accrued the following expenses expected to be incurred during dissolution and liquidation (in thousands):

In December 2015, the Company entered into the Upside Services Agreement with Upside (the “Upside Services Agreement”), a company affiliated with Walker Digital, the Company’s controlling stockholder, regarding the provision of executive management, marketing, legal and financial consulting services. There are no set deliverables contemplated by the Upside Services Agreement, and services are provides as needed pursuant to the hourly rates (approximately equal to the Company’s cost) specified in the Upside Services Agreement.

	June 30, 2018
Severance and employment contract payments	$	886
Insurance costs		345
Professional fees		344
Other operating expenses		338
Settlement of in the money options		550
Liability for estimated costs during liquidation	$	2,463

InNOTE ~~connection~~5 ~~with~~- ~~the~~SHARED ~~Upside~~SERVICES ~~Services~~AGREEMENT Agreement, the Company was granted the Upside Warrant to purchase limited liability company interests in Upside at an exercise price of $0.06 per Class A common share (the “Upside Warrant”), which amount has been determined to equal the fair market value of such shares as of the date of issuance of the Upside Warrant. The Upside Warrant was issued to the Company by Jay Walker, who at the time of issuance, beneficially owned approximately 37% of the aggregate outstanding limited liability company interests of Upside on a fully diluted basis, and controls Walker Digital, the Company’s controlling stockholder. The total Class A common shares that may be purchased pursuant to the exercise of the Upside Warrant was originally 16,400,000 shares, equal to approximately 16% of the aggregate outstanding limited liability company interests of Upside, on a fully diluted basis, at the time of issuance, and the transfer of such shares to the Company was subject to certain requirements, including the provision of an opinion of counsel that such would not result in Upside being deemed to be a publicly traded partnership for purposes of U.S. federal income tax law.

The Company entered into a Securities Purchase Agreement dated as of November 21, 2016 (the “November Purchase Agreement”) in connection with the sale of an aggregate of 2,500,000 Class A Common Shares (the “November Shares”) of Upside at $2.00 per share to a group of accredited investors (the “Investors”) in private resales not requiring registration under the Securities Act of 1933. The November Shares were issued upon exercise of the Upside Warrant, granted to the Company by Jay S. Walker, the controlling stockholder of the Company, Walker Digital and Upside. The total Class A Common Shares that could be purchased pursuant to the exercise of the Upside Warrant was originally 16,400,000 and, following the exercise in connection with the November Purchase Agreement, was 13,900,000. The sale of the November Shares to the Investors was consummated concurrently with entering into the November Purchase Agreement.

In December 2016, the Company entered into a Securities Purchase Agreement (the “December Purchase Agreement”) in connection with the sale of an aggregate of 1,250,000 Class A Common Shares (the “December Shares”) of Upside, at $2.00 per share to an existing investor in Upside in a private resale not requiring registration under the Securities Act of 1933. The Shares were issued upon exercise of the Upside Warrant at a price of $0.06 per share. Giving effect to the sale of the November Shares and December Shares, the Company raised gross proceeds of $7.5 million and retained the ability to purchase 12,650,000 Shares of Upside pursuant to the Upside Warrant (then 11% of Upside on a fully diluted basis).

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On June 2, 2017, the Company entered into a Redemption Agreement with Upside to redeem the remaining 12,650,000 Upside Class A Common Shares. Simultaneously with the redemption on June 2, 2017, the Company acquired the Upside Class A Common Shares at a price of $0.06 per share pursuant to the Upside Warrant previously granted to the Company. The Upside Class A Common Shares were redeemed at $1.43182745 per share as approved by the Company’s Audit Committee. Net proceeds from the transaction after giving effect to fees and the exercise price was approximately $16.8 million. After giving effect to the transaction described above, the Company no longer retains an equity interest in Upside.

In connection with the issuance of the Upside Warrant in December of 2015, the Company recorded deferred revenue of $646 for the year ended December 31, 2015 and has amortized $0 and $84 of this deferred revenue into Other Income for the three months ended March 31, 2018 and 2017, respectively.

Investment in Tagged

The Company received 57,000 shares of common stock in Tagged, Inc. (“Tagged”) as partial payment in connection with a license agreement. If on liquidation date (i.e. public offering or change of control), the then current fair value of the stock is less than $250 (“floor value”), Tagged will pay the Company the difference between the $250 floor value and the then current fair value. The investment is carried at cost. In April 2017 Tagged was the subject of an acquisition pursuant to which the Company received $71 in exchange for its shares in Tagged and expects to receive an additional $6 during the second quarter. Also in April 2017, the Company received $173 pursuant to the license agreement (the difference between the $250 floor value and the acquisition proceeds).

NOTE 6 - SHARED SERVICES AGREEMENT

Walker Digital

The Company has a Shared Services Agreement (“WDM Shared Services Agreement”) with Walker Digital Management (“WDM”). The cost of such services varies monthly based on the terms of the WDM Shared Services Agreement. The incurred expenses include but are not limited to ~~executive compensation~~, information technology services and supplies, administrative and general services and supplies and rent and utilities, and are based either on specific attribution of those expenses or, where necessary and appropriate, based on the Company’s best estimate of an appropriate proportional allocation.

The following table represents operating expenses contributed by WDM on behalf of the Company and expenses incurred under the WDM Shared Services Agreement for the three and six months ended ~~March~~ 31June 30, 2018 and the three and six months ended June 30, 2017:

	Three Months Ended March 31,
	Three Months Ended				Six Months Ended
	2018		2017
	June 30, 2018		June 30, 2017		June 30, 2018		June 30, 2017
Operating Expenses:
Compensation expenses	$	--	$	3	$	--	$	7
Rent and utilities		1716		4542		33		88
Office services and supplies		12		7		3		13
Other		53		1517		8		31
Total operating expenses	$	23	$	70
Total Operating Expenses	$	21	$	69	$	44	$	139

As of ~~March~~ 31June 30, 2018 and December 31, 2017, due to WDM included in accounts payable/accrued expenses on the Condensed Balance Sheet was $76 and $12, respectively. Included in the liability for estimated costs during liquidation was $38, also due to WDM.

~~Upside Commerce Group, LLC~~12

In December 2015, the Company entered into the Upside Services Agreement with Upside to provide executive management, marketing, legal, financial consulting and other services, this agreement expired in December 2017. For the three months ended March 31, 2017 the Company provided approximately $35 of expenses related to such services and these amounts are included in Other Income on the Unaudited Condensed Consolidated Statement of Operations.

NOTE 7 - COMMITMENTS AND CONTINGENCIES

Litigation

The Company is subject to claims, counterclaims and legal actions that arise in the ordinary course of business. The plaintiff in a patent suit may have defenses to any counterclaim. In addition, defendants in a patent suit may file motions seeking costs and fees against the plaintiff, which may be opposed. Management believes that the ultimate liability with respect to these claims and legal actions, if any, will not have a material effect on the Company’s financial position, results of operations or cash flows. The Company recognizes a liability for a contingency when it is probable that liability has been incurred and when the amount of loss can be reasonably estimated. When a range of probable loss can be estimated, the Company accrues the most likely amount of such loss, at no less than the minimum of the range. As of March 31, 2018 and December 31, 2017, the litigation accrual was not material.

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~~Accrued~~The ~~Bonuses~~ Upside Commerce Group, LLC

AsIn ~~of March~~December 312015, ~~2018~~the ~~and December~~Company 31entered into the Upside Services Agreement with The Upside Commerce Group, ~~2017~~LLC (“Upside”) to provide executive management, ~~accrued~~marketing, ~~bonuses~~legal, ~~were~~financial $0consulting and ~~$18,~~other ~~respectively~~services. This ~~Most~~agreement ~~accrued~~expired ~~bonuses~~in ~~are~~December ~~discretionary~~2017. inFor ~~nature~~the three and six months ended June 30, ~~although~~2017 ~~some~~the ~~are~~Company ~~based~~provided onapproximately ~~specific~~$25 ~~performance~~and ~~goals.~~$61 ~~These~~of such services and these amounts are included in ~~accrued~~Other ~~expenses~~Income on the ~~condensed~~Unaudited ~~consolidated~~Condensed ~~balance~~Consolidated ~~sheets~~Statement of Operations.

NOTE 86 - ~~EQUITY~~COMMITMENTS AND CONTINGENCIES

As of March 31, 2018, the Company had authorized an aggregate of 100,000,000 shares of common stock, par value $0.001 per share. The Company, had authorized an aggregate of 15,000,000 shares of preferred stock, par value $0.001 per share, 14,999,000 shares of which have been designated Series B Convertible Preferred Stock. As of March 31, 2018, there were 21,184,744 shares of the Company’s common stock issued and 20,094,314 outstanding. As of March 31, 2018, 14,999,000 shares of the Company’s Series B Convertible Preferred Stock were issued and outstanding.Litigation

~~NOTE~~The 9Company -is ~~STOCK-BASED~~subject ~~COMPENSATION~~to claims, counterclaims and legal actions that arise in the ordinary course of business. The plaintiff in a patent suit may have defenses to any counterclaim. In addition, defendants in a patent suit may file motions seeking costs and fees against the plaintiff, which may be opposed. Management believes that the ultimate liability with respect to these claims and legal actions, if any, will not have a material effect on the Company’s financial position, results of operations or cash flows. The Company recognizes a liability for a contingency when it is probable that liability has been incurred and when the amount of loss can be reasonably estimated. When a range of probable loss can be estimated, the Company accrues the most likely amount of such loss, at no less than the minimum of the range. As of June 30, 2018 and December 31, 2017, the litigation accrual was not material.

~~Option~~NOTE ~~Repricing~~7 - EQUITY

~~On January~~As 12of June 30, ~~2017~~2018, ~~compensation~~the ~~committee~~Company ofhad ~~the~~authorized ~~Company’s~~an ~~Board~~aggregate of ~~Directors~~100,000,000 ~~and~~shares ~~Walker~~of ~~Digital~~common stock, apar ~~stockholder~~value ~~entitled~~$0.001 toper ~~vote~~share. 2The Company,~~358~~ had authorized an aggregate of 15,~~500~~000,000 shares of ~~the~~preferred ~~Company’s~~stock, ~~Common~~par ~~Stock~~value ~~and~~$0.001 per share, 14,999,000 shares of which have been designated Series B Convertible Preferred Stock,. ~~representing,~~As ~~collectively,~~of ~~approximately~~June ~~82.3%~~30, of2018, ~~the~~there ~~outstanding~~were ~~voting~~21,184,744 ~~stock~~shares of the Company’s ~~entitled~~common tostock ~~vote~~issued onand ~~such~~20,094,314 ~~date~~outstanding. ~~with~~As ~~respect~~of toJune ~~such~~30, ~~corporate~~2018, ~~actions~~14,999,000 ~~approved~~shares aof ~~one-time~~the ~~stock~~Company’s ~~Option~~Series ~~Repricing~~B ~~program~~Convertible ~~(the~~Preferred ~~“Option~~Stock ~~Repricing”)~~were toissued ~~permit~~and ~~the~~outstanding. Each ~~Company~~share toof ~~reprice~~Series ~~certain~~B ~~options~~Preferred toStock ~~purchase~~is ~~the~~entitled ~~Company’s~~to ~~Common~~receive ~~Stock~~its ~~held~~ratable byportion ~~its~~of ~~current~~the ~~directors,~~assets ~~officers~~ and ~~employees~~funds (of the ~~“Eligible~~Company ~~Options”),~~legally ~~which~~available ~~actions~~for ~~became~~distribution, ~~effective~~including ~~on February~~in 19liquidation, ~~2017.~~based ~~Under~~on the ~~Option~~numbers ~~Repricing, as~~ of ~~the~~shares ~~date~~common ~~the~~stock ~~Option~~into ~~Repricing~~which ~~became~~the ~~effective,~~Series ~~Eligible~~B ~~Options~~Preferred ~~with~~Stock anis ~~exercise~~convertible ~~price~~ at orthe ~~above~~then ~~$1.37~~effective ~~per~~conversation ~~share~~rate (~~representing~~which anis ~~aggregate~~currently of1:1 ~~2,743,000~~and ~~options,~~is orexpected ~~58%~~to ofbe ~~the~~1:1 ~~total~~as ~~outstanding)~~of ~~were~~the ~~amended~~date toof ~~reduce~~liquidating ~~such~~distributions ~~exercise price~~ to $0stockholders).~~43.~~

~~The~~NOTE ~~impact~~8 of- ~~the~~STOCK-BASED ~~repricing~~COMPENSATION was a one time incremental non cash charge of approximately $216, of which $114 was expensed in the first quarter of 2017 and an additional $102 of expense which is being charged to operations over the remaining term of the options.

Total stock-based compensation to employees and non-employees for the three and six months ended ~~March~~ 31June 30, 2018 and 2017, respectively, is presented in the following table:

	Three Months Ended March 31,
	Three Months Ended				Six Months Ended
	2018		2017
	June 30, 2018		June 30, 2017		June 30, 2018		June 30, 2017
Employee option awards	$	3219	$	~~134~~46	$	51	$	293
Employee option awards in connections with Repricing		--		114
Non-employee compensation expenses		--		--		--		1
Total stock-based compensation expense	$	3219	$	~~248~~46	$	51	$	294

Stock-based Compensation

During the ~~first~~second quarter of 2018 the Company granted no new options.

11A summary of the status of the Company’s stock option plans and the changes during the six months ended June 30, 2018, is presented in the table below:

	Number of Shares			Weighted Average Exercise Price		Intrinsic Value		Weighted Average Remaining Contractual Life (in years)
Outstanding at December 31, 2017		4,928,832		$	0.64	$	--		6.37
Options Granted		--			--		--		--
Options Exercised		--			--		--		--
Options Expired/Forfeited		(223,335	)		1.75		--		--
Outstanding at June 30, 2018		4,705,497			0.59		267		6.36
Options vested and exercisable at June 30, 2018		4,192,157		$	0.62	$	224		6.06

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AIn ~~summary~~connection ofwith the ~~status~~Company’s decision to liquidate, the Board approved the vesting of 513,340 unvested options effective immediately prior to the Company’s ~~stock~~dissolution. ~~option~~The ~~plans~~vesting ~~and~~of ~~the~~these ~~changes~~options ~~during~~represents approximately $74 of incremental expense. In connection with the ~~three~~liquidation ~~months~~the ~~ended March~~Company ~~31,~~intends ~~2018,~~to issettle ~~presented~~all outstanding vested options that are in the ~~table~~money. ~~below:~~The Company estimated this amount to be $550.

	Number of Shares			Weighted Average Exercise Price		Intrinsic Value		Weighted Average Remaining Contractual Life (in years)
Outstanding at December 31, 2017		4,928,832		$	0.64	$	--		6.37
Options Granted		--			--		--		--
Options Exercised		--			--		--		--
Options Cancelled/Forfeited		(53,334	)		0.32		--		--
Outstanding at March 31, 2018		4,875,498			0.65		400		6.43
Options vested and exercisable		4,173,824		$	0.69	$	325		6.04

As of June 30, 2018, the Company had no unrecognized stock-based compensation expense related to all unvested stock options, see Note 4 above.

As of March 31, 2018, the Company had unrecognized stock-based compensation expense related to all unvested stock options of $101, which is expected to be recognized over the remaining weighted-average vesting period of 2.1 years.

Item 2.

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

The following discussion and analysis of the financial condition and results of our operations should be read in conjunction with our financial statements and the notes to those statements. This discussion contains forward-looking statements reflecting our management’s current expectations that involve risks and uncertainties. Actual results and the timing of events may differ materially from those contained in these forward-looking statements due to a number of factors, including those discussed under the heading “Risk Factors” in our Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on February 2, 2018.

Narrative discussions of dollar figures are in thousands, except share and per share data and where the context indicates otherwise.

~~General~~Executive summary

~~Through~~Recent our wholly-owned subsidiaries, we historically have created, commercialized, licensed and, when necessary, legally enforced our homegrown portfolio of business innovations, which we acquired from our affiliate Walker Digital, LLC (“Walker Digital”), and are actively engaged in identifying new synergies for our assets and operations. In response to challenging developments in the patent licensing and enforcement environment and the cessation of the Company’s custom innovation work, the Company’s current plan of operations includes a carefully focused Licensing and Enforcement program, and an effort to acquire, through merger, share exchange, asset acquisition, plan of arrangement, recapitalization, reorganization or similar business combination, one or more operating businesses, either within its current verticals or in new industry segments, or control of such operating businesses through contractual arrangements. An investment bank has been retained to advise the Company on its acquisition process and other opportunities to create shareholder value.Developments

~~The~~As ~~Company’s~~a ~~Executive~~result ~~Chairman~~of isthe ~~entrepreneur~~approval ~~and~~of ~~inventor~~the ~~Jay~~Plan ~~Walker,~~of ~~who~~Liquidation isand ~~best~~Dissolution ~~known~~by asour Board, the ~~founder~~Company adopted the Liquidation Basis of ~~Priceline~~Accounting, effective June 28, 2018.~~com~~ ~~and~~This ~~has~~basis ~~twice~~of ~~been~~accounting ~~named~~is byconsidered ~~TIME~~appropriate ~~magazine~~when, among other things, liquidation of the Company is imminent, as defined in ASC 205-30 “~~one~~Presentation of Financial Statements - Liquidation Basis of Accounting.” Under the ~~top~~Liquidation 50Basis ~~business~~of ~~leaders~~Accounting, the following financial statements are no longer presented (except for periods prior to the adoption of the ~~digital~~Liquidation ~~age~~Basis of Accounting): a consolidated condensed balance sheet, a consolidated condensed statement of operations and comprehensive loss and a consolidated condensed statement of cash flows.” MrThe consolidated condensed statement of net assets and the consolidated condensed statement of changes in net assets are the principal financial statements presented under the Liquidation Basis of Accounting. ~~Walker~~Although ~~currently~~the ~~ranks~~Plan asof Complete Liquidation and Dissolution was approved by the ~~world’s~~Board ~~12th~~on ~~most~~June ~~patented~~28, ~~living~~2018, ~~individual~~the Company is using the liquidation basis of accounting effective June 30, ~~based~~2018 onas Ua convenience date.S. ~~patent~~Any ~~issuances~~activity ~~according~~between toJune ~~Wikipedia~~28 and June 30 would not be materially different under the going concern basis.

~~All~~Prior ~~improvements~~ to the ~~intellectual~~approval ~~property~~of ~~assets~~the ~~that~~liquidation, ~~were~~through ~~primary~~our towholly-owned ~~Walker~~subsidiaries, ~~Licensing’s~~we ~~business~~historically created, ~~together~~commercialized, ~~with~~licensed ~~any~~and, ofwhen ~~the~~necessary, ~~intellectual~~legally ~~property~~enforced ~~associated~~our ~~with~~homegrown ~~Haystack~~portfolio IQof patents, ~~have~~which ~~been~~we ~~assigned~~acquired tofrom our ~~subsidiary~~affiliate ~~Inventor~~Walker ~~Holdings~~Digital, LLC ~~pursuant~~(“Walker toDigital”). anIn ~~Invention~~early ~~Assignment~~2015 ~~Agreement~~we ~~with~~launched ~~Mr.~~an ~~Walker.~~innovation ~~While~~business, ~~the~~which ~~terms~~consisted of ~~the~~Haystack ~~Invention~~IQ™ ~~Assignment~~(formerly ~~Agreement~~known doas ~~not~~“The ~~entitle~~United usStates toPatent ~~any~~Utility™”) ~~other~~and ~~intellectual~~custom ~~property~~business Mrinnovation services. ~~Walker~~In ~~may~~light ~~develop~~of insignificant ~~the~~adverse ~~future~~developments affecting patent enforcement entities arising from certain Supreme Court holdings and legislative changes affecting our industry, inour ~~view~~operating ofbusiness ~~his~~lines ~~significant~~have ~~equity~~reported ~~position~~minimal revenues in ~~the~~recent ~~Company~~periods and ~~the~~our ~~Company’s~~current ~~platform~~plan ~~for~~of operation, prior to the ~~protection~~decision of the ~~intellectual~~Board ~~property~~to itpursue ~~holds~~the Plan of Dissolution, ~~Mr.~~included ~~Walker~~a ~~may~~carefully ~~nevertheless~~focused ~~determine~~Licensing and Enforcement program, efforts to ~~develop~~improve operational efficiencies and ~~commercialize~~preserve ~~intellectual~~cash, ~~property~~and an effort to acquire, through ~~the~~merger, ~~Company~~share exchange, asset acquisition, plan of arrangement, recapitalization, reorganization or similar business combination, one or more operating businesses, either within our current verticals or in new industry segments, or control of such operating businesses through contractual arrangements. ~~The~~After ~~terms~~an extended period of evaluation, and ~~conditions~~in consultation with a financial advisor engaged to provide guidance in this regard, the Board concluded that none of ~~any~~the ~~such~~viable ~~transaction~~acquisition ~~would~~targets bepresented ~~negotiated~~characteristics ~~between~~that ~~Mr.~~fulfilled ~~Walker~~our criteria of increasing stockholder value and creating opportunity for our ~~Audit~~investors. ~~Committee~~As ata result, on June 28, 2018, the ~~time~~Board ofadopted ~~such~~resolutions ~~determination~~seeking to schedule the special meeting and propose for stockholder approval the Plan of Dissolution.

~~All~~Critical ofaccounting ~~our~~policies intellectual property assets were created with the goal of solving business problems, with the intent to achieve commercial status. However, it is our belief that some of our inventions have become part of the commercial activities of other businesses without having been licensed, depriving us of financial value. Our monetization efforts include the possible sale or licensing of all or part of the relevant patent portfolio. We are also considering enforcement activities for certain patents, although the timing and ~~extent of these activities depends upon many factors affecting the market for patents and the patent enforcement industry that are beyond our control.~~estimates

12For a complete summary of our significant accounting policies, refer to Note 3, “Summary of Significant Accounting Policies”, in Part IV, Item 15 of our fiscal 2017 Annual Report.

Results of operations

In light of the adoption of the Liquidation Basis of Accounting as of June 28, 2018, the results of operations for the current period are not comparable to the prior year periods. Due to the adoption of the Plan of Liquidation and Dissolution, we no longer consider our results of operations to be a key performance measure.

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OnChanges November 28, 2016, the Company entered into a Release and Settlement Agreement with Walker Digital (the “Settlement Agreement”) relating to rights to indemnification from Walker Digital as a consequence of a settlement with a third party. The terms of the Settlement Agreement were approved by the Audit Committee of the Company. The Settlement Agreement required Walker Digital to pay the Company $125 in ~~cash,~~net orassets to return to the Company shares of its common stock having a value of $125 within six months following the date of the Settlement Agreement and acknowledged the direct and indirect benefits received by the Company from Walker Digital in ~~connection~~liquidation ~~with~~for the ~~sale~~Period ofended ~~shares~~June of Upside by the Company in the November Purchase Agreement (as described below) as part of the consideration received in connection with the release of the Company’s indemnification claims against Walker Digital. On May 2430, 2017, Walker Digital returned to the Company shares of its Common Stock having a value of $125. On December 18, 2017, pursuant to an agreement approved by the Audit Committee on December 6, 2017, Walker Digital returned to the Company shares of its Common Stock having a value of $157, in reimbursement of legal fees and expenses paid by the company on behalf of Walker Digital in connection with the Third Party Settlement.2018

~~Overview~~Upon adoption of the Liquidation Basis of Accounting as of June 30, 2018, the Company’s stockholders equity was decreased by approximately $2.5 million to arrive at net assets in liquidation of $20.2 million. The primary reason for the decrease in net assets as of June 30, 2018 was due to the accrual of estimated liquidation and operating costs during liquidation of $1.9 million, which includes an accrual for compensation and severance costs of $886. In addition, the Company intends to settle in the money vested options in the amount of $550.

~~Operating~~Estimated ~~activities~~liquidation ~~of the first quarter of 2018 were principally focused on the development, licensing~~ and enforcement of our patent portfolios and continuing our efforts to acquire, through merger, share exchange, asset acquisition, plan of arrangement, recapitalization, reorganization or similar business combination, one or more operating ~~businesses,~~costs ~~either~~during within our current verticals or in new industry segments, or control of such operating businesses through contractual arrangements, continuing efforts to improve operational efficiencies and preserve cash, as well as the development of our patent portfolio and select patent monetization and enforcement related activities.liquidation

~~Current~~The Liquidation Basis of Accounting requires the Company to estimate net cash flows from operations and to accrue all costs associated with implementing and completing the Plan of ~~Operation~~Complete Liquidation and Dissolution. These amounts can vary significantly due to, among other things, the costs of retaining personnel and others to oversee the liquidation, the cost of insurance, the timing and amounts associated with discharging known and contingent liabilities and the costs associated with cessation of the Company’s operations, including an estimate of costs subsequent to that date. As a result, the Company has accrued the projected costs, including corporate overhead and specific liquidation costs of severance, professional fees, and other miscellaneous wind-up costs expected to be incurred during the projected period and required to complete the liquidation of the Company’s remaining assets.

~~The~~These ~~Company’s~~accruals ~~current~~will ~~plan~~be ofadjusted ~~operations~~from ~~includes~~time ato ~~carefully~~time ~~focused~~as ~~Licensing~~projections and ~~Enforcement~~assumptions ~~program,~~change. ~~continuing~~These ~~efforts~~costs are anticipated to ~~improve~~be ~~the~~paid ~~operational~~throughout ~~efficiencies~~the ~~and~~liquidation ~~preserve~~period. ~~cash,~~Based ~~and~~on anthe ~~effort~~transition to ~~acquire,~~the ~~through~~Liquidation ~~merger,~~Basis ~~share exchange, asset acquisition, plan~~ of ~~arrangement,~~Accounting ~~recapitalization,~~on ~~reorganization~~June ~~or similar business combination~~30, ~~one or more operating businesses~~2018, ~~either~~the ~~within~~Company ~~its~~accrued ~~current~~as ~~verticals or in new industry segments, or control~~ of ~~such~~that ~~operating~~date ~~businesses~~the ~~through~~following ~~contractual~~expenses ~~arrangements.~~expected ~~The Company expects~~ to ~~consider~~be ~~acquisition~~incurred ~~opportunities,~~in ifconnection ~~any,~~with ~~based~~dissolution ~~on the circumstances presented by the business trends discussed above~~ and ~~the potential benefits to stockholders.~~liquidation:

Licensing and Enforcement

	June 30, 2018
	(in thousands)
Liability for compensation and related benefits resulting from liquidation	$	886
Liability for estimated costs during liquidation:
Insurance costs		345
Professional fees		344
Other operating expenses		338
Total		1,027
Liability for in the money options outstanding resulting from liquidation		550
Liability for estimated costs during liquidation	$	2,463

Our Licensing and Enforcement revenues historically have fluctuated period to period, and can vary significantly, based on a number of factors including the following:

• the dollar amount of agreements executed each period, which can be driven by the nature and characteristics of the technology or technologies being licensed and the magnitude of infringement associated with a specific licensee;

• the specific terms and conditions of agreements executed each period including the nature and characteristics of rights granted, and the periods of infringement or term of use contemplated by the respective payments;

• fluctuations in the total number of agreements executed each period;

• the timing, results and uncertainties associated with patent filings and other enforcement proceedings relating to our intellectual property rights;

• the ageing of the patent portfolio; and

• other external factors, including developments in the law affecting patent enforcement.

All of the Licensing and Enforcement revenues were generated through settlement and non-exclusive license agreements. All of the agreements provide for a one-time payment to the Company. Generally we are willing to engage in settlement discussions with defendants at any appropriate time during the course of litigation. We will agree to settle a dispute with a defendant when we believe that such a settlement and the terms of the agreement are in the best interest of the Company and its shareholders. The environment for entering into such patent sale agreements or license agreements in the first quarter of 2018 continues to be adversely affected by several significant developments in the intellectual property industry, including the continued effect of the Leahy-Smith America Invents Act of 2011 (including several new means by which challenges of the validity of our patents may be effected, including inter partes review proceedings) and the Supreme Court holding in the Alice Corp. v. CLS Bank International case, which called into question the patentability of certain types of inventions. In view of these trends, we are anticipating that the revenues from Licensing and Enforcement will continue to be minimal.

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Results of Operations

For the ~~Three~~Six Months Ended ~~March~~June 3130, 2018 Compared with ~~Three~~the Six Months Ended ~~March~~June 3130, 2017 (Going Concern Basis)

Net Loss

Net loss for the ~~three~~six months ended ~~March~~June 3130, 2018 was $~~615~~1,088 compared to net ~~loss~~income of $~~1,160~~281 for the ~~three~~six months ended ~~March~~June 3130, 2017.

Operating expenses of $~~656~~1,208 for the ~~quarter~~six months ended ~~March~~June 3130, 2018 included other legal and consulting fees of $2, patent prosecution and maintenance fees of $1424, compensation and related benefits (including non-cash compensation of $3251) of $~~301~~537, professional fees of $~~216~~425, and general and administrative expense of $~~123~~220.

Operating expenses of $12,~~284~~148 for the ~~quarter~~six months ended ~~March~~June 3130, 2017 included other legal and consulting fees of $~~100~~252, patent prosecution and maintenance fees of $3368, compensation and related benefits (including non-cash compensation of $~~248~~294) of $~~679~~1,056, professional fees of $~~278~~446, and general and administrative expense of $~~194~~326. Included in non cash compensation is a one time non-recurring charge of $114 in connection with the repricing of certain options.

Revenues

We recorded no revenues for either the ~~three~~six months ended ~~March~~June 3130, 2018 or the ~~three~~six months ended ~~March~~June 3130, 2017.

Although we ~~continue~~pursued ~~to engage in negotiations regarding licensing arrangements, pursue~~ a carefully focused enforcement program, and ~~conduct~~conducted other activities intended to produce revenue, no revenue was ~~recognizable~~recognized for the periods presented.

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Licensing and Enforcement Expenses

	Three Months Ended
	Six Months Ended
	March 31, 2018		March 31, 2017		% Change
	June 30, 2018		June 30, 2017		% Change
Other legal and consulting fees	$	2	$	~~100~~252		(9899	)%
Patent prosecution and maintenance costs		1424		3368		(5865	)%
Total licensing and enforcement expenses	$	1626	$	~~133~~320		(8892	)%

Other legal and consulting expenses for the ~~three~~six months ended ~~March~~June 3130, 2018 and June 30, 2017 were $2 and $~~100~~252, respectively. The decrease in other legal and consulting fees during the ~~first~~six ~~quarter~~months ofended June 30, 2018 as compared to the ~~first~~six ~~quarter~~months ofended June 30, 2017 was mainly attributable to our more focused licensing and enforcement efforts. Other legal and consulting expenses fluctuate from period to period based on patent enforcement and prosecution activity associated with ongoing licensing and enforcement programs and the timing of the commencement of new licensing and enforcement efforts ~~in each period. We expect other legal and consulting expenses to continue to fluctuate period to period based on the factors summarized above~~, ~~in connection with scheduled trial dates,~~ if any, ~~and~~in ~~our~~each ~~current and future patent development, licensing and enforcement activities~~period.

Patent prosecution and maintenance expenses for the ~~first~~six ~~quarter~~months ofended June 30, 2018 decreased to $1424 from $3368 in ~~first~~the ~~quarter~~six months ended June 30, 2017. Patent prosecution and maintenance expenses are related to legal fees and Patent Trademark Office expenses for reexaminations and patent prosecutions.

General and Administrative Expenses

Three Months Ended

Six Months Ended

March 31, 2018

March 31, 2017

% Change

June 30, 2018

June 30, 2017

% Change

Compensation and benefits

~~301~~537

~~679~~1,056

(5649

Professional fees

~~216~~425

~~278~~446

(225

General and administrative

~~123~~220

~~194~~326

(3733

Total general & administrative expenses

~~640~~1,182

1,~~151~~828

(4435

Compensation and benefits expense decreased by 5649% for the ~~three~~six months ended ~~March~~June 3130, 2018 from $~~679~~1,056 to $~~301~~537 and includes share based compensation of $3251 and $~~248~~294 for the ~~first~~six ~~quarter~~months ended ~~March~~June 3130, 2018 and June 30, 2017, respectively. The decrease in compensation and benefits is related to an overall decrease in headcount from 7 in 2017 to 4 3 in 2018.

Professional fees for the ~~first~~period ~~quarter~~ended ofJune 30, 2018 decreased by 225% and totaled $~~216~~425 and related primarily to accounting and legal fees of $~~158~~257, board fees of $39118 and public company expenses of $1950.

14Total general and administrative expenses decreased by 33% to $220 for the six months ended June 30, 2018 compared to $326 for the six months ended June 30, 2017. The decrease is attributed to decreases of $88 of office space, utilities and telephone, $4 in computer and office expenses and corporate taxes of $6.

Other Income

Other income includes amortization incurred in connection with the Upside warrant, as well as amounts received related to services provided in connection with the Upside Services Agreement. The Upside Services Agreement expired in the fourth quarter of 2017, and the warrant was fully amortized in the fourth quarter of 2017. Accordingly, there was no other income in the first six months of 2018, compared to the first six months of 2017 where other income totaled $229, of which $61 was received from Upside in connection with services provided and $84 of amortization was recorded in connection with the Upside warrant.

For the Three Months Ended June 30, 2018 Compared with Three Months Ended June 30, 2017 (Going Concern Basis)

Net Loss

Net loss for the three months ended June 30, 2018 was $474 compared to net income of $1,441 for the three months ended June 30, 2017.

Operating expenses of $553 for the quarter ended June 30, 2018 included patent prosecution and maintenance fees of $10, compensation and related benefits (including non-cash compensation of $19) of $236, professional fees of $209, and general and administrative expense of $98.

Operating expenses of $864 for the quarter ended June 30, 2017 included other legal and consulting fees of $151, patent prosecution and maintenance fees of $36, compensation and related benefits (including non-cash compensation of $46) of $377, professional fees of $168, and general and administrative expense of $132.

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Total general and administrative expenses decreased by 37% to $123 for the quarter ended March 31, 2018 compared to $194 for the quarter ended March 31, 2017. The decrease is attributed to decreases of $23 of office space, utilities and telephone, $17 in computer and office expenses, insurance of $6 and corporate taxes of $53 and was offset slightly by an increase in corporate taxes of $18.Revenues

We recorded no revenues for either the three months ended June 30, 2018 or the three months ended June 30, 2017.

Licensing and Enforcement Expenses

	Three Months Ended
	June 30, 2018		June 30, 2017		% Change
Other legal and consulting fees	$	--	$	151		(100	)%
Patent prosecution and maintenance costs		10		36		(72	)%
Total licensing and enforcement expenses	$	10	$	187		(95	)%

Other legal and consulting expenses for the three months ended June 30, 2018 and 2017 were $0 and $151, respectively. The decrease in other legal and consulting fees during the three months ended June 30, 2018 as compared to the three months ended June 30, 2017 was mainly attributable to our more focused licensing and enforcement efforts. Other legal and consulting expenses fluctuate from period to period based on patent enforcement and prosecution activity associated with ongoing licensing and enforcement programs and the timing of the commencement of new licensing and enforcement efforts, if any, in each period.

Patent prosecution and maintenance expenses for the three months ended June 30, 2018 decreased to $10 from $36 in three months ended June 30, 2017. Patent prosecution and maintenance expenses are related to legal fees and Patent Trademark Office expenses for reexaminations and patent prosecutions.

General and Administrative Expenses

	Three Months Ended
	June 30, 2018		June 30, 2017		% Change
Compensation and benefits	$	236	$	377		(37	)%
Professional fees		209		168		24	%
General and administrative		98		132		(26	)%
Total general & administrative expenses	$	543	$	677		(20	)%

Compensation and benefits expense decreased by 37% for the three months ended June 30, 2018 from $377 to $236 and includes share based compensation of $19 and $46 for the three months ended June 28, 2018 and 2017, respectively. The decrease in compensation and benefits is related to an overall decrease in headcount from 7 in 2017 to 3 in 2018.

Professional fees for the first quarter of 2018 increased by 24% and totaled $209 and related primarily to accounting and legal fees of $99, board fees of $79 and public company expenses of $31.

Total general and administrative expenses decreased by 26% to $98 for the three months ended June 30, 2018 compared to $132 for the three months ended June 30, 2017. The decrease is attributed to decreases of $44 of office space, utilities and telephone, and was offset slightly by an increase in corporate taxes of $12.

Other Income

Other income includes amortization incurred in connection with the Upside ~~Warrant~~warrant, as well as amounts received related to services provided in connection with the Upside Services Agreement. The Upside Services Agreement expired in the fourth quarter of 2017, and the ~~Warrant~~ warrant was fully amortized in the fourth quarter of 2017. Accordingly, there was no other income in the ~~first~~second quarter of 2018, compared to the ~~first~~second quarter of 2017 where other income totaled $~~120~~109, of which $3625 was received from Upside in connection with services provided and $84 of amortization was recorded in connection with the Upside ~~Warrant~~warrant.

Critical Accounting Policies and Estimates

Our significant accounting policies are more fully described in Note 3 to our Unaudited Condensed Consolidated Financial Statements. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses, and the related disclosures of contingent assets and liabilities. Actual results could differ from those estimates under different assumptions or conditions. The Company’s significant estimates and assumptions include estimates of liquidation costs, stock-based compensation, the valuation allowance related to the Company’s deferred tax assets revenue recognition, and establishing the fair value of its investments.

~~Liquidity and Capital Resources~~17

~~Our~~Table ~~current assets were $23.4 million at March 31, 2018, including $20 million~~ of short-term investments resulting from our investment of cash equivalents in highly liquid bank certificates of deposit. Working capital amounted to $23.2 million as of March 31, 2018. We have narrowed the focus of our litigation business to those patent families that we believe will yield the highest return and we have discretion as to whether the associated legal costs are incurred hourly or on a contingent basis. We believe we have the ability to manage our expenses while we invest in growing our top line and therefore believe that the Company's cash and cash equivalents are sufficient to meet our liquidity needs for at least the next twelve months from the issuance date of this filing. Cash used in operating activities was approximately $0.8 million for the quarter ended March 31, 2018. Contents

Liquidity

Our current assets were $22.8 million at June 30, 2018, including $20 million of short-term investments resulting from our investment of cash equivalents in highly liquid bank certificates of deposit. Working capital amounted to $22.8 million as of June 30, 2018. As a result of the adoption of the Plan of Complete Liquidation and Dissolution by our Board and the related winding up of business activities, the Company's cash and cash equivalents are sufficient to meet our liquidity needs for at least the next twelve months from the issuance date of this filing. Cash used in operating activities was approximately $0.5 million for the quarter ended June 30, 2018.

Contractual Obligations

We had no significant commitments for capital expenditures and we have no committed lines of credit or other committed funding or long-term debt as of ~~March~~June 3130, 2018.

Off-Balance Sheet Transactions

We are not party to any off-balance sheet transactions. We have no guarantees or obligations other than those which arise out of normal business operations.

Recently Issued Accounting Pronouncements

~~See~~As ~~Note~~a 3result toof ~~our~~adopting ~~Unaudited~~the ~~Condensed~~Liquidation ~~Consolidated~~Basis ~~Financial~~of ~~Statements~~Accounting, aswe ofbelieve ~~March~~no ~~31,~~new ~~2018,~~accounting ~~included~~pronouncements ~~elsewhere~~will have a material impact on our net assets in ~~this~~liquidation ~~document~~or changes in net assets in liquidation.

Item 3.

Quantitative and Qualitative Disclosures about Market Risk.

Not applicable.

Item 4.

Controls and Procedures

Disclosure Controls and Procedures

AsWe ofare ~~March~~committed ~~31,~~to ~~2018,~~maintaining wedisclosure ~~conducted~~controls anand ~~evaluation,~~procedures ~~under~~designed ~~the~~to ~~supervision~~ensure ~~and~~that ~~participation~~information ofrequired ~~management~~to ~~including~~be disclosed in our ~~chief~~periodic ~~executive~~reports ~~officer~~filed ~~and~~under ~~chief~~the ~~financial~~Exchange ~~officer~~Act is recorded, ofprocessed, summarized and reported within the ~~effectiveness~~time ofperiods ~~our~~specified ~~disclosure~~in ~~controls~~the SEC’s rules and ~~procedures~~forms, ~~(as~~and ~~defined~~that insuch ~~Rule~~information ~~13a-15(e)~~is accumulated and ~~Rule~~communicated ~~15d-15(e)~~to ofour ~~the~~management, ~~Securities~~including ~~Exchange~~our ~~Act~~Chief ofExecutive ~~1934~~Officer and Chief Financial Officer, as ~~amended).~~appropriate, ~~There~~to ~~are~~allow ~~inherent~~for ~~limitations~~timely todecisions ~~the~~regarding ~~effectiveness~~required ofdisclosure. ~~any~~In ~~system~~designing ofand evaluating our disclosure controls and procedures~~. Accordingly~~, ~~even~~we ~~effective~~recognize ~~disclosure~~that any controls and procedures, ~~can~~no ~~only~~matter how well designed and operated, can provide only reasonable assurance of achieving ~~their~~the desired control objectives, and we necessarily are required to apply our judgment in evaluating the cost-benefit relationship of possible controls and procedures and implementing controls and procedures.

As of June 30, 2018, the end of the period covered by this Quarterly Report on Form 10-Q, we have, with the participation of our Chief Executive Officer and Chief Financial Officer evaluated the effectiveness of the design and effectiveness of our disclosure controls and procedures, as such terms are defined in Rule 13a-15(e) and Rule 15d-15(e) under the Securities and Exchange Act of 1934 as amended June 30, 2018. Based upon this evaluation, our Chief Executive Officer and our Chief Financial Officer concluded that our disclosure controls and procedures are effective at the reasonable level as of June 30, 2018.

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Based upon this evaluation, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures are effective at the reasonable assurance level as of March 31, 2018.

Changes in Internal Control over Financial Reporting

There ~~were~~has been no ~~changes~~change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the ~~quarter~~period ~~ended~~covered ~~March~~by ~~31,~~this ~~2018~~Quarterly Report on Form 10-Q that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

Below is a brief description of developments regarding material pending legal proceedings, other than ordinary routine litigation incidental to the business, to which we or any of our subsidiaries is a party or of which any of their property is the subject during the quarter ended ~~March~~June 3130, 2018.

On February 23, 2018, Unified Patents Inc. filed a Petition with the United States Patent and Trademark Office before the Patent Trial and Appeal Board (“PTAB”) for an Inter Partes Review of one or more claims of US Patent 8,549,310. Certified Measurements, LLC estimates the PTAB will decide whether or not to institute the proceeding on or prior to the end of September 2018.

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Item 1A. Risk Factors.

Not required for a smaller reporting company.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

None.

Item 3. Default Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

None.

Item 5. Other information.

~~Submission of Matters to a Vote of Security Holders~~None.

~~The~~Item ~~Company held its Annual Meeting of Stockholders on May 3, 2018~~6. At that meeting there were 11,642,780 shares of Common Stock and 14,999,000 shares of Series B Convertible Preferred Stock present in person or by proxy and entitled to vote. Each share of Common Stock entitles its holder to one vote on any matter submitted to the stockholders. The holder of the Series B Convertible Preferred Stock vote together with the Common Stock on all matters where stockholders are entitled to vote. The holders of the Series B Convertible Preferred Stock are entitled to cast an aggregate of 80% of the total votes that may be cast with respect to any such matter. The matters voted upon and the results of the vote (after giving effect to the foregoing weighting of votes cast) are set forth below. Exhibits

~~Proposal~~The ~~One:~~following ~~Election~~is ofa ~~Directors. Stockholders~~list ~~elected each~~ of ~~the~~exhibits ~~following~~filed ~~nominees~~ as ~~director~~part toof ~~hold~~this ~~office~~Quarterly ~~until~~Report ~~the~~on ~~2019~~Form ~~Annual Meeting and until his or her successor is elected and qualified~~10-Q.

Directors	Votes For	Votes Withheld	Broker Non-Votes
Exhibit No.
Jay S. Walker	29,568,345	28,523	2,554,443
31.1	Certification of Principal Executive Officer Pursuant to Section 302 of The Sarbanes-Oxley Act of 2002.
Jonathan Ellenthal	29,567,472	29,397	2,554,443
31.2	Certification of Principal Financial Officer Pursuant to Section 302 of The Sarbanes-Oxley Act of 2002.
Jonathan A. Siegel	29,567,472	29,397	2,554,443
32.1	Certification of Principal Executive Officer Pursuant to Section 906 of The Sarbanes-Oxley Act of 2002.
Nathaniel J. Lipman	29,554,567	42,301	2,554,443
32.2	Certification of Principal Financial Officer Pursuant to Section 906 of The Sarbanes-Oxley Act of 2002.
Richard J. Salute	29,484,761	112,108	2,554,443
101.INS	XBRL Instance Document.
101.SCH	XBRL Taxonomy Schema.
101.CAL	XBRL Taxonomy Extension Calculation Linkbase.
101.DEF	XBRL Taxonomy Extension Definition Linkbase.
101.LAB	XBRL Taxonomy Extension Label Linkbase.
101.PRE	XBRL Taxonomy Extension Presentation Linkbase.

Proposal Two: Ratification of Appointment of Independent Auditors. Stockholders approved the ratification of the appointment of Marcum, LLP as the Company's independent auditors for the fiscal year ending December 31, 2018.19

Votes For	Votes Against	Abstentions	Broker Non-Votes
31,824,728	210,108	106,475	0

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16SIGNATURES

~~Table~~Pursuant to the requirements of ~~Contents~~the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Item 6. Exhibits

	WALKER INNOVATION INC.

Dated: August 6, 2018	By:	/s/ Jonathan A. Siegel
		Jonathan A. Siegel
		Chief Executive Officer (Principal Executive Officer)

Dated: August 6, 2018	By:	/s/ Kara B. Jenny
		Kara B. Jenny
		Chief Financial Officer (Principal Financial Officer and Accounting Officer)

~~The following is a list of exhibits filed as part of this Quarterly Report on Form 10-Q.~~20

Exhibit No.
31.1	Certification of Principal Executive Officer Pursuant to Section 302 of The Sarbanes-Oxley Act of 2002.
31.2	Certification of Principal Financial Officer Pursuant to Section 302 of The Sarbanes-Oxley Act of 2002.
32.1	Certification of Principal Executive Officer Pursuant to Section 906 of The Sarbanes-Oxley Act of 2002.
32.2	Certification of Principal Financial Officer Pursuant to Section 906 of The Sarbanes-Oxley Act of 2002.
101.INS	XBRL Instance Document.
101.SCH	XBRL Taxonomy Schema.
101.CAL	XBRL Taxonomy Extension Calculation Linkbase.
101.DEF	XBRL Taxonomy Extension Definition Linkbase.
101.LAB	XBRL Taxonomy Extension Label Linkbase.
101.PRE	XBRL Taxonomy Extension Presentation Linkbase.

Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	WALKER INNOVATION INC.
Dated: May 7, 2018	By:	/s/ Jonathan A. Siegel
		Jonathan A. Siegel
		Chief Executive Officer (Principal Executive Officer)
Dated: May 7, 2018	By:	/s/ Kara B. Jenny
		Kara B. Jenny
		Chief Financial Officer (Principal Financial Officer and Accounting Officer)

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