The following discussion should be read in conjunction with our consolidated financial statements and the notes thereto and includes forward-looking statements with respect to the Company's future financial performance. Actual results may differ materially from those currently anticipated and from historical results depending upon a variety of factors, including those described elsewhere in this Annual Report and under the sub-heading, "Risk Factors - Important Factors Related to Forward-Looking Statements and Associated Risks."

General

We are a holding company incorporated under the laws of Delaware that operates through a wholly-owned California subsidiary of the same name. We are an intellectual property licensing company developing and pursuing licensing of three intellectual property portfolios: context and interpersonal awareness systems ("Nunchi�" technology), advanced data security technologies ("microSignet�" technology) and secure communication technologies ("Synap�" technology).

Through September 30, 2015 we had two operating segments: (1) patent licensing and enforcement and (2) products and services. Our patent licensing consists of intellectual property revenues from our patent and technology portfolio. Our products and services revenue consisted of sales of eVU products and accessories to customers and related services. At September 30, 2015 we ceased providing eVU services, effectively ending this segment's operations.

Licensing and Patent Enforcement Activities

We commenced legal enforcement actions in 2007 related to our Flash-R flash memory patent portfolio now expired. We successfully obtained license terms from 83 companies and related distributors through September 30, 2015. We believe our success created both awareness and recognition of our intellectual property among household named companies and their counsel.

Our current licensing and enforcement activity consists of the following:

Nunchi Technology Enforcement - We commenced legal action with regards to our Nunchi portfolio of patents in July 2014. As of March 31, 2016, we have filed patent infringement litigation and sought licenses from eight companies and related distributors. We have entered into one royalty bearing license agreement and one settlement agreement with one defendant. We currently have six active complaints in the U.S. District Court for the Northern District of California and one active complaint in the U.S. District for the Southern District of California. We expect to file future complaints against additional companies. In December 2015, the United States Patent Trial and Appeal Board (PTAB) granted a defendant's petition for Inter Partes Review (IPR) of the asserted patents. An IPR is a procedure for challenging the validity of a United States patent before the United States Patent and Trademark Office (USPTO). If the patents are upheld, we believe the patents will be stronger against other future defendants considering IPR challenges. We are in early negotiations with other defendants, and are confident regarding license and settlement prospects for the Nunchi portfolio.

microSignet Technology - We are seeking to license our microSignet technology and to date have not commenced any legal actions but may do so in the future.

Synap Technology -We are seeking to license our Synap technology and to date have not commenced any legal actions, but may do so in the future.

Our historical licensing revenues were from our Flash-R patent portfolio and we are now in the early stages of licensing activities on our other portfolios. We also seek to extend our portfolio related to our existing technologies and develop new technologies for licensing.

Our business is high risk in nature. There can be no assurance we can achieve sufficient patent license or other revenues to sustain profitability. We continue to be subject to the risks normally associated with introducing new products, services and technologies, including unforeseeable expenses, delays and complications. Accordingly, there is no guarantee that we can or will report operating profits in future periods.

Overall Performance and Trends

We focused significant efforts on developing, licensing and enforcing our patent portfolio in the fiscal years ended March 31, 2016 and 2015. We have successfully completed enforcement litigation and are in the process of additional enforcement actions. There is a reluctance of patent infringers to negotiate and ultimately take a patent license without at least the threat of legal action. However, the majority of patent infringement contentions settle out of court, based on the strength of the patent claims, validity, and persuasive evidence and clarity that the patent is being infringed. We believe we are building a track record of demonstrating the strength, validity and clarity of our patent claims that can result in significant future revenues from our patent portfolio.

Revenues and profits have been sporadic in prior years and we have incurred significant historical losses and negative cash flow from operations. We expect to incur losses in the future until licensing or other revenues are sufficient to sustain continued profitability. Our ability to continue as a going concern is in doubt and is dependent upon achieving a profitable level of operations and if necessary obtaining additional financing.

For the year ended March 31, 2016:

� We recognized a net loss of $1,275,164 compared to net loss of $235,153 for fiscal 2015. The difference in results was primarily attributable to decreased patent license settlement revenues resulting from the end of the Flash-R portfolio patents and our transition to Nunchi and other technologies.

� Revenues of $709,531 decreased as compared to revenues of $2,235,803 for fiscal 2015. During fiscal 2016 we had 15 new license agreements as compared to 29 new license agreements in fiscal 2015. As a result of the timing of such license agreements, our licensing revenues in fiscal 2016 totaled $693,500 compared to $2,079,534 in fiscal 2015. Product and service revenues from our now terminated eVU business were $16,031 in fiscal 2016 compared to $156,269 in fiscal 2015.

� Operating expenses were $1.98 million for fiscal 2016 a decrease from $2.69 million in fiscal 2015 primarily as a result of reduced headcount and expenses related to the terminated eVU business and reduced contingent legal fees due to fewer new license agreements.

Management faces challenges in fiscal 2017 to generate license revenues from our technologies. These challenges include, but are not limited to, successful execution of our legal and licensing enforcement strategy in an uncertain and changing legal and regulatory environment related to patent infringement. The failure to obtain new patent license revenues could have a material adverse impact on our operations.

Critical Accounting Policies and Estimates

The discussion and analysis of our financial condition and results of operations is based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, we evaluate our estimates, including but not limited to those related to revenue recognition, inventory valuation, financing operations, stock-based compensation, fair values, derivatives, income taxes, contingencies and litigation. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

We believe that, of the significant accounting policies discussed in Note 2 to our consolidated financial statements, the following accounting policies require our most difficult, subjective or complex judgments:

� revenue recognition;

� stock-based compensation expense; and

� income taxes

We discuss below the critical accounting assumptions, judgments and estimates associated with these policies. Historically other than our estimate of foreign tax expense incurred in fiscal 2009 and recovered in fiscal years 2011 and 2015 as discussed below, our assumptions, judgments and estimates relative to our critical accounting policies have not differed materially from actual results. For further information on our critical accounting policies, refer to Note 2 to the consolidated financial statements included herein.

Revenue Recognition

As described below, significant management judgments must be made and used in connection with the revenue recognized in any accounting period. Material differences may result in the amount and timing of revenue recognized or deferred for any period, if management made different judgments.

We recognize revenue in accordance with ASC Topic 605, Revenue Recognition. Revenue is recognized when (i) persuasive evidence of an arrangement exists, (ii) all obligations have been substantially performed pursuant to the terms of the license agreement, (iii) amounts are fixed or determinable and (iv) collectability of amounts is reasonably assured.

We make estimates and judgments when determining whether the collectability of license fees receivable from customers is reasonably assured. We assess the collectability of our receivables based on a number of factors, including past transaction history and the credit-worthiness of customers. Management estimates regarding collectability impact the actual revenues recognized each period and the timing of the recognition of revenues. Our assumptions and judgments regarding future collectability could differ from actual events, thus materially impacting our financial position and results of operations.

Certain license agreements provide for the payment of contractually determined paid-up license fees in consideration for the grant of a non-exclusive, retroactive and future license to manufacture and/or sell products covered by our patented technologies. Generally, the execution of these license agreements also provide for the release of the licensee from certain past and future claims, and the dismissal of any pending litigation. Pursuant to the terms of these agreements, we have no further obligation with respect to the grant of the non-exclusive retroactive and future license and related releases, including no express or implied obligation to maintain or upgrade the technology, or provide future support or services. Generally, the agreements provide for the grant of the license and releases upon execution of the agreement. As such, the earnings process is generally complete upon the execution of the agreement, and as a result, revenue is recognized upon execution of the agreement, when collectability is reasonably assured, and all other revenue recognition criteria have been met. While most licenses contain similar standard provisions, management must evaluate each agreement and make judgments to assure that substantial delivery of contract elements has occurred, whether any significant ongoing obligations exist subsequent to contract execution, whether amounts due are collectible and the appropriate period or periods, in which, or during which, respectively, the completion of the earning process occurs. Depending on the magnitude of specific license agreements, if different judgments, assumptions and estimates are made regarding contracts executed in any specific period, our periodic financial results may be materially affected.

In fiscal 2010 we entered into our first licenses providing for future royalties based on future licensee activities. Licensees that pay license fees on a periodic basis are required to report to us actual activity after the activity takes place. The amount of license fees due under these license agreements each period cannot be reasonably estimated by management. Consequently, we recognize revenue from these licensing agreements on a lag basis as royalties are reported provided amounts are fixed or determinable and collectability is reasonably assured. The lag method allows for the receipt of licensee royalty reports prior to the recognition of revenue. Differences between amounts recognized and amounts that could subsequently be audited or reported as an adjustment to those amounts will be recognized in the period such adjustment is determined as a change in accounting estimate.

Some license agreements include nonexclusive cross licenses and our policy is to value these only if directly used in operations. To date the we have not valued any cross licenses received as they were considered part of the licensee's overall license and settlement strategy and are not used in our products. However we must evaluate each license with cross license rights to determine what is being cross licensed and if it is used in our products and this requires management to make judgments that affect our operations.

Stock-Based Compensation

ASC Topic 718, "Compensation - Stock Compensation," or ASC 718, sets forth the accounting requirements for "stock-based" compensation payments to employees, non-employee directors and consultants and requires all stock based-payments to be recognized as expense in the statement of operations. The compensation cost for all stock-based awards is measured at the grant date, based on the fair value of the award (determined using a Black-Scholes option pricing model), and is recognized as an expense over the requisite service period (generally the vesting period of the equity award). Determining the fair value of stock-based awards at the grant date requires significant estimates and judgments, including estimating the market price volatility of our common stock, future employee stock option exercise behavior and requisite service periods. Due to our limited exercise history we applied the simplified method prescribed by SEC Staff Accounting Bulletin 110, Share-Based Payment: Certain Assumptions Used in Valuation Methods - Expected Term, to estimate expected life.

Options or stock awards issued to non-employees who are not directors are recorded at their estimated fair value at the measurement date and are periodically revalued as the options vest and are recognized as expense over the related service period on a graded vesting method. Stock options issued to consultants with performance conditions are measured and recognized when the performance is complete.

ASC Topic 718 requires stock-based compensation expense to be recorded only for those awards expected to vest using an estimated pre-vesting forfeiture rate. As such, ASC Topic 718 requires us to estimate pre-vesting option forfeitures at the time of grant and reflect the impact of estimated pre-vesting option forfeitures on compensation expense recognized. Estimates of pre-vesting forfeitures must be periodically revised in subsequent periods if actual forfeitures differ from those estimates. We consider several factors in connection with our estimate of pre-vesting forfeitures including types of awards, employee class, and historical pre-vesting forfeiture data. The estimation of stock awards that will ultimately vest requires judgment, and to the extent that actual results differ from our estimates, such amounts will be recorded as cumulative adjustments in the period the estimates are revised. If actual results differ significantly from these estimates, stock-based compensation expense and our results of operations could be materially impacted.

ASC 718 also provides that any corporate income tax benefit realized upon exercise or vesting of an award in excess of that previously recognized in earnings (referred to as a "windfall tax benefit") will be presented in the Consolidated Statements of Cash Flows as a financing (rather than as operating) cash flow. Realized windfall tax benefits are credited to paid-in capital. Realized shortfall tax benefits (amounts which are less than that previously recognized in earnings) are first offset against the cumulative balance of windfall tax benefits, if any, and then charged directly to income tax expense.

Refer to Notes 2 and 8 to our consolidated financial statements included in this annual report for more information.

Income Taxes

In preparing our consolidated financial statements, we estimate our income taxes in each of the countries in which we operate. While we believe we operate only in the United States, certain licensees have withheld taxes on license payments in foreign countries. During fiscal 2015 we recorded a tax benefit of $169,888 consisting of prior year foreign tax recoveries of $206,250 less foreign taxes paid of $36,362. We determined it unlikely we can recover a refund of the $36,362 of foreign taxes withheld and that we can only use the foreign taxes as a future credit against U.S. taxes. Matters regarding foreign taxes require us to make judgments and estimates based on various assumptions and these affect our reported operations.

Our determination of income tax expense or benefit requires estimates including an assessment of the current tax expense and the effects of temporary differences resulting from the different treatment of transactions for tax and financial accounting purposes. These differences result in deferred tax assets and liabilities, which are included in our consolidated balance sheet. The Company accounts for deferred income taxes utilizing an asset and liability method, whereby deferred tax assets and liabilities are recognized based on the tax effects of temporary differences between the financial statements and the tax bases of assets and liabilities, as measured by current enacted tax rates. Deferred tax assets are reduced by a valuation allowance if it is more likely than not that some portion or all of the deferred tax asset will not be realized. We evaluate the realizability of our deferred tax assets by assessing our valuation allowance and by adjusting the amount of such allowance, if necessary. At March 31, 2016, we had net deferred tax assets primarily resulting from temporary differences between the book and tax bases of assets and liabilities, and loss and credit carry forwards. We continue to provide a 100% valuation allowance our deferred tax assets based on an assessment of the likelihood of their realization. In reaching our conclusion, we evaluated certain relevant criteria including deferred tax liabilities that can be used to offset deferred tax assets, estimates of future taxable income of appropriate character within the carry-forward period available under the tax laws, and tax planning strategies. Our judgments regarding future taxable income may change due to market conditions, changes in U.S. or international tax laws, our business and results of operations, and other factors. These changes, if any, may require material adjustments to these deferred tax assets, resulting either in a tax benefit, if it is estimated that future taxable income is likely, or a reduction in the value of the deferred tax assets, if it is determined that their value is impaired, resulting in a reduction in net income or an increase in net loss in the period when such determinations are made.

Our income tax provision is based on calculations and assumptions that will be subject to examination by the taxing authorities in the jurisdictions in which we operate. Should the actual results differ from our estimates, we would have to adjust the income tax provision in the period in which the facts and circumstances that give rise to the revision become known. Tax law and rate changes are reflected in the income tax provision in the period in which such changes are enacted. As of March 31, 2016 and 2015, we had no material uncertain tax positions and uncertain tax positions have had no impact on our consolidated financial condition or results of operations or cash flows.

Other

We do not have off-balance sheet transactions, arrangements or obligations. Inflation has not had any significant impact on our business.

Recently Issued Accounting Standards

See Note 2 to our consolidated financial statements included herein for a description of significant recent accounting standards. Other accounting standards have been issued or proposed by the FASB or other standards-setting bodies that do not require adoption until a future date and are not expected to have a material impact on our consolidated financial statements upon adoption.

Results of Operations

Year ended March 31, 2016 Compared to Year ended March 31, 2015



                                      Year Ended March 31,
                               2016                          2015
                                       % of                          % of                  Change
                       Dollars         Revenue        Dollars        Revenue        Dollars            %
Revenues:
Products and
services                  16,031            2%         156,269            7%         (140,238 )        (90% )
Patent licensing         693,500           98%       2,079,534           93%       (1,386,034 )        (67% )
                         709,531          100%       2,235,803          100%       (1,526,272 )        (68% )
Operating costs
and expenses:
Cost of revenues:
Products and
services                   8,256            1%         242,027           11%         (233,771 )        (97% )
Patent licensing
and litigation
costs                    450,000           63%         455,274           20%           (5,274 )         (1% )
Contingent legal
fees and expenses        299,731           42%         700,352           31%         (400,621 )        (57% )
Selling and
administrative           859,640          121%         929,128           42%          (69,488 )         (7% )
Research and
development              367,068           52%         366,637           16%              431            0%
                       1,984,695          279%       2,693,418          120%         (708,723 )        (26% )
Operating loss
before other
income, provision
for or benefit
from income taxes     (1,275,164 )       (179% )      (457,615 )        (20% )       (817,549 )        179%

Operating loss before other income, provision for or benefit from income taxes

The operating loss before other income, provision for or benefit from income taxes in fiscal years 2016 and 2015 resulted from a reduced number of new license agreements. Since a significant majority of license revenues to date have been one-time licenses, they are non-recurring and accordingly there is no assurance of any future license revenues.

Revenues

Revenues decreased during fiscal 2016 compared to the prior fiscal year due to fewer new license arrangements as we transition enforcement efforts from the Flash-R patent portfolio to the Nunchi patent portfolio and other technologies and the termination of eVU products and services. Revenues for the year ended March 31, 2016 included $693,500 of one-time non recurring license revenues and $16,031 of eVU service revenues.

Revenues for the year ended March 31, 2015 included $2,077,000 of one-time non recurring license revenues, $2,534 of royalty-based license revenues and $156,269 of eVU product and service revenues.

In the current year we entered into a total of 15 patent licenses, and in the prior year there were 29 new licenses. License fee revenues recognized fluctuate significantly from period to period primarily based on the following factors:

� the dollar amount of agreements executed each period, which is primarily driven by the magnitude of infringement associated with a specific licensee;

� the specific terms and conditions of agreements executed each period and the periods of infringement contemplated by the respective payments; and

� fluctuations in the number of agreements executed.

In the future the following additional factors could also impact revenue variability:

� fluctuations in the sales results or other royalty per unit activities of our licensees that impact the calculation of license fees due;

� the timing of the receipt of periodic license fee payments and/or reports from licensees.

We are targeting new licensees but our results will continue to be dependent on the timing and amount of future licensing arrangements, if any.

Operating Expenses

Operating costs and expenses include costs associated with our licensing and enforcement activities, and through September 30, 2015, costs of revenues associated with eVU products and services. eVU product and service costs were 52% and 154% of related revenues for the fiscal years ended March 31, 2016 and 2015, respectively. The eVU business was terminated at September 30, 2015.

Licensing and litigation costs of revenues include the costs and expenses incurred in connection with our licensing and enforcement activities, including contingent and non-contingent litigation costs and related enforcement support costs. Non-contingent licensing and litigation costs and related enforcement support costs may be incurred without any directly related revenues in a respective period. Generally contingent costs relate to revenues during a respective period but can vary depending on our share of certain costs and expenses.

Selling and administrative costs decreased by $69,488 from fiscal 2015 to fiscal 2016. The decrease is primarily due to shareholder meeting expenses of $54,687 in fiscal 2015, with no comparable expense in fiscal 2016.

Research and related expenditures of $367,068 in fiscal 2016 were consistent with the prior year. We expect future research and development costs to be comparable to the most recent year due to current staffing levels and projects. Should we elect to develop significant new technologies or products we may require increased internal and external research and development costs.

Income Taxes

We had no provision for or benefit from income taxes in fiscal 2016. We had a tax benefit of $169,888 in the prior year, resulting from the recovery of $206,250 of foreign taxes paid in fiscal 2010, less foreign taxes paid in fiscal 2015 of $36,362.

Loss

The net loss for the year ended March 31, 2016 was $1,275,164. The net loss for the year ended March 31, 2015 was $235,153.

Liquidity and Capital Resources

                                                        2015 to 2016       2015 to 2016
                                                          variance           variance
                                  2015       2016          in $'s             in %'s
                                           (in thousands, except percentages)
     Working capital             $ 1,710     $ 503     $       (1,207 )             (71% )
     Cash and cash equivalents   $ 1,953     $ 701     $       (1,252 )             (63% )
     Total assets                $ 2,014     $ 759     $       (1,255 )             (62% )




                                                             2015 to 2016     2014 to 2015
                                                               variance         variance
                                      2015        2016          in $'s           in %'s
    Net cash provided by (used in)             (in thousands, except percentages)
    Operating activities             $ 164     $ (1,233 )   $     (1,397 )          (844% )
    Investing activities             $   0     $    (25 )   $        (25 )              -
    Financing activities             $   1     $      7     $          6            (536% )

At March 31, 2016, we had working capital of $503,000 compared to working capital of $1.71 million for the prior year. We had no working capital invested in accounts receivable at March 31, 2016, and $11,218 at March 31, 2015. License payments are normally due at signing of the license or within 30-45 days. We currently have no credit lines or debt arrangements to provide working capital other than from cash as generated from operations.

Operating Activities

For the year ended March 31, 2016, net cash decreased by $1,251,500. Cash used . . .