Network-1 Reports Second Quarter Results
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Network-1 Reports Second Quarter Results

Thursday, August 12, 2021 7:20 PM
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Network-1 Technologies, Inc.

NEW YORK, NY / ACCESSWIRE / August 12, 2021 / Network-1 Technologies, Inc. (NYSE American:NTIP), a company specializing in the development, licensing, and protection of its intellectual property assets, today announced financial results for the quarter ended June 30, 2021.

Network-1 had no revenue for the three months ended June 30, 2021 and revenue of $18,692,000 for the six months ended June 30, 2021, as compared to revenue of $55,000 and $216,000 for the three and six months ended June 30, 2020, respectively. The increase in revenue for the six months ended June 30, 2021 was due to revenue of $18,692,000 from Network-1's resolution of a contractual dispute with Cisco Systems, Inc. concerning the licensing of Network-1's Remote Power Patent.

Network-1 realized a net loss of $783,000 or $0.03 per share basic and diluted for the three months ended June 30, 2021 compared with a net loss of $584,000 or $0.02 per share basic and diluted for the three months ended June 30, 2020. The increased net loss was primarily due to an increase in litigation costs of $184,000.

Network-1 realized net income of $8,668,000 or $0.36 per share basic and $0.35 diluted for the six months ended June 30, 2021 compared with a net loss of $1,921,000 or $0.08 per share basic and diluted for the six months ended June 30, 2020. The increase in net income was primarily due to $18,692,000 of revenue from the resolution of a contractual dispute with Cisco during the three months ended March 31, 2021.

At June 30, 2021, Network-1 had cash and cash equivalents and marketable securities of $53,775,000 and working capital of $51,611,000. Network-1 believes based on its current cash position it will have sufficient cash to fund its operations for the foreseeable future.

On July 26, 2021, Network-1 agreed to settle its patent litigation against Hewlett-Packard Company and Hewlett-Packard Enterprise Company (collectively, "HP") pending in the U.S. District Court for the Eastern District of Texas, Tyler Division, for infringement of Network-1's Remote Power Patent. Under the terms of the settlement agreement, Hewlett-Packard Enterprise Company paid Network-1 $17,000,000 in full settlement of the litigation and HP received a fully paid license and release to the Remote Power Patent for its full term (which expired on March 7, 2020), which applies to sales of Power over Ethernet ("PoE") products by HP and its wholly owned subsidiary Aruba Networks, LLC. The HP settlement will be recorded in the quarter ended September 30, 2021.

On June 9, 2020, the Board of Directors of Network-1 approved the continuation of Network-1's dividend policy which consists of semi-annual cash dividends of $0.05 per share ($0.10 per share annually) which dividends are anticipated to be paid in March and September of each year. On February 23, 2021, Network-1's Board of Directors declared a semi-annual cash dividend of $0.05 per share with a payment date of March 31, 2021 to all shareholders of record as of March 16, 2021. Network-1's dividend policy undergoes a periodic review by the Board of Directors and is subject to change at any time depending upon Network-1's earnings, financial requirements and other factors existing at the time.

ABOUT NETWORK-1 TECHNOLOGIES, INC.

Network-1 Technologies, Inc. is engaged in the development, licensing and protection of its intellectual property and proprietary technologies. Network-1 works with inventors and patent owners to assist in the development and monetization of their patented technologies. Network-1 currently owns eighty-seven (87) patents covering various telecommunications and data networking technologies as well as technologies relating to document stream operating systems and the identification of media content. Network-1's current strategy includes efforts to monetize three patent portfolios (the Cox, Mirror Worlds and M2M/IoT Patent Portfolios). Network-1's strategy is to focus on acquiring and investing in high quality patents which management believes have the potential to generate significant licensing opportunities as Network-1 has achieved with respect to its Remote Power Patent and Mirror Worlds Patent Portfolio. Network-1's Remote Power Patent has generated licensing revenue in excess of $170,000,000 from May 2007 through June 30, 2021. Network-1 has achieved licensing and other revenue of $47,150,000 through June 30, 2021 with respect to its Mirror Worlds Patent Portfolio.

This release contains forward-looking statements within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. These statements address future events and conditions concerning Network-1's business plans. Such statements are subject to a number of risk factors and uncertainties as disclosed in the Network-1's Annual Report on Form 10-K for the year ended December 31, 2020 and its Quarterly Reports on 10-Q for the three months ended March 31, 2021 and June 30, 2021 filed with the Securities and Exchange Commission including, among others, Network-1's uncertain revenue stream, uncertainty as to the outcome of pending litigations involving Network-1's Remote Power Patent, Mirror Worlds patent portfolio and Cox patent portfolio, the ability of Network-1 to successfully execute its strategy to acquire or make investments in high quality patents with significant licensing opportunities, Network-1's ability to achieve revenue and profits from its Cox Patent Portfolio, its M2M/IoT Patent Portfolio and additional revenue and profit from its Mirror Worlds Patent Portfolio as well as a return on its investment in IliAD Biotechnologies, LLC or other intellectual property it may acquire or finance in the future, the ability of Network-1 to enter into additional license agreements, uncertainty as to whether cash dividends will continue be paid, Network-1's ability to enter into strategic relationships with third parties to license or otherwise monetize their intellectual property, the risk in the future of Network-1 being classified as a Personal Holding Company which may result in Network-1 issuing a special cash dividend to its stockholders, future economic conditions and technology changes and legislative, regulatory and competitive developments. Except as otherwise required to be disclosed in periodic reports, Network-1 expressly disclaims any future obligation or undertaking to update or revise any forward-looking statement contained herein.

The condensed consolidated statements of operations and comprehensive loss and condensed consolidated balance sheet are attached.

Corey M. Horowitz, Chairman and CEO
Network-1 Technologies, Inc.
(212) 829-5770
(917) 692-0000
 

NETWORK-1 TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
(UNAUDITED)

 


 
 
Three Months Ended
June 30,
  
Six Months Ended 
June 30,
  

 
 
2021
  
2020
  
2021
  
2020
  
REVENUE $-  $55,000  $18,692,000  $216,000  
 
                 
OPERATING EXPENSES:                 
Costs of revenue
  -   20,000   5,420,000   52,000  
Professional fees and related costs
  308,000   124,000   663,000   523,000  
General and administrative
  461,000   459,000   974,000   945,000  
Amortization of patents
  73,000   72,000   147,000   144,000  
Stock-based compensation
  59,000   85,000   118,000   157,000  
 
                 
TOTAL OPERATING EXPENSES  901,000   760,000   7,322,000   1,821,000  
 
                 
OPERATING INCOME (LOSS)  (901,000)  (705,000)  11,370,000   (1,605,000) 
 
OTHER INCOME:
                 
Interest and dividend income, net
  68,000   120,000   118,000   298,000  
Net realized and unrealized gain (loss) on marketable securities
  49,000   206,000   8,000   (116,000) 
Total other income, net
  117,000   326,000   126,000   182,000  
INCOME (LOSS) BEFORE INCOME TAXES AND EQUITY IN NET LOSSES OF EQUITY METHOD INVESTEE  (784,000)  (379,000)  11,496,000   (1,423,000) 
 
                 
INCOME TAXES PROVISION (BENEFIT):                 
Current  (180,000)  (142,000)  710,000   (382,000) 
Deferred taxes, net  (52,000)  142,000   1,672,000   382,000  
Total income taxes provision (benefit)  (232,000)  --   2,382,000   --  
 
                 
INCOME (LOSS) BEFORE SHARE OF NET LOSSES OF EQUITY METHOD INVESTEE: $(552,000) $(379,000) $9,114,000  $(1,423,000) 
 
                 
SHARE OF NET LOSSES OF EQUITY METHOD INVESTEE $(231,000) $(205,000) $(446,000) $(498,000) 
 
                 
NET INCOME (LOSS)
 $(783,000) $(584,000) $8,668,000  $(1,921,000) 
 
                 
Net Income (Loss) Per Share                 
Basic
 $(0.03) $(0.02) $0.36  $(0.08) 
Diluted
 $(0.03) $(0.02) $0.35  $(0.08) 
 
                 
Weighted average common shares outstanding:
                 
Basic
  23,839,455   23,945,916   24,106,169   23,987,715  
Diluted
  23,839,455   23,945,916   24,878,257   23,987,715  
 
                 
Cash dividends declared per share  -   -  $0.05  $0.05  
 
                 
NET INCOME (LOSS) $(783,000) $(584,000) $8,668,000  $(1,921,000) 
 
                 
OTHER COMPREHENSIVE INCOME (LOSS)
Net unrealized holding gain (loss) on corporate bonds and notes during the period, net of tax
  (3,000)  175,000   8,000   (8,000) 
 
                 
COMPREHENSIVE INCOME (LOSS) $(786,000) $(409,000) $8,676,000  $(1,929,000) 

Condensed Consolidated Balance Sheet as of June 30, 2021

(Unaudited)

Cash and cash equivalents and marketable securities

$ 53,775,000
  
Total current assets$ 53,833,000
  
Total assets$ 59,548,000
  
Total current liabilities$ 2,222,000
  
Total long term liabilities$ 717,000
  
Total stockholders' equity$ 56,609,000
  

SOURCE: Network-1 Technologies, Inc.

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