·
|
As part of Network-1's Share Repurchase Program, Network-1 repurchased an aggregate of 1,183,536 shares of common stock during the 2015 year at a cost of $2,587,716 or an average price per share of $2.19. Since inception of the Share Repurchase Program (August 2011) through March 1, 2016, Network-1 has repurchased an aggregate of 6,882,604 shares of its common stock at a cost of $11,344,823 or an average per share price of $1.65.
|
·
|
On February 16, 2015, Sony Corporation of America filed a Petition for Covered Business Method Review (CBM) and a request for an ex parte reexamination with the USPTO seeking to invalidate certain claims of Network-1's Remote Power Patent. On July 1, 2015, the PTAB of the USPTO issued a decision in Network-1's favor denying institution of the Covered Business Method Review and rejected Sony's challenge to the patentability of the Remote Power Patent. On November 9, 2015, the USPTO issued Reexamination Certificate C2, rejecting Sony's challenge to the validity of the Remote Power Patent. It is anticipated that the stay of Network-1's pending litigation with respect to the Remote Power Patent will be lifted in 2016 and the case will proceed to trial.
|
·
|
Avaya Inc., Dell Inc., Sony Corporation of America and Hewlett Packard Co. were petitioners in Inter Partes Review proceedings (which were joined together) ("IPR Proceeding") at the USPTO before the Patent Trial and Appeal Board (the "Patent Board") involving the Remote Power Patent. Petitioners in the IPR Proceeding sought to cancel certain claims of the Remote Power as unpatentable. A hearing on the merits of the IPR Proceeding was held on January 9, 2014. On May 22, 2014, the Patent Board issued its Final Written Decision in Network-1's favor rejecting a challenge to the patentability of the Remote Power Patent. The Federal Circuit Court of Appeals affirmed the decision of the Patent Board on August 5, 2015.
|
·
|
Network-1 continues to develop its Cox Patent Portfolio, which now consists of eleven (11) patents relating to technology for identifying media content on the Internet. Since the acquisition of the portfolio in February 2013, Network-1 has filed twelve additional patent applications (seven of which have been issued and five of which are pending). On April 4, 2014 and December 3, 2014, Network-1 initiated litigation against Google Inc. and YouTube, LLC in the United States District Court for the Southern District of New York for infringement of several of its patents within the Cox Patent Portfolio. The lawsuit alleges that Google and YouTube have infringed and continue to infringe the patent by making, using, selling and offering to sell unlicensed systems and products and services related thereto, which include YouTube's content ID system. The case has been stayed pending proceedings at the Patent Board.
|
·
|
At December 31, 2015, Network-1's principal sources of liquidity consisted of working capital of approximately of $21,711,000 which included cash and cash equivalents of approximately $20,608,000. Management believes based on Network-1's current cash position and projected licensing revenue from its existing licensing agreements that Network-1 will have sufficient cash to fund its operations for the foreseeable future.
|
·
|
At December 31, 2015, Network-1 had net operating loss carryforwards (NOLs) totaling approximately $19,603,000 expiring through 2029, with a future tax benefit of approximately $6,819,000. At December 31, 2015 and December 31, 2014, $4,958,000 and $4,743,000, respectively, has been recorded as deferred tax assets on Network-1's balance sheet. During 2015, Network-1 realized a cash savings of $1,636,000 by using the tax benefit associated with its net operating loss carryforward.
|
Corey M. Horowitz, Chairman and CEO
|
Network-1 Technologies, Inc.
|
(212) 829-5770
|
Years Ended
December 31, |
||||||||
2015
|
2014
|
|||||||
REVENUE
|
$
|
16,565,000
|
$
|
12,309,000
|
||||
OPERATING EXPENSES:
|
||||||||
Costs of revenue
|
5,506,000
|
3,510,000
|
||||||
Professional fees and related costs
|
2,331,000
|
1,160,000
|
||||||
General and administrative
|
2,874,000
|
2,033,000
|
||||||
Amortization of patents
|
1,655,000
|
1,650,000
|
||||||
Stock-based compensation
|
272,000
|
333,000
|
||||||
Contingent patent cost
|
—
|
900,000
|
||||||
TOTAL OPERATING EXPENSES
|
12,638,000
|
9,586,000
|
||||||
OPERATING INCOME
|
3,927,000
|
2,723,000
|
Years Ended
December 31,
|
||||||||
2015 | 2014 | |||||||
OTHER INCOME (EXPENSES):
|
||||||||
Interest income, net
|
58,000
|
37,000
|
||||||
Loss on sale of securities available-for-sale (reclassified from accumulated
other comprehensive income for previously unrealized losses on securities)
|
—
|
(51,000
|
) | |||||
INCOME BEFORE INCOME TAXES
|
3,985,000
|
2,709,000
|
||||||
INCOME TAXES (BENEFIT):
|
||||||||
Current
|
93,000
|
27,000
|
||||||
Deferred taxes (benefit)
|
(215,000
|
)
|
916,000
|
|||||
Total Income Taxes (Benefit)
|
(122,000
|
)
|
943,000
|
|||||
NET INCOME
|
$
|
4,107,000
|
$
|
1,766,000
|
||||
Net Income Per Share
|
||||||||
Basic
|
$
|
0.17
|
$
|
0.07
|
||||
Diluted
|
$
|
0.17
|
$
|
0.07
|
||||
Weighted average common shares outstanding:
|
||||||||
Basic
|
23,501,987
|
25,170,346
|
||||||
Diluted
|
24,482,557
|
26,928,330
|
||||||
NET INCOME
|
$
|
4,107,000
|
$
|
1,766,000
|
||||
OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX:
|
||||||||
Reclassification adjustment for loss included in net income
|
—
|
51,000
|
||||||
Unrealized holding loss on securities available-for-sale arising
during the year |
(18,000
|
)
|
(37,000
|
)
|
||||
Total other comprehensive income (loss), net of tax benefit
|
(18,000
|
)
|
14,000
|
|||||
COMPREHENSIVE INCOME
|
$
|
4,089,000
|
$
|
1,780,000
|
Cash and cash equivalents
|
$
|
20,608,000
|
||
Total current assets
|
$
|
23,402,000
|
||
Total assets
|
$
|
30,381,000
|
||
Total current liabilities
|
$
|
1,691,000
|
||
Total long term liabilities
|
$
|
-0-
|
||
Total stockholders' equity
|
$
|
28,690,000
|
||