Contacts:
Network-1 Technologies, Inc.
Corey M. Horowitz, Chairman and CEO
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212-829-5770 (o)
917-692-0000 (m)
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In June 2016, Network-1 reached a settlement with Sony Corporation and affiliated entities ("Sony"). With respect to the settlement, Sony received a non-exclusive fully-paid license for Network-1's Remote Power Patent for its remaining life (March 2020).
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In April, 2016, Mirror Worlds Technologies, LLC ("MWT"), the Network-1's wholly-owned subsidiary, entered into an agreement pursuant to which it received $17,500,000 in connection with the settlement of a professional liability claim relating to services rendered in 2008-2010. Network-1, through MWT, acquired the claim in May 2013 as part of its acquisition of the Mirror Worlds Patent Portfolio.
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In October 2016, Network-1 entered a settlement agreement with Polycom, Inc. ("Polycom"). Under the terms of the settlement, Polycom entered into a non-exclusive license for the Remote Power Patent for its full term and is obligated to pay a license initiation fee of $5,000,000 for past sales of its PoE products and ongoing royalties based on its sales of PoE products. $2,000,000 of the license initiation fee was paid and the balance will be paid in three annual installments of $1,000,000 beginning in October, 2017. Payments due in October 2018 and October 2019 need not be paid by Polycom if all asserted claims of the Remote Power Patent have been found invalid. Such payments in October 2018 and October 2019 have not been included in Network-1's revenue for the year ended December 31, 2016.
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In July 2016, Network-1 also reached settlement agreements with Alcatel-Lucent USA, Inc. and Alcatel-Lucent Holdings Inc. (collectively, "Alcatel") and ALE, USA, Inc. ("ALE"). Under the terms of the settlement agreements, Alcatel and ALE received a non-exclusive fully paid license for the Remote Power Patent for its remaining life. The aggregate consideration to be received by Network-1 from Alcatel and ALE for the fully-paid license is $4,200,000 of which $1,900,000 has been paid and the balance of $2,300,000 is payable in three equal quarterly payments beginning sixty (60) days after a ruling (which is pending) by the Court confirming the report and recommendation rendered by the Magistrate which found all the asserted claims of the Remote Power Patent were not invalid. In July 2016, Network-1 also reached a settlement with Dell, Inc. with respect to its patent infringement litigation relating to its Remote Power Patent.
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In July 2016, Network-1 entered into a settlement agreement with Apple Inc. in connection with litigation in the United States District Court for the Eastern District of Texas, for infringement of its '227 Patent. Under the terms of the settlement agreement, Apple received a fully paid non-exclusive license to the Mirror Worlds Portfolio for its full term (which expired in June 2016), along with certain rights to other patents in Network-1's patent portfolio. Network-1 received $25,000,000 from Apple for the settlement and fully paid non-exclusive license.
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Network-1 continues to develop the Cox Patent Portfolio, which now consists of seventeen (17) patents relating to technology for identifying media content on the Internet. Since the acquisition of the portfolio in February 2013, Network-1 filed eighteen (18) additional patent applications (twelve (12) of which have been issued and six (6) 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. Currently, the litigations are subject to a stay as a result of the proceedings at the United States Patent Office as described below.
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In June, 2016, the Patent Trial and Appeal Board (PTAB) of the United States Patent Office issued its Final Written Decisions in the four pending Inter Partes Review Proceedings (IPRs) filed by Google with respect to certain patents within Network-1's Cox Patent Portfolio. The PTAB found eighty-six (86) claims "not unpatentable" (valid) and in total, one hundred nineteen (119) out of one hundred and twenty-nine (129) or 92% of the challenged claims of the patents survived. None of our asserted claims in the pending litigations against Google and YouTube were found invalid. In August, 2016, Google filed Notices of Appeal to appeal the PTAB's Final Written Decisions on the IPRs to the United States Court of Appeals for the Federal Circuit and the appeal is pending. |
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In October, 2016, the PTAB issued its Final Written Decision in favor of Network-1 with respect to Google's Petition for Covered Business Method Review (CBM) seeking to invalidated claims contained in Network-1's patent (US Patent No. 8,48,484) asserted by Network-1 in its litigation with Google and YouTube in December 2014 as referred to above. The PTAB ruled that Google had failed to show that any of the thirty-four (34) claims of our U.S. Patent 8,904,464 were unpatentable. In December, 2016, Google filed a Notice of Appeal to appeal the PTAB's Final Written Decision on the CBM to the United States Court of Appeals for the Federal Circuit and the appeal is pending. |
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In December, 2016, Nework-1 announced that its Board of Directors approved the initiation of a dividend policy. The policy provides for the payment of regular semi-annual dividends of $0.05 per common share ($0.10 per common share annually) which are anticipated to be paid in March and September of each year. It is anticipated that the semi-annual dividend will continue to be paid through March 2020 (expiration of the Remote Power Patent) provided that Network-1 continues to receive royalties from licensees of its Remote Power Patent. On February 2, 2017, Network-1's Board of Directors declared an initial semi-annual dividend $0.05 per common share which will be paid on March 24, 2017 to all shareholders of record on March 3, 2017.
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Years Ended
December 31, |
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2016
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2015
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REVENUE
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$
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65,088,000
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$
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16,565,000
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OPERATING EXPENSES:
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Costs of revenue
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25,794,000
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5,506,000
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Professional fees and related costs
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2,590,000
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2,331,000
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General and administrative
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2,782,000
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2,874,000
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Amortization of patents
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813,000
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1,655,000
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Stock-based compensation
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509,000
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272,000
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Contingent patent cost
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500,000
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—
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TOTAL OPERATING EXPENSES
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32,988,000
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12,638,000
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OPERATING INCOME
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32,100,000
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3,927,000
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OTHER INCOME:
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Interest income, net
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61,000
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58,000
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INCOME BEFORE INCOME TAXES
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32,161,000
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3,985,000
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INCOME TAXES (BENEFIT):
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Current
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4,187,000
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93,000
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Deferred taxes, net
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4,751,000
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(215,000
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)
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Total income taxes (benefit)
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8,938,000
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(122,000
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)
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NET INCOME
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$
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23,223,000
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$
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4,107,000
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Net Income Per Share
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Basic
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$
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1.00
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$
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0.17
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Diluted
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$
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0.93
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$
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0.17
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Weighted average common shares outstanding:
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Basic
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23,320,065
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23,501,987
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Diluted
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24,885,282
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24,482,557
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NET INCOME
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$
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23,223,000
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$
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4,107,000
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OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX:
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Unrealized holding gain (loss) on securities available-for-sale arising
during the year |
4,000
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(18,000
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)
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Total other comprehensive income (loss)
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4,000
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(18,000
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)
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COMPREHENSIVE INCOME
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$
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23,227,000
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$
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4,089,000
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Cash and cash equivalents
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$
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50,918,000
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Total current assets
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$
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56,140,000
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Total assets
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$
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57,597,000
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Total current liabilities
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$
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4,725,000
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Total long term liabilities
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$
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-0-
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Total stockholders' equity
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$
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52,872,000
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