[1]   On October 16, 2017, the U.S. Bankruptcy Court of the Southern District of New York approved the Company's settlement of its patent litigation against Avaya, Inc. ("Avaya") pending in the United States District Court for the Eastern District of Texas, Tyler Division, for infringement of Network-1's Remote Power Patent (U.S. Patent No. 6,218,930) (see Note J[1] hereof).  As part of the settlement, Avaya, which on January 19, 2007 had filed a voluntary petition for relief under Chapter 11 of the United States Bankruptcy Code, entered into a non-exclusive license agreement for the full term of the Company's Remote Power Patent, which expires in March, 2020.  Under the terms of the license, Avaya paid a lump sum amount for sales of certain designated Power over Ethernet ("PoE") products and is obligated to pay an ongoing royalty  for  other designated PoE products.  In addition, Avaya agreed that the Company shall have an allowed general unsecured claim ("Allowed Claim") in the amount of $40,000,000 relating to all acts occurring on or before January 19, 2017.

Under the Debtors' (Avaya and certain affiliates) First Amended Joint Chapter 11 Plan of Reorganization of Avaya Inc. and Its Debtor Affiliates, which the Debtors filed with the Bankruptcy Court on August 24, 2017, and the Modified Global Plan Settlement, dated October 11, 2017 (collectively the "Plan"), the Debtors have estimated that the total amount of general unsecured claims that will ultimately be allowed will total approximately $305,000,000 which, based on the treatment of general unsecured creditors therein, would result in estimated recoveries for the holders of general unsecured claims of approximately 18.9%.  The Debtors have acknowledged in the Plan that depending on its ability to successfully prosecute or otherwise reduce the remaining outstanding claims, the total amount of the general unsecured claims could be substantially higher which would decrease the percentage recoveries to the holders of general unsecured claims, including the Company.  In such an event, the amount recovered by the Company under its Allowed Claim could be substantially lower than 18.9%.  A hearing to consider confirmation of the Plan is currently scheduled to commence on November 15, 2017.  There is no assurance that the Bankruptcy Court will confirm the Plan or any other Chapter 11 plan, and no assurance of the recovery for general unsecured claims under either the Plan or any other Chapter 11 plan.

[2]   On November 1, 2017, the Company agreed to settle its patent litigation against Juniper Networks, Inc. ("Juniper") pending in the United States District Court for the Eastern District of Texas, Tyler Division, for infringement of Network-1's Remote Power Patent (See Note J[1] hereof).  Under the terms of the settlement, Juniper will pay $13,250,000 to the Company and receive a fully-paid license to the Company's Remote Power Patent for its full term.

[3]   On November 13, 2017, a jury in the United States District Court for the Eastern District of Texas, Tyler Division, determined that certain claims of the Company's Remote Power Patent (U.S. Patent No. 6,218,930) are invalid and not infringed by Hewlett-Packard.  The jury verdict of invalidity and non-infringement, or a final judgment based on this verdict, may be determined to relieve some of our licensees of our Remote Power Patent from their obligation to continue to pay royalties to the Company, including Cisco Systems, Inc., our largest licensee.  Such a determination would have a material adverse effect on our business and results of operations.