NETWORK-1 TECHNOLOGIES INC
For the period ended Jun 30, 2024. Filed Aug 12, 2024.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2024 · Filed Aug 12, 2024
NTIP$1.600.0%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-31; filed 2024-05-10.
0001072613-24-000458
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-06-30; filed 2024-08-12.
0001072613-24-000616
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 39 previous paragraphs and 46 current paragraphs.
21 unchanged; 16 reworded; 6 added; 2 removed; 0 previous and 3 current paragraphs rearranged.
Tables are not compared: 0 previous and 0 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (6)
Current report
General and administrative expenses were $519,000 for the three months ended June 30, 2024 as compared to $610,000 for the three months ended June 30 , 2023. The decrease in 2024 general and administrative expenses of $91,000 was primarily due to higher 2023 payroll taxes of $92,000 related to the vesting of RSU’s. In addition, our 2024 exchange listing fees decreased by $52,000 and were offset by higher payroll costs of $43,000.
Current report
Six Months Ended June 30, 2024 Compared to Six Months Ended June 30, 2023
Current report
Revenue. We had revenue of $100,000 for the six months ended June 30, 2024 compared to revenue of $820,000 for the six months ended June 30, 2023. All such revenue was from litigation settlements involving our Remote Power Patent (see Note I[3] and B[2] to our unaudited condensed consolidated financial statements).
Current report
Operating Expenses. Operating expenses for the six months ended June 30, 2024 were $1,642,000 as compared to $2,145,000 for the six months ended June 30, 2023. The decrease in operating expenses of $503,000 was primarily as a result of decreases in costs of revenue of $204,000 related to litigation settlements and general and administrative expenses of $203,000.
Current report
General and administrative expenses were $1,188,000 for the six months ended June 30, 2024 as compared to $1,391,000 for the six months ended June 30, 2023. The decrease in general and administrative expenses of $203,000 was primarily due to decreased payroll and payroll taxes of $178,000 and decreased exchange listing fees of $44,000, offset in part by increases in state franchise and capital taxes of $63,000 due to the timing of recognizing those costs.
Current report
Net Loss. As a result of the foregoing, we realized a net loss of $1,578,000 or $0.07 per share basic and diluted for the six months ended June 30, 2024, compared with a net loss of $1,099,000 or $0.05 per share basic and diluted for the six months ended June 30, 2023. Our increased net loss for the six months ended June 30, 2024 was primarily due to a decrease in revenue of $720,000 and an increase our share of the net losses of our equity method investee of $240,000, offset in part by decreased operating expenses of $503,000.
Removed paragraphs (2)
Previous report
General and administrative expenses were $669,000 for the three months ended March 31, 2024 as compared to $781,000 for the three months ended March 31,2023. The decrease in general and administrative expenses of $112,000 was primarily due to a decrease in compensation expense of $121,000 in 2024 as a result of severance payments accrued in the comparable period of 2023 and lower stock-based compensation expense of $46,000 as a result of increased restricted stock units vesting in 2023, offset by an increase in state franchise and capital taxes of $60,000.
Previous report
Interest and Dividend Income. Interest and dividend income for the three months ended March 31, 2024 was $431,000 as compared to $310,000 for the three months ended March 31, 2023 primarily as a result of moderately higher interest rates in 2024 compared to 2023.
Reworded paragraphs (16)
Previous wording
Our principal business is the development, licensing and protection of our intellectual property assets. We presently own one-hundred two (102) U.S. patents and fifteen (15) foreign patents relating to:(i) our Cox Patent Portfolio relating to enabling technology for identifying media content on the Internet and taking further action to be performed after such identification; (ii) our M2M/IoT Patent Portfolio relating to, among other things, enabling technology for authenticating and using eSim (embedded Subscriber Identification Module) technology in IoT, Machine-to-Machine and other mobile devices, including smartphones, tablets and computers as well as automobiles; (iii) our HFT Patent Portfolio covering certain advanced technologies relating to high frequency trading, which inventions specifically address technological problems associated with speed and latency and provide critical latency gains in trading systems where the difference between success and failure may be measured in nanoseconds; (iv) our Mirror Worlds Patent Portfolio relating to foundational technologies that enable unified search and indexing, displaying and archiving of documents in a computer system; and (v) our Remote Power Patent covering the delivery of power over Ethernet (PoE) cables for the purpose of remotely powering network devices, such as wireless access ports, IP phones and network based cameras.
Current wording
Our principal business is the development, licensing and protection of our intellectual property assets. We presently own one-hundred two (102) U.S. patents and sixteen (16) foreign patents relating to:(i) our Cox Patent Portfolio relating to enabling technology for identifying media content on the Internet and taking further action to be performed after such identification; (ii) our M2M/IoT Patent Portfolio relating to, among other things, enabling technology for authenticating and using eSim (embedded Subscriber Identification Module) technology in IoT, Machine-to-Machine and other mobile devices, including smartphones, tablets and computers as well as automobiles; (iii) our HFT Patent Portfolio covering certain advanced technologies relating to high frequency trading, which inventions specifically address technological problems associated with speed and latency and provide critical latency gains in trading systems where the difference between success and failure may be measured in nanoseconds; (iv) our Mirror Worlds Patent Portfolio relating to foundational technologies that enable unified search and indexing, displaying and archiving of documents in a computer system; and (v) our Remote Power Patent covering the delivery of power over Ethernet (PoE) cables for the purpose of remotely powering network devices, such as wireless access ports, IP phones and network based cameras.
Previous wording
At March 31, 2024, our principal sources of liquidity consisted of cash and cash equivalents and marketable securities of $43,394,000 and working capital of $43,067,000**.**Based on our cash position, we review opportunities to acquire additional intellectual property as well as evaluate other strategic opportunities.
Current wording
At June 30, 2024, our principal sources of liquidity consisted of cash and cash equivalents and marketable securities of $42,599,000 and working capital of $42,369,000**.**Based on our cash position, we review opportunities to acquire additional intellectual property as well as evaluate other strategic opportunities.
Previous wording
To date we have invested $7,000,000 in ILiAD, a clinical stage biotechnology company with an exclusive license to seventy (70) patents (see Note J to our unaudited condensed consolidated financial statements included herein). Our investment continues to involve significant risk and the outcome is uncertain.
Current wording
To date we have invested $7,000,000 in ILiAD, a clinical stage biotechnology company with an exclusive license to seventy-one (71) patents (see Note J to our unaudited condensed consolidated financial statements included herein). Our investment continues to involve significant risk and the outcome is uncertain.
Previous wording
We have been dependent upon our Remote Power Patent for a significant portion of our revenue. Our Remote Power Patent has generated licensing revenue in excess of $188,000,000 from May 2007 through March 31, 2024. We no longer receive licensing revenue for our Remote Power Patent for any period subsequent to March 7, 2020 (the expiration date of the patent). During the fourth quarter of 2022, we commenced nine separate litigations against ten defendants involving our Remote Power Patent for patent infringement for the period prior to March 7, 2020. During the year ended December 31, 2023, we entered into settlements with eight defendants with respect to the aforementioned litigation resulting in aggregate settlement payments made to us of $2,601,000 and a future conditional payment of $150,000 (see Note I[4] hereof). All of our revenue for 2023 was from these settlements involving our Remote Power Patent. If we are unable to successfully monetize our other patent portfolios or achieve a successful outcome of our investment in ILiAD, our business, financial condition and results of operations will be negatively impacted.
Current wording
We have been dependent upon our Remote Power Patent for a significant portion of our revenue. Our Remote Power Patent has generated licensing revenue in excess of $188,000,000 from May 2007 through June 30, 2024. We no longer receive licensing revenue for our Remote Power Patent for any period subsequent to March 7, 2020 (the expiration date of the patent). During the fourth quarter of 2022, we commenced nine separate litigations against ten defendants involving our Remote Power Patent for patent infringement for the period prior to March 7, 2020. As of June 30,2024, we entered into settlements with nine defendants with respect to the aforementioned litigation, including one defendant for $100,000 for the three months ended June 30, 2024, resulting in aggregate settlement payments made to us of $2,701,000 and a future conditional payment of $150,000 (see Note I[3] hereof). All of our revenue for 2023 and for the three and six months ended June 30, 2024 was from these settlements involving our Remote Power Patent. If we are unable to successfully monetize our other patent portfolios or achieve a successful outcome of our investment in ILiAD, our business, financial condition and results of operations will be negatively impacted.
Previous wording
In addition, we have pending litigation involving certain patents within our Cox Patent Portfolio and have appealed the judgment of the District Court dismissing our litigation against Meta (Facebook) on the grounds of non-infringement involving certain patents within our Mirror Worlds Portfolio. We also intend to commence efforts to monetize certain patents within our M2M/IoT Patent Portfolio and HFT Patent Portfolio. We may not achieve successful outcomes of such litigation, the appeal, or future litigation involving our patent assets.
Current wording
In addition, we have appealed the judgment of the District Court dismissing our litigation against Google and YouTube involving certain patents within our Cox Patent Portfolio and have also appealed the judgment of the District Court dismissing our litigation against Meta (Facebook) on the grounds of non-infringement involving certain patents within our Mirror Worlds Portfolio. We also intend to commence efforts to monetize certain patents within our M2M/IoT Patent Portfolio and HFT Patent Portfolio. We may not achieve successful outcomes of such appeals or future litigation involving our patent assets.
Previous wording
Revenue. We had no revenue for the three months ended March 31, 2024 and revenue of $537,000 for the three months ended March 31, 2023. Our revenue for the three months ended March 31, 2023 was from litigation settlements involving our Remote Power Patent (see Note I[4] and Note B[2] to our unaudited condensed consolidated financial statements).
Current wording
Revenue. We had revenue of $100,000 for the three months ended June 30, 2024 as compared to revenue of $283,000 for the three months ended June 30, 2023. All such revenue was from litigation settlements involving our Remote Power Patent (see Note I[3] and B[2] to our unaudited condensed consolidated financial statements).
Previous wording
Operating Expenses. Operating expenses for the three months ended March 31, 2024 were $918,000 as compared to $1,313,000 for the three months ended March 31, 2023. The decrease in operating expenses of $395,000 was primarily as a result of decreases in costs of revenue of $151,000 due to no litigation settlements, professional fees of $79,000 due to decreased legal fees, general and administrative expenses of $112,000 and patent amortization of $53,000 due to patents expiring in 2023.
Current wording
Operating Expenses. Operating expenses for the three months ended June 30, 2024 were $724,000 as compared to $832,000 for the three months ended June 30, 2023. The decrease in operating expenses of $108,000 was primarily as a result of deceases in costs of revenue of $53,000 related to litigation settlements, general and administrative expenses of $91,000, and amortization of patents of $52,000 due to patent expirations, offset by increased professional fees of $88,000 related to contingent legal fees incurred with respect to litigation settlements and the timing of accounting and tax return preparation and compliance costs.
Previous wording
Realized and Unrealized Loss on Marketable Securities. For the three months ended March 31, 2024, we recorded realized and unrealized gains on marketable securities of $48,000, as compared to $364,000 for the three months ended March 31, 2023 largely due to the timing of the maturities of fixed income investments and a relatively stable interest rate environment.
Current wording
Realized and Unrealized Gain on Marketable Securities. For the three months ended June 30, 2024, we recorded realized and unrealized gains on marketable securities of $54,000**,**as compared to a loss of $75,000 for the three months ended June 30, 2023 largely due to the timing of the maturities of fixed income investments and a relatively stable interest rate environment.
Previous wording
Share of Net Losses of Equity Method Investee. We recognized $628,000 of net losses during the three month period ended March 31, 2024 related to our equity share of ILiAD net losses, as compared to a recognized net loss of $674,000 for the three months ended March 31, 2023. ILiAD, as a clinical stage biotechnology company, is anticipated to continue to incur losses (see Note J to our unaudited condensed consolidated financial statements included herein).
Current wording
Share of Net Losses of Equity Method Investee. We recognized $677,000 of net losses during the three month period ended June 30, 2024, related to our equity share of ILiAD net losses, as compared to a recognized net loss of $391,000 for the three months ended June 30, 2023.
Previous wording
Net Loss. As a result of the foregoing, we realized a net loss of $920,000 or $0.04 per share basic and diluted for the three months ended March 31,2024, compared with a net loss of $623,000 or $0.03 per share basic and diluted for the three months ended March 31, 2023. Our increased net loss for the three months ended March 31,2024 was primarily due to no revenue for the period as compared to revenue of $537,000 for the three month period ended March 31, 2023.
Current wording
Net Loss. As a result of the foregoing, we realized a net loss of $658,000 or $0.03 per share basic and diluted for the three months ended June 30, 2024, compared with a net loss of $476,000 or $0.02 per share basic and diluted for the three months ended June 30, 2023. Our increased net loss for the three months ended June 30, 2024 was primarily due to decreased revenue of $183,000 and the increased loss of $286,000 of our share of net losses of our equity method investee, offset in part by lower operating expenses of $108,000**.**
Previous wording
Income Taxes. For the three months ended March 31, 2024, we had no current tax expense for federal, state and local income taxes and a deferred tax benefit of $147,000. For the three months ended March 31, 2023, we had no current tax expense for federal, state and local income taxes and a deferred tax expense of $153,000.
Current wording
Income Taxes. For the six months ended June 30, 2024, we had no current tax expense for federal, state and local income taxes and a deferred tax benefit of $284,000**.**For the six months ended June 30, 2023, we had no current tax expense for federal, state and local income taxes and a deferred tax benefit of $247,000.
Previous wording
We have financed our operations primarily from revenue from licensing our patents. At March 31, 2024, our principal sources of liquidity consisted of cash and cash equivalents and marketable securities of $43,394,000 and working capital of $43,067,000. Based on our current cash position, we believe that we will have sufficient cash to fund our operations for the next twelve months and the foreseeable future. Our patent infringement litigation or realization of our investment in ILiAD may result in a material increase in our liquidity and capital resources.
Current wording
We have financed our operations primarily from revenue from licensing our patents. At June 30, 2024, our principal sources of liquidity consisted of cash and cash equivalents and marketable securities of $42,599,000 and working capital of $42,369,000**.**Based on our current cash position, we believe that we will have sufficient cash to fund our operations for the next twelve months and the foreseeable future. Our patent infringement litigation or realization of our investment in ILiAD may result in a material increase in our liquidity and capital resources.
Previous wording
Working capital decreased by $1,783,000 at March 31, 2024 to $43,067,000 as compared to working capital of $44,850,000 at December 31, 2023. The decrease in working capital was primarily due to payment of dividends of $1,175,000, cash used in operating activities of $596,000, and repurchases of common stock of $186,000.
Current wording
Working capital decreased by $2,481,000 at June 30, 2024 to $42,369,000 as compared to working capital of $44,850,000 at December 31, 2023. The decrease in working capital was primarily due to payment of dividends of $1,175,000 and repurchases of common stock of $883,000.
Previous wording
Net cash used in operating activities for the three months ended March 31, 2024 increased by $306,000 from $290,000 for the three months ended March 31, 2023, to $596,000 for the three months ended March 31, 2024, primarily as a result of a higher net loss in 2024 compared to 2023.
Current wording
Net cash used in operating activities for the six months ended June 30, 2024 increased by $107,000 from $553,000 for the six months ended June 30, 2023, to $660,000 for the three months ended June 30, 2024, primarily as a result of a higher net loss in 2024 compared to 2023.
Previous wording
Net cash provided by investing activities during the three months ended March 31, 2024 increased by $4,921,000 to $3,262,000 as compared to net cash used by investing activities of $1,659,000 for the three months ended March 31, 2023, primarily as a result of net investment shifting from marketable securities to investments in securities classified as cash and cash equivalents.
Current wording
Net cash provided by investing activities during the six months ended June 30, 2024 increased by $533,000 to $5,859,000 as compared to $5,326,000 for the six months ended June 30, 2024, primarily as a result of net investment shifting from marketable securities to investments in securities classified as cash and cash equivalents.
Previous wording
Net cash used in financing activities for the three months ended March 31,2024 and 2023 was $1,457,000 and $1,580,000, respectively. The change of $123,000 primarily resulted from a reduction in repurchases of treasury shares of $120,000 in 2024.
Current wording
Net cash used in financing activities for the six months ended June 30, 2024 and 2023 was $2,156,000 and $1,606,000, respectively. The change of $550,000 primarily resulted from an increase in repurchases of common stock of $551,000 in 2024.
Rearranged current paragraphs (3)
Current report — wording carried from elsewhere
Income Taxes. For the three months ended June 30, 2024, we had no current tax expense for federal, state and local income taxes and a deferred tax benefit of $137,000. For the three months ended June 30, 2023, we had no current tax expense for federal, state and local income taxes and a deferred tax benefit of $94,000. The increase in the deferred tax benefit is primarily the result of an increase of $286,000 in our share of the net losses of our equity method investee in 2024.
Current report — wording carried from elsewhere
Realized and Unrealized Gain on Marketable Securities. For the six months ended June 30, 2024, we recorded realized and unrealized gains on marketable securities of $102,000 as compared to a gain of $289,000 for the six months ended June 30, 2023 largely due to the timing of the maturities of fixed income investments and a relatively stable interest rate environment.
Current report — wording carried from elsewhere
Share of Net Losses of Equity Method Investee. We recognized $1,305,000 of net losses during the six month period ended June 30, 2024 related to our equity share of ILiAD net losses, as compared to a recognized net loss of $1,065,000 for the six months ended June 30, 2023.