NETWORK-1 TECHNOLOGIES, INC.

Previous wording

Our principal business is the development, licensing and protection of our intellectual property assets. We presently own one-hundred four (104) 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.

Current wording

Our principal business is the development, licensing and protection of our intellectual property assets. We presently own one-hundred fourteen (114) U.S. patents, fifty-four (54) of which have expired, and sixteen (16) international patents related to (i) the M2M/IoT patent portfolio (the “M2M/IoT Patent Portfolio”) relating to, among other things, enabling technology for authenticating and using eSIM (embedded Subscriber Identification Module) technology in Internet of Things (“IoT”), Machine-to-Machine, and other mobile devices, including smartphones, tablets and computers, as well as automobiles; (ii) the HFT patent portfolio (the “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; (iii) the Cox patent portfolio (the “Cox Patent Portfolio) relating to enabling technology for identifying media content on the Internet and taking further actions to be performed after such identification; (iv) the smart home patent portfolio (the “ Smart Home Patent Portfolio”) relating to, among other things, the enabling technology to support the interoperability of smart home IoT devices; (v) the Mirror Worlds patent portfolio (the “Mirror Worlds Patent Portfolio”) relating to foundational technologies that enable unified search and indexing, displaying and archiving of documents in a computer system; and (vi) the remote power patent (the “Remote Power Patent”) covering 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

With respect to our one-hundred four (104) U.S. patents, fifty-four (54) of such patents have expired. However, we can assert expired patents against third parties but only for past damages up to the patent expiration date. We currently have pending litigation involving expired patents including our Remote Power Patent and certain patents within our Cox and Mirror Worlds Patent Portfolios (see Note I to our unaudited condensed consolidated financial statements included herein). Our revenue is largely dependent upon our ability to achieve successful litigation outcomes.

Current wording

Although fifty-four (54) of our U.S. patents have expired, we can assert expired patents against third parties but only for past damages up to the patent expiration date. We currently have a pending appeal involving certain expired patents within our Cox Patent Portfolio and our revenue for the three months ended March 31, 2025 related to a settlement payment received from litigation involving our expired Remote Power Patent. (see Note I to our unaudited condensed consolidated financial statements included herein).

Previous wording

At September 30, 2024, our principal sources of liquidity consisted of cash and cash equivalents and marketable securities of $41,516,000 and working capital of $41,058,000. Based on our cash position, we review opportunities to acquire additional intellectual property as well as evaluate other strategic opportunities.

Current wording

At March 31, 2025 our principal sources of liquidity consisted of cash and cash equivalents and marketable securities of $39,193,000 and working capital of $38,443,000. 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-two (72) 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-six (76) 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 September 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 September 30, 2024, we entered into settlements with nine defendants with respect to the aforementioned litigation, including one defendant for $100,000 for the nine months ended September 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 nine months ended September 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.

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 March 31, 2025. 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). All of our revenue for 2024 and for the three months ended March 31, 2025 was from 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 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 HFT and M2M/IoT patent portfolios. We may not achieve successful outcomes of such appeals or litigation involving our patent assets.

Current wording

In December 2024, we commenced patent infringement litigations against Citadel Securities, LLC and Jump Trading, LLC involving our HFT patent Portfolio. 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. We also intend to commence efforts to monetize certain patents within our M2M/IoT patent portfolio. We may not achieve successful outcomes of such appeals or litigation involving our patent assets. Our revenue is largely dependent on our ability to achieve successful litigation outcomes.

Previous wording

Revenue. We had revenue of $100,000 for the nine months ended September 30, 2024 compared to revenue of $820,000 for the nine months ended September 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 included herein).

Current wording

Revenue. We had revenue of $150,000 for the three months ended March 31, 2025 and no revenue for the three months ended March 31, 2024. The revenue for the three months ended March 31, 2025 related to a conditional payment received from a defendant with respect to a settlement involving our Remote Power Patent (see Note I[3] to our unaudited condensed consolidated financial statements included herein).

Previous wording

Operating Expenses. Operating expenses for the three months ended September 30, 2024 were $896,000 as compared to $859,000 for the three months ended September 30, 2023. The increase in operating expenses of $37,000 was primarily as a result of increased professional fees of $181,000 offset by decreases in general and administrative expenses of $85,000, amortization of patents of $41,000 and stock-based compensation of $18,000.

Current wording

Operating Expenses. Operating expenses for the three months ended March 31, 2025 were $795,000 as compared to $918,000 for the three months ended March 31, 2024. The decrease in operating expenses of $123,000 was primarily as a result of decreased professional fees of $98,000.

Previous wording

General and administrative expenses were $1,764,000 for the nine months ended September 30, 2024 as compared to $2,070,000 for the nine months ended September 30, 2023. The decrease in general and administrative expenses of $306,000 was primarily due to decreases in payroll and payroll taxes of $188,000, exchange listing fees of $43,000, stock-based compensation of $75,000 and the timing of recording certain state franchise and capital-based taxes of $37,000.

Current wording

General and administrative expenses were $602,000 for the three months ended March 31, 2025 as compared to $669,000 for the three months ended March 31, 2024. The decrease in general and administrative expenses of $67,000 was primarily due to lower stock-based compensation of $34,000 and state franchise taxes of $38,000.

Previous wording

Interest and Dividend Income. Interest and dividend income for the three months ended September 30, 2024 was $524,000 as compared to $406,000 for the three months ended September 30, 2023 as a result of higher yielding fixed income investments with longer maturities.

Current wording

Interest and Dividend Income. Interest and dividend income for the three months ended March 31, 2025, was $484,000 as compared to $431,000 for the three months ended March 31, 2024 as a result of investing in higher yielding fixed income investments with longer maturities.

Previous wording

Realized and Unrealized Gain on Marketable Securities. For the three months ended September 30, 2024, we recorded realized and unrealized gains on marketable securities of $293,000, as compared to $131,000 for the three months ended September 30, 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 March 31, 2025, we recorded realized and unrealized gains on marketable securities of $149,000, as compared to $48,000 for the three months ended March 31, 2024. The increase was largely due to the timing of the maturities of fixed income investments.

Previous wording

Income Taxes. For the three months ended September 30, 2024, we had no current tax expense for federal, state and local income taxes and a deferred tax benefit of $71,000. For the three months ended September 30, 2023, we had a current tax benefit of $13,000 for federal, state and local income taxes and a deferred tax benefit of $31,000.

Current wording

Income Taxes. For the three months ended March 31, 2025, we had no current tax expense for federal, state and local income taxes and a deferred tax benefit of $111,000. 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.

Previous wording

Share of Net Losses of Equity Method Investee. We recognized $308,000 of net losses during the three month period ended September 30, 2024 related to our equity share of ILiAD net losses, as compared to a recognized net loss of $532,000 for the three months ended September 30, 2023. We expect to continue to record our share of net losses from ILiAD as ILiAD is a privately held clinical stage biotechnology company.

Current wording

Share of Net Losses of Equity Method Investee. We recognized $462,000 of net losses during the three month period ended March 31, 2025, related to our equity share of ILiAD net losses, as compared to a recognized net loss of $628,000 for the three months ended March 31, 2024. We anticipate continuing to record our share of net losses from ILiAD.

Previous wording

Net Loss. As a result of the foregoing, we realized a net loss of $316,000 or $0.01 per share basic and diluted for the three months ended September 30, 2024, compared with a net loss of $810,000 or $0.03 per share basic and diluted for the three months ended September 30, 2023. Our decreased net loss for the three months ended September 30, 2024 was primarily due to increases in interest income of $118,000 and in realized and unrealized gains from investments of $162,000, along with a decrease in our equity share of ILiAD net losses of $224,000.

Current wording

Net Loss. As a result of the foregoing, we realized a net loss of $363,000 or $0.02 per share basic and diluted for the three months ended March 31, 2025, compared with a net loss of $920,000 or $0.04 per share basic and diluted for the three months ended March 31, 2024. The reduction in net loss of $557,000 for the three months ended March 31, 2025, as compared to 2024, was primarily the result of the reduced loss recognized with respect to our equity method investee (ILiAD) of $166,000, higher revenue of $150,000, lower operating expenses of $123,000, and higher realized and unrealized gains on marketable securities of $101,000.

Previous wording

We have financed our operations primarily from revenue from licensing our patents. At September 30, 2024, our principal sources of liquidity consisted of cash and cash equivalents and marketable securities of $41,516,000 and working capital of $41,058,000. 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 March 31, 2025 our principal sources of liquidity consisted of cash and cash equivalents and marketable securities of $39,193,000 and working capital of $38,443,000. 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 $3,792,000 at September 30, 2024 to $41,058,000 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 $2,366,000 and repurchases of common stock of $1,083,000.

Current wording

Working capital decreased by $1,623,000 at March 31, 2025 to $38,443,000 as compared to working capital of $40,066,000 at December 31, 2024. The decrease in working capital was primarily due to payment of dividends of $1,144,000 and the acquisition of patents of $414,000.