NETWORK-1 TECHNOLOGIES, INC.

Previous 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 six months ended June 30, 2025 related to a settlement payment received from litigation involving our expired Remote Power Patent. (see Note I[4] to our unaudited condensed consolidated financial statements included herein).

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 nine months ended September 30, 2025 related to a settlement payment received from litigation involving our expired Remote Power Patent (see Note I[5] to our unaudited condensed consolidated financial statements included herein).

Previous wording

At June 30, 2025 our principal sources of liquidity consisted of cash and cash equivalents and marketable securities of $38,485,000 and working capital of $38,288,000. Based on our cash position, we review opportunities to acquire additional intellectual property as well as evaluate other strategic opportunities.

Current wording

At September 30, 2025 our principal sources of liquidity consisted of cash and cash equivalents and marketable securities of $37,097,000 and working capital of $36,856,000. 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-seven (77) 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-eight**(**78) 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 June 30, 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 six months ended June 30, 2025 was from settlements involving our Remote Power Patent.

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 February 2025. We are no longer asserting our Remote Power Patent. All of our revenue for the nine months ended September 30, 2025 was from a settlement involving our Remote Power Patent (see Note I[5] to our unaudited condensed consolidated financial Statements included herein).

Previous wording

On June 27, 2025, we commenced patent litigation against Samsung Electronics Co., LTD and Samsung Electronics America, Inc. (collectively, “Samsung”) in the United States District Court for the Eastern District of Texas for infringement of certain patents within our M2M/IoT Patent Portfolio. The lawsuit alleges that Samsung infringes our patents by supporting certain eSIM (embedded Subscriber Identification Module) and 5G technologies in its mobile devices, including its Galaxy smartphones, watches and tablets (see Note I[1] to our unaudited condensed consolidated financial statements included herein).

Current wording

On June 27, 2025, we commenced patent litigation against Samsung Electronics Co., LTD and Samsung Electronics America, Inc. (collectively, “Samsung”) in the United States District Court for the Eastern District of Texas for infringement of certain patents within our M2M/IoT Patent Portfolio (see Note I[2] to our unaudited condensed consolidated financial statements included herein).

Previous wording

In December 2024, we commenced patent infringement litigations against Citadel Securities, LLC and Jump Trading, LLC involving our HFT Patent Portfolio (see Note I[2] to our unaudited condensed consolidated financial statements included herein).

Current wording

On December 24, 2024, we commenced patent infringement litigations against Citadel Securities, LLC and Jump Trading, LLC in the Unted States District Court for the Northern District of Illinois involving our HFT Patent Portfolio (see Note I[3] to our unaudited condensed consolidated financial statements included herein).

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 (see Note I[3] to our unaudited condensed consolidated financial statements included herein).

Current wording

In addition, we have appealed the judgment of the United States District Court for the Southern District of New York dismissing our litigation against Google and YouTube involving certain patents within our Cox Patent Portfolio (see Note I[4] to our unaudited condensed consolidated financial statements included herein).

Previous wording

On March 31, 2025, we acquired our Smart Home Patent Portfolio from IoT and M2M Technologies, LLC, relating to, among other things, enabling technology to support the interoperability of smart home IoT devices. The patent portfolio currently consists of eight (8) U.S. patents and one (1) international patent as well as eleven (11) U.S. pending patent applications and five (5) pending international patents (see Note G[2] to our unaudited condensed consolidated financial statements included herein).

Current wording

On March 31, 2025, we acquired our Smart Home Patent Portfolio from IoT and M2M Technologies, LLC, relating to, among other things, enabling technology to support the interoperability of smart home IoT devices, advanced security against quantum computers and improvements in Internet transport layer security. The patent portfolio currently consists of eight (8) U.S. patents and one (1) international patent as well as eleven (11) U.S. pending patent applications and five (5) pending international patents (see Note G[2] to our unaudited condensed consolidated financial statements included herein).

Previous wording

General and administrative expenses were $1,121,000 for the six months ended June 30, 2025 as compared to $1,188,000 for the six months ended June 30, 2024. The decrease in general and administrative expenses of $67,000 was primarily due to decreased stock-based compensation of $49,000.

Current wording

General and administrative expenses were $537,000 for the three months ended September 30, 2025 as compared to $576,000 for the three months ended September 30, 2024. The decrease in general and administrative expenses of $39,000 was primarily due to decreased stock-based compensation of $37,000**.**

Previous wording

Realized and Unrealized Gain on Marketable Securities. For the six months ended June 30, 2025, we recorded realized and unrealized gains on marketable securities of $171,000, as compared to $102,000 for the six months ended June 30, 2024. The increase was largely due to the timing of the maturities of fixed income investments.

Current wording

Realized and Unrealized Gain on Marketable Securities. For the three months ended September 30, 2025, we recorded realized and unrealized gains on marketable securities of $44,000, as compared to $293,000 for the three months ended September 30, 2024. The decrease of $249,000 was due to increased unrealized losses of $358,000, offset somewhat by increased realized gains of $109,000.

Previous wording

Share of Net Losses of Equity Method Investee. We recognized $279,000 of net losses during the three month period ended June 30, 2025, related to our equity share of ILiAD net losses, as compared to a recognized net loss of $677,000 for the three months ended June 30, 2024. We anticipate continuing to record our share of net losses from ILiAD.

Current wording

Share of Net Losses of Equity Method Investee. We recognized $354,000 of net losses during the three month period ended September 30, 2025 related to our equity share of ILiAD net losses, as compared to a recognized net loss of $308,000 for the three months ended September 30, 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 $826,000 or $0.04 per share basic and diluted for the six months ended June 30, 2025, compared with a net loss of $1,578,000 or $0.07 per share basic and diluted for the six months ended June 30, 2024. The reduction in net loss of $752,000 for the six months ended June 30, 2025, as compared to 2024, was primarily the result of decreased recognized losses in our equity method investee of $564,000, decreased operating expenses of $127,000, increased other income of $115,000 and increased revenue of $50,000, offset by decreased income tax benefits of $104,000.

Current wording

Net Loss. As a result of the foregoing, we realized a net loss of $560,000 or $0.02 per share basic and diluted for the three months ended September 30, 2025, compared with a net loss of $316,000 or $0.01 per share basic and diluted for the three months ended September 30, 2024. The increase in our net loss of $244,000 for the three months ended September 30, 2025, as compared to the same period in 2024 was primarily the result of decreased other income of $306,000 and increased share of net losses of equity method investee of $46,000, offset somewhat by decreased operating expenses of $96,000**.**

Previous wording

Revenue. We had revenue of $150,000 for the six months ended June 30, 2025 and $100,000 in revenue for the six months ended June 30, 2024. All such revenue was from litigation settlements involving our Remote Power Patent (See Note I[4] to our unaudited condensed consolidated financial statements included herein).

Current wording

Revenue. We had revenue of $150,000 for the nine months ended September 30, 2025 and $100,000 in revenue for the nine months ended September 30, 2024. All such revenue was from litigation settlements involving our Remote Power Patent (See Note I[5] to our unaudited condensed consolidated financial statements included herein).

Previous wording

Operating Expenses. Operating expenses for the six months ended June 30, 2025 were $1,515,000 as compared to $1,642,000 for the six months ended June 30, 2024. The decrease in operating expenses of $127,000 was primarily as a result of lower professional fees and related costs of $81,000 from decreased revenue from litigation settlements in 2025 and decreased general and administrative expenses of $67,000.

Current wording

Operating Expenses. Operating expenses for the nine months ended September 30, 2025 were $2,315,000 as compared to $2,538,000 for the nine months ended September 30, 2024. The decrease in operating expenses of $223,000 was primarily as a result of decreased professional fees and related costs of $145,000 and decreased general and administrative expenses of $86,000.

Previous wording

Income Taxes. For the six months ended June 30, 2025, we realized a $31,000 current tax benefit related to a federal income tax refund, as compared to no current tax expense for federal, state and local income taxes for the same period in 2024. We had a deferred tax benefit of $149,000 and $284,000 for the six months ended June 30, 2025 and 2024, respectively. The decrease of $135,000 in our deferred tax benefit was primarily due to a decrease of $564,000 in our recognized net losses of our equity method investee for the six months ended June 30, 2025.

Current wording

Income Taxes. For the nine months ended September 30, 2025, we realized a $31,000 current tax benefit related to a federal income tax refund, as compared to no current income tax expense or benefit for the same period in 2024. We had a deferred tax benefit of $232,000 and $355,000 for the nine months ended September 30, 2025 and 2024, respectively. The decrease of $123,000 in our deferred tax benefit was primarily due to a decrease of $518,000 in the net losses of ILiAD recognized in 2025.

Previous wording

Share of Net Losses of Equity Method Investee. We recognized $741,000 of net losses during the six month period ended June 30, 2025 related to our equity share of ILiAD net losses, as compared to a recognized net loss of $1,305,000 for the six months ended June 30, 2024. We anticipate continuing to record our share of net losses from ILiAD.

Current wording

Share of Net Losses of Equity Method Investee. We recognized $1,095,000 of net losses during the nine month period ended September 30, 2025 related to our equity share of ILiAD net losses, as compared to a recognized net loss of $1,613,000 for the nine months ended September 30, 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 $463,000 or $0.02 per share basic and diluted for the three months ended June 30, 2025, compared with a net loss of $658,000 or $0.03 per share basic and diluted for the three months ended June 30, 2024. The reduction in our net loss of $195,000 for the three months ended June 30, 2025, as compared to 2024, was primarily the result of a decrease of $398,000 of our share of net losses of ILiAD, which offset the effect of decreases in revenue of $100,000, other income of $39,000 and income tax benefits of $68,000**.**

Current wording

Net Loss. As a result of the foregoing, we realized a net loss of $1,386,000 or $0.06 per share basic and diluted for the nine months ended September 30, 2025, compared with a net loss of $1,894,000 or $0.08 per share basic and diluted for the nine months ended September 30, 2024. The reduction in net loss of $508,000 for the nine months ended September 30, 2025, as compared to 2024, was primarily the result of the decrease in the recognized share of the net losses of our equity method investee of $518,000.

Previous wording

We have financed our operations primarily from revenue from licensing our patents. At June 30, 2025 our principal sources of liquidity consisted of cash and cash equivalents and marketable securities of $38,485,000 and working capital of $38,288,000. 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 September 30, 2025 our principal sources of liquidity consisted of cash and cash equivalents and marketable securities of $37,097,000 and working capital of $36,856,000. 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 pending 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 $1,778,000 at June 30, 2025 to $38,288,000 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 $1,155,000, the acquisition of patents of $414,000 and repurchases of our common stock of $207,000.

Current wording

Working capital decreased by $3,210,000 at September 30, 2025 to $36,856,000 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 $2,296,000, cash used in operating activities of $606,000, the acquisition of patents of $415,000 and repurchases of our common stock of $287,000.

Previous wording

Net cash used in operating activities decreased by $158,000 to $502,000 for the six months ended June 30, 2025, from $660,000 for the six months ended June 30, 2024. The decrease was primarily attributable to the decrease in our net loss of $752,000, offset by non-cash income and expense items of $698,000, including reduced recognized losses of our equity method investee of $564,000. The decrease in cash used in operating activities is also a result of a net decrease in cash used in operating assets and liabilities of $104,000, including decreased cash used in payment of accrued expenses of $139,000, offset by decreased cash provided by accounts payable of $80,000**.**

Current wording

Net cash used in operating activities decreased by $79,000 to $606,000 for the nine months ended September 30, 2025, from $685,000 for the nine months ended September 30, 2024. The decrease in cash used in operating activities was attributable to the decrease in our net loss of $508,000, offset by non-cash income and expense items of $352,000. The non-cash items include reduced recognized losses of our equity method investee of $518,000 and decreased stock-based compensation of $86,000, offset by the reduced deferred tax benefit of $123,000 and reduced unrealized gains on marketable securities of $136,000. In addition, the decrease in cash used in operating activities is net of an increase in cash used for operating assets and liabilities of $77,000. This included decreased cash provided by accounts payable of $229,000, offset by decreased cash used in payment of accrued expenses of $117,000.

Previous wording

Net cash provided by investing activities during the six months ended June 30, 2025 decreased by $3,709,000 to $2,150,000 as compared to $5,859,000 for the six months ended June 30, 2024, primarily as a result of decreased sales of marketable securities of $5,298,000, offset by decreased purchases of marketable securities of $2,003,000 and the acquisition of patents in 2025 of $414,000.

Current wording

Net cash used in investing activities during the nine months ended September 30, 2025 increased by $3,855,000 to $2,241,000 as compared to cash provided by investing activities of $1,614,000 for the nine months ended September 30, 2024, primarily as a result of decreased sales of marketable securities of $3,390,000 and the acquisition of patents in 2025 of $415,000.

Previous wording

Net cash used in financing activities for the six months ended June 30, 2025 and 2024 was $1,369,000 and $2,156,000, respectively. The decrease of $787,000 for the six months ended June 30, 2025 primarily resulted from a decrease of $676,000 in repurchases of our common stock.

Current wording

Net cash used in financing activities for the nine months ended September 30, 2025 and 2024 was $2,590,000 and $3,510,000, respectively. The decrease of $920,000 for the nine months ended September 30, 2025 primarily resulted from a decrease of $796,000 in repurchases of our common stock.