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 twenty- one (121) U.S. patents, fifty-four (54) of which have expired, and fifteen (15) foreign patents (unexpired) relating to: (i) 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; (ii) 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; (iii) 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; (iv) our Smart Home Patent Portfolio relating to, among other things, the enabling technology to support the interoperability of smart home IoT devices.

Current wording

Our principal business is the development, licensing and protection of our intellectual property assets. We presently own one hundred twenty-two (122) U.S. patents, fifty-four (54) of which have expired, and fifteen (15) foreign patents (unexpired) relating to: (i) 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; (ii) 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; (iii) 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; and (iv) our Smart Home Patent Portfolio relating to, among other things, the enabling technology to support the interoperability of smart home IoT devices.

Previous wording

At June 30, 2026, our principal sources of liquidity consisted of cash and cash equivalents and marketable securities of $33,752,000 and working capital of $33,179,000. 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, 2026, our principal sources of liquidity consisted of cash and cash equivalents and marketable securities of $31,102,000 and working capital of $29,868,000. Based on our cash position, we review opportunities to acquire additional intellectual property as well as evaluate other strategic opportunities.

Previous wording

We have four pending litigations involving certain patents within our M2M/IoT Patent Portfolio, HFT Patent Portfolio and Cox Patent Portfolio (see “Legal Proceedings” at pages 19 – 20 hereof). We may not achieve successful outcomes of such litigation, or future litigation involving our patent assets.

Current wording

We have four pending litigations involving certain patents within our M2M/IoT Patent Portfolio, HFT Patent Portfolio and Cox Patent Portfolio (see “Legal Proceedings” at page 20 hereof). We may not achieve successful outcomes of such litigation, or future litigation involving our patent assets.

Previous wording

The significant components of expenses, when revenue is recorded, that may impact our net income (loss) relate to contingent legal fees and expenses related to our patent litigation contingent payments related to patent acquisitions (see Note H[1] and Note H[2] hereof) to our unaudited condensed consolidated financial statements included herein) and incentive compensation payable to our Chairman and Chief Executive Officer pursuant to the surviving provisions of his prior employment agreement (see Note I[1] to our unaudited condensed consolidated financial statements included herein). All such components of expenses are based on a percentage of the revenue received by us as a result of litigation or otherwise.

Current wording

The significant components of expenses, when revenue is recorded, that may impact our net income (loss) relate to contingent legal fees and expenses related to our patent litigation, contingent payments related to patent acquisitions (see Note H[1] and Note H[2] hereof) to our unaudited condensed consolidated financial statements included herein) and incentive compensation payable to our Chairman and Chief Executive Officer pursuant to the surviving provisions of his prior employment agreement (see Note I to our unaudited condensed consolidated financial statements included herein). All such components of expenses are based on a percentage of the revenue received by us as a result of litigation or otherwise.

Previous wording

*Revenue.*We had no revenue for the three months ended June 30, 2026 and June 30, 2025. We currently have four pending patent infringement litigations involving certain patents within our HFT Patent Portfolio, M2M/IoT Patent Portfolio and Cox Patent Portfolio (see Note J to our unaudited condensed consolidated financial statements included herein).

Current wording

*Revenue.*We had no revenue for the three months ended September 30, 2026 and for the three months ended September 30, 2025. We currently have four pending patent infringement litigations involving certain patents within our HFT Patent Portfolio, M2M/IoT Patent Portfolio and Cox Patent Portfolio (see Note J to our unaudited condensed consolidated financial statements included herein).

Previous wording

*Operating Expenses.*Operating expenses for the three months ended June 30, 2026 were $1,013,000 as compared to $720,000 for the three months ended June 30, 2025. The increase in operating expenses of $293,000 was primarily due to increased litigation related costs of $337,000 offset by decreased restricted stock compensation expense of $38,000.

Current wording

*Operating Expenses.*Operating expenses for the three months ended September 30, 2026 were $1,608,000 as compared to $800,000 for the three months ended September 30, 2025. The increase in operating expenses of $808,000 was primarily due to increased litigation related expenses of $834,000 offset by decreased restricted stock compensation expense of $24,000.

Previous wording

Interest and Dividend Income. Interest and dividend income for the three months ended June 30, 2026 was $350,000 as compared to $445,000 for the three months ended June 30, 2025. The decrease of $95,000 was a result of decreased funds available for investment in marketable securities in 2026, as well as such investments being made in lower yielding fixed income investments as a result of prevailing interest rate market conditions.

Current wording

Interest and Dividend Income. Interest and dividend income for the three months ended September 30, 2026 was $421,000 as compared to $467,000 for the three months ended September 30, 2025. The decrease of $46,000 was a result of decreased funds available for investment in marketable securities in 2026.

Previous wording

*Income Taxes.*For the three months ended June 30, 2026, we had no current income tax expense as compared to a $31,000 current tax benefit related to a federal income tax refund for the same period in 2025. For the three months ended June 30, 2026, we had no deferred income taxes as compared to a deferred tax benefit of $38,000 for the three months ended June 30, 2025. The decrease in our deferred income tax benefit was the result of no longer recognizing our share of the net losses of our equity method investee (ILiAD) in 2026.

Current wording

*Income Taxes.*For the three months ended September 30, 2026 and 2025, we had no current income tax expense. For the three months ended September 30, 2026, we had deferred income tax expense of $86,000 related to return-to-provision adjustments in connection with filing our 2025 tax return compared to a deferred income tax benefit of $83,000 for the three months ended September 30, 2025 as a result of recognizing our share of the net losses of our equity method investee (ILiAD) in 2025. In 2026, no such deferred income tax benefit was recognized as result of a change to the fair value method of accounting for our equity investment in 2026.

Previous wording

*Share of Net Losses of Equity Method Investee.*As a result of the conversion to the fair value method of accounting for our equity investment, we recognized no net losses during the three month period ended June 30, 2026 as compared to $279,000 of net losses under the equity method of accounting during the three month period ended June 30, 2025.

Current wording

*Share of Net Losses of Equity Method Investee.*As a result of the conversion to the fair value method of accounting for our equity investment, we recognized no net losses during the three month period ended September 30, 2026 as compared to $354,000 of net losses under the equity method of accounting during the three month period ended September 30, 2025.

Previous wording

Net Loss. As a result of the foregoing, we realized a net loss of $655,000 or $0.03 per share basic and diluted for the three months ended June 30, 2026, compared with a net loss of $463,000 or $0.02 per share basic and diluted for the three months ended June 30, 2025. The increase in our net loss of $192,000 for the three months ended June 30, 2026, as compared to the same period in 2025, was the result of increased operating expenses of $293,000, decreased other income of $109,000 and decreased income tax benefits of $69,000, offset somewhat by the decrease in our share of net loss of equity method investee of $279,000.

Current wording

*Net Loss.*As a result of the foregoing, we realized a net loss of $2,333,000 or $0.10 per share basic and diluted for the three months ended September 30, 2026, compared with a net loss of $560,000 or $0.02 per share basic and diluted for the three months ended September 30, 2025. The increase in our net loss of $1,773,000 for the three months ended September 30, 2026, as compared to the same period in 2025, was the result of increased operating expenses of $808,000 primarily due to increased litigation costs, increased net realized and unrealized losses on marketable securities of $1,104,000, decreased interest and dividend income of $46,000 and increased income taxes of $169,000, offset somewhat by the decrease in our share of net loss of equity method investee of $354,000.

Previous wording

Revenue. We had no revenue for the six months ended June 30, 2026 and $150,000 in revenue for the six months ended June 30, 2025. We currently have four pending patent infringement litigations involving certain patents within our HFT Patent Portfolio, M2M/IoT Patent Portfolio and Cox Patent Portfolio (see Note J to our unaudited condensed consolidated financial statements included herein).

Current wording

Revenue. We had no revenue for the nine months ended September 30, 2026 and $150,000 of revenue for the nine months ended September 30, 2025. We currently have four pending patent infringement litigations involving certain patents within our HFT Patent Portfolio, M2M/IoT Patent Portfolio and Cox Patent Portfolio (see Note J to our unaudited condensed consolidated financial statements included herein).

Previous wording

Operating Expenses. Operating expenses for the six months ended June 30, 2026 were $2,428,000 as compared to $1,515,000 for the six months ended June 30, 2025. The increase in operating expenses of $913,000 was primarily as a result of increased professional fees and related costs of $971,000, as a result of increased litigation related costs of $962,000, offset by reduced costs of revenue of $42,000 due to no revenue in the period ended June 30, 2026.

Current wording

Operating Expenses. Operating expenses for the nine months ended September 30, 2026 were $4,036,000 as compared to $2,315,000 for the nine months ended September 30, 2025. The increase in operating expenses of $1,721,000 was primarily as a result of increased litigation related expenses of $1,782,000, offset by reduced costs of revenue of $42,000 due to no revenue in the period ended September 30, 2026.

Previous wording

Interest and Dividend Income. Interest and dividend income for the six months ended June 30, 2026 was $734,000 as compared to $929,000 for the six months ended June 30, 2025. The decrease of $195,000 was a result of decreased funds available for investment in marketable securities in 2026, as well as such investments being made in lower yielding fixed income investments as a result of prevailing interest rate market conditions.

Current wording

Interest and Dividend Income. Interest and dividend income for the nine months ended September 30, 2026 was $1,155,000 as compared to $1,396,000 for the nine months ended September 30, 2025. The decrease of $241,000 was a result of decreased funds available for investment in marketable securities in 2026.

Previous wording

Gain on Equity Investment. For the six months ended June 30, 2026, as a result of ILiAD’s private financing completed in February 2026 and the resulting change in our accounting for the investment from the equity method to the cost method, we recorded a gain on our equity investment in ILiAD of $1,052,000 (see Note K and Note B[3] to our unaudited condensed consolidated financial statements included herein).

Current wording

Gain on Equity Investment. For the nine months ended September 30, 2026, as a result of ILiAD’s private financing completed in February 2026 and the resulting change in our accounting for the investment from the equity method to the cost method, we recorded a gain on our equity investment in ILiAD of $1,052,000 (see Note K and Note B[3] to our unaudited condensed consolidated financial statements included herein).

Previous wording

Realized and Unrealized Gain (Loss) on Marketable Securities. For the six months ended June 30, 2026, we recorded realized and unrealized losses on marketable securities of $279,000, as compared to realized and unrealized gains of $171,000 for the six months ended June 30, 2025. The decrease of $450,000 was primarily due to unrealized losses of $84,000 as of June 30, 2026 on our marketable securities, compared to unrealized gains of $257,000 at December 31, 2025. The decrease reflects a decline in the market value of U.S. government securities, fixed income mutual funds and corporate bonds and notes held by us. During the period ended June 30, 2026, short-term Treasury yields increased, which resulted in lower market prices for our fixed-income securities.

Current wording

Realized and Unrealized Gain (Loss) on Marketable Securities. For the nine months ended September 30, 2026, we recorded realized and unrealized losses on marketable securities of $1,339,000, as compared to realized and unrealized gains of $215,000 for the nine months ended September 30, 2025. The decrease of $1,554,000 was primarily due to unrealized losses of $1,279,000 as of September 30, 2026 on our marketable securities, compared to unrealized gains of $257,000 at December 31, 2025. The decrease of $1,536,000 reflects a decline in the market value of U.S. government securities and fixed income mutual funds held by us. During the nine month period ended September 30, 2026, increasing short-term Treasury interest rates resulted in lower market prices for our fixed income securities, compared to decreasing interest rates in 2025.

Previous wording

Income Taxes. For the six months ended June 30, 2026, we had no current income tax expense as compared to a $31,000 current tax benefit related to a federal income tax refund for the same period in 2025. We had a deferred tax expense of $245,000 for the six months ended June 30, 2026 compared to a deferred tax benefit of $149,000 for the six months ended June 30, 2025. The increase of $394,000 in our deferred income taxes was primarily the result of deferred income tax expense of $245,000 recorded in 2026 in connection with the gain on our equity investment (ILiAD) and no deferred income tax benefit as a result of no longer recognizing our share of the losses of our equity method investee, as compared to $149,000 of deferred tax benefit as a result of our recognized net losses of our equity method investee (ILiAD) for the six months ended June 30, 2025.

Current wording

Income Taxes. For the nine months ended September 30, 2026, we had no current income tax expense as compared to a $31,000 current tax benefit in 2025 related to a federal income tax refund. We had a deferred tax expense of $331,000 for the nine months ended September 30, 2026 compared to a deferred tax benefit of $232,000 for the nine months ended September 30, 2025. The increase of $563,000 in our deferred income taxes was the result of deferred income tax expense of $245,000 recorded in 2026 in connection with the gain on our equity investment (ILiAD), deferred income tax expense of $86,000 in return-to-provision adjustments recorded in 2026, and no deferred income tax benefit in 2026 as compared to $232,000 of deferred tax benefit in 2025 as a result of recognized net losses of our equity method investee (ILiAD) for the nine months ended September 30, 2025.

Previous wording

Share of Net Losses of Equity Method Investee. As a result of the conversion to the fair value method of accounting for our equity investment, we recognized no net losses during the six months period ended June 30, 2026 as compared to $741,000 of net losses during the six month period ended June 30, 2025 as a result of application of the equity method of accounting.

Current wording

Share of Net Losses of Equity Method Investee. As a result of the conversion to the fair value method of accounting for our equity investment, we recognized no net losses during the nine months period ended September 30, 2026 as compared to $1,095,000 of net losses as a result of application of the equity method of accounting during the nine month period ended September 30, 2025.

Previous wording

Net Loss. As a result of the foregoing, we realized a net loss of $1,166,000 or $0.05 per share basic and diluted for the six months ended June 30, 2026, compared with a net loss of $826,000 or $0.04 per share basic and diluted for the six months ended June 30, 2025. The increase in net loss of $340,000 for the six months ended June 30, 2026, as compared to 2025, was primarily the result of decreased revenue of $150,000, increased operating expenses of $913,000, decreased interest and dividend income of $195,000, increased realized and unrealized loss on marketable securities of $450,000 and increased income taxes of $425,000, offset by increased gain on equity investment of $1,052,000 and decreased recognized losses of our equity method investee of $741,000.

Current wording

Net Loss. As a result of the foregoing, we realized a net loss of $3,499,000 or $0.15 per share basic and diluted for the nine months ended September 30, 2026, compared with a net loss of $1,386,000 or $0.06 per share basic and diluted for the nine months ended September 30, 2025. The increase in net loss of $2,113,000 for the nine months ended September 30, 2026, was primarily the result of decreased revenue of $150,000, increased operating expenses of $1,721,000, decreased interest and dividend income of $241,000, increased realized and unrealized losses on marketable securities of $1,554,000 and increased income taxes of $594,000, offset by increased gain on equity investment of $1,052,000 and decreased recognized losses of our equity method investee of $1,095,000.

Previous wording

We have financed our operations primarily from revenue from licensing our patents. At June 30, 2026, our principal sources of liquidity consisted of cash and cash equivalents and marketable securities of $33,752,000 and working capital of $33,179,000. Based on our current working capital position, we believe that we will have sufficient liquidity to fund our operations for the next twelve months and the foreseeable future. Our pending patent infringement litigations 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, 2026, our principal sources of liquidity consisted of cash and cash equivalents and marketable securities of $31,102,000 and working capital of $29,868,000. Based on our current working capital position, we believe that we will have sufficient liquidity to fund our operations for the next twelve months and the foreseeable future. Our pending patent infringement litigations 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 $3,157,000 at June 30, 2026 to $33,179,000 as compared to working capital of $36,336,000 at December 31, 2025. The decrease during the six month period ended June 30, 2026 was primarily attributed to the net cash used in operating activities of $1,242,000, dividend payments of $1,140,000, the acquisition of patents of $250,000 and repurchases of common stock of $136,000.

Current wording

Working capital decreased by $6,468,000 at September 30, 2026 to $29,868,000 as compared to working capital of $36,336,000 at December 31, 2025. The working capital decrease during the nine month period ended September 30, 2026 was primarily attributable to our net loss, excluding non-cash items, of $3,926,000, primarily operating expenses of $3,742,000 and net realized and unrealized losses on marketable securities of $1,339,000, offset by interest and dividend income of $1,155,000. Additional decreases in working capital were attributable to dividends declared of $2,148,000, the acquisition of patents of $250,000 and repurchases of our common stock of $136,000.

Previous wording

Net cash used in operating activities increased by $740,000 to $1,242,000 for the six months ended June 30, 2026 from $502,000 for the six months ended June 30, 2025. The increase in net cash used in operating activities was primarily attributable to an increase in our net loss of $340,000, a non-cash gain on our equity investment of $1,052,000 in 2026, the reduction in the loss on our equity method investment recognized in 2025 of $741,000. These uses of cash were offset by an increase in our unrealized loss on marketable securities of $510,000, increased accounts payable of $402,000 and an increase in the deferred tax expense of $394,000.

Current wording

Net cash used in operating activities increased by $916,000 to $1,522,000 for the nine months ended September 30, 2026 compared to $606,000 for the nine months ended September 30, 2025. The increase in net cash used in operating activities was primarily attributable to an increase in our net loss of $4,260,000, excluding certain non-cash items including a $1,052,000 non-cash gain on our equity investment in 2026 and the $1,095,000 non-cash share of equity method losses in 2025. This increase resulted primarily from increased operating expenses of $1,721,000, increased realized and unrealized losses on marketable securities of $1,554,000, decreased interest and dividend income of $241,000, and increased income tax expense of $594,000. These uses of cash were partially offset by non-cash and working capital items, including an increase in unrealized losses on marketable securities of $1,643,000, an increase in deferred tax expense of $563,000 and an increase in accounts payable of $1,097,000, primarily related to litigation costs.

Previous wording

Net cash used in investing activities during the six months ended June 30, 2026 increased by $3,590,000 to $1,440,000 used in investing activities as compared to $2,150,000 provided by investing activities for the six months ended June 30, 2025. The increase in the net cash used in investing activities is primarily as a result of reduced sales of marketable securities of $2,444,000 and increased purchases of marketable securities of $1,310,000, offset by reduced acquisitions of patents of $164,000.

Current wording

Net cash used in investing activities during the nine months ended September 30, 2026 increased by $1,373,000 to $3,614,000, as compared to $2,241,000 for the nine months ended September 30, 2025. The increase in the net cash used in investing activities was primarily as a result of reduced sales of marketable securities of $4,503,000 offset by reduced purchases of marketable securities of $2,965,000 and reduced patent acquisitions of $165,000.

Previous wording

Net cash used in financing activities for the six months ended June 30, 2026 and 2025 was $1,285,000 and $1,369,000, respectively. The decrease in net cash used in financing activities of $84,000 primarily resulted from the decrease in stock repurchases of $71,000.

Current wording

Net cash used in financing activities for the nine months ended September 30, 2026 and 2025 was $2,460,000 and $2,590,000, respectively. The decrease in net cash used in financing activities of $130,000 primarily resulted from the decrease in our stock repurchases of $151,000.