NEW YORK, Aug. 15, 2016
/PRNewswire/ -- Network-1 Technologies, Inc. (NYSE: NTIP)
today announced financial results for the quarter ended
June 30, 2016.
Network-1 had revenue of $20,447,000 and $25,637,000 for the three and six months ended
June 30, 2016, respectively, as
compared to revenue of $1,747,000 and
$7,374,000 for the three and six
months ended June 30, 2015,
respectively. The increase in revenue of $18,700,000 for the three months ended
June 30, 2016, was due primarily to a
$17,500,000 settlement of a
professional liability claim. Revenue from licensing of
Network-1's patents increased $1,200,000 or 69% from $1,747,000 to $2,947,000 for the three months ended
June 30, 2016 compared to the three
months ended June 30, 2015 due
primarily from a patent litigation settlement in June, 2016 and
increased licensing revenue from licensees.
Network-1 realized net income of $8,230,000 or $0.35
per share (basic) and $0.33 per share
(diluted)) for the three months ended June
30, 2016 compared with a net loss of $(220,000) or $(0.01) per share (basic and diluted) for the
second quarter ended June 30,
2015.
Network-1 reported net income of $12,050,000 or $0.52 per share (basic) and $0.49 per share (diluted) for the six months
ended June 30, 2016 compared with a
net income of $1,310,000 or
$0.06 per share (basic) and
$0.05 per share (diluted) for the six
months ended June 30, 2015.
At June 30, 2016, Network-1 had
cash and cash equivalents of $35,369,000 and working capital of $37,654,000. Subsequent to the end of the
second quarter, Network-1 entered into settlement and license
agreements aggregating $32,900,000
that will be recorded as revenue for the quarter ended September 30, 2016.
At June 30, 2016, the Company had
net operating loss carryforwards (NOLs) of approximately
$4,300,000 and temporary differences
of approximately $1,100,000 totaling
approximately $5,400,000 expiring
through 2029, with a future tax benefit of approximately
$1,874,000.
In September 2011, Network-1
initiated patent litigation against sixteen (16) data networking
equipment manufacturers in the United States District Court for the
Eastern District of Texas, Tyler
Division, for infringement of its Remote Power Patent. Network-1
has now reached settlement and license agreements with eleven (11)
of the original defendants. The remaining five defendants in
the lawsuit are Avaya Inc., AXIS Communications Inc.,
Hewlett-Packard Company, Juniper Networks, Inc., and Polycom
Inc. Network-1 seeks monetary damages based upon reasonable
royalties. The litigation is currently scheduled for trial in
March 2017.
The Remote Power Patent relates to, among other things,
delivering power over Ethernet cables to remotely power network
connected devices including, among others, wireless access points,
VoIP telephones and network cameras. In June 2003, the IEEE approved the 802.3af PoE
Standard, which led to the rapid adoption of PoE. The IEEE
also approved the 802.3at Power over Ethernet Plus (PoE Plus)
Standard, which increased the maximum power delivered to network
devices to 40-60 watts from the current 15 watts under the 802.3af
Standard.
Network-1 currently has twenty-four (24) license agreements with
respect to its Remote Power Patent, which include, among others,
license agreements with Cisco Systems, Inc., Extreme Networks,
Inc., Dell, Inc., Netgear Inc., Alcatel-Lucent USA, Sony Corporation, Shoretel Inc.,
Microsemi Corporation, Motorola Solutions, Inc., NEC Corporation,
Samsung Electronics Co., Ltd., and several other data networking
vendors.
On April 4, 2014 and December 3,
2014, Network-1 initiated litigation against Google Inc. and
YouTube, LLC in the United States District Court for the Southern
District of New York for
infringement of several of its patents which relate to the
identification of media content on the Internet. The lawsuits
allege that Google and YouTube have infringed and continue to
infringe certain of the Company's patents by making, using, selling
and offering to sell unlicensed systems and related products and
services, which include YouTube's Content ID system. In
December 2014, Google Inc. filed four
petitions to institute Inter Partes Review (the "IPRs") at
the United States Patent and Trademark Office ("USPTO") pertaining
to patents asserted in the litigation. In each of the four IPRs
Google sought to invalidate certain claims of the patents at issue
within the Cox Patent Portfolio. On June 21,
2016, the PTAB issued its Final Written Decision in the four
pending IPRs finding eighty-six (86) claims "not unpatentable"
(valid) and, in total, one hundred and nineteen (119) out of one
hundred and twenty-nine (129) or 92% of the challenged claims of
the patents have survived Google's challenges in the IPRs.
None of the claims of the patents being asserted in the pending
litigations against Google and YouTube were found invalid.
ABOUT NETWORK-1 TECHNOLOGIES, INC.
Network-1 Technologies, Inc. is engaged in the development,
licensing and protection of its intellectual property and
proprietary technologies. Network-1 works with inventors and
patent owners to assist in the development and monetization of
their patented technologies. Network-1 currently owns twenty-eight
(28) patents covering various telecommunications and data
networking technologies as well as technologies relating to
document stream operating systems and the identification of media
content. Network-1's current strategy includes continuing to
pursue licensing opportunities for its Remote Power Patent and its
efforts to monetize two patent portfolios (the Cox and Mirror
Worlds patent portfolios) acquired by Network-1 in 2013.
Network-1's acquisition strategy is to focus on acquiring high
quality patents which management believes have the potential to
generate significant licensing opportunities as Network-1 has
achieved with respect to its Remote Power
Patent. Network-1's Remote Power Patent has generated
licensing revenue in excess of $90
million from May 2007 through
June 30, 2016.
This release contains forward-looking statements within the
meaning of the "safe harbor" provisions of the Private Securities
Litigation Reform Act of 1995. These statements address future
events and conditions concerning Network-1's business plans. Such
statements are subject to a number of risk factors and
uncertainties as disclosed in the Network-1's Annual Report on Form
10-K for the year ended December 31,
2015 filed with the Securities and Exchange Commission,
including, among others, the continued validity of Network-1's
Remote Power Patent, the ability of Network-1 to successfully
execute its strategy to acquire high quality patents with
significant licensing opportunities, Network-1's ability to achieve
revenue and profits from the Mirror Worlds Patent Portfolio and the
Cox Patent Portfolio as well as intellectual property it may
acquire in the future, the ability of Network-1 to enter into
additional license agreements, the ability of Network-1 to continue
to receive material royalties from its existing license agreements
for its Remote Power Patent, the uncertainty of patent litigation
and proceedings at the United States Patent and Trademark Office,
the difficulty in Network-1 verifying royalty amounts owed to it by
its licensees, Network-1's ability to enter into strategic
relationships with third parties to license or otherwise monetize
their intellectual property, the risk in the future of Network-1
being classified as a Personal Holding Company, the continued
viability of the PoE market, future economic conditions and
technology changes and legislative, regulatory and competitive
developments. Except as otherwise required to be disclosed in
periodic reports, Network-1 expressly disclaims any future
obligation or undertaking to update or revise any forward-looking
statement contained herein.
Corey M. Horowitz,
Chairman and CEO
|
Network-1
Technologies, Inc.
|
(212)
829-5770
|
The condensed statements of operations and condensed balance
sheet are attached.
Network-1
Technologies, Inc.
Condensed
Statements of Operations
|
|
|
Three Months
Ended
June
30,
|
Six Months
Ended
June
30,
|
|
2016
|
2015
|
2016
|
2015
|
|
|
|
|
|
REVENUE
|
$20,447,000
|
$
1,747,000
|
$25,637,000
|
$
7,374,000
|
|
|
|
|
|
OPERATING
EXPENSES:
|
|
|
|
|
Costs of revenue
|
5,754,000
|
478,000
|
7,240,000
|
2,167,000
|
Professional fees and
related costs
|
372,000
|
327,000
|
825,000
|
773,000
|
General and
administrative
|
426,000
|
792,000
|
828,000
|
1,451,000
|
Amortization of
patents
|
297,000
|
413,000
|
711,000
|
826,000
|
Stock-based
compensation
|
32,000
|
74,000
|
44,000
|
174,000
|
Contingent patent
cost
|
500,000
|
—
|
500,000
|
—
|
TOTAL OPERATING
EXPENSES
|
7,381,000
|
2,084,000
|
10,148,000
|
5,391,000
|
|
|
|
|
|
OPERATING INCOME
(LOSS)
|
13,066,000
|
(337,000)
|
15,489,000
|
1,983,000
|
OTHER
INCOME:
|
|
|
|
|
Interest income, net
|
16,000
|
12,000
|
26,000
|
33,000
|
|
|
|
|
|
INCOME (LOSS) BEFORE
INCOME TAXES (BENEFIT)
|
13,082,000
|
(325,000)
|
15,515,000
|
2,016,000
|
|
|
|
|
|
|
|
|
|
|
INCOME TAXES
(BENEFIT):
|
|
|
|
|
Current
|
330,000
|
(15,000)
|
381,000
|
40,000
|
Deferred taxes (benefit), net
|
4,522,000
|
(90,000)
|
3,084,000
|
666,000
|
Total income taxes
(benefit)
|
4,852,000
|
(105,000)
|
3,465,000
|
706,000
|
|
|
|
|
|
NET INCOME
(LOSS)
|
$
8,230,000
|
$
(220,000)
|
$
12,050,000
|
$
1,310,000
|
|
|
|
|
|
Net Income (Loss) Per
Share
|
|
|
|
|
Basic
|
$
0.35
|
$
(0.01)
|
$
0.52
|
$
0.06
|
Diluted
|
$
0.33
|
$
(0.01)
|
$
0.49
|
$
0.05
|
|
|
|
|
|
Weighted average
common shares outstanding:
|
|
|
|
|
Basic
|
23,300,638
|
23,439,468
|
23,276,295
|
23,761,420
|
Diluted
|
24,637,316
|
23,439,468
|
24,451,944
|
25,006,281
|
|
|
|
|
|
NET INCOME
(LOSS)
|
$
8,230,000
|
$
(220,000)
|
$
12,050,000
|
$
1,310,000
|
|
|
|
|
|
OTHER COMPREHENSIVE
INCOME (LOSS):
|
|
|
|
|
Unrealized holding gain
(loss) on securities available-for-sale arising
during the period
|
16,000
|
(32,000)
|
43,000
|
(12,000)
|
|
|
|
|
|
|
|
|
|
|
COMPREHENSIVE INCOME
(LOSS)
|
$
8,246,000
|
$
(252,000)
|
$
12,093,000
|
$
1,298,000
|
|
|
|
|
|
|
|
|
|
|
Condensed Balance
Sheet as of June 30, 2016
|
|
Cash and cash
equivalents
|
$
35,369,000
|
|
|
Total
current assets
|
$
39,485,000
|
|
|
Total
assets
|
$
42,672,000
|
|
|
Total
current liabilities
|
$
1,831,000
|
|
|
Total
long term liabilities
|
$ 0
|
|
|
Total stockholders' equity
|
$40,841,000
|
|
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/network-1-reports-strong-second-quarter-results-300313611.html
SOURCE Network-1 Technologies, Inc.