NEW YORK, March 5, 2015 /PRNewswire/ -- Network-1
Technologies, Inc. (NYSE MKT: NTIP), a company specializing in the
development, licensing, and protection of its intellectual property
assets, today announced financial results for the year ended
December 31, 2014.
Network-1 had revenue of $12,309,000 for the year ended December 31,
2014 ("2014") as compared to revenue of $8,017,000 for the year ended December 31,
2013 ("2013"). The increase in revenue of $4,292,000 or 53.5% for 2014 was due to increased
royalty revenue from our licensees, which included $3,281,000 of additional royalty payments from
Cisco Systems as a result of Network-1's audit of its license
agreement with Cisco. Exclusive of royalty revenue from the
Cisco audit, royalty revenue from licensees for 2014 increased
$1,011,000 or 12.6% to $9,028,000 as compared to $8,017,000 for 2013.
Network-1 reported net income of $1,766,000 or $0.07
per share (basic and diluted) for 2014 as compared to net income of
$1,016,000 or $0.04 per share (basic and diluted) for 2013.
Included in the results for 2014 and 2013 are non-cash stock-based
compensation expenses of $333,000 and
$390,000, respectively, and non-cash
amortization expense of $1,650,000
and $1,008,000, respectively.
The increase in amortization expense in 2014 was due to Network-1's
acquisition of thirteen (13) additional patents during 2013.
Network-1 also accrued contingent patent costs of
$900,000 with respect to a contingent
payment relating to the purchase of its Remote Power Patent.
"It was a tremendous year for Network-1," commented Corey M. Horowitz, Chairman and CEO of
Network-1. "We have sixteen (16) licensees for our Remote
Power Patent, twelve (12) of which generate on-going royalties for
Network-1. Significantly, during the year our Remote Power
Patent's validity was affirmed by the United States Patent and
Trademark Office in two separate proceedings which we believe will
facilitate additional licensing opportunities. In addition,
the development and monetization activities involving our Mirror
Worlds and Cox Portfolios are proceeding well. The
combination of our cash position, our profitable royalty stream and
our diverse and valuable IP portfolio positions us very well going
forward in the IP development and monetization space."
The following are financial and strategic highlights:
- As part of Network-1's Share Repurchase Program we repurchased
an aggregate of 2,335,740 shares of common stock during the year at
a cost of $4,439,484 or an average
price per share of $1.90 per share.
Network-1 continues to believe that its shares are
undervalued and expects to continue to purchase shares in the
market. During the year, the Board of Directors increased the
Share Repurchase Program by $5,000,000 (for a total of $12,000,000 since inception of the
Program). Since inception of the Share Repurchase Program
(August 2011) through February 28, 2015, Network-1 has repurchased an
aggregate of 5,749,048 shares of its common stock at a cost of
$8,872,107 or an average per share
price of $1.54 per share.
- On July 20, 2012, an unknown third party filed with the
United States Patent and Trademark Office ("USPTO") a request for
ex parte reexamination of certain claims pertaining to
Network-1's Remote Power Patent. The request for
reexamination was stayed by the USPTO from December 2012 until
May 2014 (the completion of the
Inter Partes Review proceedings at the USPTO involving
Network-1's Remote Power Patent described below). On
October 14, 2014, the USPTO issued a
Reexamination Certificate, rejecting a challenge to the
patentability of the Remote Power Patent (U.S. Patent No.
6,218,930). The Reexamination Certificate confirmed the
patentability of the challenged claims of the Remote Power Patent
(claims 6, 8 and 9) without any amendment or modification.
The USPTO also allowed fourteen (14) new claims, bringing the total
claims in the Remote Power Patent to twenty-three (23)
claims. No claims were rejected.
- Avaya Inc., Dell Inc., Sony Corporation of America and Hewlett
Packard Co. were petitioners in Inter Partes Review
proceedings (which were joined together) ("IPR Proceeding") at the
USPTO before the Patent Trial and Appeal Board (the "Patent Board")
involving the Remote Power Patent. Petitioners in the IPR
Proceeding sought to cancel certain claims of the Remote Power as
unpatentable. A hearing on the merits of the IPR Proceeding
was held on January 9, 2014. On
May 22, 2014, the Patent Board issued
its Final Written Decision in Network-1's favor rejecting a
challenge to the patentability of the Remote Power
Patent.
- During the year, the USPTO issued Network-1 three new patents
in the Cox Patent Portfolio pertaining to enabling technology for
identification of media content on the Internet, bringing the total
number of issued patents in the portfolio to nine. 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 within the Cox Patent
Portfolio. The lawsuit alleges that Google and YouTube have
infringed and continue to infringe the patent by making, using,
selling and offering to sell unlicensed systems and products and
services related thereto, which include YouTube's content ID
system.
- At December 31, 2014, Network-1's
principal sources of liquidity consisted of working capital of
approximately of $18,021,000 which
included cash and cash equivalents of approximately $17,662,000. Management believes based on
Network-1's current cash position and projected licensing revenue
from its existing licensing agreements that Network-1 will have
sufficient cash to fund its operations for the foreseeable
future.
- At December 31, 2014, Network-1 had net operating loss
carryforwards (NOLs) totaling approximately $25,200,000 expiring through 2029, with a future
tax benefit of approximately $9,000,000. At December 31, 2014
and December 31, 2013, $4,743,000 and $5,659,000, respectively, has been recorded as
deferred tax assets on Network-1's balance sheet. During the
year ended December 31, 2014, as a result of income (before
taxes) of $2,709,000, $943,000 was recorded as income tax expense and
the deferred tax assets were reduced by $916,000 to $4,743,000. During 2014, Network-1 realized
a tax savings of $916,000 by using
the tax benefit associated with our net operating loss
carry-forward.
Consistent with its activities over the past several years,
Network-1 plans on continuing its licensing activities relating to
the Remote Power Patent and the development and monetization of the
Mirror Worlds Patent Portfolio and the Cox Patent Portfolio.
In addition, Network-1 may acquire additional intellectual property
assets in the future to develop, commercialize, license or
otherwise monetize such intellectual property. In this
regard, Network-1 continually reviews opportunities to acquire or
license additional intellectual property for the purpose of
pursuing licensing opportunities related to its existing
intellectual property portfolio or otherwise. Network-1's
strategy includes working with inventors and patent owners to
assist in the development and monetization of their patented
technologies. Network-1 may also enter into strategic
relationships with third parties to develop, commercialize, license
or otherwise monetize their intellectual property. The form
of such relationships may differ depending upon the opportunity and
may include, among other things, a strategic investment in such
third party, the provision of financing to such third party or the
formation of a joint venture with such third party or others for
the purpose of monetizing their intellectual property assets.
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-four
(24) 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.
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,
2014 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,
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 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.
|
Years Ended
December 31,
|
|
2014
|
|
2013
|
ROYALTY
REVENUE
|
12,309,000
|
|
$
8,017,000
|
|
|
|
|
COST OF REVENUE
(exclusive of contingent patent cost)
|
3,510,000
|
|
2,359,000
|
|
|
|
|
GROSS
PROFIT
|
8,799,000
|
|
5,658,000
|
|
|
|
|
OPERATING
EXPENSES:
|
|
|
|
|
|
|
|
General and administrative
|
3,193,000
|
|
2,735,000
|
|
|
|
|
Amortization of patents
|
1,650,000
|
|
1,008,000
|
|
|
|
|
Stock-based compensation
|
333,000
|
|
390,000
|
|
|
|
|
Contingent patent cost
|
900,000
|
|
—
|
|
|
|
|
TOTAL OPERATING
EXPENSES
|
6,076,000
|
|
4,133,000
|
|
|
|
|
OPERATING
INCOME
|
2,723,000
|
|
1,525,000
|
|
|
|
|
OTHER INCOME
(EXPENSES):
|
|
|
|
|
|
|
|
Interest income, net
|
37,000
|
|
36,000
|
Loss on sale of securities
available-for-sale(reclassified from
accumulated other comprehensive income for previously
unrealized
losses on securities)
|
(51,000)
|
|
—
|
|
|
|
|
INCOME BEFORE INCOME
TAXES
|
2,709,000
|
|
1,561,000
|
|
|
|
|
|
|
|
|
INCOME
TAXES:
|
|
|
|
|
|
|
|
Current
|
27,000
|
|
10,000
|
|
|
|
|
Deferred
|
916,000
|
|
535,000
|
|
|
|
|
Total Income Taxes
|
943,000
|
|
545,000
|
|
|
|
|
NET
INCOME
|
$
1,766,000
|
|
$
1,016,000
|
|
|
|
|
Net Income Per
Share
|
|
|
|
|
|
|
|
Basic
|
$
0.07
|
|
$
0.04
|
|
|
|
|
Diluted
|
$
0.07
|
|
$
0.04
|
|
|
|
|
Weighted average
common shares outstanding:
|
|
|
|
|
|
|
|
Basic
|
25,170,346
|
|
25,589,238
|
|
|
|
|
Diluted
|
26,928,330
|
|
27,954,685
|
|
|
|
|
NET INCOME
|
$
1,766,000
|
|
$
1,016,000
|
|
|
|
|
OTHER COMPREHENSIVE
INCOME, NET OF TAX:
|
|
|
|
|
|
|
|
Reclassification adjustment for loss included in net
income
|
51,000
|
|
—
|
|
|
|
|
Unrealized holding loss on securities available-for-sale
arising
during the year
|
(37,000)
|
|
(17,000)
|
|
|
|
|
Total other comprehensive income (loss), net of tax
|
14,000
|
|
(17,000)
|
|
|
|
|
COMPREHENSIVE
INCOME
|
$
1,780,000
|
|
$
999,000
|
Condensed Balance Sheet as of December
31, 2014
Cash and cash
equivalents
|
$
|
17,662,000
|
|
|
|
Total
current assets
|
$
|
20,232,000
|
|
|
|
Total
assets
|
$
|
29,152,000
|
|
|
|
Total
current liabilities
|
$
|
2,211,000
|
|
|
|
Total
long term liabilities
|
$
|
0
|
|
|
|
Total stockholders'
equity
|
$
|
26,941,000
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/network-1-reports-2014-year-end-financial-results-300046418.html
SOURCE Network-1 Technologies, Inc.