Network-1 Reports 2023 Year-End Financial Results
Network-1 Technologies, Inc. (NTIP) reported revenue of $2.6 million in 2023 from settlements related to its Remote Power Patent, compared to no revenue in 2022. The company incurred operating expenses of $933,000 in 2023, primarily due to legal fees and incentive bonuses. Interest and dividend income increased to $1.87 million in 2023, with gains on marketable securities reaching $525,000. Despite a net loss of $1.46 million in 2023, Network-1 maintains strong liquidity with $45.47 million in cash and marketable securities. The company's Share Repurchase Program was extended to repurchase up to $5 million of common stock, with 428,132 shares repurchased in 2023. Network-1's dividend policy includes semi-annual cash dividends of $0.05 per share.
The reported financial results for Network-1 Technologies indicate a significant shift in the company's revenue stream, with a year-over-year increase from no revenue to $2.6 million. This is a noteworthy development for investors as it reflects the company's ability to monetize its intellectual property through litigation settlements. However, the net loss of $1.457 million, despite the increase in revenue, suggests that the company's cost structure and contingent legal fees might be areas of concern.
Furthermore, the increase in interest and dividend income aligns with the broader market trend of higher interest rates in 2023. The positive turnaround in gains from marketable securities also demonstrates a more favorable investment environment, which could be indicative of prudent financial management. Yet, these financial gains were not sufficient to offset the operational losses.
The liquidity position, with over $45 million in cash and marketable securities, suggests a strong balance sheet. This is further supported by the company's confidence in its liquidity to fund future operations. The share repurchase program and consistent dividend policy are signals of management's commitment to returning value to shareholders. Nonetheless, the share repurchase strategy should be evaluated in the context of the company's long-term growth strategy and potential investment opportunities that could drive future revenue growth.
From a market perspective, Network-1 Technologies' transition from a lack of revenue to generating income through litigation settlements is a strategic pivot that may influence investor perception. The ability to enforce and monetize patents is crucial in the intellectual property sector and successful litigation can serve as a deterrent against future infringements, potentially opening up new licensing opportunities.
However, the dependence on litigation settlements for revenue may raise questions about the sustainability and predictability of future earnings. Investors typically prefer stable and recurring revenue streams and the reliance on one-off settlements could introduce volatility into the stock's performance. It is also important to consider the competitive landscape and the potential for Network-1 to secure additional licensing agreements without resorting to litigation.
The share repurchase program, while underscoring confidence in the intrinsic value of the company's stock, may also reflect a lack of attractive investment opportunities to fuel organic growth. The continuation of dividend payments signals stability, but the Board's statement that the dividend policy is subject to periodic review could introduce uncertainty regarding future payouts.
In the realm of intellectual property, Network-1 Technologies' focus on litigation to enforce patent rights is a critical aspect of their business strategy. The company's success in securing settlements highlights the strength and enforceability of its patent portfolio. However, the legal landscape is ever-changing and the potential for legislative or judicial shifts could impact the company's ability to leverage its intellectual property in the future.
The increased legal expenses are indicative of the costs associated with litigation, which can be substantial. While the company has successfully monetized its Remote Power Patent, there is an inherent risk in relying heavily on litigation outcomes, which are unpredictable and can be influenced by various external factors.
It is also essential to consider the broader implications of the company's litigation strategy on its reputation and relationships within the industry. Aggressive enforcement actions could potentially lead to strained relationships with other companies and may affect future collaboration or licensing agreements.
03/08/2024 - 05:00 PM
NEW CANAAN, CT / ACCESSWIRE / March 8, 2024 / Network-1 Technologies, Inc. (NYSE American:NTIP) ("Network-1"), a company engaged in acquiring, developing, licensing, and monetizing intellectual property, today announced financial results for the year ended December 31, 2023.
Network-1 had revenue of $2,601,000 for the year ended December 31, 2023 as compared to no revenue in the year ended December 31, 2022. Revenue realized in 2023 was from settlement agreements in litigations related to Network-1's Remote Power Patent. Network-1incurred increases in operating expenses of $933,000 in 2023 compared to 2022, primarily due to increases in costs of revenue of $874,000 related to contingent legal fees and incentive bonus compensation in connection with the litigation settlements.
Interest and dividend income for 2023 was $1,868,000 as compared to interest and dividend income of $1,020,000 for 2022. The increase in interest and dividend income of $848,000 for 2023 was primarily due to higher yielding fixed income investments due to generally higher interest rates during 2023. In addition, for 2023, Network-1 recorded realized and unrealized gains on marketable securities of $525,000 as compared to realized and unrealized losses on marketable securities of $1,351,000 in 2022. The improvement in unrealized and realized gains in 2023 was primarily due to the more favorable interest rate environment for fixed income securities in 2023 as compared to 2022.
Network-1 reported a net loss of $1,457,000 or $0.06 per share basic and diluted for the year ended December 31, 2023 compared to a net loss of $2,326,000 or $0.10 per share on a basic and diluted basis for the year ended December 31, 2022.
At December 31, 2023, Network-1's principal sources of liquidity consisted of cash and cash equivalents and marketable securities of $45,467,000 and working capital of $44,850,000. M anagement believes that based on Network-1's current cash, cash equivalents and marketable securities positions, Network-1 will have sufficient liquidity to fund its operations for the foreseeable future.
On June 14, 2023, Network‑1's Board of Directors authorized an extension and increase of Network‑1's Share Repurchase Program to repurchase up to $5,000,000 of shares of its common stock over the subsequent 24-month period. During the year ended December 31, 2023, Network‑1 repurchased an aggregate of 428,132 shares of its common stock pursuant to its Share Repurchase Program at a cost of approximately $955,000 or an average price per share of $2.23 . Since inception of its Share Repurchase Program (August 2011) to December 31, 2023, Network‑1 repurchased an aggregate of 9,532,982 shares of its common stock at a cost of approximately $18,713,000 (exclusive of commissions) or an average per share price of $1.94 .
Network-1's dividend policy consists of semi-annual cash dividends of $0.05 per share ($0.10 per share annually) which have been paid in March and September of each year. In 2023 and March 2024, Network‑1 continued to declare and pay dividends consistent with its dividend policy. Network‑1's dividend policy undergoes a periodic review by its Board of Directors and is subject to change at any time depending upon Network‑1's earnings, financial requirements and other factors existing at the time.
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 one hundred (100) U.S. patents covering various telecommunications and data networking technologies as well as technologies relating to document stream operating systems, the identification of media content and high frequency trading. Network-1's current strategy includes continuing to pursue licensing opportunities for its intellectual property. Network-1's strategy is to focus on acquiring and investing in 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 and Mirror Worlds Patent Portfolio. Network-1's Remote Power Patent has generated licensing revenue in excess of $188,000,000 from May 2007 through December 31, 2023. Network-1 has achieved licensing and other revenue of $47,150,000 t hrough December 31, 2023 with respect to its Mirror Worlds Patent Portfolio.
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, 2023 filed with the Securities and Exchange Commission on March 8, 2024 including, among others, Network-1's uncertain revenue from licensing its intellectual property, uncertainty as to the outcome of pending litigation involving Network-1's Cox Patent Portfolio and Remote Power Patent, whether Network-1 will be successful in its appeal to the Federal Circuit of the District Court judgment of non-infringement dismissing Network-1's litigation against Meta Platforms, Inc.( formerly Facebook), the ability of Network-1 to successfully execute its strategy to acquire or make investments in high quality patents with significant licensing opportunities, Network-1's ability to achieve revenue and profits from its Cox Patent Portfolio, M2M/IoT Patent Portfolio, HFT Patent Portfolio and additional revenue and profit from its Remote Power Patent and Mirror Worlds Patent Portfolio as well as a successful outcome on its investment in ILiAD Biotechnologies, LLC or other intellectual property it may acquire or finance in the future, the ability of Network-1 to enter into additional license agreements, uncertainty as to whether cash dividends will continue be paid, Network-1's ability to enter into strategic relationships with third parties to license or otherwise monetize their intellectual property, the increasing development of artificial intelligence could materially impact Network-1's business, the risk in the future of Network-1 being classified as a Personal Holding Company which may result in Network-1 issuing a special cash dividend to its stockholders, 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.
Network-1's statements of operations and comprehensive loss and balance sheet are attached.
For additional details regarding the above referenced highlights, please see Network-1's Annual Report on Form 10-K for the year ended December 31, 2023 filed with the SEC on March 8, 2024.
NETWORK-1 TECHNOLOGIES, INC.
Years Ended December 31,
2023 2022 REVENUE
$ 2,601,000 $
OPERATING EXPENSES:
Costs of revenue
874,000 - Professional fees and related costs
807,000 809,000 General and administrative
2,889,000 2,778,000 Amortization of patents
266,000 316,000
TOTAL OPERATING EXPENSES
4,836,000 3,903,000
OPERATING LOSS
(2,235,000 ) (3,903,000 ) OTHER INCOME
Interest and dividend income, net
1,868,000 1,020,000 Gain on conversion of note
- 271,000 Gain on equity method investment
- 3,883,000 Net realized and unrealized gain (loss) on marketable securities
525,000 (1,351,000 ) Total other income, net
2,393,000 3,823,000
INCOME (LOSS) BEFORE INCOME TAXES AND SHARE OF
NET LOSSES OF EQUITY METHOD INVESTEE
158,000 (80,000 )
INCOME TAXES PROVISION:
Current
11,000 - Deferred taxes, net
(399,000 ) 607,000 Total income taxes (benefit) expense
(388,000 ) 607,000 INCOME (LOSS) BEFORE SHARE OF NET LOSSES OF
EQUITY METHOD INVESTEE:
546,000 (687,000 ) SHARE OF NET LOSSES OF EQUITY METHOD INVESTEE
(2,003,000 ) (1,639,000 ) NET LOSS
$ (1,457,000 ) $ (2,326,000 )
Net Loss Per Share:
Basic
$ (0.06 ) $ (0.10 ) Diluted
$ (0.06 ) $ (0.10 )
Weighted average common shares outstanding:
Basic
23,791,287 23,825,917 Diluted
23,791,287 23,825,917 Cash dividends declared per share
$ 0.10 $ 0.10
NET LOSS
$ (1,457,000 ) $ (2,326,000 ) OTHER COMPREHENSIVE INCOME (LOSS}
Net unrealized holding gain (loss) on corporate bonds and notes
14,000 (2,000 )
COMPREHENSIVE LOSS
$ (1,443,000 ) $ (2,328,000 )
NETWORK-1 TECHNOLOGIES, INC.
December 31,
2023 2022 ASSETS:
CURRENT ASSETS:
Cash and cash equivalents
$ 16,896,000 $ 13,448,000 Marketable securities, at fair value
28,571,000 34,991,000 Prepaid taxes
- 177,000 Other current assets
206,000 348,000 Total Current Assets
45,673,000 48,964,000 OTHER ASSETS:
Patents, net of accumulated amortization
1,326,000 1,592,000 Equity investment
5,249,000 7,252,000 Operating leases right of use asset
16,000 161,000 Security deposits
13,000 - Total Other Assets
6,604,000 9,005,000 TOTAL ASSETS
$ 52,277,000 $ 57,969,000 LIABILITIES AND STOCKHOLDERS' EQUITY:
CURRENT LIABILITIES:
Accounts payable
$ 125,000 $ 507,000 Income taxes payable
- 115,000 Accrued payroll
378,000 317,000 Other accrued expenses
297,000 587,000 Operating lease obligations, current
23,000 79,000
Total Current Liabilities
823,000 1,605,000
LONG TERM LIABILITIES:
Deferred tax liability
762,000 1,161,000 Operating lease obligation, non-current
- 94,000 TOTAL LIABILITIES
$ 1,585,000 $ 2,860,000
COMMITMENTS AND CONTINGENCIES (See Note I)
STOCKHOLDERS' EQUITY
Preferred stock, $0.01 par value; authorized 10,000,000 shares;
none issued and outstanding at December 31, 2023 and December 31, 2022
$ - $ - Common stock, $0.01 par value; authorized 50,000,000 shares;
23,553,908 and 23,863,639 shares issued and outstanding at December 31, 2023 and December 31, 2022, respectively
235,000 239,000 Additional paid-in capital
67,446,000 66,939,000 Accumulated deficit
(16,989,000 ) (12,055,000 ) Accumulated other comprehensive loss
- (14,000 )
TOTAL STOCKHOLDERS' EQUITY
50,692,000 55,109,000 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
$ 52,277,000 $ 57,969,000
Contacts:
Network-1 Technologies, Inc.
SOURCE: Network-1 Technologies, Inc.
press release on accesswire.com
What was Network-1 Technologies, Inc.'s revenue in 2023?
Network-1 reported revenue of $2,601,000 in 2023.
What were the operating expenses incurred by Network-1 in 2023?
Network-1 incurred operating expenses of $933,000 in 2023, primarily due to legal fees and incentive bonuses.
How much interest and dividend income did Network-1 earn in 2023?
Network-1 earned $1,868,000 in interest and dividend income in 2023.
What was Network-1's net loss in 2023?
Network-1 reported a net loss of $1,457,000 in 2023.
What is Network-1's liquidity position as of December 31, 2023?
As of December 31, 2023, Network-1 had cash and marketable securities of $45,467,000 and working capital of $44,850,000.
How many shares did Network-1 repurchase in 2023?
Network-1 repurchased 428,132 shares of its common stock in 2023.
What is Network-1's dividend policy?
Network-1's dividend policy includes semi-annual cash dividends of $0.05 per share.
