Network-1 Reports 2023 Year-End Financial Results
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Insights
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.
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
Interest and dividend income for 2023 was
Network-1 reported a net loss of
At December 31, 2023, Network-1's principal sources of liquidity consisted of cash and cash equivalents and marketable securities of
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
Network-1's dividend policy consists of semi-annual cash dividends of
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
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.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
| 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 arising during the year, net of tax | 14,000 | (2,000 | ) | ||||||
COMPREHENSIVE LOSS | $ | (1,443,000 | ) | $ | (2,328,000 | ) | |||
NETWORK-1 TECHNOLOGIES, INC.
CONSOLIDATED BALANCE SHEETS
| 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, none issued and outstanding at December 31, 2023 and December 31, 2022 | $ | - | $ | - | ||||
Common stock, 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.
Corey M. Horowitz, Chairman and CEO
(917) 692-0000
SOURCE: Network-1 Technologies, Inc.
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