8-K
Network-1 Technologies, Inc. (NTIP)
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): August 12, 2021
Network 1 Technologies, Inc.
(Exact name of registrant as specified in its charter)
| Delaware | 001-15288 | 11-3027591 |
|---|---|---|
| (State or Other Jurisdiction | (Commission | (I.R.S. Employer |
| of Incorporation) | File Number) | Identification No.) |
445 Park Avenue,Suite 912, New York, New York 10022
(Address of Principal Executive Offices) (Zip Code)
(212) 829-5770
(Registrant’s telephone number, including area code)
N/A
(Former name or former address, if changed since last report)
Securities registered
pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
|---|---|---|
| Common<br> Stock, par value $0.01 per share | NTIP | NYSE American |
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ☐ | Written<br>communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|---|---|
| ☐ | Soliciting<br>material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| --- | --- |
| ☐ | Pre-commencement<br>communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| --- | --- |
| ☐ | Pre-commencement<br>communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
| --- | --- |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
| Item 2.02 | Results of Operations and Financial Condition. |
|---|
On August 12, 2021, Network-1 Technologies, Inc. issued a press release announcing its financial results for the quarter ended June 30, 2021. A copy of the press release is attached hereto as Exhibit 99.1.
| Item 9.01 | Financial Statements and Exhibits. |
|---|
(d) Exhibits
| Exhibit No. | Description |
|---|---|
| 99.1 | Press Release dated August 12, 2021 |
| -1- |
| --- |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| NETWORK-1 TECHNOLOGIES, INC. | ||
|---|---|---|
| Dated August 18,<br> 2021 | By: | /s/ Corey M.<br> Horowitz |
| Name: <br>Title: | Corey M. Horowitz<br><br> <br>Chairman & Chief Executive Officer |
-3-
Exhibit99.1
FOR IMMEDIATERELEASE
| Corey M. Horowitz,<br> Chairman and CEO |
|---|
| Network-1 Technologies, Inc. |
| (212) 829-5770 |
NETWORK-1 REPORTS SECOND QUARTER RESULTS
NewYork, New York August 12, 2021 - Network-1 Technologies, Inc. (NYSE AMERICAN: NTIP), a company specializing in the development, licensing, and protection of its intellectual property assets, today announced financial results for the quarter ended June 30, 2021.
Network-1 had no revenue for the three months ended June 30, 2021 and revenue of $18,692,000 for the six months ended June 30, 2021, as compared to revenue of $55,000 and $216,000 for the three and six months ended June 30, 2020, respectively. The increase in revenue for the six months ended June 30, 2021 was due to revenue of $18,692,000 from Network-1’s resolution of a contractual dispute with Cisco Systems, Inc. concerning the licensing of Network-1’s Remote Power Patent.
Network-1 realized a net loss of $783,000 or $0.03 per share basic and diluted for the three months ended June 30, 2021 compared with a net loss of $584,000 or $0.02 per share basic and diluted for the three months ended June 30, 2020. The increased net loss was primarily due to an increase in litigation costs of $184,000.
Network-1 realized net income of $8,668,000 or $0.36 per share basic and $0.35 diluted for the six months ended June 30, 2021 compared with a net loss of $1,921,000 or $0.08 per share basic and diluted for the six months ended June 30, 2020. The increase in net income was primarily due to $18,692,000 of revenue from the resolution of a contractual dispute with Cisco during the three months ended March 31, 2021.
At June 30, 2021, Network-1 had cash and cash equivalents and marketable securities of $53,775,000 and working capital of $51,611,000. Network-1 believes based on its current cash position it will have sufficient cash to fund its operations for the foreseeable future.
On July 26, 2021, Network-1 agreed to settle its patent litigation against Hewlett-Packard Company and Hewlett-Packard Enterprise Company (collectively, “HP”) pending in the U.S. District Court for the Eastern District of Texas, Tyler Division, for infringement of Network-1’s Remote Power Patent. Under the terms of the settlement agreement, Hewlett-Packard Enterprise Company paid Network-1 $17,000,000 in full settlement of the litigation and HP received a fully paid license and release to the Remote Power Patent for its full term (which expired on March 7, 2020), which applies to sales of Power over Ethernet ("PoE") products by HP and its wholly owned subsidiary Aruba Networks, LLC. The HP settlement will be recorded in the quarter ended September 30, 2021.
On June 9, 2020, the Board of Directors of Network-1 approved the continuation of Network-1’s dividend policy which consists of semi-annual cash dividends of $0.05 per share ($0.10 per share annually) which dividends are anticipated to be paid in March and September of each year. On February 23, 2021, Network-1’s Board of Directors declared a semi-annual cash dividend of $0.05 per share with a payment date of March 31, 2021 to all shareholders of record as of March 16, 2021. Network-1’s dividend policy undergoes a periodic review by the 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.
ABOUTNETWORK-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 eighty-seven (87) 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 efforts to monetize three patent portfolios (the Cox, Mirror Worlds and M2M/IoT Patent Portfolios). 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 $170,000,000 from May 2007 through June 30, 2021. Network-1 has achieved licensing and other revenue of $47,150,000 through June 30, 2021 with respect to its Mirror Worlds Patent Portfolio.
Thisrelease contains forward-looking statements within the meaning of the "safe harbor" provisions of the Private Securities LitigationReform Act of 1995. These statements address future events and conditions concerning Network-1's business plans. Such statements aresubject 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 December31, 2020 and its Quarterly Reports on 10-Q for the three months ended March 31, 2021 and June 30, 2021 filed with the Securities andExchange Commission including, among others, Network-1’s uncertain revenue stream, uncertainty as to the outcome of pending litigationsinvolving Network-1’s Remote Power Patent, Mirror Worlds patent portfolio and Cox patent portfolio, the ability of Network-1 tosuccessfully execute its strategy to acquire or make investments in high quality patents with significant licensing opportunities, Network-1'sability to achieve revenue and profits from its Cox Patent Portfolio, its M2M/IoT Patent Portfolio and additional revenue and profitfrom its Mirror Worlds Patent Portfolio as well as a return on its investment in IliAD Biotechnologies, LLC or other intellectual propertyit may acquire or finance in the future, the ability of Network-1 to enter into additional license agreements, uncertainty as to whethercash dividends will continue be paid, Network-1's ability to enter into strategic relationships with third parties to license or otherwisemonetize their intellectual property, the risk in the future of Network-1 being classified as a Personal Holding Company which may resultin 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 disclaimsany future obligation or undertaking to update or revise any forward-looking statement contained herein.
The condensed consolidated statements of operations and comprehensive loss and condensed consolidated balance sheet are attached.
NETWORK-1 TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
(UNAUDITED)
| Three Months Ended<br> June 30, | Six Months Ended<br> June 30, | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2021 | 2020 | 2021 | 2020 | |||||||||
| REVENUE | $ | — | $ | 55,000 | $ | 18,692,000 | $ | 216,000 | ||||
| OPERATING EXPENSES: | ||||||||||||
| Costs of revenue | — | 20,000 | 5,420,000 | 52,000 | ||||||||
| Professional fees and related costs | 308,000 | 124,000 | 663,000 | 523,000 | ||||||||
| General and administrative | 461,000 | 459,000 | 974,000 | 945,000 | ||||||||
| Amortization of patents | 73,000 | 72,000 | 147,000 | 144,000 | ||||||||
| Stock-based compensation | 59,000 | 85,000 | 118,000 | 157,000 | ||||||||
| TOTAL OPERATING EXPENSES | 901,000 | 760,000 | 7,322,000 | 1,821,000 | ||||||||
| OPERATING INCOME (LOSS) | (901,000 | ) | (705,000 | ) | 11,370,000 | (1,605,000 | ) | |||||
| OTHER INCOME: | ||||||||||||
| Interest and dividend income, net | 68,000 | 120,000 | 118,000 | 298,000 | ||||||||
| Net realized and unrealized gain (loss) on marketable securities | 49,000 | 206,000 | 8,000 | (116,000 | ) | |||||||
| Total other income, net | 117,000 | 326,000 | 126,000 | 182,000 | ||||||||
| INCOME (LOSS) BEFORE INCOME TAXES AND EQUITY IN NET LOSSES OF EQUITY METHOD INVESTEE | (784,000 | ) | (379,000 | ) | 11,496,000 | (1,423,000 | ) | |||||
| INCOME TAXES PROVISION (BENEFIT): | ||||||||||||
| Current | (180,000 | ) | (142,000 | ) | 710,000 | (382,000 | ) | |||||
| Deferred taxes, net | (52,000 | ) | 142,000 | 1,672,000 | 382,000 | |||||||
| Total income taxes provision (benefit) | (232,000 | ) | — | 2,382,000 | — | |||||||
| INCOME (LOSS) BEFORE SHARE OF NET LOSSES OF EQUITY METHOD INVESTEE: | $ | (552,000 | ) | $ | (379,000 | ) | $ | 9,114,000 | $ | (1,423,000 | ) | |
| SHARE OF NET LOSSES OF EQUITY METHOD INVESTEE | $ | (231,000 | ) | $ | (205,000 | ) | $ | (446,000 | ) | $ | (498,000 | ) |
| NET INCOME (LOSS) | $ | (783,000 | ) | $ | (584,000 | ) | $ | 8,668,000 | $ | (1,921,000 | ) | |
| Net Income (Loss) Per Share | ||||||||||||
| Basic | $ | (0.03 | ) | $ | (0.02 | ) | $ | 0.36 | $ | (0.08 | ) | |
| Diluted | $ | (0.03 | ) | $ | (0.02 | ) | $ | 0.35 | $ | (0.08 | ) | |
| Weighted average common shares outstanding: | ||||||||||||
| Basic | 23,839,455 | 23,945,916 | 24,106,169 | 23,987,715 | ||||||||
| Diluted | 23,839,455 | 23,945,916 | 24,878,257 | 23,987,715 | ||||||||
| Cash dividends declared per share | — | — | $ | 0.05 | $ | 0.05 | ||||||
| NET INCOME (LOSS) | $ | (783,000 | ) | $ | (584,000 | ) | $ | 8,668,000 | $ | (1,921,000 | ) | |
| OTHER COMPREHENSIVE INCOME (LOSS)<br> <br>Net unrealized holding gain (loss) on corporate bonds and notes during the period, net of tax | (3,000 | ) | 175,000 | 8,000 | (8,000 | ) | ||||||
| COMPREHENSIVE INCOME (LOSS) | $ | (786,000 | ) | $ | (409,000 | ) | $ | 8,676,000 | $ | (1,929,000 | ) | |
| Condensed Consolidated Balance Sheet as of June 30, 2021<br> <br>(Unaudited)<br> <br><br> <br><br> <br>Cash<br> and cash equivalents and marketable securities | $ | 53,775,000 | ||||||||||
| --- | --- | --- | ||||||||||
| Total<br> current assets | $ | 53,833,000 | ||||||||||
| Total<br> assets | $ | 59,548,000 | ||||||||||
| Total<br> current liabilities | $ | 2,222,000 | ||||||||||
| Total<br> long term liabilities | $ | 717,000 | ||||||||||
| Total<br> stockholders' equity | $ | 56,609,000 |