Network-1 Technologies, Inc 10-K for FY2023

Network-1 Technologies, Inc. (NTIP)

10-K 2024-03-08 For: 2023-12-31

Added on April 08, 2026

About this 10-K

Network-1 Technologies, Inc filed this 10-K on March 8, 2024, covering the fiscal year ended December 31, 2023 (FY2023).

Headline figures

Fiscal year ended December 31, 2023, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $2.6M
Net loss: $1.46M; compared with a net loss of $2.33M a year earlier
Diluted EPS: -$0.06; compared with -$0.10 a year earlier

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Delaware		11-3027591
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification Number)

65 Locust Avenue, Third Floor           New Canaan, Connecticut 06840
(Address of Principal Executive Offices)

Title of each class	Trading symbol	Name of each exchange on which registered
Common Stock $.01 par value	NTIP	NYSE American

Large accelerated filer ☐	Accelerated filer ☐
Non-accelerated filer ☒	Smaller Reporting Company ☒
Emerging growth company ☐

Item 1.       Business	2
Item 1A. Risk Factors	10
Item 1B.   Unresolved Staff Comments	19
Item 1C.   Cybersecurity	19
Item 2.     Properties	19
Item 3.      Legal Proceedings	19
Item 4.    Mine Safety Disclosures	21
PART II
Item 5.     Market For Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	22
Item 6.      (Reserved)	24
Item 7.     Management's Discussion and Analysis of Financial Condition and Results of Operations	25
Item 7A. Quantitative and Qualitative Disclosures About Market Risk	32
Item 8.      Financial Statements and Supplementary Data	32
Item 9.     Changes in and Disagreements With Accountants on Accounting and Financial Disclosure	32
Item 9A. Controls and Procedures	32
Item 9B.   Other Information	33
Item 9C.   Disclosure Regarding Foreign Jurisdictions that Prevent Inspections	34
PART III
Item 10.     Directors, Executive Officers and Corporate Governance	34
Item 11.    Executive Compensation	39
Item 12.  Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	44
Item 13.   Certain Relationships and Related Transactions and Director Independence	46
Item 14.   Principal Accountant Fees and Services	47
PART IV
Item 15.    Exhibits and Financial Statement Schedules	48
Signatures	50

Period	Total Number of Shares Purchased	Average Price Paid Per Share	Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Number (or Approximate Dollar Value) of Shares) that May Yet Be Purchased Under the Plans or Programs
October 1, 2023 to October 31, 2023	31,146	$2.22	31,146	$4,561,139
November 1, 2023 to November 30, 2023	77,087	$2.20	77,087	$4,391,365
December 1, 2023 to December 31, 2023	8,581	$2.17	8,581	$4,372,705
Total	116,814	$2.20	116,814

	Number of securities to be issued upon exercise of outstanding options and rights	Weighted-average exercise price of outstanding options and rights	Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column(a))
	(a)	(b)	(c)

Equity compensation plans approved by security holders	587,500⁽¹⁾	$ —⁽²⁾	2,180,000 ⁽³⁾

Equity compensation plans not approved by security holders	$  —	$  —	—

Total	587,500	$  —	2,180,000

NAME	AGE	POSITION
Corey M. Horowitz	69	Chairman, Chief Executive Officer and Chairman of the Board of Directors
Jonathan E. Greene	62	Executive Vice President, Secretary and a Director
Robert M. Mahan	57	Chief Financial Officer
Emanuel R. Pearlman	63	Director
Niv Harizman	59	Director
Allison Hoffman	53	Director

Name and Principal Position	Year	Salary ($)		Bonus ($)			Stock Awards($)⁽³⁾			All Other Compensation($)⁽¹⁾			Total($)
Corey M. Horowitz	2023	$	545,572	$	305,000	(2)	$	—		$	53,500	(4)	$	904,072
Chairman and Chief Executive Officer	2022	$	535,000	$	175,000	(2)	$	1,102,940		$	109,675	(4)	$	1,922,615

Robert Mahan	2023	$	175,000	$	—		$	115,000	(5)	$	—		$	290,000
Chief Financial Officer

Jonathan Greene	2023	$	200,000	$	25,000		$	33,900		$	30,409	(6)	$	289,309
Executive Vice President	2022	$	200,000	$	25,000		$	41,100		$	20,419	(6)	$	286,519

Name	Fees earned or paid in cash ($)⁽¹⁾	Stock Awards ($)^{(2) (3)}	All other compensation ($)⁽⁴⁾	Total ($)
Emanuel Pearlman	$50,000	$33,750	$ 1,125	$ 84,875
Niv Harizman	$46,250	$33,750	$ 1,125	$ 81,125
Allison Hoffman	$48,750	$33,750	$ 1,125	$ 83,625

	Option Awards				Stock Awards
Name	Number of Securities Underlying Unexercised Options		Option Exercise Price ($)	Option Expiration Date	Equity incentive plan awards: Number of unearned shares, units or other rights that have not vested	Equity incentive plan awards: Market value of unearned shares, units or other rights that have not vested⁽¹⁾ ($)
Name	Exercisable	Unexercisable	Option Exercise Price ($)	Option Expiration Date
Corey M. Horowitz Chairman and CEO	—	—	—	—	500,000⁽²⁾	$1,090,000
Robert M. Mahan Chief Financial Officer	—	—	—	—	50,000⁽³⁾	$   109,000
Jonathan Greene Executive Vice President	—	—	—	—	22,500⁽⁴⁾	$     49,050

NAME AND ADDRESS OF BENEFICIAL OWNER	AMOUNT AND NATURE OF BENEFICIAL OWNERSHIP ⁽¹⁾⁽²⁾		PERCENTAGE OF COMMON STOCK BENEFICIALLY OWNED⁽²⁾
Executive Officers and Directors: Corey M. Horowitz⁽³⁾		6,895,942		29.2%
CMH Capital Management Corp.⁽⁴⁾		2,291,372		9.7%
Niv Harizman⁽⁵⁾		305,985		1.3%
Emanuel Pearlman⁽⁶⁾		132,059		*
Jonathan E. Greene⁽⁷⁾		103,597		*
Allison Hoffman⁽⁸⁾		94,311		*
Robert Mahan⁽⁹⁾		—		—
All officers and directors as a group  (6 Persons)		7,531,894		32%
5% Stockholders:
Steven D. Heinemann⁽¹⁰⁾		1,941,696		8.2%
Goose Hill Capital LLC⁽¹¹⁾		1,356,563		5.8%
Clayton Partners LLC⁽¹²⁾		1,435,200		6.1%


Index to Consolidated Financial Statements	Page

Report of Independent Registered Public Accounting Firm (PCAOB Firm ID 688)	F-1

Consolidated Balance Sheets as of December 31, 2023 and 2022	F-3

Consolidated Statements of Operations and Comprehensive Loss for the years ended December 31, 2023 and 2022	F-4

Consolidated Statements of Changes in Stockholders' Equity for the years ended December 31, 2023 and 2022	F-5

Consolidated Statements of Cash Flows for the years ended December 31, 2023 and 2022	F-6

Notes to Consolidated Financial Statements	F-7


	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


	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	)

																	Total Stockholders’ Equity
	Common Stock						Additional Paid-in Capital
	Shares			Amount			Additional Paid-in Capital			Accumulated Deficit			Accumulated Other Comprehensive Income (Loss)			Total Stockholders’ Equity

Balance – January 1, 2022		23,792,212		$	238,000		$	66,361,000		$	(6,428,000	)	$	(12,000	)	$	60,159,000
Dividends and dividend equivalents declared		—			—			—			(2,418,000	)		—			(2,418,000	)
Stock-based compensation		—			—			585,000			—			—			585,000
Vesting of restricted stock units		182,500			2,000			(2,000	)		—			—			—
Cashless exercise of stock options		500,000			5,000			(5,000	)		—			—			—
Value of shares delivered to pay exercise price and withholding taxes		(382,543	)		(3,000	)		—			(352,000	)		—			(355,000	)
Treasury stock purchased and retired		(228,530	)		(3,000	)		—			(531,000	)		—			(534,000	)
Net unrealized loss on corporate bonds and notes		—			—			—			—			(2,000	)		(2,000	)
Net loss		—			—			—			(2,326,000	)		—			(2,326,000	)
Balance – December 31, 2022		23,863,639		$	239,000		$	66,939,000		$	(12,055,000	)	$	(14,000	)	$	55,109,000
Dividends and dividend equivalents declared		—			—			—			(2,433,000	)		—			(2,433,000	)
Stock-based compensation		—			—			508,000			—			—			508,000
Vesting of restricted stock units		157,500			1,000			(1,000	)		—			—			—
Value of shares delivered to pay withholding taxes		(39,099	)		—			—			(83,000	)		—			(83,000	)
Treasury stock purchased and retired		(428,132	)		(5,000	)		—			(961,000	)		—			(966,000	)
Realized gain on corporate bonds		—			—			—			—			14,000			14,000
Net loss		—			—			—			(1,457,000	)		—			(1,457,000	)
Balance – December 31, 2023		23,553,908		$	235,000		$	67,446,000		$	(16,989,000	)		—		$	50,692,000


	Years Ended December 31,
	2023			2022
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(1,457,000	)	$	(2,326,000	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Amortization of patents		266,000			316,000
Stock-based compensation		508,000			585,000
Loss allocated from equity investment		2,003,000			1,639,000
Deferred tax (benefit) expense		(399,000	)		607,000
Amortization of right of use asset, net		65,000			43,000
Gain on equity method investment		—			(3,883,000	)
Accrued interest on convertible note		—			(86,000	)
Gain on conversion of note		—			(271,000	)
Unrealized (gain) loss on marketable securities		(103,000	)		880,000

Changes in operating assets and liabilities:
Other current assets		142,000			(208,000	)
Prepaid taxes		177,000			(167,000	)
Accounts payable		(382,000	)		48,000
Income taxes payable		(115,000	)		(2,837,000	)
Security deposit		(13,000	)		13,000
Operating lease obligations		(70,000	)		(31,000	)
Accrued expenses		(291,000	)		242,000

NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES		331,000			(5,436,000	)

CASH FLOWS FROM INVESTING ACTIVITIES:
Sales of marketable securities		53,521,000			13,156,000
Purchases of marketable securities		(46,984,000	)		(33,903,000	)
Development of patents		—			(524,000	)
Equity Investment		—			(1,000,000	)

NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES		6,537,000			(22,271,000	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Cash dividends paid		(2,371,000	)		(2,453,000	)
Value of shares delivered to fund withholding taxes		(83,000	)		(355,000	)
Repurchases of common stock, inclusive of commissions		(966,000	)		(534,000	)

NET CASH USED IN FINANCING ACTIVITIES		(3,420,000	)		(3,342,000	)

NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS		3,448,000			(31,049,000	)

CASH AND CASH EQUIVALENTS, beginning of year		13,448,000			44,497,000

CASH AND CASH EQUIVALENTS, end of year	$	16,896,000		$	13,448,000

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the years for:
Interest	$	—		$	—
Income taxes	$	65,000		$	3,004,000

NON-CASH FINANCING ACTIVITY
Accrued dividend rights on restricted stock units	$	65,000		$	37,000
Modification of right-of-use asset	$	80,000		$	204,000
Conversion of note receivable	$	—		$	1,086,000

Schedule of disaggregation of revenue
		Years Ended December 31,
		2023		2022
Litigation Settlements	$	2,601,000	$	—
Total Revenue	$	2,601,000	$	—

Schedule of patent
	2023			2022
Gross carrying amount	$	8,473,000		$	8,473,000
Accumulated amortization		(7,147,000	)		(6,881,000	)
Patents, net	$	1,326,000		$	1,592,000

Schedule of future amortization of current intangible
For the years ended December 31,
2024	$	120,000
2025		120,000
2026		120,000
2027		119,000
2028		116,000
Thereafter		731,000
Total	$	1,326,000

Schedule of earnings per share
	2023		2022

Weighted-average common shares outstanding – basic		23,791,287		23,825,917

Dilutive effect of restricted stock units		—		—

Weighted-average common shares outstanding – diluted		23,791,287		23,825,917

Restricted stock units excluded from the computation of diluted income per share because the effect of inclusion would have been anti-dilutive		587,500		625,000

Schedule of components of the income taxes
	2023			2022
Current
State and local	$	—		$	—
Federal		11,000			—
Total Current Tax Expense (Benefit)	$	11,000		$	—

Deferred
State and local		(39,000	)		56,000
Federal		(360,000	)		551,000
Total Deferred Tax Expense		(399,000	)		607,000

Total Income Taxes	$	(388,000	)	$	607,000

Schedule of components of deferred tax assets and liability
	2023			2022
Deferred tax assets (liability):
Net operating loss carryforward	$	804,000		$	477,000
Capital loss carryforward		47,000			331,000
Stock options and RSU		27,000			30,000
Tax credit carryforward		148,000			—
Other		182,000			—
Total deferred tax assets		1,208,000			838,000
Valuation allowance		(1,208,000	)		(838,000	)

Deferred tax assets, net of valuation allowance	$	—		$	—

	2023			2022

Deferred Tax Liability⁽¹⁾		(762,000	)		(1,161,000	)
Total deferred tax liability	$	(762,000	)	$	(1,161,000	)

Schedule of reconciliation of income tax
	Years Ended
	December 31,
	2023			2022

Income tax - statutory rate		21.00	%		21.00	%
Permanent differences		(0.19)	%		(8.4)	%
Change in valuation allowance		(1.98)	%		(48.79)	%
State		2.46	%		1.28	%
Other		—			(0.43)	%
Total		21.29	%		(35.34)	%

Schedule of stock option activity
	2023						2022
	Number of Shares			Weighted-Average Grant Date Fair Value			Number of Shares			Weighted-Average Grant Date Fair Value
Balance of restricted stock units outstanding at beginning of year		625,000		$	1.87			12,500		$	3.36

Grants of restricted stock units		120,000			2.27			670,000			1.92

Vested restricted stock units		(157,500	)		(2.43	)		(57,500	)		(2.73	)

Balance of restricted stock units outstanding at end of year		587,500		$	1.81			625,000		$	1.87

Schedule of marketable securities
	December 31, 2023
	Cost Basis		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Certificates of Deposit	$	6,112,000	$	—	$	(35,000	)	$	6,077,000
Government securities		14,701,000		127,000		(10,000	)		14,818,000
Fixed income mutual funds		7,585,000		91,000		—			7,676,000
Total marketable securities	$	28,398,000	$	218,000	$	(45,000	)	$	28,571,000


		December 31, 2022
	Cost Basis		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Government securities	$	20,781,000	$	67,000	$	—		$	20,848,000
Fixed income mutual funds		11,904,000		—		915,000			10,989,000
Certificates of Deposit		3,019,500		—		(43,000	)		2,976,000
Corporate bonds and notes		192,000		—		(14,000	)		178,000
Total marketable securities	$	35,896,000	$	67,000	$	(972,000	)	$	34,991,000

Schedule of equity method investments
	Twelve Months Ended September 30,
	2023		2022

Loss from continuing operations	$	24,272,000	$	15,246,000
Comprehensive loss	$	29,532,000	$	17,913,000

Schedule of operating leases obligations
	As of		As of
	December 31, 2023		December 31, 2022
Operating lease right-of-use assets	$	16,000	$	161,000

Operating lease obligations – current		23,000		79,000
Operating lease obligations – non-current		—		94,000
Total lease obligations	$	23,000	$	173,000

Schedule of leases cost
	For the Year Ended December 31,
	2023		2022
Operating lease cost	$	68,000	$	48,000
Short-term lease cost		—		82,000
Total lease cost	$	68,000	$	130,000

Schedule of future minimum leases payments
	Operating Leases
2024	$	23,000
2025		—
2026		—
2027		—
2028		—
Total future minimum lease payments		23,000
Less imputed interest		—
Total operating lease liability	$	23,000

NAME	TITLE	DATE

/s/ Corey M. Horowitz Corey M. Horowitz	Chairman and Chief Executive Officer, Chairman of the Board of Directors (principal executive officer)	March 8, 2024
/s/ Robert Mahan Robert Mahan	Chief Financial Officer (principal financial officer and principal accounting officer)	March 8, 2024
/s/ Jonathan Greene Jonathan Greene	Executive Vice President, Secretary and a Director	March 8, 2024
/s/ Emanuel Pearlman Emanuel Pearlman	Director	March 8, 2024
/s/ Niv Harizman Niv Harizman	Director	March 8, 2024
/s/ Allison Hoffman Allison Hoffman	Director	March 8, 2024

Name:

Account Number:

Date of Request:

Amount or # of Shares:

Broker:

Name		Jurisdiction

Mirror Worlds Technologies, LLC		Delaware

HFT Solutions, LLC		Delaware


Date: March 8, 2024		/s/ Corey M. Horowitz
		Corey M. Horowitz Chairman and Chief Executive Officer


Date: March 8, 2024		/s/ Robert M. Mahan
		Robert M. Mahan Chief Financial Officer