PART I. Financial Information [Item 1. Condensed Consolidated Financial Statements (unaudited)](index=4&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements%20%28unaudited%29) This section presents the unaudited condensed consolidated financial statements for periods ended September 30, 2020, and 2019, detailing the company's financial position, performance, cash flows, and intellectual property licensing business [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets decreased from **$55.1 million** at year-end 2019 to **$51.0 million** as of September 30, 2020, driven by reduced marketable securities and royalty receivables, while total liabilities also significantly declined Condensed Consolidated Balance Sheet Highlights (in thousands) | | Sep 30, 2020 | Dec 31, 2019 | | :--- | :--- | :--- | | **Total Current Assets** | $45,522 | $48,758 | | **Total Assets** | $50,989 | $55,076 | | **Total Current Liabilities** | $344 | $1,569 | | **Total Liabilities** | $344 | $1,569 | | **Total Stockholders' Equity** | $50,645 | $53,507 | [Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Income%20%28Loss%29) Q3 2020 revenue surged to **$4.15 million** from **$0.52 million** in Q3 2019, resulting in a **$1.69 million** net income, while nine-month revenue also increased, narrowing the net loss to **$0.23 million** Statement of Operations Highlights (in thousands, except per share data) | Metric | Q3 2020 | Q3 2019 | Nine Months 2020 | Nine Months 2019 | | :--- | :--- | :--- | :--- | :--- | | **Revenue** | $4,150 | $520 | $4,366 | $1,725 | | **Operating Income (Loss)** | $1,660 | $(576) | $55 | $(1,625) | | **Net Income (Loss)** | $1,687 | $(411) | $(234) | $(859) | | **Diluted EPS** | $0.07 | $(0.02) | $(0.01) | $(0.04) | [Condensed Consolidated Statements of Stockholders' Equity](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders%27%20Equity) Stockholders' equity decreased from **$53.5 million** at year-end 2019 to **$50.6 million** as of September 30, 2020, primarily due to **$2.4 million** in dividends and treasury stock purchases, partially offset by net income - Total stockholders' equity declined from **$53,507,000** at Dec 31, 2019 to **$50,645,000** at Sep 30, 2020[17](index=17&type=chunk) - Key activities impacting equity during the nine months ended Sep 30, 2020 included dividend declarations (**$2,434,000**), net loss (**$234,000**), and treasury stock purchases (**$252,000**)[17](index=17&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operating activities improved to **$0.11 million** for the nine months ended September 30, 2020, with investing activities providing **$4.34 million** and financing activities using **$2.82 million**, leading to a **$1.63 million** net cash increase Cash Flow Summary for Nine Months Ended Sep 30 (in thousands) | Cash Flow Activity | 2020 | 2019 | | :--- | :--- | :--- | | **Net Cash from Operating Activities** | $107 | $(1,388) | | **Net Cash from Investing Activities** | $4,344 | $(2,410) | | **Net Cash from Financing Activities** | $(2,817) | $(3,228) | | **Net Increase (Decrease) in Cash** | $1,634 | $(7,026) | | **Cash and Cash Equivalents, End of Period** | $24,221 | $16,737 | [Notes to Unaudited Condensed Consolidated Financial Statements](index=12&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) Notes detail accounting policies, patent portfolios, revenue recognition, a **$4.15 million** Dell settlement, favorable HP appeal ruling, an equity investment in ILiAD Biotechnologies, and potential Personal Holding Company (PHC) tax implications - The company's business is the development, licensing, and protection of its **84 patents**, which include the Remote Power Patent (expired March 7, 2020), Mirror Worlds, Cox, M2M/IoT, and QoS patent portfolios[27](index=27&type=chunk)[28](index=28&type=chunk) - Revenue for the three months ended September 30, 2020 includes **$4,150,000** from a litigation settlement with Dell, Inc[40](index=40&type=chunk) - On September 24, 2020, a federal court overturned a non-infringement judgment in the company's litigation with Hewlett-Packard. The company believes this obligates Cisco and other licensees to pay significant royalties that accrued from Q4 2017 through March 7, 2020[30](index=30&type=chunk)[109](index=109&type=chunk)[111](index=111&type=chunk) - The company holds an equity investment in ILiAD Biotechnologies, a clinical-stage biotech company, and recorded its share of ILiAD's net losses, which amounted to **$146,000** for Q3 2020 and **$644,000** for the first nine months of 2020[116](index=116&type=chunk)[118](index=118&type=chunk) - The company may be classified as a Personal Holding Company (PHC) starting in July 2020, which could subject it to a **20% tax** on undistributed PHC income if it achieves net income for the year[53](index=53&type=chunk)[54](index=54&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=32&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses patent portfolios and licensing strategy, highlighting a significant Q3 2020 revenue increase due to a **$4.15 million** Dell settlement, leading to **$1.66 million** operating income, and assesses liquidity and COVID-19 impacts [Results of Operations](index=34&type=section&id=Results%20of%20Operations) Q3 2020 revenue surged to **$4.15 million** from **$0.52 million** in Q3 2019 due to a Dell settlement, yielding **$1.69 million** net income, while nine-month revenue increased to **$4.37 million**, narrowing the net loss to **$0.23 million** Q3 2020 vs. Q3 2019 Performance (in thousands) | Metric | Q3 2020 | Q3 2019 | Change | | :--- | :--- | :--- | :--- | | **Revenue** | $4,150 | $520 | +$3,630 | | **Operating Income (Loss)** | $1,660 | $(576) | +$2,236 | | **Net Income (Loss)** | $1,687 | $(411) | +$2,098 | Nine Months 2020 vs. 2019 Performance (in thousands) | Metric | Nine Months 2020 | Nine Months 2019 | Change | | :--- | :--- | :--- | :--- | | **Revenue** | $4,366 | $1,725 | +$2,641 | | **Operating Income (Loss)** | $55 | $(1,625) | +$1,680 | | **Net Loss** | $(234) | $(859) | +$625 | - The primary reason for the revenue increase in both the three and nine-month periods was a **$4.15 million** litigation settlement with Dell, Inc[139](index=139&type=chunk)[148](index=148&type=chunk) [Liquidity and Capital Resources](index=36&type=section&id=Liquidity%20and%20Capital%20Resources) As of September 30, 2020, liquidity is strong with **$45.5 million** in cash, equivalents, and marketable securities, and **$45.2 million** in working capital, despite a **$2.0 million** working capital decrease from year-end 2019 - Principal sources of liquidity at September 30, 2020 were cash, cash equivalents, and marketable securities of **$45,492,000** and working capital of **$45,178,000**[156](index=156&type=chunk) - Working capital decreased by **$2,011,000** from December 31, 2019, primarily due to a decrease in cash and marketable securities, offset by a decrease in current liabilities[157](index=157&type=chunk) - Net cash from operating activities improved to **$107,000** for the nine months ended Sep 30, 2020, compared to a use of **$(1,388,000)** in the prior year period, driven by the Dell settlement revenue[158](index=158&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=38&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company states this item is 'Not Applicable,' indicating no significant market risk exposure, as cash is held in money market funds, certificates of deposit, and short-term fixed-income securities - The company states this section is **"Not Applicable"**[171](index=171&type=chunk) - Cash is maintained in money market funds, certificates of deposit, and short-term fixed income securities, leading management to believe there is no significant exposure to interest rate risk[162](index=162&type=chunk) [Item 4. Controls and Procedures](index=38&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, concluded that disclosure controls and procedures were effective as of September 30, 2020, with no material changes to internal control over financial reporting during the quarter - The CEO and CFO concluded that disclosure controls and procedures were **effective** as of the end of the quarter covered by the report[171](index=171&type=chunk) - No material changes to internal control over financial reporting occurred during the fiscal quarter ended September 30, 2020[172](index=172&type=chunk) PART II. Other Information [Item 1. Legal Proceedings](index=38&type=section&id=Item%201.%20Legal%20Proceedings) This section highlights material legal developments, including a **$4.15 million** settlement with Dell and a favorable appeal ruling against Hewlett-Packard regarding the Remote Power Patent, remanding the case for a new trial - The company settled its breach of contract litigation with Dell, Inc., receiving a payment of **$4,150,000** in full settlement on July 28, 2020[174](index=174&type=chunk) - On September 24, 2020, the U.S. Court of Appeals for the Federal Circuit overturned a non-infringement judgment in the company's litigation with Hewlett-Packard, remanding the case for a new trial on infringement and further proceedings on validity regarding the Remote Power Patent[176](index=176&type=chunk) [Item 1A. Risk Factors](index=39&type=section&id=Item%201A.%20Risk%20Factors) The company refers investors to risk factors detailed in previous SEC filings, including its Annual Report on Form 10-K for 2019 and prior 2020 quarterly reports, with no new specific risks detailed - The report refers to previously filed documents (Annual Report on Form 10-K for year ended Dec 31, 2019, and prior 2020 10-Q reports) for a full discussion of risk factors[178](index=178&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=39&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reported no unregistered equity sales or stock repurchases during Q3 2020, with approximately **$4.2 million** remaining authorized for future repurchases under the existing program - There were **no unregistered sales** of equity securities during the three months ended September 30, 2020[179](index=179&type=chunk) - The company did **not repurchase any** of its common stock during the three months ended September 30, 2020[180](index=180&type=chunk) - As of September 30, 2020, **$4,196,100** remained available for repurchase under the existing Share Repurchase Program[180](index=180&type=chunk) [Item 3. Defaults Upon Senior Securities](index=40&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reported no defaults upon senior securities - The company reported **"None"**[182](index=182&type=chunk) [Item 4. Other Information](index=40&type=section&id=Item%204.%20Other%20Information) The company reported no other information to disclose for the period - The company reported **"None"**[183](index=183&type=chunk) [Item 5. Exhibits](index=40&type=section&id=Item%205.%20Exhibits) This section lists exhibits filed with the report, including Sarbanes-Oxley certifications from the CEO and CFO, and interactive data files (XBRL) - The report lists certifications pursuant to Section 302 and 906 of the Sarbanes-Oxley Act and XBRL interactive data files as exhibits[184](index=184&type=chunk)

(Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2020 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from __________ to__________ UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 _________________ FORM 10-Q _________________ Commission File Number 1-15288 _____________________ NETWORK-1 TECHNOLOGIES, INC. (Exact name of re ...

[PART I. Financial Information](index=5&type=section&id=PART%20I.%20Financial%20Information) [Item 1. Condensed Consolidated Financial Statements](index=5&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements) For the three months ended March 31, 2020, the company reported a significant decrease in revenue and a wider net loss compared to the same period in 2019, reflecting the impact of patent expiration and ongoing litigation [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of March 31, 2020, total assets decreased to $51.15 million from $55.08 million at year-end 2019, primarily due to a reduction in marketable securities, while total liabilities also significantly dropped Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2020 | December 31, 2019 | Change | | :--- | :--- | :--- | :--- | | **Total Current Assets** | $45,222 | $48,758 | -$3,536 | | Cash and cash equivalents | $26,594 | $22,587 | +$4,007 | | Marketable securities, at fair value | $18,409 | $25,730 | -$7,321 | | **Total Assets** | **$51,151** | **$55,076** | **-$3,925** | | **Total Current Liabilities** | $467 | $1,569 | -$1,102 | | **Total Liabilities** | **$467** | **$1,569** | **-$1,102** | | **Total Stockholders' Equity** | **$50,684** | **$53,507** | **-$2,823** | [Condensed Consolidated Statements of Operations and Comprehensive Loss](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) For the first quarter of 2020, revenue sharply declined to $161,000, leading to a net loss of $1.34 million, significantly wider than the prior-year period due to lower revenue, investment losses, and equity method losses Statement of Operations Summary (in thousands, except per share data) | Metric | Q1 2020 | Q1 2019 | YoY Change | | :--- | :--- | :--- | :--- | | **Revenue** | **$161** | **$606** | **-73.4%** | | Total Operating Expenses | $1,061 | $1,139 | -6.9% | | **Operating Loss** | **($900)** | **($533)** | **+68.9%** | | Net realized and unrealized (loss) gain on marketable securities | ($322) | $23 | N/A | | Share of Net Losses of Equity Method Investee | ($293) | ($96) | +205.2% | | **Net Loss** | **($1,337)** | **($240)** | **+457.1%** | | **Net Loss Per Share (Basic & Diluted)** | **($0.06)** | **($0.01)** | **+500%** | - The company declared a cash dividend of **$0.05 per share** in both Q1 2020 and Q1 2019[14](index=14&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash used in operating activities slightly increased to $1.54 million for Q1 2020, while net cash provided by investing activities substantially rose to $6.91 million due to reduced marketable securities purchases, and cash used in financing activities increased due to higher stock repurchases Cash Flow Summary (in thousands) | Cash Flow Activity | Q1 2020 | Q1 2019 | | :--- | :--- | :--- | | Net Cash Used in Operating Activities | ($1,538) | ($1,415) | | Net Cash Provided by Investing Activities | $6,910 | $494 | | Net Cash Used in Financing Activities | ($1,365) | ($1,192) | | **Net Increase (Decrease) in Cash** | **$4,007** | **($2,113)** | | **Cash and Cash Equivalents, End of Period** | **$26,594** | **$21,650** | [Notes to Unaudited Condensed Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) The notes detail the company's intellectual property licensing business, the expiration of its primary revenue-generating patent, updates on significant legal proceedings, and information on its equity investment, stock repurchase program, and dividend policy - The company's business involves the development, licensing, and protection of its intellectual property assets, including **83 patents** across several portfolios (Remote Power, Mirror Worlds, Cox, M2M/IoT, QoS)[26](index=26&type=chunk) - The Remote Power Patent expired on **March 7, 2020**, ceasing future licensing revenue, though significant past royalty payments are contingent on the outcome of the HP litigation appeal[26](index=26&type=chunk)[27](index=27&type=chunk)[29](index=29&type=chunk) - A pending appeal in the Hewlett-Packard case could obligate licensees like Cisco to pay significant royalties accrued from **Q4 2017 through March 7, 2020**[109](index=109&type=chunk)[111](index=111&type=chunk) - On **March 25, 2020**, the company was granted summary judgment against Dell, Inc. for unpaid royalties, obligating Dell to pay all outstanding royalties through the patent's expiration[115](index=115&type=chunk) - In **January 2020**, the U.S. Court of Appeals reversed a summary judgment in favor of Facebook, remanding the patent infringement litigation for further proceedings[114](index=114&type=chunk) - The company invested **$5 million** in ILiAD Biotechnologies, LLC, recognizing a net loss of **$293,000** from this equity method investment in Q1 2020[116](index=116&type=chunk)[119](index=119&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=32&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the significant financial impact of the Remote Power Patent's expiration on March 7, 2020, highlighting uncertain future revenue dependent on other patent portfolios and litigation outcomes, while maintaining a strong liquidity position to fund operations - The Remote Power Patent, a key revenue source, expired on **March 7, 2020**, having generated over **$147 million** in licensing revenue from May 2007 through March 31, 2020[128](index=128&type=chunk)[130](index=130&type=chunk) - Future revenue is uncertain and may depend on the outcome of litigation involving the Cox and Mirror Worlds patent portfolios, and the ability to monetize the M2M/IoT portfolio or newly acquired patents[133](index=133&type=chunk) - The company's principal sources of liquidity at March 31, 2020, consisted of **$45 million** in cash, cash equivalents, and marketable securities, which management believes is sufficient to fund operations for the foreseeable future[135](index=135&type=chunk)[153](index=153&type=chunk) Q1 2020 vs Q1 2019 Results Analysis | Item | Q1 2020 | Q1 2019 | Reason for Change | | :--- | :--- | :--- | :--- | | **Revenue** | $161,000 | $606,000 | Decline in licensing revenue, a one-time license conversion in 2019, and the patent expiration | | **Operating Loss** | ($900,000) | ($533,000) | Primarily due to the $445,000 decrease in revenue | | **Net Loss** | ($1,337,000) | ($240,000) | Driven by lower revenue, losses on marketable securities, and share of losses from equity investment | [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=38&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company has indicated that this section is not applicable - The company states that there are no applicable quantitative and qualitative disclosures about market risk[167](index=167&type=chunk) [Item 4. Controls and Procedures](index=38&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of March 31, 2020, with no material changes to internal control over financial reporting during the quarter - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of the end of the reporting period[167](index=167&type=chunk) - There were no changes in internal control over financial reporting during the quarter that materially affected, or are reasonably likely to materially affect, internal controls[168](index=168&type=chunk) [PART II. Other Information](index=38&type=section&id=PART%20II.%20Other%20Information) [Item 1. Legal Proceedings](index=38&type=section&id=Item%201.%20Legal%20Proceedings) This section provides updates on key legal matters, including pending appeals in the Hewlett-Packard case, a favorable summary judgment against Dell, a reversed summary judgment in the Facebook case, and ongoing litigation against Google and YouTube - **Remote Power Patent Litigation (HP):** An appeal of the District Court's denial of a new trial on infringement is pending a decision from the U.S. Court of Appeals for the Federal Circuit[171](index=171&type=chunk) - **Dell Litigation:** On **March 25, 2020**, the court granted summary judgment in favor of Network-1 on its breach of contract claim against Dell for failure to make royalty payments[173](index=173&type=chunk) - **Mirror Worlds Patent Litigation (Facebook):** On **January 23, 2020**, the U.S. Court of Appeals reversed a summary judgment of non-infringement and remanded the case to the District Court for further proceedings[174](index=174&type=chunk) - **Cox Patent Portfolio Litigation (Google/YouTube):** The consolidated cases are ongoing, with a ruling on the Markman (claim construction) hearing held in **November 2019** still pending[178](index=178&type=chunk) [Item 1A. Risk Factors](index=40&type=section&id=Item%201A.%20Risk%20Factors) The company highlights the potential adverse impact of the global COVID-19 pandemic on its business, specifically noting delays in court proceedings that could affect the timing of future license agreements - The global COVID-19 pandemic is identified as a risk factor, specifically noting that it is causing delays in the courts, which could adversely affect the timing of consummating future license agreements[180](index=180&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=40&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reported no unregistered sales of equity securities during the quarter, while repurchasing 72,300 shares of common stock for approximately $152,000 under its authorized program, with approximately $4.3 million remaining available for future repurchases - There were no issuances of unregistered securities during the three months ended March 31, 2020[181](index=181&type=chunk) Stock Repurchases in Q1 2020 | Period | Total Shares Purchased | Average Price Paid Per Share | | :--- | :--- | :--- | | January 2020 | 5,137 | $2.21 | | February 2020 | 2,700 | $2.25 | | March 2020 | 64,463 | $2.02 | | **Total Q1 2020** | **72,300** | **$2.10** | - As of March 31, 2020, the remaining authorized amount for share repurchases under the program was **$4,293,632**[182](index=182&type=chunk) [Item 3. Defaults Upon Senior Securities](index=41&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reported no defaults upon senior securities - None[184](index=184&type=chunk) [Item 4. Other Information](index=41&type=section&id=Item%204.%20Other%20Information) The company reported no other information - None[185](index=185&type=chunk) [Item 5. Exhibits](index=42&type=section&id=Item%205.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including Sarbanes-Oxley certifications and interactive data files (XBRL) [Signatures](index=43&type=section&id=Signatures) The report is duly signed by the company's Chairman and Chief Executive Officer, Corey M. Horowitz, and another officer, David C. Kahn, on May 19, 2020

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 _________________ FORM 10-K _________________ ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2019 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from __________ to _________ Securities registered pursuant to Section 12(b) of the Act: Common Stock $.01 par value NTIP NYSE American Title o ...

U.S. SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2019 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ______ to ______ Commission File Number 1-15288 NETWORK-1 TECHNOLOGIES, INC. (Exact Name of Registrant as Specified in Its Charter) Delaware 10022 (State or Other Jurisdiction o ...

U.S. SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2019 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ______ to ______ Commission File Number 1-15288 NETWORK-1 TECHNOLOGIES, INC. (Exact Name of Registrant as Specified in Its Charter) Delaware (State or Other Jurisdiction of Incorpora ...

[PART I. FINANCIAL INFORMATION](index=5&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Item 1. Condensed Consolidated Financial Statements](index=5&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements) This section presents unaudited condensed consolidated financial statements, including balance sheets, statements of operations, equity, and cash flows, with detailed notes on accounting policies, patent assets, and legal proceedings [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets%20as%20of%20March%2031,%202019%20and%20December%2031,%202018) The balance sheet shows a decrease in total assets and liabilities from December 2018 to March 2019, leading to a slight decrease in total stockholders' equity | Metric | March 31, 2019 ($) | December 31, 2018 ($) | Change ($) | | :----- | :------------- | :---------------- | :----- | | Total Assets | $58,097,000 | $60,266,000 | -$2,169,000 | | Total Liabilities | $1,094,000 | $2,061,000 | -$967,000 | | Total Stockholders' Equity | $57,003,000 | $58,205,000 | -$1,202,000 | | Cash and cash equivalents | $21,650,000 | $23,763,000 | -$2,113,000 | | Marketable securities | $30,837,000 | $31,228,000 | -$391,000 | | Royalty receivables, net | $774,000 | $444,000 | +$330,000 | [Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Income%20%28Loss%29%20for%20the%20three%20months%20ended%20March%2031,%202019%20and%202018) The company reported a significant decline in revenue and a net loss for Q1 2019, primarily due to the absence of large non-recurring licensing revenue from the prior year | Metric | 3 Months Ended March 31, 2019 ($) | 3 Months Ended March 31, 2018 ($) | Change ($) | | :----- | :---------------------------- | :---------------------------- | :----- | | Revenue | $606,000 | $19,463,000 | -$18,857,000 | | Operating Expenses | $1,139,000 | $8,580,000 | -$7,441,000 | | Operating Income (Loss) | $(533,000) | $10,883,000 | -$11,416,000 | | Net Income (Loss) | $(240,000) | $8,601,000 | -$8,841,000 | | Basic EPS | $(0.01) | $0.36 | -$0.37 | | Diluted EPS | $(0.01) | $0.34 | -$0.35 | - The significant decrease in revenue and net income was primarily due to non-recurring revenue of **$19,020,000** in Q1 2018, which included a **$12,700,000** Fully-Paid License with Juniper Networks and **$6,320,000** from the sale of an Avaya unsecured claim[158](index=158&type=chunk)[166](index=166&type=chunk) [Condensed Consolidated Statements of Stockholders' Equity](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity%20for%20the%20three%20months%20ended%20March%2031,%202019%20and%202018) Stockholders' equity decreased from $58.21 million at December 31, 2018, to $57.00 million at March 31, 2019, mainly due to net loss and dividends | Metric | December 31, 2018 ($) | March 31, 2019 ($) | Change ($) | | :----- | :---------------- | :------------- | :----- | | Total Stockholders' Equity | $58,205,000 | $57,003,000 | -$1,202,000 | | Accumulated Deficit | $(7,102,000) | $(8,558,000) | -$1,456,000 | | Dividends and dividend equivalents declared | — | $(1,215,000) | -$1,215,000 | | Stock-based compensation | — | $144,000 | +$144,000 | | Net unrealized gain on corporate bonds and notes | — | $110,000 | +$110,000 | | Net loss | — | $(240,000) | -$240,000 | [Condensed Consolidated Statements of Cash Flows](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows%20for%20the%20three%20months%20ended%20March%2031,%202019%20and%202018) Net cash used in operating activities was $(1.42) million for Q1 2019, a significant decrease from $16.92 million provided in Q1 2018, primarily due to net loss | Cash Flow Activity | 3 Months Ended March 31, 2019 ($) | 3 Months Ended March 31, 2018 ($) | Change ($) | | :----------------- | :---------------------------- | :---------------------------- | :----- | | Operating Activities | $(1,415,000) | $16,922,000 | -$18,337,000 | | Investing Activities | $494,000 | $(9,788,000) | +$10,282,000 | | Financing Activities | $(1,192,000) | $(1,557,000) | +$365,000 | | Net Increase (Decrease) in Cash | $(2,113,000) | $5,557,000 | -$7,670,000 | | Cash and Cash Equivalents, end of period | $21,650,000 | $56,678,000 | -$35,028,000 | - The decrease in net cash from operating activities was primarily due to a decrease in net income of **$8.84 million** and a **$6.64 million** decrease in accrued expenses[171](index=171&type=chunk) [Notes to Unaudited Condensed Consolidated Financial Statements](index=12&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) This section explains accounting policies, financial instrument valuations, patent assets, stock-based compensation, legal proceedings, and other commitments - The HP Jury Verdict on invalidity and non-infringement of the Remote Power Patent has materially adversely affected the company's results, leading several large licensees (including Cisco) to cease ongoing royalty payments[28](index=28&type=chunk)[143](index=143&type=chunk) - The company adopted ASC 842 (Leases) on January 1, 2019, recognizing **$127,000** of operating lease right-of-use assets and **$128,000** of operating lease obligations[72](index=72&type=chunk)[179](index=179&type=chunk) - The company made an initial investment of **$2.5 million** in ILiAD Biotechnologies, LLC, a development-stage biotechnology company, and is obligated to invest an additional **$2.5 million** contingent on FDA approval for a Phase 2b clinical study[127](index=127&type=chunk)[128](index=128&type=chunk)[129](index=129&type=chunk) [NOTE A – BASIS OF PRESENTATION AND NATURE OF BUSINESS](index=12&type=section&id=NOTE%20A%20%E2%80%93%20BASIS%20OF%20PRESENTATION%20AND%20NATURE%20OF%20BUSINESS) This note outlines the basis for financial statements, the company's IP business, and the adverse impact of the HP Jury Verdict on Remote Power Patent revenue - The company's primary business is the development, licensing, and protection of its intellectual property assets, including the Remote Power Patent, Mirror Worlds Patent Portfolio, Cox Patent Portfolio, M2M/IoT Patent Portfolio, and QoS Patents[25](index=25&type=chunk)[139](index=139&type=chunk) - The HP Jury Verdict in November 2017, finding certain claims of the Remote Power Patent invalid and not infringed, has had a **material adverse effect** on the company's operations and cash flow, leading major licensees like Cisco to stop royalty payments[28](index=28&type=chunk)[143](index=143&type=chunk) - The company is appealing the District Court's denial of its motion for a new trial on infringement, and if unsuccessful, its business, results of operations, and cash flow will continue to be **materially adversely affected**[28](index=28&type=chunk)[143](index=143&type=chunk) [NOTE B – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES](index=14&type=section&id=NOTE%20B%20%E2%80%93%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) This note details key accounting policies, including revenue recognition, marketable securities valuation, patent capitalization, and the adoption of ASC 842 for leases - Revenue is recognized when intellectual property licensing is complete, reflecting expected consideration. For royalty-bearing licenses, revenue is recognized when royalty reports are received due to the inability to reasonably estimate royalties in advance[37](index=37&type=chunk)[43](index=43&type=chunk) - The company adopted ASC 842 (Leases) on January 1, 2019, recognizing operating lease right-of-use assets and related lease obligations on the balance sheet[70](index=70&type=chunk)[72](index=72&type=chunk) - The company capitalizes costs associated with patent acquisition, registration, and maintenance, amortizing them over their remaining useful lives[47](index=47&type=chunk) [NOTE C – PATENTS](index=21&type=section&id=NOTE%20C%20%E2%80%93%20PATENTS) The company's patent portfolio includes Remote Power, Mirror Worlds, Cox, M2M/IoT, and QoS Patents, with reported net patent value and amortization expense | Metric | March 31, 2019 ($) | December 31, 2018 ($) | | :----- | :------------- | :---------------- | | Gross carrying amount – patents | $7,705,000 | $7,682,000 | | Accumulated amortization – patents | $(5,746,000) | $(5,693,000) | | Patents, net | $1,959,000 | $1,989,000 | | Amortization expense (3 months) | $54,000 | $70,000 | - The Remote Power Patent expires in **March 2020**, and most Mirror Worlds Patent Portfolio patents expired in **February 2020**. M2M/IoT Patent Portfolio patents have longer expiration dates, ranging from **September 2033** to **May 2034**[78](index=78&type=chunk) [NOTE D – STOCK-BASED COMPENSATION](index=22&type=section&id=NOTE%20D%20%E2%80%93%20STOCK-BASED%20COMPENSATION) The company issues restricted stock units (RSUs) to non-management directors and its CEO, with vesting conditions including continued service and stock price targets. Stock-based compensation expense for RSUs decreased in Q1 2019 compared to Q1 2018 | Metric | 3 Months Ended March 31, 2019 ($) | 3 Months Ended March 31, 2018 ($) | | :----- | :---------------------------- | :---------------------------- | | RSU Compensation Expense | $144,000 | $226,000 | - As of March 31, 2019, there was **$599,000** of unrecognized RSU compensation to be expensed over a weighted average period of **1.41 years**[82](index=82&type=chunk) - The CEO's **750,000** RSUs have vesting conditions tied to employment and stock price targets (**$3.25** and **$4.25 per share**), which have been satisfied[105](index=105&type=chunk) [NOTE E – EARNINGS PER SHARE](index=23&type=section&id=NOTE%20E%20%E2%80%93%20EARNINGS%20PER%20SHARE) Basic and diluted EPS calculations are provided, with potential dilutive effects from options, warrants, and restricted stock units. For Q1 2019, no dilutive effects were included due to their anti-dilutive nature | Metric | 3 Months Ended March 31, 2019 ($) | 3 Months Ended March 31, 2018 ($) | | :----- | :---------------------------- | :---------------------------- | | Basic EPS | $(0.01) | $0.36 | | Diluted EPS | $(0.01) | $0.34 | | Weighted-average common shares outstanding – basic | 23,745,848 | 23,807,014 | | Weighted-average common shares outstanding – diluted | 23,745,848 | 25,611,497 | - Options and restricted stock units totaling **2,068,750** were excluded from diluted EPS calculation for Q1 2019 because their inclusion would have been anti-dilutive[89](index=89&type=chunk) [NOTE F – MARKETABLE SECURITIES](index=24&type=section&id=NOTE%20F%20%E2%80%93%20MARKETABLE%20SECURITIES) The company's marketable securities consist of certificates of deposit, short-term bond funds, and corporate bonds and notes, measured at fair value. Unrealized gains and losses are recognized differently based on the security type | Marketable Securities (Fair Value) | March 31, 2019 ($) | December 31, 2018 ($) | | :------------------------------- | :------------- | :---------------- | | Certificates of deposit | $11,126,000 | $13,151,000 | | Short term bond funds | $11,393,000 | $9,640,000 | | Corporate bonds and notes | $8,318,000 | $8,437,000 | | Total marketable securities | $30,837,000 | $31,228,000 | - Unrealized holding gains and losses on corporate bonds and notes are reported as a separate component of stockholders' equity until realized, while those on certificates of deposit and bond mutual funds are recorded in net realized and unrealized gain/loss from investments[90](index=90&type=chunk) [NOTE G – COMMITMENTS AND CONTINGENCIES](index=24&type=section&id=NOTE%20G%20%E2%80%93%20COMMITMENTS%20AND%20CONTINGENCIES) This note details legal fee arrangements for patent litigation, obligations related to patent acquisitions (including contingent payments to Dr. Cox and Recognition), and operating lease agreements, including the impact of adopting ASC 842 - The company has contingency fee arrangements with legal counsel for patent litigations, with fees ranging from **12.5% to 35%** of net recovery depending on the stage of the proceeding[91](index=91&type=chunk)[92](index=92&type=chunk)[93](index=93&type=chunk) - Patent acquisition agreements include contingent payments to Dr. Ingemar Cox (**12.5%** of net proceeds from Cox Patent Portfolio) and Recognition Interface, LLC (**10-20%** of net proceeds from Mirror Worlds Patent Portfolio)[95](index=95&type=chunk)[98](index=98&type=chunk) - The company recorded **$128,000** of ROU assets and related lease obligations upon adopting ASC 842, with a weighted average remaining lease term of **10 months** and a discount rate of **5.5%** as of March 31, 2019[102](index=102&type=chunk)[104](index=104&type=chunk) [NOTE H - EMPLOYMENT ARRANGEMENTS AND OTHER AGREEMENTS](index=27&type=section&id=NOTE%20H%20-%20EMPLOYMENT%20ARRANGEMENTS%20AND%20OTHER%20AGREEMENTS) This note outlines the employment agreements for the Chairman and CEO, CFO, and Executive Vice President, including base salaries, annual target bonuses, restricted stock unit grants with vesting conditions, and incentive compensation tied to patent licensing activities - The Chairman and CEO's employment agreement includes an annual base salary of **$475,000** (increasing **3% annually**), a target bonus of **$175,000**, and **750,000** RSUs with employment and stock price vesting conditions[105](index=105&type=chunk) - The Chairman and CEO receives incentive compensation of **5%** of gross royalties from Remote Power Patent licensing and **10%** net interest (min **6.25%** gross) from other patent licensing activities, which continues for the life of the patents[106](index=106&type=chunk)[107](index=107&type=chunk) | Incentive Compensation (Chairman & CEO) | 3 Months Ended March 31, 2019 ($) | 3 Months Ended March 31, 2018 ($) | | :------------------------------------ | :---------------------------- | :---------------------------- | | Earned | $30,000 | $973,000 | [NOTE I – LEGAL PROCEEDINGS](index=29&type=section&id=NOTE%20I%20%E2%80%93%20LEGAL%20PROCEEDINGS) This note details ongoing patent litigation, including the Remote Power Patent case against HP (with an appeal pending), the Dell litigation for breach of license agreement, the Facebook litigation concerning the Mirror Worlds Patent Portfolio (also on appeal), and the Google/YouTube litigation for the Cox Patent Portfolio - The company is appealing the District Court's denial of a new trial on infringement in the Remote Power Patent case against HP, while HP cross-appealed the validity ruling. The outcome significantly impacts future royalty payments from licensees like Cisco[113](index=113&type=chunk)[121](index=121&type=chunk)[143](index=143&type=chunk) - Dell Inc. is being sued for breach of a settlement and license agreement due to its failure to make royalty payments following the HP Jury Verdict, with Dell asserting a counterclaim[126](index=126&type=chunk)[193](index=193&type=chunk) - The Facebook litigation for infringement of Mirror Worlds Patent Portfolio patents was dismissed via summary judgment of non-infringement, which the company has appealed[125](index=125&type=chunk)[194](index=194&type=chunk) - Litigations against Google and YouTube for infringement of Cox Patent Portfolio patents, previously stayed, were lifted in **January 2019**, with a claim construction hearing set for **August 2019**[123](index=123&type=chunk)[198](index=198&type=chunk) [NOTE J – EQUITY INVESTMENT](index=32&type=section&id=NOTE%20J%20%E2%80%93%20EQUITY%20INVESTMENT) The company invested $2.5 million in ILiAD Biotechnologies, LLC, a development-stage biotechnology company, with an obligation for an additional $2.5 million contingent on FDA approval for a Phase 2b clinical study, which was received in May 2019. The investment is accounted for using the equity method - The company made an initial **$2.5 million** investment in ILiAD Biotechnologies, LLC, acquiring **1,111,111** Class C units and warrants[128](index=128&type=chunk) - An additional **$2.5 million** investment is contingent on FDA approval for a Phase 2b clinical study, which was received on **May 2, 2019**, leading to a **$1 million** tranche 2 investment in **May 2019**[129](index=129&type=chunk) | Metric | 3 Months Ended March 31, 2019 ($) | | :----- | :---------------------------- | | Net loss from equity investment in ILiAD | $(96,000) | [NOTE K– STOCK REPURCHASE](index=33&type=section&id=NOTE%20K%E2%80%93%20STOCK%20REPURCHASE) The company has an ongoing share repurchase program, authorized to repurchase up to $5 million of common stock over 24 months (totaling $17 million since inception). A small number of shares were repurchased in Q1 2019 - The Board authorized an extension and increase of the Share Repurchase Program to repurchase up to **$5,000,000** of common stock over **24 months**, bringing the total authorization to approximately **$17,000,000** since **August 2011**[133](index=133&type=chunk)[200](index=200&type=chunk) | Metric | Since Inception (Aug 2011) through March 31, 2019 | 3 Months Ended March 31, 2019 | | :----- | :------------------------------------------------ | :---------------------------- | | Shares Repurchased | 8,154,698 | 300 | | Aggregate Cost ($) | $15,142,916 | $676 | | Average Price Per Share ($) | $1.86 | $2.25 | | Remaining Authorization ($) | — | $1,321,091 | [NOTE L – CONCENTRATIONS](index=34&type=section&id=NOTE%20L%20%E2%80%93%20CONCENTRATIONS) The company's revenue and royalty receivables are highly concentrated, with a few licensees accounting for a significant portion of its financial performance - Revenue from four licensees constituted approximately **80%** of the company's revenue for the three months ended March 31, 2019[135](index=135&type=chunk) - Royalty receivables from five licensees constituted approximately **93%** of the company's total royalty receivables at March 31, 2019[135](index=135&type=chunk) [NOTE M – DIVIDEND POLICY](index=34&type=section&id=NOTE%20M%20%E2%80%93%20DIVIDEND%20POLICY) The company has a semi-annual cash dividend policy of $0.05 per common share, anticipated to continue through March 2020, contingent on receiving royalties from Remote Power Patent licensees. The policy may be modified or discontinued if the HP Jury Verdict on non-infringement is not overturned - The company has a semi-annual cash dividend policy of **$0.05 per common share** (**$0.10 annually**), paid in **March** and **September**[136](index=136&type=chunk)[149](index=149&type=chunk) - The continuation of dividends through **March 2020** is contingent on receiving royalties from Remote Power Patent licensees. The policy may be modified or discontinued if the HP Jury Verdict finding of non-infringement is not overturned or if arbitration does not rule in the company's favor[136](index=136&type=chunk)[149](index=149&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=35&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section discusses the company's business, the impact of the HP Jury Verdict, Q1 2019 financial performance, liquidity, capital resources, and critical accounting policies - The company's principal business is intellectual property development, licensing, and protection, with the Remote Power Patent being a significant revenue generator historically[139](index=139&type=chunk)[141](index=141&type=chunk) - The HP Jury Verdict and subsequent cessation of royalty payments by major licensees like Cisco have **materially adversely affected** revenue and cash flow, making future revenue uncertain and dependent on other patent portfolios or new acquisitions[143](index=143&type=chunk)[145](index=145&type=chunk) - The company's liquidity at March 31, 2019, consisted of **$52.49 million** in cash, cash equivalents, and marketable securities, and **$52.26 million** in working capital, deemed sufficient for foreseeable operations[147](index=147&type=chunk)[168](index=168&type=chunk) [OVERVIEW](index=35&type=section&id=OVERVIEW) The company's core business is intellectual property licensing, primarily from its Remote Power Patent, which has been severely impacted by the HP Jury Verdict - The company owns **66 patents** across five portfolios: Remote Power, Mirror Worlds, Cox, M2M/IoT, and QoS[139](index=139&type=chunk) - The Remote Power Patent generated approximately **$144,000,000** in licensing revenue from **May 2007** through **March 31, 2019**. The Mirror Worlds Patent Portfolio generated **$47,150,000** through **March 31, 2019**[141](index=141&type=chunk) - The HP Jury Verdict in **November 2017**, finding the Remote Power Patent invalid and not infringed, caused major licensees to stop royalty payments, leading to a **material adverse effect** on revenue and cash flow[143](index=143&type=chunk) [RESULTS OF OPERATIONS (Three Months Ended March 31, 2019 Compared to Three Months Ended March 31, 2018)](index=38&type=section&id=RESULTS%20OF%20OPERATIONS) Revenue for Q1 2019 significantly decreased by $18.86 million (96.9%) compared to Q1 2018, primarily due to the absence of prior-year non-recurring revenue | Metric | 3 Months Ended March 31, 2019 ($) | 3 Months Ended March 31, 2018 ($) | Change ($) | | :----- | :---------------------------- | :---------------------------- | :----- | | Revenue | $606,000 | $19,463,000 | -$18,857,000 | | Operating Expenses | $1,139,000 | $8,580,000 | -$7,441,000 | | Operating Income (Loss) | $(533,000) | $10,883,000 | -$11,416,000 | | Net Income (Loss) | $(240,000) | $8,601,000 | -$8,841,000 | - The decrease in revenue was primarily due to **$19,020,000** of non-recurring revenue in Q1 2018 from a **$12,700,000** Fully-Paid License with Juniper Networks and **$6,320,000** from the sale of the Avaya unsecured claim[158](index=158&type=chunk)[166](index=166&type=chunk) - Royalty Bearing Licenses revenue increased slightly by **$33,000**, from **$443,000** in Q1 2018 to **$476,000** in Q1 2019[158](index=158&type=chunk) [LIQUIDITY AND CAPITAL RESOURCES](index=40&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) The company's liquidity is strong, with $52.49 million in cash, cash equivalents, and marketable securities, and $52.26 million in working capital as of March 31, 2019 | Metric | March 31, 2019 ($) | December 31, 2018 ($) | Change ($) | | :----- | :------------- | :---------------- | :----- | | Cash and cash equivalents & marketable securities | $52,487,000 | $55,000,000 (approx) | -$2,513,000 | | Working Capital | $52,258,000 | $53,486,000 | -$1,228,000 | - Net cash provided by (used in) operating activities decreased by **$18,337,000**, from **$16,922,000** in Q1 2018 to **$(1,415,000)** in Q1 2019, primarily due to decreased net income and accrued expenses[171](index=171&type=chunk) - The company believes it has sufficient cash to fund operations for the foreseeable future and continually reviews opportunities to acquire additional intellectual property and other strategic opportunities[168](index=168&type=chunk) [OFF-BALANCE SHEET ARRANGEMENTS](index=40&type=section&id=OFF-BALANCE%20SHEET%20ARRANGEMENTS) The company has no off-balance sheet arrangements - The company does not have any off-balance sheet arrangements[174](index=174&type=chunk) [CONTRACTUAL OBLIGATIONS](index=40&type=section&id=CONTRACTUAL%20OBLIGATIONS) The company has no long-term debt, capital lease obligations, or purchase obligations, only operating lease obligations recorded under ASC 842 - The company has no long-term debt, capital lease obligations, purchase obligations, or other long-term liabilities, apart from operating lease obligations recorded under ASC 842[175](index=175&type=chunk) [CRITICAL ACCOUNTING POLICIES](index=40&type=section&id=CRITICAL%20ACCOUNTING%20POLICIES) The preparation of financial statements involves significant estimates and assumptions, particularly concerning revenue recognition, patents, and income taxes - Significant estimates and assumptions are made in revenue recognition, patents, stock-based compensation, income taxes, and valuation of patents and equity method investments[176](index=176&type=chunk) [Accounting Standards Adopted In The Period](index=41&type=section&id=Accounting%20Standards%20Adopted%20In%20The%20Period) The company adopted ASU 2016-2 (ASC 842) for leases on January 1, 2019, recognizing right-of-use assets and lease obligations for existing operating leases using the modified retrospective method - The company adopted ASC 842 (Leases) on **January 1, 2019**, recognizing **$127,000** of operating lease right-of-use assets and **$128,000** of operating lease obligations[178](index=178&type=chunk)[179](index=179&type=chunk) - The modified retrospective method was used for adoption, and the company elected practical expedients not to reassess lease classification, existing contracts for leases, or initial direct costs[179](index=179&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=41&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This item is not applicable to the company, indicating no significant market risk disclosures are required - This item is not applicable[182](index=182&type=chunk) [Item 4. Controls and Procedures](index=41&type=section&id=Item%204.%20Controls%20and%20Procedures) The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of March 31, 2019, and there were no material changes in internal control over financial reporting during the quarter - The CEO and CFO evaluated and concluded that disclosure controls and procedures were effective as of **March 31, 2019**[182](index=182&type=chunk) - No material changes in internal control over financial reporting occurred during the quarter ended **March 31, 2019**[183](index=183&type=chunk) [PART II. OTHER INFORMATION](index=42&type=section&id=PART%20II.%20OTHER%20INFORMATION) [ITEM 1: LEGAL PROCEEDINGS](index=42&type=section&id=ITEM%201:%20LEGAL%20PROCEEDINGS) This section provides updates on the company's key patent infringement litigations, including the Remote Power Patent case against HP, Dell, Facebook, and Google/YouTube litigations - The company is appealing the District Court's denial of a new trial on infringement in the Remote Power Patent case against HP, which significantly impacts future royalty payments from licensees[187](index=187&type=chunk) - Dell Inc. is being sued for breach of a settlement and license agreement due to non-payment of royalties following the HP Jury Verdict; Dell's motion to stay the case was denied[193](index=193&type=chunk) - The Facebook litigation for Mirror Worlds Patent Portfolio infringement was dismissed via summary judgment of non-infringement, and the company has appealed this decision[194](index=194&type=chunk) - The Google and YouTube litigations for Cox Patent Portfolio infringement were consolidated and stays were lifted in **January 2019**, with a claim construction hearing scheduled for **August 2019**[198](index=198&type=chunk) [Remote Power Patent Litigation](index=42&type=section&id=Remote%20Power%20Patent%20Litigation) The company initiated patent litigation against 16 manufacturers for infringement of its Remote Power Patent, settling with 15. The remaining defendant, HP, saw a jury verdict of invalidity and non-infringement, which the District Court partially overturned (validity) but upheld non-infringement. The company is appealing the non-infringement ruling, and HP is cross-appealing validity - The company settled with **15 of 16** defendants in the Remote Power Patent litigation, with HP remaining[186](index=186&type=chunk) - The District Court overturned the jury's invalidity verdict for the Remote Power Patent but denied a new trial on non-infringement, leading to appeals from both the company (non-infringement) and HP (validity)[187](index=187&type=chunk) - The outcome of the appeal is critical as it affects the obligation of major licensees, including Cisco, to continue paying royalties[187](index=187&type=chunk) [Dell Litigation](index=43&type=section&id=Dell%20Litigation) The company filed a lawsuit against Dell Inc. for breach of a settlement and license agreement, alleging Dell's failure to make royalty payments after the HP Jury Verdict. Dell denied the claim and filed a counterclaim, but its motion to stay the case was denied - The company sued Dell Inc. for breach of a license agreement due to Dell's failure to pay royalties following the HP Jury Verdict[193](index=193&type=chunk) - Dell filed a counterclaim exceeding **$1,000,000** and sought to stay the case pending the HP appeal, but its motion was denied[193](index=193&type=chunk) [Mirror Worlds Patent Portfolio Litigation](index=43&type=section&id=Mirror%20Worlds%20Patent%20Portfolio%20Litigation) The company's subsidiary initiated litigation against Facebook for infringement of Mirror Worlds Patent Portfolio patents related to Newsfeed and Timeline features. The case was dismissed via summary judgment of non-infringement, and the company has appealed this decision - Litigation against Facebook for infringement of Mirror Worlds Patent Portfolio patents (U.S. Patent Nos. **6,006,227**, **7,865,538**, and **8,255,439**) was initiated in **May 2017**[194](index=194&type=chunk) - The case was dismissed in **August 2018** after Facebook's motion for summary judgment of non-infringement was granted, and the company has appealed this decision[194](index=194&type=chunk) [Cox Patent Portfolio – Google and YouTube Legal Proceedings](index=44&type=section&id=Cox%20Patent%20Portfolio%20%E2%80%93%20Google%20and%20YouTube%20Legal%20Proceedings) The company initiated two litigations against Google and YouTube for infringement of its Cox Patent Portfolio patents related to media content identification (YouTube's Content ID system). These cases, previously stayed, were consolidated and the stays were lifted in January 2019, with a claim construction hearing set for August 2019 - Two litigations were initiated against Google and YouTube for infringement of Cox Patent Portfolio patents related to media content identification (YouTube's Content ID system)[196](index=196&type=chunk)[197](index=197&type=chunk) - Court-ordered stays on these litigations were lifted on **January 2, 2019**, and the cases were consolidated, with a claim construction hearing scheduled for **August 26, 2019**[198](index=198&type=chunk) [ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS](index=44&type=section&id=ITEM%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%20AND%20USE%20OF%20PROCEEDS) This section reports no recent issuances of unregistered securities during Q1 2019 and provides details on the company's ongoing share repurchase program, including the number of shares repurchased and the remaining authorization - There were no issuances of unregistered securities during the three months ended **March 31, 2019**[199](index=199&type=chunk) [Recent Issuances of Unregistered Securities](index=44&type=section&id=Recent%20Issuances%20of%20Unregistered%20Securities) No unregistered securities were issued during the three months ended March 31, 2019 - No unregistered securities were issued during the three months ended **March 31, 2019**[199](index=199&type=chunk) [Stock Repurchases](index=44&type=section&id=Stock%20Repurchases) The company's Share Repurchase Program, authorized for up to $5 million over 24 months (totaling $17 million since inception), saw 300 shares repurchased for $676 in Q1 2019, leaving $1,321,091 remaining under the authorization - The Share Repurchase Program was extended and increased to repurchase up to **$5,000,000** of common stock over **24 months**, with a total authorization of approximately **$17,000,000** since **August 2011**[200](index=200&type=chunk) | Metric | 3 Months Ended March 31, 2019 | | :----- | :---------------------------- | | Shares Purchased | 300 | | Average Price Paid Per Share ($) | $2.25 | | Total Cost ($) | $676 | | Remaining Authorization ($) | $1,321,091 | [ITEM 3. DEFAULTS UPON SENIOR SECURITIES](index=45&type=section&id=ITEM%203.%20DEFAULTS%20UPON%20SENIOR%20SECURITIES) The company reported no defaults upon senior securities - There were no defaults upon senior securities[203](index=203&type=chunk) [ITEM 4. OTHER INFORMATION](index=45&type=section&id=ITEM%204.%20OTHER%20INFORMATION) This item states that there is no other information to report - No other information is reported under this item[204](index=204&type=chunk) [ITEM 5. EXHIBITS](index=45&type=section&id=ITEM%205.%20EXHIBITS) This section lists the exhibits filed with the 10-Q report, including certifications from the CEO and CFO, and interactive data files in XBRL format - Exhibits include CEO and CFO certifications (**31.1**, **31.2**, **32.1**, **32.2**) and interactive data files (XBRL Instance, Scheme, Calculation, Definition, Label, Presentation Documents)[205](index=205&type=chunk)

FORM 10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2018 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ____________ to ___________. Commission File Number: 1-15288 NETWORK-1 TECHNOLOGIES, INC. UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 (Exact Name of Registrant as Specified in Its Charter) Delaware 11-3027591 (State or Ot ...