Network-1(NTIP) - 2024 Q4 - Annual Results

Financial Highlights Revenue and Operating Expenses Network-1's revenue significantly decreased in 2024 due to lower litigation settlement agreements, leading to a corresponding decrease in operating expenses, primarily contingent legal fees | Metric | 2024 | 2023 | Change (YoY) | | :-------------------- | :----------- | :----------- | :----------- | | Revenue | $100,000 | $2,601,000 | -96.12% | | Operating Expenses | $3,721,000 | $4,836,000 | -22.91% | | Costs of Revenue | $28,000 | $874,000 | -96.80% | - Revenue in both 2024 and 2023 was derived from settlement agreements in litigations involving Network-1's Remote Power Patent. The decrease in operating expenses was primarily due to a $846,000 decrease in costs of revenue related to lower contingent legal fees and incentive bonus compensation, resulting from decreased litigation settlement revenue[2] Net Loss and EPS The company reported an increased net loss in 2024, primarily influenced by a substantial operating loss and its share of losses from an equity investee | Metric | 2024 | 2023 | | :-------------------------------- | :----------- | :----------- | | Net Loss | $(3,034,000) | $(1,457,000) | | Net Loss Per Share (Basic & Diluted) | $(0.13) | $(0.06) | - Included in net loss is Network-1's share of the net loss of its equity investee (ILiAD Biotechnologies, LLC) of $1,912,000 in 2024, compared to $2,003,000 in 2023[3] Other Income Interest and dividend income remained stable in 2024, while realized and unrealized gains on marketable securities declined due to timing of maturities and lower yields | Metric | 2024 | 2023 | Change (YoY) | | :------------------------------------ | :----------- | :----------- | :----------- | | Interest and Dividend Income, net | $1,897,000 | $1,868,000 | +1.55% | | Net Realized and Unrealized Gain on Marketable Securities | $177,000 | $525,000 | -66.30% | - The decline in unrealized and realized gains in 2024 was primarily due to the timing of maturities of marketable securities and the declines in realized yields on fixed income holdings[4] Liquidity and Capital Resources As of December 31, 2024, Network-1 maintained strong liquidity with significant cash, cash equivalents, and marketable securities, which management believes are sufficient to fund future operations | Metric (as of Dec 31, 2024) | Amount | | :-------------------------- | :----------- | | Cash and Cash Equivalents | $13,145,000 | | Marketable Securities | $27,455,000 | | Total Cash & Marketable Securities | $40,600,000 | | Working Capital | $40,066,000 | - Management believes that based on current cash, cash equivalents, and marketable securities positions, Network-1 will have sufficient liquidity to fund its operations for the foreseeable future[5] Shareholder Returns Network-1 continued its share repurchase program in 2024, repurchasing over $1.27 million in stock, and maintained its semi-annual cash dividend policy, cumulatively returning over $41 million to shareholders since 2010 | Share Repurchase Program Activity | 2024 | Since Inception (Aug 2011 - Dec 31, 2024) | | :-------------------------------- | :----------- | :---------------------------------------- | | Shares Repurchased | 733,436 | 10,374,232 | | Cost (exclusive of commissions) | ~$1,270,438 | ~$19,983,000 | | Average Price Per Share | $1.73 | $1.93 | - Network-1's dividend policy consists of semi-annual cash dividends of $0.05 per share ($0.10 per share annually), which were declared and paid consistently in 2024. Combined with approximately $22,000,000 in dividends paid since 2010, Network-1 has returned in excess of $41,000,000 to its shareholders through dividends and share repurchases[6][7][11] Company Overview Business Description Network-1 specializes in the acquisition, development, licensing, and protection of intellectual property, assisting inventors and patent owners in monetizing their patented technologies - Network-1 Technologies, Inc. is engaged in the acquisition, development, licensing, and protection of its intellectual property and proprietary technologies. The company works with inventors and patent owners to assist in the development and monetization of their patented technologies[8] Intellectual Property and Strategy The company holds 106 U.S. and 16 international patents, focusing on monetizing three key patent portfolios (Cox, M2M/IoT, HFT) and acquiring high-quality patents with significant licensing potential, building on past successes with its Remote Power and Mirror Worlds portfolios | Patent Holdings | Count | | :---------------- | :---- | | U.S. Patents | 106 | | International Patents | 16 | | Patent Portfolio | Licensing Revenue (through Dec 31, 2024) | | :-------------------- | :--------------------------------------- | | Remote Power Patent | >$188,000,000 | | Mirror Worlds Patent Portfolio | $47,150,000 | - Network-1's current strategy includes efforts to monetize three patent portfolios (the Cox, M2M/IoT, and HFT portfolios) and to focus on acquiring and investing in high-quality patents with the potential to generate significant licensing opportunities[8] Forward-Looking Statements and Risks The release includes forward-looking statements subject to various risks, including uncertain revenue from intellectual property licensing, outcomes of pending litigation, ability to execute acquisition strategies, and potential impacts from AI development - * Uncertain revenue from licensing intellectual property * Uncertainty regarding the outcome of pending litigation involving Network-1's HFT Patent Portfolio and appeal to the Federal Circuit for the Cox Patent Portfolio * Ability to successfully execute its strategy to acquire or make investments in high-quality patents * Uncertainty as to whether cash dividends will continue to be paid * The increasing development of artificial intelligence could impact Network-1's business * Risk of being classified as a Personal Holding Company, potentially requiring a special cash dividend[9] Consolidated Financial Statements Consolidated Statements of Operations and Comprehensive Loss The consolidated statements of operations show a significant decrease in revenue and an increased net loss for 2024 compared to 2023, driven by lower operating income and continued equity method investee losses | Metric | 2024 | 2023 | | :-------------------------------------------------- | :----------- | :----------- | | REVENUE | $100,000 | $2,601,000 | | TOTAL OPERATING EXPENSES | $3,721,000 | $4,836,000 | | OPERATING LOSS | $(3,621,000) | $(2,235,000) | | Total other income, net | $2,074,000 | $2,393,000 | | (LOSS) INCOME BEFORE INCOME TAXES AND SHARE OF NET LOSSES OF EQUITY METHOD INVESTEE | $(1,547,000) | $158,000 | | SHARE OF NET LOSSES OF EQUITY METHOD INVESTEE | $(1,912,000) | $(2,003,000) | | NET LOSS | $(3,034,000) | $(1,457,000) | | Net Loss Per Share (Basic & Diluted) | $(0.13) | $(0.06) | | Cash dividends declared per share | $0.10 | $0.10 | Consolidated Balance Sheets The consolidated balance sheets indicate a decrease in total assets and stockholders' equity from 2023 to 2024, primarily due to reductions in cash, marketable securities, and equity investment, while total liabilities also decreased | Metric (as of Dec 31) | 2024 | 2023 | | :------------------------------------ | :----------- | :----------- | | Cash and cash equivalents | $13,145,000 | $16,896,000 | | Marketable securities, at fair value | $27,455,000 | $28,571,000 | | Total Current Assets | $40,832,000 | $45,673,000 | | Equity investment | $3,337,000 | $5,249,000 | | TOTAL ASSETS | $45,414,000 | $52,277,000 | | Total Current Liabilities | $766,000 | $823,000 | | Deferred tax liability | $337,000 | $762,000 | | TOTAL LIABILITIES | $1,103,000 | $1,585,000 | | TOTAL STOCKHOLDERS' EQUITY | $44,311,000 | $50,692,000 |