Network-1(NTIP) - 2023 Q4 - Annual Report

Financial Performance - Revenue for 2023 was $2,601,000, with a net loss of $1,457,000, compared to no revenue and a net loss of $2,326,000 in 2022[70] - The company faced a net income of $14,281,000 in 2021, with revenue of $36,029,000, indicating significant fluctuations in financial performance[70] - The company may be classified as a Personal Holding Company in the future, which could result in a 20% tax on undistributed income[71] - The ability to continue paying cash dividends and raise capital if needed is essential for maintaining investor confidence[97] Revenue Generation - The Remote Power Patent generated over $188,000,000 in revenue from May 2007 to December 31, 2023, constituting 100% of revenue for 2023[64] - The patent monetization cycle is long and costly, with significant time lags before recognizing revenue from acquired patents[68] - The company aims to further develop, license, and monetize its M2M/IoT and HFT Patent Portfolios, which are critical for future revenue[97] Investments and Assets - The company invested $7,000,000 in ILiAD, a clinical stage biotechnology company, with uncertain future returns[63] - The company has 100 U.S. patents and 15 foreign patents, focusing on acquiring high-quality patent assets for significant licensing opportunities[67] Competition and Market Position - The company faces intense competition in acquiring intellectual property and entering strategic relationships, with competitors having greater resources[80] - The company faces risks from technology changes, legislative, regulatory, and competitive developments that could affect its market position[97] Stock and Shareholder Matters - The common stock is traded on the NYSE American exchange under the symbol "NTIP" and may face delisting if continued listing standards are not met[89] - The company has authorized the issuance of up to 10,000,000 shares of preferred stock, which could adversely affect common stockholders if issued[91] - The company has a dividend policy of $0.05 per share, paid semi-annually, but future payments are subject to review and may change[73] Corporate Governance - The company has been dependent on its CEO, Corey M. Horowitz, for its success, with no key-man insurance in place[72] - The company is subject to "anti-takeover" provisions that could prevent business combinations with stockholders owning 15% or more for three years unless approvals are obtained[92] - Provisions in the corporate charter and by-laws may deter unsolicited takeovers and limit stockholders' ability to influence management changes[94] Legal Matters - The company is involved in litigation against Google and YouTube regarding patents, which could impact its financial performance[97] Financial Reporting - The preparation of financial statements involves estimates and assumptions that could materially affect the company's financial condition and operating results[90] Stock Price Volatility - The stock price may be highly volatile, influenced by factors beyond the company's control, including market fluctuations unrelated to operating performance[96]