Network-1 Reports 3Q 2012 Results
Nov 19, 2012 (Close-Up Media via COMTEX) --
Network-1 Security Solutions announced financial results for the quarter ended Sept. 30.
In a release dated Nov. 14, the Company said that Network-1 had revenues of $1,418,000 and $7,809,000 for the three and nine months ended Sept. 30, respectively, as compared with revenue of $1,222,000 and $6,611,000 for the three and nine months ended Sept. 30, 2011, respectively.
Network-1 reported net income of $194,000 or $0.01 per share (basic) and $0.01 (diluted) for the third quarter ended Sept. 30, as compared to a net income of $248,000 or $0.01 per share (basic) and $0.01 (diluted) for the third quarter ended Sept. 30, 2011.
Network-1 reported net income for the nine months ended Sept. 30, of $2,854,000 or $.0.11 per share (basic) and $0.10 per share (diluted), compared with a net income of $8,580,000 or $0.33 per share (basic) and $0.28 (diluted) for the nine months ended Sept. 30, 2011.
Included in the net income for the nine month period ended Sept. 30, 2011 were (i) a one-time, non-cash income tax benefit of $7,000,000 (recorded on the balance sheet as a deferred tax asset) and (ii) $1,000,000 of additional patent expense payable to a third party because Network-1 achieved $25 million in net royalties from licensing its Remote Power Patent. Before consideration of the one-time income tax benefit and patent expense, net income for the nine months ended Sept. 30, 2011 was $1,826,000 or $0.07 per share (basic) and $0.06 per share (diluted).
At Sept. 30, Network-1 had net operating loss carryforwards totaling approximately $24,980,000 expiring between 2020 and 2031, with a future tax benefit of approximately $8,470,000. During the three month period ended Sept. 30, as a result of income (before taxes) for the period of $346,000, $152,000 was recorded as income tax expense, of which $141,000 was a non-cash expense, and accordingly the deferred tax asset was reduced by $141,000 to $6,194,000. During the three month period ended Sept. 30, 2011 as a result of income (before taxes) for the period of $421,000, $173,000 was recorded as income tax expense, of which $140,000 was a non-cash expense, and accordingly the deferred tax asset was reduced by $140,000 to $6,860,000.
To the extent Network-1 earns income in the future, it will report income tax expense and such expense attributable to federal income taxes will reduce the recorded income tax asset reflected on the balance sheet. Management will continue to evaluate the recoverability of the NOL and adjust the deferred tax asset appropriately.
"It was a quarter of continued growth for Network-1," said Corey Horowitz, Chairman and CEO of Network-1. "Our royalty revenues from our Remote Power Patent for the quarter were higher from most of our royalty paying licensees as compared with the second quarter of 2011. We now have 14 licensees to this important technology, including some of the largest technology companies in the world."
In September 2011, Network-1 initiated patent litigation against 16 data networking equipment manufacturers in the United States District Court for the Eastern District of Texas, Tyler Division, for infringement of its Remote Power Patent. Named as defendants in the lawsuit, excluding related parties, were Alcatel-Lucent USA, Allied Telesis, Avaya, AXIS Communications, Dell, GarrettCom, Hewlett-Packard Company, Huawei Technologies USA, Juniper Networks, Motorola Solutions, NEC Corp., Polycom, Samsung Electronics, ShoreTel, Sony Electronics, and Transition Networks, Network-1 seeks monetary damages based upon reasonable royalties.
In March 2012, Network-1 reached settlement agreements with defendants Motorola Solutions, and Transition Networks. In October 2012, Network-1 reached a settlement agreement with defendant GarrettCom. As part of the settlements, Motorola, Transition Networks and GarrettCom each entered into a non-exclusive license agreement for Network-1's Remote Power Patent pursuant to which each such defendant agreed to license the Remote Power Patent for its full term (which expires in March 2020) and pay a license initiation fee and quarterly or annual royalties based on their sales of PoE products.
Network-1 Security Solutions is engaged in the acquisition, development, licensing and protection of its intellectual property and proprietary technologies.
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