Welcome!

News Feed Item

Network-1 Reports Third Quarter 2012 Results

NEW YORK, Nov. 14, 2012 /PRNewswire/ -- Network-1 Security Solutions, Inc. (OTC BB: NSSI) today announced financial results for the quarter ended September 30, 2012. 

Network-1 had revenues of $1,418,000 and $7,809,000 for the three and nine months ended September 30, 2012, respectively, as compared with revenue of $1,222,000 and $6,611,000 for the three and nine months ended September 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 September 30, 2012 as compared to a net income of $248,000 or $0.01 per share (basic) and $0.01 (diluted) for the third quarter ended September 30, 2011.   

Network-1 reported net income for the nine months ended September 30, 2012 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 September 30, 2011. 

Included in the net income for the nine month period ended September 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 September 30, 2011 was $1,826,000 or $0.07 per share (basic) and $0.06 per share (diluted). 

At September 30, 2012, Network-1 had net operating loss carryforwards (NOLs) 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 September 30, 2012 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 September 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", commented Corey M. 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", he continued. 

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, Inc., Allied Telesis, Inc., Avaya Inc., AXIS Communications Inc., Dell, Inc., GarrettCom, Inc., Hewlett-Packard Company, Huawei Technologies USA, Juniper Networks, Inc., Motorola Solutions, Inc., NEC Corporation, Polycom Inc., Samsung Electronics Co., Ltd., ShoreTel, Inc., Sony Electronics, Inc., and Transition Networks, Inc.  Network-1 seeks monetary damages based upon reasonable royalties.  In March 2012, Network-1 reached settlement agreements with defendants Motorola Solutions, Inc. ("Motorola") and Transition Networks, Inc. ("Transition Networks").  In October 2012, Network-1 reached a settlement agreement with defendant GarrettCom, Inc. ("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.

ABOUT NETWORK-1 SECURITY SOLUTIONS, INC.

Network-1 Security Solutions, Inc. is engaged in the acquisition, development, licensing and protection of its intellectual property and proprietary technologies. It currently owns six patents covering various telecommunications and data networking technologies and is currently focusing its licensing efforts on its Remote Power Patent (U.S. Patent No. 6,218,930) covering the remote delivery of power over Ethernet networks.  The Remote Power Patent was granted by the U.S. Office of Patents and Trademarks on April 21, 2001 and expires on March 11, 2020.  Network-1 has entered into fourteen (14) license agreements with respect to its Remote Power Patent which include, among others, license agreements with Cisco Systems, Inc. and Cisco-Linksys, Microsemi Corporation, Motorola Solutions, Inc., Extreme Networks, Inc., Netgear, Inc. and several other major data networking equipment manufacturers.

This release contains forward-looking statements within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. These statements address future events and conditions concerning Network-1's business plans. Such statements are subject to a number of risk factors and uncertainties as disclosed in the Network-1's Annual Report on Form 10-K for the year ended December 31, 2011 and its Quarterly Report on 10-Q for the quarter ended September 30, 2012 including, among others, the ability of Network-1 to enter into additional license agreements with third parties for its intellectual property or the intellectual property of its strategic partners, the ability of Network-1 to receive significant royalties from its existing license agreements, the uncertainty of patent litigation, Network-1's ability to achieve revenues and profits from its intellectual property or the intellectual property of its strategic partners, Network-1's ability to execute its strategy to acquire additional patents or enter into strategic relationships with third parties to license or otherwise monetize their intellectual property, risks associated with the pending reexamination of the Remote Power Patent by the United States Patent and Trademark Office, the continued viability of the PoE market, future economic conditions and technology changes and legislative, regulatory and competitive developments. Except as otherwise required to be disclosed in periodic reports, Network-1 expressly disclaims any future obligation or undertaking to update or revise any forward-looking statement contained herein.

The condensed statements of operations and condensed balance sheets are attached.



Three Months Ended

September 30,

Nine Months Ended

September 30,


2012

2011

2012

2011






ROYALTY REVENUE

$     1,418,000

$  1,222,000

$   7,809,000

$    6,611,000

COST OF REVENUE

393,000

341,000

2,341,000

1,883,000

    GROSS PROFIT

1,025,000

881,000

5,468,000

4,728,000

OPERATING EXPENSES:





   General and Administrative

624,000

411,000

1,660,000

1,693,000

   Additional Patent Expense

1,000,000

   Non-Cash compensation

58,000

59,000

223,000

268,000






                TOTAL OPERATING EXPENSES

682,000

470,000

1,883,000

2,961,000






OPERATING INCOME

343,000

411,000

3,585,000

1,767,000
















OTHER INCOME (EXPENSES):





   Interest income, net

3,000

10,000

22,000

42,000
















INCOME BEFORE INCOME TAXES

346,000

421,000

3,607,000

1,809,000











INCOME TAXES (BENEFIT)





   Current

11,000

33,000

44,000

89,000

   Deferred

141,000

140,000

709,000

(6,860,000 )

   Total Income Taxes (Benefit)

152,000

173,000

753,000

(6,771,000)

NET INCOME

$       194,000

$   248,000

$    2,854,000

$    8,580,000











Net Income per share -  Basic

$           0.01

$          0.01

$            0.11

$             0.33

                                -  Diluted

$           0.01

$          0.01

$            0.10

$             0.28











Weighted average number of common shares outstanding:










                                -     Basic

25,963,093

26,014,578

25,659,085

25,979,596

                                -     Diluted

28,516,642

30,991,041

28,544,972

30,956,059






NET INCOME

$       194,000

$  248,000

$    2,854,000

$ 8,580,000






OTHER COMPREHENSIVE INCOME NET OF TAX:     Unrealized gain (loss) arising during period

(6,000)

(4,000)






COMPREHENSIVE INCOME

 

$       188,000

$         248,000

$    2,850,000

$   8,560,000

 

Condensed Balance Sheet as of September 30, 2012



Cash and cash equivalents

$  22,213,000



   Total current assets

$  24,320,000



   Total assets

$ 30,600,000



   Total current liabilities

$    668,000



   Total long term liabilities

$  -0-



   Total stockholders' equity

$29,932,000



 

Corey M. Horowitz, Chairman and CEO


Network-1 Security Solutions, Inc.


(212) 829-5770

SOURCE Network-1 Security Solutions, Inc.

More Stories By PR Newswire

Copyright © 2007 PR Newswire. All rights reserved. Republication or redistribution of PRNewswire content is expressly prohibited without the prior written consent of PRNewswire. PRNewswire shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon.

Latest Stories
The emerging Internet of Everything creates tremendous new opportunities for customer engagement and business model innovation. However, enterprises must overcome a number of critical challenges to bring these new solutions to market. In his session at @ThingsExpo, Michael Martin, CTO/CIO at nfrastructure, outlined these key challenges and recommended approaches for overcoming them to achieve speed and agility in the design, development and implementation of Internet of Everything solutions wi...
Cloud computing is being adopted in one form or another by 94% of enterprises today. Tens of billions of new devices are being connected to The Internet of Things. And Big Data is driving this bus. An exponential increase is expected in the amount of information being processed, managed, analyzed, and acted upon by enterprise IT. This amazing is not part of some distant future - it is happening today. One report shows a 650% increase in enterprise data by 2020. Other estimates are even higher....
Today we can collect lots and lots of performance data. We build beautiful dashboards and even have fancy query languages to access and transform the data. Still performance data is a secret language only a couple of people understand. The more business becomes digital the more stakeholders are interested in this data including how it relates to business. Some of these people have never used a monitoring tool before. They have a question on their mind like “How is my application doing” but no id...
The 19th International Cloud Expo has announced that its Call for Papers is open. Cloud Expo, to be held November 1-3, 2016, at the Santa Clara Convention Center in Santa Clara, CA, brings together Cloud Computing, Big Data, Internet of Things, DevOps, Digital Transformation, Microservices and WebRTC to one location. With cloud computing driving a higher percentage of enterprise IT budgets every year, it becomes increasingly important to plant your flag in this fast-expanding business opportuni...
Identity is in everything and customers are looking to their providers to ensure the security of their identities, transactions and data. With the increased reliance on cloud-based services, service providers must build security and trust into their offerings, adding value to customers and improving the user experience. Making identity, security and privacy easy for customers provides a unique advantage over the competition.
Qosmos has announced new milestones in the detection of encrypted traffic and in protocol signature coverage. Qosmos latest software can accurately classify traffic encrypted with SSL/TLS (e.g., Google, Facebook, WhatsApp), P2P traffic (e.g., BitTorrent, MuTorrent, Vuze), and Skype, while preserving the privacy of communication content. These new classification techniques mean that traffic optimization, policy enforcement, and user experience are largely unaffected by encryption. In respect wit...
Fact: storage performance problems have only gotten more complicated, as applications not only have become largely virtualized, but also have moved to cloud-based infrastructures. Storage performance in virtualized environments isn’t just about IOPS anymore. Instead, you need to guarantee performance for individual VMs, helping applications maintain performance as the number of VMs continues to go up in real time. In his session at Cloud Expo, Dhiraj Sehgal, Product and Marketing at Tintri, wil...
19th Cloud Expo, taking place November 1-3, 2016, at the Santa Clara Convention Center in Santa Clara, CA, will feature technical sessions from a rock star conference faculty and the leading industry players in the world. Cloud computing is now being embraced by a majority of enterprises of all sizes. Yesterday's debate about public vs. private has transformed into the reality of hybrid cloud: a recent survey shows that 74% of enterprises have a hybrid cloud strategy. Meanwhile, 94% of enterpri...
Enterprises have forever faced challenges surrounding the sharing of their intellectual property. Emerging cloud adoption has made it more compelling for enterprises to digitize their content, making them available over a wide variety of devices across the Internet. In his session at 19th Cloud Expo, Santosh Ahuja, Director of Architecture at Impiger Technologies, will introduce various mechanisms provided by cloud service providers today to manage and share digital content in a secure manner....
Smart Cities are here to stay, but for their promise to be delivered, the data they produce must not be put in new siloes. In his session at @ThingsExpo, Mathias Herberts, Co-founder and CTO of Cityzen Data, will deep dive into best practices that will ensure a successful smart city journey.
SYS-CON Events announced today that 910Telecom will exhibit at the 19th International Cloud Expo, which will take place on November 1–3, 2016, at the Santa Clara Convention Center in Santa Clara, CA. Housed in the classic Denver Gas & Electric Building, 910 15th St., 910Telecom is a carrier-neutral telecom hotel located in the heart of Denver. Adjacent to CenturyLink, AT&T, and Denver Main, 910Telecom offers connectivity to all major carriers, Internet service providers, Internet backbones and ...
To leverage Continuous Delivery, enterprises must consider impacts that span functional silos, as well as applications that touch older, slower moving components. Managing the many dependencies can cause slowdowns. See how to achieve continuous delivery in the enterprise.
There is growing need for data-driven applications and the need for digital platforms to build these apps. In his session at 19th Cloud Expo, Muddu Sudhakar, VP and GM of Security & IoT at Splunk, will cover different PaaS solutions and Big Data platforms that are available to build applications. In addition, AI and machine learning are creating new requirements that developers need in the building of next-gen apps. The next-generation digital platforms have some of the past platform needs a...
SYS-CON Events announced today Telecom Reseller has been named “Media Sponsor” of SYS-CON's 19th International Cloud Expo, which will take place on November 1–3, 2016, at the Santa Clara Convention Center in Santa Clara, CA. Telecom Reseller reports on Unified Communications, UCaaS, BPaaS for enterprise and SMBs. They report extensively on both customer premises based solutions such as IP-PBX as well as cloud based and hosted platforms.
DevOps at Cloud Expo – being held November 1-3, 2016, at the Santa Clara Convention Center in Santa Clara, CA – announces that its Call for Papers is open. Born out of proven success in agile development, cloud computing, and process automation, DevOps is a macro trend you cannot afford to miss. From showcase success stories from early adopters and web-scale businesses, DevOps is expanding to organizations of all sizes, including the world's largest enterprises – and delivering real results. Am...