Network-1 (NTIP) 10-Q 14 Aug 15 2015 Q2 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2015	Aug. 14, 2015
Document And Entity Information
Entity Registrant Name	NETWORK 1 TECHNOLOGIES INC
Entity Central Index Key	1,065,078
Document Type	10-Q
Document Period End Date	Jun. 30, 2015
Document Fiscal Period Focus	Q2
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Is Entity a Well-known Seasoned Issuer	No
Is Entity a Voluntary Filer	No
Is Entity's Reporting Status Current	Yes
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		23,307,485
Document Fiscal Year Focus	2,015

CONDENSED CONSOLIDATED BALANCE

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($)	Jun. 30, 2015	Dec. 31, 2014
CURRENT ASSETS:
Cash and cash equivalents	$ 16,751,000	$ 17,662,000
Marketable securities, available for sale	1,067,000	1,079,000
Royalty receivables	1,841,000	1,249,000
Other current assets	166,000	242,000
Total Current Assets	19,825,000	20,232,000
OTHER ASSETS:
Deferred tax assets	4,077,000	4,743,000
Patent, net of accumulated amortization	2,791,000	3,582,000
Other investments	190,000	576,000
Security deposits	19,000	19,000
Total Other Assets	7,077,000	8,920,000
TOTAL ASSETS	26,902,000	29,152,000
CURRENT LIABILITIES:
Accounts payable	236,000	338,000
Accrued expenses	650,000	1,873,000
TOTAL LIABILITIES	$ 886,000	$ 2,211,000
STOCKHOLDERS' EQUITY
Preferred stock, $0.01 par value, authorized 10,000,000 shares; none issued and outstanding at June 30, 2015 and December 31, 2014
Common stock, $0.01 par value; authorized 50,000,000 shares; 23,311,485 and 24,274,336 shares issued and outstanding at June 30,2015 and December 31, 2014, respectively	$ 233,000	$ 243,000
Additional paid-in capital	61,149,000	60,977,000
Accumulated deficit	(35,337,000)	(34,262,000)
Other comprehensive income (loss)	(29,000)	(17,000)
TOTAL STOCKHOLDERS' EQUITY	26,016,000	26,941,000
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$ 26,902,000	$ 29,152,000

CONDENSED CONSOLIDATED BALANCE3

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Jun. 30, 2015	Dec. 31, 2014
STOCKHOLDERS' EQUITY
Preferred stock, par value	$ 0.01	$ 0.01
Preferred stock, shares authorized	10,000,000	10,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	50,000,000	50,000,000
Common stock, shares issued	23,311,485	24,274,336
Common stock, shares outstanding	23,311,485	24,274,336

CONDENSED CONSOLIDATED STATEMEN

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) (Unaudited) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Condensed Statements Of Income And Comprehensive Income
ROYALTY REVENUE	$ 1,747,000	$ 5,166,000	$ 7,374,000	$ 9,657,000
COST OF REVENUE	478,000	1,506,000	2,167,000	2,820,000
GROSS PROFIT	1,269,000	3,660,000	5,207,000	6,837,000
OPERATING EXPENSES:
General and administrative	1,119,000	615,000	2,224,000	1,213,000
Amortization of patents	413,000	409,000	826,000	818,000
Stock-based compensation	74,000	135,000	174,000	162,000
TOTAL OPERATING EXPENSES	1,606,000	1,159,000	3,224,000	2,193,000
OPERATING INCOME (LOSS)	(337,000)	2,501,000	1,983,000	4,644,000
OTHER INCOME:
Interest income, net	12,000	12,000	33,000	21,000
INCOME (LOSS) BEFORE INCOME TAXES	(325,000)	2,513,000	2,016,000	4,665,000
INCOME TAXES (BENEFIT)
Current	(15,000)	57,000	40,000	102,000
Deferred	(90,000)	855,000	666,000	1,566,000
Total Income Taxes (Benefit)	(105,000)	912,000	706,000	1,668,000
NET INCOME (LOSS)	$ (220,000)	$ 1,601,000	$ 1,310,000	$ 2,997,000
Net Income (Loss) per share
Basic	$ (0.01)	$ 0.06	$ .06	$ 0.12
Diluted	$ (0.01)	$ 0.06	$ .05	$ 0.11
Weighted average number of common shares outstanding:
Basic	23,439,468	25,484,978	23,761,420	25,629,473
Diluted	23,439,468	27,496,232	25,006,281	27,689,150
NET INCOME (LOSS)	$ (220,000)	$ 1,601,000	$ 1,310,000	$ 2,997,000
OTHER COMPREHENSIVE INCOME (LOSS)
Unrealized holding gain (loss) on securities available - for - sale arising during period	(32,000)	(4,000)	(12,000)	(10,000)
COMPREHENSIVE INCOME (LOSS)	$ (252,000)	$ 1,597,000	$ 1,298,000	$ 2,987,000

CONDENSED CONSOLIDATED STATEME5

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW (Unaudited) - USD ($)	6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income	$ 1,310,000	$ 2,997,000
Adjustments to reconcile net income to net cash provided by operating activities:
Amortization of Patents	826,000	818,000
Stock based compensation	174,000	162,000
Deferred tax provision	666,000	$ 1,566,000
Impairment of investments	386,000
Sources (uses) of cash from changes in operating assets and liabilities:
Royalty receivables	(592,000)	$ (4,323,000)
Other current assets	76,000	70,000
Accounts payable	(102,000)	(50,000)
Accrued expense	(1,223,000)	1,077,000
NET CASH PROVIDED BY OPERATING ACTIVITIES	1,521,000	2,317,000
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of patents and other assets	$ (35,000)	(40,000)
Acquisitions of Investments, at cost		(190,000)
NET CASH USED IN INVESTING ACTIVITIES	$ (35,000)	(230,000)
CASH FLOWS FROM FINANCING ACTIVITIES:
Value of shares delivered to fund withholding taxes on exercise of options		(1,064,000)
Repurchases of common stock, net of commissions	$ (2,397,000)	(2,877,000)
Repurchase of warrants		(505,000)
NET CASH USED IN FINANCING ACTIVITIES	$ (2,397,000)	(4,446,000)
NET DECREASE IN CASH AND CASH EQUIVALENTS	(911,000)	(2,359,000)
CASH AND CASH EQUIVALENTS, beginning of period	17,662,000	18,938,000
CASH AND CASH EQUIVALENTS, end of period	$ 16,751,000	$ 16,579,000
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest
Cash paid for taxes		$ 22,000

BASIS OF PRESENTATION AND NATUR

BASIS OF PRESENTATION AND NATURE OF BUSINESS	6 Months Ended
	Jun. 30, 2015
Notes to Financial Statements
NOTE A - BASIS OF PRESENTATION AND NATURE OF BUSINESS	[1] BASIS OF PRESENTATION The accompanying condensed consolidated financial statements are unaudited, but, in the opinion of the management of Network-1 Technologies, Inc. (the "Company"), contain all adjustments consisting only of normal recurring items which the Company considers necessary for the fair presentation of the Company's financial position as of June 30, 2015, and the results of its operations and comprehensive income (loss) and its cash flows for the three and six month periods ended June 30, 2015 and June 30, 2014. The unaudited condensed consolidated financial statements included herein have been prepared in accordance with the accounting principles generally accepted in the United States of America (U.S. GAAP) for interim financial information and the instructions to Form 10-Q and Regulation S-X. Accordingly, certain information and footnote disclosures normally included in the consolidated financial statements prepared in accordance with U.S. GAAP have been omitted pursuant to such rules and regulations, although management believes that the disclosures are adequate to make the information presented not misleading. These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements for the year ended December 31, 2014 included in the Company's Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 5, 2015. The results of operations for the three and six months ended June 30, 2015 are not necessarily indicative of the results of operations to be expected for the full year. The accompanying consolidated financial statements include accounts of the Company and its wholly-owned subsidiary, Mirror Worlds Technologies, LLC. [2] BUSINESS: The Company is engaged in the development, licensing and protection of its intellectual property assets. The Company presently owns twenty-four (24) patents including (i) the remote power patent (the “Remote Power Patent”) covering the delivery of power over Ethernet (PoE) cables for the purpose of remotely powering network devices, such as wireless access ports, IP phones and network based cameras; (ii) the Mirror Worlds patent portfolio (the “Mirror World Patent Portfolio”) relating to foundational technologies that enable unified search and indexing, displaying and archiving of documents in a computer system; (iii) the Cox patent portfolio (the “Cox Patent Portfolio”) relating to enabling technology for identifying media content on the Internet and taking further action to be performed based on such identification; and (iv) patents covering systems and methods for the transmission of audio, video and data over computer and telephony networks in order to achieve high quality of service (QoS) (the “QoS Patents”). The Company has been actively engaged in licensing its Remote Power Patent (U.S. Patent No. 6,218,930). The Company has entered into nineteen (19) license agreements with respect to its Remote Power Patent. The Company’s current strategy includes continuing to pursue licensing opportunities for its Remote Power Patent and its efforts to monetize two patent portfolios (the Cox Patent Portfolio and the Mirror Worlds Patent Portfolio) acquired by the Company in 2013 – (see Note J[2]). The Company’s acquisition strategy is to focus on acquiring high quality patents which management believes have the potential to generate significant licensing opportunities as the Company has achieved with respect to its Remote Power Patent. The Company’s Remote Power Patent has generated licensing revenue in excess of $78,000,000 from May 2007 through June 30, 2015. The Company continually reviews opportunities to acquire or license additional intellectual property. In addition, the Company may enter into strategic relationships with third parties to develop, commercialize, license or otherwise monetize their intellectual property. The Company has been dependent upon royalty revenue from license of its Remote Power Patent to fund its operations.

SUMMARY OF SIGNIFICANT ACCOUNTI

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES	6 Months Ended
	Jun. 30, 2015
Notes to Financial Statements
NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES	Use of Estimates and Assumptions The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting periods. The significant estimates and assumptions made in the preparation of the Company’s unaudited condensed consolidated financial statements include the valuation of warrants, stock-based payments, deferred income taxes and valuation of other investments. Actual results could be materially different from those estimates, upon which the carrying values were based. Patents The Company owns patents that relate to various technologies. The Company capitalizes the costs associated with acquisition, registration and maintenance of its acquired patents and amortizes these assets over their remaining useful lives on a straight-line basis. Any further payments made to maintain or develop the patents would be capitalized and amortized over the balance of the useful life for the patents or expensed as appropriate. Revenue Recognition The Company recognizes revenue received from the licensing of its intellectual property in accordance with Staff Accounting Bulletin No. 104, "Revenue Recognition" ("SAB No. 104") and related authoritative pronouncements. Revenue is recognized when (i) persuasive evidence of an arrangement exists, (ii) all obligations have been performed pursuant to the terms of the license agreement, (iii) amounts are fixed or determinable, and (iv) collectability of amounts is reasonably assured. The Company relies on royalty reports received from third party licensees to record its revenue. From time to time the Company may audit royalties reported from licensees as the Company did with respect to Cisco Systems, Inc. (see Note N). Any adjusted royalty revenue as a result of such audits is recorded by the Company in the period in which such adjustment is agreed to by the Company and the licensee or otherwise determined. Income Taxes The Company accounts for income taxes in accordance with Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 740, “Income Taxes” (ASC 740), which requires the Company to use the assets and liability method of accounting for income taxes. Under the assets and liability method, deferred income taxes are recognized for the tax consequences of temporary differences by applying enacted statutory tax rates applicable to future years to differences between financial statement carrying amounts and the tax bases of existing assets and liabilities and operating loss and tax credit carry forward. Under this accounting standard, the effect on deferred income taxes of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is recognized if it is more likely than not that some portion, or all of, a deferred tax asset will not be realized. ASC 740-10, “Accounting for Uncertainty in Income Taxes,” defines uncertainty in income taxes and the evaluation of a tax position as a two-step process. The first step is to determine whether it is more likely than not that a tax position will be sustained upon examination, including the resolution of any related appeals or litigation based on the technical merits of that position. The second step is to measure a tax position that meets the more-likely-than-not threshold to determine the amount of benefit to be recognized in the financial statements. A tax position is measured at the largest amount of benefit that is greater than 50 percent likelihood of being realized upon ultimate settlement. Tax positions that previously failed to meet the more-likely-than-not recognition threshold should be recognized in the first subsequent period in which the threshold is met. Previously recognized tax positions that no longer meet the more-likely-than-not criteria should be de-recognized in the first subsequent financial reporting period in which the threshold is no longer met. United States federal, state and local income tax returns prior to 2011 are not subject to examination by any applicable tax authorities. Stock-Based Compensation The Company accounts for its stock-based compensation at fair value estimated on the grant date using the Black-Scholes option pricing model. See Note D for further discussion of the Company’s stock-based compensation. Earnings (Loss) Per Share The Company reports earnings (loss) per share in accordance with U.S. GAAP, which requires presentation of basic and diluted earnings (loss) per share in conjunction with the disclosure of the methodology used in computing such earnings (loss) per share. Basic earnings (loss) per share excludes dilution and is computed by dividing income (loss) available to common shareholders by the weighted average common shares outstanding during the period. Diluted earnings (loss) per share takes into account the potential dilution that could occur if securities or other contracts, such as warrants and options to purchase common stock were exercised. Common stock equivalents having an anti-dilutive effect on earnings per share are excluded from the calculation of diluted earnings (loss) per share. Financial Instruments U.S. GAAP regarding fair value of financial instruments and related fair value measurements define fair value, establish a three-level valuation hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The three levels of inputs are defined as follows: Level 1 inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets. Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument. Level 3 inputs to the valuation methodology are unobservable. The carrying value of cash, royalty receivables, other assets, accounts payable, and accrued expenses approximates fair value because of the short period of time between the origination of such instruments and their expected realization and their current market rates of interest. Marketable securities available for sale are measured at fair value on recurring basis based on Level 1 inputs (see Note H). The Company also measures the fair value of certain assets on a non-recurring basis, when events or circumstances indicate the carrying amount of the assets may be impaired. These assets consist of the Company’s investments in Lifestreams Technologies Corporation (“Lifestreams”) and are reflected as “Other Investments” in the Company’s Condensed Consolidated Balance Sheets (see Note I). These assets were initially measured at cost and have been written down to fair value as a result of impairment or adjustment to reflect the fair value measurement as of June 30, 2015. The following table shows the fair value hierarchy for these assets measured at fair value on a non-recurring basis. Non-Recurring Fair Carrying Value on Condensed Consolidated Balance Assets Measured at Fair Value Condensed Consolidated Balance Sheet Value Measurements Sheet Level 1 Level 2 Level 3 Classification June 30, 2015 Non-Current Assets Other Investments $ 190,000 — — $ 190,000 Other Assets The Company has no significant influence or control over Lifestreams and holds less than 20% ownership of Lifestreams. These investments are reviewed on a periodic basis for impairment. The Company reviews several factors to determine whether a loss for impairment is needed. These factors include but are not limited to: (i) the financial condition and prospects of the issuer; (ii) the failure of the issuer to make required principal and interest payments; (iii) the issuer’s difficulty in raising sufficient financing to effectuate its business plan; (iv) the extent to which fair value is less than cost; and (v) the length of time the investment is in an unrealized loss position. For the three and six months ended June 30, 2015, the Company has recorded impairment related to Other Investments in the amount of $386,000. There can be no assurance that the Company will be able to realize the estimated fair value.

PATENTS

PATENTS	6 Months Ended
	Jun. 30, 2015
Notes to Financial Statements
NOTE C - PATENTS	The Company’s intangible assets at June 30, 2015 include patents with estimated remaining economic useful lives ranging from 1 to 6.25 years. For all periods presented, all of the Company’s patents were subject to amortization. The gross carrying amounts and accumulated amortization related to acquired intangible assets as of June 30, 2015 and December 31, 2014 are as follows: June 30, December 31, 2015 2014 Gross carrying amount – patents $ 6,345,000 $ 6,310,000 Accumulated amortization – patents (3,554,000 ) (2,728,000 ) Patents, net $ 2,791,000 $ 3,582,000 Amortization expense for the three months ended June 30, 2015 and June 30, 2014 was $413,000 and $409,000, respectively. Amortization expense for the six months ended June 30, 2015 and June 30, 2014 was $826,000 and $818,000, respectively. Future amortization of current intangible assets, net is as follows: Twelve Months Ended June 30, 2016 $ 1,535,000 2017 $ 192,000 2018 $ 192,000 2019 $ 188,000 2020 and thereafter $ 684,000 Total $ 2,791,000 The Company’s Remote Power Patent expires in March 2020. The expiration dates of the patents within the Company’s Mirror Worlds Patent Portfolio range from June 2016 to February 2020. The expiration dates of the patents within the Cox Patent Portfolio range from September 2021 to November 2023 and the expiration date of the QoS Patents is June 2019.

STOCK-BASED COMPENSATION

STOCK-BASED COMPENSATION	6 Months Ended
	Jun. 30, 2015
Notes to Financial Statements
NOTE D - STOCK-BASED COMPENSATION	The fair value of each option grant on the date of grant is estimated using the Black-Scholes option-pricing model. On the date of grant, the following weighted average assumptions were utilized for options granted during the three and six months ended June 30, 2015 and 2014. 2015 2014 Risk-free interest rates Expected option life in years Expected stock price volatility Expected dividend yield 1.39% 5 years 30.24% -0- 1.65% 5 years 42.65% -0- The following table presents information relating to all stock options outstanding and exercisable at June 30, 2015: Weighted Weighted Average Weighted Range of Average Remaining Average Exercise Options Exercise Life in Options Exercise Price Outstanding Price Years Exercisable Price $0.83 - $2.34 2,855,000 $1.33 3.61 2,647,087 $ 1.29 During the six month period ended June 30, 2015, the Company granted 5-year stock options to each of its three non-management directors to purchase 35,000 shares of its common stock at an exercise price of $2.34 per share. Such options vest over a one-year period in four equal quarterly amounts beginning on April 22, 2015, subject to continued service on the Board. The Company recorded stock-based compensation of $74,000 and $135,000 for the three months ended June 30, 2015 and June 30, 2014, respectively. The Company recorded stock-based compensation of $174,000 and $162,000 for the six months ended June 30, 2015 and June 30, 2014, respectively. The Company has an aggregate of $99,000 During the three month period ended June 30, 2015, the Company’s Executive Vice President exercised a stock option to purchase 150,000 shares of the Company’s common stock at an exercise price of $0.90 per share. The option was exercised on a cashless (net exercise) basis by delivery to the Company of 60,000 shares of common stock resulting in 90,000 net shares issued to the Company’s Executive Vice President with respect to such option exercise. In addition, during the three month period ended June 30, 2015, a consultant to the Company exercised a stock option to purchase 50,000 shares of the Company’s common stock at an exercise price of $0.90 per share. The option was exercised on a cashless (net exercise) basis by delivery to the Company of 19,651 shares of common stock resulting in 30,349 net shares issued to the consultant with respect to such option exercise. During the three month period ended June 30, 2014, the Company’s Chairman and Chief Executive Officer exercised stock options to purchase an aggregate of 1,517,500 shares of common stock at exercise prices of $0.25 per share (1,100,000 shares) and $0.68 per share (417,500 shares). All such shares were exercised on a cashless (net exercise) basis by delivery of an aggregate of 292,618 shares of common stock. In addition, the Chairman and Chief Executive Officer delivered an aggregate of 516,288 shares of common stock with an aggregate value of $986,110 to fund payroll withholding taxes with respect to such option exercises. As a result of the aforementioned stock option exercises, the Chairman and Chief Executive Officer received 708,594 net shares of the Company’s common stock. During the six month period ended June 30, 2014, the Company’s Executive Vice President exercised a stock option to purchase 75,000 shares of the Company’s common stock at an exercise price of $0.68 per share. The option was exercised on a net exercise (cashless) basis by delivery to the Company of 31,098 shares of common stock. In addition, 16,968 shares were delivered to the Company with an aggregate value of $28,000 to fund payroll withholding taxes on exercise, resulting in net shares of 26,934 issued to the Company’s Executive Vice President with respect to such option exercise. As of June 30, 2015, the following are the outstanding warrants to purchase shares of the Company’s common stock: Number of Exercise Warrants Price Expiration Date 250,000 $2.10 May 21, 2018 250,000 $1.40 May 21, 2018 125,000 $2.10 July 26, 2018 125,000 $1.40 July 26, 2018 Total 750,000 All of the aforementioned warrants were issued to Recognition Interface, LLC in connection with the Company’s acquisition of the Mirror Worlds Patent Portfolio (see Note J[2]).

INCOME TAXES

INCOME TAXES	6 Months Ended
	Jun. 30, 2015
Notes to Financial Statements
NOTE E - INCOME TAXES	At June 30, 2015, the Company had net operating loss carryforwards (NOLs) totaling approximately $23,329,000 expiring through 2029, with a future tax benefit of approximately $8,165,000 At June 30, 2015 and December 31, 2014, $4,077,000 and $4,743,000, respectively, were recorded as deferred tax assets on the Company’s condensed consolidated balance sheets. During the three month period ended June 30, 2015 as a result of a loss before taxes of $(325,000), $105,000 was recorded as an income tax reduction and our deferred tax assets were increased by $90,000 to $4,077,000. During the six month period ended June 30, 2015 as a result of income (before taxes) for the period of $2,016,000, $706,000 was recorded as income tax expense and the deferred tax assets were reduced by $666,000 to $4,077,000. To the extent that the Company has taxable income in the future, it will report income tax expense and such expense attributable to federal income taxes will reduce the deferred tax assets reflected on the accompanying condensed consolidated balance sheets. Management will continue to evaluate the recoverability of the Company’s NOLs and adjust the deferred tax assets accordingly. Utilization of NOLs can be subject to a substantial annual limitation due to ownership change limitations that could occur in the future, as required by Section 382 of the Internal Revenue Code of 1986, as amended, as well as similar state provisions. There was no change in the allowance against the deferred tax assets since December 31, 2014.

EARNINGS (LOSS) PER SHARE

EARNINGS (LOSS) PER SHARE	6 Months Ended
	Jun. 30, 2015
Notes to Financial Statements
NOTE F - EARNINGS (LOSS) PER SHARE	Basic Earnings (loss) per share is calculated by dividing the net income (loss) by the weighted average number of outstanding common shares during the period. Diluted per share data includes the dilutive effects of options, warrants and convertible securities. Potential shares of 3,605,000 and 3,720,000 at June 30, 2015 and June 30, 2014, respectively, consisted of options and warrants. Computations of basic and diluted weighted average common shares outstanding are as follows: Six Months Ended June 30, Three Months Ended June 30, 2015 2014 2015 2014 Weighted-average common shares outstanding – basic 23,761,420 25,629,473 23,439,468 25,484,978 Dilutive effect of options and warrants 1,244,861 2,059,677 — 2,011,254 Weighted-average common shares outstanding – diluted 25,006,281 27,689,150 23,439,468 27,496,232 Options and warrants excluded from the computation of diluted income (loss) per share because the effect of inclusion would have been anti-dilutive 234,163 675,000 3,605,000 675,000

CASH AND CASH EQUIVALENTS

CASH AND CASH EQUIVALENTS	6 Months Ended
	Jun. 30, 2015
Notes to Financial Statements
NOTE G - CASH AND CASH EQUIVALENTS	The Company places cash investments in high quality financial institutions insured by the Federal Deposit Insurance Corporation ("FDIC"). At June 30, 2015, the Company maintained a cash balance of $16,129,000 in excess of FDIC limits. The Company considers all highly liquid short-term investments purchased with an original maturity of three months or less to be cash equivalents. Cash and cash equivalents as of June 30, 2015 and December 31, 2014 are composed of: June 30, 2015 December 31, 2014 Cash $ 3,116,000 $ 2,984,000 Money market fund 13,635,000 14,678,000 Total $ 16,751,000 $ 17,662,000

MARKETABLE SECURITIES

MARKETABLE SECURITIES	6 Months Ended
	Jun. 30, 2015
Notes to Financial Statements
NOTE H - MARKETABLE SECURITIES	Marketable securities are classified as available-for-sale and are recorded at fair market value. Unrealized gains and losses are reported as other comprehensive income or loss. Realized gains and losses are reclassified from other comprehensive income or loss to net income or loss in the period they are realized. At June 30, 2015, the Company's marketable securities consisted of two corporate bonds (aggregate face value $1,000,000) with a 3.9% and 4.5% coupon and term of greater than three months when purchased. The Company’s marketable securities mature in 2021 and it is not the intention of the Company to hold such securities until maturity.

OTHER INVESTMENTS

OTHER INVESTMENTS	6 Months Ended
	Jun. 30, 2015
Notes to Financial Statements
NOTE I - OTHER INVESTMENTS	In May 2013, as part of the acquisition of the Mirror Worlds Patent Portfolio (see Note J[2]), the Company acquired from Mirror Worlds, LLC 250,000 shares of common stock of Lifestreams Technologies Corporation (“Lifestreams”), a company engaged in the development of next generation applications and methodologies designed to organize and display digital data. In July 2013, the Company made an additional investment of $50,000 in Lifestreams as part of a financing and received 123,456 shares of Series A preferred stock and, as part of an amended license agreement between the Company’s wholly-owned subsidiary and Lifestreams, the Company received a warrant to purchase 1,305,000 shares of common stock of Lifestreams. The warrant was valued at $70,000 based on the Black-Scholes option model and recorded as non-cash royalty income during 2013. In March 2014, the Company participated in a $2.0 million secured convertible notes (the “Notes”) financing of Lifestreams by agreeing to invest an aggregate of $380,000 in four equal tranches (the first tranche of $95,000 was paid at closing). In May 2014, August 2014 and December 2014, the Company made additional investments of $95,000 each as part of the second, third and fourth tranche of the investment. Since the Company owns less than 20% of the outstanding equity of Lifestreams and does not have significant influence or control, the Company’s investment in Lifestreams was recorded at cost. The Notes all matured on March 31, 2015. At June 30, 2015, Lifestreams remained in default of the Notes and had not completed any additional material financing. As a result, the Company has an impairment of $386,000 with respect to the investment which has a carrying value at June 30, 2015 of $190,000 compared with a carrying value at December 31, 2014 of $576,000. The carrying value of $190,000 at June 30, 2015 reflects management’s estimate at June 30, 2015 of the fair value of the investment (see Note B). The impairment of $386,000 is included in general and administrative expenses in the Company’s Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2015.

COMMITMENTS AND CONTINGENCIES

COMMITMENTS AND CONTINGENCIES	6 Months Ended
	Jun. 30, 2015
Notes to Financial Statements
NOTE J - COMMITMENTS AND CONTINGENCIES	[1] Legal Fees : Russ, August & Kabat provides legal services to the Company with respect to its pending patent litigations filed in April 2014 and December 2014 against Google Inc. and YouTube, LLC in the United States District Court for the Southern District of New York relating to certain patents within the Company’s Cox Patent Portfolio (see Note L[1] hereof). The terms of the Company’s agreement with Russ, August & Kabat provides for legal fees on a full contingency basis ranging from 15% to 30% of the net recovery (after deduction of expenses) depending on the stage of the proceeding in which the result (settlement or judgment) is achieved. The Company is responsible for all of the expenses incurred with respect to this litigation. Dovel & Luner, LLP provides legal services to the Company with respect to its patent litigation commenced in May 2013 against Apple Inc., Microsoft, Inc. and other major vendors of document system software and computer systems in the United States District Court of Texas, Tyler Division, for infringement of U.S. Patent No. 6,006,227 (part of the Mirror Worlds Patent Portfolio - see Note L[2] hereof). The terms of the Company’s agreement with Dovel & Luner LLP provide for legal fees on a contingency basis ranging from 25% to 40% of the net recovery (after deduction of expenses) depending upon the stage of proceeding in which a result (settlement or judgment) is achieved, subject to certain agreed upon contingency fee caps depending upon the amount of the net recovery. The Company is responsible for a certain portion of the expenses incurred with respect to the litigation. Dovel & Luner, LLP provides legal services to the Company with respect to its patent litigation filed in September 2011 against sixteen (16) data networking equipment manufacturers in the United States District Court for the Eastern District of Texas, Tyler (see Note L[3]). The terms of the Company’s agreement with Dovel & Luner LLP essentially provides for legal fees on a full contingency basis ranging from 12.5% to 35% (with certain exceptions) of the net recovery (after deduction for expenses) depending on the stage of the preceding in which a result (settlement or judgment) is achieved. For the three month period ended June 30, 2015 and June 30, 2014, the Company accrued aggregate contingent legal fees with respect to the litigation of $14,000 and $28,000, respectively, to Dovel & Luner, LLP. For the six month period ended June 30, 2015 and June 30, 2014, the Company accrued aggregate contingent legal fees with respect to the litigation of $222,000 Dovel & Luner, LLP provided legal services to the Company with respect to the litigation settled in July 2010 against Cisco and several other major data networking equipment manufacturers (see Note L[4]). The terms of the Company’s agreement with Dovel & Luner, LLP with respect to this litigation provided for legal fees of a maximum aggregate cash payment of $1.5 million plus a contingency fee of 24% (based on the settlement being achieved at the trial stage). As a result of the royalty payments payable quarterly by Cisco in accordance with the Company’s settlement and license agreement with Cisco, the Company has an obligation to pay Dovel & Luner, LLP (including local counsel) 24% of such royalties received. During the three months ended June 30, 2015 and June 30, 2014, the Company incurred aggregate legal fees to Dovel & Luner, LLP of $359,000 and $1,178,000 respectively. During the six months ended June 30, 2015 and June 30, 2014, the Company incurred aggregate legal fees to Dovel & Luner, LLP of $1,546,000 and $2,192,000, respectively, with respect to the aforementioned litigation. With respect to the Company’s litigation against D-Link, which was settled in May 2007, the Company utilized the services of Blank Rome, LLP on a full contingency basis. In accordance with the Company’s contingency fee agreement with Blank Rome LLP, once the Company recovered its expenses related to the litigation (which were recovered in the first quarter of 2013), the Company is obligated to pay legal fees to Blank Rome LLP equal to 25% of the royalty revenue received by the Company from its license agreement with D-Link for the life of the Remote Power Patent. During the three month period ended June 30, 2015 and June 30, 2014, the Company accrued legal fees to Blank Rome LLP of $16,000 and $14,000, respectively. During the six month period ended June 30, 2015 and June 30, 2014, the Company accrued legal fees to Blank Rome LLP of $29,000 and $28,000, respectively. [2] Patent Acquisitions: On February 28, 2013, the Company completed the acquisition of four patents (as well as a pending patent application) from Dr. Ingemar Cox (these patents together with subsequent related patent issuances comprise the Cox Patent Portfolio), a technology leader in digital watermarking content identification, digital rights management and related technologies, for a purchase price of $1,000,000 in cash and 403,226 shares of the Company’s common stock. In addition, the Company is obligated to pay Dr. Cox 12.5% of the net proceeds (after deduction of expenses) generated by the Company from licensing, sale or enforcement of the patents. Since the acquisition of the patent portfolio from Dr. Cox, the Company has been issued five additional related patents by the U.S. Patent and Trademark Office (“USPTO”). Professional fees and filing fees of $169,000 were capitalized as patent cost. On May 21, 2013, the Company’s wholly-owned subsidiary, Mirror Worlds Technologies, LLC, acquired all of the patents previously owned by Mirror Worlds, LLC (which subsequently changed its name to Looking Glass LLC (“Looking Glass”)), consisting of nine issued United States patents and five pending applications covering foundational technologies that enable unified search and indexing, displaying and archiving of documents in a computer system (these patents together with subsequent related patent issuances comprise the Mirror Worlds Patent Portfolio). As consideration for the patent acquisition, the Company paid Looking Glass $3,000,000 in cash, and issued 5-year warrants to purchase an aggregate of 1,750,000 shares of the Company’s common stock (875,000 shares of common stock at an exercise price of $1.40 per share and 875,000 shares of common stock at an exercise price of $2.10 per share) (the “Looking Glass Warrants”). On June 3, 2014, the Company repurchased the Looking Glass Warrants from Looking Glass at a cost of $505,000. As part of the acquisition of the Mirror Worlds Patent Portfolio, the Company also entered into an agreement with Recognition Interface, LLC (“Recognition”), an entity that financed the commercialization of the patent portfolio prior to its sale to Mirror Worlds, LLC and also retained an interest in the licensing proceeds of the patent portfolio held by Mirror Worlds, LLC. Pursuant to the terms of the Company’s agreement with Recognition, Recognition received (i) 5-year warrants to purchase 250,000 shares of the Company’s common stock at an exercise price of $1.40 per share, and (ii) 5-year warrants to purchase 250,000 shares of common stock at an exercise price of $2.10 per share. Recognition also received from the Company an interest in the net proceeds realized from the monetization of the Mirror Worlds Patent Portfolio, as follows: (i) 10% of the first $125 million of net proceeds; (ii) 15% of the next $125 million of net proceeds; (iii) and 20% of any portion of the net proceeds in excess of $250 million. In addition, Abacus and Associates, Inc. (“Abacus”), an entity affiliated with Recognition, received a 60-day warrant to purchase 500,000 shares of the Company’s common stock at an exercise price of $2.05 per share. In accordance with the Company’s agreement with Recognition, as a result of the exercise of the 60-day warrant by Abacus in July 2013, additional 5-year warrants to purchase an aggregate of 250,000 shares of the Company’s common stock were issued to Recognition (125,000 shares at an exercise price of $2.10 per share and 125,000 shares at an exercise price of $1.40 per share). As part of the acquisition of the Mirror Worlds Patent Portfolio, professional fees and filing fees of $409,000 were capitalized as patent cost. [3] Amended Patent Purchase Agreement: In January 2005, the Company and Merlot Communications, Inc., the successor of which is BAXL Technologies, Inc. (the “Seller”), amended the Patent Purchase Agreement originally entered into in November 2003 (the "Amendment") pursuant to which the Company paid an additional purchase price of $500,000 to Seller for the restructuring of future contingent payments to Seller from the licensing or sale of the patents (including the Remote Power Patent and the QoS Patents). The Amendment provided for future contingent payments by the Company to Seller of $1.0 million upon achievement of $25 million of Net Royalties (as defined) which payment was made in 2012, an additional $1.0 million contingent payment upon achievement of $50 million of Net Royalties (the “Second Contingent Payment”) and an additional $500,000 contingent payment upon achievement of $62.5 million of Net Royalties from the licensing or sale of the patents acquired from Seller. On March 11, 2015, the Company entered into an agreement with a secured creditor of the Seller, who had all rights with respect to the Second Contingent Payment, pursuant to which the Company paid the secured creditor $900,000 in full satisfaction of the Second Contingent Payment of $1.0 million. [4] Services Agreement: Pursuant to a master services agreement, dated November 30, 2004 (the “Services Agreement”), between the Company and ThinkFire Services USA, Ltd. (“ThinkFire”), the Company was obligated to pay ThinkFire fees from royalty payments received from certain licensees of the Remote Power Patent over the term of the licenses in consideration for services performed on behalf of the Company. During the years ended December 31, 2014 and December 31, 2013, the Company incurred fees to ThinkFire of $105,000 and $104,000, respectively. On February 10, 2015, the Company entered into an agreement with ThinkFire pursuant to which the Services Agreement was terminated with no further obligations in consideration of the Company’s payment of $285,000 to ThinkFire ($261,000 of such payment has been included as general and administrative expenses for the six months ended June 30, 2015 and the balance of $24,000 was accrued as an expense for the year ended December 31, 2014). [5] Lease Agreements: The Company currently leases office space in New York, New York at a cost of $3,600 per month pursuant to a lease expiring on November 30, 2015. The Company entered into a four-year lease agreement commencing July 18, 2011 to rent office space, consisting of approximately 2,400 square feet, for offices in New Canaan, Connecticut. The Company paid a base rent of $7,000 per month which is subject to annual adjustments to reflect increases in real estate taxes and operating expenses. Effective August 1, 2015, the Company entered into an agreement to extend the lease for a four year period (expiring September 30, 2019) at a base rent of $7,000 per month for the first year (increasing $100 per month each year), which is subject to annual adjustments to reflect increases in real estate taxes and operating expenses. Mirror Worlds Technologies, LLC, the Company’s wholly-owned subsidiary, leases office space in Tyler, Texas with a base monthly rent of $620, which expires in April 2016.

EMPLOYMENT ARRANGEMENTS AND OTH

EMPLOYMENT ARRANGEMENTS AND OTHER AGREEMENTS	6 Months Ended
	Jun. 30, 2015
Notes to Financial Statements
NOTE K - EMPLOYMENT ARRANGEMENTS AND OTHER AGREEMENTS	[1] The Incentive Compensation shall continue to be paid to the Chairman and Chief Executive Officer for the life of each of the Company’s patents with respect to licenses entered into with third parties during the term of his employment or at anytime thereafter, whether he is employed by the Company or not; provided that In connection with the Agreement, the Chairman and Chief Executive Officer has also agreed not to compete with the Company as follows: (i) during the term of the Agreement and for a period of 12 months thereafter if his employment is terminated “Other Than For Cause” (as defined) provided he is paid his 12 month base salary severance amount and (ii) for a period of two years from the termination date, if terminated “For Cause” by the Company or “Without Good Reason” by the Chairman and Chief Executive Officer. [2]

LEGAL PROCEEDINGS

LEGAL PROCEEDINGS	6 Months Ended
	Jun. 30, 2015
Notes to Financial Statements
NOTE L - LEGAL PROCEEDINGS	[1] In December 2014, Google filed four petitions to institute Inter Partes Inter Partes Inter Partes Inter Partes Inter Partes On April 13, 2015, Google filed a Petition for Covered Business Method Review (CBM) at the PTAB seeking to invalidate claims pertaining to the Company’s U.S. Patent No. 8,904,464, the patent asserted in our litigation against Google and YouTube filed on December 3, 2014 as referenced above. The PTAB has not yet made a decision as to whether the CBM Petition will be instituted (and proceed to trial) or denied. The above referenced litigation commenced by the Company in December 2014 against Google and YouTube was stayed on July 2, 2015 pending a decision of the PTAB on whether or not to institute the CBM Petition. [2] Mirror Worlds v Apple, et. al. Mirror Worlds v. Microsoft, et. al. [3] [4] [5] ex parte [6] Inter Partes [7] ex parte ex parte ex parte

STOCK REPURCHASE

STOCK REPURCHASE	6 Months Ended
	Jun. 30, 2015
Notes to Financial Statements
NOTE M - STOCK REPURCHASE	On August 22, 2011, the Company announced that its Board of Directors approved a share repurchase program to repurchase up to $2,000,000 of shares of its common stock over the next 12 months ("Share Repurchase Program"). On June 17, 2015, the Board of Directors authorized its fifth increase to the Share Repurchase Program authorizing the repurchase of up to an additional $2.0 million of shares of common stock over the subsequent 12 month period (for a total of up to $14 million since inception of the program in August 2011). The common stock may be repurchased from time to time in open market transactions or privately negotiated transactions in the Company’s discretion. The timing and amount of the shares repurchased is determined by management based on its evaluation of market conditions and other factors. The Share Repurchase Program may be increased, suspended or discontinued at any time. Since inception of the Share Repurchase Program through June 30, 2015, the Company has repurchased an aggregate of 6,782,268 shares of its common stock at an average price per share of $1.64 or an aggregate cost of $11,131,253 ( )

CISCO ROYALTY AUDIT AND CONCENT

CISCO ROYALTY AUDIT AND CONCENTRATION	6 Months Ended
	Jun. 30, 2015
Notes to Financial Statements
NOTE N - CISCO ROYALTY AUDIT AND CONCENTRATION	In late December 2013, the Company exercised its right to audit the royalties paid to it by Cisco for the years 2012 and 2013 (the “Audit Period”) in accordance with its May 2011 license agreement with Cisco Systems, Inc. (“Cisco”). As a result of the audit, Cisco agreed to pay the Company additional royalty payments pursuant to the May 2011 license agreement of $3,281,000 for the Audit Period and other periods covered by the license agreement which was recorded as royalty revenue in the three month period ended June 30, 2014, at the time the Company completed the audit and additional royalty payments were agreed to by the parties. Cisco constituted approximately 84 % and 92% of the Company’s revenue, respectively, for the six month periods ended June 30, 2015 and June 30, 2014. Revenue from Cisco constituted approximately 79% and 92% of the Company’s revenue, respectively, for the three months periods ended June 30, 2015 and June 30, 2014. At June 30, 2015 and December 31, 2014, the royalty receivable from Cisco constituted approximately 75% and 74% of the Company’s royalty receivables, respectively.

SUMMARY OF SIGNIFICANT ACCOUN20

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)	6 Months Ended
	Jun. 30, 2015
Summary Of Significant Accounting Policies Policies
Use of Estimates and Assumptions	The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting periods. The significant estimates and assumptions made in the preparation of the Company’s unaudited condensed consolidated financial statements include the valuation of warrants, stock-based payments, deferred income taxes and valuation of other investments. Actual results could be materially different from those estimates, upon which the carrying values were based.
Patents	The Company owns patents that relate to various technologies. The Company capitalizes the costs associated with acquisition, registration and maintenance of its acquired patents and amortizes these assets over their remaining useful lives on a straight-line basis. Any further payments made to maintain or develop the patents would be capitalized and amortized over the balance of the useful life for the patents or expensed as appropriate.
Revenue Recognition	The Company recognizes revenue received from the licensing of its intellectual property in accordance with Staff Accounting Bulletin No. 104, "Revenue Recognition" ("SAB No. 104") and related authoritative pronouncements. Revenue is recognized when (i) persuasive evidence of an arrangement exists, (ii) all obligations have been performed pursuant to the terms of the license agreement, (iii) amounts are fixed or determinable, and (iv) collectability of amounts is reasonably assured. The Company relies on royalty reports received from third party licensees to record its revenue. From time to time the Company may audit royalties reported from licensees as the Company did with respect to Cisco Systems, Inc. (see Note N). Any adjusted royalty revenue as a result of such audits is recorded by the Company in the period in which such adjustment is agreed to by the Company and the licensee or otherwise determined.
Income Taxes	The Company accounts for income taxes in accordance with Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 740, “Income Taxes” (ASC 740), which requires the Company to use the assets and liability method of accounting for income taxes. Under the assets and liability method, deferred income taxes are recognized for the tax consequences of temporary differences by applying enacted statutory tax rates applicable to future years to differences between financial statement carrying amounts and the tax bases of existing assets and liabilities and operating loss and tax credit carry forward. Under this accounting standard, the effect on deferred income taxes of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is recognized if it is more likely than not that some portion, or all of, a deferred tax asset will not be realized. ASC 740-10, “Accounting for Uncertainty in Income Taxes,” defines uncertainty in income taxes and the evaluation of a tax position as a two-step process. The first step is to determine whether it is more likely than not that a tax position will be sustained upon examination, including the resolution of any related appeals or litigation based on the technical merits of that position. The second step is to measure a tax position that meets the more-likely-than-not threshold to determine the amount of benefit to be recognized in the financial statements. A tax position is measured at the largest amount of benefit that is greater than 50 percent likelihood of being realized upon ultimate settlement. Tax positions that previously failed to meet the more-likely-than-not recognition threshold should be recognized in the first subsequent period in which the threshold is met. Previously recognized tax positions that no longer meet the more-likely-than-not criteria should be de-recognized in the first subsequent financial reporting period in which the threshold is no longer met. United States federal, state and local income tax returns prior to 2011 are not subject to examination by any applicable tax authorities.
Stock-based compensation	The Company accounts for its stock-based compensation at fair value estimated on the grant date using the Black-Scholes option pricing model. See Note D for further discussion of the Company’s stock-based compensation.
Earnings/Loss per Share	The Company reports earnings (loss) per share in accordance with U.S. GAAP, which requires presentation of basic and diluted earnings (loss) per share in conjunction with the disclosure of the methodology used in computing such earnings (loss) per share. Basic earnings (loss) per share excludes dilution and is computed by dividing income (loss) available to common shareholders by the weighted average common shares outstanding during the period. Diluted earnings (loss) per share takes into account the potential dilution that could occur if securities or other contracts, such as warrants and options to purchase common stock were exercised. Common stock equivalents having an anti-dilutive effect on earnings per share are excluded from the calculation of diluted earnings (loss) per share.
Financial Instruments	U.S. GAAP regarding fair value of financial instruments and related fair value measurements define fair value, establish a three-level valuation hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The three levels of inputs are defined as follows: Level 1 inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets. Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument. Level 3 inputs to the valuation methodology are unobservable. The carrying value of cash, royalty receivables, other assets, accounts payable, and accrued expenses approximates fair value because of the short period of time between the origination of such instruments and their expected realization and their current market rates of interest. Marketable securities available for sale are measured at fair value on recurring basis based on Level 1 inputs (see Note H). The Company also measures the fair value of certain assets on a non-recurring basis, when events or circumstances indicate the carrying amount of the assets may be impaired. These assets consist of the Company’s investments in Lifestreams Technologies Corporation (“Lifestreams”) and are reflected as “Other Investments” in the Company’s Condensed Consolidated Balance Sheets (see Note I). These assets were initially measured at cost and have been written down to fair value as a result of impairment or adjustment to reflect the fair value measurement as of June 30, 2015. The following table shows the fair value hierarchy for these assets measured at fair value on a non-recurring basis. Non-Recurring Fair Carrying Value on Condensed Consolidated Balance Assets Measured at Fair Value Condensed Consolidated Balance Sheet Value Measurements Sheet Level 1 Level 2 Level 3 Classification June 30, 2015 Non-Current Assets Other Investments $ 190,000 — — $ 190,000 Other Assets The Company has no significant influence or control over Lifestreams and holds less than 20% ownership of Lifestreams. These investments are reviewed on a periodic basis for impairment. The Company reviews several factors to determine whether a loss for impairment is needed. These factors include but are not limited to: (i) the financial condition and prospects of the issuer; (ii) the failure of the issuer to make required principal and interest payments; (iii) the issuer’s difficulty in raising sufficient financing to effectuate its business plan; (iv) the extent to which fair value is less than cost; and (v) the length of time the investment is in an unrealized loss position. For the three and six months ended June 30, 2015, the Company has recorded impairment related to Other Investments in the amount of $386,000. There can be no assurance that the Company will be able to realize the estimated fair value.

SUMMARY OF SIGNIFICANT ACCOUN21

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)	6 Months Ended
	Jun. 30, 2015
Summary Of Significant Accounting Policies Tables
Fair value hierarchy for assets measured at fair value on a non-recurring basis	The following table shows the fair value hierarchy for these assets measured at fair value on a non-recurring basis. Non-Recurring Fair Carrying Value on Condensed Consolidated Balance Assets Measured at Fair Value Condensed Consolidated Balance Sheet Value Measurements Sheet Level 1 Level 2 Level 3 Classification June 30, 2015 Non-Current Assets Other Investments $ 190,000 — — $ 190,000 Other Assets

PATENTS (Tables)

PATENTS (Tables)	6 Months Ended
	Jun. 30, 2015
Patents Tables
Accumulated amortization related to acquired intangible assets	The gross carrying amounts and accumulated amortization related to acquired intangible assets as of June 30, 2015 and December 31, 2014 are as follows: June 30, December 31, 2015 2014 Gross carrying amount – patents $ 6,345,000 $ 6,310,000 Accumulated amortization – patents (3,554,000 ) (2,728,000 ) Patents, net $ 2,791,000 $ 3,582,000
Future amortization of current intangible assets, net	Future amortization of current intangible assets, net is as follows: Twelve Months Ended June 30, 2016 $ 1,535,000 2017 $ 192,000 2018 $ 192,000 2019 $ 188,000 2020 and thereafter $ 684,000 Total $ 2,791,000

STOCK-BASED COMPENSATION (Table

STOCK-BASED COMPENSATION (Tables)	6 Months Ended
	Jun. 30, 2015
Stock-based Compensation Tables
Schedule of stock option	On the date of grant, the following weighted average assumptions were utilized for options granted during the three and six months ended June 30, 2015 and 2014. 2015 2014 Risk-free interest rates Expected option life in years Expected stock price volatility Expected dividend yield 1.39% 5 years 30.24% -0- 1.65% 5 years 42.65% -0-
Schedule of information of stock options outstanding and exercisable	The following table presents information relating to all stock options outstanding and exercisable at June 30, 2015: Weighted Weighted Average Weighted Range of Average Remaining Average Exercise Options Exercise Life in Options Exercise Price Outstanding Price Years Exercisable Price $0.83 - $2.34 2,855,000 $1.33 3.61 2,647,087 $ 1.29
Outstanding warrants to puchase shares	As of June 30, 2015, the following are the outstanding warrants to purchase shares of the Company’s common stock: Number of Exercise Warrants Price Expiration Date 250,000 $2.10 May 21, 2018 250,000 $1.40 May 21, 2018 125,000 $2.10 July 26, 2018 125,000 $1.40 July 26, 2018 Total 750,000

EARNINGS (LOSS) PER SHARE (Tabl

EARNINGS (LOSS) PER SHARE (Tables)	6 Months Ended
	Jun. 30, 2015
Earnings Loss Per Share Tables
Schedule Earnings Per Share	Computations of basic and diluted weighted average common shares outstanding are as follows: Six Months Ended June 30, Three Months Ended June 30, 2015 2014 2015 2014 Weighted-average common shares outstanding – basic 23,761,420 25,629,473 23,439,468 25,484,978 Dilutive effect of options and warrants 1,244,861 2,059,677 — 2,011,254 Weighted-average common shares outstanding – diluted 25,006,281 27,689,150 23,439,468 27,496,232 Options and warrants excluded from the computation of diluted income (loss) per share because the effect of inclusion would have been anti-dilutive 234,163 675,000 3,605,000 675,000

CASH AND CASH EQUIVALENTS (Tabl

CASH AND CASH EQUIVALENTS (Tables)	6 Months Ended
	Jun. 30, 2015
Cash And Cash Equivalents Tables
Scedule of cash and cash equivalent	Cash and cash equivalents as of June 30, 2015 and December 31, 2014 are composed of: June 30, 2015 December 31, 2014 Cash $ 3,116,000 $ 2,984,000 Money market fund 13,635,000 14,678,000 Total $ 16,751,000 $ 17,662,000

BASIS OF PRESENTATION AND NAT26

BASIS OF PRESENTATION AND NATURE OF BUSINESS (Details Narrative) - 6 months ended Jun. 30, 2015	USD ($)Agreement
Notes to Financial Statements
Remote power patent revenue since May 2007 | $	$ 78,000,000
Patents owned	24
Number of License Agreements	19

SUMMARY OF SIGNIFICANT ACCOUN27

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($)	Jun. 30, 2015	Dec. 31, 2014
Other Investments	$ 190,000	$ 576,000
Fair Value, Inputs, Level 1 [Member]
Other Investments
Fair Value, Inputs, Level 2 [Member]
Other Investments
Fair Value, Inputs, Level 3 [Member]
Other Investments	$ 190,000

SUMMARY OF SIGNIFICANT ACCOUN28

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($)	3 Months Ended	6 Months Ended
	Jun. 30, 2015	Jun. 30, 2015	Jun. 30, 2014
Summary Of Significant Accounting Policies Details Narrative
Impairment of investments	$ 386,000	$ 386,000

PATENTS (Details)

PATENTS (Details) - USD ($)	Jun. 30, 2015	Dec. 31, 2014
Patents Details
Gross carrying amount - patents	$ 6,345,000	$ 6,310,000
Accumulated amortization - patents	(3,554,000)	(2,728,000)
Patents, net	$ 2,791,000	$ 3,582,000

PATENTS (Details 1)

PATENTS (Details 1) - USD ($)	Jun. 30, 2015	Dec. 31, 2014
Patents Details 1
2,016	$ 1,535,000
2,017	192,000
2,018	192,000
2,019	188,000
2020 and thereafter	684,000
Total	$ 2,791,000	$ 3,582,000

PATENTS (Details Narrative)

PATENTS (Details Narrative) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Amortization expense	$ 413,000	$ 409,000	$ 826,000	$ 818,000
Expiration of Remote Power Patent			March 2,020
Expiration of QoS family patents			June 2,019
Minimum [Member]
Estimated remaining economic useful of patents			1 year
Expiration dates of the patents within the Company's Mirror Worlds patent portfolio			JUNE 2,016
Expiration dates of the patents within the Cox patent portfolio			SEPTEMBER 2,021
Maximum [Member]
Estimated remaining economic useful of patents			6 years 3 months
Expiration dates of the patents within the Company's Mirror Worlds patent portfolio			FEBRUARY 2,020
Expiration dates of the patents within the Cox patent portfolio			NOVEMBER 2,023

STOCK BASED COMPENSATION (Detai

STOCK BASED COMPENSATION (Details)	6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014
Stock Based Compensation Details
Risk-free interest rates	1.39%	1.65%
Expected option life in years	5 years	5 years
Expected stock price volatility	30.24%	42.65%
Expected dividend yield	0.00%	0.00%

STOCK BASED COMPENSATION (Det33

STOCK BASED COMPENSATION (Details 1) - Jun. 30, 2015 - $ / shares	Total
Options outstanding	2,855,000
Weighted Average Remaining Life in Years	3 years 7 months 10 days
Options exercisable	2,647,087
Weighted average exercise price	$ 1.29
Minimum [Member]
Range of Exercise price	0.83
Maximum [Member]
Range of Exercise price	$ 2.34

STOCK BASED COMPENSATION (Det34

STOCK BASED COMPENSATION (Details 2) - Jun. 30, 2015 - $ / shares	Total
Number of warrants outstanding	750,000
Exercise Price $ 2.10
Number of warrants outstanding	250,000
Exercise Price	$ 2.10
Expiration Date	May 21, 2018
Exercise Price $ 1.40
Number of warrants outstanding	250,000
Exercise Price	$ 1.40
Expiration Date	May 21, 2018
Exercise Price $ 2.10
Number of warrants outstanding	125,000
Exercise Price	$ 2.10
Expiration Date	Jul. 26, 2018
Exercise Price $ 1.40
Number of warrants outstanding	125,000
Exercise Price	$ 1.40
Expiration Date	Jul. 26, 2018

STOCK BASED COMPENSATION (Det35

STOCK BASED COMPENSATION (Details Narrative) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Issuance of stock options to each of the three non-management director to purchase common stock			35,000
Issuance of stock options to each of the three non-management directors to purchase common stock, exercise price per share			$ 2.34
Stock-based compensation	$ 74,000	$ 135,000	$ 174,000	$ 162,000
Unrecognized stock-based compensation cost	99,000		99,000
Aggregate intrinsic value of options exercisable	$ 1,167,985		$ 1,167,985
Executive Vice President [Member]
Stock option excercised	150,000			75,000
Stock option excercised, exercise price per share	$ 0.90			$ 0.68
Delivery of shares of common stock by cashless basis	60,000			31,098
Net shares issued	90,000			26,934
Chief Executive Officer [Member]
Stock option excercised		1,517,500
Stock option excercised at 0.25 exercise price		1,100,000
Stock option excercised at 0.68 exercise price		417,500
Stock option excercised, exercise price per share		$ 0.25
Delivery of shares of common stock by cashless basis		292,618
Delivery of shares to fund withholding taxes		516,288
Aggregate value of shares delieverd to fund withholding taxes		$ 986,110
Net shares issued		708,594

INCOME TAXES (Details Narrative

INCOME TAXES (Details Narrative) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014	Dec. 31, 2014
Income Taxes Details Narrative
Net operating loss carryforwards	$ 23,329,000		$ 23,329,000
Future tax benefit			8,165,000
Deferred tax assets	4,077,000		4,077,000		$ 4,743,000
Income loss before taxes	(325,000)	$ 2,513,000	2,016,000	$ 4,665,000
Income tax expense	(105,000)	912,000	706,000	1,668,000
Decrease in deferred tax assets	$ 90,000	$ 855,000	$ 666,000	$ 1,566,000

EARNINGS (LOSS) PER SHARE (Deta

EARNINGS (LOSS) PER SHARE (Details) - shares	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Earnings Loss Per Share Details
Weighted-average common shares outstanding - basic	23,439,468	25,484,978	23,761,420	25,629,473
Dilutive effect of options and warrants		2,011,254	1,244,861	2,059,677
Weighted-average common shares outstanding - diluted	23,439,468	27,496,232	25,006,281	27,689,150
Options and warrants excluded from the computation of diluted income (loss) per share because the effect of inclusion would have been anti-dilutive	3,605,000	675,000	234,163	675,000

EARNINGS (LOSS) PER SHARE (De38

EARNINGS (LOSS) PER SHARE (Details Narratrive) - shares	6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014
Earnings Loss Per Share Details Narratrive
Potentialy Dilutive Shares	3,605,000	3,720,000

CASH AND CASH EQUIVALENTS (Deta

CASH AND CASH EQUIVALENTS (Details) - USD ($)	Jun. 30, 2015	Dec. 31, 2014	Jun. 30, 2014	Dec. 31, 2013
Cash And Cash Equivalents Details
Cash	$ 3,116,000	$ 2,984,000
Money market fund	13,635,000	14,678,000
Total	$ 16,751,000	$ 17,662,000	$ 16,579,000	$ 18,938,000

CASH AND CASH EQUIVALENTS (De40

CASH AND CASH EQUIVALENTS (Details Narrative)	Jun. 30, 2015USD ($)
Cash And Cash Equivalents Details Narrative
Maintained cash balance in excess of FDIC	$ 16,129,000

MARKETABLE SECURITIES (Details

MARKETABLE SECURITIES (Details Narrative) - Jun. 30, 2015 - USD ($)	Total
Corporate bonds face value, 3.9% - 4.5% coupon	$ 1,000,000
Maturity date of marketable securities	2,021
Corporate Bond 1 [Member]
Corporate bond coupon	3.90%
Corporate Bond 2 [Member]
Corporate bond coupon	4.50%

OTHER INVESTMENTS (Details Narr

OTHER INVESTMENTS (Details Narrative) - USD ($)	1 Months Ended		3 Months Ended		6 Months Ended
	Jul. 31, 2013	May. 31, 2013	Jun. 30, 2015	Sep. 30, 2013	Jun. 30, 2015	Jun. 30, 2014	Dec. 31, 2014	Aug. 31, 2014	Jul. 31, 2014	May. 31, 2014	Mar. 31, 2014
Asset Impairment			$ 386,000		$ 386,000
Investment carrying value			$ 190,000		190,000		$ 576,000
General and administrative expenses					$ 386,000
Non cash royalty income valued from warrants				$ 70,000
Additional investment in various tranche							$ 95,000	$ 95,000		$ 95,000
Lifestreams Technologies Corporation [Member]
Additional investment									$ 50,000
Company received a warrant to purchase common stock shares	1,305,000
Company participated in convertible secured notes											$ 2,000,000
Additional investment in various tranche											$ 95,000
Mirror Worlds, LLC [Member]
Acquisition of common stock		250,000
Series A Preferred Stock [Member]
Shares received	123,456

COMMITMENTS AND CONTINGENCIES -

COMMITMENTS AND CONTINGENCIES - Legal Fees (Details Narrative) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Legal Service Agreement With Russ, August Kabot For Litigation Filed In April 2014 and December 2014 [Member]
Legal Fees payment ,Terms			Legal fees on a full contingency basis ranging from 15% to 30% of the net recovery (after deduction of expenses)
Legal Service Agreement With Dovel And Luner For Litigation Settlement In May 2013 [Member]
Legal Fees payment ,Terms			Legal fees on a contingency basis ranging from 25% to 40% of the net recovery (after deduction of expenses)
Legal Service Agreement With Dovel And Luner For Litigation Filed In September 2011 [Member]
Legal Fees payment ,Terms			Legal fees on a full contingency basis ranging from 12.5% to 35% (with certain exceptions) of the net recovery (after deduction for expenses)
Legal fees and expenses	$ 14,000	$ 28,000	$ 222,000	$ 62,000
Legal Service Agreement With Dovel And Luner For Litigation Settlement In July 2010 [Member]
Legal Fees payment ,Terms			Legal fees of a maximum aggregate cash payment of $1.5 million plus a contingency fee of 24% (based on the settlement being achieved at the trial stage)
Legal fees and expenses	359,000	1,178,000	$ 1,546,000	2,192,000
Legal Service Agreement-Blank Rome [Member]
Legal Fees payment ,Terms			Legal fees to Blank Rome LLP equal to 25% of the royalty revenue received by the Company from its license agreement with D-Link
Legal fees and expenses	$ 16,000	$ 14,000	$ 29,000	$ 28,000

COMMITMENTS AND CONTINGENCIES44

COMMITMENTS AND CONTINGENCIES - Patent Acquisitions (Details Narrative) - USD ($)	Jun. 03, 2014	Jul. 31, 2013	May. 21, 2013	Feb. 28, 2013
Exercise price of five year option
Acquisition of Cox patents cash, purchase price				$ 1,000,000
Acquisition of Cox patents, common stock issued				403,226
Obligated to pay Cox, net proceeds percentage				12.50%
Capitalized professional fees and filing fees related to Cox Patent Portfolio				$ 169,000
Cash consideration for Mirror Worlds patent acquisition			$ 3,000,000
Cost of repurchase of Mirror Worlds warrants	$ 505,000
Issued 5-year warrants (Looking Glass) to purchase shares of common stock			1,750,000
5-year warrants (Looking Glass) to purchase 875,000 shares, exercise price per share			1.40
5-year warrants (Looking Glass) to purchase 875,000 shares, exercise price per share			2.10
Issued 5-year warrants (Recognition) to purchase 250,000 shares, exercise price per share			1.40
Issued 5-year warrants (Recognition) to purchase 250,000 shares, exercise price per share			2.10
60 day warrants (Abacus) to purchase shares of common stock			500,000
60-day warrants (Abacus), exercise price per shares			$ 2.05
Issued additional 5-year warrants (Recognition) to purchase shares of common stock as a result of exercise of 60-day warrant		250,000
Additional 5-year warrants to purchase 125,000 shares of common stock as a result of exercise of 60-day warrant, exercise price per share		2.10
Additional 5-year warrants to purchase 125,000 shares of common stock as a result of exercise of 60-day warrant, exercise price per share		1.40
Capitalized professional fees and filing fees related to Mirror Worlds patents			$ 409,000
Net proceeds percentage payable to Recognition from the monetization of the Mirror Worlds patent portfolio
First $125 Million			10.00%
Next $125 Million			15.00%
Over $250 Million			20.00%

COMMITMENTS AND CONTINGENCIES45

COMMITMENTS AND CONTINGENCIES - Amended Patent Purchase Agreement (Details Narrative) - USD ($)	Jun. 30, 2015	Mar. 11, 2015	Dec. 31, 2014	Dec. 31, 2012	Jan. 01, 2005
Additional patent cost for restructuring of future contingent payments					$ 500,000
Achievement of net royalties	$ 62,500,000		$ 50,000,000
Contingent payment made			$ 1,000,000	$ 1,000,000
Payment to secured creditor in satisfaction of contingent payment		$ 900,000
Additional contingent payment	500,000
2012 [Member]
Achievement of net royalties	25,000,000
Contingent payment made	$ 1,000,000

COMMITMENTS AND CONTINGENCIES46

COMMITMENTS AND CONTINGENCIES - Services Agreement (Details Narrative) - USD ($)	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014	Dec. 31, 2014	Dec. 31, 2013	Feb. 10, 2015
Purchase Commitment, Excluding Long-term Commitment [Line Items]
Company paid for service agreement termination							$ 285,000
General and administrative expenses	$ 1,119,000	$ 615,000	$ 2,224,000	$ 1,213,000
Accrued expense			(1,223,000)	$ 1,077,000
Service Agreement with ThinkFire
Purchase Commitment, Excluding Long-term Commitment [Line Items]
Fees for services performed on behalf of entity					$ 105,000	$ 104,000
General and administrative expenses			$ 261,000
Accrued expense					$ 24,000

COMMITMENTS AND CONTINGENCIES47

COMMITMENTS AND CONTINGENCIES - Leases Agreements (Details Narrative) - 6 months ended Jun. 30, 2015	USD ($)Agreement
Rental cost per month	$ 3,600
Expiring date	November 30, 2015
Tyler, Texas [Member]
Rental cost per month	$ 620
Expiring date	April 2,016
In June 2011 [Member]
Rental cost per month	$ 7,000
Expiring date	August 2,015
Rent space | Agreement	2,400
Description lease agreement	Extend the lease for a four year period (expiring September 30, 2019) at a base rent of $7,000 per month for the first year (increasing $100 per month each year).

EMPLOYMENT ARRANGEMENTS AND O48

EMPLOYMENT ARRANGEMENTS AND OTHER AGREEMENTS (Details Narrative) - USD ($)	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014	Mar. 31, 2015	Dec. 31, 2014	Apr. 09, 2014	Nov. 01, 2012
Employment Arrangements And Other Agreements Details Narrative
Annual base salary Chairman and CEO			$ 415,000
Target annual bonus or minimum bonus Chairman and CEO			150,000
Annual cash bonus for CEO					$ 200,000
Issuance of stock option to CEO to purchase common stock						500,000
CEO Stock option, exercise price						$ 1.19
Number of shares vested in equal quarterly amounts						41,667
Earned incentive compensation	$ 87,000	$ 257,000	$ 369,000	$ 481,000
CEO Incentive Compensation - percentage of gross royalties - Remote Power Patent								5.00%
CEO Incentive Compensation - percentage of net royalties - Additional Patents								10.00%
CEO Incentive Compensation - percentage of gross royalties - Additional Patents								6.25%
Number of years option granted to Chief Financial Officer			5 years
Annual base salary of Chief Financial Officer			$ 157,500
Annual bonus for Chief Financial Officer						$ 30,000
Issuance of 5 year stock option to CFO							50,000
CFO stock option, exercise price							$ 1.65

LEGAL PROCEEDINGS (Details narr

LEGAL PROCEEDINGS (Details narrative) - USD ($)	1 Months Ended		51 Months Ended	55 Months Ended
	Jul. 31, 2015	Jul. 31, 2010	Mar. 31, 2020	Dec. 31, 2015
Legal Proceedings Details Narrative
Royalties received from license defendants upon setlement		$ 32,000,000
Maximum Cisco royalty payment per year				$ 8,000,000
Maximum Cisco royalty payment per year for remaning term of the patent			$ 9,000,000
Aggregate payments received from licenses relating to settlements	$ 1,350,000

STOCK REPURCHASE PROGRAM (Detai

STOCK REPURCHASE PROGRAM (Details Narrative) - USD ($)	3 Months Ended	6 Months Ended	47 Months Ended
	Jun. 30, 2015	Jun. 30, 2015	Jun. 30, 2015	Aug. 22, 2011	Jun. 03, 2011
Number of shares, common stock subject to repurchase	254,600	1,083,200	6,782,268
Average price per share, common stock subject to repurchase	$ 2	$ 2.19	$ 1.64
Aggregate cost of common stock repurchase	$ 508,796	$ 2,374,146	$ 11,131,253
Board of Directors [Member]
Stock Repurchase Program, dollar amount of shares authorized to be repurchased				2,000,000
Stock Repurchase Program, doller amount of additional shares authorized to be repurchased					2,000,000
Stock Repurchase Program, dollar amount of shares to be repurchase since inception					14,000,000

CISCO AUDIT (Details Narrative)

CISCO AUDIT (Details Narrative) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014	Dec. 31, 2014
Cisco Audit Details Narrative
Additional Cisco royalty payments as a result of audit		$ 3,281,000
Percentage Revenue	79.00%	92.00%	84.00%	92.00%
Percentage of royalty receivable	75.00%		75.00%		74.00%

Uncategorized Items - nssi-2015

Label	Element	Value
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range, Outstanding Options, Weighted Average Exercise Price	us-gaap_SharebasedCompensationSharesAuthorizedUnderStockOptionPlansExercisePriceRangeOutstandingOptionsWeightedAverageExercisePriceBeginningBalance1	$ 1.33