Cover
Cover - shares | 3 Months Ended | |
Mar. 31, 2024 | May 03, 2024 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Document Period End Date | Mar. 31, 2024 | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2024 | |
Current Fiscal Year End Date | --12-31 | |
Entity File Number | 1-15288 | |
Entity Registrant Name | NETWORK-1 TECHNOLOGIES, INC. | |
Entity Central Index Key | 0001065078 | |
Entity Tax Identification Number | 11-3027591 | |
Entity Incorporation, State or Country Code | DE | |
Entity Address, Address Line One | 65 Locust Avenue | |
Entity Address, Address Line Two | Third Floor | |
Entity Address, City or Town | New Canaan | |
Entity Address, State or Province | CT | |
Entity Address, Postal Zip Code | 06840 | |
City Area Code | 203 | |
Local Phone Number | 920-1055 | |
Title of 12(b) Security | Common Stock, par value $0.01 per share | |
Trading Symbol | NTIP | |
Security Exchange Name | NYSEAMER | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 23,414,473 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) | Mar. 31, 2024 | Dec. 31, 2023 |
ASSETS CURRENT ASSETS: | ||
Cash and cash equivalents | $ 18,105,000 | $ 16,896,000 |
Marketable securities, at fair value | 25,289,000 | 28,571,000 |
Other current assets | 218,000 | 206,000 |
TOTAL CURRENT ASSETS | 43,612,000 | 45,673,000 |
OTHER ASSETS: | ||
Patents, net of accumulated amortization | 1,296,000 | 1,326,000 |
Equity investment | 4,621,000 | 5,249,000 |
Operating leases right-of-use asset | 75,000 | 16,000 |
Security deposit | 13,000 | 13,000 |
Total Other Assets | 6,005,000 | 6,604,000 |
TOTAL ASSETS | 49,617,000 | 52,277,000 |
LIABILITIES AND STOCKHOLDERS’ EQUITY: CURRENT LIABILITIES: | ||
Accounts payable | 306,000 | 125,000 |
Accrued payroll | 378,000 | |
Other accrued expenses | 182,000 | 297,000 |
Operating lease obligation, current | 57,000 | 23,000 |
Total Current Liabilities | 545,000 | 823,000 |
LONG TERM LIABILITIES: | ||
Deferred tax liability | 615,000 | 762,000 |
Operating lease obligation, non-current | 24,000 | |
TOTAL LIABILITIES | 1,184,000 | 1,585,000 |
STOCKHOLDERS’ EQUITY | ||
Preferred stock, $0.01 par value, authorized 10,000,000 shares; none issued and outstanding at March 31, 2024 and December 31, 2023 | ||
Common stock, $0.01 par value; authorized 50,000,000 shares; 23,552,561 and 23,553,908 shares issued and outstanding at March 31, 2024 and December 31, 2023, respectively | 235,000 | 235,000 |
Additional paid-in capital | 67,560,000 | 67,446,000 |
Accumulated deficit | (19,362,000) | (16,989,000) |
TOTAL STOCKHOLDERS’ EQUITY | 48,433,000 | 50,692,000 |
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ 49,617,000 | $ 52,277,000 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Mar. 31, 2024 | Dec. 31, 2023 |
Statement of Financial Position [Abstract] | ||
Preferred Stock, Par or Stated Value Per Share | $ 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 or Stated Value Per Share | $ 0.01 | $ 0.01 |
Common Stock, Shares Authorized | 50,000,000 | 50,000,000 |
Common Stock, Shares, Issued | 23,552,561 | 23,553,908 |
Common Stock, Shares, Outstanding | 23,552,561 | 23,553,908 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Income Statement [Abstract] | ||
REVENUE | $ 537,000 | |
OPERATING EXPENSES: | ||
Costs of revenue | 151,000 | |
Professional fees and related costs | 219,000 | 298,000 |
General and administrative | 669,000 | 781,000 |
Amortization of patents | 30,000 | 83,000 |
TOTAL OPERATING EXPENSES | 918,000 | 1,313,000 |
OPERATING LOSS | (918,000) | (776,000) |
OTHER INCOME: | ||
Interest and dividend income, net | 431,000 | 310,000 |
Net realized and unrealized gain on marketable securities | 48,000 | 364,000 |
Total other income, net | 479,000 | 674,000 |
LOSS BEFORE INCOME TAXES AND EQUITY IN NET LOSSES OF EQUITY METHOD INVESTEE | (439,000) | (102,000) |
INCOME TAX PROVISION: | ||
Current | ||
Deferred taxes | (147,000) | (153,000) |
Total income tax benefit | (147,000) | (153,000) |
(LOSS) INCOME BEFORE SHARE OF NET LOSSES OF EQUITY METHOD INVESTEE | (292,000) | 51,000 |
SHARE OF NET LOSSES OF EQUITY METHOD INVESTEE | (628,000) | (674,000) |
NET LOSS | $ (920,000) | $ (623,000) |
Net loss per share: | ||
Basic | $ (0.04) | $ (0.03) |
Diluted | $ (0.04) | $ (0.03) |
Weighted average common shares outstanding: | ||
Basic | 23,540,468 | 23,866,821 |
Diluted | 23,540,468 | 23,866,821 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY - USD ($) | Common Stock [Member] | Additional Paid-in Capital [Member] | Retained Earnings [Member] | AOCI Attributable to Parent [Member] | Total |
Balance – January 1, 2023 at Dec. 31, 2022 | $ 239,000 | $ 66,939,000 | $ (12,055,000) | $ (14,000) | $ 55,109,000 |
Beginning Balance, Shares at January 1, 2023 at Dec. 31, 2022 | 23,863,639 | ||||
Dividends and dividend equivalents declared | (1,196,000) | (1,196,000) | |||
Stock-based compensation | 161,000 | 161,000 | |||
Vesting of restricted stock units | $ 1,000 | (1,000) | |||
Vesting of restricted stock units Shares | 123,750 | ||||
Value of shares delivered to pay withholding taxes | (83,000) | (83,000) | |||
Value of shares delivered to pay withholding taxes shares | (39,099) | ||||
Treasury stock purchased and retired | $ (1,000) | (305,000) | (306,000) | ||
Treasury stock purchased and retired shares | (136,785) | ||||
Net loss | (623,000) | (623,000) | |||
Balance – March 31, 2023 at Mar. 31, 2023 | $ 239,000 | 67,099,000 | (14,262,000) | (14,000) | 53,062,000 |
Ending Balance, Shares at March 31, 2023 at Mar. 31, 2023 | 23,811,505 | ||||
Balance – January 1, 2023 at Dec. 31, 2023 | $ 235,000 | 67,446,000 | (16,989,000) | 50,692,000 | |
Beginning Balance, Shares at January 1, 2023 at Dec. 31, 2023 | 23,553,908 | ||||
Dividends and dividend equivalents declared | (1,207,000) | (1,207,000) | |||
Stock-based compensation | 115,000 | 115,000 | |||
Vesting of restricted stock units | $ 1,000 | (1,000) | |||
Vesting of restricted stock units Shares | 111,250 | ||||
Value of shares delivered to pay withholding taxes | (61,000) | (61,000) | |||
Value of shares delivered to pay withholding taxes shares | (28,853) | ||||
Treasury stock purchased and retired | $ (1,000) | (185,000) | (186,000) | ||
Treasury stock purchased and retired shares | (83,744) | ||||
Net loss | (920,000) | (920,000) | |||
Balance – March 31, 2023 at Mar. 31, 2024 | $ 235,000 | $ 67,560,000 | $ (19,362,000) | $ 48,433,000 | |
Ending Balance, Shares at March 31, 2023 at Mar. 31, 2024 | 23,552,561 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net loss | $ (920,000) | $ (623,000) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Amortization of patents | 30,000 | 83,000 |
Stock-based compensation | 115,000 | 161,000 |
Loss allocated from equity method investment | 628,000 | 674,000 |
Unrealized (gain) loss on marketable securities | 20,000 | (270,000) |
Deferred tax (benefit) expense | (147,000) | (153,000) |
Amortization of operating leases – right of use assets | 16,000 | 16,000 |
Other current assets | (12,000) | 229,000 |
Other assets | (13,000) | |
Accounts payable | 181,000 | 94,000 |
Operating lease obligations | (17,000) | (17,000) |
Accrued expenses | (490,000) | (471,000) |
NET CASH USED IN OPERATING ACTIVITIES | (596,000) | (290,000) |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Sales of marketable securities | 5,756,000 | 7,671,000 |
Purchases of marketable securities | (2,494,000) | (9,330,000) |
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES | 3,262,000 | (1,659,000) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Cash dividends paid | (1,210,000) | (1,191,000) |
Value of shares delivered to fund payment of withholding taxes | (61,000) | (83,000) |
Repurchases of common stock, inclusive of commissions | (186,000) | (306,000) |
NET CASH USED IN FINANCING ACTIVITIES: | (1,457,000) | (1,580,000) |
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | 1,209,000 | (3,529,000) |
CASH AND CASH EQUIVALENTS, beginning of period | 16,896,000 | 13,448,000 |
CASH AND CASH EQUIVALENTS, end of period | 18,105,000 | 9,919,000 |
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION | ||
Interest | ||
Income taxes | ||
NON-CASH FINANCING ACTIVITIES | ||
Accrued dividend rights on restricted stock units | 32,000 | 8,000 |
Right of use asset and lease liability | $ 75,000 |
BASIS OF PRESENTATION AND NATUR
BASIS OF PRESENTATION AND NATURE OF BUSINESS | 3 Months Ended |
Mar. 31, 2024 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
BASIS OF PRESENTATION AND NATURE OF BUSINESS | 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 March 31, 2024, and the results of its operations, changes in stockholders’ equity, and its cash flows for the three month periods ended March 31, 2024 and March 31, 2023. 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 may 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 unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements for the year ended December 31, 2023 included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 8, 2024. The results of operations for the three months ended March 31,2024 are not necessarily indicative of the results of operations to be expected for the full year. The accompanying unaudited condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, Mirror Worlds Technologies, LLC and HFT Solutions, LLC. All intercompany balances and transactions have been eliminated in consolidation. [2] BUSINESS The Company is engaged in the development, licensing and protection of its intellectual property assets. The Company presently owns one-hundred two ( 102 54 15 The Company’s current strategy includes continuing to pursue licensing opportunities for its patent portfolios. In addition, the Company reviews opportunities to acquire or license additional intellectual property as well as other strategic alternatives. The Company’s patent acquisition and development 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 and Mirror Worlds Patent Portfolio. In addition, the Company may also enter into strategic relationships with third parties to develop, commercialize, license or otherwise monetize their intellectual property. The Company has also made equity investments totaling $ 7,000,000 |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 3 Months Ended |
Mar. 31, 2024 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE B – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [1] Use of Estimates and Assumptions The preparation of the unaudited condensed consolidated 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 unaudited condensed 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 costs related to the Company’s assertion of litigation, valuation of the Company’s patent portfolios, stock-based compensation, the recoverability of deferred tax assets and the carrying value of the Company’s equity method investments. Actual results could be materially different from those estimates upon which the carrying values were based. Certain amounts recorded to reflect the Company’s share of income or losses of its equity method investee, accounted for under the equity method, are based on estimates and the unaudited results of operations of the equity method investee and may require adjustment in the future when the audit of the equity method investee is complete. The Company reports its share of the results of its equity method investee on a one quarter lag basis. [2] Revenue Recognition Under ASC 606, revenue is recognized when the Company completes the licensing of its intellectual property to its licensees, obtains a final judgment awarding damages or enters into a litigation settlement agreement involving its patents. With respect to licensing its intellectual property, obtaining a final judgment or entering into a litigation settlement agreement, revenue is recognized in an amount that reflects the consideration the Company expects to be entitled to in exchange for licensing its intellectual property, obtaining a final judgment or in a settlement of the litigation. The Company determines revenue recognition through the following steps: • identification of the license agreement, the final judgment or the litigation settlement agreement; • identification of the performance obligations in the license agreement, the final judgment or the litigation settlement agreement; • determination of the consideration for the license, final judgment or settlement; • allocation of the transaction price to the performance obligations in the contract; and • recognition of revenue when the Company satisfies its performance obligations. Revenue disaggregated by source is as follows: Three Months Ended March 31, 2024 2023 Litigation settlements $ — $ 537,000 Total Revenue $ — $ 537,000 During the three months ended March 31, 2024, the Company had no revenue. During the three months ended March 31, 2023, the Company entered into settlement agreements with three defendants with respect to patent infringement litigation involving its Remote Power Patent, resulting in aggregate settlements paid of $ 537,000 Revenue from the Company’s patent licensing and enforcement business is typically generated from negotiated license agreements or settlement agreements with respect to any of the Company’s patents. The timing and amount of revenue recognized from each licensee or such settlement agreement depends upon a variety of factors, including the terms of each agreement and the nature of the obligations of the parties. These agreements may include, but not be limited to, elements related to past infringement liabilities, non-refundable upfront license fees, and ongoing royalties on licensed products sold by the licensee. Generally, in the event of a litigation settlement related to the Company’s assertion of patent infringement involving its intellectual property, defendants may either pay (i) a non-refundable lump sum payment for a non-exclusive fully-paid license, (ii) a non-refundable lump sum payment (license initiation fee) together with an ongoing obligation to pay quarterly or monthly royalties to the Company for the life of the licensed patent, or (iii) a lump sum settlement payment with respect to litigation involving the Company’s expired patents. Fully-paid licenses provide for a non-refundable up-front payment for which the Company has no future obligations or performance requirements, revenue is generally recognized when the Company has obtained the signed license agreement, all performance obligations have been substantially performed, amounts are fixed and determinable, and collectability is reasonably assured. Revenue from fully-paid licenses may consist of one or more installments. The timing and amount of revenue recognized from each licensee depends upon a number of factors including the specific terms of each agreement and the nature of the deliverables and obligations. [3] Equity Method Investments Equity method investments are equity securities in entities the Company does not control but over which it has the ability to exercise significant influence. These investments are accounted for under the equity method of accounting in accordance with ASC 323, Investments — Equity Method and Joint Ventures [4] Income Taxes The Company accounts for income taxes in accordance with Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 740, Income Taxes 1,319,000 . 1,319,000 615,000 The personal holding company (“PHC”) rules under the Internal Revenue Code impose a 20% tax on a PHC’s undistributed personal holding company income (“UPHCI”), which means, in general, taxable income subject to certain adjustments and reduced by certain distributions to shareholders. For a corporation to be classified as a PHC, it must satisfy two tests: (i) that more than 50% in value of its outstanding shares must be owned directly or indirectly by five or fewer individuals at any time during the second half of the year (after applying constructive ownership rules to attribute stock owned by entities to their beneficial owners and among certain family members and other related parties) (the “Ownership Test”) and (ii) at least 60% of its adjusted ordinary gross income for a taxable year consists of dividends, interest, royalties, annuities and rents (the “Income Test”). During the second half of 2023, based on available information concerning the Company’s shareholder ownership, the Company did not satisfy the Ownership Test. In addition, the Company did not satisfy the Income Test in the second half of 2023. Thus, the Company was not a PHC in 2023. However, the Company may subsequently be determined to be a PHC in 2024 or in future years if it satisfies both the Ownership Test and Income Test. If the Company were to become a PHC in 2024 or any future year, it would be subject to the 20% tax on its UPHCI. In such event, the Company may issue a special cash dividend to its shareholders in an amount equal to the UPHCI rather than incur the 20% tax. ASC 740-10, Accounting for Uncertainty in Income Taxes The Company recognizes interest and penalties, if any, related to income tax in the income tax provision in the unaudited condensed consolidated statements of operations. U.S. federal, state and local income tax returns prior to 2020 are not subject to examination by any applicable tax authorities, except that tax authorities could challenge returns (only under certain circumstances) for earlier years to the extent they generated loss carry-forwards that are available for those future years. [5] New Accounting Standards Segments In November 2023, the FAS B issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures Income Tax Disclosure In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures |
PATENTS
PATENTS | 3 Months Ended |
Mar. 31, 2024 | |
Patents | |
PATENTS | NOTE C – PATENTS The Company’s intangible assets at March 31, 2024 include patents with estimated remaining economic useful lives ranging from 9 15 March 31, 2024 December 31, 2023 Gross carrying amount – patents $ 8,473,000 $ 8,473,000 Accumulated amortization – patents (7,177,000 ) (7,147,000 ) Patents, net $ 1,296,000 $ 1,326,000 Amortization expense for the three months ended March 31, 2024 and 2023 was $ 30,000 83,000 For the years ended December 31, 2024 – remaining $ 90,000 2025 120,000 2026 120,000 2027 119,000 2028 116,000 Thereafter 731,000 Total $ 1,296,000 The expiration dates of patents within the Company’s M2M/IoT Patent Portfolio range from September 2033 May 2034 October 2039 November 2039 |
STOCK-BASED COMPENSATION
STOCK-BASED COMPENSATION | 3 Months Ended |
Mar. 31, 2024 | |
Equity [Abstract] | |
STOCK-BASED COMPENSATION | NOTE D – STOCK-BASED COMPENSATION Restricted Stock Units The Company adopted the 2022 Stock Incentive Plan, (the “2022 Plan”), approved by its Board of Directors on July 25, 2022 and its stockholders on September 20, 2022. The 2022 Plan provides for the grant of any or all of the following types of awards: (a) stock options, (b) restricted stock, (c) deferred stock, (d) stock appreciation rights, and (e) other stock-based awards including restricted stock units. As of March 31, 2024, there were 121,250 2,110,000 A summary of restricted stock unit activity for the three months ended March 31, 2024 is as follows (each restricted stock unit issued by the Company represents the right to receive one share of the Company’s common stock): Number of Shares Weighted-Average Grant Date Fair Value Balance of restricted stock units outstanding at December 31, 2023 587,500 $ 1.81 Grants of restricted stock units 70,000 2.17 Vested restricted stock units (111,250 ) (2.45 ) Balance of restricted stock units outstanding at March 31, 2024 546,250 $ 1.72 Restricted stock unit compensation expense was $ 115,000 161,000 The Company had an aggregate of $ 545,000 1.7 All of the Company’s outstanding (unvested) restricted stock units have dividend equivalent rights. During the three months ended March 31, 2024, the Company paid a total of $ 35,000 96,000 99,000 , |
LOSS PER SHARE
LOSS PER SHARE | 3 Months Ended |
Mar. 31, 2024 | |
Net loss per share: | |
LOSS PER SHARE | NOTE E – LOSS PER SHARE Basic loss per share is calculated by dividing the net loss by the weighted average number of outstanding common shares during the period. Diluted per share data includes the dilutive effects of options and restricted stock units. Potentially dilutive shares of 546,250 571,250 Computations of basic and diluted weighted average common shares outstanding were as follows: Three Months Ended 2024 2023 Weighted-average common shares outstanding – basic 23,540,468 23,866,821 Dilutive effect of restricted stock units and stock options — — Weighted-average common shares outstanding – diluted 23,540,468 23,866,821 Restricted stock units excluded from the computation of diluted loss per share because the effect of inclusion would have been anti-dilutive 546,250 571,250 |
MARKETABLE SECURITIES
MARKETABLE SECURITIES | 3 Months Ended |
Mar. 31, 2024 | |
Marketable Securities | |
MARKETABLE SECURITIES | NOTE F – MARKETABLE SECURITIES Marketable securities as of March 31, 2024 and December 31, 2023 were composed of the following: March 31, 2024 Cost Unrealized Unrealized Fair Certificates of deposit $ 6,170,000 $ — $ (17,000 ) $ 6,153,000 Government securities 11,357,000 63,000 (21,000 ) 11,399,000 Fixed income mutual funds 7,610,000 127,000 — 7,737,000 Total marketable securities $ 25,137,000 $ 190,000 $ (38,000 ) $ 25,289,000 December 31, 2023 Cost Unrealized Unrealized Fair Certificates of Deposit $ 6,112,000 $ ― $ (35,000 ) $ 6,077,000 Government Securities 14,701,000 127,000 (10,000 ) 14,818,000 Fixed income mutual funds 7,585,000 91,000 — 7,676,000 Total marketable securities $ 28,398,000 $ 218,000 $ (45,000 ) $ 28,571,000 The Company’s marketable securities are classified within Level 1 of the fair value hierarchy because they are valued using quoted market prices in an active market. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 3 Months Ended |
Mar. 31, 2024 | |
COMMITMENTS AND CONTINGENCIES (Note G) | |
COMMITMENTS AND CONTINGENCIES | NOTE G – COMMITMENTS AND CONTINGENCIES [1] Legal Fees Russ, August & Kabat provides legal services to the Company with respect to its patent litigation filed in May 2017 against Facebook, Inc. (now Meta Platforms, Inc.) in the U.S. District Court for the Southern District of New York relating to several patents within the Company’s Mirror Worlds Patent Portfolio (see Note I[2] hereof). The terms of the Company’s agreement with Russ, August & Kabat provide for cash payments on a monthly basis subject to a cap plus a contingency fee ranging between 15 24 Russ, August & Kabat also 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 U.S. District Court for the Southern District of New York relating to certain patents within the Company’s Cox Patent Portfolio (see Note I[1] hereof). The terms of the Company’s agreement with Russ, August & Kabat provide for legal fees on a full contingency basis ranging from 15 30 Dovel & Luner, LLP (“Dovel”) provides legal services to the Company with respect to its patent litigation related to the Remote Power Patent (See Note I[4] hereof). The terms of the Company’s agreement with Dovel provide, among other things, for legal fees on a contingency basis ranging from 15 40 [2] Patent Acquisitions On March 25, 2022, the Company completed the acquisition of a new patent portfolio (HFT Patent Portfolio) currently consisting of nine U.S. patents and two pending U.S. patents covering certain advanced technologies relating to high frequency trading, which inventions specifically address technological problems associated with speed and latency and provide critical latency gains in trading systems where the difference between success and failure may be measured in nanoseconds. The Company paid the seller $ 500,000 375,000 15 17.5 In connection with the Company’s acquisition of its Cox Patent Portfolio, the Company is obligated to pay Dr. Cox 12.5 As part of the acquisition of the Mirror Worlds Patent Portfolio, the Company also entered into an agreement with Recognition Interface, LLC (“Recognition”) pursuant to which Recognition received from the Company an interest in the net proceeds realized from the monetization of the Mirror Worlds Patent Portfolio, as follows: (i) 10 15 20 3,127,000 In connection with the Company’s acquisition of its M2M/IoT Patent Portfolio, the Company is obligated to pay M2M 14 5 250,000 [3] Leases The Company has one operating lease for its principal office space in New Canaan, Connecticut that expires on April 30, 2025. The Company pays a base rent of $ 5,500 The calculated incremental borrowing rate was approximately 4.2 3 The remaining lease term as of March 31, 2024 is thirteen (13) months. Right of use lease assets and related lease obligations for the Company’s operating leases were recorded in the unaudited condensed consolidated balance sheets as follows: As of March 31, 2024 As of Operating lease right-of-use assets $ 75,000 $ 16,000 Operating lease obligations – current $ 57,000 $ 23,000 Operating lease obligations – non-current 24,000 — Total lease obligations $ 81,000 $ 23,000 The table below presents certain information related to the Company’s lease costs for the period ended: For the Three Months 2024 2023 Operating lease cost $ 17,000 $ 19,000 Short-term lease cost — — Total lease cost $ 17,000 $ 19,000 Future lease payments included in the measurement of lease liabilities on the unaudited condensed consolidated balance sheet as of March 31, 2024, were as follows: Operating Leases 2024 – remaining period $ 59,000 2025 26,000 Total future minimum lease payments 85,000 Less imputed interest (4,000 ) Total operating lease liability $ 81,000 |
EMPLOYMENT ARRANGEMENTS AND OTH
EMPLOYMENT ARRANGEMENTS AND OTHER AGREEMENTS | 3 Months Ended |
Mar. 31, 2024 | |
Employment Arrangements And Other Agreements | |
EMPLOYMENT ARRANGEMENTS AND OTHER AGREEMENTS | NOTE H – EMPLOYMENT ARRANGEMENTS AND OTHER AGREEMENTS On March 22, 2022, the Company entered into an employment agreement (“Agreement”) with its Chairman and Chief Executive Officer, pursuant to which he continues to serve as the Company’s Chairman and Chief Executive Officer for a four- year term (“Term”), at an annual base salary of $ 535,000 3 175,000 Under the terms of the Agreement (which terms are substantially the same as the prior employment agreement with the Chairman and Chief Executive Officer), so long as the Chairman and Chief Executive Officer continues to serve as an executive officer of the Company, whether pursuant to the Agreement or otherwise, the Chairman and Chief Executive Officer shall also receive incentive compensation in an amount equal to 10 10 0 27,000 5 |
LEGAL PROCEEDINGS
LEGAL PROCEEDINGS | 3 Months Ended |
Mar. 31, 2024 | |
COMMITMENTS AND CONTINGENCIES (Note G) | |
LEGAL PROCEEDINGS | NOTE I – LEGAL PROCEEDINGS [1] Company initiated litigation against Google Inc. (“Google”) and YouTube, LLC (“YouTube”) in the U.S. District Court for the Southern District of New York for infringement of several of its patents within its Cox Patent Portfolio acquired from Dr. Cox which relate to the identification of media content on the Internet. The lawsuit alleges that Google and YouTube have infringed and continue to infringe certain of the Company’s patents by making, using, selling and offering to sell unlicensed systems and related products and services, which include YouTube’s Content ID system. The litigations against Google and YouTube were subject to court ordered stays which were in effect from July 2, 2015 until January 2, 2019 as a result of proceedings at the Patent Trial and Appeal Board (PTAB) and the appeals of PTAB Final Written Decisions to the U.S. Court of Appeals for the Federal Circuit. Pursuant to a Joint Stipulation and Order Regarding Lifting of Stays, entered on January 2, 2019, the parties agreed, among other things, that the stays with respect to the litigations were lifted. In January 2019, the two litigations against Google and YouTube were consolidated. Discovery has been completed and the parties have each submitted summary judgment motions. [2] Company’s wholly-owned subsidiary, initiated litigation against Facebook, Inc. (now Meta Platforms, Inc., “Meta”) in the U.S. District Court for the Southern District of New York, for infringement of U.S. Patent No. 6,006,227, U.S. Patent No. 7,865,538 and U.S. Patent No. 8,255,439 (among the patents within the Company’s Mirror Worlds Patent Portfolio). The lawsuit alleged that the asserted patents are infringed by Meta’s core technologies that enable Meta’s Newsfeed and Timeline features. NOTE I – LEGAL PROCEEDINGS (continued) On August 11, 2018, the Court issued an order granting Meta’s motion for summary judgment of non-infringement and dismissed the case. On August 17, 2018, the Company filed a Notice of Appeal to appeal the summary judgment decision to the U.S. Court of Appeals for the Federal Circuit. On January 23, 2020, the U.S. Court of Appeals for the Federal Circuit ruled in the Company’s favor and reversed the summary judgment finding of the District Court and remanded the litigation to the Southern District of New York for further proceedings. On March 7, 2022, the District Court entered a ruling granting in part and denying in part a motion for summary judgment by Meta. In its ruling the Court (i) denied Meta’s motion that the asserted patents were invalid by concluding that all asserted claims were patent eligible under §101 of the Patent Act and (ii) granted summary judgment of non-infringement in favor of Meta and dismissed the case. The Company strongly disagrees with the decision of the District Court on non-infringement and on April 4, 2022, the Company filed a notice of appeal to the U.S. Court of Appeals for the Federal Circuit. On April 18, 2022, Meta filed a notice of cross-appeal with respect to the Court’s ruling on validity. The appeal is pending. [3] Company filed a lawsuit against NETGEAR, Inc. (“Netgear”) in the Supreme Court of the State of New York, County of New York, for breach of a Settlement and License Agreement, dated May 22, 2009, with the Company (the “Agreement”) for failure to make royalty payments, and provide corresponding royalty reports, to the Company based on sales of Netgear’s PoE products. On October 22, 2021, Netgear filed a Demand for Arbitration at the American Arbitration Association (“AAA”) seeking to arbitrate certain issues raised in the litigation. The Company objected to jurisdiction at the AAA. On April 1, 2022, the Court denied Netgear’s motion to compel arbitration. On April 22, 2022, Netgear filed a counterclaim in the Court action alleging that the Company breached the Agreement by not offering Netgear lower royalties. On September 22, 2022, the arbitration brought by Netgear was dismissed by the AAA on jurisdiction grounds. On August 27, 2023, the Court granted Netgear’s cross-motion for summary judgment and dismissed the Company’s claims and also denied the Company’s summary judgment motion with respect to Netgear’s counterclaim for breach of the license agreement. The Company appealed the Court decision. On February 20, 2024, the Appellate Division of the Supreme Court, State of New York, First Department, upheld the lower court ruling dismissing the Company’s complaint and granted the Company’s motion to dismiss Netgear’s counterclaim for breach of the most favored license provision concerning two licensees, but said there was a triable issue as to a third licensee. On March 17, 2024, the Company and Netgear settled the litigation and exchanged general releases ending the litigation. [4] Company initiated nine separate litigation against ten defendants for infringement of its Remote Power Patent seeking monetary damages based upon reasonable royalties, as follows: (i) On October 6, 2022, the Company initiated such litigation against Arista Networks, Inc., Fortinet, Inc., Honeywell International Inc. and Ubiquity Inc. in the United States District Court, District of Delaware; (ii) On October 27, 2022, and November 3, 2022, the Company initiated such litigation against TP-Link USA Corporation and Hikvision USA, Inc. in the United States District Court for the Central District of California; (iii) On November 4, 2022, the Company initiated such litigation against Panasonic Holdings Corporation and Panasonic Corporation of North America in the United States District Court for the Eastern District of Texas (Marshall Division); and (iv) On November 8, 2022 and November 16, 2022, the Company initiated such litigation against Antaira Technologies, LLC and Dahua Technology USA in the United States District Court for the Central District of California The Company has entered into settlement agreements with all of the defendants in the above referenced litigations except Ubiquity Inc. and Honeywell International Inc. which remain pending . 150,000 |
INVESTMENT
INVESTMENT | 3 Months Ended |
Mar. 31, 2024 | |
Equity Method Investments and Joint Ventures [Abstract] | |
INVESTMENT | NOTE J – INVESTMENT During the period December 2018 through August 2022, the Company made aggregate investments of $ 7,000,000 6.7 5.4 For the three months ended March 31, 2024 and 2023, the Company recorded an allocated net loss from its equity method investment in ILiAD of $ 628,000 674,000 The difference between the Company’s share of equity in ILiAD’s net assets and the purchase price of the investment is due to an excess amount paid over the book value of the investment of $ 6,054,000 , The following table provides certain summarized financial information for ILiAD (the equity method investee) for the periods presented and has been compiled from ILiAD’s unaudited financial statements, reported on one quarter lag. Three Months Ended December 31, 2023 2022 Loss from continuing operations $ (10,091,000 ) $ (3,466,000 ) Comprehensive loss $ (9,470,000 ) $ (9,911,000 ) |
STOCK REPURCHASES
STOCK REPURCHASES | 3 Months Ended |
Mar. 31, 2024 | |
Other Liabilities Disclosure [Abstract] | |
STOCK REPURCHASES | NOTE K – STOCK REPURCHASES On June 13, 2023, the Board of Directors authorized an extension and increase of the Company’s share repurchase program (the “Share Repurchase Program”) to repurchase up to $ 5,000,000 9,724,540 18,894,986 1.97 During the three months ended March 31, 2024, the Company repurchased an aggregate of 83,744 182,070 2.17 On December 27, 2023, the Company entered into a written trading plan (the “10b5-1 Plan”) under Rule 10b5-1 of the Securities Exchange Act of 1934 (the “Exchange Act”). Adopting a trading plan that satisfies the conditions of Rule 10b5-1 allows a company to repurchase its shares at times when it might otherwise be prevented from doing so due to self-imposed trading black-outs or pursuant to insider trading laws. Purchases under the 10b5-1 Plan may be made during the following periods: (1) beginning on January 9,2024 until two trading days after the Company issues a press release announcing its financial results for the year ended December 31, 2023, and (2) beginning on April 1, 2024 until two trading days after the Company issues a press release announcing its financial results for the quarter ended March 31, 2024. Under the 10b5-1 Plan, the Company’s third party broker may purchase up to 1,0000,000 shares of the Company’s common stock, subject to certain price, market, volume and timing constraints, in accordance with the terms of the plan and subject to Rule 10b5-1 and Rule 10b-18 of the Exchange Act. On August 16, 2022, the Inflation Reduction Act of 2022 (the “IR Act”) was signed into federal law. The IR Act provides for, among other things, a new U.S. federal 1% excise tax on certain repurchases of stock by publicly traded U.S. domestic corporations occurring on or after January 1, 2023. The amount of the excise tax is generally 1% of the fair market value of the shares repurchased at the time of the repurchase. The excise tax applies in cases where the total value of the stock repurchase during the taxable year exceeds $1,000,000 At March 31, 2024, the dollar value of remaining shares that may be repurchased under the Share Repurchase Program was $ 4,190,635 |
CONCENTRATIONS
CONCENTRATIONS | 3 Months Ended |
Mar. 31, 2024 | |
Risks and Uncertainties [Abstract] | |
CONCENTRATIONS | NOTE L – CONCENTRATIONS The Company maintains cash and certificates of deposit in accounts at financial institutions. The accounts are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $ 250,000 1,153,000 18,040,000 |
DIVIDEND POLICY
DIVIDEND POLICY | 3 Months Ended |
Mar. 31, 2024 | |
Equity [Abstract] | |
DIVIDEND POLICY | NOTE M – DIVIDEND POLICY The Company’s dividend policy consists of semi-annual cash dividends of $ 0.05 0.10 1,175,000 |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 3 Months Ended |
Mar. 31, 2024 | |
Accounting Policies [Abstract] | |
Use of Estimates and Assumptions | [1] Use of Estimates and Assumptions The preparation of the unaudited condensed consolidated 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 unaudited condensed 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 costs related to the Company’s assertion of litigation, valuation of the Company’s patent portfolios, stock-based compensation, the recoverability of deferred tax assets and the carrying value of the Company’s equity method investments. Actual results could be materially different from those estimates upon which the carrying values were based. Certain amounts recorded to reflect the Company’s share of income or losses of its equity method investee, accounted for under the equity method, are based on estimates and the unaudited results of operations of the equity method investee and may require adjustment in the future when the audit of the equity method investee is complete. The Company reports its share of the results of its equity method investee on a one quarter lag basis. |
Revenue Recognition | [2] Revenue Recognition Under ASC 606, revenue is recognized when the Company completes the licensing of its intellectual property to its licensees, obtains a final judgment awarding damages or enters into a litigation settlement agreement involving its patents. With respect to licensing its intellectual property, obtaining a final judgment or entering into a litigation settlement agreement, revenue is recognized in an amount that reflects the consideration the Company expects to be entitled to in exchange for licensing its intellectual property, obtaining a final judgment or in a settlement of the litigation. The Company determines revenue recognition through the following steps: • identification of the license agreement, the final judgment or the litigation settlement agreement; • identification of the performance obligations in the license agreement, the final judgment or the litigation settlement agreement; • determination of the consideration for the license, final judgment or settlement; • allocation of the transaction price to the performance obligations in the contract; and • recognition of revenue when the Company satisfies its performance obligations. Revenue disaggregated by source is as follows: Three Months Ended March 31, 2024 2023 Litigation settlements $ — $ 537,000 Total Revenue $ — $ 537,000 During the three months ended March 31, 2024, the Company had no revenue. During the three months ended March 31, 2023, the Company entered into settlement agreements with three defendants with respect to patent infringement litigation involving its Remote Power Patent, resulting in aggregate settlements paid of $ 537,000 Revenue from the Company’s patent licensing and enforcement business is typically generated from negotiated license agreements or settlement agreements with respect to any of the Company’s patents. The timing and amount of revenue recognized from each licensee or such settlement agreement depends upon a variety of factors, including the terms of each agreement and the nature of the obligations of the parties. These agreements may include, but not be limited to, elements related to past infringement liabilities, non-refundable upfront license fees, and ongoing royalties on licensed products sold by the licensee. Generally, in the event of a litigation settlement related to the Company’s assertion of patent infringement involving its intellectual property, defendants may either pay (i) a non-refundable lump sum payment for a non-exclusive fully-paid license, (ii) a non-refundable lump sum payment (license initiation fee) together with an ongoing obligation to pay quarterly or monthly royalties to the Company for the life of the licensed patent, or (iii) a lump sum settlement payment with respect to litigation involving the Company’s expired patents. Fully-paid licenses provide for a non-refundable up-front payment for which the Company has no future obligations or performance requirements, revenue is generally recognized when the Company has obtained the signed license agreement, all performance obligations have been substantially performed, amounts are fixed and determinable, and collectability is reasonably assured. Revenue from fully-paid licenses may consist of one or more installments. The timing and amount of revenue recognized from each licensee depends upon a number of factors including the specific terms of each agreement and the nature of the deliverables and obligations. |
Equity Method Investments | [3] Equity Method Investments Equity method investments are equity securities in entities the Company does not control but over which it has the ability to exercise significant influence. These investments are accounted for under the equity method of accounting in accordance with ASC 323, Investments — Equity Method and Joint Ventures |
Income Taxes | [4] Income Taxes The Company accounts for income taxes in accordance with Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 740, Income Taxes 1,319,000 . 1,319,000 615,000 The personal holding company (“PHC”) rules under the Internal Revenue Code impose a 20% tax on a PHC’s undistributed personal holding company income (“UPHCI”), which means, in general, taxable income subject to certain adjustments and reduced by certain distributions to shareholders. For a corporation to be classified as a PHC, it must satisfy two tests: (i) that more than 50% in value of its outstanding shares must be owned directly or indirectly by five or fewer individuals at any time during the second half of the year (after applying constructive ownership rules to attribute stock owned by entities to their beneficial owners and among certain family members and other related parties) (the “Ownership Test”) and (ii) at least 60% of its adjusted ordinary gross income for a taxable year consists of dividends, interest, royalties, annuities and rents (the “Income Test”). During the second half of 2023, based on available information concerning the Company’s shareholder ownership, the Company did not satisfy the Ownership Test. In addition, the Company did not satisfy the Income Test in the second half of 2023. Thus, the Company was not a PHC in 2023. However, the Company may subsequently be determined to be a PHC in 2024 or in future years if it satisfies both the Ownership Test and Income Test. If the Company were to become a PHC in 2024 or any future year, it would be subject to the 20% tax on its UPHCI. In such event, the Company may issue a special cash dividend to its shareholders in an amount equal to the UPHCI rather than incur the 20% tax. ASC 740-10, Accounting for Uncertainty in Income Taxes The Company recognizes interest and penalties, if any, related to income tax in the income tax provision in the unaudited condensed consolidated statements of operations. U.S. federal, state and local income tax returns prior to 2020 are not subject to examination by any applicable tax authorities, except that tax authorities could challenge returns (only under certain circumstances) for earlier years to the extent they generated loss carry-forwards that are available for those future years. |
New Accounting Standards | [5] New Accounting Standards Segments In November 2023, the FAS B issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures Income Tax Disclosure In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | Three Months Ended March 31, 2024 2023 Litigation settlements $ — $ 537,000 Total Revenue $ — $ 537,000 |
PATENTS (Tables)
PATENTS (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Patents | |
Schedule of Intangible Assets and Goodwill [Table Text Block] | March 31, 2024 December 31, 2023 Gross carrying amount – patents $ 8,473,000 $ 8,473,000 Accumulated amortization – patents (7,177,000 ) (7,147,000 ) Patents, net $ 1,296,000 $ 1,326,000 |
Schedule of Finite-Lived Intangible Assets, Future Amortization Expense [Table Text Block] | For the years ended December 31, 2024 – remaining $ 90,000 2025 120,000 2026 120,000 2027 119,000 2028 116,000 Thereafter 731,000 Total $ 1,296,000 |
STOCK-BASED COMPENSATION (Table
STOCK-BASED COMPENSATION (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Equity [Abstract] | |
STOCK-BASED COMPENSATION | Number of Shares Weighted-Average Grant Date Fair Value Balance of restricted stock units outstanding at December 31, 2023 587,500 $ 1.81 Grants of restricted stock units 70,000 2.17 Vested restricted stock units (111,250 ) (2.45 ) Balance of restricted stock units outstanding at March 31, 2024 546,250 $ 1.72 |
LOSS PER SHARE (Tables)
LOSS PER SHARE (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Net loss per share: | |
LOSS PER SHARE | Three Months Ended 2024 2023 Weighted-average common shares outstanding – basic 23,540,468 23,866,821 Dilutive effect of restricted stock units and stock options — — Weighted-average common shares outstanding – diluted 23,540,468 23,866,821 Restricted stock units excluded from the computation of diluted loss per share because the effect of inclusion would have been anti-dilutive 546,250 571,250 |
MARKETABLE SECURITIES (Tables)
MARKETABLE SECURITIES (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Marketable Securities | |
MARKETABLE SECURITIES | March 31, 2024 Cost Unrealized Unrealized Fair Certificates of deposit $ 6,170,000 $ — $ (17,000 ) $ 6,153,000 Government securities 11,357,000 63,000 (21,000 ) 11,399,000 Fixed income mutual funds 7,610,000 127,000 — 7,737,000 Total marketable securities $ 25,137,000 $ 190,000 $ (38,000 ) $ 25,289,000 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
COMMITMENTS AND CONTINGENCIES (Note G) | |
[custom:OperatingLeasesTableTextBlock] | As of March 31, 2024 As of Operating lease right-of-use assets $ 75,000 $ 16,000 Operating lease obligations – current $ 57,000 $ 23,000 Operating lease obligations – non-current 24,000 — Total lease obligations $ 81,000 $ 23,000 |
Lease, Cost [Table Text Block] | For the Three Months 2024 2023 Operating lease cost $ 17,000 $ 19,000 Short-term lease cost — — Total lease cost $ 17,000 $ 19,000 |
Lessor, Operating Lease, Payment to be Received, Maturity [Table Text Block] | Operating Leases 2024 – remaining period $ 59,000 2025 26,000 Total future minimum lease payments 85,000 Less imputed interest (4,000 ) Total operating lease liability $ 81,000 |
INVESTMENT (Tables)
INVESTMENT (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Equity Method Investments and Joint Ventures [Abstract] | |
INVESTMENT | Three Months Ended December 31, 2023 2022 Loss from continuing operations $ (10,091,000 ) $ (3,466,000 ) Comprehensive loss $ (9,470,000 ) $ (9,911,000 ) |
BASIS OF PRESENTATION AND NAT_2
BASIS OF PRESENTATION AND NATURE OF BUSINESS (Details Narrative) | 3 Months Ended |
Mar. 31, 2024 USD ($) Integer | |
U.S. Patents owned by the company | 102 |
Expired patents | 54 |
Foreign patents owned by the company | 15 |
ILiAD Biotechnologies, LLC [Member] | |
Aggregate investment amount | $ | $ 7,000,000 |
SUMMARY OF SIGNIFICANT ACCOUN_4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Product Information [Line Items] | ||
Total Revenue | $ 537,000 | |
Litigation Settlements [Member] | ||
Product Information [Line Items] | ||
Total Revenue | $ 537,000 |
SUMMARY OF SIGNIFICANT ACCOUN_5
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2024 | |
Accounting Policies [Abstract] | ||
Litigation settlement amount | $ 537,000 | |
Deferred tax assets | $ 1,319,000 | |
Deferred Tax Assets, Valuation Allowance | 1,319,000 | |
Deferred tax liability | $ 615,000 |
PATENTS (Details)
PATENTS (Details) - USD ($) | Mar. 31, 2024 | Dec. 31, 2023 |
Patents | ||
Gross carrying amount – patents | $ 8,473,000 | $ 8,473,000 |
Accumulated amortization – patents | (7,177,000) | (7,147,000) |
Patents, net | $ 1,296,000 | $ 1,326,000 |
PATENTS (Details 1)
PATENTS (Details 1) | Mar. 31, 2024 USD ($) |
Patents | |
Finite-Lived Intangible Asset, Expected Amortization, Remainder of Fiscal Year | $ 90,000 |
2025 | 120,000 |
2026 | 120,000 |
2027 | 119,000 |
2028 | 116,000 |
Thereafter | 731,000 |
Total | $ 1,296,000 |
PATENTS (Details Narrative)
PATENTS (Details Narrative) - USD ($) | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Amortization expense | $ 30,000 | $ 83,000 |
Minimum [Member] | ||
Estimated remaining economic useful of patents | 9 years | |
Expiration dates of the patents within the Company's M2M/IoT Patent Portfolio | September 2033 | |
Expiration dates within companys HFT patent portfolio | October 2039 | |
Maximum [Member] | ||
Estimated remaining economic useful of patents | 15 years | |
Expiration dates of the patents within the Company's M2M/IoT Patent Portfolio | May 2034 | |
Expiration dates within companys HFT patent portfolio | November 2039 |
STOCK-BASED COMPENSATION (Detai
STOCK-BASED COMPENSATION (Details) | 3 Months Ended |
Mar. 31, 2024 $ / shares shares | |
Equity [Abstract] | |
Restricted stock, Outstanding Number of shares, Beginning Balance | shares | 587,500 |
Restricted stock, Weighted Average Grant Date Fair Value, Beginning Balance | $ / shares | $ 1.81 |
Grants of restricted stock units | shares | 70,000 |
Grants of restricted stock units, Weighted Average Grant Date Fair Value | $ / shares | $ 2.17 |
Vested restricted stock units | shares | (111,250) |
Vested restricted stock units, Weighted Average Grant Date Fair Value | $ / shares | $ (2.45) |
Resricted stock, Outstanding Number of shares, Ending Balance | shares | 546,250 |
Restricted stock, Weighted Average Grant Date Fair Value, Ending Balance | $ / shares | $ 1.72 |
STOCK-BASED COMPENSATION (Det_2
STOCK-BASED COMPENSATION (Details Narrative) - USD ($) | 3 Months Ended | ||
Mar. 31, 2024 | Mar. 31, 2023 | Dec. 31, 2023 | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||
Dividend equivalent rights | $ 35,000 | ||
Restricted Stock Units (RSUs) [Member] | |||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||
Restricted stock unit compensation expense | 115,000 | $ 161,000 | |
Unrecognized restricted stock unit compensation expense | $ 545,000 | ||
Weighted average amortized period | 1 year 8 months 12 days | ||
Accrued dividend rights on restricted stock unit | $ 96,000 | $ 99,000 | |
Stock Incentive Plan 2022 [Member] | |||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||
Common stock subject to outstanding awards under 2022 plan | 121,250 | ||
Common stock available for issuance under 2022 Plan | 2,110,000 |
LOSS PER SHARE (Details)
LOSS PER SHARE (Details) - shares | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Net loss per share: | ||
Weighted-average common shares outstanding – basic | 23,540,468 | 23,866,821 |
Dilutive effect of restricted stock units and stock options | ||
Weighted-average common shares outstanding – diluted | 23,540,468 | 23,866,821 |
Restricted stock units excluded from the computation of diluted loss per share because the effect of inclusion would have been anti-dilutive | 546,250 | 571,250 |
LOSS PER SHARE (Details Narrati
LOSS PER SHARE (Details Narrative) - shares | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Net loss per share: | ||
Potentially Dilutive Shares | 546,250 | 571,250 |
MARKETABLE SECURITIES (Details)
MARKETABLE SECURITIES (Details) - USD ($) | Mar. 31, 2024 | Dec. 31, 2023 |
Fair Value [Member] | ||
Schedule of Investments [Line Items] | ||
Certificates of deposit | $ 6,153,000 | $ 6,077,000 |
Government securities | 11,399,000 | 14,818,000 |
Fixed income mutual funds | 7,737,000 | 7,676,000 |
Total marketable securities | 25,289,000 | 28,571,000 |
Cost Basis [Member] | ||
Schedule of Investments [Line Items] | ||
Certificates of deposit | 6,170,000 | 6,112,000 |
Government securities | 11,357,000 | 14,701,000 |
Fixed income mutual funds | 7,610,000 | 7,585,000 |
Total marketable securities | 25,137,000 | 28,398,000 |
Gross Unrealized Gains [Member] | ||
Schedule of Investments [Line Items] | ||
Certificates of deposit | ||
Government securities | 63,000 | 127,000 |
Fixed income mutual funds | 127,000 | 91,000 |
Total marketable securities | 190,000 | 218,000 |
Gross Unrealized Losses [Member] | ||
Schedule of Investments [Line Items] | ||
Certificates of deposit | (17,000) | (35,000) |
Government securities | (21,000) | (10,000) |
Fixed income mutual funds | ||
Total marketable securities | $ (38,000) | $ (45,000) |
COMMITMENTS AND CONTINGENCIES_2
COMMITMENTS AND CONTINGENCIES (Details) - USD ($) | Mar. 31, 2024 | Dec. 31, 2023 |
COMMITMENTS AND CONTINGENCIES (Note G) | ||
Operating lease right-of-use assets | $ 75,000 | $ 16,000 |
Operating lease obligations – current | 57,000 | 23,000 |
Operating lease obligations – non-current | 24,000 | |
Total lease obligations | $ 81,000 | $ 23,000 |
COMMITMENTS AND CONTINGENCIES_3
COMMITMENTS AND CONTINGENCIES (Details 1) - USD ($) | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
COMMITMENTS AND CONTINGENCIES (Note G) | ||
Operating lease cost | $ 17,000 | $ 19,000 |
Short-term lease cost | ||
Total lease cost | $ 17,000 | $ 19,000 |
COMMITMENTS AND CONTINGENCIES_4
COMMITMENTS AND CONTINGENCIES (Details 2) - USD ($) | Mar. 31, 2024 | Dec. 31, 2023 |
COMMITMENTS AND CONTINGENCIES (Note G) | ||
2024 – remaining period | $ 59,000 | |
2025 | 26,000 | |
Total future minimum lease payments | 85,000 | |
Less imputed interest | (4,000) | |
Total operating lease liability | $ 81,000 | $ 23,000 |
COMMITMENTS AND CONTINGENCIES_5
COMMITMENTS AND CONTINGENCIES (Details Narrative) - USD ($) | 1 Months Ended | 3 Months Ended | 104 Months Ended | |
Mar. 25, 2022 | Mar. 31, 2024 | Dec. 31, 2021 | May 01, 2022 | |
COMMITMENTS AND CONTINGENCIES (Note G) | ||||
Contingency fee minimum - Meta litigation | 15% | |||
Contingency fee maximum - Meta litigation | 24% | |||
Legal fees on a full contingency minimum - Google litigation | 15% | |||
Legal fees on a full contingency maximum - Google litigation | 30% | |||
Legal fees on a contingency basis minimum - Remote power patent | 15% | |||
Legal fees on a contingency basis maximum - Remote power patent | 40% | |||
HFT patent acqusition - cash at closing | $ 500,000 | |||
Contingent common stock issued upon achieving certain milestones - dollar value | $ 375,000 | |||
First $50 million of HFT net proceeds | 15% | |||
Greater than $50 million of HFT net proceeds | 17.50% | |||
Obligated to pay Cox, net proceeds percentage | 12.50% | |||
First $125 Million | 10% | |||
Next $125 Million | 15% | |||
Over $250 Million | 20% | |||
Recognition net proceeds payment related to Mirror Worlds patents | $ 3,127,000 | |||
Obligated to pay M2M | ||||
First $100 Million | 14% | |||
Next $100 Million | 5% | |||
Additional consideration payable upon occurrence of certain future events | $ 250,000 | |||
Base rent | $ 5,500 | |||
Lease borrowing rate - incremental | 4.20% | |||
Remaining lease term | 3 years |
EMPLOYMENT ARRANGEMENTS AND O_2
EMPLOYMENT ARRANGEMENTS AND OTHER AGREEMENTS (Details Narrative) - USD ($) | 1 Months Ended | 3 Months Ended | |
Mar. 22, 2022 | Mar. 31, 2024 | Mar. 31, 2023 | |
CEO Incentive Compensation - Other Patents | 10% | ||
CEO Incentive Compensation - Remote Power Patent | $ 0 | $ 27,000 | |
CEO Incentive Compensation - Remote Power Patent | 5% | ||
Chief Executive Officer [Member] | |||
CEO Incentive Compensation | 10% | ||
Chief Executive Officer [Member] | New Employment Agreement [Member] | |||
Annual base salary | $ 535,000 | ||
Annual base salary increase | 3% | ||
Annual Target Bonus | $ 175,000 |
LEGAL PROCEEDINGS (Details Narr
LEGAL PROCEEDINGS (Details Narrative) - USD ($) | 3 Months Ended | 8 Months Ended |
Mar. 31, 2024 | Dec. 03, 2014 | |
Conditional settlement payment unrecognized | $ 150,000 | |
Google [Member] | ||
Litigation pending, description | Company initiated litigation against Google Inc. (“Google”) and YouTube, LLC (“YouTube”) in the U.S. District Court for the Southern District of New York for infringement of several of its patents within its Cox Patent Portfolio acquired from Dr. Cox which relate to the identification of media content on the Internet. The lawsuit alleges that Google and YouTube have infringed and continue to infringe certain of the Company’s patents by making, using, selling and offering to sell unlicensed systems and related products and services, which include YouTube’s Content ID system. The litigations against Google and YouTube were subject to court ordered stays which were in effect from July 2, 2015 until January 2, 2019 as a result of proceedings at the Patent Trial and Appeal Board (PTAB) and the appeals of PTAB Final Written Decisions to the U.S. Court of Appeals for the Federal Circuit. Pursuant to a Joint Stipulation and Order Regarding Lifting of Stays, entered on January 2, 2019, the parties agreed, among other things, that the stays with respect to the litigations were lifted. In January 2019, the two litigations against Google and YouTube were consolidated. Discovery has been completed and the parties have each submitted summary judgment motions. | |
Facebook [Member] | ||
Litigation pending, description | Company’s wholly-owned subsidiary, initiated litigation against Facebook, Inc. (now Meta Platforms, Inc., “Meta”) in the U.S. District Court for the Southern District of New York, for infringement of U.S. Patent No. 6,006,227, U.S. Patent No. 7,865,538 and U.S. Patent No. 8,255,439 (among the patents within the Company’s Mirror Worlds Patent Portfolio). The lawsuit alleged that the asserted patents are infringed by Meta’s core technologies that enable Meta’s Newsfeed and Timeline features. | |
Netgear [Member] | ||
Litigation pending, description | Company filed a lawsuit against NETGEAR, Inc. (“Netgear”) in the Supreme Court of the State of New York, County of New York, for breach of a Settlement and License Agreement, dated May 22, 2009, with the Company (the “Agreement”) for failure to make royalty payments, and provide corresponding royalty reports, to the Company based on sales of Netgear’s PoE products. On October 22, 2021, Netgear filed a Demand for Arbitration at the American Arbitration Association (“AAA”) seeking to arbitrate certain issues raised in the litigation. The Company objected to jurisdiction at the AAA. On April 1, 2022, the Court denied Netgear’s motion to compel arbitration. On April 22, 2022, Netgear filed a counterclaim in the Court action alleging that the Company breached the Agreement by not offering Netgear lower royalties. On September 22, 2022, the arbitration brought by Netgear was dismissed by the AAA on jurisdiction grounds. On August 27, 2023, the Court granted Netgear’s cross-motion for summary judgment and dismissed the Company’s claims and also denied the Company’s summary judgment motion with respect to Netgear’s counterclaim for breach of the license agreement. The Company appealed the Court decision. On February 20, 2024, the Appellate Division of the Supreme Court, State of New York, First Department, upheld the lower court ruling dismissing the Company’s complaint and granted the Company’s motion to dismiss Netgear’s counterclaim for breach of the most favored license provision concerning two licensees, but said there was a triable issue as to a third licensee. On March 17, 2024, the Company and Netgear settled the litigation and exchanged general releases ending the litigation. | |
October And November 2022 [Member] | ||
Litigation pending, description | Company initiated nine separate litigation against ten defendants for infringement of its Remote Power Patent seeking monetary damages based upon reasonable royalties, as follows: (i) On October 6, 2022, the Company initiated such litigation against Arista Networks, Inc., Fortinet, Inc., Honeywell International Inc. and Ubiquity Inc. in the United States District Court, District of Delaware; (ii) On October 27, 2022, and November 3, 2022, the Company initiated such litigation against TP-Link USA Corporation and Hikvision USA, Inc. in the United States District Court for the Central District of California; (iii) On November 4, 2022, the Company initiated such litigation against Panasonic Holdings Corporation and Panasonic Corporation of North America in the United States District Court for the Eastern District of Texas (Marshall Division); and (iv) On November 8, 2022 and November 16, 2022, the Company initiated such litigation against Antaira Technologies, LLC and Dahua Technology USA in the United States District Court for the Central District of California |
INVESTMENT (Details)
INVESTMENT (Details) - USD ($) | 3 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Equity Method Investments and Joint Ventures [Abstract] | ||
ILiAD Loss from continuing operations | $ (10,091,000) | $ (3,466,000) |
ILiAD Comprehensive loss | $ (9,470,000) | $ (9,911,000) |
INVESTMENT (Details Narrative)
INVESTMENT (Details Narrative) - USD ($) | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
ILiAD Biotechnologies, LLC [Member] | ||
Schedule of Equity Method Investments [Line Items] | ||
Aggregrate investment | $ 7,000,000 | |
Book value of the investment | $ 6,054,000 | |
Iliad [Member] | Class C Units [Member] | ||
Schedule of Equity Method Investments [Line Items] | ||
Ownership percentage not fully diluted | 6.70% | |
Iliad [Member] | ||
Schedule of Equity Method Investments [Line Items] | ||
Aggregrate investment | $ 7,000,000 | |
Equity investment net loss | $ 628,000 | $ 674,000 |
Iliad [Member] | Class C Units [Member] | ||
Schedule of Equity Method Investments [Line Items] | ||
Ownership percentage fully diluted | 5.40% |
STOCK REPURCHASES (Details Narr
STOCK REPURCHASES (Details Narrative) - USD ($) | 1 Months Ended | 3 Months Ended | 143 Months Ended | |
Aug. 16, 2022 | Mar. 31, 2024 | Mar. 31, 2024 | Jun. 13, 2023 | |
Other Liabilities Disclosure [Abstract] | ||||
Stock Repurchase Program, dollar amount, that may be repurchased | $ 5,000,000 | |||
Number of shares, common stock repurchased since inception | 9,724,540 | |||
Aggregate cost of common stock repurchased since inception | $ 18,894,986 | |||
Average price per share, common stock repurchased since inception | $ 1.97 | |||
Number of shares, repurchased | 83,744 | |||
Aggregate repurchased, cost | $ 182,070 | |||
Average repurchased price per share | $ 2.17 | |||
Excise tax description | The excise tax applies in cases where the total value of the stock repurchase during the taxable year exceeds $1,000,000 | |||
Value of remaining shares that may be repurchased | $ 4,190,635 | $ 4,190,635 |
CONCENTRATIONS (Details Narrati
CONCENTRATIONS (Details Narrative) | Mar. 31, 2024 USD ($) |
Risks and Uncertainties [Abstract] | |
FDIC insured amount | $ 250,000 |
Excess of Insured amount | 1,153,000 |
Cash equivalents | $ 18,040,000 |
DIVIDEND POLICY (Details Narrat
DIVIDEND POLICY (Details Narrative) | 3 Months Ended |
Mar. 31, 2024 USD ($) $ / shares | |
Equity [Abstract] | |
Dividends, per share - semi-annual | $ 0.05 |
Dividends, per share - annual | $ 0.10 |
Semi-annual cash dividends | $ | $ 1,175,000 |