Network-1 Reports Second Quarter 2010 ResultsNetwork-1 had revenues of $174,000 and $292,000 for the
three and six months ended June 30, 2010
NEW YORK, Aug. 16 /PRNewswire-FirstCall/ -- Network-1 Security Solutions, Inc.
(OTC Bulletin Board: NSSI) today announced financial results for the quarter
ended June 30, 2010. Network-1 had revenues of $174,000 and $292,000 for the
three and six months ended June 30, 2010 as compared with revenues of $487,000
and $514,000 for the three and six months ended June 30, 2009, respectively. The
decreased revenue of $313,000 for the three months ended June 30, 2010 as
compared to the three month period ended June 30, 2009 was due primarily to an
initial payment of $350,000 in 2009 from the settlement of our litigation with
Network-1 reported a net loss of ($1,157,000) or $(0.05) per share for the
second quarter ended June 30, 2010 as compared to a net loss of ($297,000) or $
(.01) per share for the second quarter ended June 30, 2009. Included in the net
loss for the quarter ended June 30, 2010 and June 30, 2009 were non-cash
compensation expenses of $269,000 and $191,000, respectively.
Network-1 reported a net loss for the six months ended June 30, 2010 of $
(1,815,000) or $(0.08) per share, compared with a net loss of $(1,263,000), or $
(0.05) per share for the six months ended June 30, 2009. Included in the net
loss for the six months ended June 30, 2010 and June 30, 2009 were non-cash
compensation expenses of $316,000 and $746,000, respectively.
On July 19, 2010, Network-1 announced that it agreed to settle its patent
litigation against Adtran, Inc, Cisco Systems, Inc. and Cisco-Linksys, LLC,
(collectively, "Cisco"), Enterasys Networks, Inc., Extreme Networks, Inc.,
Foundry Networks, Inc., and 3Com Corporation, Inc., pending in the United States
District Court for the Eastern District of Texas, Tyler Division, for
infringement of the Company's Remote Power Patent, U.S. Patent No. 6,218,930
("Remote Power Patent"). As part of the settlement, Adtran, Cisco, Enterasys,
Extreme Networks and Foundry Networks each entered into a settlement agreement
with Network-1 and agreed to enter into non-exclusive licenses for the Remote
Power Patent (the "Licensed Defendants"). Under the terms of the licenses, the
Licensed Defendants agreed to pay to Network-1 an aggregate upfront payment of
approximately $32 million and have also agreed to license the Remote Power
Patent for its full term, which expires in March 2020.
In addition, Cisco agreed to pay royalties (beginning in 2011) based on its
sales of Power over Ethernet ("PoE") products up to maximum royalty payments per
year of $8 million through 2015 and $9 million per year thereafter for the
remaining term of the patent. The royalty payments are subject to certain
conditions including the continued validity of Network-1's Remote Power Patent,
and the actual royalty amounts received may be less than the caps stated above.
The settlement with 3Com provides for a dismissal of the litigation without
prejudice. The release covers sales of certain 3Com Power over Ethernet products
sold through the date of the settlement. In addition, Network-1 and 3Com's
parent, Hewlett Packard Corporation, agreed that the dismissal does not apply to
Hewlett-Packard Power over Ethernet products and that any future litigation
involving Network-1 and Hewlett Packard concerning the Remote Power Patent will
be in the United States District Court for the Eastern District of Texas. For
additional details of the settlement, please see Network-1 Current Report on
Form 8-K filed with the Securities and Exchange Commission on July 20, 2010.
As of August 16, 2010 Network-1 has received approximately $31 million as part
of the settlements.
The Remote Power Patent relates to, among other things, the delivery of power
over Ethernet cables in order to remotely power network connected devices
including, among others, wireless switches, wireless access points, RFID card
readers, VOIP telephones and network cameras. In June 2003, the Institute of
Electrical and Electronic Engineers (IEEE) approved the IEEE 802.3af Power over
Ethernet standard which has led to the rapid adoption of PoE.
By taking advantage of PoE technology, companies can deploy next generation
solutions such as Voice over IP and Wireless LAN's without having to run
separate power cables. PoE technology provides numerous benefits including
significant deployment savings and increased service reliability through
centralized backup power. These benefits have caused analysts to identify PoE as
a "must have" technology and vendors have responded with a wealth of new product
Indeed, industry analysts expect PoE to become a defacto technology embedded in
LAN Ethernet switches that power devices such as wireless access points, VOIP
telephones, and network cameras, among others. Industry analysts project that in
2010 fully 20% of all Ethernet switch ports were PoE enabled and between 90 and
95% of IP Phones and Wireless Access Points were also so enabled.
ABOUT NETWORK-1 SECURITY SOLUTIONS, INC.
Network-1 Security Solutions, Inc. is engaged in the acquisition, development,
licensing and protection of its intellectual property and proprietary
technologies. It currently owns six patents covering various telecommunications
and data networking technologies and is currently focusing its licensing efforts
on its Remote Power Patent (U.S. Patent No. 6,218,930) covering the remote
delivery of power over Ethernet networks. The Remote Power Patent was granted by
the U.S. Office of Patents and Trademarks on April 21, 2001 and expires on March