NTIP 10-K & 10-Q changes, risk factors and insider trading

Our revenue is dependent upon our litigation outcomes. We currently have pending patent infringement litigations involving our HFTM2M/IoT Patent Portfolio and HFT Patent Portfolio as well as a pending appeal of dismissal of litigation involving our Cox Patent Portfolio (see “Legal Proceedings” at page 20pages 19-20 hereof). Patent litigation is inherently risky and uncertain and we cannot assure you that any of our current or future litigation will result in a favorable outcome for us. Accordingly, our revenue is uncertain.

We believe our patents are valid, enforceable and valuable. Despite this belief, third parties typically defend assertion of our patents by asserting defenses, among others, of non-infringement and invalidity. In addition, in the future certain of our patents may bebecome subject to USPTO post-grant inter partes review proceedings (IPRs) which could result in all or a part of our patents being invalidated or the claims being limited. Unfavorable outcomes in our litigation or IPRs may reduce our ability to enforce our patents or have other adverse adverse consequences. If we are unable to protect our patents or otherwise realize value for them, our business, financial condition and operating results would be negatively impacted.

We may not achieve successful outcomes of litigations involving our HFT Patent Portfolio or be able to monetize our M2M/IoT Patent Portfolio, which would have a material negative impact on our ability to achieve significant revenue and net income in the future.

On December 26, 2024, we commenced patent litigations against Citadel Securities, LLC and Jump Trading, LLC in the United States District Court for the Northern District of Illinois for infringement of certain patents within our HFT Patent PortfolioPortfolio. (seeOn “LegalSeptember Proceedings”8, 2025, atwe pagecommenced 20patent hereof).litigation Weagainst Optiver US LLC and Optiver Trading US LLC in the United States District Court for the Western District of Texas also intendfor toinfringement makeof effortscertain topatents monetizewithin our HFT Patent Portfolio. On June 27, 2025, we commenced patent litigation against Samsung Electronics Co., LTD and Samsung Electronics America, Inc. in the United Stated District Court for the Eastern District of Texas for infringement of certain patents within our M2M/IoT Patent Portfolio.Portfolio (see Legal Proceedings at page 19 hereof). We may not achieve successful outcomes in these patent litigations involving our HFT Patent Portfolio or be able to monetize ourand M2M/IoT Patent Portfolio which would have a material negative impact on our ability to achieve significant revenue and net income in the future.

We have invested $7,000,000 in ILiAD, a privately held clinical stage biotechnology company, with focus on validating its proprietary intranasal vaccine (BPZE1) for the prevention of pertussis (whopping cough). Notwithstanding the aforementioned, ILiAD still faces material risks going forward. Accordingly, our investment in ILiAD remains subject to substantial risks.risks (see Note H to our consolidated financial statements included herein).

Our Remote Power Patent has generated revenue for us in excess of $188,000,000 from May 2007 through December 31, 2024.2025. Revenue from our Remote Power Patent constituted 100% of our revenue for 2025 ($150,000), 2024 ($100,000) and 2023 ($2,601,000). We had no revenuelonger inintend to 2022 and revenue fromenforce our Remote Power Patentpatent constitutedwhich 100%expired ofin March 2020. Our revenue is dependent on our revenueability forto 2021successfully ($36,029,000), 2020 ($4,403,000) and 2019 ($3,037,000). As a result of the expiration ofmonetize our Remote Power Patent on March 7, 2020, we no longer receive revenue from such other patent for any period subsequent to the expiration date.portfolios. Our failure to successfully monetize our other patents,patent including our HFT Patent Portfolio and M2M/IoT Patentportfolios Portfolio, would have a negative impact on our business, financial condition and operating results.

Based upon the success we achieved from licensing our Remote Power Patent (twenty-eight (28) license agreements and in excess of $188,000,000 of revenue through December 31, 20242025), the revenue we generated from our Mirror Worlds Patent Portfolio ($47,150,000), establishing a patent portfolio currently consisting of one hundred and sixnineteen (106119) U.S. patents and sixteenfifteen (1615) foreign patents, and our cash position, we believe we have the expertise and sufficient capital to compete in the patent monetization market and to enter strategic relationships with third parties to develop, commercialize, license or otherwise monetize their patents. Our strategy is to focus on acquiring high quality patent assets which management believes have the potential for significant licensing opportunities. However, we may not be able to acquire such additional high quality patents or, if acquired, we may not achieve material revenue or profit from such patents. Acquisitions of patent assets are competitive, time consuming, complex and costly to consummate. High quality patents with significant licensing opportunities are difficult to find and are often very competitive to acquire. In addition, such acquisitions present material risks. Even if we acquire such additional patent assets, we may not be able to achieve significant licensing revenue or even generate sufficient revenue related to such patent assets to offset the acquisition costs and the legal fees and expenses which may be incurred to enforce, license or otherwise monetize such patents. In addition, we may not be able to enter into strategic relationships with third parties to license or otherwise monetize their intellectual property and, even if we consummate such strategic relationships, we may not achieve material revenue or profit from such relationships.

Our success is largely dependent upon the personal efforts of Corey M. Horowitz, our Chairman, Chief Executive Officer and Chairman of our Board of Directors. On March 22, 2022, we entered into a new four year employment agreement with Mr. Horowitz pursuant to which he continueshas continued to serve as our Chairman and Chief Executive Officer. The loss of the services of Mr. Horowitz would have a material adverse effect on our business and prospects. We do not maintain key-man life insurance on the life of Mr. Horowitz. The Company and Mr. Horowitz are in discussions to extend his employment agreement.

-1414-- AI driven legal analytics tools can also empower potential infringers with sophisticated insights into the strengths and weaknesses of our patent claims, potentially reducing our leverage in litigation and licensing negotiations. Investors are advised that our financial results could be adversely affected if we are unable to adapt to the rapid changes brought about by AI and ML technologies, and our ability to enforce our patent rights is consequently diminished.

We have pending litigations involving our M2M/IoT Patent Portfolio and HFT Patent Portfolio and a pending appeal to the Federal Circuit of dismissal of our litigation against Google and YouTube involving certain patents within our Cox Patent Portfolio (see “Legal Proceedings” at pagepages 20 19-20 of this Annual Report). While we have contingent legal fee arrangements, or a contingency plus a fixed cash amount arrangement,arrangements with our patent litigation counsel in each litigation, except for proceedings at the USPTO which are on a fixed fee basis, we are responsible for all or a portion of the expenses which are anticipated to be material. In addition, the time and effort required of our management to effectively pursue these litigations is likely to be significant and it may adversely affect other business opportunities.

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In addition, the securities markets have from time to timetime-to-time experienced significant price and volume fluctuations that are unrelated to the the operating performance of particular companies. These market fluctuations may also have a material and adverse effect on the market price of our common stock.

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The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the financial statements and related notes contained elsewhere in this Annual Report on Form 10-K. The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to these differences include those discussed below and elsewhere in this Annual Report on Form 10-K, particularly in the “Risk Factors” Section on pages 10 – 189-18 hereof.

Our principal business is the development, licensing and protection of our intellectual property assets. We presently own one hundred andnineteen six (106119) U.S. patentspatents, fifty-four (54) of which have expired, and sixteenfifteen (1615) foreign patents (unexpired) relating to: (i) our M2M/IoT Patent Portfolio relating to, among other things, enabling technology for authenticating and using eSIM (embedded Subscriber Identification Module) technology in IoT, Machine-to-Machine and other mobile devices, including smartphones, tablets and computers, as well as automobiles; (ii) our HFT Patent Portfolio 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; (iii) our Cox Patent Portfolio relating to enabling technology for identifying media content on the Internet internet and taking further action to be performed after such identification; (iv) our Smart Home Patent Portfolio relating to, among other things, the enabling technology to support the interoperability of smart home IT devices; (v) our 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; and (vvi) our Mirror Worlds Patent Portfolio relating to foundational technologies that enable unified search and indexing, displaying and archiving of documents in a computer system.

-2626--In the We past, we have been dependent upon our Remote Power Patent for a significant portion of our revenue. Our Remote Power Patent has generated revenue in excess of $188,000,000 from May 2007 through December 31, 2024. We no longer receive licensing revenue for our Remote Power Patent for any period subsequent to March 7, 2020 (the expiration date of the patent).2025. During the fourthyear quarterended ofDecember 2022,31, we2025 commenced nineand separate litigations against ten defendants involving2024, our Remote Power Patent for patent infringement for the period prior to March 7, 2020. During 2024, we entered into a settlement agreement with one defendant for which we received $100,000. Such settlement payment constitutedgenerated all of our revenuerevenue. forWe 2024.no Duringlonger 2023, we entered into settlement agreements with eight of the defendants with respect to the aforementioned litigation resulting in aggregate settlement payments madeintend to us of $2,601,000 and a future conditional payment of $150,000 (see Note K to our consolidated financial statements included herein). All of our revenue for 2023 was from these settlements involvingenforce our Remote Power Patent.Patent as the patent has expired. Our future revenue is dependent on our ability to monetize our M2M/ IOT Patent Portfolio, HFT Patent Portfolio, Cox Patent Portfolio (if we are successful on our appeal to the Federal Circuit) and Smart Home Patent Portfolio. If we are unable to successfully monetize our othersuch patent portfolios or achieve a successful outcome of our investment in ILiAD, our business, financial condition and results of operations will be negatively impacted.

In-2424- - We addition, we have pending litigation involving certain patents within our M2M/IoT Patent Portfolio and HFT Patent Portfolio and have appealed the judgment of the District Court dismissing our litigation against Google and YouTube on the grounds of non-infringement involving certain patents within our Cox Patent Portfolio.Portfolio In(see addition,“Legal weProceedings” intendat topages monetize19-20 our M2M/IoT Patent Portfolio.hereof). We may not achieve successful outcomes outcomes of such litigation, the appeal, or future litigation involving our patent assets.

-2727---2525- - Our annual and quarterly operating and financial results may fluctuate significantly from period to periodperiod-to-period as a result of a variety of factors that are outside our control, including the timing and our ability to achieve successful outcomes of our patent litigation, our ability and timing of consummating future license agreements for our intellectual property, and whether we will achieve a return on our investment in ILiAD and the timing of any such return.

Our current dividend policy consists of semi-annual cash dividends of $0.05 per share ($0.10 per share annually) which have been paid in March and September of each year. InTo 2024 and 2023,date, we have paid semi-annual cash dividends in accordance with our dividend policy. At this time, time, we anticipate continuing to pay dividends consistent with our policy. However, our dividend policy undergoes a periodic review by our Board of Directors and is subject to change at any time depending upon our financial requirements, earnings and other factors existing existing at the time (see Note N to our consolidated financial statements included herein).

Operating Expenses. Operating expenses for 20242025 were $3,721,000$3,456,000 as compared to $4,836,000$3,721,000 for 2023.2024. The decrease in operating expenses of $1,115,000$265,000 was primarily due to lowerdecreased professional fees and related costs of revenue$171,000 ofand $846,000,decreased general and administrative of $275,000 and amortizationexpenses of patents of $146,000. These reductions were offset somewhat due to higher professional fees of $152,000.$129,000.

GeneralProfessional fees and administrativerelated expensescosts were $2,614,000$788,000 for 20242025 as compared to $2,889,000$959,000 for 2023.2024. The decrease in generalprofessional fees and administrativerelated expensescosts forof 2024$171,000 in 2025 was primarily due to lowerone-time payrollsettlement costs in 2024 of $205,000. This decrease was offset somewhat by higher legal fees related to patents and relatedpatent employer taxeslitigation of $159,000 and stock-based compensation of $109,000.$53,000.

Operating Loss. We had an operating loss of $3,621,000$3,306,000 for 20242025 compared with an operating loss of $2,235,000$3,621,000 for 2023.2024. The operating loss increasedecrease of $1,386,000$315,000 was primarily due to lowerincreased revenue fromof patent$50,000 litigationand settlementsdecreased inoperating 2024expenses of $2,501,000 as compared to 2023.$265,000.

Realized and Unrealized Loss on Marketable Securities. For 2024,2025, we recorded realized and unrealized gains on marketable securities of $177,000$277,000 as compared to realized and unrealized gains on marketable securities of $525,000$177,000 in 2023,2024, primarily due to theincreased timingunrealized gains of maturities on marketable securities and the declines$150,000 in yields on our fixed income holdings.2025.

Share of Net Losses of Equity Method Investee. We recognized $1,912,000$1,603,000 of net losses during 20242025 related to our equity share of ILiAD ILiAD net losses, as compared to recognized net losses of $2,003,000$1,912,000 for 20232024 (see Note H to our consolidated financial statements included included herein). We anticipate continuing to record our share of net losses from ILiAD.

Net Loss. As a result of the foregoing, we realized a net loss of $2,420,000 or $0.11 per share basic and diluted for 2025 compared with a net loss of $3,034,000 or $0.13 per share basic and diluted for 2024 compared with a net loss of $1,457,000 or $0.06 per share basic and diluted for 2023.2024. Our net loss for 20242025 increaseddecreased by $1,577,000$614,000 as compared to 2024 2023 primarily due toa lower revenue from patent litigation settlementsdecrease in 20242025 of $2,501,000.our operating loss of $315,000 and our recognized share of net losses of ILiAD of $309,000.

Working capital decreased by $4,784,000$3,730,000 at December 31,202431, 2025 to $40,600,000$36,336,000 as compared to working capital of $44,850,000$40,066,000 at December 31, 2023.2024. The decrease in working capital in 20242025 was primarily due to our operating loss of $3,621,000,$2,999,000 (which excludes $307,000 of non-cash stock-based compensation), cash dividendsdividend payments of $2,366,000 $2,296,000, the acquisition of patents of $415,000 and share repurchases of $1,295,000,$293,000, offset by interest and dividend income of $1,897,000.$1,844,000 and net realized and unrealized gains on marketable securities of $277,000.

-2727- - Net cash used in operating activities for 20242025 increaseddecreased by $1,407,000$207,000 from $1,076,000 used in operating activities for 2024 compared to $869,000 $331,000used provided byin operating activities for 2023,2025, primarily because of the increase in ourdecreased net loss of $1,577,000.$614,000 and a decrease in uses of operating assets and liabilities, offset somewhat by a decreased share of net loss of equity investee of $309,000 and an increased unrealized gain of $216,000.

Net cash usedprovided inby investing activities during 20242025 decreasedincreased by $5,488,000$2,673,000 as a result of ourincreased holdingssales of marketable securities decliningof $907,000 and decreased purchases of marketable securities of $2,181,000, offset by $1,049,000the inacquisition 2024of aspatents comparedof to $6,537,000 in 2023.$415,000.

Net cash used in financing activities for 20242025 and 20232024 was $3,724,000$2,596,000 and $3,420,000,$3,724,000, respectively. The increasedecrease of $304,000$1,128,000 in 2025 primarily resulted resulted from highera decrease in repurchases of common shares of $329,000.$1,002,000.

We maintain our cash equivalents and marketable securities in money market funds, government securities, certificates of deposit, corporate bonds and short-term fixed income securities. Accordingly, we do not believe that our investments have significant exposure to interest rate risk.

Our operations and financial results are subject to various risks and uncertainties that could adversely affect our business, financial condition, results of operations and the trading price of our common stock. Investors should carefully consider the risks described in this Quarterly Report on Form 10-Q for the three months ended MarchJune 31,30, 2026, and our Annual Report on Form 10-K for the year ended December 31, 2025 (pages 9-18), filed with the SEC on March 13, 2026.

Our principal business is the development, licensing and protection of our intellectual property assets. We presently own one hundred twenty-onetwenty- one (121) U.S. patents, fifty-four (54) of which have expired, and fifteen (15) foreign patents (unexpired) relating to: (i) our M2M/IoT Patent Portfolio relating to, among other things, enabling technology for authenticating and using eSIM (embedded Subscriber Identification Module) technology in IoT, Machine-to-Machine and other mobile devices, including smartphones, tablets and computers, as well as automobiles; (ii) our HFT Patent Portfolio 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; (iii) our Cox Patent Portfolio relating to enabling technology for identifying media content on the internet and taking further action to be performed after such identification; (iv) our Smart Home Patent Portfolio relating to, among other things, the enabling technology to support the interoperability of smart home IoT devices; (v) our 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; and (vi) our Mirror Worlds Patent Portfolio relating to foundational technologies that enable unified search and indexing, displaying and archiving of documents in a computer system. The Company is no longer monetizing its Remote Power Patent and Mirror Worlds Patent Portfolio.devices.

At MarchJune 31,30, 2026, our principal sources of liquidity consisted of cash and cash equivalents and marketable securities of $34,589,000$33,752,000 and working capital of $33,674,000.$33,179,000. Based on our cash position, we review opportunities to acquire additional intellectual property as well as evaluate other strategic opportunities.

We have fivefour pending litigations involving certain patents within our M2M/IoT Patent Portfolio, HFT Patent Portfolio and Cox Patent Portfolio (see “Legal Proceedings” at pages 1819 -– 1920 hereof). We may not achieve successful outcomes of such litigation, or future litigation litigation involving our patent assets.

To date we have invested $7,000,000 in ILiAD, a clinical stage biotechnology company dedicated to the prevention and treatment of human disease caused by Bordetella pertussis with a focus on validating its proprietary intranasal vaccine, BPZE1, for the prevention of pertussis (see Note K to our unaudited condensed consolidated financial statements included herein). On February 5, 2026, ILiAD completed a $115,000,000 preferred stock financing. As part of the financing, ILiAD converted from a limited liability company to a corporation. The financing was led by RA Capital Management with participation from new investors Janus Henderson Investors and BNP Paribas Asset Management Alts, as well as existing investors including a multi-national pharmaceutical company and AI Life Sciences. As a result of the financing, the Company’s percentage ownership of ILiAD was reduced to approximately 2.5% on a fully diluted basis. As a result of the financing, we no longer account for our investment in ILiAD using the equity method of accounting and now we use the cost method of accounting (see Note B[3] and Note K of our unaudited condensed consolidated financial statements included herein).

The significant components of expenses, when revenue is recorded, that may impact our net income (loss) relate to contingent legal fees and expenses related to our patent litigation as well as contingent payments related to patent acquisitions (see Note H[1] and Note H[2] hereof) to our unaudited condensed consolidated financial statements included herein) and incentive compensation payable to our Chairman and Chief Executive Officer pursuant to the surviving provisions of his prior employment agreement (see Note I[1] to our unaudited condensed consolidated financial statements included herein). BothAll such components of expenses are based on a percentage of the revenue received by us as a result of litigation or otherwise.

Three Months Ended MarchJune 31,30, 2026 Compared to Three Months Ended MarchJune 31,30, 2025

Revenue. We had no revenue for the three months ended MarchJune 31,30, 2026 and revenueJune of $150,000 for the three months ended March 31,30, 2025. We currently have fivefour pending patent infringement litigations involving certain patents within our HFT Patent Portfolio, M2M/IoT Patent Portfolio and Cox Patent Portfolio (see Note J to our unaudited condensed consolidated financial statements included herein).

Operating Expenses. Operating expenses for the three months ended MarchJune 31,30, 2026 were $1,415,000$1,013,000 as compared to $795,000$720,000 for the three months ended MarchJune 31,30, 2025. The increase in operating expenses of $620,000$293,000 was primarily due to increased professional fees and related costs of $654,000, as a result of increased litigation related costs of $625,000, $337,000 offset by reduceddecreased costsrestricted stock compensation expense of revenue of $42,000 due to no revenue in the period ended March 31, 2026.$38,000.

Income Taxes. For the three months ended MarchJune 31,30, 2026 and 2025,2026, we had ano deferredcurrent income tax expense ofas $245,000compared to a $31,000 current tax benefit related to a federal income tax refund for the same period in 2025. For the three months ended June 30, 2026, we had no deferred income taxes as compared to a deferred tax benefit of $111,000, respectively. The net increase of $356,000 in our deferred income taxes was the result of deferred income tax expense of $245,000$38,000 for the three months ended MarchJune 31,30, 20262025. recordedThe decrease in connection with the gain on our equity investment and no deferred income tax benefit was recorded in the same period as a result of no longer recognizing our share of the net losses of our equity method investee (ILiAD) in 2026, as compared to $111,000 of deferred income tax benefit for the three months ended March 31, 2025.2026.

Share of Net Losses of Equity Method Investee. As a result of the conversion to the fair value method of accounting for our equity investment, we recognized no net losses during the three monthsmonth period ended MarchJune 31,30, 2026 as compared to $462,000$279,000 of net losses under the equity method of accounting during the three month period ended MarchJune 31,30, 2025 as a result of application of the equity method of accounting.2025.

Net Loss. As a result of the foregoing, we realized a net loss of $511,000$655,000 or $0.02$0.03 per share basic and diluted for the three months ended endedJune March 31,30, 2026, compared with a net loss of $363,000$463,000 or $0.02 per share basic and diluted for the three months ended March 31,June 30, 2025. The increase in our net loss of $148,000$192,000 for the three months ended MarchJune 31,30, 2026, as compared to the same period in 2025, was primarily the result of increased operating expenses of the$293,000, gaindecreased onother equity investmentincome of $1,052,000$109,000 and thedecreased benefitincome tax benefits of no$69,000, recognizedoffset somewhat by the decrease in our share of net lossesloss of equity method investee, which loss was $462,000 for the three months ended March 31, 2025. These items were offset by lower revenueinvestee of $150,000, increases in litigation related costs of $625,000, realized and unrealized losses on marketable securities of $436,000, deferred income taxes of $356,000 and a decrease in earned interest and dividend income of $100,000 during the three months ended March 31, 2026.$279,000.

We have financed our operations primarily from revenue from licensing our patents. At MarchJune 31,30, 2026, our principal sources of liquidity consisted of cash and cash equivalents and marketable securities of $34,589,000$33,752,000 and working capital of $33,674,000.$33,179,000. Based on our current working capital position, we believe that we will have sufficient liquidity to fund our operations for the next twelve months and the foreseeable future. Our pending patent infringement litigationlitigations or realization of our investment in ILiAD may result in a material increase in our liquidity and capital resources.

Working capital decreased by $2,662,000$3,157,000 at MarchJune 31,30, 2026 to $33,674,000$33,179,000 as compared to working capital of $36,336,000 at December 31, 2025. The decrease during the six month period ended June 30, 2026 was primarily attributed to dividend payments of $1,140,000, certain aspects of the net cash used in operating activities of $1,242,000, dividend payments of $310,000$1,140,000, the acquisition of patents of $250,000 and lower accrued payrollrepurchases of $289,000common during the three month period ended March 31, 2026. These decreases in working capital were partially offset by increased current liabilitiesstock of $340,000.$136,000.

Net cash used in investing activities during the threesix months ended MarchJune 31,30, 2026 increased by $3,533,000$3,590,000 to $3,248,000$1,440,000 used in investing activities as compared to net cash$2,150,000 provided by investing activities of $285,000 for the threesix months ended MarchJune 31,30, 2025,2025. The increase in the net cash used in investing activities is primarily as a result of increased purchases of marketable securities of $2,802,000 andreduced sales of marketable securities of $770,000$2,444,000 asand ourincreased investmentspurchases shifted to longer duration maturities of greatermarketable securities thanof three$1,310,000, months.offset by reduced acquisitions of patents of $164,000.

Net cash used in financing activities for the threesix months ended MarchJune 31,30, 2026 and 2025 was $1,234,000$1,285,000 and $1,301,000,$1,369,000, respectively. The decrease decreasein net cash used in financing activities of $67,000 for the three months ended March 31, 2025$84,000 primarily resulted from reducedthe decrease in stock repurchases of $65,000.$71,000.