NYSE: NTIP

We
have invested $7,000,000 in ILiAD Biotechnologies, Inc. (“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 (whooping cough). On December 31, 2025, we owned approximately 6.4% of the outstanding
units of ILiAD on a non-fully diluted basis and approximately 4.8% of the outstanding units on a fully diluted basis (see “Business-
Investment in ILiAD Biotechnologies).

Our
current strategy includes continuing our efforts to monetize our intellectual property. In addition, we continue to seek to
acquire additional intellectual property assets to develop, commercialize, license or otherwise monetize. Our strategy includes working
with inventors and patent owners to assist in the development and monetization of their patented technologies. Our 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 we have previously achieved with respect to our Remote Power Patent and our Mirror Worlds Patent Portfolio.
In addition, we may also enter into strategic relationships with third parties to develop, commercialize, license or otherwise monetize
their intellectual property.

In
the past we have been dependent upon our Remote Power Patent for a significant portion of our revenue. Our Remote Power Patent generated
revenue in excess of $188,000,000 from May 2007 through December 31, 2025. During the year ended December 31, 2025 and 2024, our Remote
Power Patent generated all of our revenue. We are no longer enforcing our Remote Power Patent. Our future revenue is dependent on our
ability to monetize our other patent assets.

We
have pending litigations involving our assertion of infringement claims concerning certain patents within our M2M/IoT Patent Portfolio
and HFT Patent Portfolio. In addition, we have a pending appeal to the U.S. Court of Appeals for the Federal Circuit of a District Court’s
judgment of non-infringement dismissing our case against Google and YouTube involving certain patents within our Cox Patent Portfolio
(see “Legal Proceedings” at pages 19-20 of this Annual Report).

At
December 31, 2025, we had cash and cash equivalents and marketable securities of $36,869,000 and working capital of $36,336,000. Based
on our current cash position, we believe that we will have sufficient cash to fund our operations for the foreseeable future.

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Overview
of Our Patents

We
are currently developing patents within our M2M/IoT Patent Portfolio, HFT Patent Portfolio and Smart Home Patent Portfolio. In addition,
we are currently monetizing certain patents within our M2M/IoT Patent Portfolio, HFT Patent Portfolio and Cox Patent Portfolio (see “Legal
Proceedings” at pages 19-20 hereof).

M2M/IoT
Patent Portfolio

Our
M2M/IoT Patent Portfolio, acquired in December 2017 from M2M and IoT Technologies, LLC (“M2M”), relates 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. The M2M/IoT Patent Portfolio currently
consists of forty-five (45) issued U.S. patents, five (5) pending U.S. patent applications, and fourteen (14) registered foreign patents.
Since we acquired the M2M/IoT Patent Portfolio in December 2017, we have been issued thirty-three (33) additional U.S. patents with respect
to the portfolio. We anticipate further issuances of additional claims for this portfolio. The expiration dates of the forty-five (45)
issued U.S. patents currently within our M2M/IoT Patent Portfolio range from September 2033 to May 2034. The expiration dates of the
fourteen (14) foreign patents currently within our M2M/IoT Patent Portfolio range from October 2034 - December 2034.

We
have an obligation to pay M2M 14% of the first $100 million of net proceeds (after deduction of expenses) and 5% of net proceeds greater
than $100 million from Monetization Activities (as defined) related to our M2M/IoT Patent Portfolio. In addition, M2M will be entitled
to receive from us $250,000 of additional consideration upon the occurrence of certain future events related to the patent portfolio.

John
Nix, the Managing Member of M2M, provides consulting services to us with respect to our M2M/IoT Patent Portfolio. Mr. Nix is an entrepreneur
and inventor, and founder and former Chief Executive Officer of Vobal Technologies, LLC. In 2016, Mr. Nix was recognized as “Creator
of the Year” by the Intellectual Property Law Association of Chicago for his intellectual property related to eSIM technology.

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HFT
Patent Portfolio

On
March 25, 2022, we acquired the HFT Patent Portfolio. This portfolio covers 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. The HFT Patent Portfolio currently includes eleven (11) issued U.S. patents and two pending U.S. patents.
The expiration dates within our HFT Patent Portfolio range from October 2039 to February 2040.

In
addition to the purchase price that we paid at closing, we have an obligation to pay the seller an additional cash payment of $500,000
and $375,000 of our common stock contingent upon achieving certain milestones with respect to the HFT Patent Portfolio. We also have
an obligation to pay the seller 15% of the first $50 million of net proceeds (after deduction of expenses) generated from the patent
portfolio and 17.5% of net proceeds greater than $50 million.

Cox
Patent Portfolio

Our
Cox Patent Portfolio, acquired from Dr. Ingemar Cox in February 2013, currently consists of thirty-nine (39) U.S. patents relating to
enabling technology for identifying media content on the Internet, such as audio and video, and taking further actions to be performed
based on such identification. All of the patents within our Cox patent portfolio have expired. We have a pending appeal to the Federal
Circuit of a District Court ruling dismissing our case against Google Inc. and YouTube, LLC involving assertion of certain patents within
our Cox Patent Portfolio (see “Legal Proceedings” at pages 19-20 hereof). The patents within our Cox Patent Portfolio are
based on a patent application filed in 2000. Since the acquisition of the Cox Patent Portfolio in February 2013, we have been issued
thirty-four (34) additional patents relating to this portfolio. The claims in these thirty-four (34) additional patents are generally
directed towards systems of content identification and performing actions following therefrom.

We
are obligated to pay Dr. Cox 12.5% of the net proceeds generated by us from licensing, sale or enforcement of the Cox Patent Portfolio.
Dr. Cox provides consulting services to us with respect to the Cox Patent Portfolio and assists our efforts to develop the patent portfolio.

Dr.
Cox is currently a Professor at the University of Copenhagen and University College London where he is head of its Information and
Decision Systems Group. He is also Director of the EPSRC Digital Health Hub for AMR (Antimicrobial resistance). Dr. Cox was formerly
a member of the Technical Staff at AT&T Bell Labs and a Fellow at NEC Research Institute. He is a Fellow of the ACM, IEEE, the
IET (formerly IEE), and the British Computer Society and is a member of the UK Computing Research Committee. In 2019, Dr. Cox was
the recipient of the Tony Kent Strix Award in recognition of his contribution to the field of information retrieval. He was founding
co-editor in chief of the IEE Proc. on Information Security and was an associate editor of the IEEE Trans. on Information Forensics
and Security. He is co-author of a book entitled “Digital Watermarking” and its second edition “Digital
Watermarking and Steganography”. He is an inventor or co-inventor of over seventy (70) U.S. patents.

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Smart
Home Patent Portfolio

Our
Smart Home Patent Portfolio, acquired in March 2025, relates to, among other things, enabling technology to support the interoperability
of smart home IoT devices. Our Smart Home Patent Portfolio currently consists of nine issued U.S. patents, four pending U.S. Patents
and one registered foreign patent and five pending foreign patents. The expiration dates within our HFT Patent Portfolio range from October
2039 to February 2040.

We
are obligated to pay the seller 12.5% of the first $100 million of net proceeds (after the deduction of expenses) and 5% of the net proceeds
in excess of $100 million from Monetization Activities (as defined) related to the patent portfolio. In addition, we are obligated to
pay the seller $50,000 upon certain events.

Network-1
Strategy

Our
strategy is to capitalize on our intellectual property assets by entering into licensing arrangements with third parties that utilize
our intellectual property's proprietary technologies as well as any additional proprietary technologies covered by patents which may
be acquired by us in the future. Our current 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 we have achieved with our Remote Power
Patent and Mirror Worlds Patent Portfolio. We no longer intend to enforce our Remote Power Patent and Mirror Worlds Patent Portfolio
as all such patents have expired. Our revenue is dependent on our ability to monetize our other patent portfolios. In addition, we may
enter into third party strategic relationships with inventors and patent owners to assist in the development and monetization of their
patent technologies. Based on our cash position, we review opportunities to acquire additional intellectual property as well as evaluate
other strategic alternatives.

In
connection with our activities relating to the protection of our intellectual property assets, or the intellectual property assets of
third parties with whom we may have strategic relationships in the future, it may be necessary to assert patent infringement claims against
third parties whom we believe are infringing our patents or those of our strategic partners. We are currently involved in several litigations
to protect our patents including certain patents within our M2M/IoT Patent Portfolio and HFT Patent Portfolio as well as an appeal to
the Federal Circuit of a District Court dismissal involving certain patents within our Cox Patent Portfolio (see “Legal Proceedings”
at pages 19-20 (hereof).

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Revenue
Concentration

Revenue
from our Remote Power Patent as a result of a litigation settlement constituted 100% of our revenue for the year ended December 31, 2025.
We anticipate that our future revenue will continue to be derived from a few parties.

Competition

With
respect to our ability to acquire additional intellectual property assets or enter into strategic relationships with third parties to
monetize their intellectual property assets, we face considerable competition from other companies, many of which have significantly
greater financial and other resources than we have. The patent licensing and enforcement industry has grown and there has been a material
increase in the number of companies seeking to acquire intellectual property assets from third parties or to provide financing to third
parties seeking to monetize their intellectual property. Entities including, among others, Acacia Research Corporation (NASDAQ:ACTG),
Intellectual Ventures, WI-LAN Inc., and RPX Corporation, seek to acquire intellectual property or partner with third parties to license
or enforce intellectual property rights. In addition, we also compete with strategic corporate buyers with respect to the acquisition
of intellectual property assets. It is expected that others will enter this market as well. Many of these competitors have significantly
greater financial and human resources than us.

We
may also compete with litigation funding firms such as Burford Capital Limited, Validity Finance, LLC, Fortress Investment Group, LLC,
Parabellum Capital LLC and Bentham Capital LLC, venture capital firms and hedge funds for intellectual property acquisitions and licensing
opportunities. Many of these competitors also have greater financial resources and human resources than us.

Regulatory
Environment

If
new legislation, regulations or rules are implemented either by Congress, the USPTO or the courts that impact the patent application
process, the patent enforcement process or the rights of patent holders, these changes could negatively affect our business, financial
condition and results of operations. Certain legislation, regulations, and rulings by the courts and actions by the USPTO have materially
increased the risk and cost of enforcement of patents. U.S. patent laws were amended by the Leahy-Smith America Invents Act, referred
to as the “America Invents Act”, which became effective on March 16, 2013. The America Invents Act included a number of significant
changes to U.S. patent law. In general, it addressed issues surrounding the enforceability of patents and the increase in patent litigation
by, among other things, establishing new procedures for patent litigation and new administrative post-grant review procedures to challenge
the patentability of issued patents outside of litigation, including Inter Partes Review (IPR) proceedings which provide third
parties a timely and cost effective alternative to district court litigation to challenge the validity of an issued patent. The America
Invents Act and its implementation increased the uncertainties and costs surrounding the enforcement of patent rights has made it more
difficult to successfully enforce our patents.

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In
addition, future changes in patent law could adversely impact our business. Such changes may not be advantageous to us and may make it
more difficult to obtain adequate patent protection to enforce our patents. Increased focus on the growing number of patent lawsuits,
particularly by non-practicing entities (NPEs), may result in legislative changes which increase the risk and costs of asserting patent
litigation.

Investment
in ILiAD Biotechnologies

During
the period December 2018 to date, we made aggregate investments of $7,000,000 in ILiAD, a privately held clinical stage biotechnology
company dedicated to the prevention and treatment of human disease caused by Bordetella pertussis. ILiAD is focused on validating
its proprietary intranasal vaccine, BPZE1, for the prevention of pertussis (whooping cough). Pertussis is a life-threatening disease
caused by the highly contagious respiratory bacterium Bordetella pertussis. On December 31, 2025, we owned approximately 6.4%
of the outstanding units of ILiAD on a non-fully diluted basis and approximately 4.8% of the outstanding units on a fully diluted basis.
In connection with our investment, Corey Horowitz, our Chairman and Chief Executive Officer, became a member of ILiAD’s Board of
Managers and received the same compensation for service on the Board as the other non-management Board members. Following ILiAD’s
completion of a preferred stock financing in February 2026, Mr. Horowitz no longer serves on the Board.

BPZE1
was developed in the laboratory of Camille Locht, PhD, at the Institut Pasteur de Lille (IPL) and French National Institute of Health
and Medical research. BPZE1 is a live-attenuated intranasal vaccine designed to overcome deficiencies of current pertussis vaccines,
including poor durability of protection and failure to prevent nasopharyngeal Bordetella pertussis infections that lead to escape
mutants and transmission to vulnerable infants. On February 5, 2026, ILiAD completed a $115,000,000 preferred stock financing. 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. Following the closing of
the financing, we owned approximately 3.1% of the outstanding shares on a non-fully diluted basis and approximately 2.5% of the outstanding
shares on a fully diluted basis (see Note O to our consolidated financial statements included herein).

Corporate
Information

We
were incorporated under the laws of the State of Delaware in July 1990. Our principal executive offices are located at 65 Locust Avenue,
Third Floor, New Canaan, Connecticut 06840 and our telephone number is (203) 920-1055.

Available
Information

We
file or furnish various reports, such as registration statements, quarterly and current reports, proxy statements and other materials
with the SEC. Our website address is www.network-1.com. You may obtain, free of charge on our website, copies of our annual
reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, proxy statements, Section 16 filings and amendments
to those reports or statements filed
or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act, as soon as reasonably practicable after we electronically file such
material with, or furnish it to, the SEC. The information we post on our website is intended for reference purposes only; none of the
information posted on our website is part of this Annual Report or incorporated by reference herein.

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In
addition to the materials that are posted on our website, you may read and copy any materials we file with the SEC at the SEC's Public
Reference Room at 100 F Street, NE, Washington, DC 20549. You may obtain information on the operation of the Public Reference Room by
calling the SEC at 1-800-SEC-0330. The SEC also maintains a website that contains reports, proxy and other information statements, and
other information regarding issuers, including us, that file electronically with the SEC. The address of the SEC’s website is http://www.sec.gov.

Employees
and Consultants

We
currently have two full-time employees and two consultants providing monthly services to us.