SOURCE: Internet Patents Corporation

March 04, 2013 16:15 ET

Internet Patents Corporation Reports Fourth Quarter 2012 Results

SACRAMENTO, CA--(Marketwire - Mar 4, 2013) -  Internet Patents Corporation ("IPC") (NASDAQ: PTNT) today reported financial results for the fourth quarter ended December 31, 2012. 

"During the fourth quarter we initiated two lawsuits against Quinstreet, Inc. and Tree.com, Inc. alleging infringement of U.S. Patent No. 7,707,505 entitled Dynamic Tabs for a Graphical User Interface," said Hussein Enan, Chairman and CEO of Internet Patents Corporation. "We also continue to pursue the three patent infringement lawsuits filed earlier in the year and to review and identify other potential infringers of our strong portfolio of e-commerce patents."

Operating Highlights
As of the quarter ended December 31, 2012:

  • In its fourth quarter of operating a patent licensing business, the Company reported a net loss for the quarter of $667,000 or $0.09 per share.
  • Total operating expenses of $670,000 exceeded the Company's target range of $0.5 to $0.6 million. This was due to the Company recording a charge of $95,000 for the quarter, representing the difference between the Company's lease obligations and sub-lease income it expects to receive for the duration of the lease. We expect operating expenses for the foreseeable future to increase to between $0.6 million and $0.8 million per quarter, reflecting additional patent litigation costs.
  • Cash and cash equivalents and short-term investments were $33.6 million, which includes $1.0 million in restricted short-term investments.
  • The number of shares of Internet Patents Corporation common stock issued and outstanding was 7,751,952. Options representing a total of 231,666 shares of common stock remain outstanding and exercisable as of that same date.
  • Net operating loss (NOL) carry forwards were approximately $140.8 million and $62.7 million for federal income tax and state income tax purposes, respectively. Included in these amounts are unrealized federal and state net operating loss deductions resulting from stock option exercises of approximately $10.3 million each. The benefit of these unrealized stock option-related deductions has not been included in deferred tax assets and will be recognized as a credit to additional paid-in capital when realized. Federal and state net operating loss carry forwards begin expiring in 2019 and 2013 respectively.

Information Regarding Tax Basis of Special Distribution
On March 9, 2012, Internet Patents Corporation made a special distribution to holders of its Common stock. This distribution would generally constitute a dividend for U.S. federal income tax purposes to the extent it was paid from IPC's current or accumulated earnings and profits, as determined under U.S. federal income tax principles. 

IPC determined that the distribution exceeded its 2012 accumulated earnings and profits. Accordingly, the distribution will constitute a return of capital and will first reduce a stockholder's adjusted tax basis in the Common stock, but not below zero, and then will be treated as gain from the sale of the Common stock. Such gain generally will be long term capital gain if the Common stock has been held for more than one year. The maximum tax rate for non-corporate taxpayers on adjusted net capital gains is 15% for long-term capital gains recognized in taxable years beginning on or before December 31, 2012.

IRS Form 8937 applicable to the special distribution is accessible on the investor relations page of IPC's website: http://internetpatentscorporation.net/Investor_Relations.html.

About Internet Patents Corporation
Headquartered in Sacramento, CA, Internet Patents Corporation (NASDAQ: PTNT) operates a patent licensing business focused on its e-commerce technologies.www.internetpatentscorporation.net

Forward-Looking Statements

This news release contains forward-looking statements, which include statements expressing the intent, belief or current expectations of Internet Patents Corporation that are subject to significant risks and uncertainties and are subject to change based on various factors, many of which are beyond our control. The words "may,""could," "should," "would," "believe," "anticipate," "estimate," "expect," "intend,""plan," "target," "goal," and similar expressions are intended to identify forward-looking statements. Actual results might differ materially from those stated or implied by such forward-looking statements due to risks and uncertainties associated with Internet Patent Corporation's business, which include, but are not limited to: the unpredictable nature of patent licensing and patent litigation; potential changes in the laws and regulations relating to patents and patent litigation; the risk that we are not currently engaged in the patent licensing business, and our patent portfolio has never generated revenues; future changes we may make in our patent licensing strategy; and changes in the taxation of income due to the disallowance or expiration of the Company's net operating losses. Unless legally required, Internet Patents Corporation undertakes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise. The forward-looking statements should be considered in the context of these and other risk factors disclosed in the Company's filings with the Securities and Exchange Commission.

   
   
INTERNET PATENTS CORPORATION  
   
CONDENSED CONSOLIDATED BALANCE SHEETS  
   
(in thousands)  
(unaudited)  
   
    December 31,
2012
    December 31,
2011
 
Assets                
Current assets:                
  Cash and cash equivalents   $ 31,068     $ 70,326  
  Short-term investments     1,497       1,225  
  Restricted short-term investments     1,000       -  
  Prepaid expenses and other current assets     169       1,374  
    Total current assets     33,734       72,925  
Property and equipment, net     32       42  
Other assets     27       1,027  
    Total assets   $ 33,793     $ 73,994  
                 
Liabilities and stockholders' equity                
Current liabilities:                
  Accounts payable   $ 234     $ 3,385  
  Accrued expenses and other current liabilities     346       541  
  Income tax payable     -       644  
    Total current liabilities     580       4,570  
                 
Income tax liability     101       101  
Total liabilities     681       4,671  
                 
Stockholders' equity:                
  Common stock     11       10  
  Paid-in capital     221,726       216,401  
  Treasury stock     (6,788 )     (6,589 )
  Accumulated deficit     (181,837 )     (140,499 )
    Total stockholders' equity     33,112       69,323  
    Total liabilities and stockholders' equity   $ 33,793     $ 73,994  
                 
                 
                 
INTERNET PATENTS CORPORATION  
   
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS  
   
(in thousands, except per share amounts)  
(unaudited)  
       
    Years Ended December 31,  
    2012     2011  
                 
Total revenues   $ -     $ -  
                 
Operating expenses:                
  Sales and marketing     -       -  
  Technology     -       97  
  General and administrative     2,959       3,184  
    Total operating expenses     2,959       3,281  
    Loss from operations     (2,959 )     (3,281 )
 Other income (expense), net     172       15  
 Loss from continuing operations     (2,787 )     (3,266 )
Discontinued operations, net of tax                
Income from discontinued operations     -       719  
Gain on sale of discontinued operations             53,716  
Total discontinued operations     -       54,435  
                 
Net income (loss) before income taxes   $ (2,787 )   $ 51,169  
Income tax expense (benefit)     (61 )     -  
Net income (loss)   $ (2,726 )   $ 51,169  
                 
Net income (loss) per share:                
  Basic and diluted                
    Loss from continuing operations, net of tax   $ (0.36 )   $ (0.56 )
    Discontinued operations, net of tax   $ -     $ 9.34  
Net income (loss) per basic common share   $ (0.36 )   $ 8.78  
                 
Shares used in computing income (loss) per share:                
    Basic and diluted     7,659       5,831  

Contact Information

  • Investor Relations Contact:
    Jennifer Jarman
    The Blueshirt Group
    415-217-5866
    Email Contact