Spherix Releases Update Letter to Shareholders

BETHESDA, Md., Jan. 20, 2016

To My Fellow Shareholders:

The past year was an important one for Spherix and its shareholders.  We resolved a number of challenges, including the satisfaction of our preferred stock payment obligations and the termination of all security interests on our assets.  These positive developments have cleared our path to pursue a plethora of significant licensing opportunities and to leverage our portfolio of technology patents unimpeded.   I am excited as we enter 2016 with a streamlined capital structure, bolstered balance sheet and a clear path to success.

We remain focused on further monetizing our extensive patent portfolio. With an expansive addressable market we believe to be more than $50 billion, we are well positioned to pursue and capture licensing revenue from a broad spectrum of technology companies that today utilize technologies protected by our patents. It is significant that, for the first time in two years, we own our valuable assets developed by Nortel free and clear of any encumbrances.  This freedom provides the Company the ability to monetize our valuable IP in ways not previously available, including sales of individual patents, and we intend to pursue significant monetization efforts to maximize shareholder value. 

Throughout 2015, our litigation efforts were thorough and far-reaching.  We have enforced a cross-section of our portfolio in several lawsuits in multiple jurisdictions, and enforced a portion of our portfolio through a license that not only eliminated a significant portion of our obligations and brought cash into the company, but cleared the way to derive additional value from our patents. Today, we continue to enforce our patents in two court cases, both in the cordless telephone space. We will continue that enforcement effort while we shift our focus towards developing additional sources of revenue from licensing agreements and working to restore compliance with our NASDAQ listing requirements.

During 2015, we developed a comprehensive list of companies that are potential licensees of our patents. The list is long and includes a variety of network device manufacturing companies, as well as network and internet service providers that deploy these products. Thus, an exceptionally large number of potential licensees remains.  We believe this potential total addressable market is over $50 billion of potentially infringing products sold.  A fair and reasonable license for our patents applied to a market of this size would result in a very significant increase in our cash flows.  For that reason alone, we believe our current market capitalization is far below the value of our intellectual property.   

Our efforts to capture a meaningful share of the massive market opportunity available through licensing are already underway. With the combination of a recently issued Markman order in the Eastern District of Texas and the prior license agreement history related to our patents, we now have increased leverage and strength in negotiations and a clear path to pursue additional licensing and royalty opportunities.