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Back in October, InsWeb Corporation (then trading under ticker INSW) sold essentially its entire operating business to BankRate (RATE) for $65 million in cash. The company then changed its name to Internet Patents Corp. (PTNT) and authorized a $5-per-share special dividend, which was paid last month. The stock spiked sharply on both news items, reaching a dividend-adjusted high of $3.60 per share before drifting downward; it closed Friday at $3.22.

With the release of the company's 2011 10-K earlier this month, investors have new information on the company's future. Internet Patents plans to go forward as a standalone business focused solely on licensing or protecting its six remaining e-commerce patents. Unfortunately, this business has no existing clients, no existing revenue, and, most likely, litigation expense in the future.

Still, the company's operations look to use up little cash. As of Dec. 31, the company had just seven employees. One of them was long-time CEO -- and now CFO -- Hussein Enan, whose annual salary is just $12 (yes, that's 12 dollars.) Total expenses for continuing operations in 2011 were $3.28 million. That figure excludes the costs associated with the former InsWeb business (which were moved to discontinued operations) and also includes a $300,000 bonus for Enan, which looks unlikely to be repeated in 2012. As such, a reasonable estimate for 2012 expenses is about $3 million, depending on legal costs and the company's ability to cut expenses going forward.

In the meantime, after the special distribution -- which amounted, in total, to $38.6 million dollars -- Internet Patents should retain some $33 million in cash and short-term investments, according to the 10-K. (The company had about $71.55 million total as of Dec. 31.)

Given the company's 7.747 million shares outstanding (as of March 12), Internet Patents still holds $4.26 per share in cash. Put another way, the market is discounting its cash balance by about $8 million -- or what appears to be enough money to operate the licensing business for about two-and-a-half years.

On its face, the discount seems appropriate; as noted, the licensing business has no revenues and no history, and a real risk of failure. Expensive litigation can drain the cash balance; given that the patents were issued between 1999 and 2000, their lifespan may only be an additional seven to eight years.

Still, Internet Patents looks to be an interesting gamble. CEO Enan owns 25.1% of outstanding shares; his $12 salary and the divestiture and special dividend payment made over the last few months show that his focus has truly been on his role as a shareholder, rather than as an employee. The continuing focus on patent monetization -- seen in Google's (GOOG) purchase of Motorola Mobility and recent movements at companies such as MIPS Technologies (MIPS) and AOL (AOL) -- may make the company a target for other licensing companies, such as Tessera Technologies (TSRA).

This is all speculation, of course; Internet Patents is essentially a startup with an admittedly questionable business model and an excess of cash. But given CEO Enan's clear focus on shareholder-friendly policies, the safety of the cash balance well above the market capitalization, and the possibility of success on the patent front, there seems to be a solid risk/reward profile for Internet Patents -- even after the special dividend.

Source: After Distribution, Internet Patents Remains Interesting Play