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Proc-Type: 2001,MIC-CLEAR
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 fsu+F+miRwoEnJ/7wRkw1g==

<SEC-DOCUMENT>0001072613-05-002636.txt : 20051115
<SEC-HEADER>0001072613-05-002636.hdr.sgml : 20051115
<ACCEPTANCE-DATETIME>20051115133301
ACCESSION NUMBER:		0001072613-05-002636
CONFORMED SUBMISSION TYPE:	8-K
PUBLIC DOCUMENT COUNT:		2
CONFORMED PERIOD OF REPORT:	20051110
ITEM INFORMATION:		Results of Operations and Financial Condition
ITEM INFORMATION:		Non-Reliance on Previously Issued Financial Statements or a Related Audit Report or Completed Interim Review
ITEM INFORMATION:		Financial Statements and Exhibits
FILED AS OF DATE:		20051115
DATE AS OF CHANGE:		20051115

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			NETWORK 1 SECURITY SOLUTIONS INC
		CENTRAL INDEX KEY:			0001065078
		STANDARD INDUSTRIAL CLASSIFICATION:	SERVICES-PREPACKAGED SOFTWARE [7372]
		IRS NUMBER:				113027591
		STATE OF INCORPORATION:			DE
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		8-K
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	001-15288
		FILM NUMBER:		051205718

	BUSINESS ADDRESS:	
		STREET 1:		1601 TRAPELO RD
		STREET 2:		RESERVOIR PLACE
		CITY:			WALTHAM
		STATE:			MA
		ZIP:			02451
		BUSINESS PHONE:		7815223400

	MAIL ADDRESS:	
		STREET 1:		1601 TRAPELO RD
		STREET 2:		RESERVOIR PLACE
		CITY:			WALTHAM
		STATE:			MA
		ZIP:			02451
</SEC-HEADER>
<DOCUMENT>
<TYPE>8-K
<SEQUENCE>1
<FILENAME>form8-k_13981.txt
<DESCRIPTION>FORM 8-K  (NOVEMBER 10, 2005)
<TEXT>
================================================================================

                                  UNITED STATES

                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                               __________________

                                    Form 8-K

                                 CURRENT REPORT

                     Pursuant to Section 13 or 15(d) of the

                         Securities Exchange Act of 1934


Date of Report (Date of earliest event reported):  November 10, 2005
                                                   -----------------------------




                       Network-1 Security Solutions, Inc.
- --------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)


          Delaware                  1-14896                      11-3027591
- --------------------------------------------------------------------------------
(State or other jurisdiction      (Commission                  (IRS Employer
      of incorporation)           File Number)               Identification No.)


              445 Park Avenue, Suite 1028, New York, New York 10022
- --------------------------------------------------------------------------------
                    (Address of principal executive offices)


       Registrant's telephone number, including area code: (212) 829-5700


                                       N/A
- --------------------------------------------------------------------------------
         (Former name or former address, if changed since last report.)






         Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (SEE General Instruction A.2. below):

[_]  Written communications pursuant to Rule 425 under the Securities Act (17
     CFR 230.425)

[_]  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
     240.14a-12)

[_]  Pre-commencement communications pursuant to Rule 14d-2(b) under the
     Exchange Act (17 CFR 240.14d-2(b))

[_]  Pre-commencement communications pursuant to Rule 13e-4(c) under the
     Exchange Act (17 CFR 240.13e-4(c))

================================================================================
<PAGE>
ITEM 2.02   RESULTS OF OPERATIONS AND FINANCIAL CONDITION

         On November 14, 2005, the Company issued a press release announcing its
results of operations for its third quarter ended September 30, 2005. A copy of
the press release is furnished herewith as Exhibit 99.1.

         The information contained in this Item 2.02, including Exhibit 99.1
attached hereto, is being furnished and shall not be deemed to be "filed" for
the purposes of Section 18 of the Securities Exchange Act of 1934, as amended,
or otherwise subject to the liabilities of that Section. Furthermore, the
information contained in this Item 2.02 or Exhibit 99.1 shall not be deemed to
be incorporated by reference into any registration statement or other document
filed pursuant to the Securities Act of 1933, as amended, except as shall be
expressly set forth by specific reference in such filing.



ITEM 4.02   NON-RELIANCE ON PREVIOUSLY ISSUED FINANCIAL STATEMENTS OR A RELATED
            AUDIT REPORT OR COMPLETED INTERIM REVIEW

         On November 10, 2005, management concluded that the Company's financial
statements for the year ended December 31, 2004, for the three and six months
periods ended June 30, 2004, and the nine months ended September 30, 2004 should
be restated due to not recording a deemed dividend with respect to an exchange
transaction in April 2004. Additionally, on that date management also concluded
that the financial statements for the year ended December 31, 2003 should be
restated due to not presenting the gain on sale of the Company's software assets
and revenue and expenses associated with the software business as discontinued
operations.

         In April 2004, the Company entered into an exchange agreement with the
holders of all of the Company's outstanding shares of Series E convertible
preferred stock ("Series E") and Series D convertible preferred stock ("Series
D") to exchange 2,483,508 shares of Series E for 6,208,770 shares of common
stock and 231,054 shares of Series D for 489,348 shares of common stock (the
"Exchange Transaction"). The holders of the Series E and Series D received 1.25
times the number of shares of common stock that each preferred stockholder would
have otherwise received upon conversion.

         The staff of the Division of Corporate Finance of the Securities and
Exchange Commission in reviewing the Company's 10-KSB for the year ended
December 31, 2004 commented on the Company's accounting of the 2004 Exchange
Transaction which included discussions concerning whether or not the Preferred
Stock (Series E and Series D) contained a "beneficial conversion feature" which
should be accounted for under Emerging Issues Task Force Issue No. (EITF) 00-27
as a deemed dividend and included in the net loss attributable to common
stockholders and the per share amounts.

         The Company has concluded that it should have recognized a deemed
dividend as a result of the beneficial conversion feature in accordance with
ETIF 00-27. The change in the accounting treatment for the Exchange Transaction
results in an increase to the net loss attributable to common stockholders of
$273,000. The loss per share is increased by $(0.01) per share and $(0.03) per
share for the three and six months ended June 30, 2004, $(0.02) per share

                                        2
<PAGE>
for the nine months ended September 30, 2004 and $(0.02) per share for the year
ended December 31, 2004.

         In addition, following discussions with the staff of the Securities and
Exchange Commission pertaining to comments relating to the Company's Annual
Report on Form 10-KSB for the year ended December 31, 2004, the Company's
management also concluded that the gain on sale of assets associated with the
Company's software products in May 2003 and expenses and revenues related to the
software business should be reclassified to discontinued operations in
accordance with Statement of Financial Accounting Standards (SFAS) No. 144. This
reclassification has no effect on the net loss, net loss attributable to common
stockholders or net loss per common share-basic and diluted.

         The Company's management and audit committee has discussed the
restatement matters disclosed herein with the Company's independent registered
public accounting firm.

         As a result of management's determination, the previously issued
financial statements for the years ended December 31, 2004 and 2003, the three
and six months ended June 30, 2004 and the nine months ended September 30, 2004
should no longer be relied upon.



ITEM 9.01   FINANCIAL STATEMENTS ARE EXHIBITS

Exhibit
Number      Description
- ---------   -----------
99.1        Press Release, dated November 14, 2005














                                        3
<PAGE>

                                    SIGNATURE
                                    ---------

         Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.




                                  NETWORK-1 SECURITY SOLUTIONS, INC.



Dated:   November 15, 2005        By: /s/ Corey M. Horowitz
                                      ------------------------------------------
                                      Name:   Corey M. Horowitz
                                      Title:  Chairman & Chief Executive Officer


























                                        4
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.1
<SEQUENCE>2
<FILENAME>exh99-1_13981.txt
<DESCRIPTION>PRESS RELEASE
<TEXT>
                                                                    EXHIBIT 99.1
                                                                    ------------
_____________________

FOR IMMEDIATE RELEASE
_____________________


COREY M. HOROWITZ, CHAIRMAN
NETWORK-1 SECURITY SOLUTIONS, INC.
212-829-5770




 NETWORK-1 REPORTS THIRD QUARTER RESULTS AND ANNOUNCES RESTATEMENT OF FINANCIALS


         NEW YORK, November 14, 2005--Network-1 Security Solutions, Inc. (OTC:
NSSI.OB ) today announced financial results for the third quarter ended
September 30, 2005.

         Network-1 reported a net loss of ($320,000) or $(.02) per share for the
third quarter ended September 30, 2005 as compared to a net loss of ($280,000)
or $(.02) per share for the third quarter ended September 30, 2004. Network-1
had no revenues during the quarter ended September 30, 2005.

         The Company had no revenues for the nine months ended September 30,
2004. Network-1 reported a net loss for the nine months of 2005 of $(1,286,000)
or $(0.07) per share, compared with a net loss of $(1,134,000), or $(0.08) per
share for the nine months of 2004, which included a deemed dividend of $273,000
relating to a preferred stock conversion transaction.

         At September 30, 2005, the Company had approximately $1,257,000 in cash
and cash equivalents which management believes will be sufficient to fund its
operations until September 2006, although there is no assurance that Network-1
will have sufficient capital through such date.

         The Company also announced that it will restate certain information in
its financial statements for the year ended December 31, 2004, the three and six
month period ended June 30, 2004, the nine month period ended September 30, 2004
and the year ended December 31, 2003. The restatements relate to the inclusion
of a deemed dividend with respect to the conversion of preferred stock in April
2004 and the reclassification as discontinued operations of the gain on sale of
the Company's software assets in May 2003 and revenue and expenses associated
with the software business. The restatements to include the deemed dividend
results in an increase in net loss attributable to common stockholders of
$273,000 or $(.02) per share for the year ended December 31, 2004, $(0.1) per
share and $(.03) per share for the three and six month periods ended June 30,
2004 and $ (.02) per share for the nine month period ended September 30, 2004.
The reclassification of the sale of the software assets and revenues and
expenses associated with the software business to discontinued operations will
have no effect on the net loss, net loss attributable to common stockholders or
net loss per share - basic and diluted.
<PAGE>

         During the third quarter, Network-1 initiated patent litigation against
D-Link Corporation and D-Link Systems, Incorporated ("D-Link") in the United
States District Court for the Eastern District of Texas, Tyler Division, for
infringement of the Remote Power Patent. Network-1 seeks an award of damages in
the form of monetary damages based upon reasonable royalties as well as a
trebling of damages for D-Link's continued willful infringement of the Remote
Power Patent. Network-1 further requests that the Court permanently enjoin
D-Link from importation and sale of D-Link's PoE products into the United
States.

         The Company's Remote Power Patent relates to, among other things,
several key technologies underlying the IEEE 802.3af Power Over Ethernet (PoE)
standard that was approved on June 13, 2003 by the Institute of Electrical and
Electronic Engineers (IEEE) (the Standard). The Standard governs the delivery of
power over Ethernet cables in order to power network connected devices
including, among others, VoIP phones, wireless LAN access points and IP network
cameras.

          The Company has commenced a program offering licensing opportunities
to those companies Network-1 believes would benefit from access to the
technologies covered by the Remote Power Patent. To date, the Company has
contacted approximately 85 companies in the business of manufacturing or selling
products that comply with the Standard, including wireless switches, wireless
access points, RFID card readers, VOIP telephones, enterprise LAN switches and
network cameras, all of whom the Company believes would benefit from obtaining a
license to the Remote Power Patent. To date the Company has not entered into any
license agreements with respect to the Remote Power Patent.


ABOUT NETWORK-1 SECURITY SOLUTIONS, INC.

Network-1 Security Solutions, Inc. is engaged in the acquisition, development,
licensing and protection of its intellectual property and proprietary
technologies. The Company owns six patents covering various telecommunications
and data networking technologies. As part of its business strategy it is
offering licenses to the Remote Power Patent to third parties who Network-1
believes could benefit from the technologies covered by this patent.

THIS RELEASE CONTAINS FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF THE "SAFE
HARBOR" PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995.
THESE STATEMENTS ADDRESS FUTURE EVENTS AND CONDITIONS CONCERNING THE COMPANY'S
BUSINESS PLANS. SUCH STATEMENTS ARE SUBJECT TO A NUMBER OF RISK FACTORS AND
UNCERTAINTIES AS SET FORTH IN THE COMPANY'S REPORT ON FORM 10-QSB FOR THE
QUARTER ENDED SEPTEMBER 30, 2005, SUCH AS THE ABILITY OF NETWORK-1 TO OBTAIN
LICENSE AGREEMENTS FROM THIRD PARTIES FOR ITS PATENT PORTFOLIO, UNCERTAINTY OF
PATENT LITIGATION, THE COMPANY'S ABILITY TO ACHIEVE REVENUES AND PROFITS FROM
ITS PATENT PORTFOLIO, FUTURE ECONOMIC CONDITIONS, TECHNOLOGY CHANGES AND
LEGISLATIVE AND REGULATORY DEVELOPMENTS. EXCEPT AS OTHERWISE REQUIRED TO BE
DISCLOSED IN PERIODIC REPORTS, THE COMPANY EXPRESSLY DISCLAIMS ANY FUTURE
OBLIGATION OR UNDERTAKING TO UPDATE OR REVISE ANY FORWARD-LOOKING STATEMENT
CONTAINED HEREIN.



The condensed statements of operations and consolidated balance sheet are
attached.
<PAGE>
NETWORK-1 SECURITY SOLUTIONS, INC.
CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)

<TABLE><CAPTION>
                                                            THREE MONTHS ENDED              NINE MONTHS ENDED
                                                               SEPTEMBER 30,                   SEPTEMBER 30,
                                                       ----------------------------    ----------------------------
                                                           2005            2004            2005            2004
                                                       ------------    ------------    ------------    ------------
                                                                                                       (as restated)
<S>                                                    <C>             <C>             <C>             <C>
Operating expenses:
     General and administrative                        $    329,000    $    280,000    $    809,000    $    862,000
     Patent Costs                                                                           500,000




LOSS BEFORE INTEREST INCOME                                (329,000)       (280,000)     (1,309,000)       (862,000)
Interest income - net                                         9,000                          29,000           1,000
                                                       ------------    ------------    ------------    ------------

Net Loss                                                   (320,000)       (280,000)     (1,280,000)       (861,000)
                                                       ============    ============    ============    ============


Deemed dividend on additional warrant
antidilutution adjustment                                                                    (6,000)

Deemed dividend on Preferred Stock conversion                                                              (273,000)

Net loss attributable to common stockholders           $   (320,000)   $   (280,000)   $ (1,286,000)   $ (1,134,000)
                                                       ------------    ------------    ------------    ------------


Loss per common share: basic and diluted               $      (0.02)   $      (0.02)   $      (0.07)   $      (0.08)
                                                       ============    ============    ============    ============


Weighted average shares: basic and diluted               17,697,572      15,012,572      17,671,198      14,108,917
                                                       ============    ============    ============    ============
</TABLE>
<PAGE>




CONDENSED  BALANCE SHEET AS OF 09/30/05


   Cash and cash equivalents                           $  1,257,000
                                                       ============

   Total current assets                                $  1,287,000
                                                       ============

   Total assets                                        $  1,380,000
                                                       ============

   Total current liabilities                           $    599,000
                                                       ============

   Total stockholders' equity                          $    781,000
                                                       ============
</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
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