NETWORK-1 SECURITY SOLUTIONS, INC.
Filed Pursuant to Rule 424(b)(3)
Registration No. 333-126013
PROSPECTUS SUPPLEMENT NO. 15
(To Prospectus dated December 22, 2005)
This is a prospectus supplement to our prospectus dated December 22, 2005 (the
"Prospectus") relating to the resale from time to time by selling stockholders
of up to 15,786,256 shares of our Common Stock, including shares issuable upon
exercise of outstanding warrants and options. On November 15, 2006, we filed
with the Securities and Exchange Commission a Current Report on Form 8-K. The
text of the Current Report on Form 8-K is attached to and a part of this
supplement.
This prospectus supplement should be read in conjunction with the Prospectus and
the prior prospectus supplements, and may not be delivered or utilized without
the Prospectus and the prior prospectus supplements. This prospectus supplement
is qualified by reference to the Prospectus, except to the extent that the
information provided by this prospectus supplement supersedes the information
contained in the Prospectus.
The securities offered by the Prospectus involve a high degree of risk. You
should carefully consider the "Risk Factors" referenced on page 7 of the
Prospectus in determining whether to purchase the Common Stock.
The date of this prospectus supplement is November 15, 2006.
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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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 14, 2006
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Network-1 Security Solutions, Inc.
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(Exact name of registrant as specified in its charter)
Delaware 1-14896 11-3027591
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
445 Park Avenue, Suite 1028, New York, New York 10022
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(Address of principal executive offices)
Registrant's telephone number, including area code: (212) 829-5700
N/A
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(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))
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ITEM 2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION
On November 14, 2006, the Company issued a press release announcing its
results of operations for the quarter ended September 30, 2006. 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 9.01 FINANCIAL STATEMENTS ARE EXHIBITS
Exhibit Number Description
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99.1 Press Release, dated November 14, 2006
2
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, 2006 By: /S/ Corey M. Horowitz
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Name: Corey M. Horowitz
Title: Chairman & Chief Executive Officer
3
EXHIBIT 99.1
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FOR IMMEDIATE RELEASE
COREY M. HOROWITZ, CHAIRMAN
NETWORK-1 SECURITY SOLUTIONS, INC.
212-829-5770
NETWORK-1 REPORTS THIRD QUARTER RESULTS
NEW YORK, November 14, 2006--Network-1 Security Solutions, Inc. (OTC:
NSSI.OB ) today announced financial results for the third quarter ended
September 30, 2006.
Network-1 reported a net loss of ($440,000) or $(.02) per share for the
third quarter ended September 30, 2006 as compared to a net loss of ($320,000)
or $(.02) per share for the third quarter ended September 30, 2005. Network-1
had no revenues during the quarter ended September 30, 2006.
The Company had no revenues for the nine months ended September 30, 2006.
Network-1 reported a net loss for the nine months ended September 30, 2006 of
$(1,056,000) or $(0.06) per share, compared with a net loss of $(1,286,000), or
$(0.07) per share for the nine months ended September 30, 2005.
At September 30, 2006, the Company had approximately $2,129,000 in cash and
cash equivalents which management believes will be sufficient to fund its
operations until December 2007, although there is no assurance that Network-1
will have sufficient capital through such date.
Network-1's patent infringement litigation against D-Link Systems Inc. and
its corporate parent D-Link Corporation, Inc. of Taiwan involving the Company's
Remote Power Patent is proceeding on a timely basis in the United States
District Court for the Eastern District of Texas, Tyler Division. A Markman
hearing was held on September 19 and a decision is pending.
The Remote Power Patent relates to, among other things, the delivery of
power over Ethernet cables in order to remotely power network connected devices
including, among others, wireless switches, wireless access points, RFID card
readers, VOIP telephones and network cameras. In June 2003, the Institute of
Electrical and Electronic Engineers (IEEE) approved the IEEE 802.3af Power over
Ethernet ("PoE") standard (the "Standard") which has led to the rapid adoption
of PoE. According to industry analysts, annual revenues for several of the
markets adopting this technology each exceed or are projected to exceed $1
billion.
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 third parties who Network-1 believes could benefit from the
technologies covered by its Remote Power 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 DISCLOSED IN THE COMPANY'S QUARTERLY REPORT ON FORM 10-QSB FOR
THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2006 INCLUDING, AMONG OTHERS, 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, THE COMPANY'S ABILITY TO
RAISE CAPITAL WHEN NEEDED, FUTURE ECONOMIC CONDITIONS AND TECHNOLOGY CHANGES AND
LEGISLATIVE, REGULATORY AND COMPETITIVE 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.
INVESTOR CONTACT:
Alliance Advisors, LLC
Alan Sheinwald, 914-244-0062
asheinwald@allianceadvisors.net
The condensed statements of operations and condensed balance sheet are attached.
NETWORK-1 SECURITY SOLUTIONS, INC.
CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
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2006 2005 2006 2005
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Operating expenses:
General and administrative $ 459,000 $ 329,000 $ 1,105,000 $ 809,000
Patent Costs 500,000
LOSS BEFORE INTEREST INCOME (459,000) (329,000) (1,105,000) (1,309,000)
Interest income - net 19,000 9,000 49,000 29,000
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Net Loss (440,000) (320,000) (1,056,000) (1,280,000)
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Deemed dividend on additional warrant
antidilutution adjustment (6,000)
Net loss attributable to common stockholders $ (440,000) $ (320,000) $(1,056,000) $(1,286,000)
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Loss per common share: basic and diluted $ (0.02) $ (0.02) $ (0.07) $ (0.07)
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Weighted average shares: basic and diluted 19,208,474 17,697,572 18,702,034 17,671,198
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CONDENSED BALANCE SHEET AS OF 09/30/06
Cash and cash equivalents $2,129,000
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Total current assets $2,145,000
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Total assets $2,232,000
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Total current liabilities $ 251,000
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Total stockholders' equity $1,981,000
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