Network-1 Reports Second Quarter 2013 Results

                Network-1 Reports Second Quarter 2013 Results

PR Newswire

NEW YORK, Aug. 14, 2013

NEW YORK, Aug.14, 2013 /PRNewswire/ --Network-1 Security Solutions, Inc.
(OTC BB: NSSI) today announced financial results for the quarter ended June
30, 2013. Network-1 had revenue of $1,907,000 and $5,971,000 for the three
and six months ended June 30, 2013, respectively, ascompared with revenue of
$1,966,000 and $ 6,391,000 for the three and six months ended June 30, 2012,
respectively.

Network-1 reported net income of $782,000 or $0.03 per share (basic) and $0.03
(diluted) for the second quarter ended June 30, 2013 as compared $737,000 or
$0.03 per share (basic) and $0.02 (diluted) for the second quarter ended June
30, 2012.

Network-1 reported net income for the six months ended June 30, 2013 of
$2,174,000 or $0.09 per share (basic) and $0.08 per share (diluted), compared
with a net income $2,660,000 or $0.10 per share (basic) and $0.09 per share
(diluted) for the six months ended June 30, 2012.

At June 30, 2013, the Company had net operating loss carry forwards (NOLs)
totaling approximately $23,954,000 expiring through 2029, with a future tax
benefit of approximately $8,144,000. At June 30, 2013 the remaining deferred
tax asset was $5,878,000.

During the six months ended June30, 2013, Network-1 acquired thirteen (13)
patents as well as six (6) pending patent applications. Network-1 continues
to review potential patent acquisitions and strategic relationships with third
parties to monetize their patents.

"It was another strong quarter for Network-1," commented Corey M. Horowitz,
Chairman and CEO of Network-1. "Importantly, during this quarter we acquired
a patent portfolio from Mirror Worlds, LLC which has significant licensing
potential and at the same time continued to develop our content recognition
patent portfolio acquired during the first quarter. Combined with our ongoing
Remote Power Patent licensing initiatives, we are strongly positioned for
continued growth in our overall technology licensing activities," he added.

During the quarter, Network -1 initiated patent litigation against several
vendors of document system software and computer systems in the United States
District Court for the Eastern District of Texas, Tyler Division, for
infringement of U.S. Patent No. 6,006,227 (the ''227 Patent").

Named as defendants in the lawsuit are Apple, Inc., Microsoft, Inc.,
Hewlett-Packard Company, Lenovo Group Ltd., Lenovo, Inc., Dell, Inc., Best Buy
Co., Inc., Samsung Electronics America, Inc. and Samsung Telecommunications
America L.L.C. Network-1 seeks, among others things, monetary damages based
upon reasonable royalties.

The lawsuit alleges that that the Defendants have infringed and continue to
infringe the claims of the '227 Patent by selling and offering to sell Mac OS
and Windows operating systems as well as personal computers and tablets that
include versions of those operating systems.

The '227 Patent was among nine (9) patents and five (5) pending patent
applications acquired by Network-1, through its newly formed subsidiary,
Mirror Worlds Technologies, LLC, from Mirror Worlds, LLC (the "MW Patent
Portfolio") during the quarter. The '227 Patent entitled "Document Stream
Operating System" relates to methods that enable unified search, indexing,
displaying and archiving of documents in a computer system.The inventions
described in the '227 Patent resulted from the work done by Yale University
computer scientist, Professor David Gelernter, and his then graduate student,
Dr. Eric Freeman, in the mid-1990s. Both Professor Gelernter and Dr. Freeman
entered into consulting agreements with us as part of our acquisition of the
MW Patent Portfolio.

Professor Gelernter and Dr.Freeman are currently associated with Lifestreams
Technologies Corporation ("Lifestreams"), a company that develops next
generation applications and methodologies aimed at organizing and displaying
digital data. Lifestreams is a licensee of the MW Patent Portfolio. In
connection with the acquisition of the MW Patent Portfolio, we also acquired
an equity interest in Lifestreams. In addition, in July 2013 we made an
additional equity investment in Lifestreams and, as part of an amended license
agreement with Lifestreams related to the MW Patent Portfolio, we received a
warrant to purchase 7.5% of the outstanding common stock of Lifestreams on a
fully diluted basis.

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. Network-1 works with inventors and patent owners to assist in
the development and monetization of their patented technologies. It
currently owns nineteen (19) patents covering various technologies including
patents covering (i) the delivery of power over Ethernet (PoE) cables for the
purpose of remotely powering network devices, such as wireless access ports,
IP phones and network based cameras; (ii) foundational technologies that
enable unified search and indexing, displaying and archiving of documents in a
computer system; (iii) enabling technology for identifying media content on
the Internet and taking further action to be performed based on such
identification including, among others, the insertion of advertising and the
facilitation of the purchase of goods and services; and (iv) systems and
methods for the transmission of audio, video and data over computer and
telephony networks. Network-1 currently has sixteen (16) license agreements
with respect to its Remote Power Patent, which include, among others, license
agreements with Cisco Systems, Inc., Cisco Linksys, Inc., Extreme Networks,
Inc., Netgear Inc., Motorola Solutions, Inc., Allied Telesis, Inc., NEC
Corporation and several other data networking vendors. The Remote Power
Patent covers the remote delivery of power over Ethernet networks. The Remote
Power Patent was granted by the U.S. Office of Patents and Trademarks on April
21, 2001 and expires on March 11, 2020.In addition, Network-1 seeks to acquire
additional intellectual property assets and enter into strategic relationships
with third parties to monetize their intellectual property assets. During the
first six months ended June30, 2013, Network-1 acquired thirteen (13) patents
as well as six (6) pending patent applications.

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
Network-1's business plans. Such statements are subject to a number of risk
factors and uncertainties as disclosed in the Network-1's Annual Report on
Form 10-K for the year ended December 31, 2012 including, among others, the
continued validity of Network-1's Remote Power Patent, the ability of
Network-1 to enter into additional license agreements, the ability of
Network-1 to receive significant royalties from its existing license
agreements, the uncertainty of patent litigation, risks related to the
reexamination of Network-1's Remote Power Patent by the United States Patent
and Trademark Office, Network-1's ability to achieve revenues and profits from
its intellectual property or the intellectual property of its strategic
partners, Network-1's ability to execute its strategy to acquire additional
patents or enter into strategic relationships with third parties to license or
otherwise monetize their intellectual property, the continued viability of the
PoE market, future economic conditions and technology changes and legislative,
regulatory and competitive developments. Except as otherwise required to be
disclosed in periodic reports, Network-1 expressly disclaims any future
obligation or undertaking to update or revise any forward-looking statement
contained herein.

Corey M. Horowitz, Chairman and CEO
Network-1 Security Solutions, Inc.
(212) 829-5770

The condensed statements of operations and condensed balance sheets are
attached.



Network-1 Security Solutions, Inc.
Condensed Statements of Operations
                                Three Months Ended      Six Months Ended

                                June June
                                30,   30,
                                2013        2012        2013         2012
ROYALTY REVENUE                 $ 1,907,000 $          $         $ 
                                            1,966,000   5,971,000    6,391,000
COST OF REVENUE                 547,000     562,000     1,772,000    1,948,000
GROSS PROFIT                1,360,000   1,404,000   4,199,000    4,443,000
OPERATING EXPENSES:
General and Administrative   767,000     446,000     1,445,000    1,036,000
Non-Cash compensation        144,000     74,000      256,000      165,000
 TOTAL OPERATING 911,000     520,000     1,701,000    1,201,000
EXPENSES
OPERATING INCOME                449,000     884,000     2,498,000    3,242,000
OTHER INCOME (EXPENSES):
Interest income, net         12,000      10,000      18,000       19,000
INCOME BEFORE INCOME TAXES      461,000     894,000     2,516,000    3,261,000
INCOME TAXES (BENEFIT)
Current                      (22,000)    9,000       26,000       33,000
Deferred                     (299,000)   148,000     316,000      568,000
Total Income Taxes           (321,000)   157,000     342,000      601,000
(Benefits)
NET INCOME                      $          $         $         $ 
                                782,000    737,000    2,174,000   2,660,000
Net Income per share - Basic   $       $      $       $     
                                0.03         0.03         0.09    0.10
 $       $      $       $     
 Diluted                 0.03         0.02         0.08    0.09
Weighted average number of
common shares outstanding:
 25,181,736  26,192,920  25,098,074   25,595,913
-Basic
 27,087,061  28,819,929  27,396,414   28,729,256
-Diluted
NET INCOME                      $          $         $         $ 
                                782,000    737,000    2,174,000   2,660,000
OTHER COMPREHENSIVE INCOME NET                                    
OF TAX: 
 Unrealized gain (loss)       (9,000)     3,000       (14,000)     2,000
arising during period
COMPREHENSIVE INCOME            $          $         $        $ 
                                773,000    740,000    2,160,000    2,662,000





Condensed Balance Sheet as of June 30, 2013
Cash and cash equivalents                   $ 18,103,000
 Total current assets                     $ 20,735,000
 Total assets                             $ 32,307,000
 Total current liabilities                $    811,000
 Total long term liabilities              $  -0-
 Total stockholders' equity               $ 31,496,000



SOURCE Network-1 Security Solutions, Inc.

Website: http://www.network-1.com
 
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