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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 18, 2003
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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.)
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Item 2. Acquisition of Disposition of Assets
(a) On November 18, 2003, Network-1 Security Solutions, Inc.
("Network-1") acquired a patent portfolio (the "Patent Portfolio") from Merlot
Communications, Inc. a broadband communications solutions provider. Network-1
intends to pursue licensing opportunities related to the technologies covered by
the Patent Portfolio as well as pursue the acquisition of additional patents as
its new core business.
The Patent Portfolio consists of six patents issued by the U.S.
Patent Office that relate to various telecommunications and networking
technologies and include, among other things, patents covering the transmission
of audio, voice and data over computer and telephony networks and the delivery
of remote power over Ethernet networks. The consideration paid by Network-1 for
the acquisition of the Patent Portfolio consisted of a cash payment of $100,000
and additional payments conditioned upon Network-1 achieving certain financial
milestones. The $100,000 payment was funded from working capital of Network-1.
The amount of consideration paid by Network-1 for the Patent Portfolio was the
result of arms length negotiation between the parties. Wheatley Partners II,
L.P. and its affiliates and related entities, who currently own 32% of the
outstanding voting stock of Network-1, also own a majority of the outstanding
voting stock of Merlot Communications, Inc.
In December 2002, Network-1 discontinued its security software
product business, as it was unable to achieve sufficient product revenue to
support the expenses of such operations. In June 2003, Network-1 sold its
CyberwallPLUS security software and related intellectual property to an
unaffiliated third party. The Board of Directors focused its efforts on seeking
a merger candidate or other strategic transaction for the Company in order to
enhance shareholder value. After reviewing numerous opportunities, the Board
decided that the acquisition of the Patent Portfolio and the pursuit of
licensing opportunities related thereto was the most attractive alternative for
its shareholders.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(a) Financial Statements of Business Acquired. Not Applicable.
(b) Proforma Financial Information. Not Applicable.
(c) Exhibits.
10.10 Patents Purchase, Assignment and License Agreement, dated
November 18, 2003, between Network-1 Security Solutions, Inc. and
Merlot Communications, Inc.
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: December 3, 2003 By: /s/ Edward James
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Name: Edward James
Title: Interim Chief Executive Officer
and Chief Financial Officer