Network-1Security Solutions

WELLESLEY HILLS, Mass. – Network-1 Security Solutions Inc., a designer of software products that provide security for computer networks and their information resources, went public November 12, offering 1.7 million shares at $6 apiece. Stocks priced at the company’s proposed offer price.

The initial public offering, which left 4.9 million shares of common stock outstanding, was underwritten by Whale Securities Co., L.P.

There were no selling shareholders. The company’s venture backers are Applewood Associates, L.P., Seneca Ventures, Woodland Venture Fund, Pisces Investors, L.P., Security Partners, L.P., Navigator Fund, L.P. and Navigator Global Fund.

Network-1 markets a family of security software products designed for computer networks, including Internet-based systems, internal networks and computing resources. It also offers consulting services in network security, design and support. The company’s FireWall/Plus software provides protection against internal and external security breaches to computer networks and secures organizational communications over internal networks and the Internet.

The $9.18 million raised by the IPO will be used for sales and marketing, software development, repayment of debt, the purchase of computer equipment, expansion of the company’s office space, working capital and general corporate purposes.

Network-1 has not been profitable since its inception, losing $4.5 million in 1996 and $2.4 million in 1997.

Corey Horowitz, president of CMH Capital Management Corp., which manages the Pisces Investors and Security Partners funds, has been a board member since April 1994 and chairman since January 1996. Barry Rubenstein, a general partner at Applewood Associates, L.P., Woodland Venture Fund and Seneca Ventures, joined the Network-1 board in July 1998, as did Irwin Lieber, also an Applewood general partner.

Network-1 – Selected Financial

(in thousands, except per share data)

Year Ended December 31, Six Months Ended June 30,

1996 1997 1997 1998

Net revenue 1,027 2,369 1,427 902

Net income (loss) -4,499 -2,390 -781 -1,990

Net income (loss) per share -2.46 -1.29 -0.4 -1.17